Both cities were spurred to act by the risk of credit downgrades and by a recent accounting change<br />that calls for cities to calculate the number of years before their pension funds will run out of money — a once-unthinkable catastrophe that has come to pass in Prichard, Ala.; Central Falls, R. I.; and now Puerto Rico.<br />Illinois, California, Oregon, Pennsylvania and Kansas are among the states where, by law, public pensions<br />cannot be reduced — not even the pensions that current workers hope to earn in the future.<br />Just six months ago, the mayor of Dallas, Michael S. Rawlings, was warning<br />that his city might need to declare bankruptcy after a panic led stampeding retirees to pull half a billion dollars out of its pension fund for police officers and firefighters.<br />Importantly, the new law for Dallas also bans the kind of big, one-time withdrawals<br />that caused last year’s run, in which retirement-age police and firefighters stripped about $500 million out of their pension fund, leaving it tattered almost beyond repair.<br />“The key to all this is, not one retiree’s pension check is going to be reduced<br />one penny,” said Ray Hunt, the president of the Houston Police Officers Union.
