Major U.S. cities emerged from the financial crisis with increasingly underfunded pension and retiree health-care plans, according to a study released Tuesday.
Cities employing nearly half of U.S. municipal workers saw their pension and retiree health-care funding levels fall from 79% in fiscal year 2007 to 74% in fiscal year 2009, using the latest available data, according to the Pew Center on the States. Pension systems are considered healthy if they are 80% funded.
The growing funding gulf, which the study estimated at more than $217 billion for the 61 cities in the study, raises worries about local finances at a time when states are also struggling to recover from the recession. Property-tax revenue dipped during the housing crisis, straining city finances amid a weak national economy.
While the recession may have exacerbated pension woes, it didn't cause them in most instances, according to the Pew Center, a division of the Pew Charitable Trusts that focuses on state policy. The cities that are the worst off, according to the most recent data, didn't make their full required contributions to their pension systems before the financial crisis.