Seattle workers pension plan is short by $1.2 billion
Seattle’s auditor says the city's employee pension plan is underfunded by $1.2 billion .
In a report on the city’s financial condition, the auditor says Seattle only has 70 percent of the money it needs to meet its pension obligations.
Eric Scorsone, a professor of local government finance at Michigan State University, said 80 percent is considered healthy and 60 percent is considered risky — so Seattle's position in the middle is “not terrible."
"But certainly we don’t want to put it off any longer at this point. Some actions are going to need to be taken, potentially, to help address the problem,” Scorsone said.
The city’s employee retirement system failed to answer information requests from KUOW about the history of the shortfall and its causes.
Scorsone said many cities fail to use good times to fund their employees’ pensions. And when stretched during hard times, such as the recession a decade ago, cities struggle to find funds.
It’s been estimated that state and local governments have $4 trillion - $5 trillion in unfunded pension liabilities.
However, few cities have experienced Seattle’s boom, which gave the City Council new tax money to spend and also replenished emergency funds. With that growth, however, came new pressures such as the city’s crisis of homelessness that have shaped the city’s financial priorities.
And now the city’s auditor’s report indicates that revenue growth from the boom is starting to taper: Sales tax revenue grew nearly 9 percent in 2018, but is expected to grow only 3.5 percent this year and 2 percent in 2020.
The city says it plans to clear this shortfall in its employee pension by 2042.