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3 years ago

1cNYB93

1cNYB93

City of ChicagoThe $19.4

City of ChicagoThe $19.4 billion figure grossly underestimates the pensionshortfall. That’s because these funds assume unrealisticallyhigh investment returns — generally around 8 percent. Moody’sInvestors Service now calculates the unfunded liability forthe Chicago funds using more realistic assumptions. UnderMoody’s methodology, Chicago’s total pension debt jumps to$36 billion.City of Chicago pension shortfalltotals $36 billion (in billions)$36.0$19.4Official unfunded pension liablityMoody’s adjusted unfunded pension liablitySource: Moody’s Investors Service; city of Chicago and all associated pensionfunds; Commission on Government Forecasting and AccountabilityNote: Most recent available data used; see Sources and Methodology formore informationAcross Chicago’s four pension funds, there are about 51,000active employees. 6 With $36 billion in unfunded liabilities,this means that there is approximately $700,000 in unfundedpension liabilities for every active employee in the system.A healthy pension fund should be 100 percent funded, toensure it will meet its future obligations. Chicago’s 2012adjusted funding level was 23 percent.City of Chicago pensions only23% funded76%61%35%23%1998 official 2007 official 2012 official 2012 Moody’s adjustedSource: Moody’s Investors Service; city of Chicago and all associatedpension funds; Commission on Government Forecasting and Accountability.Note: Funding ratios derived by dividing assets by assets plus unfundedliability. Most recent available data used; see Sources and Methodology formore information.illinoispolicy.org | 8

Long-term debt: $12 billionCity of ChicagoSome city of Chicago bonds are funded with property taxrevenue while others are funded with sales tax revenue andmotor fuel taxes. After removing O’Hare and Midway revenuebonds (which are paid with user fees imposed on airlines),Chicago holds approximately $12 billion in outstanding longtermdebt – a 57 percent increase since 2003.The city ofChicago is scheduled to spend more than $900 million dollarsin debt service payments in 2013.City of Chicago’s long-term debt and debt service(in millions)Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Long-term debt $7,552 $8,079 $8,050 $8,529 $8,898 $9,197 $9,563 $10,616 $11,174 $11,964 $11,833Debt Service $495 $502 $575 $560 $724 $821 $658 $594 $702 $738 $914Source: City of Chicago Note: Numbers may not add due to rounding. Excludes O’Hare and Midway bonds.illinoispolicy.org | 9

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