Moody's: Wide Variation in Pension
Metrics for 50 Largest Local Governments Continues
Moody's Investors Service - 27 Jul 2015
New York, July 27, 2015 -- Moody's Adjusted Net Pension
Liabilities (ANPLs) increased for 31 of the 50 largest local
governments in fiscal 2013, Moody's Investors Service says in a new
report. The 50 largest governments are ranked by outstanding debt
in fiscal 2013.
The fiscal 2013 median ANPL increased to 204% of operating
revenues from 175% the prior fiscal year, but pension costs and
liability burdens still vary widely among the 50 largest local
governments. For 14 of the local governments, pension and actuarial
costs amount to less than five percent of revenues.
"Relative to revenues and to full value, fiscal 2013 ANPLs
exhibited a moderate shift toward heavier burdens, with a small
number of outliers continuing to exhibit exceptionally large
burdens," Moody's AVP -- Analyst Tom Aaron says in "Pension
Liabilities Rise for Most of 50 Largest Local Governments."
As a percentage of operating revenues, Chicago (Ba1 negative)
remained at the top with adjusted net pension liabilities at 703%,
followed by Dallas (Aa1 stable) at 506%, Houston (Aa2 negative) at
458%, Los Angeles (Aa2 stable) at 410%, and Jacksonville, FL (Aa2
stable) at 403%.
ANPL changes in 2013 government reporting exhibited mixed results
owing to differences in plan valuation dates spread across 2012 and
2013 calendar years, since Moody's adjustments tie actuarial
valuation dates to market-based discount rates in valuing
liabilities.
As a result, the 29 issuers with disclosure tied to 2012
actuarial reports saw ANPLs increase an average of 37%. The other
21 issuers that disclosed 2013 actuarial results saw ANPLs decrease
by an average of 13%.
Pension plans for the largest local governments also benefitted
from strong investment performance in 2013, following almost flat
returns in 2012. Moreover, plans with fiscal years ending June 30
achieved solid investment performance in 2014.
Beginning in fiscal 2014, many plan funding disclosures will
become more timely as new public pension accounting standards are
adopted, since assets and liabilities must be reported at the end
of the plan's fiscal year. Moody's expects some local government
ANPLs to moderately decline based on these disclosures.
The top 50 local governments with the lowest ANPLs for FY 2013
are Washington, D.C. (Aa1 stable) at 24%, , Cypress-Fairbanks
Independent School District, TX (Aa1 stable) at 25%, and
Mecklenburg County, NC (Aaa stable) at 29%.
The report is available to Moody's subscribers at http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_1005536