Tag: CTA pension fund

Chicago’s Pension Hole Gets Deeper

Rahm Emanuel Oval Office Barack Obama

A new report from the watchdog group Civic Federation reveals that Chicago’s unfunded pension obligations have tripled since 2003 and now stand at $37 billion.

Details from the report, summarized by the Chicago Sun-Times:

The report found the gap between current assets of the ten funds and pensions promised to retirees had risen to $37.3 billion.

The 10 funds had an average funding level of 45.5 percent in 2012, down from 74.5 percent a decade ago.

The firefighters pension fund is in the worst shape, with assets to cover just 24.4 percent of future liabilities. The CTA pension fund is in the best financial condition at 59 percent.

Government employees did their part by contributing the required portion of their paychecks to their future pensions. But the government contribution fell nearly $2 billion short of the $2.8 billion required to cover costs and reduce a portion of unfunded liabilities over a 30-year time frame, the report concludes.

Investment income didn’t help. And the future outlook is bleak, thanks to a “declining ratio” of active employees to beneficiaries.

In 2012, the 10 funds had 1.11 active employees for every retiree, down from a 1.55 ratio a decade ago. The police, laborers, Metropolitan Water Reclamation District, Forest Preserve and CTA funds all had more beneficiaries than active employees in 2012.

Counting statewide funds, the pension liability amounts to $19,579 for every Chicago resident.

Chicago is required by law to make a $550 million contribution in 2016 to two police and fire pension funds. Mayor Rahm Emanuel presumably needs to raise that money through various taxes. But he has repeatedly promised not to raise property taxes, and more recently said he won’t raise gas or sales taxes, either. From the Sun-Times:

Mayor Rahm Emanuel on Wednesday ruled out pre-election increases in property, sales or gasoline taxes but pointedly refused to say whether he would steer clear of any other taxes, fines or fees.

“We’ve balanced three budgets in a row holding the line on property, sales and gas taxes and finding efficiencies and reforms in the system. . . . We eliminated the per-employee head tax . . . and we put money back in the rainy day fund,” the mayor said.

“On my fourth budget, we will hold the line on property, sales and gas taxes and put money back in the rainy day fund and continue to look at the system as a whole to find efficiencies and reforms and things that were duplicative where you could do better.”

This past summer, Chicago hiked its telephone tax by 56 percent.

 

Photo: Pete Souza [Public domain], via Wikimedia Commons

Chicago Fund Staff Racked Up Travel Bills With Trips to Las Vegas, Hawaii, San Diego

Chicago Train

Staff members at the Chicago Transit Authority (CTA) pension fund have been hitting all the best vacation spots lately. But an investigation by the Better Government Association (BGA) raises questions about whether those trips—which were billed to the pension fund—were necessary.

The visits were work related—but they were also expensive, according to the BGA:

The newly released records show the agency’s expenses include more than $20,000 on a six-night trip to Hawaii for five people in 2010, $4,400 on a three-night trip to New Orleans for two people in 2011, $7,500 on a four-night, four-person trip to San Diego in 2012 and about $12,000 on a four-night trip to Las Vegas for six people in 2013.

The fund’s executive director, John Kallianis, was among those who went to Las Vegas and San Diego. He defended the trips, saying the conferences were “rigorous” and “very well worth the expense.”

Executive staff members at the CTA fund said that the trips were valuable because such conferences are educational for staff and trustees, and the distance travelled was necessary because the conferences don’t often come to Midwest locales.

But CTA pension officials did seem to know the travel information wouldn’t be received well if released to the public. Those officials initially refused to comply with Freedom of Information Act requests asking for the travel receipts and documents.

Eventually the BGA sued for access to the data, and CTA officials complied.

This isn’t the first time there have been questions around the governance of the CTA fund. From the BGA:

The fund’s governance came into question several times over the last year when we reported that its now-former investment adviser was under a U.S. Securities and Exchange Commission investigation and that one of the CTA pension trustees was soliciting donations for a union charity from pension advisers.

It would be helpful to see the travel expense totals for other pension funds of comparable size—it’s certainly not uncommon for staff to travel to conferences, but without seeing other data it’s hard to say whether the CTA staff’s travel expenses were excessive relative to their peers.

The CTA pension fund was 59.4 percent funded as of January 2013.

 

Photo by David Wilson