“We were not honest. The whole system wasn’t honest. The city didn’t contribute the honest amount. Workers were not contributing the honest amount, and we winked at the public, yet left them with a problem because nobody had the leadership to be honest.”
Chicago Mayor Rahm Emanuel on Chicago’s Pension Crisis
Reporters are focusing too much attention on two years of investment returns that fell short of public pension fund investment return assumptions and not enough attention on the fact that unfunded liabilities would’ve grown even if investment returns had met those assumptions. That is one consequence of accounting utilized by public pension funds that deceptively hides the truthful size of obligations when they are created so that they explode later, as explained here, here and here.
Pension costs are just now starting their inexorable rise — California just doubled spending on teacher pensions and they will double again and again — but the cause resides in deceptive public pension fund accounting that started long ago and continues to this day. The consequences for school children, college students and other citizens are on a par with the consequences for homeowners in 2008. Their futures have been — are being — devoured by the self-interested decisions of pension fund board members who, as Mayor Emanuel describes, refuse to exhibit honest leadership.