CHICAGO (WBBM NEWSRADIO) — Chicago owes billions of dollars to its public pension funds for its teachers, fire, transit and other city workers. Mary Williams Walsh, the managing editor for the online newsletter News Items, said she considers it the worst for a major city in the U.S.
“There’s different ways of measuring things, so you can never be very precise, but I would say it’s one of the worst — if not, the worst,” she said.
Williams Walsh, a finance expert and a former New York Times reporter, said those for fire and police have the lowest funding. For each dollar they have to pay, she said they get about 23 cents.
She blamed so-called “ramps” — plans under prior administrations to postpone pension payments and then increase them in later years — for Chicago’s current situation.
“What somebody should say is, ‘If you can’t afford your contributions now, [then] you can’t afford your plan, and you should do it over,’” Williams Walsh said. “I mean, you should find some way of making it affordable.”
She said one answer could be declaring bankruptcy, like Detroit or Puerto Rico. Although Detroit’s decision resulted in reductions in pension benefits, Williams Walsh said those losses still weren’t equivalent to how underfunded the pensions were.
“It’s not like a disaster,” she said. “You might have a cut, but other people are going to have bigger cuts than you if you’re in a guaranteed pension plan.”
Illinois law, though, doesn’t allow for that. The Lightfoot Administration made payments and changes that improved the city’s bond rating, which made bankruptcy less likely.
Williams Walsh’s advice to the new mayor: Respect current taxpayers, and do whatever he can to keep them — and the businesses that employ them — from leaving.