Bet Big, Then Go Short
Governments that borrow money to fund their pensions often pay less into their pension funds in future years than they're supposed to. That can leave the funds in a worse shape than they were when the debt was sold, even if the pensions earn more on the borrowed money than taxpayers owe in interest.
Check out the table below to see how the 20 biggest pension bond deals since 1996 have worked out. And explore our map to see the pension funding ratios by state.
Pension Funding Ratios by State
|Deal Rank||Year Sold||Sponsoring Government||State||Amount of Pension Bonds Sold (millions)||Bond Amount Deposited in Pensions (millions)||Bonds Used To Pay Or Offset Pension Contributions?||Government(s) Underfunded Pension After Sale?||Years of Pension Underfunding||Did Funding Get Worse?||Unfunded Liabilities At Issue (millions)||Unfunded Liabilities Latest (millions)||Funded Ratio At Issue||Funded Ratio Latest|
|8||City of Detroit||$1,440||Yes||Yes||Yes||$148||$2,918|
|9||Chicago Transit Authority||$1,297||Yes||Yes||Yes||$636||$1,213|
|10||City of Philadelphia||$1,292||No||Yes||Yes||$1,365||$5,707|
|13||New York State||$773||No||No||Yes||($9,270)||$19,846|
|14||San Diego County||$737||No||No||No||$1,435||$2,138|
|17||San Diego County||$454||No||No||No||$1,203||$2,138|
|18||City of Oakland||$436||Yes||Yes||Yes||($56)||$478|
Top 20 list excludes pooled bond issues, refinancings, and bond sales whose pension funding component was too small to make the cut.
Funding ratios and liabilities reflect phasing-in of new accounting rules, which require pensions to calculate their assets and liabilities using different methodologies that require the use of lower rates of return for deeply underfunded pension plans. That makes certain plans, like New Jersey, Puerto Rico and Kentucky look more underfunded than they would have been under old accounting standards, but the general trend of decreasing funding is the same.
Unfunded liabilities measured at end of fiscal year in which bonds were sold, or next nearest year if data was unavailable, and the latest year for which the information was published. Amounts in parentheses mean pension assets exceed liabilities.
Count of years of pension underfunding includes fiscal year in which bonds were sold.
Sources: Bond sale data from Thomson Reuters. Uses of funds from bond documents. Pension funding statistics from annual financial reports filed by the pension plans and governments.
* A portion of San Diego's 2002 deal also went to refinance previous bonds