In 2018, Philadelphia adopted a comprehensive plan to improve the long-term health of its pension system by paying down its unfunded liability more quickly while also reducing the rate at which future liabilities will grow. Its funding ratio has historically been below average compared to peer cities, and the funded level dropped 10 points from 2008 to 2009, to 45 percent. When reform discussions began in 2016, the fund was still only 44.8 percent funded, with just $4.9 billion available to cover $11 billion in liabilities.

To combat the underfunding, the city employed a bilateral approach, focusing on reforms that foster effective decision-making and fiscal discipline and wide-ranging partnerships that engage elected officials, union officials, and pension board members. These changes were made to improve the health of the pension fund and to reach full funding by 2033.

The City of Philadelphia won GFOA's 2020 Award for Excellence in Governance Finance for its creative solution to a common problem with its "pension road to recovery."

• Publication date: December 2020