Chicago Tribune Investigates Pensions - What Does This Mean for Us?

Pension Bets Not Paying Off
I’m very pleased to see yesterday’s article placing the blame on those who are truly at fault-the politicians. For the past six months, I have been in communication with Tribune Reporter Jason Grotto regarding his series of articles about city pensions. He departed from the Tribune Editorial Board’s agenda to blame the “greedy” public employee. Today’s article clearly demonstrates Mayor Daley’s political stranglehold on the choosing of investment managers and the pernicious effect of playing politics with our pension funds.

Placing blame where it is deserved is necessary, but alone is inadequate. The important question remains -- what is the solution? A look at the unfunded liability numbers can seem overwhelming. In the 1980’s the police fund was funded in the 40 percentile. The Fire Fund was told in the 1970’s that they’d run out of money. The funding structure for our pension is broken. There are ways, however, in which our pension can be fixed. The pension funds have used a 2:1 employer to employee contributions. $2 to every $1 contributed. THERE IS NO CORRELATION BETWEEN WHAT IT COSTS TO FUND A PENSION PLAN AND THIS MULTIPLIER USED BY THE CITY. The fix should begin there, but more must be done.

A pension obligation bond needs to be issued. We need to take advantage of where the bond rating is right now BEFORE the City gets downgraded again. The employer and employee contributions need to be increased. This may be difficult to hear, but anyone telling officers that this is not true is lying to you, plain and simple. What should NOT occur is any increase in employee contribution without a corresponding increase in employer contribution as well as the means to enforce employer contributions. We need a funding mechanism with teeth, to hold the city’s feet to the fire and ensure that history does not repeat itself. Finally, we need an alternate source of revenue that flows directly from the source (such as the airports or TIF funds) straight into the pension plans without giving the City the ability to withhold any funds. The burden cannot stay directly on the property tax payer or they will revolt.

It is of paramount importance, more now than ever as pensions remain in the political spotlight, that everyone be informed and engaged regarding our pension fund. It is my proud duty to represent your interests, and I will do so tirelessly, striving to ensure the health of our pension fund. As ever, if you have any questions or concerns, do not hesitate to contact me at mikeshields1@yahoo.com.