Gauging the Burden of Public Pensions on Cities
In the wake of the bankruptcy of Detroit, stories in the popular press have created an impression that pensions are the major expense of U.S. cities and will lead to their widespread collapse. It is thus important to have a precise understanding of the burden pensions place on cities.
This issue brief takes a comprehensive measure of pensions’ costs to city residents in a sample of 173 cities. It finds that overall pension costs equal only 7.9 percent of the total revenue base. The authors conclude that, while some cities do face significant financial problems, pension costs are less of a burden to most cities than has been widely reported.