[Chicago Tribune] Even as Mayor Rahm Emanuel pledged this week to reverse some of the city's most-criticized borrowing practices, one major ratings agency on Friday highlighted another financial issue: rapidly ballooning employee pension fund payments.
It's not like we haven't known about this. Various financial reports have been pointing to this problem for the last couple decades.
This is why unions wanted to go after public employees: 1) organize 2) collect money 3) use money to elect Democrats 4) be rewarded with higher salaries and pensions 5) rinse and repeat. |
Chicago's pension payments not only will grow by 135 percent to $1.1 billion next year, but also will continue swelling at a significant pace until 2026, when they will reach $1.9 billion -- or four times what the city is paying into those funds this year, according to the report by Moody's Investors Service.
Though the city will put more money into its retirement systems, the total pension debt, now estimated at about $20 billion, will continue to grow until 2027, when the city would finally begin to whittle away at that liability, the report states. But the payments still would continue to increase by up to 3 percent a year until 90 percent of the debt is covered, the report adds.
The police and fire pension funds, which account for most of the payment increases, are not expected to reach 90 percent funding until 2040. That's the schedule set under a state law that also requires that the city pay $550 million more into those two funds next year.
Emanuel is negotiating with police and fire unions to achieve a combination of reduced benefits, larger employee contributions and phased-in city payment increases. Even if he achieves that -- and the courts don't overturn changes he already engineered to municipal workers and laborers funds -- the city still would have to pay significantly more into the funds in the coming years. |