Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, told Dan Proft on Chicago’s Morning Answer this week that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension.
Glennon explained that pension buyouts work by calculating the long-term actuarial value of an individual retiree’s benefits based on age and gender, then offering a lump sum cash payment at a discount of roughly thirty-five to forty percent from that estimated value. On its face, the state or city appears to come out ahead by settling a future obligation at a reduced rate. Politicians have pointed to a two-billion-dollar reduction in the state’s unfunded pension liability as proof that the program works and have proposed extending the model to Chicago’s four pension funds. The problem, Glennon said, is that someone has to pay for those buyouts, and since neither the state nor the city has the cash on hand, they borrow it through bond issuances. The first bond sold to fund the state program carries an interest rate of five and a quarter percent. The net result is a transfer of pension debt onto the bond ledger with interest costs attached, which Glennon described as moving money from one credit card to another.
The savings calculation is further complicated by a phenomenon economists call negative selection. The people most likely to accept a lump-sum pension buyout are not those who expect to live long and healthy lives, but those who have reason to believe their lifespan will fall short of what actuarial tables predict. Someone with serious health conditions receives the same buyout offer as a healthy retiree of the same age and gender, because the state conducts no medical investigation. That means the program systematically buys out the people whose early deaths would have represented a financial benefit to the pension fund while retaining the healthy retirees whose longevity represents the larger long-term cost. The claimed savings, Glennon said, are therefore overstated even before accounting for the borrowing costs.
He noted that Governor Pritzker appeared before the Economic Club several years ago and publicly boasted that a study demonstrated the state’s pension buyout program would save tens of billions of dollars over time. Wirepoints submitted a Freedom of Information Act request for that study. It does not appear to exist. The Illinois Answers Project, an investigative arm of the Better Government Association, filed similar requests and reported being stonewalled. The BGA rated Pritzker’s claims mostly untrue. Senate Pensions Committee Chairman Robert Martwick, who Glennon described as the most important figure in Springfield on this issue, is the same legislator who previously proposed solving the entire pension crisis by issuing a single one-hundred-billion-dollar bond, a suggestion that drew national ridicule, and who championed increases to two Chicago pension benefits while those funds were twenty percent funded and thirty-six billion dollars in the red.
The pension discussion connected directly to a new report from Cook County Treasurer Maria Pappas showing that property tax bills sent by taxing agencies across Cook County totaled nineteen point two billion dollars in 2024, an increase of more than one hundred and eighty percent from 1995. Over the same thirty-year period, inflation rose by less than ninety-one percent, and average wages grew by less than property taxes. Glennon said the trajectory is directly tied to pension obligations consuming an ever-larger share of municipal budgets, with Illinois Policy Institute research showing that roughly two-thirds of Chicago’s police and fire pension contributions now go toward paying existing pensions rather than funding current services.
The property tax problem is compounded by the ongoing collapse of commercial real estate values in Chicago. A building at 175 West Jackson recently sold for forty-one million dollars, an eighty-seven percent decline from its three-hundred-and-six-million-dollar purchase price in 2018, against an appraised value of four hundred and ten million dollars at the time its two-hundred-and-fifty-million-dollar loan was issued. Glennon noted that commercial properties in Cook County are taxed at more than twice the rate of residential properties, meaning that as assessed values on office buildings continue to fall, the tax burden shifts increasingly onto homeowners. Because commercial leases tend to run on five-year terms, the full impact of Chicago’s office vacancy crisis on assessed valuations is still working its way through the system, producing what he described as a drip, drip, drip of declining revenue that will only worsen over the next several years.
On the question of a potential Bears stadium, Glennon said the legislation that would have provided infrastructure support for an Arlington Heights site failed to clear committee and has been punted to a later date, leaving the competition between the Illinois suburb and Hammond, Indiana unresolved. Indiana has offered approximately one billion dollars in infrastructure funding drawn from surtaxes on food and hotels in Lake and Porter Counties. Glennon said he questions whether Illinois could realistically match that offer given its fiscal constraints, while also noting that decades of research on publicly financed stadiums consistently finds little to no tangible economic benefit to local communities and that the level of subsidies provided typically far exceeds any measurable return. He said the broader problem is a system in which politically connected large enterprises extract favorable treatment from Springfield while ordinary small and medium-sized businesses have no comparable leverage, a dynamic he described as dragging down economic competition across the entire state.