Chicago has made the second half of its supplemental pension payment for this year, fulfilling a budgetary pledge and assuaging some concerns of aldermen and bond rating agencies.
After deciding to split the supplemental pension payment in two and delay making the second half of the payment, Mayor Brandon Johnson
CFO Ashlee Gabrysch later said the administration
"For decades, administrations before ours kicked the can down the road on funding our pension system, abandoning our obligation to our hardworking public servants and putting Chicago in greater financial risk," Johnson said in a statement. "My administration made a commitment to ending those irresponsible practices and has continued making supplemental pension payments year after year, without relying on one-time federal dollars."
This payment brings the total supplemental pension payments made since 2023 to almost $1.1 billion.
"The rating agencies have specifically warned us about not making this payment," said Alderman Bill Conway. "That's why myself and many members of city council have been very vocal about the need to make the payment. So I am happy that the mayor's office has finally done that after waffling a bit on it."
Conway said Chicago's bond ratings are hovering just above junk status, and said "it would have been disastrous for us not to make the payment."
Chicago's general obligation bonds are rated BBB-plus by KBRA, BBB-plus by Fitch Ratings and BBB by S&P Global Ratings, with negative outlooks, and Baa3 with a stable outlook by Moody's Ratings. Junk status would be falling below the BBB-minus or Baa3 rating.
Ben VanMetre, vice president of public finance at Moody's, stressed that the rating agency's stable outlook on Chicago reflects among other things the expectation "that the city will continue making progress towards structurally balancing operations while maintaining solid liquidity and adhering to its current pension funding policy."
Any weakening of pension contribution levels relative to tread water, or a return to debt manuevers like scoop-and-toss or borrowing for operations, could lead to a downgrade, VanMetre said by email.
The city's pension systems are also highly vulnerable to asset depletion if the city were to pull back on pension contributions, in Moody's opinion.
The supplemental pension payments, adopted as part of
The total unfunded liability of Chicago pensions stood around $35 billion as of 2024, according to a
From 2024 to 2025, each of Chicago's four pension funds saw increases in their funding levels, the Johnson administration said in a statement. The aggregate funded ratio of the four funds rose to 28.15% from 25.63% on a fair-value basis, supported partly by strong investment performance.
"The city's demonstrated commitment to making the pension advance payment is a critical step in addressing the compounding effects of legacy pension costs," Gabrysch said in a statement, calling the billion-plus total "a notable milestone" and underscoring the administration's resolve to confront the city's financial challenges "head-on."
Alderman Scott Waguespack said the supplemental pension payment was made possible this year because the Budget Accountability Coalition included it as part of the alternative 2026 budget. The administration had proposed reducing it, he said.
"We made several efforts this year to push for the second payment to be made and were glad to see the administration followed through in order to avoid another credit downgrade," he said by email.
The city counted on an additional $364 million in supplemental pension payments in its 2027 budget forecast.
Fitch did not immediately respond to requests for comment. S&P and KBRA declined comment.
