Unfunded Pension Liabilities

Texas has $86B in unfunded pension liability according to The Texan. This includes the liabilities in both the state and local government retirement systems. A description of the data acquired by the Texas Pension Review Board can be found here. The $86B unfunded liability is for 2019.

The City of Georgetown contributes to and uses the Texas Municipal Retirement System (TMRS) for its employees.

In total, the local public pensions in Texas have $20 billion in unfunded liabilities. This includes the $4.3 billion from the Texas Municipal Retirement System (TMRS), an amalgamation system for cities not big enough to finance their own independent pension systems. Cities that are part of the TMRS pay into the system just as they would their own. 

For the TMRS, the total in unfunded liabilities comes out to $18,082 per payee. 

Not including TMRS, the localities collectively owe $75,000 per payee.

At the end of 2018, the pension liability for Georgetown is $28,763,027 as shown below. Because of the mismatch in city fiscal years and calendar years, the 2018 data is the latest available.

It is likely that the liability increase for 2019 will be at least as much as the 2018 increase over 2017 of $11M. 

Notice that if the discount rate is decreased by 1%, the unfunded liability almost doubles to $53,054,358. The discount rate is basically the assumed rate of return of the investments. Based on stock and bond market performance this year, it is expected the unfunded liability will substantially increase when reported in 2022.

Of course this liability does not show up during any of the annual budget documents!

The City Council should be asked why they are not funding the retirement system such that there is no unfunded liability!

Subsidizing The Slaughter: Big Wind Kills Another Bald Eagle, Gets More Federal Subsidies

A bald eagle flies over Mill Pond in Centerport, New York in 2018. (Photo by Bruce Bennett/Getty ... [+]

 GETTY IMAGES

On May 1, the Toledo Blade reported that a wind turbine in Bowling Green, Ohio had killed an adult bald eagle. Six days later, the Treasury Department announced that it would provide another extension of the production tax credit, the lucrative subsidy that the wind industry has relied on for decades. Forbes

City Revamps Homeowner Solar Electric Program

The City initiated a program in 2006 to allow residential customers with wind and solar electric generation capability to pay only for electricity used in excess of their own needs at the standard residential rate.

If the residential customers generated more electricity than they consumed, they earned credit equal to the city's avoided fuel cost.

This is called a Net Energy Metering (NEM) program where the customer only pays for the energy used or is credited with excess energy generated.

In 2012, the program was extended to include non-residential customers.

The program was also amended to provide that customers who generated electricity in excess of their needs were credited with the excess electricity at the standard residential rate for every Kilowatt-hour put into the City's electric distribution system.

By 2020, 334 customers had signed up for the program.

A review in 2020 by the City shows that renewable energy credits exceed avoided energy costs and results in cost shifting from NEM to Non-NEM customers. There was also no limit on the credit $.

A comparison of a typical Georgetown residential electric bill for August follows:

It is clear that the customer with net solar energy saves $64.16. Yet the City is selling its excess electricity from the foolish long-term wind and solar contracts at a loss and local residents are generating more excess energy to be sold at a loss into the ERCOT energy market.

The publisher of the Wilco Sun estimated the city lost $32,936 over an 18 hour period on April 26, 2020.

Needless to say the City needs to modify this program and they are indeed in the process of reducing the NEM program to reduce the transfer of costs from those with solar panels on their roof to those without solar panels.

An in-depth analysis and description of the program changes can be found here.

There are customers who have signed up for the program that think they had a "contract" with the City with a defined set of conditions. They are finding out the city can change the terms of their "contract" unilaterally without their consent.

Lesson learned - never trust the government!