On average, for the largest 15 cities in the country, public
employee pensions, debt and other retirement benefits made up 26
percent of expenditures compared with 25 percent in fiscal 2016,
S&P said in its report.
In order - from high to low - of fixed costs as a percentage of
expenditures, the cities surveyed were Chicago, Dallas,
Jacksonville, San Jose, Houston, Austin, Phoenix, New York,
Columbus, San Francisco, San Antonio, Los Angeles, Indianapolis,
San Diego and Philadelphia.
For 11 of the cities surveyed, the financial burden of pensions
was greater than debt obligations, S&P said.
Across all pension plans in the survey, the median funded ratio
was 69 percent, S&P said. Chicago was an outlier at only 26
percent funded, the report said.
"We expect those cities with poorly funded pensions to continue
to see steady growth in fixed costs over time, likely pressuring
or crowding out other budget priorities and leading to a
diminished capacity for weathering stress scenarios," the report
Funding ratios for pensions have remained mostly flat over the
past three years despite strong investments in the funds in
fiscal 2017, S&P said. That, in part, is due to multiple cities
revising their assumed investment rate of return lower, it said.
The median assumed investment rate of return across the largest
cities was 7.25 percent in fiscal 2017 compared to 7.5 percent
two years prior, S&P said.
(Reporting by Laila Kearney; editing by Diane Craft)
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