Each Household in Chicago Is Obligated to Pay Nearly $125,000 – Mostly in Pension Liability

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Chicagoans have no idea how much pension debt Illinois politicians have placed upon them, a staggering total of $130,000 billion, which leaves each household on the hook for $125,000. This includes direct pension debt owed by the city government, Chicago Public Schools, the park district, Chicago’s share of Cook County governments, five-state pension funds, and massive unfunded liabilities. This figure is nearly double what officials admit. Unfortunately, 27% of Chicagoans are in poverty, so the middle class will be stuck with an even bigger burden to make up for those that cannot pay. People are getting what they voted for, but are not yet aware of the magnitude of the crisis.

Chicagoans have no idea how much pension debt Illinois politicians have saddled them with. Officially, Windy City residents are on the hook for $70 billion in total pension shortfalls from the city and its sister governments plus a share of Cook County and state pensions.

But listen to Moody’s Investors Service, the rating agency that’s been most critical of Chicago’s finances, and you’ll get a different picture. Moody’s pegs the total pension debt burden for Chicagoans at $130 billion, nearly double the official numbers. (Yes, by chance the number is eerily similar to the official shortfall of $129 billion facing the five state-run pension funds. But don’t confuse the two.)

That’s scary news for Windy City residents. Barring real reforms, concessions from the unions or bankruptcy, Chicagoans can expect to be hit with whatever series of tax hikes politicians will try to enact to reduce that debt.

That $130 billion is the total Moody’s calculates when adding up the direct pension debt owed by the city government, Chicago Public Schools, the park district and Chicago’s share of various Cook County governments and the five state pension funds. Moody’s takes a more realistic approach to investment assumptions than the city and county governments take.

 

Officially, the four city-run funds have $28 billion in unfunded pension debts.

Then there’s another $11 billion in official CPS teacher pension debt. Add another $4 billion from the Chicago Park District and the city’s pro-rata share of Cook County-related pension debt. Finally, add Chicagoans’ $27 billion share of the state’s pension debt ($129 billion). In total, the official debt Chicagoans are stuck with adds up to $70 billion.

That’s over $67,000 in pension debt for each household in Chicago.

But the burden is so much higher than that. That $70 billion is based on the rosy actuarial assumptions used by the pension funds.

Other financial institutions, including Moody‚Äôs, use far more realistic assumptions to figure out the size of Chicago and the state‚Äôs pension debt. Under Moody‚Äôs calculations ‚Äď what they call the Adjusted Net Pension Liability (ANPL) ‚Äď Chicagoans‚Äô pension debt burden is far bigger.

The unfunded liability of Chicago’s four city-run funds alone under Moody’s calculation swells to $42 billion. Chicago Teachers Pension Fund debt more than doubles to $25 billion. And Chicagoans’ share of the state’s $250 billion ANPL becomes $53 billion.

In all, Chicagoans are on the hook for $130 billion in unfunded overlapping Chicago-area and state ANPL, according to Moody’s.

That translates to nearly $125,000 in pension debt for every household in Chicago.

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