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Explanations and theories

Wednesday, Mar 27, 2013 - Posted by Rich Miller

* I asked Bruce Rauner’s campaign spokesman just what the possible GOP gubernatorial candidate meant yesterday when he issued this press release

Yesterday, Governor Pat Quinn announced his support for a guarantee of pension payments to be added to the overall pension reform bills. Bruce Rauner released the following statement:

“After years of continued mismanagement, Governor Quinn continues to reveal his true colors: a lackey to the government union bosses.

“Governor Quinn’s giveaway to government unions will only make our pension crisis worse. Because of years of bad deals and poor decisions in Springfield, we have $100 billion in unfunded pension liabilities.

“It’s clear that career politicians in Springfield don’t have the backbone to stand up to the union bosses they depend on for re-election and are willing to sacrifice Illinois taxpayers for their own political needs.”

* The reply…

It’s a bad idea for today’s governor and legislature to hold future governors and legislatures responsible for pension payments that ramp up without bold reforms.

* Then again, Rauner won’t say what “bold reforms” he wants. Daily Herald

(W)e asked spokesman Chip Englander what [pension reform] plan Rauner does back. Perhaps one from state Rep. Tom Morrison, a Palatine Republican, that does not include the guarantee Quinn backs?

Englander took a broad swipe at the efforts at the Capitol. Then he said Rauner isn’t officially running yet, so he doesn’t have a plan yet.

    “Springfield politicians don’t have the nerve, backbone, or fortitude to do what needs to be done. It’s going to take more than introducing a bill and leaving it up to legislators and bureaucrats. A governor who’s willing to put solving a major problem over their desire to be re-elected, be bold and facts-based, engage and educate the public, and charge forward is the likely prescription. None — I repeat — none of that exists in Springfield today. Should Bruce run for governor he’ll have a plan. But the right first step is listening and learning and that’s what he’s doing now. “

Um, yesterday’s press release didn’t sound like he was “learning.” It sounded like he was “teaching,” without saying much at all except that guaranteeing state payments is the worst idea ever.

* A longtime reader/subscriber mused yesterday in an e-mail about what he thinks is going on. He noted that the Chicago Tribune editorial board agrees with Rauner that pension benefits should not be guaranteed…

I think the Trib was singing Dan Biss’ glory because they thought his pension plan would pave the way for the tax hike going away.

But if you ask him, he will tell you the savings are not enough. His savings make the payments manageable going forward while diminishing the pain in the rest of the budget.

My guess is the Tribsters only recently learned that, at which point they were like, waiiiiittttt a minute. So the tax hike doesn’t go away with this?

Hmmmm … well what if we told lawmakers they shouldn’t be bound by those onerous pension payments?

I think they want to be able to say in a year or so that enough progress has been made that the mistake of a tax increase should roll back and they’re even willing to redo the ramp to make it happen.

I think Bruce is hopping on board in an effort to disrupt an actual solution and try to guarantee this continues until 2014 gov race.

Meanwhile, Bill Brady is smiling. He’ll campaign across downstate that the pension payments must be made and he’s the one willing to be honest with the hard working teachers and state workers.

* There are more nefarious theories out there. For instance, this one is from comments yesterday

Rauner is parroting the Tillman/Proft talking points verbatim. Their attacks on the Nekritz-Biss-Cross bill were nearly entirely based on their opposition to requiring the state to make payments into the pension systems.

Why? Because they want the ability to not make pension payments in order to extract huge concessions from the unions. In short, they want to bust the unions by withholding the pension payments.

* And then there was this comment

Business groups already condemned the guaranty provisions, which are patently absurd. They would delegate to courts the right to seize state cash in “reasonable” amounts, would be litigated forever if they aren’t voided for vagueness on their face. Skipping payments to the system has already been upheld as constitutional. Funding should be redirected to a sensible alternative system.

That last sentence “Funding should be redirected to a sensible alternative system” is the most interesting. This may very well have something to do with crashing the system and creating something new.


  1. - foster brooks - Wednesday, Mar 27, 13 @ 8:07 am:

    How does Quinn poll against this wing nut? Just curious

  2. - Foxfire - Wednesday, Mar 27, 13 @ 8:13 am:

    The system is already crashing. The only question is will the system be repaired or totaled. The funding guarantee and bold reforms are both necessary to resolve this crisis. Get to it.

  3. - Cassiopeia - Wednesday, Mar 27, 13 @ 8:15 am:

    The state is currently funding SERS at the rate at which it is paying out in such a way that it appears as if receipts from all sources nearly match the benefits being paid. I haven’t looked at the other 4 systems but I wonder what would be the state’s annual pension cost would be if it just paid what was needed every year to match payments?

  4. - WizzardOfOzzie - Wednesday, Mar 27, 13 @ 8:33 am:

    I’m glad we’ve finally identified a staffer. For all of the consultants out there, looks like there may some opportunity. Chip Englander (that’s an amazing name for a Republican spokesperson) looks like a low level staffer from California. That should work well in Illinois.

  5. - Oswego Willy - Wednesday, Mar 27, 13 @ 8:34 am:

    ===This may very well have something to do with crashing the system and creating something new.===

    I would really love to hear from someone who can speak to this, giving the viability of crashing the system as an option, and further, the Constituionality of that option, given that a “Governor Rauner” would be, in fact, choosing to do harm to the system a “Governor” swore an oath to defend the state constitution.

    Last point, this “learning” and “listening” is going to get quite old, quite fast, when all the Rauner Crew is doing is running “stuff” up the flagpole with words like “bold”, and then hemming and hawing about “listening” and “learning”.

    Maybe …”wishy-washy”?

  6. - Rich Miller - Wednesday, Mar 27, 13 @ 8:56 am:

    ===looks like a low level staffer from California===

    Um, no.

  7. - Anyone Remember? - Wednesday, Mar 27, 13 @ 9:06 am:

    If we do “crash the system” isn’t the only way it saves money is to pay out at some fraction of the dollar? Many comments would like to see the present system converted to 401(k)s, but even states with better funded pension systems (Georgia, Utah) found to do so immediately would cost more than their current system.

  8. - mythoughtis - Wednesday, Mar 27, 13 @ 9:09 am:

    It seems that the legislators at the last constitutional convention had a crystal ball when they inserted the phrases about the pension not being able to be diminished. Whether their intentions will be honored seems to be another question.

  9. - just sayin' - Wednesday, Mar 27, 13 @ 9:28 am:

    My sense is the wheels are already coming off Rauner’s campaign. He may be great making money in the financial sector but he’s clearly over his head here trying to make governor his entry level political job. Hitting some Lincoln Days and jamming promotional spam on our facebook accounts isn’t going to cut it.

  10. - Frenchie Mendoza - Wednesday, Mar 27, 13 @ 9:31 am:

    I have no doubt Rauner is attempting to bust the unions. It fits in well with his “We might have to shutdown government for two weeks and rewrite the contacts for everyone” schtick that he performed a week or so ago.

    Rich, golf-playing, business types love this — because it means more control and more money — money that specifically lands in their pockets.

    What I find more disturbing — with Rauner and with the GOP in general — is they seem to be preaching a real politics of destruction. Middle- and lower-class destruction specifically — and for someone like me — a voter who votes democratic but is always open to thoughtful opposition — I find no value in this. None at all. There’s a compassion and an idealism that’s lacking in the GOP agenda — especially since their drubbing in the national election (a drubbing that they’ve apparently refused to acknowledge) — something that most younger folks these days finds troublesome and essentially empty.

    I get that theirs is a politics of punishment. I get that and accept it. It’s a way for the rich to get richer. It’s a way to punish those less fortunate. And it’s certainly a way to rouse the wealthy base that will provide the campaign money for the rough and tumble election sure to come.

    But the message at its core is pretty empty. I don’t see hope with Rauner — especially when many folks (myself included) understand that, come on now, it’s not *all* about money. Money plays into it — and money fixes stuff. But it’s also about a future where folks can thrive — everyone. There doesn’t need to be a punishing race to the bottom in order to straighten out government. State employees don’t have to suffer so that the rich (mostly white) guys can make money. The unions are always going to be a part of things — so why not try authentic compromise and reform?

    I’m fine with the rich, mostly white guys making whatever money they need in order to feel like they control something and have conquered something. I realize that much of the subtext with the GOP is who can be the most powerful in order to extract the most from the powerless. But come one — someone has to provide an authentic vision for the future. It’s certainly not Rauner. It may not be Quinn either. But the state is starved for a vision, too. It’s not all about pensions and money. That’s a big part — but there’s other stuff, too — and a lot of younger voters sense this. That’s why these politics of punishment are always going to be rejected.

  11. - RNUG Fan - Wednesday, Mar 27, 13 @ 9:39 am:

    Why do you think this became an issue all of a sudden when its no worse than 1971 when it became a constitutional right?
    I alos think it was to creat a civil war between the unions and the dems. The unions must hit back or lose their crdibility.
    Here is the split. The Rauner crowd wanst to destro the unions. Brady may want to actually win something and considering how popular the downstate no voters will be after offending a bunch of crazy Chicago plutocrats who brag about their wealth which came for the very pension funds they wish to destroy

  12. - muon - Wednesday, Mar 27, 13 @ 9:42 am:

    I posted this yesterday, but it was after midnight, so I don’t know how many saw it. It’s still relevant in this thread, so I hope Rich doesn’t mind the rerun.

    Judgment Day@4:42(3/26/13) - “but if those unfunded pension obligations are actually in excess of $90 billion dollars, then the constitutional guarantees are going to be unlikely to endure. All you have to do is to look at Cyprus, and likely soon to be others.” The 1970 Constitutional Convention considered the insolvency of the funds and noted that the state would have to switch to a pay as you go system to cover pension benefits.


    There are those who think that crashing the system would allow it to be rebuilt. That may be true in the private sector, but at the con-con they very specifically said that it wouldn’t work here. If a court uses the con-con transcripts as intent then I’m not sure how they let a “crash the system” approach get them into a radically different system.

    On the idea of full conversion, Anyone has it right. It would cost substantially more if everyone stopped contributions to the traditional plan and the state had to pick up the tab. It also costs a lot more if the state had to pay the benefits directly if for instance the funds became insolvent. That’s because the assets of the systems wouldn’t be available to cover part of the benefit payments once they’ve “crashed”.

  13. - Rich Miller - Wednesday, Mar 27, 13 @ 9:46 am:

    ===My sense is the wheels are already coming off Rauner’s campaign===

    C’mon. The campaign hasn’t even begun yet. Give it time.

  14. - Colossus - Wednesday, Mar 27, 13 @ 9:47 am:

    Frenchie - I won’t sign on to all of it, but I can get on board with what you’re saying. I hope to see more of your insight around here.

  15. - The Captain - Wednesday, Mar 27, 13 @ 9:52 am:

    What’s most disappointing about Rauner is that he could potentially be one of the few completely inexperienced top ballot candidates that could actually bring something interesting to the table but instead he’s just settling for being another in a long list of vanity candidates who intend to solve the state’s problems with obvious awesomeness. This pension episode is a simple paint-by-numbers attack every political consultant knows they can run for any candidate (aggressive attack, don’t actually need a plan, most voters will only see the headline or first paragraph, very few voters would understand an actual plan anyway, win at pejorative buzzword bingo) and shows no real new or unique insight into the problem. You could run this play for a longshot gadfly or an old experienced hand but it doesn’t lead anyone to believe that Rauner’s brought a new fresh outsider perspective to this longstanding problem, if anything it just makes it clear that he’s gone native. He’s one of us now, just another politician.

  16. - Kerfuffle - Wednesday, Mar 27, 13 @ 9:55 am:

    It’s a bad idea to do what should have been done all along? It would be interesting to see a well done study on how much better off the pension systems would be had full payments been made over the last 40 years or so. In my mind, muddled though it may be, there was obviously good reason for the inclusion of the constitutional requirement guaranteeing that retirement benefits can’t be diminished. It should evidently have gone further and also stipulated that the payment of the state’s portion of retirement costs should have been a requirement as well.

  17. - walkinfool - Wednesday, Mar 27, 13 @ 10:02 am:

    Rauner doesn’t yet know what he wants to do here — other than appeal to some likely funders.

  18. - capncrunch - Wednesday, Mar 27, 13 @ 10:03 am:

    “But the right first step is listening and learning and that’s what he’s doing now. “

    What little is there to not know about Illinois’ pension problem?

  19. - Downstate - Wednesday, Mar 27, 13 @ 10:13 am:

    I love all the venom for Rauner for SAYING he doesn’t want to make the payments. But nothing at all the Democrat lawmakers who actually DIDN’t make the payments.

  20. - Old and in the Way - Wednesday, Mar 27, 13 @ 10:13 am:

    There are several projections on what the pension funds would look like if the payments had been . Generally they project that the collective level of funding would be around 80% today vs 40%. There are lots of variables which make it difficult to arrive at an “exact” figure. Perhaps the best example is IMRF, which is about 85% funded because municipalities could not skip payments.

  21. - unbiased observer - Wednesday, Mar 27, 13 @ 10:17 am:

    RNUG fan,

    I think a couple of the main differences between now and 1971 include the percentage of the annual budget being directed to pension obligations, and the total amount of FUTURE pension obligations as things currently stand now, i.e., unless some sort of changes are made (revenue increases or pension benefit decreases).

    I don’t have the numbers in front of me but I suspect someone who monitors this website will be able to comment intelligently on this.

    from a fiscal perspective, the level of pension funding is not as relevant when you run the numbers and can confidently project that there will enough cash on hand to meet ongoing obligations.

    we are in a situation now, that we will not be able to do that very shortly, without cutting into basic services, education, etc. (unless we make the changes above).

  22. - Carl Nyberg - Wednesday, Mar 27, 13 @ 10:30 am:

    Has anyone asked Rauner about the possibility of taxing option contracts at the Chicago Board of Trade?

  23. - just sayin' - Wednesday, Mar 27, 13 @ 10:31 am:

    “C’mon. The campaign hasn’t even begun yet. Give it time.”

    Fair enough Rich. But the problem for Rauner is that more times means more Republicans finding out how much money this guy has given to Dems over the years. I don’t see how Rauner gets there in a gop primary unless it’s by default, e.g. Lisa M. runs and the other Republicans without gobs of money to waste just decide to sit out.

  24. - Rich Miller - Wednesday, Mar 27, 13 @ 10:35 am:

    ===But nothing at all the Democrat lawmakers who actually DIDN’t make the payments. ===

    Apparently, you don’t read this blog much, or the comments.

  25. - circular firing squad - Wednesday, Mar 27, 13 @ 11:01 am:

    We may need to change the name Twirling CFS . Cousin Brucey. and Gas Brady are really out of control. Great fun to watch as we color our eggs

  26. - wordslinger - Wednesday, Mar 27, 13 @ 11:04 am:

    == a lackey to the government union bosses.–

    LOL, spend it all, Einstein.

    Smithers, release the hounds! Excellent….

  27. - Obamas Puppy - Wednesday, Mar 27, 13 @ 11:17 am:

    All you have to look at is how his big business buddies yanked pension funds out from underneath retirees to see his real intention here. Force bankruptcy of systems and fight the lawsuit that makes state government the final guarantor of these liabilities. It is not brain surgery. This guy is a Scott Walker wanna be in a navy blue state. Good luck with that…

  28. - Oswego Willy - Wednesday, Mar 27, 13 @ 11:30 am:

    No snark,

    ===Force bankruptcy of systems and fight the lawsuit that makes state government the final guarantor of these liabilities.===

    Explain to me, how the Wisconsin situation, and the Illinois Constitution guarantees come into play by bankrupting the system, if its even possible in Illinois?

    It’s like “shutting down the state”, under what authority does a “Governor Rauner” have to do that, and further, Walker had the WI Senate, Rauner wull not have either chamber.

    No snark, - Obamas Puppy -, help me understand the feasablility.

  29. - Judgment Day - Wednesday, Mar 27, 13 @ 11:36 am:


    I’m just looking at numbers. If we do have $90++ bil in unfunded pension liabilities, then we’ve got some issues, because, bluntly, the math over a 20 year period just doesn’t seem to work.

    Rauner’s not my type of candidate, but I see all the ‘class warfare’ attacks being made against him with the goal of discrediting his approach. Problem is this is a situation where ‘politics’ meets ‘numbers’ on steroids.

    Illinois is probably going to have to come up with a creditable 20 year plan to dig ourselves out of this hole we’re in. Doing it over a period longer than 20 years probably isn’t going to fly. Not these days. And making up this deficit hole over 20 years is obviously going to be some serious additional dollars.

    And pushing folks to make the temporary tax increase permanent will be an effort, much less expecting the legislature to go back and raise taxes even more.

    So we either transfer the burden to local governments, take money away from local governments, hollow out the state budget to primarily pay for employee retirement benefits, or substantially change the rules on employee retirement costs/benefits. Pick your poison, or combination of poisons.

    Well, Rauner’s taking it on. You don’t have to like what he’s doing, but it’s an approach. And we’ll see how it plays out over the next year / 18 months.

  30. - OneMan - Wednesday, Mar 27, 13 @ 11:45 am:

    Also don’t see how ‘forcing a bankruptcy’ would work since the state can’t go bankrupt.

    The problem is unlike a corporate setting, you can’t walk away from this, can’t go bankrupt, can’t shelter it, it is in the room and you can’t get away from it. You can try and do things to mitigate it, but what folks have earned they have earned, you can’t really address this.

    Part of the challenge is no one runs for public office to fully fund pensions, it isn’t interesting or sexy, you don’t get to hand out oversize checks when you do it.

    You have three options.
    Ignore it
    Try and mitigate the problem in the future by reducing benefits for new folks
    Put the money in the system, be it now or later.

    That’s about it.

  31. - unbiased observer - Wednesday, Mar 27, 13 @ 11:54 am:

    I think evaluating the perspective from which we view this fiscal emergency is informative as well…

    will most people consider this a “pension emergency” which the main goal is to figure out how to maintain all current and future pension obligations at the cost of everything else in the entire state based upon a constitutional argument?


    do we look at this fiscal emergency from a statewide solvency and functionality perspective, in which the interests of the entire state need to be taken into account. this would include the pension folks but also the taxpayer, disadvantaged, public safety, infrastructure, economic policy, etc.

  32. - JohnTwig - Wednesday, Mar 27, 13 @ 11:56 am:

    To Kerfuffle – you wonder about today had the state made required payments. In a 2011 presentation on the state of SURS by the President of SIU-C it was stated:

    “If the state of Illinois had made a contribution each year of the actuarial-determined normal cost, the system would now have a ratio of 104%.  The state would have had to contribute around 10 – 11% of payroll, which is a reasonable amount given that there were no Social Security contributions which had to be made.”

    To see how the arithmetic of the SURS Tier I plan works, see:

  33. - iThink - Wednesday, Mar 27, 13 @ 12:08 pm:

    ===Doing it over a period longer than 20 years probably isn’t going to fly. Not these days.===

    I am not so sure about that, people love putting things off. Plus, it allows you to make nice stable payments, not the ski-slope that we are looking down. In a way, this pension problem is already fixed as the Tier II people cost less than they put in. As time goes on the financial benefit will be realized, they just need to spread out that liability over a big enough time that it isn’t too burdensome.

  34. - Grandson of Man - Wednesday, Mar 27, 13 @ 12:16 pm:

    ==Governor Quinn continues to reveal his true colors: a lackey to the government union bosses.==

    I think Rauner is referring in part to Quinn’s cost-saving measure of merging work sites. Our office was closed and merged with another. We used to have secure parking. When we moved, we were not allowed to park in the employee parking lot. Management restored our parking privilege, but we still have pending grievances in arbitration.

    Before our parking was restored, some of us had problems parking on the street. Some reported theft of license plate stickers (including me), and there was some vandalism to cars parked on the street. My car window was smashed.

    I gave examples of Quinn’s “union giveaways” and servility to union bosses. Rauner doesn’t really know what is happening out here, so he is resorting to boilerplate comments. Is there a master script for these comments somewhere?

  35. - Norseman - Wednesday, Mar 27, 13 @ 12:22 pm:

    One of the pressure points regarding the pension issue comes from the bond rating agencies. They want to see reductions in the liability. Do you think they’re going to sit back allow the state to “crash” the funds without any negative consequences?

    I’m astounded by the number of folks who still can’t grasp the concept that the state can’t go bankrupt. Furthermore, do those advocating crashing the systems by emptying the funds really think the courts will ignore the pension guarantee in the constitution? You folks need to do your homework.

  36. - girllawyer - Wednesday, Mar 27, 13 @ 12:35 pm:

    By “listening and learning” he may not have meant listening to OTHER people. Maybe he just likes to listen to himself.

  37. - unbiased observer - Wednesday, Mar 27, 13 @ 12:41 pm:

    while the state cannot go bankrupt, it can stop making payments and not meet obligations (even more than is already the case) because it doesn’t have enough money. they are not legally equivalent, but they are functionally equivalent.

  38. - facts are stubborn things - Wednesday, Mar 27, 13 @ 12:41 pm:

    We are a land of laws…at least I think we still are. The law on pensions is clear. The benifits will be payed as earned. The path to getting there may be winding and full of deters but that is where we end up.

  39. - Oswego Willy - Wednesday, Mar 27, 13 @ 12:52 pm:

    ===they are not legally equivalent, but they are functionally equivalent.===

    If that were the case, no one would file for bankruptcy and just not pay creditors and …

    Yikes, we are talking about constutuonal guarantees that, up till now, no one can find a proposal that will pass muster constitutionally to fix the issue and pay what is required!

    Rauner needs to come up with viable “bold” alternatives that are not in violation of the Illinois Constitution.

    - unbiased observer -, what is the “end game”, even if its “functionally” an end game, and will it pass constitutional muster under a Rauner plan?

    Help me see that, because I guess I can’t the way Rauner is describing it.

  40. - Norseman - Wednesday, Mar 27, 13 @ 12:59 pm:

    BUO, it’s not that simplistic. Unpaid bills to vendors accrue interest and courts will order payments based upon the needs of people or other legal requirements. Now can we get away from the goofy scenarios we see on Doomsday Peppers and discuss real issues.

  41. - unbiased observer - Wednesday, Mar 27, 13 @ 1:12 pm:


    I respectfully disagree that unprecedented financial conundrums will develop within in 3-4 years if nothing is done to change the developing situation. look carefully at projected revenues and projected obligations, do the math.

  42. - thechampaignlife - Wednesday, Mar 27, 13 @ 1:14 pm:

    So, we spend down to a 0% funded level which “bankrupts” the systems. At that point, we are forced into a pay-as-you-go funding method. Wouldn’t that be roughly the $1.7B/yr “normal cost”? Or, at a minimum, wouldn’t that be less than the $5.1B we’re paying this year? And shouldn’t that only grow roughly at the rate of inflation (plus/minus any life expectancy or benefits changes)? So, what immediate and overwhelming circumstance would exist that prevents the State from affording existing benefit levels given that sufficient funding would exist to pay current benefits if not save for future needs? And even if there were a problem, wouldn’t the State have to first start delaying pension payments to retirees to show the dire straits that we’re under? In fact, we could probably do that today since it wouldn’t be unconstitutional in that it’s not a benefit reduction, just a delay in when you get your benefit. Even getting your pension payment in one lump sum for the year at the end of the year would give the State more time to invest that money.

  43. - countryboy - Wednesday, Mar 27, 13 @ 1:26 pm:

    Lots of people here rising to the bait.
    The urgency is manufactured. (I know, bond ratings are an issue.)
    But, the fix is in. Tier 2. Actuaries agree that as the workforce becomes tier 2, the employer contribution moves toward zero.
    When the surviving spouses of the tier ones are gone, so are the liabilities.
    Pensions are long term operations, and are done serious damage when manipulated by political types with a horizon of the next election cycle, and even more damage by the corporate folks who think in quarters.
    If the systems have enough assets to make it to the end of the tier one claims, and I think they do, then we’re really looking at anti-public union types who need to keep the anquish bubbling and push for reform now before the demographics and the morticians start to ease the pressure.

  44. - unbiased observer - Wednesday, Mar 27, 13 @ 1:26 pm:

    I obviously miswrote above, I do think financial conundrums will develop if changes don’t occur. sorry.

  45. - unbiased observer - Wednesday, Mar 27, 13 @ 1:28 pm:

    2014: over 30% of annual state budget to pension obligations if nothing is done.

    how do you feel about that statistic?

  46. - unbiased observer - Wednesday, Mar 27, 13 @ 1:29 pm:

    this percentage will rise annually.

  47. - Norseman - Wednesday, Mar 27, 13 @ 1:32 pm:

    BUO, feel free to disagree. I base my comments on 33 years experience in the legislative and executive branches of Illinois government. You’re experience is?

  48. - unbiased observer - Wednesday, Mar 27, 13 @ 1:37 pm:


    Ive clearly not been a part of the government at all. No doubt you should have a great deal of knowledge about the issues and problems we have with our government since you have been a part of it during the time when most of the problems develop.

    perhaps people with some fresh perspective could be useful in this situation….

    finally, I can perform mathematics. whether you been adding for 30 minutes or for 30 years, 2+2 always equals 4.

  49. - Oswego Willy - Wednesday, Mar 27, 13 @ 1:48 pm:

    Since you can do the math …

    ===- unbiased observer -, what is the “end game”, even if its “functionally” an end game, and will it pass constitutional muster under a Rauner plan?==

    Help me with that math, and make it Constitutional, please.

  50. - unbiased observer - Wednesday, Mar 27, 13 @ 1:57 pm:


    My math comments are demonstrating the problem, not the solution. they were in response to those out there who really don’t think there is a fiscal crisis developing and think this is all being manufactured by right wing elitists trying to screw public workers out of their pensions.

    if you cant do the math and see that there is an fiscal crisis developing here then im not sure there is much I can say to you at this point. good luck with that strategy I guess.

    as for solutions, my feeling is that there are not any solutions to this problem which will significantly address this issue (which it seems you don’t think exists) that you will consider constitutional except raising taxes. I don’t think it is politically possibly to solve this problem solely thru raising taxes, nor do I think would it be smart economic policy planning for our state. other things which have been mentioned (changing the ramp, increasing efficiency, “stop giving money to illegals”, pet projects) are great ideas and im all for them but they wont have the significant impact that revenue increases and pension reform will.

  51. - muon - Wednesday, Mar 27, 13 @ 2:17 pm:

    thechampaignlife, the cost for pay as you go is much more than the current normal cost and more than the current payment to the system. It would be equal to the current annual payment of the pension systems which is 9.1B$ in FY2013 according to the COGFA Feb 2013 report.

    Judgment Day, I would agree that the math for 20 years would require a big injection of new revenue. I think that’s why most of the plans out there use a 30 year time scale to payoff the unfunded liability. The math is much easier to handle.

  52. - Oswego Willy - Wednesday, Mar 27, 13 @ 2:18 pm:

    ===(which it seems you don’t think exists) that you will consider constitutional except raising taxes.===

    I will speak for me, thanks. I know… there is a problem, but I think a constitutional answer is probably goig to happen…

    Further, you have given the impression that Rauner has a viable solution, but if you are admitting the ONLY one solution to pass constitutional muster is raising taxes, then why give the impression that Rauner has a plan?

    Shutting down the state for a few weeks, or the “functionally equivalent” of backruptcy, according to you, is not consttitutional since you said rasing taxes is the only one to pass muster, so, what is your arguement for a passable, constitutional answer, since you shot the Rauner paln out saying its not constitutional?

  53. - facts are stubborn things - Wednesday, Mar 27, 13 @ 2:28 pm:

    @unbiased observer

    When you state the following —

    (changing the ramp, increasing efficiency, “stop giving money to illegals”, pet projects) are great ideas and im all for them but they wont have the significant impact that revenue increases and pension reform will.

    What you are really advocating is to find the needed revenue on the backs of those already retired. There is no need to reduce the benifits of those already retired….should not even be on the table. They (I) have crossed the finish line, completed the game, and guaged our entire financial future on the constitutional promise of benifs earned benifits paid. I don’t have the ability to chart a new course and I should not have to because I was suppose to already have finished the trip.

  54. - unbiased observer - Wednesday, Mar 27, 13 @ 2:43 pm:

    as for a specific plan that will be politically possible and be considered constitutionally sound by all parties, I am growing pessimistic it will occur. still, all parties don’t have to consider it constitutional, only the judges do.

    currently, if we had some incredible leadership, a group of well informed compassionate people come to the table and work out a plan in the best interests of the entire state, I think there is enough time to still work this thing out prior to significant financial cratering.

    3 or 4 years from now, if nothing is done, and I am very concerned about this occurring due to political and financial realities, we could be in heap big trouble as a state and our ability to creatively plan our way out of this mess will be significantly impaired. there will be even fewer options than there now.

  55. - Oswego Willy - Wednesday, Mar 27, 13 @ 2:54 pm:

    ===as for a specific plan that will be politically possible and be considered constitutionally sound by all parties, I am growing pessimistic it will occur. still, all parties don’t have to consider it constitutional, only the judges do.===

    Agreed. Just keep in mind, Rauner’s “ideas” are not going anywhere if they need to be both politcally viable and constitutional, at the rate he is proposing these ideas, and under the way he is proposing them.

    This is not Wisconsin, or even Indiana, as much as Rauner wants it to be.

  56. - Endangered Moderate Species - Wednesday, Mar 27, 13 @ 3:09 pm:

    ===a group of well informed compassionate people come to the table and work out a plan in the best interests of the entire state===

    Isn’t this the reason we have elections?

  57. - capncrunch - Wednesday, Mar 27, 13 @ 3:10 pm:


    During your 33 years in the legislative and executive branches of Illinois government were you a voting member of the legislature and, if yes, did you ever vote to divert or skip pension fund payments? If you did, how do you feel about those votes now?

  58. - Judgment Day - Wednesday, Mar 27, 13 @ 3:12 pm:

    “I would agree that the math for 20 years would require a big injection of new revenue. I think that’s why most of the plans out there use a 30 year time scale to payoff the unfunded liability. The math is much easier to handle.”


    Have my doubts that we’re going to get a 30 term for a ‘dig out’ plan for the unfunded retirement obligations. Just got done perusing GASB 68 (which takes effect 06.15.2014), and it’s ‘hinting’ toward a preferred 20 year term for most things.

    Actually, if everything we do on dealing with the unfunded retirement benefits needs to be politically viable, economically viable, and constitutional - well, we’ve got ourselves quite a conundrum (A logical postulation that evades resolution, an intricate and difficult problem).

  59. - Liepschlitz - Wednesday, Mar 27, 13 @ 3:13 pm:

    With Rauner, I can’t help have a visual of Ron Gidwitz waltzing around the Capitol while chomping on a dark Churchill. Except Rauner probably has fewer friends. But who knows,maybe he’s a health nut and munches on birdseed instead of stogies. Would be funny to see AFSCME members following him around.

  60. - unbiased observer - Wednesday, Mar 27, 13 @ 3:18 pm:


    -Actually, if everything we do on dealing with the unfunded retirement benefits needs to be politically viable, economically viable, and constitutional - well, we’ve got ourselves quite a conundrum (A logical postulation that evades resolution, an intricate and difficult problem)-

    yes indeed, my friend, yes indeed. looks like we fixin to set ourselves up for a classical cluster-(you know what) of historic proportions.

  61. - unbiased observer - Wednesday, Mar 27, 13 @ 3:20 pm:

    I was having a conversation with someone recently, only half joking, (and I promise everyone out there I am NOT in the financial industry, and I am VERY middle class), that if I could figure out a way to “short” the state of Illinois right now I would sink large chunk into that transaction right now. again, only half joking.

  62. - Norseman - Wednesday, Mar 27, 13 @ 3:37 pm:


    No Cap, I’ve never been a legislator. I didn’t have any role in pension policy or advise the staff or agencies I worked for to skip pension payments. Like all employees, I paid everything I was asked to pay.

    It’s unfortunate that folks wanting to cut our pensions want to throw out this red herring that we had something to do with the problem. Was even more disconcerting are the folks that continue spreading this goofiness despite being informed that there were lawsuits seeking to force the state to do the right thing. The courts ruled that the constitution required pension payments, but not required the state to pay a specific amount into the funds.

    Cap, all we can do is keep fighting this maliciousness and ignorance.

  63. - thechampaignlife - Wednesday, Mar 27, 13 @ 3:48 pm:

    muon, thanks for pointing me to that report. Drilling into the data further, I see that the $9.1B is the total expense. Looking at tables 10, 16, 22, 28, and 34, the employee contribution is $1.5B which leaves $7.6B for the state. Chart 5 shows the state already bearing $7.4B between the regular contribution and bond payments. So, once the bonds are paid off, we’d be able to go pay-as-you-go for just $200M more than we’re paying today. Pair that with a couple percentage points more in employee contributions, cost shifts, or other fully constitutional options and the cost to the State drops to a fully sustainable level.

  64. - Publius - Wednesday, Mar 27, 13 @ 3:52 pm:

    Actually, there is notba

  65. - PublicServant - Wednesday, Mar 27, 13 @ 3:58 pm:

    Explain why you feel GASb 68 hints at a 20 year term, Judgement.

  66. - Publius - Wednesday, Mar 27, 13 @ 3:59 pm:

    Actually there is not a pension problem as much as a spending problem. For years the governor and legislature have chosen to spend increasing amounts of money that they didn’t have on other state services like medicaid and education. They took money committed to pensions to do that. Can’t continue to short pensions, so now there is a problem. You can’t constitutionaly cut pensions, but you can cut entitlements and expenditures in other areas. But that takes guts. Easier to screw the teachers and firemen and police men and employees who have spent careers doing he state’s work.

  67. - muon - Wednesday, Mar 27, 13 @ 4:14 pm:

    thechampaignlife, what you say is fine except that some of those bonds are years away from retirement. About 700 M$ is freed up in 2016, but then its another four years for the next big chunk, and the last don’t retire until after 2033. So one problem with a plan to pay as one goes is how to get through the years in the in the short and mid term.

  68. - Judgment Day - Wednesday, Mar 27, 13 @ 4:58 pm:

    “Explain why you feel GASB 68 hints at a 20 year term, Judgement.”

    PS, here’s why. Much of GASB 68 is oriented into 10 year terms/increments (both going backwards and forwards). It some places (such as the ‘mark-to-market provisions contained in GASB 67 [effective 06.15.2013], it’s based upon prior 5 years).

    But here’s the real game changer with GASB 68: You have to explain/document all your fiscal assumptions, and in being practical about it, when you have to get out to 10 years going forward, that’s tough. 20 years going forward is pretty far out there. Beyond that, it’s pretty much guesswork.

    Realize, many local and state governments currently would not be compliant with GASB 68 ‘Guidelines’ as of today. That’s why when the ‘Guidelines’ were first proposed last year, they gave a 2 year implementation period, so they could start accumulating data, or more likely, contract with outside entities to perform the work.

    Hate to overuse the word ‘conundrum’, in a single day, but this is another one. We’ve always wanted to use a longer term in the past because it easier to ‘fuzzy’ the numbers, but with GASB 68, we’ve got to back up our assumptions over those term (years) with real data, and we’re starting to find out that we can’t do it and make it work. So, we end up having to use a shorter term/conclusions which the data allows us to support.

    Being that we are going to have to back up our numbers, that’s likely going to require a lot of changes in current methodology. Right now, there are a whole of of finance people in local governments having some real ‘fun’ with this one.

  69. - RNUG Fan - Wednesday, Mar 27, 13 @ 6:21 pm:

    The ramp which is forcing the leg and gov to pay more than 1971.It means teh Tribsters cant get their tax cut thus crisis
    I want to say some more on the banruptcy stuff. It was with one of the plutocrat bks on CNBC some years ago when Calif was going through this.
    Someone from Calif explained …I think it was their treasurer at the time that the only really secured liabilities were the bonds and pensions and California has plenty of money for those but would have to cut everything else. A bankruptcy discharges teh totall insolvent A state with tax income flowing is not a totaly insolvent individula it is more like a coporate where the secured lenders get paid first so bankruptcy so its just nonsense. It alos makes the state powers stuff look silly too esp since Illinois state taxes are far from the top and never have been near the top
    Some monopoitic coprations can force you to pay them think the utilities and the oligoploies are close but unlike Illinois those are all just fine

  70. - thechampaignlife - Wednesday, Mar 27, 13 @ 7:06 pm:

    muon, the existing $65B or so that we have invested should be able to bridge the bond payment gap pretty easily ($3B/yr for 20 years, not counting investment gains on that diminishing amount).

  71. - county chairman - Wednesday, Mar 27, 13 @ 7:36 pm:

    i find it interesting that law makers have to make another set of laws to follow was not the first ones plain enough i wander if they are going to put in enough loop holes its apparent that a law does not make one honest

  72. - Rich Miller - Wednesday, Mar 27, 13 @ 7:59 pm:

    === its apparent that a law does not make one honest===

    Gee. You’re just figuring this out now? I really hope you are not actually a county chairman.

  73. - Just The Way It Is One - Wednesday, Mar 27, 13 @ 8:08 pm:

    He just doesn’t GET it, and if he doesn’t get it NOW, is there really any significant, reasonable hope he’d get it a year from now when his name appears on the GOP BALlot? It’s just going to be such a waste of contributors’ financial resources and resolve, and the energy of sensible citizen voters who’ll have to hear more of this vague posturing and well, just plain gobbledygook!

  74. - RNUG Fan - Wednesday, Mar 27, 13 @ 8:23 pm:

    I dont think sensible citizens are going to waste much time on this guy As to his plutocrat friends I hope their money is wasted . Sadly they wont give help people like LSSI (I am very biased toward LSSI I was adopted through them)
    They will waste it on crap to feed their egos or to destry the middle class better on this guy than somebody who could win anything

  75. - county chairman - Wednesday, Mar 27, 13 @ 10:44 pm:

    dear rich mr krohe who writes for the ill times always told me when you get a negative response thats a good thing thank you

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