Latest City Pension Liability

City employees are invested in the Texas Municipal Retirement System (TMRS) for their retirement. The TMRS continues to assume a long term investment rate of return of 6.75%. 2016 was a good year for investments and they exceeded that rate of return. Here are the results from their Comprehensive Annual Financial Report.

They achieved a 7.42% return in 2016, however, their 10yr return was just 6.09%.

For 2016 TMRS reported to Georgetown that their liabilities are $129,483,368 and their assets are $107,413,854, which leaves an unfunded liability of $22,069,514. Some simple math shows that their funded ratio is 83.0% at the assumed rate of return of 6.75%.

Using the 10yr rate of return of 6.09% instead of 6.75% results in a funded ratio of 68.9%. This shows how sensitive the funded ratio is to the rate of return.

So when "experts" tell us that a funded ratio of above 80% indicates the pension fund is healthy, remember that ratio depends on the assumed rate of return.

Even though the TMRS is in relatively good shape, that is not true for public pensions around the country. Here is a chart from Bloomberg

Keep in mind that these funding ratios are likely very optimistic. Texas overall is at 75.6% and only one state, North Dakota, is fully funded. 

Once the public pension funds start to fail, and they will, the politicians think they're doing the right thing when they attempt to "socialize the issue" with federal bailouts and tax hikes. That will be a complete disaster!