Latino State News
Study: Furlough Days Cause Shortfall in City Pension Funds
Photo: Pension Funding Shortage
Chicago Public Pension Funds that are responsible for the retirement security of thousands of policeman, fireman, teachers and city employees, have been hit hard by the three-year-old furlough program.
The Daley administration and union leaders amended their collective bargaining agreement in July 2009, requiring thousands of city workers to take 24 unpaid days off a year for three years. Daley predicted the move would result in about $134 million in savings at a time. City workers were not required to make pension contributions for the furlough days although they continue to accrue benefits. The city though was not required to make the $13 million in payments for its share of the pension contributions for the furloughed days.
It is agreed that the city did save money from the furloughs, but critics point out that the administrations continued use of funds earmarked for the pension fund to plug budget holes couldn’t be sustained long term.
This leaves the city pension funds short funded by nearly 25 million over the three-year period of the agreement.
“As the city tackles its daunting structural deficient, it’s important the full impact of those efforts are accurately calculated and fully disclosed to the public,” Chicago’s Inspector General Joseph Ferguson said. “This is especially true for the furlough program and to the city’s already alarmingly underfunded employee pension funds.”