More lousy pension news
Tuesday, Nov 22, 2016 - Posted by Rich Miller
* Greg Hinz…
A Chicago agency that thought it had finally solved its pension woes has been dragged back into a nasty underfunding morass, and the situation is complicating its new budget.
Three years ago, the Chicago Park District reached a precedent-setting deal with its unions that called for both workers and taxpayers to pay more, and for the district’s retirement plan to be fully funded by 2049. But then the Illinois Supreme Court ruled in cases dealing with the state and city that benefits could not be reduced for those already on the payroll, and SEIU sued to overturn the park district deal.
“We believe we will lose the court case,” concedes Steve Lux, the district’s chief financial officer. So, as per a preliminary court ruling, both the district and workers are back on their lower, previous funding schedule, even though as of Dec. 31 the park district’s pension fund was roughly $515 million short of the assets needed to pay promised benefits, and was only 43 percent funded.
In the short run, that means extra money for pensions will not have to be included in the $449.4 million proposed 2017 budget parks Superintendent Mike Kelly is unveiling today. The district will contribute $20.1 million toward pensions, about $7 million less than required under the 2013 deal and less than the $36 million that actuarially is required. […]
If the district ends up following the pattern in the city, new hires will pay more, and taxpayers will pay a lot more. In the city’s case, police and fire retirement funds are getting a $453 million property tax hike that’s being phased in over several years. There are other levies for other employee units.
- City Zen - Tuesday, Nov 22, 16 @ 12:47 pm:
In addition to taxing the fellow behind the tree, perhaps the park district can tax the tree.
- Ron - Tuesday, Nov 22, 16 @ 1:03 pm:
It’s a shame our courts are so stupid.
- Robert the 1st - Tuesday, Nov 22, 16 @ 1:06 pm:
Congress needs to expand federal bankruptcy protections. Trump will sign it. He loves bankruptcy.
- Anon - Tuesday, Nov 22, 16 @ 1:08 pm:
Here is an idea: How about they pay the bill rather than some small percentage of the bill with the hope that people forget what they are owed?
- Stones - Tuesday, Nov 22, 16 @ 1:08 pm:
Ron @ 1:03p
The Courts aren’t stupid, they’re just interpreting crystal clear language in the Illinois Constitution.
- Demoralized - Tuesday, Nov 22, 16 @ 1:16 pm:
==Congress needs to expand federal bankruptcy protections==
Yeah, because that’s a great solution.
==It’s a shame our courts are so stupid.==
Sometimes the law is inconvenient isn’t it?
- Demoralized - Tuesday, Nov 22, 16 @ 1:20 pm:
==perhaps the park district can tax the tree==
And tick the squirrels off even more? Have you not seen what they are capable of?
- Not iy - Tuesday, Nov 22, 16 @ 1:21 pm:
More lousy corruption news. We should name this trick the Steve Brown loophole:
https://thesecretsix.com/investigation/conflicted-how-a-chicago-alderman-and-his-lobbyist-chief-of-staff-are-skirting-ethics-law/
- Anon1234 - Tuesday, Nov 22, 16 @ 1:21 pm:
Regarding federal bankruptcy laws, I thought cities can declare bankruptcy (Detroit). My question is who would take the pain in bankruptcy? Pensions or bond holders? Ultimately, does anyone predict Chicago can avoid bankruptcy with the current pension obligations and only modestly higher taxes?
- Ron - Tuesday, Nov 22, 16 @ 1:34 pm:
Math will always win out against a constitution.
- Ron - Tuesday, Nov 22, 16 @ 1:35 pm:
Regarding federal bankruptcy laws, I thought cities can declare bankruptcy (Detroit). My question is who would take the pain in bankruptcy? Pensions or bond holders? Ultimately, does anyone predict Chicago can avoid bankruptcy with the current pension obligations and only modestly higher taxes?”
Illinois does not allow municipal bankruptcy, it needs to. Both bond holders and pensioners will lose. Which is fair of course,
- Piece of Work - Tuesday, Nov 22, 16 @ 1:37 pm:
I usually don’t care for what Demo says but his last post was hilarious!
- Simple Simon - Tuesday, Nov 22, 16 @ 1:39 pm:
Bankruptcy is talked about a lot on this site, with the smarter folks always reminding us that it never quite works out like the reactionaries want. Bondholders have (and should) get a major haircut, and the more vulnerable retirees, who have fewer resources and would pay a higher human cost, often get more favorable treatment. I suspect many bankruptcy supporters would not be happy with that outcome.
- Arthur Andersen - Tuesday, Nov 22, 16 @ 1:41 pm:
The Lawyer for the Park District on that original deal should be sued for malpractice. It’s long-settled Federal law that pension contributions can’t be increased without a concurrent and financially equivalent increase in benefits.
- Liberty - Tuesday, Nov 22, 16 @ 1:45 pm:
Anon1234- Bankruptcy is a big mess. How much will Navy Pier bring in a fire sale? In Detroit “outside contributors agreed to put $800 million into Detroit’s underfunded pension plans in exchange for taking the Detroit Institute of Art’s priceless collection of Van Goghs, Matisses and Picassos off the bargaining table.”
- Six Degrees of Separation - Tuesday, Nov 22, 16 @ 1:51 pm:
If CPD was ready to put $7 million more into the system per year to start whacking away at the unfunded liability, why don’t they continue with Plan A instead of kicking the can further down the road?
- Chicago Taxpayer - Tuesday, Nov 22, 16 @ 2:37 pm:
=If CPD was ready to put $7 million more into the system per year to start whacking away at the unfunded liability, why don’t they continue with Plan A instead of kicking the can further down the road?=
Why should they if the union won’t do jack? Better to spend it on the kids.
- Illinois Bob - Tuesday, Nov 22, 16 @ 3:07 pm:
New “Welcome to Illinois” sign at Tollroads and interstates, “Abandon Hope All Ye Who Enter Here”. I order to maintain political power and corruption the pols spent big time and gave away the store to public employees, but were too gutless to raise taxes to pay for their giveaways. I don’t know of any other state that has been governed so poorly and dishonestly, or had so many “ostrich” voters that kept electing these kinds of people….
- facts are stubborn things - Tuesday, Nov 22, 16 @ 3:19 pm:
@Ron - Tuesday, Nov 22, 16 @ 1:03 pm:
=It’s a shame our courts are so stupid.=
The courts correctly interrupted the plain meaning of the words that were placed into the IL constitution precisely to protect pensioners from these times. The only tings stupid is that folks have accepted state services without being taxed for them, allowing their representatives to rob the pension funds. Now the bill is due and folks like you are blaming the courts? The courts have preserved the rule of law!
- facts are stubborn things - Tuesday, Nov 22, 16 @ 3:26 pm:
@ Ron - Tuesday, Nov 22, 16 @ 1:34 pm:
=Math will always win out against a constitution.=
Not sure what that means, however, I know that math would not mean much without a constitution and the rule of law. It would be sobering to me, if when the math gets tough or inconvenient the politicians could just do what they want.
- Anonymous - Tuesday, Nov 22, 16 @ 3:52 pm:
=Not sure what that means, however, I know that math would not mean much without a constitution and the rule of law. It would be sobering to me, if when the math gets tough or inconvenient the politicians could just do what they want.=
In the long run, you can’t spend what you don’t have-unless you’re the federal government.
- Ron - Tuesday, Nov 22, 16 @ 4:27 pm:
- Simple Simon - Tuesday, Nov 22, 16 @ 1:39 pm:
Bankruptcy is talked about a lot on this site, with the smarter folks always reminding us that it never quite works out like the reactionaries want. Bondholders have (and should) get a major haircut, and the more vulnerable retirees, who have fewer resources and would pay a higher human cost, often get more favorable treatment. I suspect many bankruptcy supporters would not be happy with that outcome.
Sounds like what should happen to me.
- Ron - Tuesday, Nov 22, 16 @ 4:28 pm:
- facts are stubborn things - Tuesday, Nov 22, 16 @ 3:26 pm:
@ Ron - Tuesday, Nov 22, 16 @ 1:34 pm:
=Math will always win out against a constitution.=
Not sure what that means, however, I know that math would not mean much without a constitution and the rule of law. It would be sobering to me, if when the math gets tough or inconvenient the politicians could just do what they want.”
Constitutions don’t pay bills. When there is no money. Game is up.
- Anonymous - Tuesday, Nov 22, 16 @ 4:43 pm:
Just tax the people of Chicago more. What’s the problem.
- RNUG - Tuesday, Nov 22, 16 @ 4:43 pm:
== Regarding federal bankruptcy laws, I thought cities can declare bankruptcy (Detroit). ==
That varies by state. In Illinois, it is technically possible but it requires the explicit permission of the General Assembly … so effectively there is no municipal bankruptcy in Illinois.
== My question is who would take the pain in bankruptcy? Pensions or bond holders? ==
Depends. Detroit’s example listed above had a bunch of wealthy Detroit citizens pony up to save the one museum being sold off, so the retirees came out mostly whole and the bond holders took a haircut. In a couple of California towns, retirees mostly won and bond holders mostly lost. Puerto Rico is still in question but early moves are protecting retirees and bond holders are having payments delayed. Here in Illinois, my guess is the retirees would get 90% - 100% and the bond holders maybe 20% or less, but you just never know.
== Ultimately, does anyone predict Chicago can avoid bankruptcy with the current pension obligations and only modestly higher taxes? ==
Chicago has the wealth to pay things off, but, so far, not the political will to raise taxes high enough (even though they have been raising taxes some). Ditto for the State.
- Robert the 1st - Tuesday, Nov 22, 16 @ 7:08 pm:
It’s up to the bankruptcy judge correct? Couldn’t he or she protect the fist $30k/year or so then pay $.50/$1 for any amount above that? Protect the modest pensions and haircut the large ones?
- Demoralized - Tuesday, Nov 22, 16 @ 7:20 pm:
You think anything over 30k is a large pension?
- Robert the 1st - Tuesday, Nov 22, 16 @ 7:25 pm:
Arbitrary number there. But the union for years has been claiming the average pension is below 30k.
- Robert the 1st - Tuesday, Nov 22, 16 @ 8:13 pm:
Would be pretty ironic if a federal judge ends up using that “curious” AFSCME figure to base any cut-off on wouldn’t it?
- Anonymous - Tuesday, Nov 22, 16 @ 8:21 pm:
Well since bankruptcy ain’t happening at the state level this discuss is academic for that group. As for the city anyone hoping for bankruptcy needs their head examined.
- Demoralized - Tuesday, Nov 22, 16 @ 8:23 pm:
That was me.
- Robert the 1st - Tuesday, Nov 22, 16 @ 8:48 pm:
Yeah, I got a little off topic. But government pensions are causing many problems from coast-to-coast. Considering the new wild-card Presidential administration and GOP congress, the Feds might be providing more options to municipalities and states alike in the next few years.
- Demoralized - Tuesday, Nov 22, 16 @ 8:51 pm:
I don’t think the solution should be trying to figure out how not to pay them.
- Robert the 1st - Tuesday, Nov 22, 16 @ 9:03 pm:
Maybe our new reality-TV government will cause hyperinflation and all the pension problems will be solved organically? Who knows?
- Demoralized - Wednesday, Nov 23, 16 @ 7:30 am:
Great idea!