Philadelphia is paying more in pension payments, as a percentage of its operating budget, than any other major city in the country, a Moody's pension report said.
The report, Pension Liabilities Rise for Most of 50 Largest Local Governments, released Friday, shows that in 2013, Philadelphia paid 18 percent ($660.6 million) of its $3.7 billion operating budget to its pension fund. Second to Philadelphia was the Metro Water Reclamation District of Chicago (a fund separate to the city pension fund) at 14 percent of its operating budget. Los Angeles was third with 14 percent ($647 million) of it $4.7 billion budget going to pension costs.
The good news is that in 2013 Philadelphia paid more than its Annual Required Contribution (ARC) of $634.2 million for that year. The not so great news is that Philadelphiais paying the third highest ARC relative to the city's revenues. Chicago is the worst with a required annual payment that is 37 percent of its revenues. Cook County, Ill. Followed at 20 percent.
As the Moody report is titled, most of the country's largest cities saw an increase in their pension liabilities. But Philadelphia was highlighted for the large amount it owes in pensions and general debt compared to its tax base.
"Pension burdens... combined with net direct debt obligations, represented less than 10 percent of tax bases for most of the largest local governments in 2013," the report said. "However, there were several exceptions. Chicago, Detroit and Philadelphia each had combined... burdens in excess of 10 percent of full value in fiscal 2013."
Philadelphia has one of the worst funded pension systems in the country. It only has 46 percent of the $11 billion it owes the city's employees and retirees. The city has been under tremendous pressure to pump as much money as possible into the fund to stabilize it. But even with its current payment plans, the soonest the fund will be whole is in 2039. And that prediction is assuming a steady 7.8 percent rate of return.
- Staff writer Joseph N. DiStefano contributed to this post.
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