Politicians who helped port of public pension funds of Chicago at Brink of insolvency

"The policeman middle ... don't know what is going on with the Board," said the police instructor Damon Stewart. (Josà © m. Osorio, Chicago Tribune/8 November 2010)Chicago's public pension funds are teetering on the brink of bankruptcy, largely because the city officials and Union leaders repeatedly exploited the system draining away billions of dollars in the last decade to serve short-term political needs, has found an investigation Tribune.

Once the funds have been used as a bargaining chip or a piggy. Politicians cut budgets by offering incentives for early retirement and greased Union contract deals with performance increases. "Pension holiday" allowed the city avoid paying in workers ' pension funds.

Consequently, funds soon may not be able to keep the promises that are encoded in the State Constitution, threatening the retirements of tens of thousands of human and trade union members leaving taxpayers on the hook for billions of dollars owed to teachers, police officers, firefighters and others.

A review of tribune of legislative changes, driven by city officials and Union leaders over the past 15 years has found that the regulations governing the contributions and the performance of city pension funds have changed almost 40 times, often with little debate on the financial consequences.

In most cases, pension fund managers had no idea how bad their changes are done. But 10 that the Tribune was able to monitor the long-term impact on pension funds was more than $ 3.6 billion.

These losses, together with pension fundamentally flawed Illinois ' funding process and of little return on investment, have pushed the unfunded liabilities of eight guest houses financed with city tax dollars by approximately $ 3.3 billion in 2000 to at least $ 20 billion, a staggering 500 percent.

Although all pension benefits have been cut off today, every man, woman and child in Chicago I owe more than $ 7,000 to cover the obligations already incurred — an amount that does not include the public pension debt of approximately 60 billion.

"What happened in Chicago is a reckless disregard for the next generation of taxpayers and employees," said Jeremy Gold, an expert on national pension counseling of public and private pension funds. "Their birthright has been sold out from under them because they will be able to pay for the services and benefits which have been rendered before grew while they are cut to save money."

Pension crisis Chicago could stain the legacy of Mayor Richard Daley, who was at the helm of the Government of the city for the past two decades and the appointment of some of the Trustees of the city's chief financial officer of the city boards. The Board, Gene Saffold, said that the problems that plague the city public pension funds are not unique in Chicago and have been driven largely by the worst economic climate in more than 70 years. Said the possibility of money running out of money "is purely hypothetical and speculative."

"The city's goal Is to ensure that the funds remain solvent without additional charge for taxpayers," said in a written response.

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This has not always been the case. Pensions have completed successfully for decades and, just 10 years ago, were relatively well funded. Retirement of teachers was close to 100%, funded in 2000. Municipal workers had levels above 90% financing. Workers of the city was enough resources to cover 133% of their liabilities. City police Pension, traditionally underfunded, passes around 70%.

Later this year, however, not one of the levels of funding pensions will be above 70%. The funds of fire and police are already under 40 and Municipal Fund is less than 50. Retirement Experts say funding levels below 80 percent point the long-term viability of pensions at risk and are almost impossible to overcome without borrowing massive tax increases, painful cuts to benefits and increase the contributions.

Decisions taken a worse system flawed

While the pension system broken Illinois ' caught the news throughout the country, relatively little attention has been paid to the looming crisis in Chicago.

City pension funds have been established to provide retirement security for tens of thousands of city workers, engineers, administrators, teachers, bus drivers, police officers and firefighters. Most do not participate in the federal social security program, and the vast majority receives benefits modest averaging about $ 40,000 a year, the Tribune found.

Most also do not understand their future is at risk.

"The policeman medium, now, don't know what is going on with the Board," said Damon Stewart, 34, an instructor of police training recruits to the Chicago Police Department, after having spent six years on the beat in Roseland and earn a degree in law.

Stewart puts money into the Fund Board with every paycheck, but says he has no illusions to receive a pension after he retires. Raised in Detroit, he saw firsthand how pension funds could go bankrupt.

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