Chicago Pension Problems

Crain's Chicago Business reports on Chicago's ticking time bomb:

While city pension funds combined cover 67.9% of promised benefits, the shortfall is much worse for the funds covering firefighters and police.

According to a soon-to-be published Civic Federation analysis, at the end of last year the firefighters plan had only 42.3% of the funds needed to pay the current value of future benefits, down from 60.2% in 2001. The police fund’s coverage ratio was 55.9%, down from 61.4% in 2001. And the general municipal employees pension fund went from being 94% funded to only 72% during that period. Only the laborers pension fund, the smallest of the four, is at or near a fully funded level, allowing the city to skip a contribution to that fund next year.

The city’s projected contribution to its other three pension funds is $398 million in the new budget, a 4.4% increase from last year and about 7.7% of all city spending.

Do you really want to be a long term creditor of the city of Chicago? Do you really trust their books?