The actuarial valuation of Chicago’s Municipal Employees’ Annuity and Benefit Fund (MEABF) paints a bleak future for the fund, even taking into consideration a proposed water and sewer tax from Mayor Rahm Emanuel, according to a recent report from Truth in Accounting.
According to the valuation, the fund is on track to become insolvent in 2025, with each dollar of promised benefits supported by just 19 cents. The city contributed $150 million to the fund in 2016, when the actuaries set the minimum payment it should have delivered to the fund at $962 million.
Truth in Accounting reported that the valuation shows the city would need to contribute $11.45 for every dollar it pays in salaries to fully fund the pensions for its municipal employees. Put another way, the city would need to lay off all employees covered by the MEABF, then contribute the sum of their salaries into the fund for 11 years to pay out all the benefits that municipal employees have earned under the current system.
Emanuel has proposed a new tax on water and sewer bills that will phase in over four years, eventually bringing in $239 million in revenue by adding 30 percent to those bills, according to the Chicago Tribune. Based on the actuaries’ valuation, Truth in Accounting notes that this figure, even assuming a continuation of 2016’s $150 million contribution, will fall far short of what is needed.