PAD4204 Public Finance discussion

Consider this scenario in a council-manager form of local government. You were hired as a professional city manager by the city council. As part of your duties, you are also responsible for balancing the budget. Each year for the past 10 years the public pension fund has been underfunded. All of the public employees are covered by a defined benefit pension plan. There are 25% of those who are between the age of 50 and 65. You realize that there will come a day when there is not going to be enough money to pay out these pensions. You want to construct a plan to insure the city will continue to pay their obligations, but provide a future option that will balance the city’s budget.

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