Did the Pensions Get Hosed?
This guy thinks so, and he makes a good argument to support his contention:
- In picking which [deception] to write about in the City of Chicago’s PR offensive last week about the its finances, I’m suffering from the “paradox of choice.” That’s what occurs when you’re overloaded with too many choices, making it difficult to decide.
I’ll go with this one for now — the numbers for Chicago’s police and firefighter pensions. Had it been honest, the city would have prefaced its pension numbers by saying, “Let’s assume we didn’t kick the can and that an old law is in effect.”
The pension numbers the city used are built on the assumption that it will make far faster, higher pension contributions than in fact it will make under a new law. Its numbers, in other words, ignore a huge can-kick the General Assembly recently passed. The numbers the city peddled therefore are worthless.
The problem is that the actuarial reports recently completed, on which the city bases its published numbers, assume the old law is still in place! They clearly state that. You can see for yourself in the report for the police report linked here. (You have to look at the “GASB 67 and 68 reports,” in which the all-important Net Pension Liability is calculated, which are the numbers the city used in its financial report widely reported last week. You may also recall that these are reports I had to get through a Freedom of Information Act request. The police pension finally posted theirs last week. The firefighter pension still has not.)
If we understand this, the city is using the old numbers to calculate the new liability. We'll confess to being less than mathematically inclined in this matter. Is this guy on the level? We know the can got kicked down the road, but did we get royally screwed in the process?