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Nov 23 2016

Unfunded University Pensions Headed for Trouble

These are high times for those in higher education. Tuition and taxpayer subsidies are lifting revenue through the stratosphere as Big Government does all it can to get ever more people attending college, including many who do not stand to benefit. Apart from the crucial role universities serve regarding education and research, there has been an explosive expansion of a remora class of useless moonbats teaching frivolous subjects to students who are not so much preparing for their adult lives as hiding from them. In social justice–dominated liberal arts departments, bloated salaries and lavish benefits are sometimes bestowed upon middle-aged adolescents who perform little work, none of it productive. A party this wild can’t go on forever :

Unfunded pension liabilities are higher than capital-related debt at the country’s public universities, according to a report Moody’s Investors Service issued Friday.

Moody’s said adjusted net pension liabilities will represent more than 60 percent of total adjusted debt by the end of the 2017 fiscal year. Unfunded pension liabilities totaled more than $183 billion across the sector after two straight years of investment returns below actuarial assumptions and after contributions to funds have remained weak.

Currently, pension expenses are just 3 percent of universities’ reported expenses, Moody’s said. But it anticipated pension expenses rising along with liabilities, putting more pressure on university finances. Moody’s also predicted that some states will shift pension burdens onto universities by lowering allocations to pay for other operating expenses.

Public school pensions are already crippling Illinois. If university pensions follow them into the sea of red ink, people may start asking what they are getting in return for all that money. That’s when the music stops and the party comes to a halt.

On a tip from R F.

7 Responses to “Unfunded University Pensions Headed for Trouble”

  1. Mr. Freemarket says:

    If we can’t keep universities well funded, where will all the history majors go after graduation???

  2. NotKennedy says:

    Back to their parent’s basement.

  3. Mr. Freemarket says:

    And that’s not fair. First of all, it is hard to complete that PhD in history by the time you are 26, and then you can’t be on your parent’s health insurance anymore either.

    Plus, what if mom won’t let you bring home a friend to “stay over?”

  4. NotKennedy says:

    Probably have to charge Mom with human rights violations and injustice! I think there was a case in NJ where a young woman sued her parents for not sponsoring her college fantasies–it was a few years ago.

    Aren’t there some online programs where they can “accelerate” the attainment of degrees/diplomas? You might not get your money’s worth but how much worse could it be than a degree from Amherst, or Mizzou?

    If you thought the dollar was worthless, check out the value of a degree in most of the liberal arts programs. They matriculate from coloring books to paint by number.

  5. jan_poster says:

    When I mention my concern about unfunded liabilities to people they have no idea what I’m talking about.

  6. NotKennedy says:

    It is one of those aspects of financial accounting that leaves room for “adjustment” based on management’s assumptions. I vaguely recall Lee Iaccoca using that adjustment to show “net income” on Chrysler’s books.

    Better that you could direct people’s attention to understanding the Statement of Cash Flows in contrast with the Balance Sheet along with Disclosures at the back of the reports.

    Actuarial assumptions can have a material impact on the veracity of management’s representations… so I’ve heard 🙂

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