Chicago Pension Data

Chicago politicians are scraping together money to fund their public pension systems:

The police/fire deal, reached a year ago and included in this year’s city budget, required a $543 million property-tax hike. The deal since has been ratified by the Illinois General Assembly.

The deal with the laborers’ fund shifts to it $40 million a year in receipts from a tax on cell phones that originally had been allotted to other purposes.

Restructuring the municipal fund will require $239 million in additional water and sewer fees when fully implemented over five years.

The situation at CPS remains fluid. But the Board of Education next week is scheduled to consider a $253 million property-tax, and recently received authority to levy an additional $43-million-a-year hike that technically is for construction, but will free up other money in CPS’ budget for pensions.

The system will will need to find another $200 million or so for pensions, money it hopes to get by convincing teachers to pick up the 7 percent of salary they’re supposed to pay themselves, but which the board pays under a decades-old contract deal.

Add all of that up (excluding only the $200 million more that CPS needs to find) and you get $1.118 billion.

Will it be enough?

To get an idea we begin our review of actuarial reports of major city plans (as we did for 154 state plans) with Chicago where their actuarial reports depict the  situation as:

fairly hopeless:

chifr

chidr

CHIPO

34 responses to this post.

  1. Posted by Theodore Konshak on August 18, 2016 at 6:02 pm

    You forgot to include the Chicago Firefighters. It worse than the ones you’ve shown.

    Reply

  2. Posted by MJ on August 18, 2016 at 6:07 pm

    So it’s fairly hopeless……so how will it end once and for all?

    Reply

  3. Posted by steve on August 18, 2016 at 6:46 pm

    It will just -END–they will all move to new jersey–pick our meager bones clean and then move on ! while our state house is concerned with the honesty (sic) of carny claw machines on the boardwalk- or as the dems say “you got to tax it to fix it”

    Reply

  4. Posted by MJ on August 18, 2016 at 8:58 pm

    It just seems to me that the public pensioners don’t appear to be overly concerned. Do they know something that we don’t based on John’s research and others who recognize the inevitable cuts that at some point will have to be made? Let’s concern ourselves with the fixed claw games on the boardwalk ha ha ha that is a funny one!

    Reply

    • Posted by dentss dunnigan on August 19, 2016 at 9:06 am

      Subliminal message ….pension clawbacks

      Reply

      • Posted by Anonymous on August 19, 2016 at 1:14 pm

        Maybe taxpayer claw backs (ha ha) based on LL’s comments that those who received the services didn’t pay for them and now they’re gone! I know that wouldn’t be fair or legal right?

        Reply

        • Posted by Anonymous on August 19, 2016 at 2:29 pm

          Oh I forgot to add I’m sure we can trace the inheritances of any deceased taxpayers that didn’t pay for services they received. Might even find some of that money with the post “generation greed” wannabees.

          Reply

  5. Posted by George on August 20, 2016 at 10:22 am

    Will it be enough?

    (494+1701-3192) / 20796 = -4.79%

    Adding in $1.118 of new taxes:
    (494+1701+1118-3192) / 20796 = +0.58%

    Adding an extra $200 million of teacher pay cuts being paid into the pension ?
    (494+1701+1.118+200-3192) / 20796 = +1.5%, so Mayor Emmanuel can claim he stopped the outflow from Chicago’s depleted pension scheme.

    Can successfully kicked!

    The arithmetic assumes everything remains unchanged and they achieve all the tax increases. There will almost certainly be more retirees next year and all retirees will be more costly.

    Does this mean that the pension scheme is now transitioning from one where reserves paid for past retirees to a pay as you go scheme where pensions are paid out of current taxes?

    Reply

    • Posted by Anonymous on August 20, 2016 at 12:14 pm

      Probably a good practice run if and when pension reserves are depleted and it’s ALL pay as you go out of General Fund revenues.

      Reply

      • Posted by dentss dunnigan on August 20, 2016 at 12:22 pm

        How high must workers contributions go every year to cover the outgoing checks …?

        Reply

        • Posted by Anonymous on August 20, 2016 at 1:43 pm

          Just an uneducated guess, same as taxes would need to go up….

          Reply

          • Posted by dentss dunnigan on August 20, 2016 at 1:45 pm

            Taxes have already been raised 3 X’s ..were contributions ?

          • Posted by Anonymous on August 20, 2016 at 2:36 pm

            3x? Guess that excludes Whitman’s big tax cuts including the resurrection and expansion of Homestead Rebates. Now since extremely paired back but how many billions are out the door. Yet another example of opportunity squandered.

            If you had any knowledge of the Whitman’s Homestead Rebate program policy you would know it was intended to be a One Time “refund” of excess GIT collections not another recurring long term unfundable program.

          • Posted by dentss dunnigan on August 20, 2016 at 5:09 pm

            Whitman that’s history …..you think the millennials give a crap about something that happened over 20 years ago ….and they themselves are buried in debt .Go after the politicians that made the promises ,not the kids trying to make ends meet it’s morally wrong on so many levels

          • Posted by Anonymous on August 20, 2016 at 5:47 pm

            Hey you like benefit claw backs so how about tax increase claw backs – same theory but some how you’ll think it’s different….

          • Posted by dentss dunnigan on August 20, 2016 at 7:08 pm

            Gladly ….I never received a Homestead check ,or any other check back from this state ….Corzine cut our school funding back to just about zero so my town gets back next to nothing back from the state ….not even a thanks .

          • Posted by Anonymous on August 20, 2016 at 8:18 pm

            You must be in one of those poorer “Abbott” district, sorry things are kind of tough for you….

      • Posted by George on August 20, 2016 at 11:37 pm

        “practice run if and when pension reserves are depleted”

        I suspect the reason for the premature depletion of the highway trust fund this year is the state is putting a few more billion dollars into the pension scheme.

        Reply

        • Posted by Anonymous on August 21, 2016 at 8:36 am

          Really that’s laughable, now I worried about your state of mind!

          Reply

        • Posted by Anonymous on August 21, 2016 at 9:41 am

          Furthermore the TTFA funding standoff will be the reason for cutting whatever ARC amount was appropriated.

          Reply

          • Posted by George on August 22, 2016 at 2:46 pm

            I am probably misinterpreting but the last page of the NJ pension directors report is a report of transfers into the pension fund from the common fund. It is a billion larger this year than last. So I am interpreting that as the state sent another billion into the pension fund, rather than the highway trust fund.

            DISCLOSURE: This is the kind of analysis you get when you count on an unpaid anonymous message board ranter to analyze the state pension scheme. Needless to say I am not clear as to what the general fund is, and what general fund transfers to the pension fund are, so I am ‘confecting’ a meaning for it all.

            May 2015: $5 billion
            http://www.nj.gov/treasury/doinvest/pdf/DirectorsReport/2015/May2015.pdf
            May 2016: $6 billion
            http://www.nj.gov/treasury/doinvest/pdf/DirectorsReport/2016/MayInvestingReport2016.pdf

          • Posted by Anonymous on August 23, 2016 at 5:53 pm

            Well if you’re looking at the budget that way every cut was at the expense of every increase BUT if you knew how TTFA is funded, through a dedicated of motor fuels tax, then maybe your post should have been under ANNON as well?

    • Posted by George on August 22, 2016 at 3:09 pm

      Thinking about when the can will need to be kicked again, I looked at the number of retired vs active employees, they were kind of close in number. So imagine if at some future date all the current active employees were retired. If the reserves stayed the same, and the taxes payed into the pensions stayed the same, but the number of retirees doubled, the 3192 cost would double to $6.384 billion.

      Depletion ratio with both current retirees and active employees retired. Pension cost is doubled.

      (494+1701+1118+200-6384) / 20796 = -13.8%

      Bringing that back to 0% would require $2.87 billion in new taxes or cost savings.

      494+1701+1118+200-6384 = -2871 which is more than twice the current 1.701 billion payed by the city taxpayers or 30% more than the amount current about paid by both the city and active workers 494+1701.

      Reply

  6. Posted by X o F on August 22, 2016 at 4:26 pm

    The unfunded portion of Chicago muni workers is $18 billion according to MEABF report ( page 9) using gasb 67 methods
    ( much more then the $9.9 billion used in the above chart )
    http://www.meabf.org/assets/pdfs/pubs/2015_Final_Financial_Report.pdf

    At December 31, 2015, the components of the net pension liability of the employer were as follows :
    Total pension liability $23.3billion
    Plan fiduciary net position $4.7 billion
    Employer’s net pension liability $18.6 billion
    Plan fiduciary net position as a percentage of the total pension liability 20.3%

    Using these more honest gasb 67 numbers make these pensions even more hopelessly unpayable

    Reply

  7. Posted by X o F on August 22, 2016 at 5:15 pm

    “By any measure, all four of Chicago’s pension funds are insolvent.

    Even worse for Chicagoans, the city’s $34 billion pension debt will be even larger when the police and fire funds properly report their numbers.

    The police and fire pension funds’ 2015 numbers don’t reflect the pension “fix” approved by the General Assembly in May, which allows Chicago to extend the timeline of its payments to the police and fire pension funds. The 15-year payment delay just kicks the city’s pension costs down the road again, but at a cost to taxpayers of an additional $18.6 billion over the next 40 years.

    Nor have the police and fire funds fully enacted new government accounting standards as the municipal and laborers pension funds have. Those new rules demand pension funds use more realistic assumptions when estimating how much money they will earn on their investments. The adoption of the new standards caused the municipal and laborers funds’ debt to double.”

    https://www.illinoispolicy.org/chicagoans-on-the-hook-for-34b-in-debt-from-citys-4-pension-funds/

    Reply

  8. Those now retired or closest to retirement have a paramount interest in keeping their pension and health benefits going as long as they can. They recognize that meaniingful reform would require cuts and clawbacks. The more years they can keep the good times rolling, the more pension assets they will shift to their own pockets. These folks, now at the banquet table filling and refilling their plates, can’t help but see that only scraps will be left for those who are currently working … but the longer these omnivores can feast, they more they’ll have put in their own and their childrens’ pockets. Their object is to keep it going as long as possible by pretending solidarity with their younger (still working) siblings. Those who are “first out” of a ponzi scheme are the ones who will get the money. Since this ponzi scheme is under a legal umbrella with the full participation of all three branches of government, there is no way that anyone will have to give anything back. As a great modern philosopher said, “He who takes gets.” This bears out the ancient rule that provides “If A shall screw B then B shall have been screwed.” To paraphrase Churchill, “Never in the course of history have so few taken so much from so many.” If nothing is done (e.g., permitting bankruptcy filings, recalling the court, ousting the legislators at the ballot box) then it will continue. “Laissez les bons temps rouler.”

    Reply

    • Posted by Theodore Konshak on August 23, 2016 at 5:30 pm

      Pension payments are not the dole. They are not welfare benefits. They are earned due to service. In the case of the State of Illinois, the actuarial funding method enacted by Governor Edgar and first imposed on teachers (both downstate Illinois and Chicago) is a fraudulent one. It is legally and morally repugnant for the perpetrator of a fraud to benefit from it. So, Mister Herzrent, if there is a moral and just God (or a federal bankruptcy judge with a sense of morality) those taxes you shamefully and fraudulently avoided in the past will be paid by you in the future. There is no free lunch. So said Marvin, the wise actuary, to me in a dream.

      Reply

      • Posted by PS Drone on August 23, 2016 at 11:30 pm

        Which is the free lunch – the State(s) not making the actuarially correct contributions to the various funds or average LEO and Firemen making high 5/low 6 figures in retirement after 30 years on the payroll? Or maybe it is the double and triple dippers making $150, $200, $250 K per year? I know, I know, all “earned due to service”.

        Reply

        • Posted by Theodore Konshak on August 24, 2016 at 12:11 am

          Pensions are based on salaries. If salaries are too high, attack the salaries. Not the pensions. If someone is double dipping, attack the double dipping. Not the pensions. If people are gaming the system, attack the gaming of the system. Not the pensions.

          All of your alleged misdeeds seem to occur before someone applies for their pension benefit. Attack the people that are permitting that spiking to occur. Not everyone gets the spiking.

          Governmental entities not making the contribution calculated by the actuary is one issue. A more important issue is the actuary calculating an unreasonable low-ball contribution. In some states, it is an issue of actuarial assumptions. In Illinois, it is an issue of methods. Assumptions are judgement but methods can be fraudulent.

          Reply

          • Posted by PS Drone on August 24, 2016 at 9:58 am

            How about we “attack” collecting the pension (based on salary) until age 66? How about we cap pensions, based on salary, @ $60K. What we have now are pensions, that as a percentage of salaries, are way too high.

  9. Posted by Theodore Konshak on August 29, 2016 at 11:22 am

    Reply to PS Drone: Illinois is a cheap state that opted out of Social Security. If you going to convince me about public employee pension benefits being too high in the State of Illinois, you’d have to show me the replacement ratios. The replacement ratio is the percentage by which pension payments replace the wages earned at retirement. The Illinois Governor is one of venture capitalists that now call themselves angel investors but I think they are more of the avenging angel type.

    Reply

    • Posted by PS Drone on August 29, 2016 at 7:57 pm

      What do you think is fair….let me guess….somewhere between 70% and 90% of your final year’s “compensation”, whatever that includes. How about we agree on 50% of the average of your last five years of straight (raw) payroll. That is a full 10% more than SS is designed to replace, although it rarely does.

      Reply

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