A growing body of research shows that economic, demographic, and institutional factors affect public pension funding. Most of these findings are based on the analysis of complete retirement systems, which are often funded by multiple plan sponsors. This article offers one of the first empirical analyses of the determinants of pension funding at the level of a city government that acts as a plan sponsor, often for more than one plan. Models predicting unfunded liabilities for a large national sample of cities over 2003–2012 suggest that city fiscal autonomy and reliance property taxes are additional pieces of the pension underfunding puzzle.
AfonsoWhitney B.2013. Diversification toward stability? The effect of local sales taxes on own source revenue. Journal of Public Budgeting, Accounting & Financial Management25:649–74.
2.
AnziaSarah F.MoeTerry M.. 2017. Polarization and policy: The politics of public-sector pensions. Legislative Studies Quarterly41:33–62.
3.
BaickerKatherineGordonNora. 2006. The effect of state education finance reform on total local resources. Journal of Public Economics90:1519–35.
4.
BartleJohn R.1995. The fiscal impact of federal and state aid to large US cities: An empirical analysis of budgetary response. Public Budgeting & Finance15:56–67.
5.
BiggsAndrew G.2015, 9. The state of public pension funding: Are government employee plans back on track?American Enterprise Institute, Economic Perspectives. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3024261(accessed September 20, 2017).
6.
BradburyKatharineZhaoBo. 2009. Measuring non-school fiscal disparities among municipalities, National Tax Journal62:25–56.
7.
BretonAlbert. 1977. The theory of local government finance and the debt regulation of local governments. Public Finance/Finances Publiques32:16–28.
8.
BrownJeffrey R.ClarkRobertRauhJoshua. 2011. The economics of state and local public pensions. National Bureau of Economic Research Working Paper No. 16792. http://www.nber.org/papers/w16792(accessed September 15, 2017).
9.
BrownJeffrey R.WilcoxDavid W.. 2009. Discounting state and local pension liabilities. American Economic Review99:538–42.
CarrollDeborah A.2009. Diversifying municipal government revenue structures: Fiscal illusion or instability?Public Budgeting & Finance29:27–48.
12.
CarrollDeborah A.EgerRobert J.IIIMarloweJustin. 2003. Managing local intergovernmental revenues: The imperative of diversification. International Journal of Public Administration26:1495–518.
13.
CascioElizabeth U.GordonNoraReberSarah. 2013. Local responses to federal grants: Evidence from the introduction of Title I in the South. American Economic Journal: Economic Policy5:126–59.
14.
ChaneyBarbara A.CopleyPaul A.StoneMary S.. 2002. The effect of fiscal stress and balanced budget requirements on the funding and measurement of state pension obligations. Journal of Accounting and Public Policy21:287–313.
15.
ChapmanJeffrey I.2008. State and local fiscal sustainability: The challenges. Public Administration Review68:S115–31.
16.
ChenGang. 2018. Understanding decisions in state pension systems: A system framework. American Review of Public Administration48:260–73.
17.
ChenGangMatkinDavid. 2017. Actuarial inputs and the valuation of public pension liabilities and contribution requirements: A simulation approach. Public Budgeting and Finance3:68–87.
18.
DulebohnJames H.1995. A longitudinal and comparative analysis of the funded status of state and local public pension plans. Public Budgeting & Finance15:52–72.
19.
DyeRichard F.ReschovskyAndrew. 2008. Property tax responses to state aid cuts in the recent fiscal crisis. Public Budgeting & Finance28:87–111.
20.
EppleDennisSchipperKatherine. 1981. Municipal pension funding: A theory and some evidence. Public Choice37:141–78.
21.
EvansJohn H.PattonJames M.. 1983. An economic analysis of participation in the municipal finance officers association certificate of conformance program. Journal of Accounting and Economics5:151–75.
GehlSarah B.WilloughbyKatherine G.BellMichael J.. 2013. Pension reform in Atlanta: Funding past promises in an uncertain future. Public Budgeting & Finance33:3–23.
24.
GiertzJ. FredPapkeLeslie E.. 2007. Public pension plans: Myths and realities for state budgets. National Tax Journal60:305–23.
25.
GordonNora. 2004. Do federal grants boost school spending? Evidence from Title I. Journal of Public Economics88:1771–92.
26.
GoreAngela K.2009. Why do cities hoard cash? Determinants and implications of municipal cash holdings?The Accounting Review84:183–207.
27.
HendrickRebecca. 2002. Revenue diversification: Fiscal illusion or flexible financial management. Public Budgeting & Finance22:52–72.
28.
HendrickRebeccaCrawfordJared. 2014. Municipal fiscal policy space and fiscal structure: Tools for managing spending volatility. Public Budgeting and Finance34:24–50.
29.
HinesJames R.ThalerRichard H.. 1995. Anomalies: The flypaper effect. The Journal of Economic Perspectives9:217–26.
30.
InmanRobert P.1982. Public employee pensions and the local labor budget. Journal of Public Economics19:49–71.
31.
InmanRobert P.2008. The flypaper effect. National Bureau of Economic Research Working Paper No. 14579. http://www.nber.org/papers/w14579(Accessed March 20, 2016).
32.
JordanMeaganWagnerGary. A.. 2008. Revenue diversification in Arkansas Cities: The budgetary and tax effort impacts. Public Budgeting and Finance28:68–82.
33.
KelleyDashle D.2014. The political economy of unfunded public pension liabilities. Public Choice158:21–38.
34.
KiewietD. RoderickMcCubbinsMatthew D.. 2014. State and local government finance: The new fiscal ice age. Annual Review of Political Science17:105–22.
KimYunjiWarnerMildred. 2016. Pragmatic municipalism: Local government service delivery after the great recession. Public Administration94:789–805.
37.
KnightBrian. 2004. Parochial interests and the centralized provision of local public goods: Evidence from congressional voting on transportation projects. Journal of Public Economics88:845–66.
38.
LaddHelen F.YingerJohn. 1994. The case for equalizing aid. National Tax Journal47:211–24.
39.
LeedsMichael A.1985. Property values and pension underfunding in the local public sector. Journal of Urban Economics18:34–46.
40.
LutzByron. 2010. Taxation with representation: Intergovernmental grants in a plebiscite democracy. Review of Economics and Statistics92:316–32.
41.
MarkovitzHarry. 1952. Portfolio selection. The Journal of Finance7:77–91.
42.
MarksBarry R.RamanK. K.WilsonEarl R.. 1988. Toward understanding the determinants of pension underfunding in the public sector. Journal of Accounting and Public Policy7:157–83.
43.
MartellChristine R.KiokoSharon N.MoldogazievTima. 2013. Impact of unfunded pension obligations on credit quality of state governments. Public Budgeting & Finance33:24–54.
44.
MitchellOlivia S.SmithRobert S.. 1991. Pension funding in the public sector. National Bureau of Economic Research Working Paper No. 3898. http://www.nber.org/papers/w3898(accessed September 10, 2016).
45.
MohanNancyTingZhang. 2014. An analysis of risk-taking behavior of public defined-benefit plans. Journal of Banking and Finance40:403–19.
46.
MunnellAlicia H.2012. State and local pensions: What now?Washington, DC: Brookings Institution Press.
47.
MunnellAlicia H.AubreyJean-Pierre. 2016a. The funding of state and local pensions: 2015-2020. Research Brief of the Center for Retirement Research at Boston College. http://crr.bc.edu/wp-content/uploads/2016/06/slp_50-1.pdf(accessed September 20, 2018).
48.
MunnellAlicia H.AubreyJean-Pierre. 2016b. Will pensions and OPEBs break state and local budgets? Research Brief 51-1 of the Center for Retirement Research at Boston College. http://crr.bc.edu/wp-content/uploads/2016/10/slp_51-1.pdf(accessed September 20, 2018).
49.
MunnellAlicia H.AubryJean-PierreCafarelliMark. 2014. The funding of state and local pensions: 2013-2017. Research Brief, Center for Retirement Research at Boston College. http://crr.bc.edu/wp-content/uploads/2014/06/slp_39.pdf(accessed July 1, 2018).
MunnellAlicia H.AubryJean-PierreHurwitzJoshCafarelliMark. 2013b, 11. Gauging the burden of public pensions on cities. Research Brief, Center for Retirement Research at Boston College. http://crr.bc.edu/wp-content/uploads/2013/11/SLP35-1.pdf(accessed February 2, 2017).
52.
MunnellAlicia H.AubryJean-PierreQuinbyLaura. 2011. Public pension funding in practice. Journal of Pension Economics and Finance10:247–68.
53.
MunnellAlicia H.HaverstickKellyJean-PierreAubryGolub-SassAlex. 2008. Why don’t some states and localities pay their required pension contributions? Research Brief 7, Center for Retirement Research at Boston College. http://crr.bc.edu/wp-content/uploads/2008/05/slp_7-508.pdf(accessed May 5, 2018).
PPD (Public Plans Database for 2001–2016). 2017. Center for Retirement Research at Boston College, Center for State and Local Government Excellence, and National Association of State Retirement Administrators. http://crr.bc.edu/data/public-plans-database/(accessed August 15, 2017).
62.
RauhJoshua D.2010. Are state public pensions sustainable? Why the federal government should worry about state pension liabilities. National Tax Journal63:585–602.
63.
ReschovskyAndrewSchwartzAmy Ellen. 1992. Evaluating the success of need-based state aid in the presence of property tax limitations. Public Finance Review20:483–98.
64.
Robare, Emily, Michael Johnson, and Thomas Schuette. 2015. The difference between true pension distress and groundless panic. Municipal Credit Research Report. Accessed January 2017. https://www.gurtin.com/researchDocument/?id=2585(accessed September 5, 2018).
65.
ShnitserNatalya. 2015. Funding discipline for U.S. public pension plans: An empirical analysis of institutional design. Iowa Law Review100:663–714.
66.
St. ClairTravis. 2012. The effect of tax and expenditure limitations on revenue volatility: Evidence from Colorado. Public Budgeting and Finance33:61–78.
67.
St. ClairTravis. 2013. The impact of budget stabilization funds on state pension contributions. Public Budgeting & Finance33:55–74.
68.
St. ClairTravisGuzmanJuan Pablo Martinez. 2018. Contribution volatility and public pension reform. Journal of Pension Economics and Finance17 (4): 513–33.
69.
SunJinping. 2013. The sustainability of public pensions: A survey of California cities. Journal of Public Budgeting, Accounting and Financial Management25:479–501.
70.
SuyderhoudJack P.1994. State-local revenue diversification, balance, and fiscal performance. Public Finance Quarterly22:168–94.
71.
ThomMichael. 2013. All of the above: How fiscal, political and workforce traits affect pension funding. State and Local Government Review45:163–71.
72.
ThomMichaelRandazzoAnthony. 2015. Underfunding annual pension contributions: Examining the factors behind an ongoing fiscal phenomenon. State and Local Government Review47:35–44.
73.
ThompsonFredPiersonKawikaHandMichaelDothanMichael. 2017. Is a good normative model of public spending run backward a good positive model?Public Budgeting & Finance37:35–57.
74.
ThompsonFredRizovaPolly. 2015. How government creates value?Economic Themes53: 449–66.
WangQuishiPengJun. 2014. An empirical analysis of state and local pension plan funded ratio change, 2001-2009. American Review of Public Administration46:75–91.
81.
WangWenYilinHou. 2012. Do local governments save and spend across budget cycles evidence from North Carolina?American Review of Public Administration42:152–69.
82.
WellerChristianWengerJeffrey. 2009. Prudent investors: The asset allocation of public pension plans. Journal of Pension Economics and Finance8:501–25.
83.
YanWenli. 2011. The interactive effect of revenue diversification and economic base on US local government revenue stability. Public Money & Management31:419–26.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
