Emanuel Pushing New Plan For One Of City’s Underfunded Pension Fund
Chicago Mayor Rahm Emanuel’s administration is pushing for a new way to fund one of the city’s underfunded pension systems. Emanuel’s previous attempt to address the Laborer’s pension fund was found to be unconstitutional by the state Supreme Court because it reduced employees’ retirement benefits.
Alex Holt, the city’s budget director, said the Laborer’s retirement fund is running out of money and can’t wait for another long, drawn-out legal challenge.
“The fact is, for right now, we needed something that was certain; something that we knew would withstand scrutiny at the court,” Holt said in a conference call with reporters Monday.
The changes the city wants to make to its employees’ retirement benefits would need approval from Illinois state lawmakers, who are entering their final scheduled week of regular session. But despite the urgency to address the underfunded pension account, Carole Brown, the city’s chief financial officer, said the city won’t lobby lawmakers in Springfield to act until the Fall veto session because the managers of the fund were only recently notified of what the administration is proposing, and those managers haven’t yet had time to assess the plan.
“We have an agreement in principle. We need to codify that,” Brown said.
The plan to stabilize the pension fund’s finances would rely on the city increasing its contributions to the fund over the next few years, with the goal of being 90 percent funded by 2057. Revenues to pay for that increase would come in part from a $1.40 fee increase from 2014 that Chicago residents pay on their landline and cell phone bills. The city estimates that fee will mean adding $40 million annually to the fund.
Under the new plan, the city would increase contributions to a Laborer’s retirement fund by three percent while lowering the eligible retirement age for employees hired after Jan. 1, 2017 from age 67 to 65. The plan would also make current employees eligible to retire at age 65 if they agreed to increase their own pension contribution by three percent.
Tony Arnold covers Illinois politics for WBEZ. Follow him @tonyjarnold.