Updated: July 18, 2013 10:06PM
Pension reform must get done. Now.
On Thursday, two more reminders — two more so-called wake up calls — landed with a massive thud in Chicago.
First, Moody’s Investors Service dropped Chicago’s credit rating an astonishing three notches, citing the city’s “very large and growing” pension liabilities, high-fixed costs and “significant” debt load. Adding salt to the wound, Moody’s also gave the City of Chicago a negative outlook. Civic Federation President Laurence Msall called it a “financial hurricane.”
This came the same day that one gruesome alternative to pension reform emerged just up the road — Detroit filed for bankruptcy, the largest such municipal bankruptcy.
Later, the school system confirmed it planned to layoff 2,100 staffers on Friday, about half of them teachers, citing budget woes exacerbated by skyrocketing pension costs.
Meanwhile, a state legislative committee on pension reform continues to meet.
So far, it has focused solely on reforming the state’s pension systems for teachers, state workers, university employees and legislators. Whatever template they settle on — and the good news is we’re hearing they’re close — must also be applied to the Chicago Teachers’ Pension Fund and the city’s four employee pension funds.
Tweak the framework some for teachers, adjust it a bit for firefighters, but don’t wait a minute more. This push should come from legislators and, most importantly, Mayor Rahm Emanuel.
Chicago school budgets have been shredded, the city’s borrowing costs now will undoubtedly rise and the state already has slashed social services and health care — all victims of a pension system we simply cannot afford.
What more could it possibly take?
Back to the good news: The pension committee has been meeting regularly and privately in small groups, with another session set for Friday. They’ve apparently broken free of the two bills — one backed by House Speaker Michael Madigan, the other by Senate President John Cullerton — that led to a stand-off in the spring and are at work on elements of a new plan that resembles what was advanced by the state’s university systems. This is an important sign of progress because the committee includes representatives of the four political caucuses in charge in Springfield.
The actuaries have estimated potential savings and legislators plan to chew them over on Friday.
Chew away, we say. They need to get this right.
But if they’re still at it a few weeks from now — and final plans don’t include the CPS and Chicago pension systems — the next thud may be Chicago and the state’s last.