Chicago's Pension Are a Mess

Meep at STUMP has an update on the insanity. Chicago Pension Watch: No, There Aren't Many Choices

Let me round up the latest “discourse” on the “way out” for Chicago pensions.

But first — where the pensions stand.

In 2025 Chicago's pension debt rose to $36.4 billion. That according the city itself.

One of the things that comes up is a Detroit-style, Chapter 9 bankruptcy.

The principal difference is that Detroit owned a bunch of art, which could be sold. Chicago doesn't own any art, or not on that scale.

If you are not a finance person (and some people who are in finance) do not necessarily understand what Chapter 9 bankruptcy can and cannot do.

It’s a legal process in federal court. It doesn’t cause money to appear from nowhere. It doesn’t cause art that a city doesn’t own to come into being — people get confused when proposing “Hey, let’s have a Grand Bargain like Detroit had in its bankruptcy!”, forgetting that Detroit for some odd reason owned art it could hold ransom. As far as I know, Chicago the city owns no such art.

Chapter 9 bankruptcy, i.e., municipal bankruptcy, is not the same thing as bankruptcy for an individual or a company. The city is not going to liquidate. Creditors know that. The creditors have limits on what they’re going to get — they will not necessarily get zeroed out (but some might).

The funding rates for the various pension funds are sad. The national average for municipal pension funds of 82.5%. The police pension is funded at 25.5% of liabilities. The firefighters pension is funded at 25.2% of liabilities. When you include all of the funds, and all of the liabilities, Chicago’s pension funds were only funded at 28.1% of liabilities.

Click thru for the details.

“But you promised” and “It’s not my fault” don’t mean much when the money runs out.