Philadlephia pension continues to go belly up.

**raider.adam** · 03-01-2010, 10:58 AM

I am sure Nutter, Butkovitz and Council choosign to not pay into it for two years is not helping.

City pension-fund shortfall comes to $5B ... & counting | Philadelphia Daily News | 03/01/2010

Then-Mayor Ed Rendell proposed to pay off the city's liabilities with escalating payments over the next 30 years. Rendell stuck with the plan for six years. But then he rolled the dice in 1999, borrowing nearly $1.3 billion in a 30-year bond deal, figuring that the pension system would invest the money and earn a bigger return than the 6.87 interest rate on the city bonds.

The plan crapped out, as the city's investments soured.

Cheiron Inc., the pension fund's actuarial consultants, reported last week that the pension fund's average gain over the last 10 years has been only 3.0 percent, not even enough to pay the interest on Rendell's bond deal. And the city still owes $1 billion in principal on Rendell's bonds, on top of the $5 billion deficiency in the pension fund itself.

In 2003, the Street administration reduced its pension payments below the levels in Rendell's 30-year plan, and the unfunded liability climbed sharply.

**Bulworth67** · 03-01-2010, 01:21 PM

I fear Nutter doesn't have the political will or ability to tackle this.

And I am sure he will be re-elected. Maybe he will surprise us and take this on after he likely gets re-elected?

**raider.adam** · 03-01-2010, 01:37 PM

Originally Posted by Bulworth67

I fear Nutter doesn't have the political will or ability to tackle this.

And I am sure he will be re-elected. Maybe he will surprise us and take this on after he likely gets re-elected?

If he waits until after he is re-elected, that means it won't be for another 4-5 years. I don't think the City can afford to wait 5 more years to deal with the pension.

I do feel for Nutter that it is falling on him, but on the same token, he was on Council when they have voted to keep being irresponsible with the pension funding. His hands definitely aren't clean.

**gray67** · 03-01-2010, 01:49 PM

These types of issues will ruin the country. Ignore the federal deficit for one second. If you add up all the liabilities that local and state governments have accumulated, I will bet that it will be a sizeable percentage of the federal deficit. That means not only do we have to fix the federal budget hole, but we also need to fix the budget holes of every other municipality in the country. I am guessing that perhaps 5% of all the relevant plans are considered close to fully funded, and I'll bet that that's a generous guess.

This country is so screwed. Politicians have no capability to make hard decisions any more. And why should we taxpayers be forced to shoulder the burden of paying for the pensions of uncaring and/or incompetent government employees?

**Illiniwek** · 03-01-2010, 01:49 PM

Philadelphia already combines high taxes with low city services. Eventually, the city will have to pay for its pension liabilities with incoming revenue. The result will likely be higher taxes and even lower services.

**Illiniwek** · 03-01-2010, 01:51 PM

More fun reading on pensions.

**phillycat** · 03-01-2010, 02:04 PM

Just curious, the solution is....?

Personally, I think the time is long past where we have to admit that allowing ANY government workers to put their time in for twenty years and then get to collect benefits for another 30-40 just isn't going to happen. And that includes cops and firefighters.

People are living much longer and doing less physically taxing jobs. There's no need for them to get to retire as early as they did when life expectancy was closer to 65.

**thunda** · 03-01-2010, 02:23 PM

Originally Posted by phillycat

Just curious, the solution is....?

Personally, I think the time is long past where we have to admit that allowing ANY government workers to put their time in for twenty years and then get to collect benefits for another 30-40 just isn't going to happen. And that includes cops and firefighters.

People are living much longer and doing less physically taxing jobs. There's no need for them to get to retire as early as they did when life expectancy was closer to 65.

Exactly. There's no reason why mostly healthy office workers can't stay working until their early seventies. More time paying into the system and less time cashing out.

How old must Philadelphia employees be to get full pension benefits?

**thunda** · 03-01-2010, 02:24 PM

Christ, the liability almost doubled under Street. What a disaster that man was.

**eldondre** · 03-01-2010, 02:25 PM

Originally Posted by Bulworth67

I fear Nutter doesn't have the political will or ability to tackle this.

And I am sure he will be re-elected. Maybe he will surprise us and take this on after he likely gets re-elected?

the city would be a better place with nutter on council and katz in office but it didn't work out that way. it's not like I think any of the other candidates woulD be addressing the issue. we need to look past the mayor and get at least a couple of decent people on council..the council that got upset when he said to get rid of DROP and council cars, both of which were good ideas even if the money wasn't enough. nobody on council, AFAIK, has revived the idea of privatizing trash collection (maybe a backdoor way of reducing pensions). the payroll needs to shrink, current employees need to contribute significantly more, and in the end, workers will have to take a reduced pension.

**raider.adam** · 03-01-2010, 02:26 PM

Originally Posted by gray67

These types of issues will ruin the country. Ignore the federal deficit for one second. If you add up all the liabilities that local and state governments have accumulated, I will bet that it will be a sizeable percentage of the federal deficit. That means not only do we have to fix the federal budget hole, but we also need to fix the budget holes of every other municipality in the country. I am guessing that perhaps 5% of all the relevant plans are considered close to fully funded, and I'll bet that that's a generous guess.

This country is so screwed. Politicians have no capability to make hard decisions any more. And why should we taxpayers be forced to shoulder the burden of paying for the pensions of uncaring and/or incompetent government employees?

Top of my head, I believe the reported number was that it would cost $286 billion for the feds to absorb just the budget deficits of the states.

**Hospitalitygirl** · 03-01-2010, 03:10 PM

Nightmare. And Nutter has neither the will nor ability to handle this.

He and Buttkiss definitely punted the issue last year, when they could instead have taken a real stance on it.

**thunda** · 03-01-2010, 04:17 PM

Originally Posted by eldondre

the city would be a better place with nutter on council and katz in office but it didn't work out that way.

That would have been a much better way to have spent 2000-2007, and then leading into a Nutter mayoralty.

Originally Posted by eldondre

we need to look past the mayor and get at least a couple of decent people on council..

I hope there are a couple of retirements/indictments/passings for the 2011 elections, so Nutter can throw his weight around in open primaries.

**borntochill** · 03-01-2010, 04:26 PM

That chart is terrifying.

**raider.adam** · 03-01-2010, 04:36 PM

Originally Posted by phillycat

Just curious, the solution is....?

Personally, I think the time is long past where we have to admit that allowing ANY government workers to put their time in for twenty years and then get to collect benefits for another 30-40 just isn't going to happen. And that includes cops and firefighters.

People are living much longer and doing less physically taxing jobs. There's no need for them to get to retire as early as they did when life expectancy was closer to 65.

Current retirement age for city employees is 55. Cops and Firefighters I think just need to work 25 years.

As for the solutions, this is tough because there are short term and long term problems.

There is really only one solution to the short term - put a lot more money into the fund.

For long term reform solutions:

1) Increase the retirement age.

2) Increase employee contributions

3) Legislate that each budget has to incorporate funding the pension at a minimal level (maybe even make it a charter amendment).

4) Possibly reform the way pensions are paid out.

Originally Posted by thunda

I hope there are a couple of retirements/indictments/passings for the 2011 elections, so Nutter can throw his weight around in open primaries.

It would also require that he isn't challenged in the primary.

**Hospitalitygirl** · 03-01-2010, 04:47 PM

Originally Posted by thunda

That would have been a much better way to have spent 2000-2007, and then leading into a Nutter mayoralty.

I hope there are a couple of retirements/indictments/passings for the 2011 elections, so Nutter can throw his weight around in open primaries.

You have much too much faith in as yet undemonstrated abilities. Far too much.

He will be challenged, and in the primaries.

**billy ross** · 03-01-2010, 05:31 PM

Originally Posted by phillycat

Just curious, the solution is....?

Personally, I think the time is long past where we have to admit that allowing ANY government workers to put their time in for twenty years and then get to collect benefits for another 30-40 just isn't going to happen. And that includes cops and firefighters.

People are living much longer and doing less physically taxing jobs. There's no need for them to get to retire as early as they did when life expectancy was closer to 65.

Actually, the solution is pretty easy. First, new workers will go into public versions of 401k's. That's already done. The second is that the sales tax for Philadelphia County needs to be raised to 8% and the extra revenue allocated to shoring up the pension plan. Wait a minute there... well, at least now we can rest assured that the 'temporary' 8% sales tax in Philly ain't so temporary.

**eldondre** · 03-01-2010, 08:26 PM

Originally Posted by Hospitalitygirl

You have much too much faith in as yet undemonstrated abilities. Far too much.

He will be challenged, and in the primaries.

you have far too much confidence in the other democrats. he was a good councilman, or at least much better than the rest, and it stands to reason we would have been better off with katz than street. it also stands to reason we wold be better with nutter on council and a competent republican mayor now but that wasn't an option. you've never mentioned a viable candidate, who do you think would have been better?are you a bradyite?

Originally Posted by billyross

Actually, the solution is pretty easy. First, new workers will go into public versions of 401k's. That's already done. The second is that the sales tax for Philadelphia County needs to be raised to 8% and the extra revenue allocated to shoring up the pension plan. Wait a minute there... well, at least now we can rest assured that the 'temporary' 8% sales tax in Philly ain't so temporary.

1) it did?
2) isn't it bringing in less than expected?
3) the above scenario probably won't add up. Philly simply can't rely on only taxing citizens, many burbs have lower taxes because of healthy commercial sectors.

**tc08105** · 03-01-2010, 08:34 PM

Isn't this the sort of thing that happens when the municipal unions run government?

**phillycat** · 03-01-2010, 08:48 PM

Originally Posted by tc08105

Isn't this the sort of thing that happens when the municipal unions run government?

name a municipality that isn't held hostage to the public pension funds -- the vast majority of which is firefighters and police.

as much as we want to think it is the surly clerk at city hall that causes this problem, it's actually the cop who put in his 20 years and is spending the next 60 grilling on his deck at the shore. Not that he doesn't deserve it -- but we sure as heck can't afford it.

interesting that Atlanta is in worse shape. I thought it was the sun belt success story? surely it can't have the legacy costs of old northeast industrial cities like Pittsburgh & Philly.