• Portland's pension funded ratio is the third lowest of large cities
  • A dedicated property tax for its fire and police pension alleviates some concern, though the long-term liability remains
  • In the last year general fund revenues improved and fund balances were up slightly in 2017

General fund year-over-year performance
Fiscal year ending Jun 30, 2016 Jun 30, 2017 Change % Change
Revenues and expenses
Revenues 686,922,352 725,250,461 +38,328,109 +5.6%
Expenses 628,675,232 658,754,450 +30,079,218 +4.8%
Revenues over expenses 58,247,120 66,496,011 +8,248,891 +14.2%
Transfers in 1,064,081 2,164,446 +1,100,365 +103.4%
Transfers out -63,837,143 -58,287,236 +5,549,907 n/a
Net revenues including transfers -4,525,942 10,373,221 +14,899,163 n/a
Net revenue margin -0.7% 1.4% +2.1%
Fund balances
Nonspendable 453,022 404,610 -48,412 -10.7%
Committed 56,495,175 58,916,535 +2,421,360 +4.3%
Assigned 17,351,152 13,028,310 -4,322,842 -24.9%
Unassigned 27,255,828 39,584,406 +12,328,578 +45.2%
Total general fund balance 101,555,177 111,933,861 +10,378,684 +10.2%
Total fund balance over expenses 16.2% 17.0% +0.8%
Unrestricted fund balance 101,102,155 111,529,251 +10,427,096 +10.3%
Unrestricted fund balance over expenses 16.1% 16.9% +0.8%

Portland, Oregon released its audited financial statement last week covering the year through June 30, 2017. Higher revenues from property taxes, licenses and fees led to a 5.6% increase in general fund revenues. Expenses increased 4.8%, year-over-year. The city's general fund balance ended the year at 15.4% of revenues, up from 14.8% in 2016. Though improved, this level of fund balance puts Portland in the bottom 20 percentile of cities with populations over 200,000 in the Munitrend database.

A large pension funded gap

Portland contributes to two pension plans: the state-administered OPERS and Portland's own Fire and Police Disability and Retirement Fund (FPDR). The FPDR plan, with a total liability of $3.4 billion and only $14 million in assets, is near-zero funded (funded ratio: 0.4%). Historically the city has made benefits on a pay-as-you-go basis -- an approach that is unusual for city pensions. However, Portland has a dedicated property tax used to make these payments. The blended fund ratio across the two plans is a low 37.6%.

Pension relative analysis
Ratio Value Median Percentile
Pension funded ratio 37.6% 75.1% 2
Net pension liability over revenues 268.1% 67.8% 2
Pension ADC over primary government revenues 7.8% 5.5% 18
Pension contribution over primary government revenues 7.8% 5.3% 17

Dedicated taxes but a large liability remains

The property tax levied for FPDR pension payments has a limit of $2.80 per $1,000 of real market value. As of 2017, the tax levy was $1.15. According to its latest bond offering documents, Portland regularly monitors the adequacy of the tax limit relative to projected future pension payments. The city modeled future scenarios and found the tax limit was hit in only a small portion of outcomes.

Although the dedicated tax alleviates some concern, the city's pension liability remains large today. Its funded ratio and governmental net pension liability over revenues are both in the bottom 2% of cities with over 200,000 people in the munitrend database. Only Dallas and Chicago have higher pension burdens.

Year-over-year ratio analysis
Fiscal year ending Jun 30, 2016 Jun 30, 2017 Change
Fund balance ratios
Total fund balance over revenues 14.8% 15.4% +0.6%
Total fund balance over expenses 16.2% 17.0% +0.8%
Unrestricted fund balance over revenues 14.7% 15.4% +0.7%
Unrestricted fund balance over expenses 16.1% 16.9% +0.8%
Cash and investments over expenses 13.9% 15.3% +1.4%
Revenue and expense ratios
Net revenue margin -0.7% 1.4% +2.1%
Debt ratios
Debt over governmental revenues 82.6% 76.8% -5.8%
Governmental debt per capita 1,637 1,685 +48
Pension ratios
Net pension liability over revenues 278.6% 268.1% -10.5%
Pension funded ratio 42.1% 37.6% -4.5%
Pension ADC percent contributed 100.0% 100.0% +0.0%
OPEB ratios
OPEB UAAL over revenues 4.3% 4.0% -0.3%
OPEB funded ratio 0.0% 0.0% +0.0%
OPEB percent contributed 82.3% 81.9% -0.3%