The Municipal Employees‘ Annuity & Benefit Fund of Chicago is not a phrase that exactly trips off the tongue.
But the pension plan covering the retirements of a hodgepodge of workers with the city of Chicago, Chicago Public Schools (nonteaching staff) and the Chicago Housing Authority, among other public bodies, is at the center of a near-comical game of hot potato between city government and CPS.
The issue: Which of those governmental bodies will make a required $175 million payment into the severely underfunded pension plan.
This embarrassing contest of wills between Chicago Mayor Brandon Johnson and outgoing Chicago Public Schools CEO Pedro Martinez has been waged without resolution for nearly a year now.
Time is almost up.
After trying and failing for much of 2024 to strong-arm Martinez into taking responsibility for the payment, Johnson’s administration once again is leaning hard on CPS to cover the cost and now says the school system needs to do so by the end of next month. If not, Johnson administration officials say, the city will have to dip into reserves to make the payment, and that could well mean another credit downgrade just months after the city’s debt rating was lowered for the first time in a decade.
The 21-member Chicago Board of Education, made up of 10 newly elected members and 11 appointed by Johnson, now must decide what to do within a few weeks. CPS doesn’t have the money and would have to take out a loan to handle the cost. The school system already has the ignominious distinction of being the nation’s single largest municipal issuer of junk-rated debt.
Contributions to MEABF for nearly a century have been the responsibility of the city of Chicago, as set forth in state law. But in 2020 Mayor Lori Lightfoot began requiring CPS to help cover some of the plan’s costs, reasoning that a chunk of the beneficiaries were school employees so it made sense to spread the financial pain. Through the Lightfoot years and in 2024, the first year of Johnson’s term, CPS paid part of the tab, with some of the cost defrayed by declared surpluses from the city’s tax-increment financing districts and the rest handled by federal pandemic aid.
Pandemic aid, which papered over the city’s fiscal fissures these past few years, is gone now.
So both CPS and the city say their taxpayers are tapped out and can’t pay into the plan. Never mind that it’s the same pool of taxpayers — residents and businesses in Chicago — who pay the freight for both governmental bodies.
Meanwhile, the thousands of real-life beneficiaries who are depending on MEABF to secure their retirements can’t be feeling warm and fuzzy about this stalemate.
As of the end of 2023, this $4.6 billion pension plan — one of four retirement funds the city manages — held just 22% of the net assets needed to meet its current and future obligations.
One way or the other, this $175 million will have to be paid. The Hobson’s choice? The city pays and risks yet another downgrade, raising its debt costs at a time when Chicago’s future solvency is openly questioned. Or CPS pays and adds to its already-unsustainable mountain of debt.
And neither party, per the orders of our uber-progressive, administratively challenged mayor, will even so much as contemplate desperately needed belt-tightening.
Anxious MEABF beneficiaries don’t deserve this treatment. Neither do Chicago taxpayers.
Submit a letter, of no more than 400 words, to the editor here or email letters@chicagotribune.com.
