The words “tough love” have been used to describe a letter sent to city employees by Chicago Mayor and former Chief of Staff to President Obama. It called for increased retirement ages, increased employee contributions, and suspending cost-of-living increases.
The letter came as Chicago faces down one of the most significant funding gaps facing major cities in the country. The city’s pension is $20 billion underfunded. The state’s is another $80 billion. And the solutions are not going to be pretty.
Part of the proposed solution being discussed by Mayor Emanuel would involve creating a hybrid pension system with a 401(K) plan. However, union officials say that plan unfairly places the burden of solving the crisis on employees, when it was the city leadership who allowed the situation to become so out of control.
From the Chicago Tribune:
Mayor Rahm Emanuel is defending his tough-medicine cure for ailing public pensions in missives being sent today to the employees who would take a financial hit.
In letters and e-mails to all city employees, Emanuel explains the goal behind his proposal to boost employee pension contributions, raise retirement ages and suspend cost-of-living increases applied to retirement benefits.
Read the full article here.