Chicago government pensions $48 billion short

Chicago government pensions $48 billion short

As of Dec. 31, 2020, only one fund out of the 11 examined in the report was even vaguely close to having the assets on hand needed to pay promised benefits. That’s Cook County’s retirement system, which has been getting extra contributions from a penny-on-the-dollar sales tax passed in 2015, and had a covered ratio of 63.9%.

On the other hand, the four funds operated by the city itself are in much worse shape. The laborers’ fund had a covered ratio of 43% at yearend 2020—the latest data available—and the much larger police, fire and municipal funds were scraping by with between 23.1% and 19.4% of needed funds.

That leaves the four city funds collectively a whopping $32 billion short of what actuaries say is needed to pay benefits, with the funded ratio flat to declining in the past several years. Add in the CTA, Chicago Park District, Chicago Public Schools and Water Reclamation District funds, and the figure hits an even more jaw-dropping $48.6 billion.

Since the end of 2020, a few things have changed, some of them positive.

For one, returns on assets are believed to have surged with the stock market last year, enabling the state to actually cut unfunded liability in its pension funds last year. And the city, in a move started by former Mayor Rahm Emanuel and continued by Mayor Lori Lightfoot, has finally moved to an actuarial funding level, giving each of the funds the amount needed to eventually come to a 90% funding level rather than shortchanging them .

The latter is no small accomplishment, and it’s a major reason why city property taxes have gone up so much in recent years.

Still, the General Assembly has sweetened benefits for some retired firefighters and police officers, notes Civic Federation President Laurence Msall. And the stock market so far this year has taken a big dip, undoing much of last year’s gains.

Based on all of that, the city funds likely have bottomed out, said Msall. But even with the recently approved city casino expected to produce a couple hundred million dollars a year for the police and fire funds, “The city overall still faces a major challenge,” he said. the casino.”

Some folks, including the Civic Federation, continue to hope for passage of an amendment to the Illinois Constitution that would allow benefits to be tweaked, such as removing the 3% compounded annual cost of living adjustment that retirees get each year. Ruling Springfield Democrats show no sign of doing that.


A new report out today from S&P Global ratings undelines the point.

“Following fiscal 2021 pension fund returns for the US public finance (USPF) sector, returns have almost completely pulled back in fiscal 2022,” it says.

In other words, get ready to dig deep.

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