(Natural News) The public pension funds of the City of Chicago owe so much debt that they rival the debt held by 44 states.
This is according to the Illinois Policy Institute, a libertarian public policy think tank, which found that the city has $48 billion pension debt. The massive size of Chicago’s pension fund underscores how difficult it is for the city to get its fiscal situation turned around. (Related: Audit reveals over 132,000 public employees in Illinois are being paid $100,000 a year.)
Justin Carlson, writing for the institute, noted how the five main public pension systems in Chicago – municipal, laborers, police, fire and the Chicago Teachers’ Pension Fund – hold more debt than 44 states. Only the states of Ohio, Pennsylvania, Texas, New Jersey, the state of Illinois (excluding Chicago) and California hold more pension debt.
Chicago’s pensions are funded directly by Chicagoans through property taxes. More than 80 percent of the property taxes the city levies on its residents – including all of the automatic annual increase – goes to pensions. Furthermore, the Chicago Teachers’ Pension Fund has its own property tax levy specifically dedicated to its pensions.
In one decade, the amount of property taxes the city takes from its residents has more than doubled. There are no signs that this trend will be reversed.
The massive debt owed by Chicago’s five main pension funds also doesn’t take into account the pension debts of other Chicago-area pension systems. The Metropolitan Water Reclamation District has a debt of nearly $1.2 billion. The retirement fund for the employees of the Chicago Transit Authority is $1.8 billion in debt. The Annuity Benefit of the employees of the Cook County government has an additional $11.8 billion debt on its own. Together, this accounts for nearly $15 billion in debt that places additional strain on the taxpayers of Chicago, Cook County and nearby areas.
6 Chicago pension systems among worst-funded in America
Despite the enormous tax burden the pensions place for Chicagoans, six Chicago pension systems are among the 10 worst-funded pensions in the United States.
According to the latest data gathered from the end of fiscal year 2022, the Cook County Employees Annuity Benefit is only 56.9 percent funded; the Chicago Teachers’ Pension Fund is only 47.6 percent funded; the Chicago Laborers’ Pension and Laborers’ Welfare Fund is only 45.9 percent funded; and the Chicago Municipal Employees’ Annuity and Benefit Fund is only 36.4 percent funded.
The pension funds for Chicago’s police and firefighters, the Chicago Policemen’s Annuity and Benefit Fund and the Chicago Firemen’s Annuity and Benefit Fund, are only 34.9 percent and 31.1 percent funded, respectively. Only one fund in the entirety of the U.S. is worse off – the Employee Retirement System for the employees of Providence, Rhode Island.
According to the federal General Accountability Office (GAO), public pension systems are considered “healthy” if they have a funded ratio of at least 80 percent. Not a single public pension fund in Chicago or Cook County qualifies as healthy.
GAO noted that pension funds that have funded ratios below 60 percent are “deeply troubled” due to their unhealthy fiscal situation. Worse yet, pension systems that have funded ratios below 40 percent are considered to be past the point of no return and will either collapse or experience major cuts.
This means that, while the pension funds for Cook County employees and Chicago’s teachers and laborers may be salvageable, the funds for municipal employees, policemen and firefighters will face collapse if they aren’t slashed.
Learn more about the fragile state of pension funds in the United States at Pensions.news.
Watch this video of Martin Brodel discussing, among other topics, the state of Chicago’s pension debts.
This video is from the Martin Brodel channel on Brighteon.com.
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