Report: Chicago's Pension Woes Worse Than Detroit's

A new report shows 30 of the 50 most indebted U.S. cities have pension liabilities that exceed revenues.

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Chicago's pension liabilities were equal to 678 percent of its revenues as of 2011.

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Detroit may be notorious for its fiscal problems, but by one measure, it is far healthier than many of its peers. Chicago, Los Angeles, and Houston are just a few of the cities with bigger pension problems than Detroit, according to a new report from Moody's Investor Service.

[READ: Detroit Bankruptcy Could Set Pension Precedent

Among the 50 local governments with the most debt, the City of Chicago has the most ground to make up on its pensions. The city's pension liabilities were equal to 678 percent of its revenues as of 2011, and Cook County (which contains Chicago and some of its suburbs) comes in next, with pension liabilities that equal nearly 382 percent of its revenue.

Below are the 10 local governments with the largest pension liabilities as a share of revenues.

Rank Debt Issuer Pension Liabilities as Percentage of Revenue

1. Chicago 678.2 percent

2. Cook County (Ill.) 381.6

3. Denver County School District 1 341.6

4. Jacksonville, Fl. 326.9

5. Los Angeles 324.5

6. Metro. Water Reclamation District of Chicago 323.4

7. Houston 312.4

8. Dallas 292.5

9. Clark County (Nev.) School District 259.1

10. Phoenix 240.2

Note: Some school districts, as well as Chicago's water reclamation district, issue their own debt, so they are listed separately from their cities.

Altogether, 30 of the 50 largest government issuers of debt have ratios over 100 percent, enough to cause "material financial strain" for many governments, according to the Moody's report.

"A lot of the problems that are more on the severe side are driven by governments not making the required payments into the pension plans," says Tom Aaron, analyst at Moody's and one of the report's authors.

Pensions have come to the forefront of the national dialogue with a recent spate of local government bankruptcies. Detroit's July petition made it the largest local bankruptcy in U.S. history, and its pensions gained extra scrutiny when the city's bankruptcy filing included a proposal to reduce pension payouts.

That city's pension liabilities represent 157.3 percent of its revenues, and the Detroit Public School District has a slightly deeper hole, at nearly 180 percent.

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Which is not to say that Chicago, Jacksonville, and other financially troubled cities are headed for Detroit's fate, says Aaron. He points to Motor City's many other economic problems, not least of which is a long and deep population decline.

"Pensions are one of many factors that go into our bond ratings, and that go into the fiscal health of a community or city," he says.

Detroit's bond rating from Moody's is at Caa3, meaning it has a relatively high credit risk. Detroit's public school district likewise is rated B2, meaning those bonds are also relatively risky. Of the 50 local governments that have issued the most debt, only three have ratings in the B or C categories. Moody's rating scale ranges from C on the low end to Aaa.

Still, other cities aren't immune to bad ratings. Moody's recently cut Chicago's bond rating from Aa3 to A3 and also cut Cook County from Aa3 to A1. In both cases, the ratings agency cited pension liabilities, according to Bloomberg.

A low credit rating can make it harder for a government to borrow money, as it often brings with it higher interest rates as investors try to avoid risk. For many local governments, more financial troubles – and, potentially, more downgrades – could be on the way.

"Detroit's not the only distressed city in the country," Aaron says. "In general we view the pool of local governments in distress as growing."