Chicago and Illinois Update: Salary Sweeteners, Begging for Revenue, and Pensions Pensions Pensions

Money money money makes the world turn round! Hmmm, is the day getting longer?

Let me break into Vatican coverage (and I have two posts more on that at least), let me look at my favorite chew toy(s): Chicago and Illinois.

The perpetual topics keep perpetuating: pensions and budgets. I saw someone post the following on X:

Ha, they’d never get rid of the liability.

Seriously, let Chicago go bankrupt first before anybody attempts to federalize it.

Also, we do not need more Chicago-style anything seeping into the federal government.

For example…

Non-budgeted salary sweeteners in Chicago, par for the course

14 April 2025, Illinois Answers Project: Quiet Use of Bonuses for City Council Aides on the Rise

Amid City Council budget negotiations late last year, Ald. David Moore (17th) asked city officials to send him a list of Chicago’s highest-paid employees.

He was floored when he saw that his own aide, Cordarryl Jackson, was listed — erroneously — as having the third-highest salary out of the city’s 30,000-plus employees, at $247,000.

“Oh my goodness,” Moore said, laughing as he reviewed the list. “Not even close … somebody screwed up big time.”

Jackson was not paid $247,000 last year for his job as assistant to the South Side alderperson. His salary was $63,216, plus a $30,600 bonus at the end of the year.

So…. how did that $247K get in there? Just curious. Was Jackson paid for multiple jobs, not just his assistant job?

But the snapshot of Jackson’s annual salary reflects a quirk of city budgeting that lets members of the City Council temporarily increase their staffers’ salaries to pay them year-end bonuses. In a few cases, the payouts are in the tens of thousands of dollars, with little documentation and no formal process, troubling some good government advocates.

This reminds me — there is a difference between the city budget and the audited financials.

For the most part, I try looking at pensions (because I’m about future promises as an actuary), but in general, I’m analyzing ACFRs, which are the audited consolidated financial reports — these are based on what was actually spent as well as some other accounting stuff (like the pensions), that are supposed to be based on real cash flows.

The budget, on the other hand, is a projection, and wishful thinking sometimes. If there are no controls, there may not be much of a tie between the budget and the financials. That’s not very good at all.

A review by Illinois Answers Project of publicly available payroll data for 259 ward and committee staffers found that 65 council staffers received increases in their salaries between October and December 2024, representing more than $260,000 in taxpayer funds for bonuses. At least 20 staffers saw temporary bumps of at least $5,000 in one-time payouts.

So, one may be thinking that $260K is not much compared to the billions of the Chicago budget, which is true… but this is just one place where the budget slips. Where else is it slipping?

“There’s no regularity” to the pay hikes, said Joe Ferguson, president of the Civic Federation, a nonprofit government watchdog. “It’s not tied to any standards. What are the criteria for [city budget officials] saying ‘yes’ or ‘no’ to that, and do they apply across the board?”

And as for that spurious $247K listed pay…

The temporary salary hikes have also caused some public confusion about how much aldermanic staffers are paid.

Because employees’ salaries are publicly listed on an annualized basis, the city’s data portal last December showed 10 aldermanic staffers, including Jackson, as earning more than $221,000 a year, which is how much Mayor Brandon Johnson earns.

Maybe they can fix that. One easy fix would be not to give the bonuses, of course.

Chicago: Time to Look for Revenue from Others

I opened with the rinky-dink stuff, I know.

The mayor of Chicago is right now going cap in hand to Springfield, and also looking down the barrel of the federal gun… and calling it terrorism.

Now, if you’re asking for money from other sources, it is good to know the best ways to pry it out of them.

I don’t think this is going to be a successful method: (again)

22 Apr 2025, Chicago Tribune/Yahoo: Mayor Brandon Johnson will head to Springfield again, to demand Chicago ‘receives its just due’

Mayor Brandon Johnson will return to Springfield next week to ratchet up the pressure on his funding requests for Chicago, but under a local and national political landscape that has shifted starkly since his last excursion to the statehouse — and with Gov. JB Pritzker preemptively throwing cold water on his visit.

At his Tuesday City Hall news conference, the mayor confirmed he will head to the Illinois General Assembly and meet with Pritzker as well as House Speaker Emanuel “Chris” Welch and Senate President Don Harmon. A flyer obtained by the Tribune shows the mayor’s political organization also plans to host a reception for the Chicago delegation at a Springfield venue next Tuesday evening.

The top of his agenda, Johnson told reporters, “hasn’t changed,” before his chief of staff Cristina Pacione-Zayas elaborated that it includes securing funding for Chicago’s public schools and transit systems; “creating additional revenue, or sustaining revenue” from the prepaid cellphone and personal property replacement taxes; and investing in the joint city-state shelter system for migrants and homeless people.

The reason I think this won’t work is:

• Illinois is under its own revenue squeeze

• Pritzker (and the legislature) also told Johnson to take a hike last year when he tried these tactics

• His timing is just plain off

The mayor last visited the General Assembly in May 2024 and saw lackluster results. But this time, Johnson hinted that President Donald Trump’s second term — and a “serious conversation about what Chicago means in this moment” — would increase the urgency for state leaders to move on his Springfield agenda.

….

But the governor suggested to reporters Tuesday the mayor should have secured major financial commitments from the state months ago.

“I will say it’s April and we put our budget together in the latter half of the prior year and then present it in February. So, it’ll be hard for us to talk about things in the current budget,” Pritzker said during an unrelated event downstate. “Though, again, maybe there are things we can move around in the budget that’ll be beneficial to the city of Chicago.”

The thing is, Pritzker is saying — yeah, maybe we can make a deal, but you have to be less of a grandstanding ass. Who do you think you are — Trump?

Johnson has little leverage.

To be fair, Pritzker also has little leverage. He doesn’t have much money to play with.

It’s such a pity that there had been decades of decisions that led them to such a crunch. Pity, pity, pity.

Speaking of timing:

21 April 2025, Fox 32 Chicago: Brandon Johnson creates fiscal working group to tackle Chicago's budget deficit

Chicago Mayor Brandon Johnson launched a citywide initiative Monday aimed at addressing Chicago's structural budget challenges through collaboration and fiscal reform.

Johnson signed an executive order which directs the Office of Budget and Management to establish a diverse working group of business leaders, nonprofits, civic groups and City Council members.

A preliminary report is due by Aug. 31 with a final report expected by May 31, 2026.

Um. Look. Johnson knew coming into the job that Chicago was screwed. Why did he wait until 2025 to get this group together? It has been two years.

To be sure, it’s a slow-moving disaster… unless one piles on more expenses than it can handle. Then it can be a very rapid fiscal disaster. Not just for Chicago, but also for Illinois.

The main “structural” budget problem is pensions (both for Illinois and Chicago), more on which below.

Eric Allie’s (from Illinois Policy) take:

More on Johnson looking for revenue:

• 15 Apr 2025, Chicago Sun-Times: Mayor Johnson brands as 'terrorism' President Trump's threat to withhold federal funding to Chicago

• 21 Apr 2025, Center Square: Alderman: Chicago mayor lacks plan for shortfall that could top $1.5 billion

• 24 Apr 2025, Crain’s: Brandon Johnson: We need to bring Chicagoans together to continue investing in people - good luck in bringing people together by running this in Crain’s, behind its paywall

• 10 Apr 2025, Better Government Assoc: New Revenues for Chicago, Mentioned in Budget Hearings, Not On Mayor’s Springfield Agenda

• 23 Apr 2025, Chicago Tribune/Yahoo: Editorial: How Mayor Johnson’s budget working group could succeed

• 24 Apr 2025, Chicago Tribune/Yahoo: Aldermen spurning Mayor Brandon Johnson’s new budget working group: ‘It points to a larger problem’

Illinois pensions: Tier Two “Fix”

Illinois Policy Institute, 6 Mar 2025: Pritzker pushes $13B pension benefit hike in his budget

Newer state employees would get a $13 billion pension benefit boost if Gov. J.B. Pritzker’s fiscal year 2026 budget proposal passes. What should be a minor fix is being used to create an even bigger Illinois pension mess.

Illinois Gov. J.B. Pritzker is planning to boost retirement benefits for state workers hired after 2010 – a change supposedly to avoid running afoul of federal rules but in reality a $13 billion pension gift to government unions.

A state that already promised public workers $143.7 billion more than it has cannot afford Pritzker’s largesse.

Pritzker unveiled his record-setting $55.2 billion fiscal year 2026 budget proposal on Feb. 19. Despite projecting a $3 billion budget deficit and zero revenue growth as recently as last November, the budget expands state spending by $2 billion compared to the 2025 budget. Pritzker said his new spending was made possible by new projections showing $1.5 billion more in revenue was going to materialize during the year.

18 Mar 2025, Illinois Policy Institute: Tier 2 pensions a better deal for long-term state workers than Social Security

Career state workers receiving a Tier 2 pension stand to retire with significantly higher payouts than Social Security would deliver.

Critics argue Illinois’ Tier 2 pensions for workers hired since 2010 are at risk of violating federal rules mandating pensions be at least as generous as Social Security, but retirement compensation for full-career state workers easily exceeds Social Security benefits.

For employees with 30 years of service, Tier 2 guarantees a minimum of 66% of their final average salary for life, with the annual pension payment growing annually. Based on this year’s pensionable salary cap, this would amount to $84,007.

That is nearly two times the maximum Social Security benefit of $48,516 for an employee retiring at 67, and the maximum benefit would only apply to someone who had earned at or above the Social Security wage base for 35 years. In other words, very few people retiring on Social Security are in line to receive the maximum amount.

One of my big deals with the elimination of the Windfall Elimination Provision/Government Pension Offset Provision as per here:

Social Security Tinkering: No, It's Not Been Made Fairer (or More Solvent)

was that the deal should be: force all the public sector employees onto Social Security, then we wouldn’t have to worry about this “fairness” argument at all. There would be nothing to “offset” because they would have been paying the FICA along with everybody else, so they would get their Social Security benefit and their state pensions.

Of course, the state employees who have been able to avoid being on Social Security would rather not take that deal, thank you very much. Paying that payroll tax for very little extra retirement benefit was not the deal they were asking for.

They’d like a pension sweetener without having to pay for it, thanks, give it to us now, no, we don’t care that the current pensions are deeply underfunded.

I’m sure the federal taxpayers will pony up to fill the Illinois (and Chicago) pension holes, right? They were so happy to fill in the Social Security “unfairness” holes! (because they were lied to about how “unfair” these were.)

More on Tier 2:

• 1 Apr 2025, State Sen. Robert Martwick, Crain’s: Opinion: Tier Two pensions are a crisis of our own making. Here's a viable fix.

• 17 Mar 2025, Center Square: Pension issue costing Illinois taxpayers could come in ‘short term future’

• 11 Apr 2025, Chicago Tribune op-ed: David Greising: State action on pension reform is slow. That may prove auspicious in the end.

• 22 April 2025, Illinois Policy: Tier 2 isn’t broken for Illinois’ career workers: expanding choice secures benefits

• 11 Mar 2025, Illinois Policy: Figure out if there’s a problem before boosting Illinois pensions

• 10 Mar 2025, Labor Tribune: Pritzker’s State of the State earns mostly high marks from Labor leaders

Chicago Teachers Pensions: Payment?

19 March 2025, ABC 7 Chicago: Mayor Johnson again appeals CPS to make $175M pension payment ahead of budget vote

On Tuesday, Mayor Brandon Johnson and his finance team continued to try to find a solution for Chicago Public Schools to repay the city $175 million for a pension payment.

This comes two days before a vote by the Board of Education on an amended budget.

Johnson also had some words on his reelection.

He suggested that potential rivals in 2027 should not even bother to run because he's accomplished so much already that he's a shoo-in for a second term.

But, the mayor's more immediate concern is convincing the Board of Education to take on more debt to repay a debt to the city.

Johnson was joined by seven senior cabinet members, including his finance and budget directors, to lay out options for CPS in its budget battle with the city: at issue is a $175 million pension payment for non-teacher employees at CPS.

The city already made the payment, and now is demanding CPS repay the money before the end of the month.

The Chicago Schools ultimately said, no, we’re not going to reimburse Chicago. Tough noogies.

24 Mar 2025, WBEZ: Mayor Johnson lacks the votes to compel CPS to make city pension payment, giving him days to find the cash

A critical mass of Chicago school board members has officially come out against reimbursing City Hall for a disputed pension payment, dooming its chances of passing. That leaves Mayor Brandon Johnson with less than a week to either change their minds or figure out another way to come up with the money he needs to close the city’s 2024 budget in the black.

Board of Education President Sean Harden postponed a pivotal vote last week on the approval of a $175 million pension payment from Chicago Public Schools to the city, a clear sign it lacked enough support to pass.

Evidently, these pension shenanigans are going to repeat.

25 Apr 2025, Chalkbeat: Chicago Public Schools floats hundreds of layoffs as one option to close $529 million budget gap

The expected $529 million gap between revenues and expenses is calculated after accounting for several new expenses, including the new teachers contract, potential raises for principals as part of their union’s negotiations, and increased costs related to SEIU and other unions, according to the internal presentation. CPS is also expecting increases in charter school funding and teacher pensions, to comply with state laws. The projection does not, however, include a much-debated pension reimbursement to the city of Chicago, which the district declined to pay this year. That suggests the district will, for now, refuse to reimburse the city for the pension payment next school year.

I added that emphasis.

This is going to be “fun” seeing this happen again next year, given it looks like Johnson does this “planning” last-minute each time, with little leverage. Nobody has room to negotiate.

Coverage on (the lack of) Chicago teacher pension payments:

• 17 Mar 2025, Chicago Sun-Times, op-ed: CPS students, families can't afford city's $175 million pension demand

• 19 Mar 2025, Chicago Tribune editorial: Editorial: Chicago school board should reject Mayor Brandon Johnson’s fiscally irresponsible pension-payment demand

• 20 Mar 2025, Bloomberg: Chicago School Board Delays Votes on Pension Payment to City

• 22 Mar 2025, Chalkbeat: Seven Chicago school board members say they oppose reimbursing city for disputed pension payment

• 27 Mar 2025, ABC 7: Alders want to be included in Mayor Johnson's plan to cover $175M budget shortfall from CPS pensions

Leftover Chicago and Illinois Stories

These are the ones that didn’t fit in the above categories.

Obligatory Eric Allie cartoon from Illinois Policy:

• 7 Apr 2025, Wirepoints: Truth in Accounting’s Sheila Weinberg on Illinois’ pension mess and whether budgets are ‘balanced’ - I have more to say about this later

• 22 Apr 2025, WBEZ Chicago: Yusef Jackson invests in company that’s reaped big profits from state of Illinois program - I wrote about this program on the old STUMP blog here: Feb 2019: Chicago and Illinois Corruption Followup: Lawsuit Involving the Unpaid Vendors Program - various connected folks have their thumbs in this pie

• 23 Apr 2025, Casino.org: Bally’s Updates Chicago IPO Prospectus, Warns of Legal Costs - I last wrote about the Casino in Chicago issue in February: Chicago and Illinois Update: Job Posting, Tier 2 "Reform", Casino Shenanigans, and More

• 25 April 2025, Block Club Chicago: Bally’s Casino Nixes Controversial Minority Investment Offer - continuing with the above, now they’re favoring Chicago residents instead of the iffier DEI focus they had earlier

• 16 Apr 2025, Wirepoints: More than $1 billion in market losses is a reminder of how close Chicago pensions are to the brink – Wirepoints

• 14 Apr 2025, Bloomberg/Yahoo: Tariff-Fueled Market Rout Cost Chicago’s Pensions $1 Billion

• 22 Apr 2025, WGN9: Illinois tourism agency hit with scandal - a case of self-dealing

• 3 Mar 2025, Rich Miller: What Is the Penalty for a State That Fails to Pay the Minimum Amount for Teachers’ Pensions?

• 15 Apr 2025, Illinois Policy: Tax Day: Here’s how your $4K in state income taxes is spent

• 22 Apr 2025, Cook County Record: Counties ask judge to rope IL state govt, private 'tax buyers' into class action over property tax 'takings'

• 31 Mar 2025, Paul Vallas: The Chicago Public Schools Must Get Its Fiscal House in Order

• 3 Apr 2025, Wirepoints: New teacher contract: CTU wins, CPS wins…Chicago taxpayers lose – Wirepoints

• 2 Apr 2025, Illinois Policy: Illinois townships vote to fix pensions, gerrymandering and unfunded mandates

• 21 Apr 2025, Chicago Sun-Times: Mayor Johnson cracks the door open to city layoffs, service cuts

• 23 Apr 2025, wttw: Long-Stalled Push for Reparations in Chicago Moving Forward, Johnson Says

• 16 Apr 2025, Center Square: Lawmakers question public university finances, taxpayer-funded increases

• 26 Feb 2025, Bond Buyer/Fidelity: Illinois' 2023 ACFR may become latest ever filed by state - it’s been more than 600 days since FY2023 has ended, and no audited financials

• 31 Mar 2025, Bloomberg: Chicago’s Retired Teachers Question Pension’s Tesla Holdings