64 Comments - RNUG - Thursday, Apr 20, 17 @ 11:29 am: One key point from the report; because of the ramp, in 2015 Illinois only paid in 72% of the amount that was needed to stop the debt from growing. Like it or not, we’ve dug such a deep hole it’s going to take even makeore money to stop digging the hole. - Norseman - Thursday, Apr 20, 17 @ 11:31 am: Rich, keeping the comments closed was probably a subconscious recognition that you’d get the same whirlwind of comments from public workers and public worker haters. Let the trolls begin. - DuPage - Thursday, Apr 20, 17 @ 11:35 am: Hey Governor Rauner, you have said you want Illinois to be more like Wisconsin, among others. Here’s a good thing Wisconsin has done that you should aim for, full funding of the pension systems. - Reality Check - Thursday, Apr 20, 17 @ 11:35 am: Interesting that New York, with the state constitutional language upon which the Illinois pension clause is based, has one of the nation’s most healthfully funded pension systems. - AnonymousOne - Thursday, Apr 20, 17 @ 11:37 am: ==we’ve dug such a deep hole== And getting deeper every day! Solutions do exist and have been presented (Martire, for example). But it seems there is no will to even attempt to fix the problem. So it grows. You have to wonder if that’s by design……… - Lucky Pierre - Thursday, Apr 20, 17 @ 11:38 am: Nothing to see here move along, fixing this issue is the Governor’s personal agenda and is not related to the budget in any way. - Driveby - Thursday, Apr 20, 17 @ 11:40 am: And that doesn’t include healthcare for pensioners, also constitutionally protected. Another $50B for IL. Memo to COGFA: Get the damn actuary report done for healthcare. The last one done on your site is from 2014. - thechampaignlife - Thursday, Apr 20, 17 @ 11:40 am: Maybe the feds should redirect our federal funding to pensions until we can caught up. That would avert the need for a bailout or bankruptcy. Could probably amortize it over a decade to reduce the shock to wherever those funds are going now, and design it so the current level of state pension contributions have to continue. - Oswego Willy - Thursday, Apr 20, 17 @ 11:46 am: ===Nothing to see here move along, fixing this issue is the Governor’s personal agenda and is not related to the budget in any way.=== Fact; Rauner’s plan equals a 1.4% or $500+ million in generated revenues… by Rauner’s own numbers. That ain’t gonna cut it, but good try - Lucky Pierre - - A guy - Thursday, Apr 20, 17 @ 11:49 am: Just amazing. Too horrific for an average Joe to even contemplate. 10% of the entire country…wow. Just wow. - Lucky Pierre - Thursday, Apr 20, 17 @ 11:50 am: Wrong again OW Pension reform alone is 1 billion dollars a year according to Senator Culllerton there are many more stop with the misdirection and fake news - Chicagonk - Thursday, Apr 20, 17 @ 11:58 am: If only the Illinois constitution had required the pension system to be fully funded at the same time it said that benefits couldn’t be reduced. - Robert the 1st - Thursday, Apr 20, 17 @ 12:00 pm: =Maybe the feds should redirect our federal funding to pensions until we can caught up= Redirect from what? Education? Medicaid? - Lucky Pierre - Thursday, Apr 20, 17 @ 12:04 pm: This should be the headline in every Illinois newspaper and the lead story on every newscast in Illinois. It is a huge national story as well. Maybe the Speaker can come out from under his desk and give his thoughts on the matter and defend his statement that this is a non budget issue that is part Governor Rauner’s personal agenda. - Oswego Willy - Thursday, Apr 20, 17 @ 12:05 pm: ===Wrong again OW=== Rauner made clear, his Turnaround Agenda package equates to 1.4% or a $500+ million increase. I know it’s not the type of facts you like, but they are facts. ===Pension reform alone is 1 billion dollars a year according to Senator Culllerton=== It has yet to be seen as constitutional. Further, Rauner vetoed the $215 million specific that there was no pension reform to be “found” and passed Now it does exist? Which is it for you, it exists or it doesn’t, lol ===there are many more…=== You can type, what else? So far, nothing. ===…stop with the misdirection and fake news=== Are you calling Rauner’s numbers the gave to Rich Miller fake news? That’s fun LOL - titan - Thursday, Apr 20, 17 @ 12:08 pm: ++++ Lucky Pierre - Thursday, Apr 20, 17 @ 11:38 am: Nothing to see here move along, fixing this issue is the Governor’s personal agenda and is not related to the budget in any way. +++ Did I miss seeing the Governor propose a truly balanced budget that included fully funded current payment and some realistic payments toward the amounts “borrowed” from the pensions in past years? None of the “fixes” being bandied about for “fixing” things going forward (even assuming their full legal validity) do much for the biggest part of the problem (the funds “borrowed” from the pensions in the past. - Oswego Willy - Thursday, Apr 20, 17 @ 12:09 pm: ===Maybe the Speaker can come out from under his desk and give his thoughts on the matter and defend his statement that this is a non budget issue that is part Governor Rauner’s personal agenda.=== … Or maybe Rauner could be honest that the main reason Rauner won’t personally propose something with his name (”Rauner Pension Solution”) is that the Rauner Tax will required to make any solution work. Oh - Lucky Pierre - Is Rauner so inept he can’t have a Rauner Solution? - Just about done with Illinois - Thursday, Apr 20, 17 @ 12:14 pm: I’m a State of Illinois retiree so I have a vested interest in keeping the pension funds liquid. But I was also from the generation which believed we fulfilled the financial and legal obligations we entered into. Somewhere our Governor, Legislators and even fellow citizens have forgotten that society only functions when we all respect and follow the laws. That includes making financial payments as we agreed to do. There were many periods during my working career that my family could not take a vacation, go to a movie, or even order a take-out pizza because I wasn’t earning a whole lot from my State of Illinois job and I had to make the mortgage payment, pay my income and property taxes (YES, State of Illinois employees pay taxes just like everyone else)along with buying food and paying for utilities. It is time our leaders, Governor and Legislators, face facts and do what many of use have had to do and many of us are still doing, tight our belts and spend less to make the mandatory payments or get a second or third job ( or in the State’s case - raise taxes) or better still a combination of the two. - Ghost - Thursday, Apr 20, 17 @ 12:16 pm: The COFGA numbers arent using the tier 2 earnings. They ate projecting liability for tier 2 employees, but tier 2 employees are overfunding. Plus new hires are all tier 2. accept fro the govt heads the Rauner gices tier 1 benefits because the tier 2 arent sufficient - Puddintaine - Thursday, Apr 20, 17 @ 12:20 pm: Don’t waste time blogging, get your money out while you still can! Don’t take my word for it, ask those folks in Dallas how it went just last month. - Lucky Pierre - Thursday, Apr 20, 17 @ 12:26 pm: What do you think has a better chance of passing the Democratic Senate? The Cullerton pension plan or the Rauner pension plan? I thought compromise was what leaders were supposed to do and you trash it. Typical - Oswego Willy - Thursday, Apr 20, 17 @ 12:30 pm: ===The Cullerton pension plan or the Rauner pension plan?=== Do you admit Rauner is grossly inept at passing legislation. Got it. Thanks. ===I thought compromise was what leaders were supposed to do and you trash it.=== No, that was Bruce Rauner, trashing the grand compromise and undercutting Leader Radogno. So Rauner is inept, trashes compromises, and can’t even propose legislation that’s passable. Why are you such a fan, - Lucky Pierre -? lol - Anonymous - Thursday, Apr 20, 17 @ 12:33 pm: Rauner did not propose the Cullerton plan and if Cullerton can’t pass his own bill you blame Rauner. Great logic there you should carve that into limestone - Scottish - Thursday, Apr 20, 17 @ 12:41 pm: When employees were swept into the union, the unfunded pension liability increased over $200 Million due to salary increases for the new union titles. We also have about $34 Billion in unfunded health insurance liability for employees and retirees. - Rosco Jenkins - Thursday, Apr 20, 17 @ 12:48 pm: Maybe the state should pay benefits for the people who work instead of giving it all away to the people who don’t . The pension money went somewhere - Six Degrees of Separation - Thursday, Apr 20, 17 @ 12:49 pm: Well, the state has 4% of the population, and has been upside down on the pension for decades. Be glad it’s not more than 10%. - titan - Thursday, Apr 20, 17 @ 1:08 pm: +++ - Rosco Jenkins - Thursday, Apr 20, 17 @ 12:48 pm: Maybe the state should pay benefits for the people who work instead of giving it all away to the people who don’t . The pension money went somewhere +++ The pensions are ‘deferred comp’ to people who worker - the payouts are paying a debt to people who worked for many years (many of whom aren’t eligible for social security because of the state pension plans - people like teachers, for example). The “missing money” went to roads and state police services, state parks, social services, and all the other facets of the state’s budget (instead of everyone paying higher taxes in past years). - anon2 - Thursday, Apr 20, 17 @ 1:59 pm: South Dakota’s pensions are funded at 104%, while Wisconsin’s are funded at 98.3%. What was that from the IPI about traditional pensions being inherently unviable? - titan - Thursday, Apr 20, 17 @ 2:29 pm: The South Dakota system looks like is remarkably similar to the Illinois system as to payout levels (and other items like early retirement). I’d bet that the state made all of its pay-ins instead of borrowing from the systems to spend on other things. - Richard head - Thursday, Apr 20, 17 @ 2:38 pm: Welfare system in Illinois is bleeding this state dry unless we get reform there will never be enough tax dollars. You need to where all the money I going - Juice - Thursday, Apr 20, 17 @ 2:43 pm: Richard, the percent of Wisconsin’s population on Medicaid is roughly the same as the State of Illinois. The money that should have been contributed to the pensions went largely to the pockets of taxpayers by keeping taxes artificially low for decades. Not to poor people. - City Zen - Thursday, Apr 20, 17 @ 3:38 pm: =the payouts are paying a debt to people who worked for many years (many of whom aren’t eligible for social security because of the state pension plans - people like teachers== They are not eligible for social security because they do not pay into social security. If they had paid, their entire pension structure would look different. Plus, that’s a 6.2% bonus every check, whereas my private sector wages are suppressed 6.2% due to the employer match. All for a fund that most likely won’t be around when I’m eligible. ==The “missing money” went to roads and state police services, state parks, social services, and all the other facets of the state’s budget (instead of everyone paying higher taxes in past years).== Don’t forget employee raises, health benefits, the jobs themselves, etc. One person’s higher taxes is another person’s pay freeze. - Sue - Thursday, Apr 20, 17 @ 3:43 pm: Of course it’s all Rauners fault - Sue - Thursday, Apr 20, 17 @ 3:46 pm: Everyone complaining that this was caused by artificial low tax rates- wrong- caused by generous spending in all facets of govt along with decades of benefit increases and early retirement incentives with generous COLA all without concern for cost - City Zen - Thursday, Apr 20, 17 @ 3:49 pm: ==Maybe the state should pay benefits for the people who work instead of giving it all away to the people who don’t.== Social Justice Warriors deserve a living wage too, you know. - JS Mill - Thursday, Apr 20, 17 @ 3:52 pm: =They are not eligible for social security because they do not pay into social security.= I paid into SSI. In fact I maxed out my last two years. I will get next to nothing from SSI- my money, along with my Federal income tax will go to prop up and/or subsidize SSI. You are welcome. = caused by generous spending in all facets of govt along with decades of benefit increases and early retirement incentives with generous COLA all without concern for cost= The “COLA” is actually the Automatic Annual Increase and you can thank Jim Thompson for that. The cost is manageable if the state actually makes it’s payment. The annual cost goes down every year thanks to Tier 2. It is down $500 million (per year) since 2011. - Anonymous - Thursday, Apr 20, 17 @ 3:55 pm: 6.2%. What a deal. Wish teachers could only pay 6.2%. Teachers paid 9.4% (so I suppose their wages were suppressed by 9.4% just as yours were suppressed 6.2%). As far as taxes going to pay salaries, benefits, raises…………how else would they be paid? Is there some kind of profit involved in teaching kids? Profit sharing? Don’t you know how public services provided are paid by those who consume them? - Gruntled University Employee - Thursday, Apr 20, 17 @ 3:56 pm: ==Plus, that’s a 6.2% bonus every check, whereas my private sector wages are suppressed 6.2% due to the employer match.== My state pension contribution is 8.5% which is 2.3% less than your SS contribution. That leaves you with 2.3% more money to contribute to an IRA to supplement your retirement. I’d be willing to bet that a 2.3% annual contribution to an IRA over the lifetime of a career coupled with SS would yield a retirement that’s very similar to the state retirement system. - Sue - Thursday, Apr 20, 17 @ 3:58 pm: JA- yes we can thank big Jim for the COLA his going away present to organized Labor and under the same legislation he took care of his own enriched pension package. As far as reasonable- inflation has been under 3 percent for the past perhaps 15 years. The legislature failed to impose a CPI cap and of course compounding increases at 3 percent is a massively expensive proposition. Pensioners have received larger raises then the active workforce for at least the last decade - City Zen - Thursday, Apr 20, 17 @ 3:59 pm: @JS Mill - The thanks should be coming from your fellow Boomers. ==The cost is manageable if the state actually makes it’s payment.== Anything is manageable if you actually make the payment. ==The annual cost goes down every year thanks to Tier 2. == Until safe harbor. I wouldn’t bank on Tier 2 savings as the plan exists today. No one should. - Anonymous - Thursday, Apr 20, 17 @ 4:10 pm: ==Anything is manageable if you actually make the payment== SO why didn’t administration after administration NOT make the payments? WHy did they choose to short the pension funds of loyal workers? Gee, could it be because there were so many other pots to put the money into and they felt the political need to NOT raise taxes to pay those pots as well as workers’ retirement funds? Hmmm. Not enough money to pay for all of our needs. SOunds like we need to cut tax rates, now, doesn’t it? /s - Sue - Thursday, Apr 20, 17 @ 4:33 pm: I don’t think any teacher participating in TRS actually pays the 9.4 out of pocket. Most If not all get the employee “pick-up” where the district’s pay the contribution- save the argument it’s part of the negotiated comp - City Zen - Thursday, Apr 20, 17 @ 4:35 pm: ==6.2%. What a deal. Wish teachers could only pay 6.2%. Teachers paid 9.4%== ==My state pension contribution is 8.5% which is 2.3% less than your SS contribution.== Did they legalize marijuana today? Time out, fellas. As long as you’re sharing withholdings, allow me to share mine. While I do indeed withhold 6.2% towards SSI, I also contribute 12% (read: TWELVE PER-CENT) towards my 401k. For those of you keeping score at home, that over 18%. Will my combined 18% equal your meager 9%-ish contributions come retirement time? It might, if I didn’t have to give away a large chunk of my SSI with everyone or if I could collect at age 55. Or if my employer matched more than 3% of my 401k and/or let me vest immediately. Or if I don’t live very long. It’s not your fault SSI sucks, but unfortunately, it does for my generation. Not only does it have a poor payback for professionals, it also suppresses my gross wages. I would much rather have me and my employer deposit 6% total into an index fund over my career vs the 12.4% into the SSI pit we currently do. - Anonymous - Thursday, Apr 20, 17 @ 4:40 pm: Mine did not. Do not speak for me. - City Zen - Thursday, Apr 20, 17 @ 4:43 pm: ==So why didn’t administration after administration NOT make the payments? Why did they choose to short the pension funds of loyal workers? Gee, could it be because there were so many other pots to put the money into== No doubt there were plenty of pots to fill. But one of those pots was employee raises. Another was health benefits. Another was job openings. To deny their existence is to deny the fungibility of money. So over 30-35 years working for the state, is your contention that if we had made each and every pension payment, there would have been zero impact to your compensation with less money to spread around? Maybe your health plan deductible wouldn’t have been as good? Maybe that 3% raise would’ve been 2%? Not even one year out of 35? If not, can I take you to Vegas? - titan - Thursday, Apr 20, 17 @ 4:48 pm: +++ - Sue - Thursday, Apr 20, 17 @ 4:33 pm: I don’t think any teacher participating in TRS actually pays the 9.4 out of pocket. Most If not all get the employee “pick-up” where the district’s pay the contribution- save the argument it’s part of the negotiated comp +++ The district pick up of the teacher’s share is usually negotiated in lieu of raises of similar amounts, and ends up reducing the pension amounts (because that money isn’t part of the salary on which the pension is calculated). You should be happy about that, not against it. - Anonymous - Thursday, Apr 20, 17 @ 4:48 pm: Maybe some of you who whine about SSI not being around for you should check out exactly where your payments are going. I do know that state pensions are NOT going to illegals or handed out to freely to those not exactly qualified. Perhaps you need to do some work of your own on your own defined benefit government plan. - RNUG - Thursday, Apr 20, 17 @ 5:08 pm: == Everyone complaining that this was caused by artificial low tax rates- wrong- caused by generous spending in all facets of govt along with decades of benefit increases and early retirement incentives with generous COLA all without concern for cost == Every study shows the MAJOR cause of the shortage was the failure to fund the plans, followed by the failure to generate earnings because the funds weren’t put in. The extra benefits like the COLA, and even the ERI, are minor in terms of the debt. - JS Mill - Thursday, Apr 20, 17 @ 5:14 pm: @cz- 6.2% is the employee share. Then there is the employer share for SSI, which happens to be about the same as the employer share of TRS. - City Zen - Thursday, Apr 20, 17 @ 5:17 pm: ==The district pick up of the teacher’s share is usually negotiated in lieu of raises of similar amounts== That only works the first year when there’s a this-for-that, say a 5% pension pick-up but no raise. But all those districts now offer both. Why offer a 5% pick-up if you’re also offering a 5% step/lane increase? Doesn’t that counter the original intent of the pick-up, the “in lieu of” part of the deal? The district isn’t saving any money if it does both. - RNUG - Thursday, Apr 20, 17 @ 5:32 pm: As far as SSI goes, it is truly a mixed bag. And it is comparing apples to oranges, because SSI includes disability insurance and somewhat different survivor’s insurance compared to the State (unless you pay the State extra for similar life / disability term coverage). In the private sector, under SSI, high earners subsidize low earners; that’s just the way it works. It doesn’t have to be as bad as it is; they could lift the earnings cap on SSI and fix most of it’s problems. I will also remind you that SSI was intended to SUPPLEMENT your private pension from your workplace … and that worked well until the Feds changed the rules and allowed companies to raid or close out those plans, or until people like Rauner deliberately took companies into bankruptcy to shed those private pension plans, effectively dumping everyone on their own to use IRA’s or 401K’s (again, both of which were intended to SUPPLEMENT your private pension). As to comparing deductions and benefits between SSI and the State plans, along with the above differences, keep in mind there are five different State plans, each plan has different costs and coverage, and within those plans there are variations depending on whether or not you also contribute to SSI. And there are a lot of Federal and State rules that limit what can be collected. For example, if you are in a non-coordinated plan (don’t pay into SSI like TRS / teachers) and also happen to have another job paying into SSI, it is highly likely one of the Federal offset rules will prevent you from collecting SSI on your non-government earnings. For another example if you are in a coordinated plan where you pay into both the State and SSI, there is another offset rule that reduces the State survivor pension by a portion of any increased SSI the spouse receives because you died. If you have strictly private pensions and SSI, these offset rules don’t apply to you. In the private sector, if you work extra and pay in extra to SSI (up to the current cap), you get to draw on it when you retire. Yes, I’ll agree it is a lousy return rate for high earners. So if you want to start arguing what is and isn’t fair, just remember some of the time a government retiree or spouse is penalized under certain programs just for being a government retiree. - RNUG - Thursday, Apr 20, 17 @ 5:39 pm: == The district pick up of the teacher’s share is usually negotiated in lieu of raises of similar amounts, and ends up reducing the pension amounts (because that money isn’t part of the salary on which the pension is calculated). You should be happy about that, not against it. == If Steve Schnorf was still here, he would have made that exact point … the the Final Average Compensation would be reduced by the 9.4% or whatever pickup compounded over the years. Steve implemented such a plan at the State for SERS employees but the next Governor reneged on it. That was an issue I used to quibble with Steve about; the union workers got made whole but the non-union people, primarily titles like PSA and SPSA at the time, never did get made whole when the State reneged, so their FAC ended up 4% lower (compounded). I know Steve had no control over that … but it was still something to bug him about, although I stopped doing it the last year or two. - RNUG - Thursday, Apr 20, 17 @ 5:42 pm: == Doesn’t that counter the original intent of the pick-up, the “in lieu of” part of the deal? == No, because it was, in fact, a one time deal. The savings come from not having a 4% or 9% or whatever higher salary as the base to be compounded on. If you do a spreadsheet and run it out 20 or 30 years, that difference in the base IS a big deal. - Anonymous - Thursday, Apr 20, 17 @ 5:43 pm: One of my parents was a teacher. Other in private industry. Private industry (Social Security earner) passed away after 37 years of contributions, 10 months before intentions of taking SSI benefits. Teacher parent was entitled to ZERO payment after spouse paid in for those 37 years. So, there’s some free money for those in SSI, courtesy of my family. - Anonymous - Thursday, Apr 20, 17 @ 5:47 pm: Incidentally, to folow up on my parents dilemma, we consulted an attorney only to find out the Windfall Provision Act and the Government Offset Provision prohibited my parent from any SSI benefit. Sadly, the TRS monthly benefit paid only 1/3 of the nursing home bills in the final year. This teacher worked for 32 years. So much for those extravagant benefits. - Anonymous - Thursday, Apr 20, 17 @ 5:48 pm: TRS monthly benefit was only 1/3 the cost of monthly nursing home care. - RNUG - Thursday, Apr 20, 17 @ 5:53 pm: My mom and dad were in a similar situation. That is a perfect example of what I was referring to above. - Sue - Thursday, Apr 20, 17 @ 6:26 pm: RNUG- every article on the pension crisis has stated COLA is the biggest contributor of the funding problem - RNUG - Thursday, Apr 20, 17 @ 6:47 pm: Everyone I’ve read SAYS otherwise. I’m not home where I can provide links at the moment. - RNUG - Thursday, Apr 20, 17 @ 7:02 pm: Pull up.the latest COGFA report on pensions. Shows cause of increases from 1996 to current (last 20 years). $44.7B - lack of employer funding - RNUG - Thursday, Apr 20, 17 @ 7:05 pm: $31.0B from changes in assumptions $15.7Bfrom other factors $14.7B from investment shortfalls $5.8B from.benefit increases I’ll give to find the Comptroller and Madiar reports later. - Anonymous - Thursday, Apr 20, 17 @ 7:16 pm: Chicago teachers don’t pay 9 percent, they pay only 2 percent. That is the reason why there is a 215 million dollar hole in the budget and school might end 3 weeks earlier than scheduled. Any all of the democrats blame Rauner not CTU, Forrest Claypool, Rahm, Speaker Madigan, Senator Cullerton, 50 alderman, and all of the Chicago state Reps and Senators - RNUG - Thursday, Apr 20, 17 @ 10:06 pm: -Sue-, I assume you will consider Crain’s and COGFA reliable sources. From a 45 page report published August 10, 2015, Crain’s wrote (emphasis added in caps): “Shorting pension payments to buy immediate budgetary relief. The nonpartisan Commission on Government Forecasting and Accountability, the fiscal research arm of the General Assembly, concluded in 2013 that the LARGEST CAUSE cause of the unfunded pension liabilities was inadequate contributions from the state. Underpayments between 1985 and 2012 totaled $41.2 billion, the agency calculated.” Note that covers the period from 4 years BEFORE the 3% AAI was implemented up through 2012. Crain’s went on to also cite multiple smaller causes including the AAI, changes in investment return assumptions, the two ERI’s, the two recessions, etc. And they continued with: ‘But perhaps the most enduring culprit is the “Edgar ramp,” conceived in 1994 by Republican Gov. Jim Edgar’ That’s the plan that institutionalized deliberate underfunding. Feel free to read the entire 45 pages: http://www.chicagobusiness.com/section/pensions There are lots more reports and studies that reach the same conclusion. - Chas - Friday, Apr 21, 17 @ 8:46 am: Game over for Illinois 1) Professional flight is happening–The professions are leaving and coming to Colorado 2) Once professionals start leaving, the companies start leaving–companies need an educated work force 3) Population shifts is happening–fewer professionals (high taxpayers) more immigrants (low taxpayers) 4) State revenues drop 5) Bond rating drops to junk 6) State cut off from the bond market 7) No federal bailout 8) Game over Sorry, comments for this post are now closed.