Thanks for the info.
So, if they don’t accrue the expense for the pension liabilities, then they will be under funded. But, the point at which the SHTF will be years from now, so those currently managing the funds, or those in elective office overseeing all of this, don’t have to make any tough decisions today about this.
Paying the pension bill and accruing for it are two different things. I can only speak for NY in that the municipality’s bill has to be paid each year. Another problem is that the state allows the municipality to borrow for its pension bill at a rate higher than what the free market would bear and now the municipality is essentially borrowing for its annual operating costs. With respect to Detroit, the pension fund was never properly managed and the bills are out of control and were never paid properly so that the fund is fully funded. This is a recipe for disaster. Detroit has no growing tax base and there are unfunded liabilities which will never be fully funded. Politicians constantly kick the can down the road and never deal with the 800lb gorilla in the room. No one has the political will to deal with the issues.