By: Mark Glennon*
A research report recently issued by Nuveen Asset Management provides another take on the total annual liability Chicago taxpayers would face if they properly funded pensions for the city’s overlapping layers of government. Brace yourself.
Chicago has been contributing to its pensions only about one-forth of what Nuveen calls Annual Pension Cost — “the amount determined by actuaries to keep the plans solvent.” (We note that S&P recently said essentially the same thing.) The unpaid portion of the city’s pension contribution exceeded $1.2 billion, “a figure representing an astonishing 43% of the city’s general fund budget,” says Nuveen. But that’s just for the city itself. Add in the pensions for the school system, the park district, the Metropolitan Water Reclamation District, Cook County and the forest preserve district, and the annual contribution shortfalls total $2.1 billion.
That analysis does not include whatever Chicagoans may have to pay to help fix state-level pensions, which have an unfunded liability of roughly $200 billion, including healthcare benefits. Nuveen also notes that its analysis was made based on out-going accounting standards and 2013 numbers, the most recent available. New accounting standards will mean worse numbers and the pension deficits, along with the contributions required to fix them, grow each year. Finally, Nuveen ignored the RTA and CTA which also underfund their pensions.
Structural budget deficits at Chicago’s various layers of government are in addition. We continue to long for a credible, total analysis of those and pension deficits for all overlapping layers of government in Chicago. Chicago Public Schools alone, in its most recently reported year, had a loss in net position of over $1.1 billion with an operating fund deficit of $513 million.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.