Chicago's public pension fund was rated the worst of 50 plans recently evaluated by Moody's.
The ratings service ranked the funds based on their adjusted net pension liabilities when compared to their net operating revenue. Chicago, based on 2011 data, had a ratio of 678 percent, Moody's said. The second-worst fund was Cook County, the home of Chicago, which came in at 382 percent.
The liabilities faced by public pension funds have gotten more attention recently as agencies like Moody's and Standard & Poor's have begun to include them in calculating bond ratings. In July, Moody's lowered Chicago's rating from A3 to Aa3. This month, S&P changed the city's outlook to negative, mostly because of the increasing amount of revenue being diverted to fund future pension liabilities.
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Moody's reported that five other pension funds had ratios more than 300 percent: Denver Country School District 1; Jacksonville, Fla.; Los Angeles; the Metro Water Reclamation District of Chicago; and Houston. Other municipalities in the top 10 were: Dallas; the Clark County, Nev. School District; and Phoenix.
Twenty of the pension funds ranked by Moody's had ratios below 100 percent, with Washington, D.C., ranked the best with a ratio of 11 percent. North Carolina's Mecklenburg County ranked second-best, with a ratio of 14 percent.
Some funds, especially those of school districts, received state support in meeting pension obligations. That helped, Moody's said, but state pension aid can have a negative affect.
For instance, in August, Moody's lowered its outlook to negative on the general obligation bonds of Huntington, N.Y. The change was made because the state allowed the city, as well as 200 other municipalities, to defer pension fund payments.
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