Charleston falls short in funding for pensions and retiree health care according to a new report out by the Pew Charitable Trusts.
This report showed that 61 key cities across America had emerged from the Great Recession with a gap of more than $217 billion between what they had promised to their workers in pensions and retiree health care and what they had saved to pay that bill.
Senior Researcher at the Pew Center on the States David Draine said Charleston was one of the worst performing cities included in the study.
“In 2009, they had only 24% of what they should have had at the time and unfunded liability over $205 million,” said Draine. “In 2010 those those funding levels dropped further and the unfunded liability went up to $274 million.”
Out of the 61 cities included in the study, only two had even half of the money needed to fulfill their promises to employees and 33 cities had set aside nothing to pay this bill coming due.
Draine said Charleston and other cities ran into problems when they viewed these funds incorrectly.
“Many cities have been treating this as a credit card bill where they only have to make minimum payments,” said Draine. “But the bill eventually comes and it’s gotten bigger in the meantime.”
Charleston City Manager David Molgaard said the study’s findings are no surprise to city officials.
“We knew that we have issues and that’s why we’ve made attempts in the last few years to try to address the shortcomings,” said Molgaard.
To address the problems, the city has been putting new employees in a different pension fund that is fully funded and paying retirees on a pay-as-you-go basis out of the old plans moving forward until that fund is built back up through assets and monies the city is able to accumulate.
Molgaard said they can now see a light at the end of the tunnel, but it’s going to take some time to get there and the road isn’t going to be easy. He said they have a strategy in place.
According to Molgaard, that light at the end of the tunnel is not expected to be reached for another 30 to 35 years.
City officials blame the current pension and retiree health care shortcomings on old methodologies that they no longer follow.