Колоссальная ложь стоит за огромными, новыми пенсионными обязательствами, наложенными Спрингфилдом на Чикаго

By Mark Glennon of Wirepoints

Which is worse, financial malfeasance or a flagrant lie to justify it? Take your pick. Both are nothing short of astonishing when it comes to Gov. JB Pritzker’s signature Friday on a bill hiking benefits for two of Chicago’s pensions that already had been bled nearly dry.

A City of Chicago actuarial analysis of the bill says the change “would increase the city’s pension liabilities by more than $11 billion across the Police and Fire funds,” the Chicago Tribune reported, while dropping the funding levels of both down to less than 18%.

Those funds were already desperately underfunded, having had only 25% of the money necessary to pay out pension benefits for work already performed. They have the lowest funded ratios for local pension plans in the country.

They are so poorly funded that their combined unfunded liabilities are larger than 43 states — including New York, Michigan, and Florida, according to a recent study. If Chicago does nothing and lets its pension problem continue, then “Chicago becoming the next Detroit is not just a possibility — it’s inevitable.” That’s from an op-ed last week by a former chief financial officer of the city.

So, what does the state, which makes the law for city pensions, do about it? It expanded benefits while providing no funding source. Next year alone, Chicago will have to come up with an extra $60 million on its $1.5 billion pension tab in 2027, and that increase will grow to more than $753 million for 2055. That’s according to the city’s actuarial analysis, but the state didn’t even bother do its own actuarial analysis on the cost.

What possible excuse does the state have for the new law?

According to the bill’s sponsor and Pritzker, the benefit spike was needed to bring the city’s Tier 2 pensions into compliance with federal law that essentially requires benefits at least equal to what Social Security provides. Sen. Robert Martwick (D-Chicago) was the sponsor, and that claim of his was echoed by Pritzker when he signed the bill.

Gov. JB Pritzker and Sen. Robert Martwick

Here is what Pritzker’s spokesman said: “The legislation codifies adjustments the city of Chicago has been implementing over the years to tackle pension system challenges and represents a proactive step to prevent more significant financial or legal issues in the future.”

That’s unquestionably a reference to the alleged Tier 2 problem under federal law.

But it’s a big, fat lie to claim the pension spike was required by federal law. The supposed federal problem is just a subterfuge for another benefit increase.

Not one Illinois Tier 2 state or local pensioner has ever been identified whose benefits are too low under federal law. The problem has turned out to be a theoretical one that might arise in the future, but requires no action today beyond a minor, inexpensive safeguard.

That far less expensive alternative was already blessed by the state for its own pensions, which are much bigger than Chicago’s. In recent legislation the state authorized a $75 million reserve fund to cover any additional benefits that might be required for particular pensioners if their benefits ever fell short of federal requirements. Common sense prevailed, for once, as we wrote about that measure. We’ve long been calling for that measure or something similar, with articles here, here, here, here and here.

The availability of that far cheaper alternative is one reason why every major independent voice outside of Springfield said Pritzker should have vetoed the new law. The Civic Federation, Commercial Club, Better Government Association, Chicago Tribune editorial board all wanted a veto. Even Democratic Comptroller Susanna Mendoza criticized it, and Chicago Chief Financial Officer Jill Jaworski said, “This is adding to the city’s burden at literally the worst possible time,” and she called the bill an unfunded mandate foisted on the city by state lawmakers.

That’s exactly what it is – an unfunded mandate foisted on the city.

In fairness, another rationale offered by the bill’s supporters is that it will set level benefits for the two Chicago pensions with other police and fire pensions downstate.

Yes, ideally, consistency would be nice, but that’s a luxury Chicago simply cannot afford. Somebody apparently needs a lecture on what “you have no money” means. For that, I have a suggestion. Pritzker and our lawmakers should be forced to watch this wonderful clip of a financial advisor trying to explain it to Walter Matthau’s character in A New Leaf. Like Pritzker, that character is a trust fund recipient.

Gov. Pritzker and you other lawmakers, please watch it closely. Maybe you’ll eventually get it.