Are City Fiscal Woes Widespread? Are Pensions the Cause?


Summary:

This brief explores the extent to which economic factors, poor fiscal management, and/or high pension costs contribute to the challenges cities with financial problems face.

Author(s):
Alicia H. Munnell, Jean-Pierre Aubry, Josh Hurwitz, and Mark Carafelli of the Center for Retirement Research at Boston College
Publication date:
12/13
Filed under:
Research Studies
Key findings:
  • Only a small number of cities overall face serious financial troubles and one-third of them are in California.
  • Pensions are a minor factor in financially troubled cities; fiscal mismanagement tops the list, followed by economic problems.
Download publication:
City_Fiscal_Woes_14-358

Detroit’s bankruptcy and Chicago’s pension problems prompted a wave of speculation about city finances, but these two examples are not representative of U.S. cities at large: the overall fiscal condition of cities is improving, and bankruptcies remain rare.

This issue brief examines a sample of cities with financial problems and explores the extent to which economic factors, poor fiscal management, and/or high pension costs contribute to the challenges such cities face. Key findings include:

  • Only a small number of cities overall face serious financial troubles, and one-third of them are in California.
  • Pensions are only a minor factor in financially troubled cities; fiscal mismanagement tops the list, followed by underlying economic issues.