Share This Page

The pensions problem: Begin here

| Monday, Aug. 19, 2013, 9:00 p.m.

Bankrupt Detroit's stone-cold lesson on underfunded retirement promises to public-sector employees is especially chilly for those states, including Pennsylvania, that have built no shelter for the winter of their disregard.

A CNBC.comanalysis shows that more than 120 of the country's biggest state and local pension plans contain a range of problems. “Thanks to a patchwork of accounting practices and rosy investment assumptions,” according to the report, it's unclear just how bad off they are.

But based on adjusted funding gaps, Pennsylvania and nine other states “would see their funding liabilities exceed an entire year's worth of state revenues,” according to the report.

Another report, this one from the Thomas B. Fordham Institute, reveals a jaw-dropping snapshot of the Philadelphia school district's pension bomb. Appropriately titled “The Big Squeeze: Retirement Costs and School District Budgets,” the report notes that in Philadelphia, the cost of retirement benefits leaps from $73 million in 2011 to a whopping $349 million by 2020, an increase of 378 percent (as measured in 2011 dollars).

Yet despite the urgency for corrections, one analyst likens public pension reform to “steering a blimp.” The Hindenburg comes to mind.

Avoiding disaster in Pennsylvania begins by getting the Legislature off the dime and shifting new state employees and public school teachers from a defined-benefit to a defined-contribution plan — which should have been done years ago.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.