91 Comments - 47th Ward - Wednesday, Nov 14, 12 @ 12:28 pm: The titans of industry, the men and women who built Chicago, the giants of our civic and philanthropic community, are throwing in the towel and having a hissy fit? Their fathers would be embarassed. As Jack Donaghy once said: “The first generation came to this country, worked its fingers to the bone and built a legacy they handed to their children. Those children built on that legacy and created new companies and made fortunes so that the third generation can go snowboarding and take improve classes.” Ty, you didn’t get what you wanted last week. Get over it. Go back to work. Your voice and leadership are needed. It’s just that you’re going to have to compromise, just like everybody else. - ArchPundit - Wednesday, Nov 14, 12 @ 12:37 pm: First, the funds won’t run out of cash, they will not be able to meet current obligations at the promised rate. The pension funds would have to pay out at a lower rate than promised in other words. There’s a difference between flat busted and not having enough to make the full payment. A rather large difference at that. Shifting teacher pensions to local districts doesn’t solve anything. It might have some positive effects in terms of incentives to local districts, but the money is mostly still going to be spent because we have to hire teachers. So either you pay at the state level or you pay at the local level, but either way you pay. Not only that, but the state is the one that made the promise and didn’t kick in the proper amounts and then it would be sending the bill due to local school boards for something they were never told to plan for. Shifting to new pension plans will also create a problem in paying for the old pension funds by stopping new money going in or reducing it depending on how you do it. There is a reason their ideas don’t get very far–they are bad ideas that don’t solve anything. “If this pile of obligations is moved over here then in the original place we no longer have any obligations so the problem is solved. Tally-ho, let’s go fox hunting now.” - Palos Park Bob - Wednesday, Nov 14, 12 @ 12:39 pm: Sadly, it seems Madigan’s strategy is to keep benefits unsustainably high without Springfield funding what they’ve created until somewhere down the road the only option for Illinois will be passing a constitutional ammendment to “diminsh and impair” public pensions. When the people of Illinois are having Healthcare, education and public safety visibly diminished, it’s unlikely that the few productive, revenue creating citizens remaining will make the choice to make paying teachers not to teach at age 55 will be more important than taking care of the sick, maintaining an adequate transportation system and educating our kids. - foster brooks - Wednesday, Nov 14, 12 @ 12:41 pm: Uh oh lookout for the tribune editorial staff. Their frothing from the mouth after seeing this. - Devices - Wednesday, Nov 14, 12 @ 12:45 pm: Political courage is a two way street. You can’t sit on the sidelines and watch unions pour money into dem candidates and expect results to go your way. The civic committee with all their mega-millionaires sat out this cycle and let unions run rampant and now they are complaining. How rich. - Rusty618 - Wednesday, Nov 14, 12 @ 12:47 pm: Reform demand? Sorry Civic Committee, but this will not work. You cannot eliminate COLA for retirees. How will they keep up with inflation? Most of them don’t have the golden umbrella that you do. If the retirement age is increased, it will also increase the pension amount that each of these people will get. I do agree that pension amounts should be capped. We have had too many appointees serve in position for a short period just to gain an extra $40K to their pension (i.e. Kurt Granburg). How about a tax increase on the Commercial Club of Chicago?! - AC - Wednesday, Nov 14, 12 @ 12:49 pm: Sounds like we need more revenue, not that the Civic Committee would ever consider that as an option. I guess if you take that off the table, the problem is unfixable. - nickypiii - Wednesday, Nov 14, 12 @ 12:54 pm: If the State had funded 100% of its obligations to these funds, how underfunded would they be? Any pension reform must force the State to pay the full amount each and every year or its just more BS. - just sayin' - Wednesday, Nov 14, 12 @ 12:56 pm: Well the Romney campaign was unfixable too, but that didn’t stop Ty Fahner from throwing other people’s money at it. Ha! - stancando - Wednesday, Nov 14, 12 @ 12:58 pm: To paraphrase General Douglas MacArthur, who knew of whom he spoke: Incompetents just don’t fade away, they become Illinois legislators. Chicago and NY are extremely fortunate in having the quality mayors that they do. Illinoisans, listen to your big city mayor. He knows what he’s doing and his first order of business is pension reform, period. - ArchPundit - Wednesday, Nov 14, 12 @ 1:00 pm: === Any pension reform must force the State to pay the full amount each and every year or its just more BS. The rule of thumb is that 80% funded is what you need for sustainability. Pension funds are invested and conservative investing strategies should lead to 80% being a reasonable level to fund the pension systems. Illinois was at 44% in recent years–I’m not sure of the most recent number. So to get to a sustainable rate the State needs to come up with a multi-year plan to increase the funding rate by 36%. The longer that takes though, the returns on investments not being made make it more expensive to get up to the proper rate of funding. - stancando - Wednesday, Nov 14, 12 @ 1:04 pm: I forwarded my message but forgot to check notify of followup comments. Please do so for me. - Anonymice - Wednesday, Nov 14, 12 @ 1:07 pm: ==somewhere down the road the only option for Illinois will be passing a constitutional ammendment to “diminish and impair” public pensions.== Which would violate the federal constitution’s contract clause, and so good luck with that. Anyone who knows a good way around that should also propose to legally default on payments of bonds and reducing payments due to vendors, because cutting back on pensions already earned is every bit as immoral (and unconstitutional) as reneging on those obligations. - Madison - Wednesday, Nov 14, 12 @ 1:07 pm: Pity the job creators. Perhaps the constitutional amendment we need to float is for the graduated income tax. That would fix the pension problem created by underfunding pensions. - Cincinnatus - Wednesday, Nov 14, 12 @ 1:11 pm: How so, Madison? No level of taxation on newly created upper brackets would fund the debt. - archimedes - Wednesday, Nov 14, 12 @ 1:13 pm: Had the GA passed SB 1673 back in May nothing would have been impacted until July 1, 2013. So now it is too late? Someone asked, if the State would have paid their full obligation, what funding level would we be at now? Using the information in the 2012 COGFA report (so it is as of June 30, 2011 fianncial reports for all the systems) - the funding level would be 75.6% for all five systems. For comparison, IMRF was at 83% at June 30, 2011 and it was lauded as one of the ten exemplary systems in the country by National Institute on retirement Security. - Liandro - Wednesday, Nov 14, 12 @ 1:16 pm: Shouldn’t the actuarial numbers used by legislative leaders basically be public information anyway? Are legislators guiding public policy based on secret numbers? I apologize for my ignorance, but that part confuses me a bit. Anyway, it has long been my assumption (without inches of actuarial studies, granted) that fixing the pension problem would take either drastic changes to the program, drastic tax hikes/spending cuts, a drastic economic upturn, or (more likely) some more moderate mixture of the four. The tax hike happened, but nothing on the other fronts. I suppose we could just keep rolling out cuts to education, various services, etc., until we hit bankruptcy, but I’ve always assumed at some point enough pressure would develop to force some change. I’m getting less and less certain on that front, though. - stancando - Wednesday, Nov 14, 12 @ 1:18 pm: It seems that most of your responders have horses in this race. Speaking as an 85 yr old WWII vet and non-pensioner taxpayer, I say: Sorry boys, you bargained for too long on both sides of the table. I hope I’m around on Pension Judgement Day. You all don’t understand the consequences. Just get a hint by googling Scranton, Stockton and San Bernandino. It’s gonna kick you where it hurts the most. - geronimo - Wednesday, Nov 14, 12 @ 1:19 pm: Perhaps Ty and his cronies, who seem to be very very concerned about it all, should make the sacrifice and live on an average public pension with no COLA ever and donate everything else they have to the underfunded systems to help fix them. Public workers living on very middle class incomes, and some below that, can’t fix this. They’re trying to survive on their non Ty Fahner incomes. He and his cronies can help alot……why don’t they? What is his worth anyway? - Dirt Diver - Wednesday, Nov 14, 12 @ 1:20 pm: Ty Fahner = Huge arrogant tool. These actuarial numbers were calculated by Aon-Hewitt, who is in bed with the Republicans. In fact former IL GOP leader Andy McKenna works there. Fact of the matter is these guys have little experience with public pension funds and produce whatever the Civic Committee tells them to produce. Fahner, wake up and smell the coffee. Your war on the middle/lower class and on defined benefit planswill not work in Illinois. The election results prove that Illinois voters do not buy into what you are selling. Look at the fact that hardly any “tribune endorsed” candidates won. Your scare tactics, rhetoric, and blackmailing of downstate “anti-teaparty Republicans” failed. Try to find another way to make the 1% richer at the expense of the 99% because your bully/scare tactics will not work in this state. Wall Street/Financial industry greed is a major factor as to why the Illinois pension funds are so poorly funded. When the demand for CDOs dropped, banks continue to issue CDOs to add to their “portfolios” (absorbing toxic debt) and many also hedged against those terrible debts, requiring a Federal bailout of AIG and other institutions at the expense of the taxpayers. When will the private sector admit that they magnified recession due to greed and extremely un-ethical actions? I’m sick and tired of the private sector pointing the finger at the public sector. - Arthur Andersen - Wednesday, Nov 14, 12 @ 1:31 pm: Ty, post-election fever? Lay down and take some Tylenol, k? Seriously, acting like a jerk and refusing to release the reports is not like you. Leave the jerk role to Msall-it comes much more naturally to him. - wordslinger - Wednesday, Nov 14, 12 @ 1:34 pm: By “unfixable,” I think Ty means he can’t put the fix in to get his way or the highway. What nonsense. Very few problems are “unfixable,” or projected outcomes inevitable. I’m old enough to remember that Social Security was supposed to be “bankrupt” two or three times by now, the world was going to run out of oil by the year 2000, Japan was going to dominate the world economy and that it was inevitable we’d either be conquered by the Soviets or die fighting them in a nuclear war. Get some guts, Ty, and get back to work. That is, if you’re really interested in a solution, and not just taking the easy money by stealing working stiffs’ pensions. - Ahoy! - Wednesday, Nov 14, 12 @ 1:41 pm: Fahner is becoming a loon. He doesn’t even address that they need to fix Tier 2, although he’s probably not looking for facts and solutions. - wordslinger - Wednesday, Nov 14, 12 @ 1:44 pm: –Ty, post-election fever? Lay down and take some Tylenol, k?– LOL. - What the? - Wednesday, Nov 14, 12 @ 1:45 pm: Since all the participants and their eligible spouse will not be deceased by 2029 or 2040 why not pull the plug on pensions now? Why have them take decreases now and that will still result in the end of pensions by 2040? - Will Caskey - Wednesday, Nov 14, 12 @ 1:49 pm: A press release without underlying data is the same as an internal poll leak, or research without backup: worthless and should only be written up to laugh at. - ArchPundit - Wednesday, Nov 14, 12 @ 1:52 pm: ==–Ty, post-election fever? Lay down and take some Tylenol, k?– Sublime - Just the Facts - Wednesday, Nov 14, 12 @ 1:54 pm: Apparently, Ty didn’t take to heart our blogmaster’s reminder that “hope is not a plan.” To the issue - unlike most states IL exempts all “pension income” eg. social security payments, private and public pension payments, withdrawals from 401(k) accounts, IRAs, etc. from the Illinois Income Tax. According to the Comptroller’s most recent Tax Expenditure report for fiscal year 2011, that exemption was worth $1.099 billion in fiscal year 2011 (the most recent year for which data is available). I would note that this amount appears to be from a fiscal year that doesn’t include a full year of the tax increase so the actual amount for FY 2012 and later fiscal years would be materially higher) According to the Governor’s Office of Management and Budget “Three Year Budget Projection” the total cost of state pension contributions in FY 2012, was 4.135 billion. (Debt service on the pension bonding done in 2003 under Blago and in 2010 and 2011 is excluded from that number and is an additional 1.605 billion.) Of the 4.135 billion number 978 million was for SERS, 750 million was for SURS and 2.406 was for K-12 Education Pensions. Elimination of the income tax exemption for pension income would bring in more than 1.1 billion per year. More than enough to pay annual payment to SERS for the forseeable future and a portio of the other required payments. It seems to me that the 95% of folks who have received the benefits of state government that were artificially inflated over the past years by the underfunding of the pensions (in which underfunding both parties are complicit), should “share the pain.” In addition, if the K-12 education pensions are gradually shifted to the locals, that should also ease the “crowding out” on the state budget. Just the facts . . . . - jake - Wednesday, Nov 14, 12 @ 1:57 pm: Here are some numbers about the graduated income tax. If we divide the population by income into quintiles–bottom 20%, next 20%, and so forth—and put incremental income tax rates at 3%, 4%, 5%, 7%, and 9%, we would increase income tax revenue per year by about $4 billion. Taxes for the bottom three quintiles would go down (the third quintile at 5% would go down because they would pay 3% and 4% on most of their income, only 5% on the last 30-40%, but the top brackets would pay their fair share–finally. Graduated tax with top rate at or close to 9% is quite common across the states. For example, that is the top rate in Iowa. An extra $4 billion per year would solve most of, but not all, the problem. Most of the rest could be met by making pensions subject to income tax, as they are in most states and in federal returns. So the deal is–tax reductions for 60% of the people, bring taxes up to the level of other states for the high income individuals, and tax pensions as is done in other states. Finally, base pensions on an actuarially sound averaging of income across the person’s entire career with the state, eliminating big pensions based on late-career raises. - Skirmisher - Wednesday, Nov 14, 12 @ 1:58 pm: If pat Quinn has almost no credibility, then surely the Civic Committee has even less, at least on this issue of pensions. I cannot help but suspect that the real agenda is to crush out public sector employee benefits so that these bosses of the private sector will have less annoying employee pressures to restore the benefits that were for a couple of generations the norm in both the private and public sectors. You have to be crazy to think that this gang of Chicago businessmen has anyones’ interests at heart other than their own. Their interest in public policy extends only as far as it impacts their profit margins. - geronimo - Wednesday, Nov 14, 12 @ 1:58 pm: Who is Ty Fahner a spokesperson for? If Ty is losing sleep over the fact that pensioners are living on an outrageous sum of money, oh, say, 40K, 50K, 60K (for the better ones, at least), why is he so bothered? Perhaps because at his income level, folks will start looking to his cache as a source to tap? Selfishness on his part to preserve that perhaps? Protection of the elite, perhaps? Trying to head off a tax increase that will hit him and his likes? Illinois has a revenue problem caused not by a faulty pension system, but by gross mismanagement by our state government for decades.The bill for all the projects/services that were paid for by pension money has now come due. - The Elderly Man You Used to Love - Wednesday, Nov 14, 12 @ 2:02 pm: Fahner’s memo is kind of the Illinois equivalent of Donald Trump’s election night tweets. - Rod - Wednesday, Nov 14, 12 @ 2:22 pm: Regarding stancando’s comment on Mayor Emanuel’s first order of business being pension reform. Where is Mayor Emanuel’s actual bill on this issue? Last session on May 7th to be exact Mayor Emanuel testified before the House Personnel and Pension Committee proposing freezing pension increases for retirees, raising the retirement age and hiking employees’ retirement contributions. Which he said would keep the city’s underfunded pension systems solvent and avert a property-tax hike of as much as 150 percent. Essentially this is the same plan as the Ty Fahner and the Civic Committee of the Commercial Club have proposed. Emanuel’s proposed changes were supposed to have been incorporated into legislation that was to have been introduced before the end of May and they never were introduced. Nor for that matter did the Mayor propose increasing property taxes in the City budget at all, let alone to the cap, last month. The bill that was introduced in the Spring session and blew up actually contained only part of the Emanuel proposals. Let’s recall how it blew up, Speaker Madigan indicated he wouldn’t support it. He and Cross were dug in on an ideological dispute over whether suburban and Downstate school districts should partly relieve the state of the funding load for teacher and administrator pensions. This aspect of the bill was also supported by Emanuel, who lacks the legislative power to push such a bill even among Democrats. The Mayor’s arguments have gained little traction in the Assembly. In fact his biggest supporter in terms of legislation was Tom Cross who now is no longer a significant player in this process because the election results. Let’s see Mayor Emanuel get his bill passed if he is all about getting things done, right now he can’t get anything done either. Emanuel is not going to save this situation he lacks the political power needed in Springfield to get this done. - 2nd Greatest Generation - Wednesday, Nov 14, 12 @ 2:33 pm: @stancando First, thank you for your service. Obviously I don’t know your personal situation, but I do know that many of your comrades in arms went to college on the GI Bill, a government-funded benefit for returning military. Many of them sought medical treatment over the years in VA hospitals, another promised – and well-deserved – benefit. And many your age have been collecting Social Security and Medicare for 20 years or more — again, more promised and earned government benefits. I’m not trying to equate working as a public school teacher or state government employee with putting one’s life on the line for our country, but would your answer be the same if your war buddies had returned home only to be told that their promised benefits were no longer available because the government had neglected to fund them? - Anyone Remember? - Wednesday, Nov 14, 12 @ 2:39 pm: If the Civic Committee of the Commercial Club of Chicago wants to be taken seriously, first they need to get their facts straight. To whit: “and shift the cost of teacher pensions to local school districts over a 12-year period. The state now pays all teacher pensions except in Chicago, where city taxpayers pick up the tab.” As Eric Zorn has shown, and was noted in these pages, in 1995 Jim Edgar / Pate Philip / Lee Daniels let Mayor Daley “divert” state funds for CPS pensions to other uses. Therefore, the State never “stopped” funding CPS pensions. Fahner putting his fingers and saying “Zorn I can’t hear you” doesn’t change that fact. - Anyone Remember? - Wednesday, Nov 14, 12 @ 2:41 pm: That should have read “Fahner putting his fingers in his ears and saying” … . - nickypiii - Wednesday, Nov 14, 12 @ 2:45 pm: So we’d be at 75.6% funding if the State did the right thing. Proof again that employees DID NOT cause this mess. TY should be pressuring legislative leaders to fully fund pension obligations each and every year. - Graduated income tax - Wednesday, Nov 14, 12 @ 2:52 pm: Then, Ty and his rich friends can really put their money up to fix the problem. Why should the wealthy in Illinois be given an easy ride. - Ruby - Wednesday, Nov 14, 12 @ 2:57 pm: Pension reform alone will not solve the huge deficit problem in Illinois. However pension reform solutions that will not be unconstitutional include taxing all retirement income and asking school districts and universities to pay a larger part of the employer share of pension contributions. Another solution being considered is using a sliding scale to ask state retirees to pay more for their health care insurance premiums according to their income. Health care costs for employees, retirees, and Medicaid are a huge expense for Illinois government that may even eclipse the cost of state pensions. - wordslinger - Wednesday, Nov 14, 12 @ 2:59 pm: –OF COURSE it’s not fixable — the evidence has been overwhelming for years. – And in all those years, no one has ever missed a pension payment or a bond payment. Nor will they. C’mon, man. There’s no inevitable destiny here. Adding to my previous list of “inevitabilities” that proved to be bogus: During the Reagan years, the phrase “deficits as far as the eye can see” materialized. Yet in the late 90s, the country started running surpluses. - Lobo y Olla - Wednesday, Nov 14, 12 @ 3:02 pm: But But But they’ve gone out of their way to personally talk to teachers! - Michelle Flaherty - Wednesday, Nov 14, 12 @ 3:06 pm: This guy changes his mind nearly as often as Pat Quinn. Is this the same Ty Fahner who testified in support of the Dem-sponsored cost shift back in May? And then went on Chicago Tonight to promote the plan some more? - Michelle Flaherty - Wednesday, Nov 14, 12 @ 3:07 pm: Fahner’s Chicago Tonight appearance from early June: http://chicagotonight.wttw.com/2012/06/05/collapse-pension-reform - Anonymice - Wednesday, Nov 14, 12 @ 3:17 pm: ==You all don’t understand the consequences. Just get a hint by googling Scranton, Stockton and San Bernandino.== You do realize that those are cities, which can declare bankruptcy? Something that the state of Illinois cannot do? And, if it could, you realize that all creditors would have to take a hit in the bankruptcy, and not just the retirees? - geronimo - Wednesday, Nov 14, 12 @ 3:18 pm: Thank you 2nd Greatest Generation for your response to stancando. Often it’s the people who smugly collect their well earned benefits who are first in line to demand that yours get cut. A close cousin to the fat cat Fahners who viciously defend their pot and demand that you give yours up. - stancando - Wednesday, Nov 14, 12 @ 3:23 pm: 2nd greatest generation: I salute your response but I don’t know how you can equate the GI Bill benefits in the same manner as Medicare and S/S. We’re all entitled to the latter IF we’ve worked for 40 quarters and many others are covered if disabled. We (Vets) were entitled to our benefits for the exact reason that you stated: We FOUGHT for our country. I don’t begrudge a pension properly earned, but in general, public sector unions negotiated their bennies by owning both sides of the bargaining table. Being thuggish and threatening the municipality rep with banishment to Siberia is NOT a properly earned asset. Asking the taxpayers to forget the means by which you obtained your ill-gotten gains is too much of a stretch. My hat is still off to you and your well-thought out reaction but fervently hope that the scales of justice prevail in the resolution of this issue. - Norseman - Wednesday, Nov 14, 12 @ 3:25 pm: 2nd Greatest Generation - Well said! - Flan - Wednesday, Nov 14, 12 @ 3:26 pm: Just have to remember that it’s not reform, it’s reduction. Pension Reduction. - Loop Lady - Wednesday, Nov 14, 12 @ 3:28 pm: Sure it’s fixable Ty, we’ll just tax the wealthy like you alot more…I can’t stand this guy and his ponitifications…once the Legislature fixes it, what will he do all day long? - geronimo - Wednesday, Nov 14, 12 @ 3:46 pm: Stancando. They didn’t give your money away to someone else. - Arthur Andersen - Wednesday, Nov 14, 12 @ 3:48 pm: Good job, 2nd greatest generation. Meanwhile, AA wonders if Dick “Dick” Ingram of TRS is straining at his IEA-logoed muzzle while trying to yell, “Ty is right!!” - archimedes - Wednesday, Nov 14, 12 @ 3:49 pm: Now Ty is advocating changes to the pensions that clearly violate contract law even by Sidley Austin opinion. Their opinion was that benefits already earned were untouchable - that benefits reliant on future work may be changed. Eliminating the COLA entirely and capping salary (if below present already earned level) would clearly change benefits earned. How does he aquare reducing retiree benefits with the law (as told by Sidley Austin)? - RNUG - Wednesday, Nov 14, 12 @ 3:50 pm: stancando @ 3:23 pm: Speaking personally, MY benefits were properly earned! I didn’t belong to a union. I didn’t get to negotiate my retirement benefits. When I hired on the to State in 1970 under the Civil Service Code. I was TOLD what they would be and what I had to do to earn them … just like I was told what my Social Security benefits would be. I fulfilled my part of the contract. Now it is up to the State to fulfill their part and continue to pay my pension under the rules enacted by the State legislature and protected by both the IL Constitution and contract law. Until the Ty Fahner’s of the world recognize that simple fact, nothing can get done … - johhnypizza - Wednesday, Nov 14, 12 @ 3:52 pm: Had to laugh at the idea floated to have a graduated income tax in Illinois so the pensions could be funded. In the graduated income tax at the federal level about 49% of citizens do not pay taxes. What would the percentage be at the state level? What is the percentage under the current system? Something tells me the answers are about the same and less respectively. - Carl Nyberg - Wednesday, Nov 14, 12 @ 4:08 pm: Would an extra $6 billion per year fix the pension problem? By slapping a one dollar tax on option contracts (one dollar for each the buyer and seller) it would raise $6 billion per year. How big a tax is this? Option contracts are between $30-250,000 each and there are already fees to the house of $8-95. Will it make rich people mad? Yep. But it is a legitimate source of revenue and most of these rich people don’t live in Illinois. The money is there to fix pensions. It’s just that the Illinois General Assembly–the guys who gave CME $500+ million per year last year–don’t want to raise taxes on the capital class. - Joe - Wednesday, Nov 14, 12 @ 4:15 pm: Laugh Jp… Not just pensions but state government In general. Why should Illinois let the rich off easy as compared to other states. Jp… Obama won… Proving the people see thru the propaganda. It’s time for the entire Democratic coalition unite to have a more fair tax system. - Madison - Wednesday, Nov 14, 12 @ 5:07 pm: JP and Cincy I think Jake@1:57 covered the bases. Now since we have a healthy majority in both houses why we can fix the pension problem. Ty will appreciate that…that’s the kind of guy Ty is. His buddies wanted a solution, and we found one. Win-Win! - George Washington - Wednesday, Nov 14, 12 @ 5:08 pm: I would think that the Civic Committee would realize the importance of the integrity of contracts. Wouldn’t advocating to allow for a contract to be changed by the side that didn’t perform their part be detrimental to their business. Mr. Fahner may want to be careful for what he’s wishing for. - western illinois - Wednesday, Nov 14, 12 @ 5:39 pm: Without contracts there is no capitalism But GW you used the word “think” with the civic club neo-feudlists. We dont need no stinkin contracts with the serfs - Judgment Day - Wednesday, Nov 14, 12 @ 5:52 pm: “When will the private sector admit that they magnified recession due to greed and extremely un-ethical actions? I’m sick and tired of the private sector pointing the finger at the public sector.” Yes, there’s more than a little bit of blame attributable to the ‘Banksters’ and the credit rating agencies. In fact, it’s substantial, IMO. But (and there’s always a ‘but’), you saw all those trustees and elected government leaders rush into these financial instruments which we all now realize were at best hot garbage and throw money at them like they were free gold, so the public sector didn’t do anything close to due diligence. And the fact is that for years the public sector hasn’t been required to play by the same financial reporting rules that the private sector is required to use. For example, GASB 67 (provide pension funding accounting based upon ‘mark-to-market’ rules) takes effect 06.15.2013, and GASB 68 (standardized pension fund accounting) doesn’t take effect until 06.15.2014. Government want to be treated equally on financial reporting? Really??? Then play by the same sets of financial reporting rules they impose on the private sector. - Small Town Liberal - Wednesday, Nov 14, 12 @ 6:21 pm: - In the graduated income tax at the federal level about 49% of citizens do not pay taxes. - Yet miraculously Illinois exports about $34 billion in federal income tax revenues on average each year. Those government hating states toward the south each get their cut of that. - Arthur Andersen - Wednesday, Nov 14, 12 @ 6:36 pm: Judgment, you have a point here, but let’s not leave our posters who don’t go to bed Googling GASBs with the impression that the public sector can write their financials on the back of an envelope and buy bad paper without constraint. Don’t forget GASBs 25 and 27 which standardized pension financial reporting back in the 90s. Your post also ignores our independent, honest, and outstanding Auditor General, Bill Holland, and his staff who tolerate no fiscal hanky-panky anywhere in State Government. - Anon - Wednesday, Nov 14, 12 @ 6:48 pm: @Ruby Why should the health care be tied to income? Why is it fair that someone making 50k a year in retirement has to pay twice what someone making 25K a year? The product is exactly the same. if you go to Wal-Mart they don’t charge you based on your income. - Michelle Flaherty - Wednesday, Nov 14, 12 @ 7:35 pm: Judgement Day, By different rules do you mean like the private pension relief provisions inserted in the federal transportation bill so corporations don’t have to pay as much into their employees’ retirement funds? Google: “Transportation bill and pension relief” if you have any doubts. - Ruby - Wednesday, Nov 14, 12 @ 8:25 pm: Anon 6:48 pm : The Illinois General Assembly has been working on a plan to have a sliding scale for health care insurance premiums for state workers and retirees since last spring. This may or may not seem fair to you and me. But one thing that I hope you do agree is not fair is the high cost of health care and health care insurance. - RNUG - Wednesday, Nov 14, 12 @ 9:04 pm: And if the current lawsuit(s) prevail, the State will still be on the hook to pay the health insurance for retirees with 20 or more years of service. - Ready to Get Out - Wednesday, Nov 14, 12 @ 9:24 pm: stancando @ 3:23 If the unions “own both sides of the bargaining table,” why have the current negotiations gone on for almost a year? - Judgment Day - Wednesday, Nov 14, 12 @ 9:40 pm: AA, I hear what you are saying. But as memory serves me, GASB has gone multiple rounds on pension and retirement accounting, and each time, the public sector accounting folks have screamed, fought, and lobbied against the changes. Sort of along the same lines as the Wall Street response to Dodd-Frank. They would apparently much prefer to exist in a regulatory vacuum. Also, if memory serves me, I believe the earlier 1990’s GASB changes were a result of the Orange County, CA investments in derivatives (in way, way over their heads - back in 1994), and also the explosion at the time in the attempted use of alternative revenue bonds for funding areas like nursing homes. All came to a pretty bad end. - Judgment Day - Wednesday, Nov 14, 12 @ 9:53 pm: “By different rules do you mean like the private pension relief provisions inserted in the federal transportation bill so corporations don’t have to pay as much into their employees’ retirement funds?” Michele: At least it was put into a bill and put out there for people to see. Do I like it? - No. But, at least it was out there. The simple truth is that with too many local and state governments (here in IL, but by no means limited to us), the issue of retirement and pension obligations, and the funding of such benefit packages has been an issue that has been carefully left for someone else to deal with - hopefully, much, much later. If they literally didn’t try to hide it outright. A certain recent Chicago mayor comes to mind…. - Arthur Andersen - Wednesday, Nov 14, 12 @ 10:01 pm: Point well made, point well taken, Judgment. Orange County barely recovered from that derivatives fiasco when they hired phony reformer Keith Bozarth from Illinois to run that pension. - Judgment Day - Wednesday, Nov 14, 12 @ 10:07 pm: One last issue to consider… There’s growing talk over the need for a ‘debt jubilee’ to occur (a writeoff of excessive, uncollectable debt). It’s an area of growing support with such diverse advocates as economist Steve Keene, OWS, and advocates who are Libertarians (there’s a mix!) who are saying that such debts will never be collected. And they are probably right. Well, the short and simple of it is that if you are in favor of such “debt jubilee’s” occurring, you are probably going to have to also be taking much the same stand regarding public pension obligations - it may be unsustainable as currently exists, and in the end, unpayable. But it goes the opposite way, also. It’s hard to be in favor of sustaining all public pension obligations and at the same time support having “debt jubilees” to reduce/eliminate what is increasingly being looked at as uncollectable debt (can you say ‘mortgages, credit cards, and student loan debt’?). Both sides in this debate have more than a little hypocrisy going on…. Just a thought…. - Michelle Flaherty - Wednesday, Nov 14, 12 @ 10:07 pm: JD, we have a pension funding plan. It was approved in the mid-1990s. It’s a 50-year “mortgage” that ends with the pension systems being 90 percent funded. But the forward thinkers who came up with this plan — which is/was needed — didn’t want to actually have to pay for it. So they kept the payments artificially low for the first 15 years of the payment plan. Now we’re getting hit with the real payments and it hurts. I’d argue that we, right now, are the “someone else” who has to deal with the past underfunding. Fahner could be a reasonable voice explaining why — if you care about schools and quality services — something must be done. But rather than explain and convince, he seems bent on bullying and derision. His arguments are divisive and toxic at a time when we need neither. Every word he utters pushes him further away from his goal — unless his goal is to look like a blathering fool. - Judgment Day - Wednesday, Nov 14, 12 @ 10:29 pm: “His arguments are divisive and toxic at a time when we need neither” Michelle: You could just as easily apply that same exact statement to AFSCME’s actions. Just saying… - Arthur Andersen - Wednesday, Nov 14, 12 @ 10:37 pm: You jumped the shark there, Judgment Day. There’s also a lot of talk, with folks from across a broad spectrum agreeing, that General Petraeus was the victim of “a Middle East conspiracy.” Like the “debt jubilee” tomfoolery, a bunch of discussion and an interesting collection of wingnuts in the amen corner doesn’t mean it’s true or gonna happen. Stick with the GASB’s, bro. - Judgment Day - Wednesday, Nov 14, 12 @ 10:45 pm: AA: Just saying that’s it’s one of those things you are hearing more and more of… Just like a push occurring for a graduated state income tax (requiring a constitutional change) to primarily pay for public employee pension and retirement benefits… Good luck getting that one on the ballot, much less passed… - Arthur Andersen - Wednesday, Nov 14, 12 @ 10:54 pm: Whatever, JD. In other news, Abdon tells WGN that Quinn is happy that Ty weighed in to help “sound the alarm” on pensions. Wonder if he hates his job yet? - Judgment Day - Wednesday, Nov 14, 12 @ 10:55 pm: “Wonder if he hates his job yet?” What odds are you giving? - wordslinger - Wednesday, Nov 14, 12 @ 11:00 pm: –By slapping a one dollar tax on option contracts (one dollar for each the buyer and seller) it would raise $6 billion per year.– For real, dude? Those numbers are huge. I believe you. And after a lifetime of working down there, that would mean oogots to those in the pits. They don’t care about the cost of trades, they just want to trade. Donavan, Rosty, Simon, Dixon, Hastert and Durbin have always kept the tax man and the regulator away from the pits. Drives the boys in New York crazy. No one would flinch to pay another buck to go long on heating oil. Carl, you’re on to something. I think we’re in the same neighborhood. Do you ever tip one at Bob’s Friendly, over there on Roosevelt by Gina’s Ice? I think we have a lot to talk about. Soccermom, too. Willie, although your down south/west in Oswego, I’ve noticed that you have an understanding of the Near West Suburban Metroplex. - Captain Illini - Wednesday, Nov 14, 12 @ 11:04 pm: RNUG is right again, and when the retiree’s win their suit, the current 20 year + employees are gonna win as well. You can’t change the terms when you’ve already fulfilled your obligation, but for others not at or past 20 years, it will not be the same. - wordslinger - Wednesday, Nov 14, 12 @ 11:43 pm: AA, I got nothing, dude. You’re about the sharpest knife in the drawer. We’re all lucky to know you. I imagine we’ll muddle through. - KurtInSpringfield - Thursday, Nov 15, 12 @ 7:53 am: Here is a plan. rewrite the terms of the pension ramp. It’s the debt service of the pensions that are crowding out the state budget. According to Ralph Martire, the normal cost of state pensions has actually gone down. (See http://www.sj-r.com/opinions/x1762349853/Ralph-Martire-Cutting-benefits-won-t-fix-state-s-pension-crisis) Any logical solution must include a guarantee of funding. The lack of funding is what caused the problem in the first place. If no funding is guaranteed and benefits are cut, it will only be a matter of time before we have another “pension crisis” on our hands. Once you have the funding in place, rewrite the terms of the pension ramp to a more manageable payment, say a fixed amount of $2 billion dollars every year instead of $5 or $6 billion and growing. If you stay caught up on the normal cost and put extra every year on the debt, it is only a matter of time before the pensions are 100% funded. In fact, an unfunded liability of $80 Billion would be paid off in 40 years (2 * 40). From today that would be 2052. Wasn’t the pension ramp supposed to have us at 80% by 2042? What’s 10 more years? - KurtInSpringfield - Thursday, Nov 15, 12 @ 8:07 am: @stancando As a (peace time) veteran myself, I thank you for your service and the sacrifice of your generation. I think the point is that you earned your benefits by serving or paying into them, the GI bill, social security, medicare, etc. We have earned our benefits also. I have worked (earned) and paid into (every paycheck) my pension. The terms of the contract(pension) were set when I was hired. Now even though funds that were supposed to pay for pensions were diverted and used for the benefit of all taxpayers in general revenue spending, you want me (and all employees eligible for public pensions) to pay that debt even though we did not incur it and had no control over the funding. That is immoral. Just as it would be to take away your benefits after you had earned and paid for them. - Dirt Diver - Thursday, Nov 15, 12 @ 9:03 am: Judgement day, GASB 67/68 will have a minimum effect on the State’s pension liabilities. Although we haven’t seen TRS projected increase in “reportable liabilies” under GASB 67/68, for SERS and SURS there was little movement in the liabilies as reported by GASB 67/68. If fact between SERS and SURS, there was an increase in liabilies (Reported by GASB 67/68) of only $3B (through 2045). Remember, GASB 67/68 has nothing to do with funding. Sure, the ratings agencies my take notice, but these new GASB reporting standards are just a red herring. Let’s also not forget that the financial sector has been “cooking their books” for years in that these banks pay off as much debt as possible before a quarterly report then reissue debt a few days later. Finally, I disagree with that fact that pension funds were buying up CDOs like free gold. Were pension funds exposed to CDOs, yes, but the exposure was minimal. Real estate has a huge presence in the fixed income universe, and many pension funds allocate 15-20% of their portfolio to fixed income. But to say Illinois funds were gobbling up toxic debt by the truckload is simply false. - 2nd Greatest Generation - Thursday, Nov 15, 12 @ 9:30 am: Thanks, KurtInSpringfield. My thoughts exactly. I didn’t have time to respond to standcando yesterday but you expressed my reasoning better than I could have. - Obamas Puppy - Thursday, Nov 15, 12 @ 9:55 am: Isn’t “Unfixable” a Taylor Swift song? - walkinfool - Thursday, Nov 15, 12 @ 10:03 am: Keep stirring the pot, Ty. Don’t p*** on the fire. - PublicServant - Thursday, Nov 15, 12 @ 10:11 am: I think it’s curious to see Ty trying to take his marbles and go home after not getting his way. I wonder whether something tangible changed as a result of the election? Even though One Term Pat is still quacking about his being “on a mission from God” to reform/save/stabilize pensions, I’m wondering whether state dems have rethought biting the bullet by supporting the previously-talked-about, illegal, and immoral plans being floated by Ty and the Plutocrats earlier. - PublicServant - Thursday, Nov 15, 12 @ 10:14 am: By the way Word, my wife’s from that area, and I’ve driven past the place a lot. To chat with you, I’d definitely stop in. - Meanderthal - Thursday, Nov 15, 12 @ 10:30 am: Fahner and company won’t release their data, so that means the pensions funds must actually be in really great shape. - geronimo - Thursday, Nov 15, 12 @ 11:07 am: It was during Ty Fahner’s term as appointed Attorney General, under Governor Jim Thompson, that pension funding fell from 90% to 30%, according to a Fred Klonsky post. If anyone should know about how to divert money, it’d be Ty. - BMAN - Thursday, Nov 15, 12 @ 11:09 am: I think the election question on the constitutional amendment dealt with the wrong problem, it should have read “Should Illinois adopt a graduated income tax?” That I could support. Sorry, comments for this post are now closed.