An overview of 2024
As a recap of our starting point: as of the end of 2023 (e.g. last year’s numbers), the combined four pension systems (Police, Fire, Labor, and Municipal Workers) stood at 23.0% funded, with $11.12 billion in assets against $48.32 billion in liabilities (a net unfunded liability of $37.2 billion). My expectation last year was that the net unfunded liability would actually climb in the near-term, even as our funded rates climb, given the latest actuarial reports for the four funds.3
Here’s what actually happened, from the city’s 2024Annual Comprehensive Financial Report:
One thing I think worth highlighting here is just how explicitly we’re paying for the mistakes of earlier administrations (mostly Daley) not fully funding pensions. We can put a dollar number on this. The four pension funds’ annual reports break out the ‘normal cost,’ which is the amount that our liability increased from active employees accruing another year of benefits. You can think of this as what the city would have to contribute if we had no unfunded liability. For the coming year, our total normal cost across the four funds is around $438 million. Because we’re tremendously underfunded, the city instead is statutorily required to pay roughly $2.6 billion into the funds. That extra $2.2 billion is the cost we’re incurring for the underfunding of the past.