Linking The Boston Globe and Cincinnati, Ohio

The link is the extent the past, in the form of pension liabilities, impacts the future as measured by financial value and quality of life.  The constraints of pension liabilities and slow growth create huge problems for wide swaths of America - - from newspapers to cities.

First, The Boston Globe by the always brilliant Matthew Yglesias at Slate:

Like everyone else I've seen the headlines remarking on the fact that a New York Times Company which bought The Boston Globe for over a billion dollars is selling it this weekend for just $70 million. But if you read the body text of those articles you'll see that the paper actually sold for much less than $70 million. It in fact sold for a negative quantity of money.

That's because the terms under which John Henry is buying the paper stick the New York Times Company with the Globe's pension obligations, which are said to amount to around $110 million. Which is to say that the worth of the overall Globe enterprise is negative $40 million, not $70 million.
 

That's shocking. What's even more shocking is that the Globe has been doing great journalism—winning Pulitzers, etc.—and even turning a modest profit. But that's the difference between a growing industry (where Tumblr can sell for $1 billion with no profits or even meaningful revenue in sight) and a shrinking one.

Moving east to Cincinnati and the Buckeye Institute

With the public pension reform debate heating up in the Statehouse, it’s fitting timing for another pension crisis to arise—this time, in Cincinnati.

Cincinnati’s situation is unique. Unlike Ohio’s other municipalities, Cincinnati city employees do not participate in one of Ohio’s five statewide retirement systems; rather, they are members of the Cincinnati Retirement System.

Like so many other defined-benefit plans across the country, the Cincinnati Retirement System is in financial distress.

As reported by the Cincinnati Enquirer, Cincinnati’s pension fund for city employees is underfunded by roughly $728 million. Only 67 cents of assets exist for every dollar in liabilities. And the projections for the future are grim. Even if the fund hits its average investment return of 7.5 percent, the system with only be 10 percent funded by 2044.

Obviously there are many similarities between Cincinnati’s pension struggles and those of Ohio’s statewide plans: overly generous benefits, poor investment returns, and demographic changes. But there is one key difference. Unlike Ohio’s pension funds, Cincinnati has frequently failed to make the annual required contributions to the system. Underfunding a defined-benefit pension plan (while politically popular) is a near guarantee for future shortfalls—and closing the gap only grows harder by deferring the costs.

For instance, in 2013, the required contribution from the city will be $67 million–$30 million more than the city contributed this year. There appears to be little political appetite (and even fewer dollars) to find the extra money to fully fund the system in 2013.