San Diego: Not the Worst at Pensions

How bad is San Diego’s pension problem? Not nearly as bad as Chicago’s, a new report from a financial analyst finds.

Chicago owes $11.9 billion to its pension plans — more than five times San Diego — and its pension debt per capita is nearly three times San Diego’s.

The report, from Chicago-based Nuveen Investments, argues that despite all the attention on San Diego’s pension issues, investors should be more wary of plans that face greater debts:

San Diego continues to face political squabbling regarding its pensions, as well as intensive media attention on its defined benefit pension plan — with some city critics recommending bankruptcy to address the issue. But our analysis shows that San Diego’s pension problems pale in comparison to those of Chicago, where pensions have received scant attention from elected officials and the media in recent years; and no one is publicly discussing bankruptcy.

Further, the report states San Diego is funding nearly all of its annual pension payments, while Chicago isn’t coming close. Full funding of Chicago’s pension plan would consume 40 percent of the city’s $2.6 billion day-to-day operating budget. San Diego’s payments require 16 percent of its $1 billion budget.

The report also is critical of credit rating agencies for saying local governments have healthy reserves but ignore their pension underfunding. It uses a rating agency’s report on Cook County, Ill. as an example.

The report is an interesting take on a priorities and perspective in both cities. San Diego has faced a national media onslaught for more than five years about its pension dilemmas, resulting in significant attention and hand-wringing over the debts. Chicago, clearly, hasn’t and the lack of attention shows.

Correction: This piece has been corrected to reflect that the report criticized credit rating agencies’ opinion of Cook County, Ill. not Chicago. We regret the error.

Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.