The city of Los Angeles might be facing a $400 million deficit, but a tide of red ink much larger than that confronts its pension funds, according to CityWatch LA. Combined deficits at the city's two major pension funds amount to a near state-of-California-sized budget hole: $11.5 billion.

What's more, CityWatch argues that the city is doing some self-delusional accounting to mask the size of this whopper. The city, it states, measures the pension funds in terms of the “actuarial value” of their investments instead of using the actual (and $7 billion lower) market values, putting the deficits at $4.6 billion on city books.

“It is like the homeowner in denial with his house now worth only 60% of its value of several years ago, but insists that the house is worth 85% of its previous value,” writes Jack Humphreville.

CityWatch argues that early retirements among city employees will only make the deficit worse as more people will end up pulling from the funds instead of contributing to them. As it stands, the pension deficits amount to $40,000 for every person who voted in the last citywide election, according to Humphreville's calculations.

[Spotted at LAObserved].

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