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The 2024 Annual Comprehensive Financial Report for the city of
Chicago now pegs the city’s unfunded liabilities at almost $36
billion, even after overall debt has dipped by $1.3 billion over
the last year.
“The biggest problem is that they are being underfunded, every
year the city and the state for pensions puts in less than the
actuaries say they are supposed to be contributing,” Glennon
told The Center Square. “These pension payments that took $2.5
billion out of the Chicago budget represent 16 to 20% of the
city budget. That gobbles up not just taxes but diminishes other
services that the city provides. To regain competitiveness and
halt the population decline and keep employers here, we need to
have a competitive level of total taxes and a competitive level
of quality of services.”
While most large public pension funds ideally have average
funding levels of about 70%, data shows Chicago’s police and
firefighters funds are only funded at 24.5%, while the laborers
fund is at 43% and the municipal workers fund is at just 26%.
Even with data showing the city faces a pension bill as high as
$2.76 billion in 2026, Glennon questioned if some of the most
recent numbers being floated by the city truly tell the whole
story about how costly things may get.
“I thought it was incomplete and misleading what the city said
about that new report, which was audited financial statements,”
he said. “In the past year the pensions had a surprisingly good
year. They improved a little bit. Their funded ratio and the
total unfunded liability improved a touch, but what they didn't
tell you is that this was a spectacular year for the markets.
You have to go to the actuary reports to find that. It wasn't in
the new report.”
Glennon said officials continue to short the funds.
“That's not my opinion. If you go to the actuarial reports they
put in boldface every year,” Glennon said. “And they do that
again in 2024. In boldface. It says ‘this pension is severely
underfunded and we strongly recommend that you switch to a
different funding formula.’”
As the city’s overall pension debt tab has continued to spiral,
lawmakers recently enacted a state law that stipulates at least
two of the city’s funds be funded at a 90% level by 2055.
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