Chicago Mayor Brandon Johnson is addressing pension issues

Chicago Mayor Brandon Johnson has created a task force to find solutions to Chicago’s underfunded pensions, asking the group to tackle one of the city’s deepest and most intractable financial problems.

Johnson announced the task force late Friday night, but did not specify who would serve on it, except to say it would include “state legislators, the city’s budget director, the city’s finance director and representatives from various city unions, including police and fire unions”.

“As mayor of Chicago, I am committed to protecting workers’ pensions and the financial stability of our government so we can achieve our goal of investing in people and strengthening communities in every corner of the city,” Johnson said. the statement said. “Together with our state legislative partners in Springfield, I am creating a task force to collaborate on finding a sustainable way to close the existing gaps in the city’s four municipal pension systems (fire, police, municipal and labor).”

Meanwhile, local Fraternal Order of Police President John Catanzaro released a video saying he was working with City Hall on broader solutions. The video was seen as a positive sign because of Catanzara’s contentious relationship with City Hall and his claim that some of the police force would resign if Johnson was elected.

Creating the task force will be the easy part, but how to find the money to boost city pensions has plagued Johnson’s predecessors. For example, former Mayor Rahm Emanuel promoted plans that were ruled unconstitutional by the Illinois Supreme Court.

Former Mayor Laurie Lightfoot won a Chicago casino from Illinois lawmakers but failed to convince state officials to take over city pensions, a move she proposed early in her administration.

Raising police and fire pensions has long been a political headache for Chicago mayors. Lightfoot failed to prevent Gov. J.B. Pritzker from signing a measure in 2021 regarding the structure of the fire fund.

Now it’s Johnson’s turn to seek solutions to a politically charged problem with few clear remedies.

As of the end of 2021, Chicago’s sworn police pension system was only 24% funded, with an unfunded liability of more than $11.8 billion. Firefighter pensions were 20.9% funded with $5.6 billion in unsecured liabilities.

Lawmakers have long wrestled with how to rein in Chicago’s pension payouts, which they can do only for future employees because the state constitution doesn’t allow cuts to employee pensions. Some say the changes made just over a decade ago went too far and denied municipal employees a federally funded pension.

Lightfoot argued the 2021 state bill would increase the cost of firefighter pensions and could lead to higher property taxes, but supporters, including sponsor Democratic Sen. Robert Martwick, said it would put Chicago’s firefighter pensions on par with the systems suburbs and states.

The legislation repealed a pension law that would have provided a Chicago firefighter born on or after Jan. 1, 1966, with a 1.5% annual cost-of-living adjustment to their pension without a lifetime cap of 30 years. %. Firefighters born before this date received a 3% annual bonus.

The new law would eliminate Chicago’s date-of-birth pension disparity and eliminate the 30% cap on cumulative cost-of-living adjustments. The system now more closely resembles counterparts outside the city, where firefighters hired before 2011 receive an annual 3% boost to their pensions, while those hired in the last decade receive a less generous increase.

Part of the reasoning was that the city has historically shied away from paying smaller bonuses to younger firefighters and instead turned to the Legislature every few years to adjust their date of birth. But the city continued to base its contributions on a smaller amount, resulting in a persistent underfunding of the pension system.

However, Lightfoot warned that the change would double pension costs by $18 million to $30 million each year. She 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, tired in the Senate, removes the age limit – 55 and above – for an officer who can receive an automatic 3% annual pension increase without the 30% cap.

On the police side, the city pays into two funds: one for sworn CPD officers; other civil servants. According to city budget documents, payments to the Chicago Police Pension and Benefit Fund totaled $5.3 billion between 2012 and 2022, while the figure was more than $330 million for the Municipal Employees Pension and Benefit Fund.

In 2022, pension benefits totaled $832 million for sworn officers and $64 million for civilian Chicago police officers. Along with $175 million in annual payments, the Police Department’s estimated expenses under the “general finance division” exceed $1 billion.

Johnson did not state his position on Martwick’s bill on the police pension structure. His deputy chief of staff, former state Sen. Cristina Pasayone-Zayas, voted for Martwick’s 2021 firefighter pension legislation.

Meanwhile, a plan to open casinos in Chicago negotiated under Lightfoot is expected to bring in a new revenue stream for police and fire pensions. The latest projections for the project, initiated by casino chain operator Bally’s, show that between $56 million and $70 million will be raised in the next three years after the temporary casino opens at Medina Temple in River North. Starting in 2026, revenues are projected to grow to $170 million with the opening of the permanent Chicago Tribune Freedom Center, before reaching $246 million in 2028.