$100 million shortfall in Huntington, WV

The police and fire public pension plans in Huntington, West Virginia face an mnfunded accrued liability (UAL) of $117 million. The UAL is the difference between what a pension system owes in benefits to its members and the amount of cash available to pay those benefits.

The Herald-Dispatch reports that Huntington's problem began growing in the 1980s "when the state Legislature gave cash-strapped cities an alternative funding method that was similar to making the minimum monthly payment on a credit card with a high-interest rate."

While the alternative funding method temporarily reduced the minimum pension contributions for cities that chose to use it, it also caused their unfunded liabilities to increase. Now, many of those cities are faced with years of skyrocketing pension costs and no revenue source to pay for it.

Huntington, for example, spent about $1.3 million, or 6 percent of its budget, on police and fire pensions in 1993. This year, the city will spend $7.1 million, or 20 percent of its budget, on those pensions.

The problem is expected to get worse. Assuming that the city budget increases at an average annual rate of 3 percent as it has in the past 12 years, pensions will eat up more than 31 percent of the budget in 2018. The annual pension payments then are scheduled to slowly decrease until the unfunded liability is paid off in 2034.

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