The city of Chicago plans to contribute a total of $2.7 billion in 2024 to its four woefully underfunded pension funds, which includes $307 million in advance payments, according to a 2024 budget forecast released by Mayor Brandon Johnson's office on Sept. 13.
The forecast, the first for Johnson since he took office in May, projects an overall $538 million shortfall due to "rising personnel, pension, and contractual costs, as well as the cost to care for new migrants arriving to the city," according to the shortfall report.
It will be the third year the city is planning to pay the actuarially determined contribution rate. In 2022, the city paid the actuarially determined contribution rate — amounting to $2.3 billion — to the four pension funds for the first time in the city's history. The city passed an ordinance in 2017 that called for contributions to the pension funds to be increased every year until reaching actuarially determined contribution amounts in 2022.
Until 2016, the city of Chicago made statutory required contributions that fell below the contributions that actuaries have said were necessary to keep the pension plans' funding ratios from falling.
Also, the City Council in November approved a new funding policy of advancing future pension contributions, which also resulted in credit rating upgrades for the city from Moody's Investors Service to Baa3 from Ba1.
Then-Mayor Lori Lightfoot announced the first advance payment of $242 million in January. The advance payment was included in the $2.6 billion in contributions the city has scheduled for payment in 2023.
The projected $307 million in advance contributions in 2024 will be the second such payment for the city.
According to the pension fund's most recent actuarial valuations as of Dec. 31, the $984 million Chicago Firemen's Annuity & Benefit Fund was the worst funded at 20.8% on an actuarial value, followed by the $3.7 billion Chicago Municipal Employees' Annuity & Benefit Fund at 22.8%, the $3 billion Chicago Policemen's Annuity & Benefit Fund at 23.8% and the $1 billion Chicago Laborers' Annuity & Benefit Fund at 44.5%.