Programs & Events
Event Details
Event Details
- Webinars: Trending@HBS
- Virtual
Detroit is the canary in the coal mine on the issue of unfunded pension and health care liabilities. This alarming issue potentially affects most municipalities and states, and raises the question: Is this a new systemic risk to the US economy? Detroit's example illustrates the significance of this issue. The legacy liabilities associated with municipal pension and health care benefits were the major contributor to the city's recent bankruptcy. Had the city not declared bankruptcy, it was projected that 67% of every incremental revenue dollar would have been allocated to these legacy benefits by 2017. Even after the bankruptcy filing, Morningstar reported that Detroit's pension funds were 92% funded. The city reported its unfunded liabilities were approximately $650 million; the emergency manager estimated them at $3.5 billion. What does this mean for other cities? Is Chicago next?