Following news of a liquidity problem in the Chicago Firefighters’ Pension Fund and a stunning $11 billion pension benefit boost for police and fire, I, your friendly actuary, Mary Pat Campbell, dive into the reactions from various groups as well as the “timely” release of a report from a task force convened by Chicago Mayor Brandon Johnson.

I explore the political negligence surrounding the Tier 2 sweetener bill and the task force’s proposed “solutions”—a mix of new taxes, fees, and the risky use of Pension Obligation Bonds (POBs)— and contrast with the argument that Chicago’s core problem is a runaway 62% spending surge since 2019. Then there’s the absurd defense of the benefit increase from State Senator Robert Martwick, who claimed it was a service to the city.

Finally, there’s the question: where are pensions for Chicago (and Illinois) ultimately going, given their history of underfunding? Now, with their benefit boost? Will they go cap in hand to the federal government for a bailout (again), and should their poorly funded, non-Social Security systems be allowed to continue? The Chicago pension crisis isn’t just local news—it’s a bellwether for the rest of the nation.

Episode Links

STUMP related links

* 19 Sep 2025: Chicago Pension Squeeze: Fire Pensions Get a Loan as Tax Revenue Delayed; Pritzker Warned Against Signing Sweetener Bill, Signed Anyway

* 4 Aug 2025 Podcast: Chicago Pension Artificial Sweeteners

* 25 July 2025 More on Chicago Pension Finance: Those Pension Sweeteners Sure are Sour

* 18 July 2025 Chicago Finances Update: Other People’s Money Doesn’t Go Too Far, Does It?

* 19 Apr 2020 Illinois Asks for $10B(+) for Pensions -- Most Disgusting COVID-19 Bailout Yet?

* 20 Jun 2022 Podcast: Pension Obligation Bonds

* 16 Feb 2015 Why are Pension Obligation Bonds OF THE DEVIL? A Lesson from the Dollar Auction

This is why I say POBs are of the devil — whether or not you believe in a literal devil, the literary devil is the kind that helps you rationalize the bad behavior you already did and are determined on continuing.

Ask Faust about how that worked out for him.

Austin Berg and The Last Ward

State lawmakers passed—and Gov. JB Pritzker signed—one of the most irresponsible bills in modern Illinois history this year: a suite of pension sweeteners for Chicago police and fire. The sweeteners added $11 billion in new benefits to the city’s police and fire pension systems, which were already the worst-funded in the nation, with no new revenue to pay for them.

In the waning days of session, sources said several leaders attempted to contact Johnson to request that he tell the governor’s team to step in and kill the bill. But the mayor was missing in action. A newly unearthed memo published this week by Paris Schutz at Fox32 confirmed Johnson’s negligence.

Specifically, Chicago CFO Jill Jaworski wrote to the governor’s team that the bill would make Chicago’s police and fire pension funds “technically insolvent.”

….

Bloomberg broke news last week that the city was forced to provide emergency lending for Chicago’s firefighter pension fund in order to avoid asset sales. Between a delay in Cook County property tax bills4 and alarmingly low funding levels, the fund literally did not have the necessary cash on hand to pay current retirees. This is what insolvency looks like.5 And this is exactly why Jaworski and Johnson should have been screaming from the rooftops to oppose the pension sweetener bill.

Bond Buyer on Chicago Task Force

18 Sep 2025: Taxes and cuts advised in Chicago finance task force report

Chicago should resume annual inflation-based adjustments to its property tax levy.

That’s one recommendation from a task force Mayor Brandon Johnson assembled and charged with coming up with ways to strengthen Chicago’s long-term financial health.

It doesn’t call for other major property tax hikes, but the report, prepared on Aug. 31 and released this week, also raises the possibility of re-amortizing and reducing pension debt, including through the issuance of pension obligation bonds.

….

The task force’s interim report puts forth a mix of efficiencies and revenue solutions in the $1 billion to $2.1 billion range to close the city’s $1.15 billion budget gap.

The group identified between $630 million and $1.65 billion in potential revenue-related opportunities, and between $372.4 million and $455.5 million in efficiencies.

As part of the efficiencies, the task force recommended extending the supplemental pension payments policy beyond 2028; re-amortizing and reducing pension debt through pension obligation bonds and pension buyouts; and shifting the timing of pension contributions.

Illinois Policy

22 Sep 2025: Chicago budget rises over 2X faster than other big cities

Not enough revenue? How about too much spending. Chicago outpaces many of America’s biggest cities with a 62% spending spike since 2019. That’s what’s driving deficits.

Chicago faces a $1.15 billion projected deficit in 2026, and the city’s budget task force’s answer is $1.6 billion in new tax hikes.

But the numbers show the city’s true budget problem isn’t a “revenue challenge,” as Mayor Brandon Johnson and his task force claim. It’s overspending.

24 Sep 2025: Uber surcharge, property taxes, liquor prices: Chicago’s push for new taxes

New taxes on Uber, automatic property tax hikes and higher liquor taxes are all being pushed as Chicago leaders seek to spend $1 billion more than they will have.

Chicago is short by $1 billion what it wants to spend in its upcoming budget, so a city task force recommended new or higher taxes and fees on rideshares, property taxes, liquor and more.

….

Mayor Brandon Johnson has claimed the city has a revenue problem, but city spending has grown at twice the rate of other large cities.

These proposals amount to the same old playbook: rather than streamlining government, leaders are again reaching deeper into taxpayers’ pockets. Chicago’s structural deficit is driven by rising pension and personnel costs that have grown faster than revenues for a decade, as well as from using temporary funds to create permanent costs.

No matter how much taxpayers give up, Chicago leaders will certainly find a way to spend more.

Twitter/X threads on Martwick’s “Reasons”

(click on pictures to go to X — there are embedded videos you can play and see what Martwick said.)

A thread (off Stu Loren’s post):

STUMP - Meep on public finance, pensions, mortality and more is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Get full access to STUMP - Meep on public finance, pensions, mortality and more at marypatcampbell.substack.com/subscribe