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(5/11/10): Cincinnati Pension Needs $600 Million Cash Infusion |
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The Cincinnati pension needs a bailout. The cost of the bailout of the pension in 2004 was estimated at $80 million. However, the cost has grown to an estimation of $600 Million in just 7 years. The city pulled money out of savings to balance the budget for 2010. The option of turning to savings to bailout the city does not exist for 2011. "The unfunded pension liability continues to grow and is the elephant in the room at city hall. The clock is ticking and the options are very limited," Smitherman says.
May 11, 2010 . Cincinnati NAACP Media Release . Cincinnati City Council and Mayor could take a lesson from how European leadership handled the financial crisis in Greece. Greece is only the size of Alabama but European leadership was forced this weekend to bail out the country. European leadership understood that the financial crisis in Greece could spread to Spain, Italy and Germany. The results could have devastated the Euro and the European economy. The Cincinnati Pension could cause financial devastation to the entire city. "The Cincinnati pension reminds me of the Greece crisis," president of the Cincinnati NAACP Christopher Smitherman says. The Cincinnati pension needs a bailout. The cost of the bailout of the pension in 2004 was estimated at $80 million. However, the cost has grown to an estimation of $600 Million in just 7 years. The City Council must issue a $600 million Bond to infuse cash into the Cincinnati pension fund to lower the unfunded liability. The debt service would cost the city approximately $42 Million per year. The $600 million cash infusion into the pension must be followed by a disciplined council that makes all annual pension contributions. City Council must cut expenses in the annual budget by $90 million to cover the cost to service the pension debt and bring revenue and city expenses in line. The city pulled money out of savings to balance the budget for 2010. The option of turning to savings to bailout the city does not exist for 2011. If City Council attempts to raise taxes or create fees the Cincinnati NAACP will petition the government. If City Council or the Mayor attempts to sell key assets the Cincinnati NAACP will petition the government. "Our institution is restricting our petition budget and volunteer capacity to respond to city halls attempt to crush our seniors with fees and taxes," president of the Cincinnati NAACP Christopher Smitherman says. . The City of Cincinnati has paid approximately $100 million dollars in fees to manage the Cincinnati pension. However, the returns have consistently missed the 8% target. "You can not lose $1 billion dollars of pension money and not have major consequences," Smitherman says. City Hall continues to push a political agenda of cutting benefits to current retirees with no accountability to the management team to perform. "The unfunded pension liability continues to grow and is the elephant in the room at city hall. The clock is ticking and the options are very limited," Smitherman says. . . . REFERENCE RELATED ARTICLES: . |