Ralph Martire: Chicago's pension underfunding. The state is "the gorilla in the room".
Ralph Martire is the long time director at the Center for Tax and Budget Accountability and an expert on the state and city pensions.
Nobody knows more.
Plenty know less, especially the Illinois Policy Institute. They constantly call for reforming the public pension systems by cutting retiree pensions that were earned through years of hard work and protected by constitutional law.
The important thing is that Martire believes the problems with underfunding pensions and the current pension debt is a funding issue, not a benefits issue. And he believes it can be solved.
Martire has an op-ed column in todays Sun-Times which should be read by every Chicago voter.
With early voting already under way, Martire more than suggests that the city’s public pensions should be a bigger topic of debate.
“Chicagoans deserve to hear more about solutions as the municipal election approaches,” Martire says.
I can understand why Paul Vallas doesn’t want to talk about the issue.
As CPS CEO under the former Richard Daley (2), it was Vallas who diverted pension payments to pay for other city bills.
The other mayoral challengers also remain mute on the pension issue.
Nothing from Chuy.
I read Brandon Johnson’s revenue plan and it says nothing about pensions, which is surprising coming from the County Commissioner, a former CPS teacher and current CTU employee.
Then there is what Martire calls the “gorilla in the room”.
But the real gorilla in the room is the decades-long failure of state law to require that Chicago make actuarially determined pension contributions. Inadequate contributions, i.e. underpaying, account for fully 60% — or $13.2 billion — of the $22 billion growth in unfunded liabilities from 2007-2020.
Which means Chicago cannot sustainably resolve its pension funding crisis unless it tames this gorilla, by working with state lawmakers to re-amortize its pension debt in a manner that’s both affordable and grows the funded ratio of all four systems annually.
In spite of the limits that the state has placed on what the mayor can do, the current Mayor Lightfoot has made an effort to address the underfunding.
Lightfoot's current $16.4 billion budget - which also serves as her re-election platform - includes a $242 million pension pre-payment after climbing the ramp to actuarial funding of all four city employee pension funds.
The pension pre-payment and Lighfoot's claims to have reduced the city's debt and eliminated Chicago's structural deficit have triggered a series of upgrades to the city's bond rating, which helps determine how much interest the city pays to borrow money.
Fred Klonsky in Retirement is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.