Tuesday, September 23, 2008

The Nashville Convention Center looks cheap

compared to the unfunded pension liability. Brad Schrade, in his article about the cost of providing lifetime healthcare for Council members ($10 million), also talks about the unfunded pension liability for Metro Taxpayers, for ALL Metro employees. Its somewhere between $1.5 billion and $2.5 billion depending on how you compute.

Link

The accounting changes come at a time when some local governments are trying to move to retirement systems similar to the private-sector model, Jones said. Governments face the choice of keeping retiree health benefits where they are or reducing them, but keeping them at current levels will require finding a way to fund them, he said.

The unfunded liability for the state is $3.1 billion, according to its own actuarial study. For Metro, the total unfunded liability of current promised benefits is $1.5 billion over 30 years. The figure grows to $2.5 billion if the city accounts for the present value of benefits to be earned in the future. The council portion of that is about $9.2 million.

Metro would have to come up with about $100 million a year in its $1.6 billion annual budget to fully fund the liability. Metro's actuarial study mentions scenarios of lowering future benefits, and outlines how that would reduce costs.

"No one has yet found a solution to this," Riebeling said. "There are a lot of different options from changing benefits to creating a trust fund for it. All these concepts will be looked at in course. We're funding it as we go. We're meeting all our obligations currently. It's not something that has to be solved overnight. Obviously it can't be solved overnight because of the amount of money involved."