Chicago Mayor Brandon Johnson has created a task force to find solutions to Chicago’s underfunded pensions, and he is asking the group to address one of the city’s deepest and most intractable financial problems.
Johnson announced the formation of the task force late Friday, but did not specify who would serve it, except that it would include “state legislators, the city’s budget director, the city’s chief financial officer, and representatives from the various unions in the city.” city, including police and fire unions.”
“As Mayor of Chicago, I am committed to protecting both the retirement security of workers and the financial stability of our government so that we can achieve our goal of investing in people and strengthening communities in every corner of the city,” Johnson said. he said he in a statement. “Together with our state legislative partners in Springfield, I am establishing a task force to collaborate in finding a sustainable path to address existing gaps in the city’s four municipal pension systems (Fire, Police, Municipal and Labor) ”.
Meanwhile, the president of the Fraternal Order of Local Police, John Catanzara, posted a video saying he is working with the City Council on broader solutions. The clip was seen as a positive sign due to Catanzara’s contentious relationship with the City Council and his assertion that sections of the police force would resign if Johnson were elected.
Creating a task force, however, will be the easy part, since finding money to increase city pensions has dogged Johnson’s predecessors. Former Mayor Rahm Emanuel, for example, pushed through plans that the Illinois Supreme Court declared unconstitutional.
Former Mayor Lori Lightfoot secured a Chicago casino from Illinois lawmakers but failed to convince state officials to take over the city’s pensions, a move she raised early in her administration.
Raising pensions for police and firefighters has long been a political headache for Chicago mayors. Lightfoot failed to prevent Gov. JB Pritzker from signing a measure in 2021 around the funding structure for firefighters.
Now it is Johnson’s turn to seek solutions to a politically fraught problem with few clear legal remedies.
As of the end of 2021, Chicago’s police sworn pension system was only 24% funded, with unfunded liabilities totaling more than $11.8 billion. Firefighters’ pensions were 20.9% funded with $5.6 billion in unfunded liabilities.
Lawmakers have long wrestled over how to control Chicago’s retirement benefits, which they can only do for future employees because the state constitution doesn’t allow existing workers’ pensions to be cut. However, some say the changes of just over a decade ago went too far, denying city employees a funded pension at the levels required by the federal government.
Lightfoot had argued that the 2021 state bill would increase pension costs for firefighters and could lead to property tax increases, but supporters, including sponsor Democratic state Sen. Robert Martwick, said it puts firefighters’ pensions Chicago fire departments on par with suburban and downstate systems.
The legislation removed a pension law that provides that a Chicago firefighter born on or after January 1, 1966 will receive a 1.5% non-compounded annual cost-of-living adjustment to his or her pension, with a lifetime cap of 30 years. % Firefighters born before that date had obtained an annual increase of 3%.
The new law eliminates Chicago’s pension differences based on date of birth and removes the 30% cap on cumulative cost-of-living adjustments. The system is now more like its counterparts outside the city, where firefighters hired before 2011 receive compound annual 3% increases in their pensions and those hired in the past decade receive a less generous increase.
Part of the reasoning was that the city has historically shied away from paying the smaller raises to younger firefighters, instead going to the legislature every few years to push through the birth deadline. But the city continued to base its contributions on the smaller amount, leading to perpetual underfunding of the pension system.
Still, Lightfoot warned that the change would double pension costs by $18 million to $30 million each year. He argued that a similar bill introduced by Martwick related to police pensions would increase Chicago’s annual costs by $57 million to $96 million a year.
That bill, which has languished in the Senate, removes an age restriction (55 or older) for an officer to receive an automatic 3% annual increase in their pension that is not subject to the 30% cap.
On the police side, the city pays into two funds: one for sworn CPD officers; other civilian employees. Payments to the Chicago Police Officers Annuity and Benefit Fund totaled $5.3 billion between 2012 and 2022, according to city budget documents, while that figure topped $330 million for the Municipal Employees Annuity and Benefit Fund. .
In 2022, pension payments totaled $832 million for sworn officers and $64 million for Chicago police civilian employees. Along with $175 million in annual profits, the Police Department’s estimated costs within “general finances” exceed $1 billion.
Johnson has not stated his position on Martwick’s pending police pension structure bill. His deputy chief of staff, former state senator Cristina Pacione-Zayas, voted in favor of the Martwick firefighters’ pension legislation in 2021.
Meanwhile, the plan to bring a casino to Chicago, negotiated under Lightfoot, is expected to generate a new source of income for police and fire pensions. The latest projections for the project spearheaded by casino chain operator Bally show between $56 million and $70 million raised over the next three years after the opening of a temporary casino at the Medinah Temple in River North. Starting in 2026, revenue is projected to grow to $170 million when the permanent site opens at the current Chicago Tribune Freedom Center print shop, to $246 million in 2028.