That’s according to credit rating agency Moody’s, as the Observer reported earlier today:
On July 9, a revised audit of the system revealed it had about $3 billion in assets, 6 percent less than was reported to the pension fund’s board in May, according to Moody’s. The asset revision was the second for the plan in 2015, which highlights the risk the fund poses to the city’s credit. As the pension system’s unfunded liabilities grow, so does the weight on the city, which is on the hook for its police and firefighters pensions.
Because of the audit revision, earlier this month the pension’s board reduced how much it expects to earn from investments in the future from from 8.5 percent to 7.25 percent. At a rate of 7 percent, Moody’s projects the pension system could be out of money by 2038.
Remember that the city is on the hook for the unfunded liability. Says Wylie H. Dallas:
The good news is that all the dirty laundry is now being aired… the bad news is that the problem is so huge that the City’s financial stability is now at risk (something else I also predicted).
We are very, very fortunate to have Lee Kleinman for Dallas, Scott Griggs and Philip Kingston working hard to address the issues. If it weren’t for their continued pressure, we would likely still be in the dark about the magnitude of the problems.
D CEO noted back in April that the city is fortunate that its other public pension fund — the Employees Retirement Fund of the City of Dallas — seems well run, favoring traditional stocks and bonds over flashy real estate:
Connecticut-born [Cheryl] Alston, who’s 49, has been executive director and chief investment officer for the fund, which covers the city’s civilian employees, since 2004. During those 10 or so years the fund has posted average returns of 8 percent a year, putting it in the top 13th percentile of 408 U.S. public pension funds, according to data compiled by research firm Wilshire Associates.
Alston says credit for that should go to her board, whose seven members all have financial expertise and support an investment approach that she describes as conservative and opportunistic. “We look at risk, return, and liquidity,” Alston explains. “A lot of investors like illiquid investments and in [the financial crisis of] ’08, that hurt them. They had to sell assets to make their payout.”