Progress Illinois

Chicago Inspector General Joseph Ferguson released a report (PDF) that found Mayor Richard Daley's reliance on using city employee furlough days to help balance his last budgets damaging to Chicago's four, already underfunded pension systems. 

According to Ferguson's report, which was released yesterday, the Daley administration's use of furloughs will cost the pension funds more than $24 million, making current funding shortfalls that much worse. Ferguson writes that as city workers, including much of Chicago's unionized workforce and non-union employees, have taken 24 unpaid furlough days offs since mid-2009, the pension funds lost $11.05 million in employee contributions. The balance comes from the consequential loss of $13.05 million in the city's matching payments to the pension funds.

While the Daley administration reports to have saved the city $134 million since 2009 through the furlough program, Ferguson paints a much grimmer picture, since the $11.05 million city workers did not contribute during their unpaid time off will have to be made up for in the future. Considering the city's dire financial straits, Ferguson rightly asserts that city officials should be providing the public with a much clearer -- and accurate -- picture of the impact of the financial decisions being made in City Hall.

“As the city tackles its daunting structural deficit, it is important the full impact of those efforts are accurately calculated and fully disclosed to the public,” said Ferguson in a press release (PDF) announcing the report.

Earlier this week, we expressed concern that some conservative pundits and policy makers are pushing states facing large budget deficits (both in the short- and long-term) to declare bankruptcy. Reuters' James Pethokoukis provides the latest example about why this approach is problematic.

Republicans in Congress have introduced a bill that suspends the ability of states and localities to sell tax-exempt bonds if they don't report their pension-fund liabilities to the U.S. Treasury Department. (State sovereignty, it seems, is a right conservatives uphold only when it's politically convenient.) The hope among some on the right is that "the shock" of the debt load will, in the words of Pethokoukis, "grease the way towards explicitly permitting states to declare bankruptcy." And that's important because it would give Republican lawmakers an opportunity to smash union contracts. "Allowing them the same ability to renegotiate obligations," he writes, "could enable them to slash public employees’ lavish benefits, a big factor in their financial woes ... From the Republican perspective, the fiscal crisis on the state level provides a golden opportunity to defund a key Democratic interest group."

Never mind that public employee pensions are, by and large, not lavish at all. Never mind that those workers bargained for those retirement benefits with the state. Never mind that the vast majority don't earn Social Security. And never mind that the state has several fiscal options to pay off the obligations, if they can muster the strength to do so. If conservatives can figure out a way to bash organized labor, they always will.