Without a taxpayer bailout, Chicago’s police pension fund won’t have enough money to pay benefits to retirees in 2021, according to a projection by Local Government Information Services (LGIS), which owns this publication.

At the end of 2020, LGIS estimates that the Policemen’s Annuity and Benefit Fund of Chicago will have less than $150 million in assets to pay $928 million promised to 14,133 retirees the following year.

Fund assets will fall from $3.2 billion at the end of 2015 to $1.4 billion at the end of 2018, $751 million at the end of 2019 and $143 million at the end of 2020, according to LGIS.

LGIS analyzed 12 years of the fund’s mandated financial filings with the Illinois Department of Insurance (DOI), which regulates public pension funds. It found that – without taxpayer subsidies and the ability to use active employee contributions to pay current retirees, a practice that is illegal in the private sector – the fund would have already run completely dry in 2015.

The Chicago police pension fund held $3.2 billion in assets in 2003. It shelled out $3.8 billion more in benefits to retired police officers than it generated in investment returns between 2003 and 2015.

Over that span, the fund paid out $6.9 billion and earned $3.0 billion, paying an additional $134 million in fees to investment managers.

Even assuming Chicago taxpayers and active Chicago police officers continue subsidizing the fund at traditional levels, and that the fund manages to generate investment returns consistent with the last 12 years – 5.19 percent per year, on average – its assets will still race to zero, outpaced by faster-growing benefit payments.

Higher Chicago Police Department (CPD) salaries led to increased benefit payments, which are based on a police officer’s final salary.

CPD raised base salaries 39 percent between 2003 and 2015, from an average of $64,568 to $90,093.

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Inflation over the same period was one-third less – about 29 percent.

Adjusted to include portion of individual police officer pension fund contributions made by taxpayers, police officer compensation increased by more than twice as much over the period – 84 percent.

Taxpayers paid $10,238 per police officer into the pension fund in 2003. Officers themselves kicked in $5,806 toward their retirements that year, or $484 per month.

In 2015, officers paid in $8,924 and taxpayers, $48,278, raising the average police officer compensation package to $138,270, according to Illinois Department of Insurance data.

But even Chicago taxpayers bucking up $50,000 per officer, per year, wouldn’t nearly be enough to save a fund that promised too much in exchange for too little.

The police officers’ pension fund was $3.4 billion in debt in 2003, when it had 13,746 active officers paying into a fund that paid for 11,239 retirees.

Their collective salaries that year were $888 million; retiree benefits were $376 million.

Twelve years later, the fund’s debt had more than doubled to $8.1 billion, and the active employee to retiree ratio had flipped.

In 2015, CPD had 12,061 active officers who earned $1.1 billion while its CPD’s pension fund paid $686 million in benefits to 13,210 retirees.

Chicago taxpayers are currently paying more retired police officers than they are active ones.

Chicago's police pension fund is hardly the only city retirement fund facing oblivion.

The Chicago Teachers' Pension Fund is $10.1 billion in debt. The city's two municipal worker funds owe $11.2 billion and its fire department fund owes $3.5 billion.

All will require taxpayer bailouts if they are going to pay retirees going into the next decade.

Put in perspective, the City of Chicago's property tax levy was $1.36 billion in 2017.

Paying for retirees "as we go," which will prove the only option once funds run dry, will require almost quadrupling city property tax bills.

Last year, it would have required more than $4 billion in revenue – including $1 billion for city of Chicago workers, $1.5 billion for teachers, and $1.5 billion for retired police officers and firefighters.

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When will Chicago's police pension fund run out of money?

The fund has been spending more than it has earned on investments.

LGIS projects that the fund will pay out nearly $4.4 billion more than it earns over the next six years.

Year Investment Income Benefits Paid Difference 2003 $627,291,033 $375,502,578 $251,788,455 2004 $367,908,110 $407,300,759 -$39,392,649 2005 $261,389,227 $437,089,259 -$175,700,032 2006 $447,275,047 $458,059,945 -$10,784,898 2007 $349,914,156 $477,685,326 -$127,771,170 2008 -$1,104,909,466 $497,721,309 -$1,602,630,775 2009 $567,314,824 $514,709,857 $52,604,967 2010 $369,558,055 $543,832,156 -$174,274,101 2011 $33,656,109 $575,305,420 -$541,649,311 2012 $353,176,346 $613,906,597 -$260,730,251 2013 $415,293,612 $641,926,292 -$226,632,680 2014 $181,901,293 $664,337,692 -$482,436,399 2015 -$5,333,795 $686,218,461 -$691,552,256 2016 $188,317,644 $721,627,334 -$533,309,689 2017 $152,087,645 $758,863,304 -$606,775,659 2018 $116,108,663 $798,020,650 -$681,911,987 2019 $80,257,804 $839,198,516 -$758,940,712 2020 $44,413,674 $882,501,159 -$838,087,486 2021 $8,455,988 $928,038,219 -$919,582,231 TOTAL $3,454,075,970 $11,821,844,834 -$8,367,768,864

Source: Illinois Department of Insurance/LGIS

2016 to 2021 numbers are projections.

Assets dwindle as liabilities soar

Chicago's police pension fund has seen its assets steadily fall over the past decade, while its liabilities – promises made to police officers as to what it will pay them upon retirement – continue to grow.

The fund will run out of money at the end of 2020, according to an LGIS projection.

Year Liabilities Assets Deficit 2003 $6,581,433,251 $3,192,648,905 $3,388,784,346 2004 $7,034,271,474 $3,173,395,801 $3,860,875,673 2005 $7,722,737,147 $3,555,381,191 $4,167,355,956 2006 $8,116,543,174 $4,192,076,199 $3,924,466,975 2007 $8,399,392,479 $4,333,233,927 $4,066,158,552 2008 $8,652,546,189 $3,000,998,381 $5,651,547,808 2009 $8,900,901,485 $3,884,978,241 $5,015,923,244 2010 $9,374,852,877 $3,718,954,539 $5,655,898,338 2011 $9,688,349,905 $3,444,690,362 $6,243,659,543 2012 $10,220,638,509 $3,148,929,770 $7,071,708,739 2013 $10,080,605,544 $3,053,881,777 $7,026,723,767 2014 $11,048,192,187 $2,954,318,954 $8,093,873,233 2015 $11,288,237,048 $3,186,423,762 $8,101,813,286 2016 $11,812,011,247 $2,573,395,008 $9,238,616,239 2017 $12,360,088,569 $1,964,613,595 $10,395,474,974 2018 $12,933,596,678 $1,358,000,075 $11,575,596,603 2019 $13,533,715,564 $751,500,398 $12,782,215,166 2020 $14,161,679,967 $143,079,323 $14,018,600,644 2021 $14,818,781,917 -$469,286,046 $15,288,067,963

Source: Illinois Department of Insurance, LGIS

2016 to 2021 data (in grey) is projected)

On the payroll: more retirees than active Chicago police officers

One reason the Chicago police pension fund is going broke: There are more retirees collecting benefits than active police officers paying into the fund.

Year Retirees Active Officers Difference 2003 11,239 13,746 2,507 2004 11,613 13,569 1,956 2005 11,795 13,462 1,667 2006 11,830 13,749 1,919 2007 11,935 13,748 1,813 2008 12,183 13,373 1,190 2009 12,154 13,154 1,000 2010 12,381 12,737 356 2011 12,663 12,236 -427 2012 12,966 12,026 -940 2013 13,159 12,161 -998 2014 13,230 12,020 -1,210 2015 13,210 12,061 -1,149

Source: Illinois Department of Insurance