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Connecticut’s $17 billion teachers’ pension returned an average of 3.2 percentage points less than its 8.5 percent assumed annual rate of return between fiscal 2001 and 2015, the sixth-widest gap among 112 state retirement funds over the period, according to data compiled by the Center for Retirement Research at Boston College. The difference between assumed and actual returns of Connecticut’s municipal employee and state workers’ pensions wasn’t much better, ranking eighth and 15th-widest, respectively, Bloomberg News reported yesterday. “Plans are aiming to hit their assumed return and so when they fall short, there’s something wrong with the system," said Jean-Pierre Aubry, associate director of state and local research at the Center for Retirement Research. “Either someone is telling them to set it too high or the investment manager isn’t hitting his goals." Connecticut’s pensions had less than half the assets needed to pay its $63.7 billion of pension promises, according to the most recent audited figures. In 2015, its retirement system was the fourth-worst among U.S. states behind New Jersey, Kentucky and Illinois, according to data compiled by Bloomberg.

Detroit's need for debt relief in 2013 following six decades of population decline, businesses disinvesting and uprooting for the suburbs, and mismanagement at City Hall was spelled out in then-Detroit Emergency Manager Kevyn Orr's declaration seeking what was at the time the largest municipal bankruptcy in U.S. history, Crain's Detroit Business reported yesterday. Four years after Gov. Rick Snyder authorized Orr to file bankruptcy, the purpose of Detroit's painful financial reckoning to shed $7 billion in debt owed to creditors and retirees is increasingly evident. As of March 31, the city had a general fund surplus of $51 million, with $52.8 million more cash on hand than in March 2016, according to a May 30 report from the Detroit Financial Review Commission to Snyder. As Detroit's post-bankruptcy unemployment rate has dwindled to a 17-year low and city tax revenues exceed expectations, the focus has turned to addressing more deep-seated problems of rebuilding a middle class in Detroit, fixing the public schools and spreading the "comeback" of downtown and Midtown to long-neglected neighborhoods.

Illinois’s biggest financial challenge, the $130 billion debt to its workers’ pension funds, may only get bigger thanks to the budget that pulled the government back from the brink, Bloomberg News reported on Friday. That spending plan, pushed through by lawmakers eager to keep Illinois’s bond rating from being cut to junk, allows the state to sink deeper into the hole by giving it five years to phase in hundreds of millions of dollars in increased contributions to four of its five retirement plans. Those extra payments stem from the funds’ decisions to roll back forecasts for what they expect to make on their investments, which means Illinois will need to set aside more money to ensure it can cover pension checks due in the decades ahead. “The phase-in of the actuarial assumption is another exercise in kicking the can down the road, but we’re not sure how far the can travels,” said Dave Urbanek, spokesman for the Illinois Teachers’ Retirement System, the state’s largest pension, which has $73 billion of unfunded liabilities. “You pay less now, pay more later.” Illinois’s swelling pension-fund debt has it at risk of becoming the only U.S. state to be cut to junk, despite the end to a two-year budget impasse that left it with a record backlog of unpaid bills, cut aid to universities and undermined its standing on Wall Street. While Illinois bonds have rallied since the legislature broke the stalemate this month, Moody’s Investors Service said it may downgrade Illinois because of its severely underfunded retirement system.

A coalition that includes some of the largest U.S. pension funds want federal regulators to force big banks and other public companies to disclose details on how they manage, compensate and incentivize their employees, Reuters reported yesterday. In a rulemaking petition seen by Reuters, a coalition of 25 institutional investors including the California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System (CalSTRS) has called on the U.S. Securities and Exchange Commission to craft regulations requiring public companies to provide details they see as material to investors. These would include details about worker demographics, skillsets, safety, productivity, human rights, compensation and incentives, the petition shows. Under current rules, companies are only required to provide investors with an employee headcount.

Connecticut Gov. Dannel P. Malloy (D) says that he still believes filing for bankruptcy protection should be a "last resort" for Connecticut's capital city, the Associated Press reported on Friday. Malloy said that he has not received a request from Hartford officials to sign off on a bankruptcy filing, as required by law. City officials announced on Thursday that they've retained Greenberg Traurig LLP, a law firm founded in Miami, to provide legal services as Hartford evaluates its restructuring options. Hartford leaders are hoping to persuade state lawmakers to provide them with $40 million in additional state aid. The General Assembly, however, has not yet passed a new budget for the fiscal year that began July 1.

The San Francisco suburb of Moraga seems as far as one could get from the financial pressures that have battered big cities like Detroit or Chicago. But on June 28, the 17,000-resident town authorized a declaration of fiscal emergency, a step California cities can take before bankruptcy, Bloomberg News reported on Friday. In this case, it gives officials in the affluent enclave the power to expedite a referendum on new fees to boost its revenue, which has been restrained by a lackluster retail base and property-tax limits the state enacted almost 40 years ago. “We just don’t have enough revenue to take us through the future for many more years before we would really be in some of the situations other cities are, where they’re laying off mass numbers of employees or declaring bankruptcy,” town manager Robert Priebe said.