DAILY WHALE / Tom Butala
Chicago Treasurer Kurt Summers, Jr. on Monday proposed local officials follow the lead of New York and Los Angeles and pool the pension funds of government workers in Chicago and Cook County.
While speaking during a City Club of Chicago luncheon after being sworn in as treasurer earlier in the day, Summers said the city and county’s 10 public pension funds currently pay higher fees on investments than they would if all the funds were invested together.
“We have partners who we invest with who have no interest to say, ‘Hey, guys. If you pooled together you would actually get lower prices, you wouldn’t have to pay us as much money.’ They don’t have an incentive to say that,” Summers told the City Club audience. “But New York figured that out. L.A. figured that out. They figured out how to aggregate their purchasing power to get lower fees.”
He explained that some of the city’s funds pay difference prices for the same types of investments. According to Summers, the Policemen’s Annuity and Benefit Fund of Chicago is charged 40 percent more on investment fees than the Municipal Employees’ Annuity and Benefit Fund of Chicago is charged by the same institution.
Beyond simply ensuring that one fund would not be charged more than another for the same investments, Summers said the combined buying power would drive down the overall investment cost.
“Rather than say, ‘You’re a $25 million investor, you’re a $50 million investor, you’re a $125 million investor,’ … there’s one Chicago, and we’re a $200 million investor,” Summers stated. “So I want the $200 million price, and I want the best $200 million price that you have anywhere in the country. And if that price ever changes anywhere else in the country, guess what? Time to come back to Chicago and lower our price.”
Summers also expressed a desire to invest in and help attract investment to Chicago’s neighborhoods. While talking to Chicago business owners after being appointed treasurer, Summers said the most common complaint he heard was that a lack of access to capital investments hindered business growth.
The lack of capital stems from a disconnect between Chicagoans and Wall Street investment bankers, Summers stated, adding that he aims to fix that disconnect.
“The thing about it is, if you’re not touching this community … you may not know … the investment opportunity is there,” he said. Summers explained that Chicago government must be more proactive in marketing investment opportunities in the city’s neighborhoods to lenders.
He continued, “The reality is that we have the power. We have the power to change this dynamic and we’re just not using it. We have the power to change those who are overlooked and shine a light on them and where they represent opportunity. We’re allowing the members of our community to be overlooked.”
Summers, who grew up in the Chatham neighborhood on the city’s South Side, likened the situation of many small Chicago businesses to his own experience. He explained that he was raised in a low-income neighborhood and faced long commutes to school and pressure to join gangs as a youth. But he noted he was able to achieve success through hard work and the support of people who believed in him, including his late grandfather Sam Patch, a political strategist for former Mayor Harold Washington.
“I faced every challenge and every temptation you might imagine a young person growing up in Chicago would face,” he said. “But there were people who never gave up on me, people who invested in me and forced me to invest in myself.”