Weekly Articles of Interest

The First 10 City Pensions That Will Run Out Of Money

By Gus Lubin
Business Insider
Oct. 12, 2010

The municipal pension crisis is like the social security crisis but worse: Unlike the federal government, cities cannot legally go into debt.

This imminent disaster is described in a new paper out by Robert Novy-Marx and Joshua Rauh [PDF].

Novy-Marx and Rauh say most cities are burdened with unfunded liabilities, which are ignored by common accounting methods (See Chart). Unfunded liabilities equal around $15,000 per household nationally, and up to $41,000 per household in some cities.

These cities are running out of money and will have to raise revenue or cut benefits to stay solvent.