The much-discussed government worker pension debt in Chicago now has a price tag: $18,596 for every man, woman and child living in the city.
That per-person figure is the highest among the nation’s 25 largest cities. It’s nearly double that of New York, the city with the second-largest tab. And it’s more than five times the median for locales included in the new study done by a major investment research company.
The Morningstar survey is further evidence that Chicago is in deep financial trouble due to the large shortfall in its pension systems that cover police, fire and other city workers. The study also included debt from retirement systems covering the state, Chicago Public Schools and Cook County government, liabilities for which the 2.7 million or so Chicagoans are either partly or wholly on the hook.
“We note that the state passed a sizable pension reform package in December, which should help ease the state’s portion of this burden going forward,” the report stated. “However, the magnitude of the per capita liability facing Chicago residents is expected to remain immense going forward, barring additional pension reforms on the local level.”
Savings for Chicagoans from the state pension law is up in the air, however, after a group of major unions sued Tuesday to try to overturn it. Mayor Rahm Emanuel has pushed for the state to help provide the city with a pension fix, and Senate President John Cullerton has indicated that’s a priority this spring. One watchdog group said it’s about time.
“Clearly, Chicago is an outlier (among U.S. cities), and this should be a wake-up all, if one is even needed,” said Laurence Msall, president of the non-partisan Civic Federation budget watchdog group.
Chicago’s per person number is even worse than the Morningstar report found — Msall noted the $18,596 figure does not include pension debt at the CTA, Chicago Park District, Cook County Forest Preserve District and the Metropolitan Water Reclamation District. In Chicago, the per-person pension debt for City Hall pension funds was alone is $7,149.
The study looked at the pension debt for the 25 largest U.S. cities and Puerto Rico. The island commonwealth was second in pension debt at $9,987 per person. New York City was next at $9,842. The median pension debt was $3,550 per person.
The study does note that cities and states have different ways of measuring their overall pension debt, technically known as unfunded liabilities. The firm did the research to help determine the “creditworthiness” of a city. Chicago is preparing to refinance about $450 million in debt and to borrow another $200 million in the coming months after Moody’s Investors Service downgraded the city’s debt rating by three notches, citing the pension debt.