Georgetown participates in the Texas Municipal Retirement System(TMRS) to provide for the retirement of city employees when they become eligible. As previously discussed, TMRS assumes a 7% growth rate in investment returns when calculating the unfunded liability that the taxpayers are liable for.
The latest investment return reported by TMRS for the period ending June 30, 2015 is 1.99%. Of course the stock market has declined substantially since then so the investment return to date is likely nonexistent.
Another method used to assess the health of a pension fund is to calculate the cash flow. Cash Flow is employee contributions plus city contributions minus benefits paid minus investment expenses. That number should be positive for a healthy pension fund. TMRS reports Cash Flow of $-47,596,720 for the period ending June 30, 2015. In order to generate the cash to cover the shortfall, funds generally have to sell assets--this is not a good thing in a down market!
Negative Cash Flow is another warning indicator to Georgetown's city staff and city council that they should be paying close attention to their pension liabilities.
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