Chicago's Pension Fund Problems Explode

Crain's Chicago Business reports:

The party was over before it even started.

That's the bad news in a new report on the sad shape of City Hall's employee pension plans, a report that says the funds missed out on good times earlier in this decade, leaving them poorly positioned to pay their bills in an economy that since has soured.

The report by the Civic Federation, a tax watchdog group, finds that even though the stock and bond markets soared through much of the decade, liabilities of the 10 funds climbed faster than their assets.

As a result, the funds -- covering workers for the city, Chicago Public Schools, Cook County, Chicago Transit Authority, Chicago Park District, and Metropolitan Water Reclamation District -- now have $17.1 billion in unfunded liabilities.

That amounts to $5,402 for every Cook County resident.

The shortfall mostly was in contributions, not investment returns. For instance, not one of the employers made the full actuarially required contribution to their fund in 2007, the federation said.

In 1998, six of the 10 funds had enough assets to pay at least 90% of the potential pensions to retirees, and three others had coverage ratios of at least 75%, the Civic Federation said. But by the end of 2007, only one fund was at the 90% level generally considered desirable by actuaries.

The report covers only the period through 2007, the latest date for which audited financials are available.

You'll want to read the whole article.