We need better numbers
Monday, Nov 25, 2019 - Posted by Rich Miller
* I can certainly understand the frustration expressed here…
* From the column…
Task force members came up with the plan a few months ago and urged the legislature to pass it. The General Assembly did so in the recent fall veto session.
Amanda Kass, the associate director of the Government Finance Research Center at the University of Illinois-Springfield, cautiously embraced consolidation when it was first disclosed. But she suggested proponents produce a “thorough analysis of the estimated costs and savings and their respective time horizons.” She also noted that different municipalities will have different “transition” costs and pressed for specifics.
Was any of that forthcoming?
Kass said “the only analysis” came in the task force report that “was not the most sophisticated analysis.”
* And then there’s this other pension thingamabob…
“In the spring, we expanded a program to buy out — a voluntary program — to buy out retirees, when they’re retiring, at 60% of what their pensions would be,” Pritzker said.
“People are choosing to take the money up front. It’s saving the state money. In fact, a study was done of what the savings would be and it’s billions and billions, potentially $25 billion of savings. And by the way, people are choosing it — almost 20% of people who are retiring are choosing that buyout.” […]
As for Pritzker’s contention that the buyouts would save the state billions, his spokeswoman said the governor was presented with an independent analysis that came to that conclusion. She declined to provide the study itself or offer any further details about where it came from and what it was based on.
“The governor was referencing a proprietary study conducted by and for an outside organization that he was presented,” Abudayyeh wrote in an email. “It determined that pension buyouts, depending on the structure of the options, have the potential to save billions, including as much as roughly $25 billion. The administration has not yet determined its estimate, nor did the governor say that this was the administration’s estimate for how much money buyouts are currently saving or will save.”
Without access to the study, we cannot confirm if Pritzker’s comments square with its findings.
- Perrid - Monday, Nov 25, 19 @ 11:58 am:
The buyouts are good, depending on them to “save” us is bad. I’d be really interested to see what assumptions this consultant group made to get to “billions” of dollars in savings.
- don the legend - Monday, Nov 25, 19 @ 12:04 pm:
==to buy out retirees, when they’re retiring, at 60% of what their pensions would be,” Pritzker said.==
60% of what exactly?
- Shemp - Monday, Nov 25, 19 @ 12:32 pm:
It shouldn’t be frustrating. For Pete’s sake, these consolidation bills have been out there for years and nobody moved them forward til now, and now it’s rush rush and make changes to get fire/police union backing and we’ll figure out the consequences later. Zalewski acting like he was not part of the problem is baloney.
- JS Mill - Monday, Nov 25, 19 @ 12:47 pm:
=60% of what exactly?=
Seriously, of what exactly? I won’t take 60% of my contributions. Is it the entire value?
- RIJ - Monday, Nov 25, 19 @ 1:23 pm:
60%? Of what? Contributions? Or 60% of the total value? How would that be assessed? Based on payouts over how many years? Show your work.
- Soccermom - Monday, Nov 25, 19 @ 2:00 pm:
There is no reason to keep the assumptions secret. This has been a problem for YEARS.
There is no secret sauce to this stuff. Show us your assumptions, and let us help you to find the best way forward.
- SSL - Monday, Nov 25, 19 @ 2:02 pm:
It doesn’t make sense that pensioners would take a lump sum that would save the state “billions”. And if that were the case, should JB really be bragging about it. Seems like the pensioners would be getting shorted. Some fact checking would be appropriate here.
- Looking down the Road - Monday, Nov 25, 19 @ 3:00 pm:
25 Billion? Nope. Evidence lacking for Pritzker’s pension buyout claim
https://www.politifact.com/illinois/statements/2019/nov/24/jb-pritzker/evidence-lacking-pritzkers-pension-buyout-claim/
Analysis? Nope. Counting Chickens Before They’re Hatched: Will Illinois Botch Pension Consolidation? https://www.forbes.com/sites/ebauer/#4ec7816252fe
- Chicago Cynic - Monday, Nov 25, 19 @ 3:05 pm:
I completely agree with Zalewski. Yea, let’s let the perfect be the enemy of really good legislation. That’s a great way to tackle these issues.
- Perrid - Monday, Nov 25, 19 @ 3:09 pm:
“60% of what?” Guys, reading is essential.
From the suntimes article, “they can trade all rights to a future retirement benefit in exchange for a lump sum equal to 60% of the total lifetime pension they would have received.”
The other buyout, that more are eligible for, changes your COLA and gives you 70% of the reduction (the reduction from the reduced COLA, not touching the base salary) upfront.
And both are optional, no one is forcing you to take it. Breathe.
- Rich Miller - Monday, Nov 25, 19 @ 3:12 pm:
===Nope. Evidence lacking for===
You realize that you just posted the link to the story I posted above, right? How about instead of trying to be a know it all, you try to engage?
- don the legend - Monday, Nov 25, 19 @ 3:18 pm:
Perrid with respect. ==From the suntimes article, “they can trade all rights to a future retirement benefit in exchange for a lump sum equal to 60% of the total lifetime pension they would have received.”++
This is my confusion. ‘Total lifetime pension they would have received’. Who determines my lifetime and what I would have received?
- Perrid - Monday, Nov 25, 19 @ 3:46 pm:
Don, that’s literally an actuary’s job. They guess what raises you’re going to get, and how long you’re going to live in retirement, and a whole lot of other stuff, and from that determine what the state should contribute each year.
So they would again run through all their guesses and give you 60% (If you qualify for that buyout, meaning you’re not active) of what they guess would be your lifetime pension.
Each pension fund would have to run the numbers for each individual to see what that number would be, and I think they’ve been using that complexity as an excuse not to “show their work”, as RIJ said.