City of Chicago Called Out over Pension Savings Claims

February 9, 2011 ( – City of Chicago pension funds were shortchanged more than $24 million over a three-year period, according to a report by Chicago's inspector general's office.

A Chicago Tribune news story said the shortfall came because workers taking unpaid furlough days were not required to make more than $11 million in pension contributions for that time off while the city did not make another $13.5 million in pension contributions for that same period.

Inspector General Joseph Ferguson also called out the city for overstating the amount of taxpayer money saved by the furlough days, the news story said.

According to the Inspector General’s report, when city officials touted budget savings from the furloughs, they failed to account for the $11 million in losses to city pension funds as a result of the decreased employee contributions. That money will eventually have to be paid back by taxpayers and shouldn’t have been counted as savings, the report said.

The Tribune said Chicago Budget Director Eugene Munin argued in a statement that the inspector general’s report was inaccurate and that the city, in fact, realized the savings it touted. “We would encourage the inspector general to support the mayor’s proposed legislation that would more equitably [spread out] the pension funds liability by requiring increased contributions from the employees,” Munin said.

Daley officials 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 said the move would result in about $134 million in savings.

The inspector general’s report also highlights growing concerns over how pension fund shortfalls play into the city’s larger financial woes. “As the city tackles its daunting structural deficit, it’s important the full impact of those efforts are accurately calculated and fully disclosed to the public,” Ferguson said in the report. “This is especially true for the furlough program and to the city’s already alarmingly underfunded employee pension funds.”

The Ferguson report is here.