CITY OF CHICAGO MAYOR RAHM EMANUEL … · fund stabilization bonds impact on total city debt $6...
Transcript of CITY OF CHICAGO MAYOR RAHM EMANUEL … · fund stabilization bonds impact on total city debt $6...
STRENGTHENING CHICAGO’S PENSIONS
CITY OF CHICAGOMAYOR RAHM EMANUEL
CITY OF CHICAGO
MAYOR RAHM EMANUEL
FUND STABILIZATION BONDS IMPACT ON TOTAL CITY DEBT
$6 BILLIONIN SAVINGSTO TAXPAYERS
$6 BILLIONIN SAVINGSTO TAXPAYERS$200 MILLION IN2020 BUDGET$200 MILLION IN2020 BUDGET
S T R E N G T H E N I N G C H I C A G O ’ S P E N S I O N S
IMPROVED RETIREMENT SECURITY
2052 the funds would reach 50 percent funded on current path.
2019 the funds would reach 50 percent funded under fund stabilization.
REDUCING TAXPAYER BURDEN Reducing the interest rate on the City’s pension debt would mean that taxpayers would be liable for less.
City of Chicago’s Debt Stays Level: $38.3B
Source
Total Pension Libility $28.0 $18.0
GO Bonds $8.8 $8.8
STSC Bonds 1.4 1.4
Fund Stabilization Bond 10.0
Total Bonded Debt $10.2 $20.2
Total Long-Term Liability $38.3 $38.3
*Pension liability as of 12/31/17, Bonded debt as of 8/1/18**Includes stabilization fund deposit; does not account for COITotals may not add due to rounding.
CurrentLiability/DebtOutstanding*
Post-BondLiability/DebtOutstanding**
BENEFITS OF A FUND STABILIZATION BONDThe fund stabilization bond is like refinancing a mortgage; it lowers the interest rate you pay but doesn’t change your total debt. It also wouldn’t extend the time to repay the debt.
All proceeds would be deposited into the pensions, immediately improving their health (funded status). The mayor is recommending that the city council vet a $10 billion proposal.
LOOKING AHEAD: SOME VIABLE SOLUTIONS, CONT’D
When I was elected Mayor in 2011, our city's pension funds were heading towards insolvency, jeopardizing a secure retirement for workers like first responders and teachers. Together, we have made progress to ensure the hard-working Chicagoans we depend on have a retirement they can depend on as well.
My fundamental philosophy has always been that solutions to our pension challenges must be based on a progressive, shared approach.
Enclosed is a summary of the steps we have taken together; as elected o�cials, labor leaders, and taxpayers; and a roadmap forward to continue to confront this challenge head-on.
For workers and retirees, pensions represent the work of a lifetime - the hard-earned reward for showing up every day to do their job, keep their word, and live up to their responsibility. That must be our work as well - to do our job, keep our word, and live up to our responsibility.
Sincerely,
Mayor Rahm Emanuel
Letter from the MayorS T R E N G T H E N I N G
C H I C A G O ’ S P E N S I O N S
WHAT’S THE IMMEDIATE FUTURE?Additional revenue required to make pension payments due in 2020 if nothing is done: $276 million
Additional revenue required to make pension payments due in 2022 if nothing is done: $310 million
LOOKING AHEAD: SOME VIABLE SOLUTIONS
to allow benefit reforms that will ensure long-term retirement security for workers and protect taxpayers. Provide flexibility to move cost-of-living increases more in line with the economy.
Move forward with President Cullerton’s consideration model. Let employees choose how to structure their retirement plans.
Ensure Chicago shares in revenue from legalized marijuana to reduce the taxpayer burden for pension liabilities. Allow Chicago to raise its own revenue from marijuana by establishing a home rule tax.
Pursue a Chicago-owned casino and dedicate revenues to workers’ pensions. The mayor is supporting legislation to move forward with this concept
$42 billion amount required to cover the cost of COLA increases from 2017 to 2057
$26 billion amount taxpayers would save if all retirees receivea Tier 2 COLA through 2057
TODAY a retiree who received $60K in benefits in 2011: • $71,643 (Tier 1 City of Chicago Pension) • $65,452 (Social Security)
INCREASED PENSION CONTRIBUTIONS
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
2004-11
$3.2B
$6.1B
2012-19
HOW OURREFORMS HAVE HELPED THE PENSIONS
PURSUE A CONSTITUTIONAL AMENDMENT
HEALTH OF PENSION FUNDS: FUNDED RATIO BEFORE AND AFTER REFORM
* Projected numbers are based on estimates, including actuarial and interest rates assumptions.
APR
IL 2
010
2010
FEB
. 20
13 -
JU
NE
2014
MA
Y 2
016
Loo
min
g In
solv
ency
. The
Co
mm
issi
on
to S
tren
gth
en C
hica
go
’s P
ensi
on
Fun
ds
rep
ort
s th
at a
ll o
f th
e C
ity’
s p
ensi
on
fund
s ar
e p
roje
cted
to
bec
om
e in
solv
ent
by
2030
, wit
h th
e fi
rst
fund
go
ing
und
er in
20
22.
New
Em
plo
yee
Tier
s. S
tate
law
cha
nges
to
cre
ate
a se
cond
tie
r o
f em
plo
yee
ben
efits
and
ad
just
ben
efits
fo
r em
plo
yees
, end
ing
the
ann
ual 3
per
cent
co
mp
oun
ded
in
crea
se f
or
new
hir
es.
Mun
icip
al a
nd L
abo
rers
Ag
reem
ent.
In c
olla
bo
rati
on
wit
h la
bo
r le
ader
s, M
ayo
r E
man
uel s
upp
ort
s S
enat
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ill 1
922
, ref
orm
ing
ben
efits
and
incr
easi
ng b
oth
the
em
plo
yee
and
em
plo
yer
cont
rib
utio
ns. T
he C
ity
Co
unci
l sub
seq
uent
ly in
crea
sed
the
9
11 s
urch
arg
e to
fre
e up
the
cit
y’s
corp
ora
te f
und
s fo
r in
crea
sed
pen
sio
n p
aym
ents
.
Ove
rrid
e o
f G
ov. R
aune
r’s
Vet
o o
f P
olic
e an
d F
ire
Ref
orm
s. G
ov. R
aune
r ve
toes
the
Cit
y’s
neg
oti
ated
po
lice
and
fire
pen
sio
n re
form
s. W
ith
May
or
Em
anue
l’s
stro
ng a
dvo
cacy
, bip
arti
san
maj
ori
ties
in t
he G
ener
al A
ssem
bly
ove
rrid
e th
e G
over
nor’
s ve
to.
JULY
20
17
Ove
rrid
e o
f G
ov. R
aune
r V
eto
of
Mun
icip
al a
nd L
abo
rers
Ref
orm
s. G
ov-
erno
r R
aune
r ve
toes
the
Cit
y’s
neg
oti
ated
mun
icip
al a
nd la
bo
rers
’ pen
sio
n re
form
s.
Wit
h M
ayo
r E
man
uel’s
str
ong
ad
voca
cy, t
he G
ener
al A
ssem
bly
incl
udes
the
Cit
y’s
neg
oti
ated
ref
orm
s in
the
sta
te b
udg
et, a
nd o
verr
ides
the
Gov
erno
r’s
veto
. Thi
s en
sure
s th
at t
he M
ayo
r’s
pla
n to
sec
ure
the
mun
icip
al a
nd la
bo
rers
pen
sio
n fu
nds
bec
ame
law
.
JULY
20
17
Fund
ing
Tea
cher
s’ P
ensi
ons
. Wit
h th
e M
ayo
r’s
stro
ng a
dvo
cacy
, the
Gen
eral
A
ssem
bly
pas
ses
a b
udg
et t
hat
end
s th
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ract
ice
of
fund
ing
all
teac
her
pen
sio
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ut
Chi
cag
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, pro
vid
ing
CP
S w
ith
an a
dd
itio
nal $
200
mill
ion
annu
ally
fo
r te
ache
r p
en-
sio
ns a
nd a
llow
ing
CP
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o r
eins
tate
a $
250
M p
rop
erty
tax
levy
onl
y fo
r te
ache
r p
en-
sio
ns.
FEB
. 20
13
May
or
Em
anue
l rea
ched
a la
ndm
ark
agre
emen
t w
ith
the
Chi
cag
o P
olic
e Se
rgea
nts’
Ass
oci
atio
n. It
wo
uld
hav
e en
sure
d f
air
emp
loym
ent
term
s, p
rese
rved
re
tire
men
t se
curi
ty f
or
the
serg
eant
s an
d r
educ
ed t
he b
urd
en o
n C
ity
taxp
ayer
s. It
p
rovi
des
a f
ram
ewo
rk a
nd s
et t
he t
one
and
pre
ced
ent
for
a p
ath
forw
ard
.
JAN
. 20
17M
unic
ipal
and
Lab
ore
rs F
und
ing
and
Ref
orm
s. In
co
llab
ora
tio
n w
ith
lab
or
lead
ers,
May
or
Em
anue
l sup
po
rts
the
Gen
eral
Ass
emb
ly’s
intr
od
ucti
on
of
the
Cit
y’s
pla
n fo
r m
unic
ipal
and
lab
ore
rs’ p
ensi
ons
, inc
lud
ing
an
incr
ease
in e
mp
loye
e co
ntri
but
ions
, ben
efit
refo
rms
and
a p
aym
ent
ram
p.
Co
urt
Bat
tle
over
Pen
sio
n R
efo
rms.
The
Cit
y o
f C
hica
go
fig
hts
to s
upp
ort
the
p
ensi
on
refo
rms
of
S.B
. 19
22 t
hat
seve
ral l
abo
r un
ions
neg
oti
ated
; ho
wev
er, t
he Il
lino
is
Sup
rem
e C
our
t st
rike
s d
ow
n th
e la
w in
Mar
ch 2
016
, cit
ing
the
Co
nsti
tuti
on.
JULY
20
15 –
M
AR
CH
20
16
FEB.
201
5 -
MAY
201
6
Po
lice
and
Fir
e Fu
ndin
g. M
ayo
r R
ahm
Em
anue
l neg
oti
ates
new
pen
sio
n fu
ndin
g
refo
rm w
ith
po
lice
and
fire
uni
ons
to
ram
p u
p C
ity
pay
men
ts o
ver
four
yea
rs –
whi
ch
req
uire
s a
stat
e la
w t
hat
pas
ses
the
Gen
eral
Ass
emb
ly. T
he C
ity
Co
unci
l pas
ses
a p
hase
d-i
n $
543
mill
ion
pro
per
ty t
ax in
crea
se t
o f
und
po
lice
and
fire
pen
sio
n p
ay-
men
ts.
JULY
20
15Sa
ving
Tea
cher
s’ P
ensi
ons
. May
or
Em
anue
l pro
po
ses
a “t
hree
-way
han
dsh
ake”
b
etw
een
the
stat
e, p
rop
erty
tax
pay
ers
and
tea
cher
s to
sec
ure
Chi
cag
o t
each
ers’
p
ensi
ons
.
SEPT
. 20
16Fu
ndin
g M
unic
ipal
Pen
sio
ns. T
he C
ity
pas
ses
a w
ater
-sew
er u
tilit
y ta
x th
at
incr
ease
s ea
ch y
ear
to h
elp
fun
d t
he r
equi
red
gro
win
g C
ity
cont
rib
utio
ns t
o t
he m
u-ni
cip
al e
mp
loye
es’ p
ensi
on
fund
.
OC
T. 2
016
Pen
sio
n A
gre
emen
t w
ith
Teac
hers
. Tea
cher
s ag
ree
that
new
em
plo
yees
mus
t m
ake
the
full
cont
rib
utio
n to
the
ir p
ensi
on,
end
ing
the
pra
ctic
e o
f th
e em
plo
yer
mak
ing
bo
th t
he e
mp
loye
r co
ntri
but
ion
and
the
bul
k o
f th
e em
plo
yee’
s co
ntri
but
ion.
TOD
AY
Dur
ing
May
or
Em
anue
l’s a
dm
inis
trat
ion,
the
Cit
y w
ill h
ave
com
mit
ted
$6
.1 b
illio
n to
pen
sio
ns f
or
city
wo
rker
s, a
nd a
n ad
dit
iona
l $4
.2 b
illio
n fo
r te
ache
rs’
pen
sio
ns. I
n to
tal,
mo
re t
han
$10
bill
ion
will
be
dep
osi
ted
in p
ensi
on
fund
s as
a
resu
lt o
f M
ayo
r E
man
uel’s
bal
ance
d a
pp
roac
h an
d p
artn
ersh
ip w
ith
Chi
cag
o-
ans
and
wo
rker
s –
all a
chie
ved
whi
le e
xpan
din
g t
he e
cono
my
and
wit
hout
cu
ttin
g s
ervi
ces
or
forc
ing
tax
pay
ers
to s
houl
der
the
bur
den
of
gro
win
g p
en-
sio
n co
sts
alo
ne.
PE
NS
ION
RE
FO
RM
AT
A G
LAN
CE