Chicago is stepping in to lend cash to its underfunded pensions so they have enough money to avoid asset sales to cover retirement checks as they wait for property taxes to come in after a computer issue delayed collections.
The city’s decision helps lessen the risk that its four pensions would need to sell assets from their portfolios, which include stocks, bonds, real estate and private equity, to raise cash after a glitch in setting up a new county computer system is delaying hundreds of millions of dollars in property tax earmarked for the funds.
The city has sent $28 million to the Firemen’s Annuity & Benefit Fund of Chicago as Sept. 12, according to its finance and budget office. Chicago is keeping tabs on the monthly cash needs of all four of its pensions, Chief Financial Officer Jill Jaworski told the city council’s budget committee last week. The other three funds provide benefits to retired laborers, police officers and other municipal workers.
“I’m glad the City is taking steps to avoid selling off assets and keeping our investments strong,” City Clerk Anna Valencia, who serves on the eight-member firefighter retirement board, said in an emailed statement. Valencia said she wants to know how the county plans to solve the billing issue and when the funds will be returned to the city so it doesn’t interfere with the budget.
Cook County, where Chicago is based, collects property taxes twice a year. In March, about 55% of the full year’s property taxes come in, with the remaining balance usually expected in August. The total amount the city has levied came up to about $1.77 billion for 2024, according to bond documents. Roughly 80% of Chicago property taxes go into the city’s pensions every year.
High property taxes and underfunded public pensions: imagine that.
