This is no way to run a city. Chicago Pension Debt Rises to $35 Billion as Mayor Hunts for Fix
For decades the politicians in Chicago promised pensions to cops, firefighters, other city workers, Chicago teachers, and maybe some other groups as well. For the most part they just couldn't be bothered to keep those pensions funded. And on at least one occasion, a mayor's brother-in-law, or cousin, or something was placed in charge of one of the pensions. You can imagine how well that worked out.
The net pension liability across the city’s four retirement funds rose about 5% to $35.4 billion as of Dec. 31 from $33.7 billion a year earlier, according to Chicago’s annual financial report posted to the city’s website.
The amount the city owes to its four pensions that pay benefits to retired firefighters, police officers, municipal workers and laborers increased “due to the short-term impact of the global market volatility on recognized investment income,” the report said. The city’s four funds range from about 19% to about 40% funded, according to the report. That’s far short of other municipal plans: around the US, funding ratios for the largest public pensions average above 70%.
And having pensions funded at 70% is not good. It is however much better than being funded at 19%.
Decades of chronic underfunding helped balloon Chicago’s pension liability, weighing on the city’s budget and credit ratings. Recent state-mandated contribution increases helped the city earn rating upgrades in the last year, including one from Moody’s Investors Service in November that allowed it to shed its one junk rating.
With the city and the state losing population, this isn't going to get easier to solve.
For some background, you can't do better than Meep (from back in May) Spending Dreams of Chicago Mayor Brandon Johnson and Waking to Reality. It is a 25 minute podcast (audio) so plan accordingly.
When the default happens, there will be much moaning and groaning all over the country as pensioners tell stories of financial woe.
ReplyDeleteWhen default happens there will be moaning all over the country because they will be bailed out by the rest of the country
DeleteThe state of Illinois and all its cities are all in the same bucket I'm sure.
ReplyDeleteYes they are, though Chicago is by far the largest.
DeleteBut it won't be the state of Illinois that bails out Chicago; it will be the federal government. Your tax dollars at work.