Chicago school district finds buyers after offering higher yields

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202201141507SM______BNDBUYER_0000017e-59c7-de0b-a77f-dbef44d30001_110.1#new_tab

Excerpt:

Chicago Public Schools’ $872 million of junk-rated paper met with a more fickle high-yield audience this week, underscoring the district?s vulnerability to market volatility even as it inches closer to investment grade status.

At attractive spreads that offered a healthy yield kick with many maturities offering 4% coupons, the bonds were 2.2 times oversubscribed, CPS said in a statement. More than 40 institutional investors placed orders including some in excess of $150 million each.

The district will pay a true interest cost of 3.51% that ranks among the lowest paid by the Chicago Board of Education over the last two decades. The sale provides $500 million of new money for capital projects and the remainder refunds 2011 bonds.

Author(s): Yvette Shields

Publication Date: 14 Jan 2022

Publication Site: Fidelity Fixed Income

Lightfoot messages indicate how flippantly state government stuck Chicago with higher pension cost – Wirepoints Quickpoint

Link: https://wirepoints.org/lightfoot-messages-indicate-how-flippantly-state-government-stuck-chicago-with-higher-pension-cost-wirepoints-quicktake/

Excerpt:

You may recall earlier this year when the General Assembly passed a bill that Gov. JB Pritzker signed to increase certain pension benefits for Chicago firefighters. The new law is expected to cost Chicago some $850 million and could drop the funded status from what was an already abysmal 18% down to an even-worse 16%.

Well, it appears that Illinois Senate leadership didn’t even bother to talk to Chicago Mayor Lori Lightfoot before mandating that additional burden.

The Chicago Tribune has released Lightfoot email and text messages it obtained on a number of matters. One went from Lightfoot to Senate President Don Harmon. “A courtesy call regarding the fire pension bill would have been helpful, particularly since there is no funding for it,” Lightfoot said. “When that pension fund collapses, I will be talking a lot about this vote.”

Author(s): Mark Glennon

Publication Date: 31 Dec 2021

Publication Site: Wirepoints

Illinois pension shortfall surpasses $500 billion, average debt burden now $110,000 per household – Wirepoints Special Report

Link:https://wirepoints.org/illinois-pension-shortfall-surpasses-500-billion-average-debt-burden-now-110000-per-household-wirepoints-special-report/

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Excerpt:

The $110,000 per household is an average across the entire state, but the precise burden for Illinoisans differs depending on where they live. The debt burden on Chicago’s one million households is larger because of the city’s deeper debt crisis. There, each household is on the hook for $180,000 for their share of state and local retirement debts.

Illinoisans living outside of Chicago, meanwhile, face an overall average burden of $90,000 per household. For comparison purposes, the burdens for Chicago and non-Chicago households, based on official state and local retirement debts, are $95,000 and $53,000, respectively.

Author(s): Ted Dabrowski and John Klingner

Publication Date: 17 Nov 2021

Publication Site: Wirepoints

Chicago Police: Vaccine Mandates and Pension Threats

Link: https://marypatcampbell.substack.com/p/chicago-police-vaccine-mandates-and

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Excerpt:

Both Chicago Police and Chicago Fire plans have active-to-beneficiary ratios of about 90%, and have been at that level for some years. Chicago Police, specifically, had such a ratio starting in 2012.

So, there are more people taking police pensions than are active employees already. If I take the numbers given, and shift 38% from active to beneficiaries, that gives one an active-to-beneficiary ratio of 52% (assuming you don’t get new actives, which you would, but still… this is a point-in-time estimate).

Author(s): Mary Pat Campbell

Publication Date: 21 Oct 2021

Publication Site: STUMP at substack

Chicago police vaccine mandate: New CPD memo threatens discipline, firing for non-compliance

Link:https://abc7chicago.com/chicago-police-vaccine-mandate-department-fraternal-order-of-fop/11138418/

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Excerpt:

 A second memo, obtained by the I-Team, was distributed throughout CPD Sunday. The latest memo threatens the firing of officers who do not follow the city’s vaccine policy and orders it be communicated to officers at all police roll calls.

“TO BE READ AT ALL ROLL CALLS FOR SEVEN (7) CONSECUTIVE DAYS. This AMC message informs Department members of consequences of disobeying a direct order to comply with the City of Chicago’s Vaccination POlice issued 8 October 2021 and being the subject of the resulting disciplinary investigation. A Department member, civilian or sworn, who disobeys a direct order by a supervisor to comply with the City of Chicago’s Vaccination Police issued 8 October 2021 will become the subject of a disciplinary investigation that could result in a penalty up to and including separation from the Chicago Police Department. Furthermore, sworn members who retire while under disciplinary investigations may be denied retirement credentials. Any questions concerning this AMC message may be directed to the Legal Affairs Division via e-mail,” the memo said.

…..

“Roughly 38% of the sworn officers on this job, almost 40% can lock in a pension and walk away today,” Fraternal Order of Police President John Catanzara, Jr. said.

Author(s): Michelle Gallardo, Chuck Goudie

Publication Date: 18 Oct 2021

Publication Site: ABC7 Chicago

Everyone Is Urging SEC To Stop Public Pension Mismanagement, Looting By Wall Street

Link:https://www.forbes.com/sites/edwardsiedle/2021/10/07/everyone-is-urging-sec-to-stop-public-pension-mismanagement–looting-by-wall-street/

Excerpt:

An investigation of the Chicago Policemen Annuity and Benefit Fund was funded by members of the Chicago Police Department Pension Board Accountability Group. According to the report, the CPABF is one of the worst funded public pension plans in the U.S. today with a funding ratio at year-end of only 23%. According to the report, “The toxic mix of defunding the police pension, conflicted and high-risk investments, and poor management of the pension cry out for greater transparency and accountability.”

As Arthur Levitt, Chairman of the SEC stated back in 1999 in connection with the Commission’s review of pay-to-play practices at public pensions, “Today, public funds hold more than $2 trillion of assets. These assets do not belong to the elected officials, and they do not belong to the trustees. They belong to the tens of thousands of firefighters, ambulance drivers, city clerks, bus drivers and other public employees who make our communities work. “Their interests,” as my father said twenty years ago, “must be paramount in investment of that money.”

The tremendous importance of public funds demands that they be managed with complete honesty and integrity and for the sole benefit of their beneficiaries.”

Author(s): Edward Siedle

Publication Date: 7 October 2021

Publication Site: Forbes

No, Lightfoot’s Chicago Budget Does Not Make An ‘Actuarial’ Pension Contribution

Link:https://www.forbes.com/sites/ebauer/2021/10/10/no-lightfoots-chicago-budget-does-not-make-an-actuarial-pension-contribution/

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Excerpt:

Now, what she identifies as an “accomplishment,” having finished the climb up the pension ramp, is actually a state law that left her no choice in the matter. But that’s not the only incorrect part of her statement. Even having finally left the ramp behind, the plans are not funded on an “actuarially determined basis.” They are funded based on the Illinois legislature’s decision of a funding schedule which, for the police and fire plans, is sufficient to attain 90% funding in the year 2055, and for the Municipal and Laborers’ plan, not until 2058. Yes, if you do the math, that’s 34 and 37 years from now.

In fact, the plans’ actuarial valuations calculate a figure that’s labelled the Actuarially Determined Contribution. For the Fire plan (19% funded), the city’s contribution was only 79% of the ADC; for the Police plan (23% funded), the city’s contribution was only 75% of the ADC. And these are the two plans which reached the top of the ramp last year!

Author(s): Elizabeth Bauer

Publication Date: 10 Oct 2021

Publication Site: Forbes

Chicago Police Pension Forensic Audit Ends With Disturbing Findings

Link: https://www.forbes.com/sites/edwardsiedle/2021/09/03/chicago-police-pension-forensic-audit-ends-with-disturbing-findings/?sh=18a0d9717c0c

Excerpt:

This week, the Chicago Police Department Pension Board Accountability Group—comprised of retired and active Chicago police officers and their dependents— released the scathing findings of a forensic audit of the Chicago Policemen’s Annuity and Benefit Fund. The Group hired an outside expert to conduct the forensic audit after the pension refused their request to do so on its own.

…..

According to a lawsuit filed this week by Tobe, the pension denied most of his requests for records under the Illinois Freedom of Information Act. It’s no secret that state and local government pensions—which are supposed to be the most transparent of all pensions—are regularly criticized for opposing public record requests, particularly related to alternative investment documents.

The report accuses the pension of failing to monitor and fully disclose investment fees and expenses.  It is estimated that fees and expenses could be 10 times greater than the $7.4 million disclosed in the pension’s most recent financial audit.  Tobe believes the fees related to dozens of investment managers are not properly disclosed. Using assumptions from an Oxford study, Tobe estimated that undisclosed fees could be as high as $70 million a year. Also, $2 million to $3 million a year in investment fees may have been paid to Wall Street for doing nothing, i.e., fees on committed, uninvested capital

Author(s): Edward Siedle

Publication Date: 3 Sept 2021

Publication Site: Forbes

Report Claims Taxpayers Are Paying Millions More Than Needed In Unnecessary Fees For Chicago Police Pension Fund

Link: https://chicago.cbslocal.com/2021/08/31/chicago-police-pension-fund-unncecessary-fees-underfunding-report/

Excerpt:

A scathing report has been issued about Chicago’s police pension fund, claiming taxpayers are paying millions of dollars more than needed in unnecessary fees.

Financial auditor Chris Tobe released a report Tuesday, three months after a group of retired officers hired him to review the management of the Policemen’s Annuity & Benefit Fund of Chicago.

….

Tobe said the police pension fund is one of the most underfunded in the country.

He said those hidden fees should set off alarms for taxpayers.

“The financials claim around $7 million a year, but I’ve estimated over $70 million – 10 times that amount – paid out in no-bid contracts to mostly what we call private equity hedge funds,” Tobe said.

Publication Date: 31 August 2021

Publication Site: CBS Chicago

Chicago Police Pension Forensic Audit Ends With Disturbing Findings

Link: https://www.forbes.com/sites/edwardsiedle/2021/09/03/chicago-police-pension-forensic-audit-ends-with-disturbing-findings/

Excerpt:

This week, the Chicago Police Department Pension Board Accountability Group—comprised of retired and active Chicago police officers and their dependents— released the scathing findings of a forensic audit of the Chicago Policemen’s Annuity and Benefit Fund. The Group hired an outside expert to conduct the forensic audit after the pension refused their request to do so on its own.

In a September 2, 2021 statement on the police pension’s website it was stated:

“Recently, certain annuitants, without asserting any wrongdoing on the part of the Fund, any Fund employee, or any Board Trustee, past or current, and in fact repeatedly acknowledging no wrongdoing or fraudulent conduct has occurred, have demanded the Board contract with another entity to conduct a desired independent forensic audit. The purpose of a forensic audit is in substance to conduct an investigation as a means of discovering potential fraud, wrongdoing, or other financial crimes. Given that no legitimate cause for this type of audit exists, it is not a prudent use of Fund resources to engage with an additional auditor to perform a forensic audit.”

…..

According to the report, CPABF is one of the worst funded public pension plans in the U.S. today with a funding ratio at year-end of only 23%. That fact alone merits an independent investigation, in my opinion. And, by the way, forensic investigations of pensions are not necessarily focused upon “potential fraud, wrongdoing or financial crimes.”

Author(s): Edward Siedle

Publication Date: 3 September 2021

Publication Site: Forbes