The pension funds would invest the proceeds of the pension obligation bond sale

 The pension funds would invest the proceeds of the pension obligation bond sale 

and hope to get returns that would outpace the interest owed. It would be one of the country’s largest issuances, but the idea is generally considered a major risk in the finance world, particularly for Chicago, which is already heavily leveraged.

Mayoral candidate and state Rep. Kambium “Kam” Buckner has proposed looking at pension obligation bonds as part of a “tapestry” of solutions for underfunded pensions. He has also floated extending the payment schedule to give the city more time to meet its funding targets.

“The problem is that the pension thing has been so sticky and so scary that people say, ‘Oh, well it’s too hard,’ and they walk away,” Buckner said. “But listen: Kicking the can down the road when the road leads to your front door is a problem.”

To fund pensions, candidate Paul Vallas, the former Chicago Public Schools CEO, said he would increase returns by making more judicious investments. He also said he would use surpluses from tax increment financing, or TIF, to replace revenue lost during former Mayor Richard M. Daley’s pension holidays.

Vallas, who is viewed skeptically by some labor unions due to his reputation for fiscal conservatism, has made a point of emphasizing that he “will not cut pension benefits.”