Chicago’s pension systems carry over $53 billion in debt, leaving taxpayers with rising bills and no reform in sight.
The Second City is climbing the ranks – but not in a good way.
Chicago’s pension systems remain among the most poorly funded government retirement systems in the country. In 2023, the unfunded debt from just the city’s municipal, laborers, police, fire and teachers’ pension funds surpassed the pension debt of 43 states. In 2024, it surpasses the pension debt of 44 states.
Data from the Equable Institute shows the Chicago teachers’ pension and the four city-sponsored pension systems – fire, police, municipal and laborers – carry about $53 billion in unfunded liabilities. The total unfunded debt increased from $51 billion reported at the end of 2023, and earned it a higher place for unfunded pension debt when compared to states nationwide.
More than 80% of the city’s property tax levy goes to pensions, and nearly all of the increase in property taxes since 2014 has been consumed by the cost of keeping up with rising benefits.
Chicago businesses already pay the highest property taxes of any major city. Residents contribute some of the highest residential rates nationwide.
Despite a massive increase in the taxpayer burden, the pension debt continues to rise. Only a constitutional amendment allowing meaningful pension reform could change the city’s trajectory.
Seven Chicago-area pension funds occupy spots among the 10 worst-funded local pension plans in the nation. Experts warn plans funded at less than 60% are considered “deeply troubled,” while those below 40% are past the point of no return. By that standard, all four of Chicago’s main pension systems have already crossed into dangerous territory.
A bipartisan attempt to rein in pension debt was struck down by the Illinois Supreme Court in 2015, and since then lawmakers have failed to act. Both former Chicago mayors Rahm Emanuel and Lori Lightfoot ended their terms urging Springfield to pursue constitutional pension reform.
Instead, lawmakers recently passed a pension sweetener for Chicago’s police and fire pensions that will further sink the nation’s worst-funded local pensions and leave taxpayers with a bill that will eventually hit $11.1 billion.
Without reform, Chicago will continue to pour more of its residents’ tax dollars into pension debt while the problem only grows worse.
