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Chicago Tribune
9 hours ago
- Business
- Chicago Tribune
Jennifer Hochschild: Chicago's solution to public pension debt is a generational scam
Chicago is drowning in debt that no one alive today created, yet everyone must pay. The city of Chicago owes a staggering $35 billion to $60 billion to public sector pension funds — several times the annual city budget. Chicago is in deeper arrears than almost all other American cities, including New York. This is not new. Back in 1917, just a decade after social worker Jane Addams helped establish the innovative teachers pension fund, the Illinois General Assembly warned that the condition of the pension system was 'one of insolvency' and 'moving toward crisis' because the 'financial provisions (were) entirely inadequate for paying the stipulated pensions when due.' Commissions have repeated the message ever since then. The response? While solemnly promising to pay up, politicians have steadily increased benefits while adding a provision to the state constitution declaring pension recipiency to be an 'enforceable contractual relationship, the benefits of which shall not be diminished or impaired.' Ever-rising pension provisions, even in the face of ever-rising deficits and interest payments, are easy to explain. Although public sector jobs may not pay especially well, the promise of a secure and substantial income after retirement is a strong economic incentive for workers and a morally honorable stance for city residents to uphold. In addition, promises of added pension benefits are politically valuable to all contract negotiators. Union leaders can assure members of a constitutionally guaranteed gain. Mayors can postpone new strains on their overstretched budgets while avoiding strikes by firefighters, police, teachers and garbage collectors. Aldermen need not raise taxes during their terms in office. Existing pension funds can be used as huge credit cards to cover urgent expenses of schooling, policing and health care. Voters are unaware or uninterested. The real mystery isn't why Chicago has this problem — it's why every American city hasn't generated ever-increasing pension deficits. As pension debt ballooned along with the proportion of the city's budget (slowly) dedicated to funding pension systems and as property taxes rose, observers began taking more notice. By the mid-2010s, all three major credit agencies downgraded both Chicago and Illinois with ratings that, as The Economist noted, put the state 'on par with Botswana' — prompting an incensed Tribune editorial to ask what Botswana had done to deserve such an insult. After passing more laws that further increased pension promises without any financial offsetting, Illinois legislators acted in 2010. Their solution was to make future workers — people who couldn't oppose the bill because they weren't yet employed or possibly even adults — absorb the rising costs. In the classic Illinois tradition, the Tier 2 bill was introduced one morning without any notice, debate or analysis; it passed both houses of the legislature that day. Then-House Speaker Michael Madigan noted that 'we don't have actuarial numbers relevant to this Amendment' but nevertheless claimed that it would save 'over a hundred billion dollars' over an unspecified time frame. The speaker's prediction may turn out to be right; those savings are coming entirely at the expense of young workers who took jobs after the tier system was established. Even Chicago's Civic Federation — a longtime advocate for reducing pension deficits — calculated disapprovingly that Tier 2 teachers pay almost 2% of their salaries to subsidize their predecessors' benefits. The teachers pension fund managers calculated, in fact, that on average, Tier 2 recipients would receive a small net negative outcome from their pension contributions. Experts fear that newer workers are receiving pensions so low that they might violate the federal 'safe harbor' law prohibiting payouts less than what Social Security would have paid that worker. But there's an even more troubling dimension that has gone almost unmentioned in public discourse and probably unnoticed by most observers: the racial wealth transfer. From 1940 through 1980, Chicago's non-Hispanic white population declined from about 90% to about 40%. Today, the city is roughly one-third Black, one-third Hispanic and one-third white. These demographic shifts mean that Chicago's increasingly diverse young workforce is financing more and more of the retirements of a generation of predominantly white pensioners. I see no easy resolution to this conjunction of demographic change, financial insouciance and political expediency. But Chicagoans should at least recognize the irony. Once again, white Americans are benefiting from the labor of their nonwhite compatriots — with no controversy, and the blessing of state law and advocates of responsible governance.
Chicago Tribune
15-03-2025
- Politics
- Chicago Tribune
Letters: Chicago woman's group was ahead of its time in focusing on outcomes for the most vulnerable
Thank you to Ron Grossman for his terrific article about the Chicago Woman's Club ('Champion of social reform,' March 9). Founded in 1876, the organization was years ahead of its time in its reform efforts in so many areas ranging from birth control to domestic violence to education and health care. As mentioned in the article, members of the Chicago Woman's Club played a key role in establishing the nation's first juvenile court in 1899. These members included Jane Addams, the founder of Hull House who is often considered the parent of modern social work. We should be proud that Illinois was the first state in the country to create a special court with special procedures to hear cases involving children who are abused, neglected or charged with offenses. In time, every state would follow our lead and initiate special courts for cases involving children. The Illinois Juvenile Court Act, which created the court and is still in effect today, is an extraordinary document. It acknowledges that children are developmentally different than adults. It focuses on efforts to educate and rehabilitate child offenders rather than on punitive measures. It recognizes that abused and neglected children are victims, not offenders. It ensures confidentiality for children involved in court proceedings. While we take these notions for granted today, they were remarkably progressive insights in the 1890s. Hopefully, Chicago and Illinois will continue in the tradition of the Chicago Woman's Club and remain at the forefront of creative efforts to improve outcomes for the most vulnerable. — Charles P. Golbert, Cook County public guardian, Chicago Senseless rebranding The people of Illinois have voted against redesigning the state flag, and I think that's a big win. Don't get me wrong — the current flag is no masterpiece of graphic design, but this relentless trend of 'rebranding' needs to stop. Too often, redesigns happen simply for the sake of change — unnecessary, expensive and often worse than what came before. Rebranding is rarely the game-changer companies or teams think it will be. Look at automakers such as GM and Kia, recently tweaking their logos in ways that added no real value. Sports teams, desperate for relevance, throw away decades of tradition on new designs that are often met with backlash. Chicago's soccer teams are prime examples. The Chicago Fire, named in honor of the Great Chicago Fire of 1871, once had a meaningful emblem featuring the cross of St. Florian, the patron saint of firefighters. Then, for no good reason, they scrapped it. Meanwhile, our women's soccer club, the Chicago Red Stars, abandoned the name chosen by the people of Chicago and watered down their identity in the process. The worst part? Most of these rebrands don't even achieve their goal. If the product on the field, court or marketplace isn't improving, a new logo won't fix it. Consumers and fans connect with authenticity, not a superficial redesign. Legendary designers Charles and Ray Eames understood this when they turned down a lucrative offer to redesign Budweiser's logo, telling Anheuser-Busch (as paraphrased by a documentarian): 'This is a terrific logo for you. It speaks to what your product is. So many people identify with it now.' The company wisely listened. Now imagine if the New York Yankees, the Boston Celtics, the Toronto Maple Leafs — or our own Cubs, Bulls or Bears — decided to change their iconic logos. You can't. Their branding is timeless because it represents something real. Instead of chasing trends, teams and companies should embrace their history. The same logic applies to the Illinois state flag. A redesign wouldn't make our state any stronger or more unified — it would just be change for the sake of change. Tradition has value, and not everything needs a fresh coat of paint. I'll close with a wise reminder from someone I greatly respect: 'Just because you can doesn't mean you should.' — R.J. LaPorta, Chicago Illinoisans have spoken The people of Illinois, who voted for our state flag, have spoken! The final decision should be the Illinois voters, not the legislators. Case closed. — Ann DeFronzo, Woodridge State flag's non-contest Whose bright idea was it to hold a state flag contest that had no winner? Just wondering what this non- contest cost us, the long-suffering taxpayers of Illinois. I'd call it a joke, but I know that I am not laughing. — Jackie Huffman, Chicago Sorry state of Walgreens Growing up in Chicago with a Walgreens everywhere you turned was a wonderful experience. The minute Walgreens agreed to a merger and it was no longer calling the shots, I cringed. The new corporation quickly began making one bad move after the other. My heart bleeds over the destructive way this company eviscerated our beloved Walgreens! It should be held accountable and never run another business again. It should be renamed the grim reaper. So very sad for Chicago. — Margie Cruz, Chicago Congressman's service In his March 2 op-ed about former U.S. Rep. Timothy P. Sheehan, a respected Chicago politician ('A Chicago congressman wanted to annex Canada long before Trump'), author Arthur Milnes writes: 'Sheehan served an unremarkable four terms in Congress.' To that, I say, Milnes needs to do his homework before summarily dismissing Sheehan's political career. On Sept. 18, 1951, Sheehan was appointed as a distinguished member of the Select Committee to Conduct an Investigation and Study of the Facts, Evidence and Circumstances of the Katyn Forest Massacre, known as the Madden Committee. The Soviets were accused of international war crimes consisting of the mass murder of thousands of Polish military officers and intellectuals in the spring of 1940 in a forest near Smolensk in the Soviet Union. The committee, in its final report in 1952, concluded that the Soviets, who blamed the Germans for the atrocities, were responsible beyond a doubt. In 1990, after decades of denial by the Soviet Union, President Mikhail Gorbachev finally acknowledged the truth of those findings. The investigation received tremendous media attention in the U.S. and worldwide. For his efforts on behalf of Poland's government and citizenry, Sheehan was honored by members of the Polish government-in-exile. I knew Sheehan for 29 years, until his passing in 2000, and it was an honor and privilege to serve as secretary to this accomplished, moral and principled man for 22 of those years. — Ruth Susmarski, Chicago
