CHICAGO (Bloomberg)—Unfunded public pension liabilities of Chicago-area governments have increased 600% since 2000 as the number of retirees gained on the number of active workers, according to a report from the city's Civic Federation.

Government payments in 2009 into the 10 retirement funds in the city and Cook County were less than half of what would be required to meet benefit obligations, the report said. The combined contribution shortfall reached $5.1 billion during the decade.

Cities, counties and states across the U.S. face a $3.6 trillion gap between pension assets and promises made to retirees, according to an October study by Robert Novy-Marx of the University of Rochester and Joshua Rauh at Northwestern University. On Wednesday, New Jersey's bond rating was downgraded by Standard & Poor's Corp., which cited its growing pension and health care obligations.

In the Chicago area, benefits promised to retirees that can't be covered by assets reached $22.9 billion in 2009, the report said. The average per-capita liability for residents of the third-largest U.S. city increased to $7,098 in 2009 from $1,198 in 2000, the report said.

“Despite reforms passed in Springfield last year, public pension funds in the Chicago area remained stressed,” said Laurence Msall, president of the Civic Federation, an independent, nonpartisan tax-policy and government research organization.

Retirees gaining

Among the 10 Chicago-area pension funds, the ratio of active employees to beneficiaries steadily dropped in the past decade, to 1.26 workers per beneficiary from 1.67, the report said.

In Chicago alone, the number of workers fell to 32,922 from 38,802 since 2002, according to the report. The city pensions' projected benefit obligation rose to $24.97 billion as of Dec. 31, 2009, from $20.3 billion in December 2004, according to data compiled by Bloomberg.

The financial stability of the area retirement systems continued to deteriorate, the study said, noting the funding levels dropped from 89.5% in 2000 to 61.3% in 2009.

The foundation report comes as the leadership of Chicago is about to change hands. Mayor Richard M. Daley is leaving office in May after 21 years in office. Voters will go to the polls Feb. 22 to choose among several candidates, including Rahm Emanuel, the former chief of staff to President Barack Obama.

Chicago's new mayor is likely to face an annual budget deficit of more than $600 million.

In a speech Tuesday, Mr. Emanuel said the city must take immediate action to control pension costs.

“We can't talk about getting our fiscal house in order without addressing the retirement system,” said Mr. Emanuel, who did not provide specifics.

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