Yunz thought I forgot. That or lost interest? Boiler has been building up steam is all. That and there seems to be quite a confluence of news in the nexus here: pensions, assessments, redistricting even migration. Damage Control teams being spread thin just trying to keep up. But let's poke in on pensions for a minute.
Let's recap: we all declared victory just a few months ago it seemed
. We 'solved this for the city' was one quote.
So last week we learn that the city pension funding is down to 54%, Note that is 54% with the notional asset of pledged future parking revenues that is still hard to define and as council is learning even harder yet to extract from the Pittsburgh Parking Authority. Let's just agree that it is not cash on hand in any form, nor fungible in any extant market. I still want to know what the real cash horizon is for the pension fund. You think others would care as well.
What really ups my distemper over the whole notional asset is how if confused the public. Maybe the asset makes sense, maybe it doesn't. But read the news coverage and tell me if you walk away with any appreciation for how much in $$ is really there to pay pension bills? No real appreciation that a large part (soon to be the majority) of all pension assets are no more than a promise from the city to itself to pay money in the future to the pension account. It is a promise that I am pretty sure existed long before last December mind you.
So it is coincidence that Governing had a column last week on the public pension problems everywhere to a degree. Will pension plans run out of money? It talks of the "risk of depletion" for pension funds. "depletion" isn't quite a euphemism, but sure sounds a lot tamer than the what it would mean if it were to come true.
So what does it all mean here? Here is what we know as to the state of the city's collective pension fund. Forgive me for any errors in the decimal points, the city does not mail me the detailed pension accounting.
Total liability Jan 1, 2011 $1,012,027,241
Funding as of Jan 1, 2011 said to be 62% which gives me $627 mil
Funding as of Sept 30, 2011 said to be 54% so $549 mil
Value of notional asset said to be valued at $239 million which gives a net value of $307 mil
That in itself would give you 30% funding ratio. It has been worse. Still,, after all the extra $$ piled in and all the other machinations, in reality we are in my calculation below the 32% we were just about two years ago. No thanks to some big losses due to massive market timing bets. I really wonder if they have really gotten all the cash back into the market in a portfolio that make sense. Something tugging at me makes me wonder what is up with the investment. Anyone know more?
If this is how we define success, you have to wonder what failure looks like? The only thing different today than a year ago is that an IOU was passed from one part of city government to another. The truth is that IOU existed legally, morally, and in the accounting long before the latest accounting trick. So what really is any different?
It really is worse than that. Realize also that there was what by definition was a one time transfer of the cash that was sitting in the not so locked 'lock box' built up from past budget surpluses. So just before the end of the year.. or so everyone is agreeing to even if the banks were closed, was the transfer of $45 million I believe it was to the pension fund. When thinking about trends, you really have to think about that as the one-time opportunity it was. No such surplus will be there for a long time again. If you were to net that out the city would most likely have been at ~$262 mil or less, or just under 26% funding ratio.
I won't pile on and say another year has gone by and while the rate of increase in the calculated total liability has slowed a bit, it would still seem an obvious projection that the total liability is higher as well which would push that % lower. That or that parts of the system are less well funded than these cumulative averages would imply. But success.. keep saying it.. it all succeeded last year.