Tilsley: No Risk in Pension System That Has $750 Million in Unfunded Liabilities!

What does a responsible management team do when its pension system is almost a billion dollars in the red? Answer at the bottom.

Some City Council members tried to reassure municipal workers who attended a special council meeting Wednesday evening about the city of Cincinnati’s troubled pension system, which is facing major shortfalls in the future.

Mayor Mark {"THE GENIUS"} Mallory told a crowd of about 100 people, "There is no one here (on council) that wants to see a single retiree go without their benefits."

...Councilmen Charlie Winburn and Christopher Smitherman called for the special meeting. Winburn, a Republican, and Smitherman, an independent, said they felt stymied from getting answers about the pension system by council's Democratic majority.

Winburn and Smitherman said they've tried to get the issue placed on council's Finance Committee agenda, but are blocked by Vice Mayor Roxanne Qualls and others... “The retirement system is in crisis and must be addressed,” Smitherman said.

Cincinnati’s $2.1 billion retirement system, which covers current and former municipal employees, has an “unfunded liability” estimated at $728 million.

But Paula Tilsley, executive director of the Cincinnati Retirement System, said its problems are long-term and current retirees shouldn't worry unnecessarily... "There is no risk in the foreseeable future that retirees won't get their pension checks," Tilsley said... The pension system covers 4,400 retirees or surviving spouses; there are about 2,900 active employees who pay into the system.

Smitherman, a financial planner, first began warning about pension problems in 2004 during his first council term... Each year, (the retirement system) is sending an estimated amount of $200 million in payments to current retirees,” Smitherman said.

“The current value of the pension being only $2 billion and not the needed $3 billion means the pension plan is sending out 10 percent of its value on an annual basis,” he added. “This is not sustainable. The health of a pension is defined as its ability to pay its future obligations not its present obligations. If you accept this definition, the (system) is not solvent.”

The system is funded at a 67 percent level, meaning that its assets do not cover projected future expenses. To be considered financially healthy, a pension system should be funded at a minimum of 80 percent.

Chris Smitherman is a hero, he's been calling out council for its crazy promises since he got into office.


Answer: Why, build a streetcar obviously!!!

WLWT: Streetcar bids could push price tag to $130 million

That's what WLWT is reporting.

Construction bids for the Cincinnati streetcar project have come in way over city hall's budget, and that's become more grist for the political mill... "They estimated $44 million on the track, (and) it came in, the low bid came in $71 million – $26 million over budget," said mayoral candidate John Cranley. "It shows incompetence." Combined with other potential changes, the higher construction costs for tracks and stations could push the price tag for the project to at least $130 million. "I and many citizens have always said that this project could not be completed at the $110 million price point," City Councilman Chris Smitherman wrote to the city manager. "Your office does not have authorization to spend any more money beyond the $110 million without bringing it back to City Council for a vote."

Yo Yo Yo: Cincinnati Streetcar Will Only Lose $5 to $10 Million a Year

Thankfully there are no other serious financial obligations the city has (ha!)...

• Even the most ardent proponents of the Streetcar acknowledge that it is not a worthwhile undertaking if it does not eventually extend up to Clifton.   
• But it has taken six years to get where we are, and it's another two years before we get the first 3.4-mile loop completed (if ever [we think never]).
• But remember, the state legislature has outlawed further State expenditures on the boondoggle, and Governor Kasich eliminated $52 million in state funds.
• Our two Congressmen, Steve Chabot and Lt. Col. Dr. Wenstrup, have foresworn providing any further federal funds for the project.
• In short, other than a massive increase in the City's earnings tax or the bonded indebtedness, resulting in a property tax increase, the Streetcar can't possibly extend up the Vine Street hill.  It's not going to happen in the lifetime of anyone reading this story.
• And in case you have not noticed, the City is flat broke, deeply in debt and crumbling from within.  We are not maintaining our streets and public buildings.
• The Streetcar will generate an annual operating deficit between $5 million and $10 million, further straining monies desperately needed for police, fire and trash collection. 

As COAST has said for years, the Streetcar will be a constant source of surprises, all of them negative.  Most of the surprises will be fiscal; some will be operational