After Jane Byrne was elected mayor, she met with Chicago Police and Fire Department organizations. There was concern that the pension funds would be in crisis starting in 1985. They also warned of another crisis in the mid 1990’s if funding changes were not made. The pensions had been severely underfunded and their mandated conservative investments were flattening out.
When Richard J. Daley was elected mayor in 1955, he started hiring more police and firefighters. These people would be retiring in mass around 1985 going forward. Police and fire hiring increased dramatically during the social unrest of the mid 1960’s to early 1970’s. Those hires would be mass retiring in the mid 1990’s. The underfunded pension funds could not support the numbers of people retiring.
Pension funding in full was placed in the city budgets throughout the decades. Those funds, like other funds in the budget, were fungible. They were used for other purposes or pension holidays were called for. There were no legally binding earmarked funds, except for the minimum payments required by law. Even the minimums were not taken seriously. There was no oversight or enforcement of the law. The State of Illinois was responsible for oversight and enforcement.
Mayor Byrne put in a fix to keep the pensions solvent through the mid 1980’s. The funding minimums were raised so the pensions could stay healthy.
After Byrne was out of office, the city crept back to its old ways, under funding the pensions. The situation became critical under Mayor Richard M. Daley. Mayors are not the only ones to blame. Aldermen approved of the spending or shifting money out of the pension budgets for other things. So did state legislators. They allowed pension holidays- times when the pensions did not have to be funded.
Once again the Chicago Police and Fire personnel kept warning about the shortages. Year after year. Decade after decade. They were voices in the wilderness. No one would listen. Not the mayor. Not the aldermen. Not the media. Not the State of Illinois, which is supposed to oversee enforcement of the funding laws.
Then other public employee unions woke up from their slumber and willing blissful ignorance. They finally realized short changing municipal pension funds would cause a crisis down the road. By the time 2008 and the economic collapse occurred it was too late.
Richard M. Daley wasted hundreds of millions of dollars on hired trucks, flower beds, trees, and other so-called beautification projects instead of fully funding the pensions. He even got the police union to get on board forgiving a 20 million dollar debt to the police pension fund for nothing in return.
Daley squandered 2 billion dollars from the parking meter deal on bread and circus spending instead of using some or all of that money to bolster the pension funds.
His solution to the looming crisis was to cut healthcare benefits of retirees and raise premiums. The Chicago City Council went right along with him.
Mayor Rahm Emanuel inherited a fiscal mess. The pension funds are in crisis. There is no money to fix them. Property and other taxes are already too high. His solution is shared pain. Retirees and city employees nearing retirement are rightfully angry.
Mayor Emanuel is taking heat from all sides, including the news media, on the pension issue. He did not cause the problem. He is charged with fixing it or kicking the can down the road.
Funny, no one is pointing the finger of blame on the Chicago City Council or the State Legislature. They approved all the accounting gimmicks which allowed the city to short change the pension funds. It is a very good bet the pension funds of the aldermen and state legislators are not only healthy, but flush with cash.
No one is questioning the health of the aldermen’s pension funds while the rest of the funds are in crisis.
Think about that.
Think about this. Chicago alderman, by definition, is a part time job. It pays a six figure executive salary, executive style expense accounts, and Rolls Royce benefits, including pensions with health care and survivor benefits.
What part time job compensates people so well? What part time job even offers pensions, let alone Rolls Royce pensions? State legislators are right behind the aldermen with their hands out. They too are part timers by definition. They too are compensated well, with perks, Rolls Royce benefits and pensions. Their pension funds are probably as healthy, if not healthier, than the aldermen.
City Hall committed acts of fiscal political malpractice and malfeasance for decades. They squandered and stole from the pension funds to cover wasteful spending sprees.
The bubble is about to burst. The piper needs to be paid. Everyone is justifiably angry. Employees, retirees, union officials, and tax payers. No one wants to feel the pain.
Fingers of blame are being pointed in all directions, except at the state legislature and the City Council. They will all retire someday with hefty healthy pensions and benefits.
No one wants to pay higher taxes. Retirees do not want cuts in their pensions or benefits. Future retirees want certainty they will have pensions and benefits. The same certainty the aldermen have.
Mayor Emanuel is taking the heat and directed anger over the pension crisis. No one likes his fixes or lack there of. But, where is the anger at the aldermen, especially the career aldermen who approved the budgets and under funding of the pensions? Year after year, in some cases decade after decade.
They should take the most of the heat. Real anger should be directed against them. Mayor Emanuel did not cause this problem. This problem was in the making for decades. He inherited a crisis. Love him or hate him, he is not to blame. The aldermen are.
Over the decades not one alderman stood up to stop the constant under funding of city pensions. Not one alderman tried to put the brakes on under funding or using pension money from the budget for bread and circus spending. Not one. Their Rolls Royce pensions with benefits were safe. What did they care?
Maybe it is time to point fingers and direct righteous anger at the fifty part time aldermen. Maybe the media should look into the health of their pension fund. Maybe the editorial boards should stop giving them a free pass.
Maybe pigs will fly.
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