Leaders who take on pension reform know that it’s difficult work. But through collaboration and perseverance it can be done. Chicago Mayor Rahm Emanuel is the perfect example of this. In 2014, warning that the city’s pension funds would be insolvent in 15 years, he was able to pass pension reform that would have gradually put hundreds of millions of dollars a year more into two of the city’s four fledgling pensions. He did it by successfully working with Chicago’s labor unions and getting the majority of those affected by the reforms to support the changes.
Mayor Emanuel’s reform efforts were dealt a tremendous setback last week when the Illinois Supreme Court struck down the city’s pension plans, which has already started a ripple effect of negative consequences. In the short-term, Fitch Ratings lowered Chicago's credit rating to just one step above junk almost immediately following the decision. Moody's downgraded the city's credit rating to junk in May, citing pension concerns. In the long-term, the city will have to look for revenue elsewhere to pay for its staggering pension debt, which will more than likely fall on taxpayers.
Last week’s decision highlights just how difficult it is to achieve retirement security for public sector workers. Even when government and union leaders came together and agreed on a path forward, their work was too easily swept aside. Retirees, workers and taxpayers are all worse off with the decision.
But we applaud Mayor Emanuel for getting knocked down and getting right back up. He has vowed to continue working with the city’s labor unions “on a shared path forward that preserves and protects the municipal and laborers' pension funds, while continuing to be fair to Chicago taxpayers and ensuring the city's long-term financial health." And that’s why Mayor Emanuel is RSI’s Hero of the Week.