The red line shows the government's estimate. The purple line is the actual cost.
The first total municipal pension default happened last week: Prichard, Ala. ran out of money stopped mailing pension checks.
Hundreds of cities could be right behind. Projections by Robert Novy-Marx and Joshua Rauh [PDF] show the average city has $15,000 per household in unfunded pension liabilities. These massive liabilities are ignored by common government accounting (see chart).
Insolvency means benefit cuts or borrowing from the already-near-broke states.
Many of the 77 cities surveyed by Novy-Marx and Rauh are facing insolvency within the next decade. Other small cities like Prichard could go even sooner.
#10 is Fort Worth
#9 is Detroit
#8 is Baltimore
#7 is New York City
#6 is Jacksonville...........Unfunded liability: $4 billion, Unfunded liability per household: $12,994,
Solvency horizon: 2020
#5 is St Paul
#4 Cincinnati
#3 is Boston
#2 is Chicago
#1 is Philadelphia
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