Metro pension system at risk from unfunded obligations, study says

By Michael Cass • THE TENNESSEAN • October 14, 2010 Metro's pension plan will be insolvent by the year 2025 unless the city gets a handle on its unfunded financial obligations, according to a new academic study. The study says six major cities can only pay for promised benefits through 2020 at best:, including Philadelphia, Boston, Chicago, Cincinnati, Jacksonville and St. Paul. With $2.3 billion in unfunded liabilities, Nashville is one of 18 other major cities and counties that can't get through 2025 with current pension assets, the professors say. "What is clear is that state and local governments in the US have massive public pension liabilities on their hands, and that we are not far from the point where these will impact the ability of state and local governments to operate," according to the study by professors at Northwestern University and the University of Rochester. "Given the legal protections that many states accord to liabilities, which in a number of cases derive from state constitutions, attempts to limit these liabilities with benefit cuts for existing workers will only go so far." A study by the federal Government Accountability Office last year found Metro had $2.65 billion in unfunded retiree health benefits, mirroring a national problem for cities and states. Mayor Karl Dean's administration said it would look into the issue. Metro Treasurer Lannie Holland could not immediately be reached for comment on the new study. Contact Michael Cass at 615-259-8838 or mcass@tennessean.com