Chicago Art Institute borrows to pay for pensions
By Andy Stonehouse
Even a venerable national institution such as the Art Institute of Chicago has been experiencing rough times on its pension holdings.
Bloomberg reports that the noted art museum has decided to take some large steps to make up for substantial pension funding obligations.
But the Matisses and Picassos are not on the auction block; rather, some $100 million of taxable and tax-exempt bonds are going to be sold to try to meet the obligations.
Plans include issuing some $61 million in tax-exempt debt through the Illinois Finance Authority and another $40 million in taxable bonds, maturing from 2013 to 2040. Morgan Stanley has been tasked with handling the transactions.
Like the rest of the country (and Illinois in particular, which is suffering tremendous pension repayment issues), funding has been a major challenge, with state-level pensions funded at a record low of 71.7 percent.
Proceeds from the museum's bond sale will immediately be used to help pay to meet the institute's unfunded pension benefit obligations, according to the organization. The Art Institute's plan had assets to meet 65 percent of its obligations last year, up considerably from a 53 percent funded status the year before.
The museum has just over 1,000 full-time employees, none unionized.
Originally published on BenefitsPro.com