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The China Factor in America's State and Local Economies

As the world's second-largest economy falters, pensions and tax revenues here are feeling the pinch.

BY  | AUGUST 2016

Earlier this summer, New York state’s pension fund announced a mediocre year. Investment earnings were essentially flat, and as a result the fund lost $5 billion because its other receipts -- contributions from government and from current employees -- didn’t cover retiree payouts.

The New York pension system was the victim of a global event that began halfway across the world a year ago this month. In August 2015, the world’s second-largest economy officially began to stumble. China’s central bank stunned investors by devaluing the yuan, lending credence to what outsiders had long been suspecting: China’s years of astounding annual economic growth -- at times cresting at double digits -- was slowing down.

Alabama’s One-Man Pension Show

He’s not the governor. He’s not a lawmaker. But thanks to the way he runs his state’s pension plans, David Bronner may be the most powerful man in Alabama.
BY ,  | MAY 2016

The office suite of David Bronner, head of the Retirement Systems of Alabama (RSA), rivals those of governors in much bigger and much richer states. Perched on the top corner of a building completed in 2008, Bronner’s spacious office is full of the framed photos, cartoons and assorted knick-knacks indicative of a long career in politics. A large rug in front of his desk prominently displays RSA’s circular logo. Bronner’s real trophy case, though, can be seen through his floor-to-ceiling windows and adjoining balcony: the panoramic view of downtown Montgomery, which shows just how much he has changed the skyline of this city of 200,000 people. Five mammoth concrete-and-glass buildings, much like the one his office occupies, stand nearby. The green-capped buildings are designed primarily to house state agencies, yet they’re outfitted with flourishes fit for big-city law firms, from fountains, marble, granite and towering lobbies to polished metal cauldrons at major entrances. Beyond them stands the city convention center and the adjoining hotel that Bronner also oversees.

As Retirees Outnumber Employees, Pensions Seek Saviors

Desperate for more money, public pension systems have been making high-risk investments hoping for a higher profit. But they may ultimately cost taxpayers more.
BY  | OCTOBER 2015

The $300 billion California Public Employees’ Retirement System began showing its age this year: It started paying out more money to retirees than it gained in contributions and investments. In roughly 20 years, CalPERS’ retirees will outnumber active workers by a ratio of nearly 2-to-1 in some of its plans.

In fact, a lot of state and local pension systems are already showing their age. Back in the 1970s, the typical pension fund had four to five times more active employees than it had retirees. Today, that ratio has slipped to 1.5-to-1 and is falling.

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