Chicago Public Pension Time Bomb Worsens

Crain's Chicago Business reports:

In ominous news for taxpayers, the fiscal difficulty continues to worsen at pension funds that cover Chicago and other government workers in the metropolitan area.

The area’s 10 big government pension funds now face $18.7 billion in unfunded liabilities, according to a report released Monday morning by the Civic Federation, a watchdog group. The deficit is more than five times the figure of just a decade ago, and about six times the size of the city’s annual operating budget.

Taxpayers ultimately are on line for the $18.7 billion unless benefits and other costs are cut and/or new revenues are found.

“With every passing year, Chicago-area governments’ pension deficits become more unmanageable,” federation President Laurence Msall said in a statement releasing the report. Unless “immediate steps” are taken to resolve the matter, he warned, “pressures (will) cause full-blown fiscal crises, like they did with the Chicago Transit Authority.”

Overall, the 10 funds have an average of just 66% of the money on hand they’ll need to pay projected benefits, a figure known as the funded ratio, the federation said. The situation is particularly dire at funds covering Chicago police and fire workers, which now have covered ratios of just 49.26% and 40.36% respectively.

Only one fund, which covers city laborers, now is above the 90% ratio that many finance experts recommend. But even it has seen its financial status decline between fiscal 1997 and fiscal 2006, from a funded ratio of 127.62% to 91.98%.

All 10 of the funds saw their funded ratios decline between fiscal 2005 and 2006.

Included in the study are four funds for city workers, two for employees of Cook County, and one each covering workers at the Board of Education, Park District, Metropolitan Water Reclamation District and the CTA.

Not reflected in the study is a pending restructuring of the CTA’s pension fund that was approved last month by the Illinois General Assembly.

Under its terms, workers agreed to sharp benefit cuts and Chicago agreed to pay tens of millions of dollars a year more into the fund by raising its tax on real-estate transactions by 40%. The proposed hike in the real-estate transfer tax is pending in the City Council, which is expected to approve it despite stiff protests from business groups.

Just think Chicago already has some of the highest taxes in the country.I guess it's expensive to allow government workers to retire in their 40's.