Brothers and Sisters,
This year is the first year that the City has put into our pension fund what professional actuaries believe is an adequate amount of money to start properly funding our pension fund to secure our retirement benefits. Finally, after decades of neglecting our retirement security, the City is directing the required resources needed to sustain benefit payments for all members. This is a great development for us all!!
But the funding battle is not over. Let me remind you that the increased funding that finally made it into the pension fund has to be maintained for another 35 years. And furthermore, let me remind you, that the City had a very difficult time coming up with the additional funding just for this first year.
My concern, and what I think should be all of our concern, is that the City can’t maintain these increased payments to our pension without making some very difficult tradeoffs – the City’s overall cost structure is too bloated. The City has borrowed way beyond its means; fiscal reality dictates that something has to give. My primary goal as a trustee is to make certain that, when the City makes decisions on what must be cut due to the lack of revenue, it isn’t our pension fund that is shortchanged yet again. I made the uncomfortable decision to litigate against the City for adequate funding for our pension fund during my first term as a pension fund trustee. I assure you I am again prepared to propose litigation against the City if they fail to make adequate payments going forward.
I think it is a reasonable question for the membership to ask – ‘If the City made adequate payments to the pension fund this year, where did they get the money from?’ The reason the City was able to make the increased payments to the pension fund this year is because the City essentially short paid their bondholders. The City employed the fiscally irresponsible practice of “scoop and toss” where they take the current debt, toss it out to future generations to pay, and then essentially stretch out the payments. Because the City employed “scoop and toss” they were able to free up money this year for our pensions. The problem is that the City eventually has to pay the bondholders; and if they pay the bondholders then they have to identify something else in the cost structure to not pay, like pension payments to the fund.
Another alternative the City has is to raise revenue, such as property taxes, water fees, increased healthcare premiums or red light camera fees. The official revenue source that has been identified to shore up our pension funds is supposed to come from the yet to be built Chicago casino.
I do not agree with the narrative City Hall is selling when it comes to the Chicago casino, the narrative is long on hope. Have you ever looked at the current state of the casino industry? The demographics do not favor substantial growth. Is the City ever going to find a reputable operator to build the casino without providing the developers with enormous financial subsidies from the TIF funds? TIF funds are essentially the City’s way of skimming property tax revenues into accounts that most critics agree have no oversight on who receives the benefits of these diverted property taxes. Property tax is the traditional funding source of first responder pension funds and yet stakeholders stood by while the two largest TIF funds were recently created to allow the continuation of diverting resources away from our pension fund.
So the question becomes – “Does the City have the financial resources to adequately fund our pensions?” And if the City doesn’t have the resources and decides to underfund our pensions as they have in the past, then the question becomes – “Will anyone stand up to defend our retirement security and demand adequate City resources to properly fund our pensions?” I promise you, I will be that voice, as I have in the past.
When I first became a trustee and started pointing out real concerns about the administration of the pension fund and the City’s lack of a sound policy for sustaining our pensions, I thought people would be interested in hearing more, or at least be upset. And to be clear, many members did want to hear more and were upset. But I never imagined there would be a cohort of vocal people so misguided as to vocally refute obvious clear evidence about the dire consequences of continuing down the path towards insolvency. I have been vocal about the lack of adequate funding of our pension fund since I first came on the job. But to my frustration, too many people either suffer from an innate fear of addressing reality or they are just unable to comprehend the mechanics of the pension fund and how it provides them retirement security.
If you don’t think funding matters, I ask you to review the difference I’ve outlined between Tier 1 and Tier 2 benefits. It can be found above, under the menu item “Tier 2 Explained”. New members of our pension fund, as the presentation illustrates, are clearly being forced to ‘take the hit’ for previous negligence securing adequate funding.
If you vote for me again, I promise to work tirelessly to keep you informed. I would be honored to have your continued support. Ballots will be mailed to your home no later than September 22nd and will be counted on October 26th. Your completed ballot should be mailed back by October 19th to ensure it is counted. Thank you for your consideration.
Fraternally,
