The 2015 Pension 40: Rahm Emanuel

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< The 2015 Pension 40: The Long Climb

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Rahm Emanuel
Mayor / Chicago
Last year: 4

Chicago is threatening to go up in flames again. In May, Moody’s Investors Service downgraded the Windy City’s outstanding debt from investment grade to junk status — the seventh reduction in two years — citing Chicago’s unfunded pension liabilities. Moody’s research describes Chicago as the U.S. city most heavily burdened by unfunded liabilities: The current level of retirement debt is more than eight times annual revenue. Chicago Mayor Rahm Emanuel, 56, who inherited $32 billion in unfunded liabilities when he took office in 2011 (it’s now $29 billion), had hoped to restore part of the retirement system to financial health in 40 years through a 2014 bill that would lower annual cost-of-living increases for retired workers, raise the amount of taxes earmarked for the system and bump up city workers’ contributions by 2.5 percent annually over five years. The plan, however, involves just two of ten Chicago pension systems. Then–Illinois governor Pat Quinn approved the Chicago plan only to find his own state pension-overhaul plan, which reduced future benefits, overturned by the Illinois Supreme Court on constitutionality grounds. As Moody’s feared, a Cook County circuit court declared Emanuel’s reforms unconstitutional in July, and the case was appealed to the state supreme court. Emanuel and his lawyers argue that without reductions the two funds will become insolvent in 2025 and 2028. The mayor, who served as President Obama’s first White House chief of staff, incorporated his pension reform bill into his 2016 budget, which was approved in late October. If the Illinois Supreme Court is successful in smacking down the Chicago reforms, Emanuel, like Illinois Governor Bruce Rauner (No. 1), will have to start all over again.

The 2015 Pension 40