Pensions are assuming an increasingly important role in state/local public policy. From Detroit’s bankruptcy to the recent legislation signed by Illinois’ governor to alleviate a $100 billion liability, Californians are uniquely familiar with this crisis. More recently than the well-known bankruptcies from Vallejo to San Bernardino, the Sacramento Bee noted just two weeks ago that while the City of Sacramento reduced its payroll by 1,000 employees over the last five years, its annual pension obligations have increased by almost 10 percent – now at $55.4 million for the budget year.
The scenario in the capital city, illustrates a little appreciated paradigm in the public sector: while governments are getting smaller (in number of employees), they are getting more expensive. This dynamic is being demonstrated in the City of Chicago, where, as the Wall… Read More