Chicago will need to do an awful lot more than reform its COLA to fix pension underfunding. Published by Jane the Actuary View all posts by Jane the Actuary
4 thoughts on “Forbes post, “Chicago Fire, Chicago Police, Chicago Pensions: Why A COLA Change Isn’t A Cure-All””
Jane, when the City fully pays its obligations to the pension fund, then you can talk to police officers and firefighters about reducing their benefits. As another columnist has correctly summed it up: “By far the largest reason for Chicago’s level of pension debt is that the city has simply failed to pay what it owes.” budgetblog.ctbaonline.org/chicagos-pension-crisis-isn-t-really-about-pensions-it-s-about-debt-cab30326b9c8 To put a finer point on it: “.
Essentially, Chicago has been borrowing from pension funds in order to pay for other priorities while keeping taxes artificially low. But as the debt payments on that pension borrowing have grown, the city has historically proven unwilling to pay them in full either, creating a spiral of rising costs>’
Jane, you solution is simply a twist on the ol’ Chicago gimmick, instead of “borrowing from the pension funds to pay other priorities” you now want to have the employees be the ones “borrowed” from so Chicago can continue to “pay other priorities” instead of paying their obligations to the pension fund.