Billions of Dollars in Liability Not Funded
HRD-93-32: Published: Nov 30, 1992. Publicly Released: Nov 30, 1992.
- Full Report:
Pursuant to a congressional request, GAO reviewed the growth of the District of Columbia's unfunded pension liability, focusing on: (1) how the District's retirement plans compare with other municipal retirement plans; and (2) the impact of U.S. Secret Service personnel on the District's pension liability.
GAO found that: (1) in 1979, Congress transferred responsibility for $2 billion in unfunded pension benefit debt to the District of Columbia; (2) since 1980, the District's total unfunded liability has grown to $4.9 billion; (3) interest accounted for 75 percent of the increase in the unfunded liability; (4) benefit changes and actuarial losses also contributed to the increase in the District's pension liability; (5) no legal requirement exists to amortize the District's debt; (6) annual federal contributions total $52.1 million, while the District contributes on a pay-as-you-go basis; (7) current payment levels are increasing the unfunded liability, which is expected to reach $7.7 billion by 2005; (8) the unfunded liability is jeopardizing the financial security and solvency of the District government; (9) plan benefits for District retirees are similar to those of other public employee retirement plans; and (10) the federal government reimburses the District, on a pay-as-you-go basis, for pension payments to members of the U.S. Secret Service and U.S. Park Police who participate in the District's retirement plan for police officers and firefighters.