Mayor RAHM EMANUEL responds to Sun-times question regarding CITY PENSIONS. Sun-times Question ~ City Pensions Chicagos fire and police pensions are greatly underfunded, and the city is required by the state to make a $550 million payment into the pension funds by the end of 2015. Do you support restructuring the pension systems, inevitably reducing benefits, to put the funds on sound financial footing? Yes or No: Ensuring the city’s pension funds are on a sustainable path to protect employee retirement savings and Chicago taxpayers is integral to getting the city’s finances back on track. I have been clear that I reject the false choice of either bankrupting the retirement security of hard-working City employees, or making Chicago taxpayers bear the burden along by relying only on substantial tax increases. Over the last three years, my administration has worked collaboratively with the Municipal and Laborers Pension Funds to craft a long-term solution that achieves this goal. This reform will provide the retirement security that 61,000 workers and retirees have earned – all while respecting our taxpayers and protecting vital City services. We changed the compounding cost of living adjustments (COLA) to a simple adjustment, and implemented three COLA pauses in the next seven years to give the fund a chance to catch its breath. Active city employees will see a 2.5% increase in their contribution that is phased in over five years. And we raised the multiplier that the City currently uses and moves it on a path to an actuarially-determined structure in the near future. We applied the same strategy to our successful solution to the Park District pension fund that was on a path to become insolvent in less than a decade. This collaborative approach can and should be applied to crafting the solution for Police and Fire Funds. To date, I am the only elected official to successfully pass pension reform legislation that was executed in collaboration with workers while incurring enough savings to protect taxpayers. I also believe that savings that can be reinvested in the pension system do not just come from raising taxes or cutting retirement payments. The changes to retiree health care benefits, for example, were very difficult to make but necessary in order for us to balance our budget and put our City on stronger financial footing. We took a balanced approach: rather than pull the rug out from retirees when the Korshak settlement expired, my administration put forward a three-year phase out of the health plan for all retirees except those of the original Korshak plaintiffs class – some our oldest and most vulnerable retirees. For those retirees and their spouses, the city will continue to provide health care for the remainder of their lives. For the rest of the retirees the three-year phase out of this benefit will allow participants to enroll in alternative plans through the affordable care act. This reform will save $100 annually. Chicagos pension systems for municipal workers and laborers already have been restructured, reducing benefits, but the city has yet to identify where it will find the revenue to sufficiently fund those systems. Under what circumstances would you support a property tax increase to raise the needed revenue for the fire and police pensions and/or the municipal workers and laborers pensions? I have always said that raising taxes should be a last resort to tackling the pension crises. As I have done with other pension deals reached over the last four years, we will look for all available reforms and savings before considering a tax increase.
Posted on: Sat, 10 Jan 2015 19:50:56 +0000
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