(Bloomberg) -- Chicago's debt to its pension funds keeps growing.
Even after the third-biggest U.S. city raised taxes to pump more money into its cash-strapped retirement system, its unfunded obligation to the pensions rose by about $2.1 billion to $30.1 billion in 2018, according to its financial report released Friday. That's because the $1.2 billion that Chicago paid into its four retirement plans was only about half what actuaries said was needed to catch up with a debt that was built up over decades, according to data compiled by Bloomberg.
The city's debt to its retirement system, which covers benefits for 119,700 people, led Moody's Investors Service to cut its bond rating to junk four years ago. The recent increase underscores the challenge that faces Mayor Lori Lightfoot, who took office in May, even after her predecessor boosted annual payments into the pensions by hundreds of millions of dollars.
In addition to the pension checks, Chicago also faces large bills for retirees' medical benefits. The city reported a $684.6 million liability for other post-employment benefits, which includes health care. Those costs have pressured other cities and states.
“It is no secret that our city faces extraordinary financial challenges, driven by a legacy of pension liabilities, mounting personnel contract increases, and growing debt service obligations -- all of which have been long in the making,” Lightfoot said in a letter included with the report. “While these costs loom large for next year and beyond, our administration will be looking at how city government functions to develop a sustainable road-map for the future.”
To contact the reporter on this story: Amanda Albright in New York at aalbright4@bloomberg.net
To contact the editors responsible for this story: Elizabeth Campbell at ecampbell14@bloomberg.net, William Selway, Michael B. Marois
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