City Pensions Running Out of Money; Cities Facing Bankruptcy

The NEXT 10 City Pensions That Will Run Out Of Money

Gus Lubin
Business Insider
12/27/2010

The first total municipal pension default happened last week: Prichard, Ala. ran out of money stopped mailing pension checks.

Hundreds of cities could be right behind. Projections by Robert Novy-Marx and Joshua Rauh [PDF] show the average city has $15,000 per household in unfunded pension liabilities. [Emphasis CAJ] These massive liabilities are ignored by common government accounting (see chart).

Insolvency means benefit cuts or borrowing from the already-near-broke states.

Many of the 77 cities surveyed by Novy-Marx and Rauh are facing insolvency within the next decade. Other small cities like Prichard could go even sooner.

The list of cities is here.

Also at Business Insider, 16 US Cities Facing Bankruptcy If They Don’t Make Deep Cuts In 2011