Pew Center: Cities' pension gaps worse than states' in 2009

Some cities are doing a better job than others in managing their defined benefit pension obligations, according to an analysis by the Pew Center on the States released Tuesday.

In their first comprehensive look at the pension challenges of American cities, Pew researchers found 61 key cities had a total shortfall of $99 billion in fiscal year 2009, the most recent year with complete data, with an average funding level of 74%, compared with 78% for all states. The 61 cities represent 45% of all municipal employees in the U.S.

Pew also looked at 40 cities for 2010 and found an even wider gap, when unfunded pension liabilities rose by 15% from 2009.

Pew researchers found a big difference in how cities managed their pension obligations. On the high end were Milwaukee at 113% funded and Washington, D.C., at 104% for fiscal year 2009; the lowest levels of funding were found in Charleston, W.Va., at 24%; Providence, R.I., at 42%; Omaha, Neb., at 43%; and Portland, Ore., at 50%.

“Sixteen cities managed to avoid the worst, and they did so by exercising fiscal discipline,” said Barbara Rosewicz, Pew director of research and information, during a conference call to review the findings.