37 Comments - Juice - Wednesday, Jul 13, 16 @ 2:44 pm: Rich, the increase is actually slightly worse than the $323 million. That is the increase from the baseline, which was the projected FY 18 contribution prior to the assumption changes, which was $40 million or so higher than the FY 17 contribution. So we’re really looking at a $360 million increase over the FY 17 contribution. - illinois bob - Wednesday, Jul 13, 16 @ 2:47 pm: This all part of employee compensation costs, and a substantial portion of it has to be taken from any proposed growth in government employee salary and benefit growth. Is it fair that current employees are hurt to fund retiree entitlements? Nope, but neither is it fair that taxpayers who don’t benefit from this at all get hit for the full cost. Welcome to reality, AFCSME. - John Doe - Wednesday, Jul 13, 16 @ 2:49 pm: Makes sense. A return of 7% is much more realistic today’s investment climate. - steward - Wednesday, Jul 13, 16 @ 2:57 pm: “neither is it fair that taxpayers who don’t benefit from this at all get hit for the full cost.” Taxpayers don’t benefit from state workers? - Honeybear - Wednesday, Jul 13, 16 @ 2:57 pm: Don’t feed it. - Honeybear - Wednesday, Jul 13, 16 @ 2:58 pm: Broadside on the wave folks, broadside on without helm or propulsion. - RNUG - Wednesday, Jul 13, 16 @ 3:03 pm: The reality of the pensions ramp, skipped payments, and slow investment growth. - Sue - Wednesday, Jul 13, 16 @ 3:04 pm: When the June 30 returns roll in in the very low single digits- we will be able to multiply this number by two or three for SURS and TRS. - Mama - Wednesday, Jul 13, 16 @ 3:12 pm: I have heard most retirees say they would be willing to pay income tax on their pension(s) if their tax money were put directly into the pension fund(s). - Mama - Wednesday, Jul 13, 16 @ 3:15 pm: The other problem is there are fewer employees paying into the pension funds. Why? All employees hired after 2009 are now paying into a 401K. - Juvenal - Wednesday, Jul 13, 16 @ 3:17 pm: === The reality of the pensions ramp, skipped payments, and slow investment growth. === The reality of retired state police, prison guards, child abuse investigators, and other public servants not keeling over soon enough to suit people like iBob. - RNUG - Wednesday, Jul 13, 16 @ 3:25 pm: == All employees hired after 2009 are now paying into a 401K. == Not true. All employees hired since 1/1/2011 are in Tier 2. All the Tier 2 member’s money go into the same 5 pension funds as Tier 1. I will agree there are exceptions to this. Under SURS, you can choose to have a self-managed fund that is more or less the equivalent of a 401K, but not exactly the same. Most the other systems do not currently offer a self-directed plan, except as an additional Deferred Compensation 457 plan (with no State match) on top of the Tier 1 / Tier 2 plan. - Enviro - Wednesday, Jul 13, 16 @ 3:27 pm: = taxpayers who don’t benefit from this at all get hit for the full cost= Taxpayers of Illinois pay the employer’s share because the state is the employer. - Anonymous - Wednesday, Jul 13, 16 @ 3:32 pm: Social service agencies should be paid for the services they have rendered pursuant to their contracts with the state. Similarly state retirees should be paid the full amount they are owed for the services they have rendered. Theirs is not only a contract, but one guaranteed by the constitution - Robert the 1st - Wednesday, Jul 13, 16 @ 3:32 pm: =The reality of retired state police, prison guards, child abuse investigators, and other public servants not keeling over soon enough= Work for 25 years and collect a pension for 30 or more. Not sustainable. - Arthur Andersen - Wednesday, Jul 13, 16 @ 3:40 pm: Sue, you should know better than to write that nonsense. Whatever the FY16 performance turns out to be, it will be averaged, or smoothed as the law says, with the last four years’ returns to get the rate used in the funding calculation. - Whatever - Wednesday, Jul 13, 16 @ 4:05 pm: ==Work for 25 years and collect a pension for 30 or more. Not sustainable. == Very sustainable, IF the state had made contributions on a current basis to keep the plans fully funded. Many defined benefit plans of large corporations were so heavily overfunded because sometimes the stock market did better than the actuaries predicted that the company closed the plan down to capture the excess investment and Congress had to impose a penalty for doing that to stop it. This whole problem is from falling so extremely far behind in the funding. - DuPage - Wednesday, Jul 13, 16 @ 4:12 pm: @Mama 3:12===I have heard most retirees say they would be willing to pay income tax on their pension(s)=== I know a lot of retirees, and have not heard any of them say that. - SecondGear - Wednesday, Jul 13, 16 @ 4:17 pm: Pensions rely on the employer/state to manage the whole retirement process from beginning of employment until the retiree is dead. Given the track record of Illinois it would seem making a front loaded system like a 401k would help both pensioners and tax payers. When the employee retirees there is a huge amount of money handed to them and they never have to worry about the state underfunding or not having the money. The future tax payers then do not have to worry about funding retirement money for state workers who retired. A win/win for both sides. - RNUG - Wednesday, Jul 13, 16 @ 4:22 pm: -DuPage- Although I never planned on it, I would pay state income tax on a reasonable portion of my retirement income … but I also get a better than average pension. I don’t think the state should be taxing the poorer pensioners. And since some state retirees did not have a choice on SS participation, the tax should either include SS income or have an exemption for those non-SS retirees equal to what their SS income would have been. Otherwise it is unequal treatment. - Fantasy - Wednesday, Jul 13, 16 @ 5:00 pm: Why are we continuing to live in a fantasyland? With fewer workers supporting more retirees, people living longer (but still retiring at a “young”age), and getting as much as 80 percent of final salary with COLA’s, no amount of cash diverted from education, health care and social services, and no realistic increases in tax burdens, can possibly sustain the pillars holding up the house of cards. Years, yes. Decades, No. Maybe the Dow goes to 50,000 or we have 1980 style inflation again, and all the funds get bailed out or diluted. But I wouldn’t count on it. - Illinois Bob - Wednesday, Jul 13, 16 @ 5:07 pm: @steward =Taxpayers don’t benefit from state workers?= Not commensurate to the cost, and extremely negative consequences, of the pension and overall compensation program for Illinois. Abuses like the potential $59K per increase in annual pension payments to Mautino if he sticks it out for year instead resigning are just another indication of that. Honeybear, when you have an evil and good wolf, the one that wins is the one you feed. Feed your “evil wolf” all you want…but the good wolf may have something to say about that. - Arthur Andersen - Wednesday, Jul 13, 16 @ 5:17 pm: Second, that’s a very simplistic way to view a complicated, long-term process. First of all, 401(k) accounts take 2-3 times as much to administer as a DB pension fund. That is not a small sum over a working career. Secondly, a 401(k) is no more or less “front loaded” than a DB pension-employer match contributions are made periodically over the career lifetime just like the pension. As far as the State, the unfunded liability still has to be paid off regardless of what funding scheme is devised for new employees, as are Tier 1 and Tier 2 normal cost. In conclusion, that dog won’t hunt. - City Zen - Wednesday, Jul 13, 16 @ 5:23 pm: @RNUG I wouldn’t say it’s unequal. Folks already paid taxes on those SS contributions. Why should they be taxed again? Plus, there is the “redistribution” element in SS where folks that made more get less back from the system, another form of tax, whereas pensioners get every dime out of the system they put in. You could say majority of folks collecting SS have paid taxes twice. - Ron - Wednesday, Jul 13, 16 @ 5:36 pm: Eliminate pensions, especially taxpayer guaranteed pensions. It’s an abomination to all that is just. - AnonymousOne - Wednesday, Jul 13, 16 @ 5:51 pm: Not sustainable? Please explain IMRF. Funded at over 95% (because employers are not legally allowed to skip payments) and is so well funded that retirees receive not 12 payments, but 13 per year! Explain that one. - PublicServant - Wednesday, Jul 13, 16 @ 6:19 pm: This has been litigated and settled. Stay any pay the constitutionally promised catch up costs from decades of a lack of funding by politicians you elected, or leave the state. I’m good with your decision either way. - Enviro - Wednesday, Jul 13, 16 @ 6:21 pm: =Eliminate pensions, especially taxpayer guaranteed pensions. It’s an abomination to all that is just= And replace pensions with what? Social Security and a 401k? - A Jack - Wednesday, Jul 13, 16 @ 6:22 pm: New York State also has a fully funded pension system. - truthteller - Wednesday, Jul 13, 16 @ 6:51 pm: Illinois has a wad of bills in addition to the monies owed to the pension funds. Should it try to skip out on those, too? Why single out pensions for non-payment, particularly when the Supreme Court has already told you three times that you can’t? - Cook County Commoner - Wednesday, Jul 13, 16 @ 7:19 pm: State, county and local pols will increase taxes to the extent they can to ensure election and re-election. There will continue to be a tug and pull between pension payment/funding and providing current services. When taxpayers have had enough, you’ll know. You can analyze this any way you want. Fairness, ethics, constitutionality, statutes. The ISC can hold the State Assembly in contempt for ignoring an order to raise taxes, although I am unclear how it would enforce such an order, assuming it had the power to issue it. Unless a miracle occurs, there will be pain, and the only people that matter are the taxpayers and their presently unknown capacity to willingly accept the medicine. - Anonymous - Wednesday, Jul 13, 16 @ 7:29 pm: “Work for 25 years and collect a pension for 30 or more. Not sustainable.” Wrong. Infinitely sustainable. Just make the required payments. - Mama - Wednesday, Jul 13, 16 @ 8:01 pm: Rauner has not made any payments into our pension funds. - RNUG - Wednesday, Jul 13, 16 @ 9:32 pm: == Rauner has not made any payments into our pension funds. == Also not true. Most of them have been made since Rauner took office. But Rauner may be planning to short the pension funds for FY17. - Arthur Andersen - Wednesday, Jul 13, 16 @ 9:56 pm: RNUG, as I read the stopgap, the pensions are fully funded for FY 17. Could be wrong. - Last Bull Moose - Wednesday, Jul 13, 16 @ 10:25 pm: My sisters are retirees and willing to see their pensions taxed. Few people can save enough in 25 years of work to fund 30 years of retirement. 45 to fund 25 is more doable. Even then fear dementia or chronic diseases. - RNUG - Thursday, Jul 14, 16 @ 12:23 am: -AA- I’m not as good as you in going through the budget. I wasn’t sure about it. Thanks. Sorry, comments for this post are now closed.