Chicago Considering Plan To Borrow $10 Billion To Fund Pension Liabilities

CHICAGO (CBS)--The City of Chicago is considering a plan to address unfunded pension liabilities by borrowing $10 billion in bonds, according to the Illinois Policy Institute.

Crain's Chicago Business reports that during an investor's conference on Aug. 2, the city's Chief Financial Officer Carole Brown and a prominent backer of Mayor Rahm Emanuel--Michael Sacks--suggested the city issue billions in obligation bonds. The plan aims to inject more cash into the pension system now in order to leverage a higher rate of return to exceed the interest that will accrue on the bonds, the Illinois Policy Institute Says.

The idea has drawn criticism. The Illinois Policy Institute says the plan does nothing to reduce the size of pension liabilities, but merely swaps one type of debt for another.