|
?:reviewBody
|
-
The day after her televised State of the City address, Chicago Mayor Lori Lightfoot made a series of editorial board stops to discuss the city’s major budgetary challenges. At the top of her list was Chicago’s pension debt, which has ballooned to $30 billion across its four public employee funds . In her opening remarks to the Chicago Sun-Times editorial board , Lightfoot said she hoped her speech would serve as a call to arms for not only Chicago residents but Illinoisans in other cities and towns grappling with chronically underfunded pensions. That underscores a theme from her address that the state must band together to partner in reform. Like Chicago, state government faces its own massive pension overhang. Gov. J.B. Pritzker has ruled out the state stepping in to take over municipal funds, saying that to do so would reduce its credit rating to junk status. However, he has left open the possibility that municipal pension funds could consolidate, pooling their assets to boost investment returns. During her sit-down with the Sun-Times, Lightfoot was asked how she would keep the rest of the state from viewing an all-in approach on pensions as Chicago getting a bailout from the state, something critics Downstate claim the city often receives . She responded with this: We’ve got 600-plus police and fire pensions Downstate that are on the cusp of insolvency because they don’t have the revenues that they need to be able to keep those pensions going, she said. They’ve done all the things that we have done historically: raised property taxes, sold assets, had their ratings reduced by rating agencies, and they’re out of levers to pull, so they need help just as we do. So this isn’t a Chicago-specific thing. Lightfoot is correct that cities and towns outside Chicago are pressured with mounting pension debt. By raising the specter of insolvency, however, the mayor suggests the situation faced by the vast majority of Downstate public safety pension funds is far more dire than it really is. Her claim raises questions on its face because the number she cited references the rough tally for all Downstate police and fire pension funds — not just those with severe funding gaps. Each year, Downstate police and fire pension funds file a report with the Illinois Department of Insurance, or DOI. Data from 2017 filings made by 632 such funds were compiled in a July report by the state legislature’s bipartisan Commission on Government Forecasting and Accountability. Collectively, the unfunded liabilities for those funds rose to $11 billion in fiscal year 2017, the commission found, and they had the assets needed to cover 55% of their liabilities. While that’s far from the 90% funding level the state requires them to reach by 2040, it doesn’t suggest most will soon be shuttering. That same year , unfunded liabilities for Chicago’s police and fire funds reached nearly $14.5 billion. I think highlighting that there are lots of police and fire pension systems that are underfunded is accurate, said Amanda Kass, associate director of the Government Finance Research Center at the University of Illinois-Chicago. I don’t think it’s accurate to indicate that the majority are on the brink of insolvency. After we reached out to the mayor’s office for clarification, her spokeswoman sent us a response that did not back up Lightfoot’s specific claim. The mayor’s point that municipalities throughout the state are struggling with their pension obligations is an important one, spokeswoman Anel Ruiz wrote in an email. Approximately 30% of the 632 public safety pension funds in the state are currently funded at ratios of under 50 percent, according to the Department of Insurance. That math tracks with the DOI data included in the commission’s report. For comparison, Chicago’s police and fire pensions are both funded at levels below 25% . Just 25 Downstate public safety funds have a ratio lower than that, records show . But Lightfoot didn’t just reference the declining health of some Downstate public safety funds in the aggregate. Instead, she said more than 600 Downstate pensions are on the cusp of insolvency. Our ruling Lightfoot said more than 600 police and fire pension funds in Downstate Illinois are on the cusp of insolvency because they don’t have the revenues that they need to be able to keep those pensions going. The source for that figure refers to the total number of Downstate public safety pensions — not just those in financial distress. And while the average funded ratio for those funds is far from the target set by the state, experts told us it’s not accurate to claim that nearly all of them are nearing a point where they won’t be able to make payments to current retirees. We rate Lightfoot’s claim Mostly False. MOSTLY FALSE — The statement contains an element of truth but ignores critical facts that would give a different impression. Click here for more on the six PolitiFact ratings and how we select facts to check.
(en)
|
![[This page as RDF]](http://data.gesis.org/claimskg/static/rdf-icon.gif){kind=icon}