PHILADELPHIA (CBS) - The latest Wall Street crisis is a worst-case scenario for the pension fund of Philadelphia city workers. This morning, members of the board that oversees the fund were meeting to look at the damage.
The fund has been woefully underfunded for years, and has lost about 20 percent of its value in the recession that began three years ago. So this latest Wall Street turmoil is the last thing the fund needs.
“It’s a whole new world out there,” city controller Alan Butkovitz says. “Although analysts say that this is undervaluing what stocks should be, every day there’s a downgrade or a rumor — and the pension board wants to be primed to be on top of it.”
It’s not certain yet whether today’s meeting will result in any specific changes to the fund. Butkovitz points out that being cautious isn’t easy.
“So even though you’re told to take a deep breath and be logical about it, unless everybody else that’s stampeding is also logical, you can take quite a beating.”
The city is required to keep the fund afloat using dollars from the so-called General Fund — even if that means cutting city services or raising taxes.
“In that kind of environment, it’s not good enough to just rest on your laurels and do what you do normally as if the world was a stable cautious place,” says Butkovitz.
But the controller also points out that hasty action by the pension board could end up hurting more, so today’s meeting will focus on walking that tightrope.
Reported by Mike Dunn, KYW Newsradio 1060