CHICAGO - The per capita tab to cover local and state unfunded pension liabilities has grown to nearly $20,000 for a Chicago resident, based on 2012 results, according to an annual report on Chicago area pension funds from the Civic Federation of Chicago.

The aggregate unfunded actuarial accrued liabilities for 10 local funds reviewed annually by the federation increased by nearly $26 billion to $37.3 billion from $11.4 billion between fiscal 2003 and 2012. Unfunded liabilities per capita in Chicago for the ten funds rose from $3,359 in 2003 to $12,233 in 2012. Chicago's four funds represented $7,281 of the per capita figure.

The federation added in the cost for a Chicago resident to cover the state's $100 billion of unfunded liabilities to reach the near $20,000 per capita figure for city residents.

"The pension funding crisis in Illinois is the result of decades of insufficient oversight and ignorance of actuarial reality," said federation president Laurence Msall. "Even with recent reforms, it will be many years before these funds are fully stabilized."

The annual report reviews the status of Chicago's four retirement funds, and those of the Chicago Park District, Chicago Public Schools Teachers' Fund, Cook County, Forest Preserve District of Cook County, Metropolitan Water Reclamation District, and the Chicago Transit Authority.

The state General Assembly has signed off on reform packages for two of Chicago's funds, the park district, and water district but the changes are not reflected in 2012 valuations.

Fiscal year 2012 data is the most recent audited data available for all ten pension funds, although some, including Chicago, have released 2013 data. Chicago actually saw a slight decrease in its unfunded obligations which now stand at about $19 billion.

Over the last decade each of the ten Chicago-area public employee pension funds reported sharp funding declines, the report said. The average actuarial funded levels, which smooth market results over a period of years, have fallen to 45.5% in 2012 from 74.5% in fiscal 2003. All ten funds are now below 60%, ranging from the Chicago firefighters fund's 24.4% to a high of 59.4% for the CTA fund.

The report also looked at the market value funded ratios which were slightly higher, with an aggregate ratio of 46.3% in fiscal 2012.

In 2012, local governments met their statutory contributions, set in state law, to the funds, but those payments fell $1.9 billion short of the $2.8 billion in contributions needed to reach an actuarially sound level, the report found. Employee contributions totaled $689.6 million.

Adequate funding levels will become even more difficult to attain in the future because the funds have fewer employees to support a rising number of beneficiaries, the federation's report warned. In fiscal 2012 the ten funds had 1.11 active employees to every beneficiary, down from 1.55 actives per beneficiary in 2003.

The average rate of return on pension plan assets for funds whose fiscal years begin January 1 was 13.0% in 2012, up from 0.5% a year earlier. The average rate of return for funds using a July 1 to June 30 fiscal year was 0.8% in 2012, down from 23.9% in 2011.

Pension reform for Chicago's two remaining funds, Cook County, and the public safety funds of local governments across the state will take center stage during the state legislative session next year. Chicago is facing a $600 million spike for its police and fire funds in 2016 to deal with a prior state funding mandate, and other local governments are also grappling with looming payment spikes. Cook County proposed an overhaul this year, but it stalled in the legislature.

State pension reforms approved last December are facing a legal challenge from employee union that argue they violate the state constitution's protection of pension benefits. The case is at the local circuit level but will ultimately be decided by the state Supreme Court.

Chicago, Cook County, the park district, school district, and state have all suffered credit deterioration that has driven up borrowing costs due to their unfunded liabilities.

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