This is a guest post by Gregory Mennis, director of state public-sector retirement systems for The Pew Charitable Trusts. It is a response to “Late to the public pension game,” from April 2.
Settlements in the Detroit bankruptcy case are arriving quickly. I thought that it might be useful to have a scorecard to tally the pieces. I took the chart above from the Detroit’s June 13, 2013 Proposal to Creditors (page 98). It lists the unsecured creditor claims. So far, Detroit has settled four unsecured liabilities valued at $4.107 billion for $1.213 billion, or 30 percent.
Some great new tools have arrived in muniland that begin to stretch the boundaries of how we organize and process our endless information. Staying on top of 80,000 municipal issuers, 50 states and unlimited private activity issuers is no easy task. Check out some of the new arrivals:
The Puerto Rico government encountered a stumbling block in its efforts to right a sinking fiscal ship on Friday when its Supreme Court ruled that legislation amending the teacher’s pension system was unconstitutional. Reuters reports:
I’ve said for several years that hiring by state and local governments is unlikely to rebound after the declines following the 2008 recession. Governments have been faced with increasing costs for Medicaid, pension and retiree healthcare, which are fixed in law and through contract negotiations and are therefore difficult to adjust. The most viable way for governments to balance their budgets was initially through layoffs; now it’s through hiring freezes. Employment data from the Federal Reserve Bank of St. Louis proves this point:
Yesterday I wrote about local governments spending $100 billion a year on police, but I realize that I didn’t provide much context for how that fits into overall spending. Here are a few datasets from the U.S. Census Bureau’s 2011 Annual Surveys of State and Local Government Finances to provide a framework.
Pew Charitable Trusts has released an ominous report, “The Fiscal Health of State Pension Plans: Funding Gap Continues to Grow.” The report finds that in 2012, U.S. public pensions lost ground in their funding ratios and ended the year weaker than they started. What is not clear is why, in March 2014, Pew is reporting 2012 data. Because of large stock market gains in 2013, pension funding gaps are now actually shrinking, not growing. Reuters writes about the Pew report: