by Matt Rosenberg July 21st, 2010
Today during my regular weekly segment on KOMO 1000 Seattle’s “Nine2Noon” show with co-anchors Brian Calvert and Nancy Barrick, I talked about the latest featured item for our Public Data Ferret project. Here’s the original Ferret write-up on fiscal challenges facing the Seattle City Employees Retirement System, and here’s the audio of the segment. A transcript follows.
Brian Calvert: “What if the retirement plan you were counting on, ends up going broke? Matt Rosenberg of communityforums.org – where you can use their feature The Public Data Ferret – joins us. Matt, you recently looked at a report on the Seattle City Employees Retirement System. According to the study, that plan has a billion (dollars) more in liabilities than its current market value….It sounds like pretty bad news.”
Matt Rosenberg: “Well, it is. The value of the funds always fluctuates because of the nature of the investments, but you kind of have to plan for that, and it appears that due diligence has gone somewhat missing, unfortunately. The liabilities – the amount that will have to be paid out over the next 30 years – have…doubled since 1999 and assets have grown, but not nearly as much, partly because of the economy and the stock market. The city and employees pay in, but there’s going to have to be a big rate hike. The report says the city is going to have to pay most of it because of contracts that cap the added amount of employee contributions.”
Nancy Barrick: “And from what I’ve heard, it’s not just the city facing this problem. We’re looking at it at the county level, also the state level.”
Matt Rosenberg: “Ah, it’s a problem that exists widely. (King) County employees are part of the state pension system, which is doing okay but could be doing better, according to a recent report. There are real issues here, and part of it is limiting future liabilities and getting under the hood. Part of the problem with the city plan, Nancy, is that employees are guaranteed a 7.75 percent annual rate of return and their share of increases, if any are needed, is strictly capped. So, you know, one guy down in California who’s attacking this issue says that it’s kind of like going to Las Vegas with your brother-in-law’s paycheck, when governments guarantee a high rate of return. We don’t get that, necessarily, in the private sector. And so in the future, maybe we need to see new employees not having their retirement funds planned by the city, but doing it on their own, while they (the city) still meet obligations to current employees (and retirees).”
Nancy Barrick: “Alright. Interesting topic. Matt Rosenberg of communityforums.org, and you can check them out, with the Public Data Ferret.”