* Jim Edgar via the Sun-Times…
Former Gov. Jim Edgar — one of the state’s most popular Republican governors — said Tuesday that Illinois is in its worst shape in 50 years, and warned that Gov. Bruce Rauner must tone down his “rhetoric” and abandon his “Turnaround Agenda” to get a complete budget done. […]
Edgar said budgets were accomplished in the ‘90s, despite many hardships, “because we compromised.” He called negotiations with Madigan during his tenure as governor during a budget impasse tense, but civil in the end because “we both tried to watch our rhetoric.” […]
“You can’t get things done if you’re not willing to meet your adversary halfway, and again we’ve gotten away from that,” Edgar said, noting the state must try something different.
“It’s obvious what we’ve done the last year hasn’t worked,” Edgar said.
* Tribune…
“It’s critical that in public arenas that we treat our adversaries with civility because one of the things I also learned (in politics is that) today’s adversary is tomorrow’s ally because issues change. But if you just call somebody stupid or a crook, it’s going to be a little harder the next day for you to meet them as allies,” he said. […]
While Edgar opposes a short-term budget deal for the state, he said he saw one good sign in that Rauner had dropped his requirement that lawmakers approve the governor’s turnaround agenda as part of a stopgap spending deal.
“The good thing the governor said was he was going to set aside his turnaround agenda. Now I think the next good thing he ought to do is just set aside the turnaround agenda until they get a real budget bill,” Edgar said.
Rauner “kind of took the first step. I hope he’ll take another step, and I hope the Democrats will meet him halfway and maybe even figure out some things they can give to him,” Edgar said.
* WSIL…
Edgar, who served as Illinois’ governor during the 1990’s, predicted programs will have to be cut and taxes will have to be raised, painful votes for both parties, he noted. He said he wishes he could say he sees a “light at the end of the tunnel.” But doesn’t.
“I’m afraid we’re going to end-up with a makeshift — what they call a temporary budget. And we still aren’t going to solve a lot of the problems out there,” Edgar said. “And it’s just going to dig the hole deeper.”
* WLS AM...
“The essence of democracy is compromise. Particularly in a state like Illinois, with the diversity this state represents. You have to be willing not only to listen to the other point of view but you’re gonna have to find common ground.”
* And the Raunerites at the Illinois Policy Institute chimed in…
Oh, please.
The ramp was a bipartisan, politically do-able plan. It wasn’t the optimal solution. But it was made far worse by efforts to get around the ramp by skipping and skimping on payments and by borrowing to make the payments.
Instead of addressing what Edgar actually said, they issued their usual ankle-biting attack. Why? Because Edgar, even to this day, is far more popular than Rauner. So they attempt to undermine him.
* But Edgar is absolutely right that the actions of the past year haven’t worked. Anybody with half a brain can see that.
And, by the way, everybody in power shares blame in this, from the governor down to the most recently appointed state legislators. Everybody.
- Saluki - Wednesday, Jun 8, 16 @ 11:34 am:
Edgar is popular because he is a reasonable person with a desire to find solutions. Rauner is a dogmatic billionaire who is willing to wreck Illinois in his pursuit of destroying the democratic party.
- Dan Johnson - Wednesday, Jun 8, 16 @ 11:36 am:
Clearly the Policy Institute and lots of voters haven’t come to terns with the fact that not paying our pension debt is the problem.
Quinn gets zero political credit for doing the most fiscally responsible thing ever — pay the debt.
And Rauner essentially has paid no political cost for doing the most fiscally reckless thing ever — not paying the debt.
It would be helpful for general civic understanding if we switched the term from ‘budget impasse’ to ‘debt reduction’ because that’s really what the debate is all about.
Anyway, that’s my /rant.
- Precinct Captain - Wednesday, Jun 8, 16 @ 11:37 am:
IPI should try reading the state constitution and the recent state Supreme Court decisions, but that’s too much of a heavy lift for them I suppose.
Edgar has been spot on all along with his comments. It is a lot easier to implement your vision when you have a budget. Instead, Rauner has ceded unprecedented authority to the courts and is missing out on designing and implementing a whole host of operational changes he could make.
- btowntruth - Wednesday, Jun 8, 16 @ 11:38 am:
The IPI cartoon proves they have no problem distorting history to defend Rauner.
- Almost the Weekend - Wednesday, Jun 8, 16 @ 11:40 am:
Wonder how many people have turned down Edgar to primary Rauner. I still have trouble comprehending his popularity, maybe the nostalgia of Illinois before free trade and globalization really devastated the state. He was governor at the right time and left before the downward hit.
- hisgirlfriday - Wednesday, Jun 8, 16 @ 11:40 am:
Edgar should announce an intention to make a primary challenge to Rauner if he can’t get a budget deal done by the end of the year.
These press pops are nice but Rauner just ignores them. A primary challenge by an ex-governor could not so easily be ignored.
- northsider (the original) - Wednesday, Jun 8, 16 @ 11:42 am:
I have been unpleasantly surprised at how
negative and disrespectful this administration’s attitude toward Governor Edgar has been, right from the start.
- Huh? - Wednesday, Jun 8, 16 @ 11:43 am:
“Anybody with half a brain can see that.”
What does this say about 1.4% who refuses to see the damage to the State that his intransigence is causing?
- Earnest - Wednesday, Jun 8, 16 @ 11:46 am:
>* But Edgar is absolutely right that the actions of the past year haven’t worked. Anybody with half a brain can see that.
I disagree. I think Rauner’s actions of the past year have worked exactly how he wanted them to.
- Formerly Known As... - Wednesday, Jun 8, 16 @ 11:47 am:
==“You can’t get things done if you’re not willing to meet your adversary halfway, and again we’ve gotten away from that,”==
Mike Madigan refuses to compromise on any sort of meaningful reform or pass any of his own. Bruce Rauner continues his recent tour of rhetoric.
Good luck with that.
- Dan Johnson - Wednesday, Jun 8, 16 @ 11:47 am:
Of course, credit is extended to the legislators who paid down the debt by funding our (annoyingly large) pension obligations for four years under Quinn as well. /rant coda
- Formerly Known As... - Wednesday, Jun 8, 16 @ 11:50 am:
==“It’s obvious what we’ve done the last year hasn’t worked”==
The last year, the last decade, the last five decades or so.
- Highland, IL - Wednesday, Jun 8, 16 @ 11:51 am:
3-2-1…my State Rep will now be pasting this into a facebook post. Poor deer in headlights guy that he is….
- Cubs in '16 - Wednesday, Jun 8, 16 @ 11:54 am:
===“You can’t get things done if you’re not willing to meet your adversary halfway, and again we’ve gotten away from that,” Edgar said, noting the state must try something different.===
Sounds eerily similar to Rich’s mantra to “Find another way”.
- Mama - Wednesday, Jun 8, 16 @ 11:54 am:
If the path you have been on for a year produced no results, it is ‘not’ working!
Find another path - one that will work for everyone! The governor needs to work on finding a Win - Win solution for Illinois.
- The_Equalizer - Wednesday, Jun 8, 16 @ 11:55 am:
I’d vote for Edgar. Geez the IPI come across as Rauner’s hired goons.
- Illannoyed - Wednesday, Jun 8, 16 @ 12:05 pm:
I don’t think it’s inaccurate to say that the many years of financial mismanagement, unbalanced budgets and growing debt created Bruce Rauner. It’s not as if he showed up on the scene after deciding he wanted to try his hand at being the governor of a prosperous state. The conditions were allowed to deteriorate so badly that an opening was provided for a self-funded outsider to convince voters that Springfield required significant change…which it does. The irony is that some of the Governor’s biggest political critics in Springfield actually created him. Now they gripe and complain about having to alter their preferred way of doing things. It’s not like voters sent Rauner to Springfield to increase taxes to cover $39 billion in annual spending, or just tidy up the status quo a bit. Had he run on that platform, he wouldn’t be Governor.
- Norseman - Wednesday, Jun 8, 16 @ 12:07 pm:
IPI = Illinois Propaganda Industry. Motto = No lie is unacceptable if it furthers our cause.
- RNUG - Wednesday, Jun 8, 16 @ 12:12 pm:
== Clearly the Policy Institute and lots of voters haven’t come to terns with the fact that not paying our pension debt is the problem.
Quinn gets zero political credit for doing the most fiscally responsible thing ever — pay the debt. ==
Very good summation.
The only thing I would add is they while the Edgar Pension Ramp was flawed, it wasn’t fatally so. As Rich and others have pointed out, the skipped and shorter payments are what struck the mortal blows.
- Anonymous - Wednesday, Jun 8, 16 @ 12:14 pm:
The best way for Rauner to get his turn around agenda, is to first be a good Gov. and get this state running well again with solid balanced budgets….eliminate all the uncertainty etc. Then as a popular gov. he can make the next election about his “turn around agenda” and start trying to gain seats in the house and senate. This Gov. just does not understand the math in the legislature at this time.
- Saluki Matt - Wednesday, Jun 8, 16 @ 12:15 pm:
@The_Equalizer
Well, Rauner’s given them money in the past, so in a manner of speaking they are.
- Dan Johnson - Wednesday, Jun 8, 16 @ 12:16 pm:
RNUG, that’s right. At least there was a pension ramp. And maybe they kept the income tax rate lower by .5% to avoid making payments for a decade before foisting it on the current generation, but they did make payments.
It’s so odd that there is deafening silence in the press reports on the ‘budget impasse’ about not paying the debt which *is* the fiscal mismanagement of the last few decades. That’s the problem. Compounded COLAs are too high and not taxing retirement income is another giveaway, but by far, the biggest driver of our fiscal problems has been just not paying the debt.
And so far, under Rauner and his tax cut — not a dime to the debt.
Can’t stop the /rant!
- Anonymous - Wednesday, Jun 8, 16 @ 12:17 pm:
The voters had a choice, between PQ who wanted to keep the 5% tax and continue to pay down our bills and Gov. Rauner who wanted the 3.75% tax and further reduce it back to 3%. The voters got their wish. We have a structural deficit in this state and the ISC has taken away the pension piggy bank.
- Agricola - Wednesday, Jun 8, 16 @ 12:18 pm:
==Instead of addressing what Edgar actually said, they issued their usual ankle-biting attack.==
Easy there, Rich. You’re letting facts get in the way of somebody’s rant/fund-raising message. Again. s/
- A Jack - Wednesday, Jun 8, 16 @ 12:20 pm:
What they failed to mention is that we are on the downside of the ramp. The employer contribution decreased 1% from last year.
If now, the economy can normalize interest rates so that the retirement systems can get a decent rate of return and the Illinois economy doesn’t tank because of some of Rauner’s policies, then we can see the light at the end of the tunnel.
- lake county democrat - Wednesday, Jun 8, 16 @ 12:25 pm:
–You can’t get things done if you’re not willing to meet your adversary halfway–
Well there you go - let’s reduce the turnaround agenda by 50% and reduce Madigan’s last submitted budget by 50%, increase taxes to cover the $3.5 billion, and we’re done.
- Anonymous - Wednesday, Jun 8, 16 @ 12:27 pm:
from Facts are Stubborn things.
@Dan Johnson - Wednesday, Jun 8, 16 @ 12:16 pm: =
=Compounded COLAs are too high =
First, it is not a COLA, but a AAI — annual automatic increase. Second, over the past 40 years the inflation rate has ran very near the 3% AAI rate. Also, it is not the 3% AAI that is the problem, it is the fact that the actuarially required pension payment was not made every year.
=
- Anonymous - Wednesday, Jun 8, 16 @ 12:30 pm:
Rauner’s name calling and then wanting to cut a deal is like calling your neighbor names and then asking to barrow his lawn mower.
- Ghost - Wednesday, Jun 8, 16 @ 12:45 pm:
In Edgars defense, the blago admin borrowed 10 bil in bonds to fund the pensions. the money put the pensions up to almost 60% funding….. they then skipped the next several years payments which wiped put all the gains and set the funds back to low 40% funding before the economic collapse.
to the GOP credit the pension problem falls in everyone, but it was the dems and blago who made spending plans the shorted funding and dropped it from almost 60 to barley 40% funding.
- Anon - Wednesday, Jun 8, 16 @ 12:52 pm:
Nobody on here seems to understand. Pensions ARE the problem. Not just the funding of them. The entire concept of a defined benefits retirement system is the problem. Get rid of it!
- A Jack - Wednesday, Jun 8, 16 @ 12:55 pm:
Since we are now at the top of the ramp, we only need to increase taxes to pay current bills, then as the ramp continues down, then taxes can be lowered accordingly.
- A Jack - Wednesday, Jun 8, 16 @ 12:59 pm:
Oddly New York does fine with its fully funded defined benefit plan…. Maybe it’s their graduated tax system?
- wordslinger - Wednesday, Jun 8, 16 @ 1:00 pm:
If a budget is critical, perhaps all those insisting on non-budget pre-conditions should put them aside and focus on the top priority.
- RNUG - Wednesday, Jun 8, 16 @ 1:01 pm:
== Nobody on here seems to understand. Pensions ARE the problem. Not just the funding of them. The entire concept of a defined benefits retirement system is the problem. Get rid of it! ==
First, pick a name.
Second, you can’t get rid of the pensions for existing employees. The court has ruled and that train has left the station. The $10B debt MUST be paid.
Third, the State already created a Tier 2 pension system back in 1/2011 for new hires. It costs the State nothing, zero, nada and actually helps pay down the annual normal cost. Changing it to a 401K will actually cost the State money.
If you want all the details, use Google and read everything I have wrote here about the pensions the past 5 years.
- RNUG - Wednesday, Jun 8, 16 @ 1:03 pm:
Correction … $110B … missed a digit typing here in the hammock under the shade tree.
- Illinois Bob - Wednesday, Jun 8, 16 @ 1:26 pm:
First of all, Edgar SHOULD have known that future Illinois governments weren’t going to bite the bullet and pay for the consequences of his and Thompson’s policies that led to the pension crisis.
He back loaded the expense, and political consequences, so that he could keep the gravy train he was riding keep on runnin’.
He also never recognized that the pension expenses should have been considered park of public employee compensation and should have been shifted to local governmental bodies such as school districts so that revenues would go to fund pensions and other retirement benefits instead of escalating pay and benefit scales at double the rate of inflation.
Those are the things he SHOULD have done, but didn’t even attempt.
He doesn’t own all of today’s financial problems, but his actions and inactions on policy led to much of the suffering we’re left with today.
- Illinois Bob - Wednesday, Jun 8, 16 @ 1:31 pm:
RNUG, as our resident pension expert, is their an interpretation of the “shall not diminish nor impair” clause in the constitution that prevents employee contributions from being raised, say to 50% of the present value, of a teacher or other public employee pension?
If not, it would seem that that should be one of the first steps taken to raise pension revenues, perhaps with the proviso that all additional funds collected would be used to fund pensions in the group that’s doing the contributions.
- Dan Johnson - Wednesday, Jun 8, 16 @ 1:34 pm:
Anonymous, thanks for the clarification that it isn’t a COLA but an AAI (is that for all the funds?), but who cares that over the last 40 years the inflation rate has been about 3%. It hasn’t been for a decade. That’s like saying we should hold on to the expected 7.5% or 8% expected investment returns because over the last 40 years, we’ve been close to that, even though it’s unrealistic to assume anyone can hit that figure going forward. The AAI or COLA should be adjusted to CPI or an equivalent figure that tracks what inflation actually is year to year, if we constitutionally can do so. I don’t remember whether that was specifically addressed in recent decisions.
- A Jack - Wednesday, Jun 8, 16 @ 1:46 pm:
Thee AAI adjustment was one of the pension reform changes ruled unconstitutional.
- RNUG - Wednesday, Jun 8, 16 @ 2:03 pm:
== RNUG, as our resident pension expert, is their an interpretation of the “shall not diminish nor impair” clause in the constitution that prevents employee contributions from being raised, say to 50% of the present value, of a teacher or other public employee pension? ==
Yes. You can’t change the contribution rate without providing an additional consideration or benefit. And it has to be a voluntary “opt in” choice to get the new benefit in exchange for a higher contribution.
That would be the consideration model that Eric Madiar suggested would be legal in his seminal “Welshing” document, trading one thing of value for something of a perceived roughly equal value. That is how you voluntarily modify contracts. And the IL SC hinted in the SB-1 decision that there was a legal way to change things but they didn’t draw a road map. Most people believe the court was talking about consideration as understood under Contract Law.
The problem is that everything that Rauner and/or Cullerton have proposed to date is a forced choice between diminishment A or diminishment B. Their proposals do not allow “keep what you have”. Rauner got it partially right with his future raises don’t count towards pensions but he can’t use the raises part of his proposal because there are already rulings on what salary / compensation must be included in calculating a pension. And even after the crystal clear SB-1 ruling, Rauner is still clinging to the discredited Sidley-Austin theory that yet to be earned benefits for existing employees can be changed: they can’t.
Now if the state was willing to do a cash buy-out today of future benefits for people who wanted to do so, that might be legal under the pension clause (I’m going to ignore the IRS pension rules for the moment re legality).
The GA has been gradually easing closer to consideration model pension bills, but they haven’t gotten to legal ones yet. And the big problem with consideration models is they generally don’t save a lot of money, so they don’t meet the political objective of eliminating ~ $110B of pension debt.
- RNUG - Wednesday, Jun 8, 16 @ 2:14 pm:
- Dan Johnson -
Over almost every period since the Feds started calculating it (early 1900’s), the CPU has averaged 3%. And yes, it is protected and can’t be changed.
When the State went to the AAI, 3% is what they chose. The historical CPI was one reason. Another reason was the State wanted an easily estimated and budgeted number. A fixed 3% was easier than doing, say, a trailing federal CPI where you would never know the amount from year to year. Finally, at the time 3% was chosen, the CPU back in the 1980’s was anywhere from 6% to almost 14%.
The State thought they were getting a good deal at 3% … and they did for a while. At the moment the retirees are on the better side of the deal, so the State has tried to change it … and found out they couldn’t for existing employees / retirees. The State did change is for Tier 2, ie, new hires after 1/2011.
- Illinois Bob - Wednesday, Jun 8, 16 @ 2:25 pm:
Thanks RNUG.
Great authoritative info as usual.
It seems to confirm my belief that you can’t touch ANYTHING in pension contributions or payouts.
It seems the only way to slow pension liability growth is to massively privatize public employee jobs (which are excluded from the public pension protections) and get those in the pension programs out of accruing higher benefits and costs or shift the expense of new pension obligations to those establishing the other employee compensation (schools primarily) so that the pension contributions, or at least a substantial portion of them, are taken from what would have been salary and benefit raises.
That’s harsh pudding and neither option is desirable, but there’s no way that the people of Illinois can afford raising the revenue above the crushing $140 billion unfunded liability we already have.
- Tone - Wednesday, Jun 8, 16 @ 2:26 pm:
Why does anyone care what Edgar says? He is a primary reason Illinois is in free fall.
- Illinois Bob - Wednesday, Jun 8, 16 @ 2:28 pm:
It also seems that it’s time to dump new employees into social security with 401K matching “bonuses” to be contributed by the public employer dependent on financial condition at the end of the fiscal year.
- Tone - Wednesday, Jun 8, 16 @ 2:35 pm:
Bob is right. No more pensions guaranteed by a Constitution and the citizens.
- Mongo - Wednesday, Jun 8, 16 @ 2:38 pm:
Tone, that’s not anywhere close to the truth. Governor’s right and left of Edgar have all contributed. Edgar remains reasonable, constitutional, and civil. Those traits are not possessed by BVR.
- Tone - Wednesday, Jun 8, 16 @ 2:41 pm:
Edgar Ramp
- RNUG - Wednesday, Jun 8, 16 @ 2:42 pm:
== It also seems that it’s time to dump new employees into social security with 401K matching “bonuses” to be contributed by the public employer dependent on financial condition at the end of the fiscal year. ==
-Illinois Bob-,
You weren’t paying attention. 401K with some level of match plus SS will cost more than Tier 2. The pension fix is already in; it was Tier 2. It’s just going to take 30 years of staying the course and not skipping the employer contribution.
BTW … At one point California was where we were / are. They implemented the equivalent of Tier 2 and a tax increase just like Illinois. Now they are doing well. What was the difference? CA made their tax increase permanent and actually spent it on the pension funds.
- Tone - Wednesday, Jun 8, 16 @ 2:44 pm:
CA is a gorgeous place catering to the wealthy. Illinois is a dump minus Chicago.
- downstate commissioner - Wednesday, Jun 8, 16 @ 2:48 pm:
What Edgar needs to do is announce his candidacy for governor NOW; he has another two years to find a qualified Lt. Gov. to run with him. Unless someone else steps up, he may be the only repub with the popularity to overcome Rauner’s money. Once in for a year or so, retire again and let a competent and trustworthy LT take over.
There are surely a few moderate repubs with the competency to replace Rauner; most of them do not have the money to take him on head-to-head.
- Tone - Wednesday, Jun 8, 16 @ 2:49 pm:
People will pay a premium to live in CA. Not Illinois.
- RNUG - Wednesday, Jun 8, 16 @ 2:52 pm:
== CA is a gorgeous place catering to the wealthy. Illinois is a dump minus Chicago. ==
Since you all have no problems asking me personal questions, which I honestly answer, I’m going to ask you one.
-Tone-, If you hate Illinois so much, why are you here? Why aren’t you in CA?
- Sue - Wednesday, Jun 8, 16 @ 3:11 pm:
Rich- the other problem with the ramp is that the legislature and Governor contemplated that the economy in Zillinois would grow at historic rates so that the pension obligations would consume a manageable share of revenue. No one assumed the payments in 2016 would approach 30 percent of the budget. They would have laughed at that but given what has occurred pension payments are not sustainable absent destroying everything else. Boston commuters pay half of what we pay for monthly METRA tickets all because Springfield subsidies are virtually ZIP. The same is becoming true for everything else. We are punishing the future of the State absent some relief or alternatively taxes will go up but we will see no benefit in the schools or elsewhere though we will be paying more
- RNUG - Wednesday, Jun 8, 16 @ 3:17 pm:
== the other problem with the ramp is that the legislature and Governor contemplated that the economy in Zillinois would grow at historic rates so that the pension obligations would consume a manageable share of revenue. ==
That assumption doesn’t really matter or hold water. Several after the fact studies have shown ~70% of the current $110B shortfall are the result of shorted/skipped payments. We wouldn’t be having this conversation if the payments had been made as scheduled and the debt stood around $33B today.
- Tone - Wednesday, Jun 8, 16 @ 3:28 pm:
If it weren’t for family, great jobs and Chicago, we would be out.
- Sue - Wednesday, Jun 8, 16 @ 3:28 pm:
Tone- you are blaming the wrong G. Thompson’s 3 percent COLA giveaway on his way out the door (and in the same legislative bill in which he more or less doubled his own pension) is THE reason we are in this mess
- RNUG - Wednesday, Jun 8, 16 @ 3:55 pm:
== Thompson’s 3 percent COLA giveaway on his way out the door (and in the same legislative bill in which he more or less doubled his own pension) is THE reason we are in this mess ==
So, Sue, you are saying the studies that attribute about 10% of the pension shortfall to the AAI are wrong?
- Illinois Bob - Wednesday, Jun 8, 16 @ 4:17 pm:
@RNUG
=You weren’t paying attention. 401K with some level of match plus SS will cost more than Tier 2=
You didn’t pay attention to my answer. the 401K contribution would be optional. Private companies have often forgone matching funds to the 401Ks when times are tough.
One advantage of the SSC contribution is that it’s not “optional” and poor returns on investment won’t affect it. Defined contributions instead of defined benefits with market risk on the employer may be the way to go given the lack of fiscal discipline in Springfield and Chicago.
What APPEARS to cost more may actual cost less in the long term when such risk and the irresponsibility of Springfield is considered.
- Chicago 20 - Wednesday, Jun 8, 16 @ 5:40 pm:
California has a progressive income tax with a top rate of 13.3%.
I only can wish that Illinois changes our state constitution to allow Illinois to join the majority of states and have a progressive income tax so that Illinois can also cater to the wealthy.
- RNUG - Wednesday, Jun 8, 16 @ 8:51 pm:
== You didn’t pay attention to my answer. the 401K contribution would be optional. ==
You can’t change Tier 1 so there is no savings to be found there.
Tier 2 costs the State ZERO. In fact, there are excess funds being paid in that offsets some of the money the State has to pay for Tier 1 every year. Even if you switch to a 401K with NO match, you lose those excess funds helping to offset Tier 1.
And for the non-coordinated, mostly teachers, you have to start paying SS. Doesn’t matter if the State has to pay it or if you cost shift it to the districts and their property taxes. It’s still all money out of the taxpayerpocket. Your just changing whether it comes out of the left pocket or the right one. And you can bet that if there is a cost shift, there will be a demand for a home that state support level of schools in exchange.
It’s clear to me that 401K’s as the State’s primary retirement vehicle will be a losing proposition for the State also.
- Arthur Andersen - Wednesday, Jun 8, 16 @ 8:57 pm:
RNUG, I’m with you 100 percent on all your comments, fwiw.
Bob, for all the experience you often tell us about, did any of it include recruiting people? Doesn’t seem like it, as I can tell you from 30 plus years of experience in State Government (resulting in a big fat pension-thanks!
) that the DB pension was an important piece of the package in recruiting top candidates to work for State agencies. An employer-optional match 401k is basically worthless in that context.
Now, for a couple comments on the “Edgar Ramp,” and pension funding generally.
Some of you all seem to think that the Ramp law back in 1994 was some kind of secret deal foisted upon the GA, stakeholders, and the general public. Absolutely incorrect. The entire GA was provided detailed analysis of multiple scenarios, including the annual cost for each system for each year over the 50-year funding period. No surprises.
Further, when the benefit formulas were changed in FY98 to the flat percentage from the old step formula (e.g. 2.2 % per year for teachers), Edgar mandated a ten-year amortization of the increased cost of the new benefit and contributions from both members and employers (school districts) along with a State share written into the Pension Code. Blago and Filan wiped the latter mandate off the books the first chance they had, causing a several hundred million dollar addition to the unfunded.
Let’s also not forget that the pension systems received $7.3 billion in Pension Bond proceeds, followed immediately by a payment book for $10 billion plus interest. Last I checked, the arbitrage was still positive. The subsequent $2 billion cuts and restart of the ramp in FY 06/07 was very damaging to the funded status of the systems, more than wiping out any gain from the POB’s.
Sue, you’re not completely off base in pointing to the AAI as a contributing factor in the unfunded, particularly where the contribution is only 0.5%. The AAI is in no way the primary or predominant cause of the growth in unfunded.
- Oswego Willy - Wednesday, Jun 8, 16 @ 9:16 pm:
I can read/watch - RNUG - just go chapter and verse and remind us all why he’s the go-to commenter on pensions.
Throw in - AA -, add - steve schnorf -, mix in - Norseman -…
Whoa.
Well done today, - RNUG -, per usual, but I do t take it for granted.
- JS Mill - Wednesday, Jun 8, 16 @ 9:33 pm:
@RNUG & AA- excellent, balanced, truthful work.
Kudos
- RNUG - Wednesday, Jun 8, 16 @ 11:40 pm:
-OW-, -JS-, etc.
Thanks. That makes up for the times I just pound my head on the keyboard and want to type one and two word retorts.
- Arthur Andersen - Thursday, Jun 9, 16 @ 7:27 am:
Thanks, guys.
Always glad to do my part.
- @Adam_Heenan - Friday, Jun 10, 16 @ 12:01 pm:
People who populate the IPI aren’t hurting at all. Those Ayn Randian Objectivists are so far removed from reality they don’t even live in IL. They live in the magical state of Miltonia located on the campus of U of C most of the year’ spend the work day whereever the TTIP and TPP takes teh, and vacation in the hills of Montana.
They have no interest in IL until they’re banking interest from Illinois.