CHICAGO — University of Chicago graduate students have come up with what they say is one way to tackle the city’s $35 billion in pension debt: adding a toll to DuSable Lake Shore Drive.
A team of master’s degree candidates in University of Chicago’s business and public policy schools recently won its Harris Policy Innovation Challenge, which asked students for sweeping proposals on how to address Chicago’s pension crisis.
The city is on the hook to pay out about $35 billion over four pension funds promised to its employees, including retiring firefighters and police officers. A new state law requires the city to fund 90 percent of those pensions within the next 30 years, according to WTTW.
Syed Ahmad, a first-year master’s candidate at University of Chicago, assembled the winning team — which will share a $10,000 prize — to approach the problem by “bringing ideas from the private sector to the public sector.”
The students’ boldest proposal: adding a 75-cent toll to DuSable Lake Shore Drive on the North Side.
“The money is going to have to come from somewhere,” Ahmad said. “You may not like the toll, but you’ll probably like increased property taxes, increased sale tax or a progressive income tax even less.”
The team is also recommending the deregulation of marijuana licensing to increase the number of dispensaries in the state — and the tax revenue that come from them.
“The price of legal marijuana is still much higher in Illinois than elsewhere. Maybe there’s enough dispensaries in Logan Square, but there aren’t enough people selling marijuana,” Ahmad said. “The state needs to increase the licenses to increase the supply, which will decrease prices, which means more people will buy weed legally.”
The panel of finance experts and civic leaders judging the students’ pitches included current or former executives at Netflix, the Art Institute of Chicago, the Chicago Community Trust, CBRE Investment Management and the university. Ahmad’s team was advised by Jack Brofman, a former deputy chief financial officer for the city who has worked on its pension payments.
The winning team’s core proposals would also commit more resources to market and pitch investors on the city’s vacant lots, as well as raise pension contributions for police and firefighters to 11.5 percent, matching the city’s two other funds.
More proposals include revamping the process to collect outstanding citizen debt; securitizing a new form of city tax revenue; using actuaries to set the city’s annual contributions; creating new tiers for pension payouts based on years served, and consolidating the pensions’ investment arms under its most profitable one: firefighters, Ahmad said.
In total, the proposals would bring in between $200 million and $400 million a year to the city, Ahmad said.
Six of the nine proposals would require state legislation to clear the way for the city. Ahmad said his team would be “happy to talk” with Mayor Brandon Johnson or Gov. JB Pritzker.
Neither Johnson’s nor Pritzker’s office returned Block Club’s requests for comment.
“In a four-year term, Mayor Johnson could get the ball rolling on all these fronts. Everything would be on its way to being done,” Ahmad said. “But if he’s got other priorities … . We’re talking about process improvements and changes to how bureaucrats do their jobs. It certainly is work.”
Poor early returns and uncertainty now swirls around a signature plan from former Mayor Lori Lightfoot to help open a riverfront casino with taxes earmarked for the city’s pensions.
Ahmad said there’s “no silver bullet” to solve Chicago’s “huge problem.”
“The city is dealing with a migrant crisis, homelessness, things they need to spend money on,” Ahmad said. “But it’s harder to do that with a $35 billion debt looming over.”
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