This article covers the Civic Federation’s Status of Local Pensions report that annually examines the most recent audited data available for ten Chicago-area public pension funds. For all pension funds supported by the taxes of Chicago residents, including statewide funds, the unfunded liability per capita for each Chicago resident in FY2012 was $19,579.
Chicago-area public employee pension funding levels continued to decline in FY2012, with total unfunded liabilities for the ten funds analyzed rising to $37.2 billion from $32.0 billion in FY2011. On average, the ten funds analyzed had an actuarial funding level of 45.5% in FY2012, down from 74.5% in FY2003. For all pension funds supported by the taxes of Chicago residents, including…
A Civic Federation report released today examines the continued funding decline of Chicago-area public employee pension funds. For all pension funds supported by the taxes of Chicago residents, including statewide funds, total unfunded liabilities reached $131.9 billion in fiscal year 2012, the most recent audited data available for all the funds. This equates to a pension liability of $19,579…
The declining health of public employee pension funds throughout the State of Illinois is primarily due to two causes: inadequate employer contributions over a sustained period and recent investment losses. This blog will discuss the role of investment rate of return in public employee pension funding and provide an update on the investment returns of Chicago-area pension funds in FY2012, the…
The most basic question about a pension fund is whether its assets are sufficient to cover total liabilities incurred. In this blog post, we examine the aggregate pension liabilities and Other Post Employment Benefit (OPEB) liabilities of ten large local government pension funds in the Chicago area and their collective assets.[1] Liabilities are calculated using actuarial assumptions about…
Information included in recent bond disclosures by the State of Illinois indicate that the pension obligation bonds (POBs) sold in 2003 primarily to boost the retirement systems’ assets have earned the minimum investment returns needed to break even in only seven of the last ten years. The $10 billion pension bond issuance will cost the State a total of $11.9 billion in interest repaid…
The difference between a pension fund’s assets and accrued liabilities is known as the unfunded liability. The unfunded actuarial accrued liability (UAAL) is calculated by subtracting the actuarial value of the assets from the actuarial accrued liability (AAL) of each fund. One of the functions of this indicator is to measure a fund’s ability to bring assets in line with liabilities. Healthy…
This week the City of Chicago released its Annual Financial Analysis for 2014. According to an executive order issued by Mayor Rahm Emanuel on May 20, 2011, the Office of Budget and Management is mandated to produce a financial analysis of the City budget by July 31st of each year. The report includes: A financial condition analysis that covers the previous ten years, including a…
This article discuses an upcoming $550 million contribution to the City of Chicago’s police and fire pension funds. The City’s 2014 Annual Financial Analysis, released July 31, interprets language in the 2011 pension law such that the increased contribution is not payable until 2016. The Civic Federation said this gives the City 16 months to negotiate and pass a pension deal before difficult tax…
This article discusses the City of Chicago’s 2014 Annual Financial Analysis released July 31, which reviews 2014 and includes projections for fiscal years 2015 through 2017. The Civic Federation said the City is making significant progress on managing its finances and reducing the structural deficit, but continued progress is threatened by the failure to address the City’s police and fire pension…
