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* Subscribers were told about this yesterday …
Illinois will owe $1 billion more to its pension funds next fiscal year as smaller employee contributions kick in, according to projections released this week by state actuaries.
The 19 percent increase in obligations, to $5.9 billion from $4.9 billion in fiscal 2012, wasn’t anticipated by budget officials when they presented the current plan in February. The higher cost to Illinois’s five retirement funds risks deepening a budget hole as lawmakers consider tax breaks for businesses threatening to leave the state.
* That billion dollars will take a huge bite out of the budget, but so will other stuff…
“Medicaid’s going to grow by $700 million or $800 million,” said House Minority Leader Tom Cross, R-Oswego, in an interview. “Now pensions are at $1 billion, and then you’ve got unpaid Medicaid bills. This year’s budget is going to be a very, very difficult one to balance.”
* Understatement of the year by Trotter…
Sen. Donne Trotter, D-Chicago, called the new pension costs “disheartening.”
“Certainly, we’re having a reverse Christmas here,” said Trotter, who supports expanding gambling to bring in more money.
* Part of the reason for the big jump…
About $133 million of SURS’s increased request is because it assumes its future payroll growth will be less than previously anticipated. SURS believes its payroll will increase an average of 3.75 percent annually, instead of the previously assumed 5 percent. […]
Another $105 million of SURS’s increased request is because of a 2010 law establishing a two-tiered pension system. Workers who started after Jan. 1, 2011, receive lower benefits than those who started before that date. That law also capped the maximum salary on which a pension can be based at $106,800 annually.
* And Leader Cross’ pension reform bill won’t solve the immediate problem…
Cross said the new amounts provided by the systems bolster his case that the state’s pension systems need to be reformed, but he conceded that his legislation, Senate Bill 512, would provide no immediate relief.
* Grim…
“Over the last three decades or more, the proper investment was not made in these funds by governors and general assemblies of their time,” said Quinn, a Democrat. “They postponed payments, didn’t make payments, shorted payments, and the chickens are coming home to roost. We have to deal with that reality.”
He didn’t say how the state would make pension payments next year.
He didn’t say because he doesn’t know. A billion more for pensions, $800 million more for Medicaid, tax cuts on the table… Another disaster, campers.
posted by Rich Miller
Friday, Nov 18, 11 @ 5:57 am
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Previous Post: SUBSCRIBERS ONLY - Supplement to today’s edition and a campaign roundup
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While it may appear that pension reform is critical given the numbers that are coming out. It is not. The General Assembly can choose to effectively do nothing about this larger issue. Choosing to do nothing creates a solution in its self. That solution is simply to allow state pension funds to become insolvent with time.
While the Illinois Constitution requires that the State provide these pensions and make them a property right of those receiving those pensions, those provisions will have to be enforced ultimately by the courts. In that situation, and I would say likely situation, where the pension funds become insolvent the courts will have to order the Assembly to fund the pensions. Assuming that is the case and the Assembly refuses what can the courts do, put the state into full receivership? Not likely.
Most likely the courts will appoint a special master who will some how interpret the Constitutional provision to be something far less than the State paying dollar for dollar the pension entitlements. The courts will not bankrupt the state and they will not order the Assembly to radically increase taxes to pay for pensions. If he courts did this, their own legitimacy would be called into question.
Comment by Rod Friday, Nov 18, 11 @ 6:35 am
Yeah, keep dreaming “Rod”. Count on the courts to ignore the Illinois and US Constitutions and the rule of law. Then, if they refuse, expect a courageous General Assembly to violate a court order and question the court’s legitimacy. That is sure to happen just like that, right after the Cubs win the World Series. Hope springs eternal in wingnut land.
Comment by Bill Friday, Nov 18, 11 @ 7:16 am
Yep, keep giving out those tax cuts to big business and corporations and keep crushing the middle class and retirees. No retirement for you, middle class!
Comment by Flan Friday, Nov 18, 11 @ 7:37 am
That $480 million we could have saved in debt cost restructuring from McPier would come in handy right about now… Thanks MJM!
Comment by in the 'ville Friday, Nov 18, 11 @ 7:45 am
This is based on the “RAMP” law you wrote about recently. My prediction is they will just change the Ramp Law and then hammer the State Employees once again. That way they can give the Millionares 900 million in tax breaks so they don’t have to move out of their mansions.
Comment by He Makes Ryan Look Like a Saint Friday, Nov 18, 11 @ 7:47 am
For cryin-out-loud, just change the Ramp already.
Comment by Cornerfield Friday, Nov 18, 11 @ 7:49 am
What a counter-intuitive mess this is - SURS says fewer expected employees = more needed to fund the pension. OK, then, hire more people? (help unemployment, boost the economy, and ease the pension payment?) And the bill that screwed over the new hires ALSO means we need to pay more now? huh? Where’s the benefit in that - would repealing that law save money?
Comment by Happy Returns Friday, Nov 18, 11 @ 7:54 am
flan’s got the right idea. first, corporate america found they couldn’t afford the retirement benefits they had promised. so they bailed (in some cases, got the federal government to bail them out). they pushed people into 401k — but then we discovered that the stock market isn’t a reliable place to put your savings. good thing people had their homes!
oh, wait, the bankers overlent, created a housing bubble (predicated on the belief that housing prices could never fall!), and now our houses are worth half as much (or less). now state and local governments find that they can’t afford the pensions they promised (even though the real reason is that most weren’t funded at responsible levels, but one of the few people still around that we can blame for that is the speaker, so no going there!) — decades after corporate america came to that realization. and, if you listen to republicans, we can’t even afford social security, because giving another huge tax break to the wealthy is the key to economic recovery! yep, no retirement for you! can’t work in the private sector and earn retirement and can’t work in the public sector and earn retirement.
smart people joined the military. you know that’s one place that republicans and corporate america won’t screw up the retirement plan…
Comment by bored now Friday, Nov 18, 11 @ 8:03 am
The 90% funding goal was pie in the sky to begin with.
What do the trustees who actually run the systems — and who have never missed a payment — consider a reasonable goal? 70%?
As far as medical costs go, I don’t have a clue as to what to do. People live longer, and the longer they live, the more expensive it gets.
Comment by wordslinger Friday, Nov 18, 11 @ 8:19 am
This $500 million revenue mistake for FY 2013 makes you wonder what other fun surprises the pension systems have in store for the Governor and Legislature over the next decade? Why were these assumptions not addressed in the Spring when the initial estimates were presented? It’s also hard not to wonder what other assumptions regarding age, return on investment, the size of the State work force, etc., that are currently incorrect but the pension systems have not chosen to address those problems this year. Also, while were pondering this subject, one has to wonder what assumptions are incorrect at the local government level that will impact their pension funds funding levels over the next decade when they begin to get corrected by the local funds managers and consultants. I think our state leaders need to understand all of the true costs of all of these funds in order to make the correct decisions to address this budgetary problem.
Comment by davis Friday, Nov 18, 11 @ 8:22 am
We need to go from a flat tax to a progressive income tax and we will need to begin to tax pensions at income levels. The state needs more money and the flat tax and not taxing pensions is hurting the state. We are one of a few states that do not tax pensions but people are not moving here because of not taxing pensions (have you seen the weather here in January?). We also need a casino in Chicago. That will all help. Now we have have to do it gradually. Either begin to tax pensions over a decade or more, or state if you retire beginning in 2014 or something your pension will be taxed. The legislature will need a backbone to do these things, but odds are they will not.
Comment by Union Friday, Nov 18, 11 @ 8:28 am
This is what happens when you rush a law from committee to passage in half a day. The pensions are funded from 3 sources, employee contributions, which for new employees are capped at $106,800 now, investment returns and employer contributions. The law attacked one funding leg, investment returns aren’t very stellar lately either, so where did you expect the increased amount to come from?
Comment by PublicServant Friday, Nov 18, 11 @ 8:43 am
Happy, The effect of the two-tier system in the short term is to reduce the contributions coming into the plan from new employees in exchange for long term savings. So, SURS may be correct that they need more now to maintain their assets.
Word, the trustees of the systems were asked that question recently and last Feb they sent COGFA a letter saying that it should be raised to 100%, not lowered. ouch.
Comment by muon Friday, Nov 18, 11 @ 8:46 am
–…the trustees of the systems were asked that question recently and last Feb they sent COGFA a letter saying that it should be raised to 100%, not lowered. ouch. –
That’s neither reasonable nor necessary.Why should they be fooling around with 100% of future liabiltiy to invest? What’s the prudent level that ensures the projected payout schedule?
Comment by wordslinger Friday, Nov 18, 11 @ 8:56 am
How about a 90% tax on all state pensions? As a non state pensioner it sounds very fair to me
Comment by Observer Friday, Nov 18, 11 @ 8:58 am
According to the recent report of the Comptroller, tax expenditures for corporations, aka “tax loopholes”, cost the state coffers over $1.5 Billion in 2010 alone.
Comment by Yellow Dog Democrat Friday, Nov 18, 11 @ 9:02 am
This is what TRS and others were cautioning about with 512. there’s a very real scenario where if 512 passes, the state’s immediate costs skyrocket. It won’t be years before the savings are realized.
And one has to wonder exactly how many $106K-plus employees there are in higher ed?
Comment by Michelle Flaherty Friday, Nov 18, 11 @ 9:02 am
How about a 90% tax on Observer’s income. Since I’m not Observer, that sounds very fair to me.
Comment by PublicServant Friday, Nov 18, 11 @ 9:10 am
-That’s neither reasonable nor necessary.Why should they be fooling around with 100% of future liabiltiy to invest? What’s the prudent level that ensures the projected payout schedule?-
I’m not agreeing with it, I’m just saying that they answered your question earlier this year. From what I can tell the current national average is about 80% funded. The average target would be higher because there are a number of systems like Illinois that are currently well below target. Fitch considers 70% to be adequately funded, and under 60% to be weak.
Comment by muon Friday, Nov 18, 11 @ 9:12 am
From what I’ve read here is seems like the more services are reduced by cutting head count (a likely scenario over the next 5 years at all levels of government) then the State’s pension payments will increase in relation to the extent of the cuts? When does it make fiscal sense under this scenario to stop reducing public employee head count? Does it make fiscal sense for governments to promote the rapid hiring of Tier 2 pension employees? It seems like it would keep head count at a level to provide services, allow for future employee contributions and reduce the government’s share of increased contributions.
Comment by davis Friday, Nov 18, 11 @ 9:14 am
Who took credit for the passage of the 2nd tier? Hmmmm - I remember a certain legislator proudly proclaiming that he called in his lawyer and they drew it up on a piece of paper then passed it, no analysis nothing. If I could just remember the name.
Comment by Obamas Puppy Friday, Nov 18, 11 @ 9:27 am
Graduate income tax on pension benefits. If you earn over $50,000 - we tax your pension benefits at 100%.
The pension is a safety net, not a cushion. This helps to relieve those “double dippers” and thieves of ending up with multiple pensions from their corrupt ways.
Comment by Downstate Friday, Nov 18, 11 @ 9:28 am
This is why 512 makes absolutely no sense. It will bring about the collapse of the pension system sooner rather than later.
Maybe that was the whole point.
Comment by Generation X Friday, Nov 18, 11 @ 9:34 am
Replace the sales tax exemptions for food, drugs and services with an expansion of the EITC.
Comment by Yellow Dog Democrat Friday, Nov 18, 11 @ 9:47 am
=That’s neither reasonable nor necessary.Why should they be fooling around with 100% of future liabiltiy to invest? What’s the prudent level that ensures the projected payout schedule?=
100% IS the prudent level. Anything less means you’re borrowing at the rate of return on investment of the pension fund in order to pay for other spending. It would be cheaper to issue bonds to pay for the other spending.
Comment by anonymice Friday, Nov 18, 11 @ 10:03 am
Change the ramp so that more of the increase comes after the employer contributions would otherwise drop from new employees under SB-1946–out in the FY20’s (graph in capfax 11/7).
Make the school districts, universities and agencies responsible for the full actuarial cost of pensions for the portion of salaries over $107K and for any raise exceeding CPI+2% without exception; give the them 3 years to catch up on the pension contributions.
Determine whether the policies that provide end-of-career sweeteners can be eliminated or modified.
Comment by east central Friday, Nov 18, 11 @ 10:03 am
- That’s neither reasonable nor necessary.Why should they be fooling around with 100% of future liabiltiy to invest? -
Generally, “fully funded” does not mean that the system has all the assets necessary to cover future benefits. Instead, it means that the assets + expected returns on those assets will be sufficient to meet the pension obligations.
Comment by Pelon Friday, Nov 18, 11 @ 10:11 am
***Illinois will owe $1 billion more to its pension funds next fiscal year as smaller employee contributions kick in, according to projections released this week by state actuaries.***
The General Assembly knew and discussed this many years ago when they decided to skip pension payments. Now they say wow we have to do something this is way to expensive they screwed up they need to take the heat for it. Many of the same Rep’s are still there that took those votes. Why is it the state employes responsibility to bale out the state constantly we have been paying and taking constant pay cuts and staff cuts no matter what the media says.
Comment by anon Friday, Nov 18, 11 @ 10:12 am
Cross’ bill is a clever move to destroy the defined benefit pensions, because they must be either be offered as completely unaffordable to the employee, or unaffordable in the short term to the state.
Comment by walkinfool Friday, Nov 18, 11 @ 10:22 am
sheesh. Should rename state government SNAFU.
Comment by Bitterman Friday, Nov 18, 11 @ 10:25 am
The Illinois constitution is clear on this issue.
The state has to pay what it owes to retired employees.
Comment by DuPage Dave Friday, Nov 18, 11 @ 10:30 am
Once the Two-Tier fully kicks in, doesn’t it make sense to move to 100% funding?
Comment by Cincinnatus Friday, Nov 18, 11 @ 10:42 am
All this talk about what we did to correct the pension issues for new hires is like putting duct tape over a hole in a leaky roof. So what? The real problem is current and past employees. Something has to be done. We either need to amend the constitution or correct the funding problems through shared sacrifice. My wife’s state insurance plan is super-cheap. We have very minute co-pays for prescriptions, doctor’s visits, surgeries and births. Fix it. Charge more. Ramp up what current employees must contribute to the pension system and what they must pay for healthcare. Apparently, people in state government and under the dome live in a bubble and can’t see the forest through the trees. The answer can’t always be to just kick the can down the road or keep spending more money. At some point, we have to either cut costs altogether or force those in SURS and SERS to pay more. Yeah, it sucks. That’s life. I don’t get a pension and have to utilize a 401(k). My dad’s pension was automatically reduced when he became eligible for Social Security. I have aunts and uncles who will never get a pension. I don’t know what else to say.
Comment by Team Sleep Friday, Nov 18, 11 @ 10:43 am
They are going to need the gaming bill passed soon.
Comment by downstate hack Friday, Nov 18, 11 @ 10:53 am
“I don’t get a pension and have to utilize a 401(k). My dad’s pension was automatically reduced when he became eligible for Social Security. I have aunts and uncles who will never get a pension. I don’t know what else to say.”
I know unemployed people. I know people that have broken their legs. Let’s fire all state employees and break their legs. Seems logical.
Comment by chi Friday, Nov 18, 11 @ 10:54 am
Public Servant While I appreiate your concern it is the state pension fund that is in the problematic state not mine. I don’t have one you see other than my self funded plan like so many other of us people that pay the taxes in this state. If I understand it correctly, you will not even pay taxes on your retirment benefits. Therefore I stick to my conclusion that we tax the pension benefits at 90% because that way the constitutional requirements that pensions be paid would be met as well as funding being provided.
I am sorry about your pension, but maybe state employees should live likke the rest of us for awhile
Comment by Observer Friday, Nov 18, 11 @ 11:36 am
Austerity anyone?
Comment by Allen Skillicorn Friday, Nov 18, 11 @ 11:41 am
==Fitch considers 70% to be adequately funded==
I’d think 100% would be adequately funded. Where’s the other 30% going to come from - does it magically appear a few decades from now?
Comment by Robert Friday, Nov 18, 11 @ 11:46 am
To Rich: you posted the article saying pensions are underfunded from the 1950s. Do you know what the state did to fix it?
Comment by Union Friday, Nov 18, 11 @ 11:54 am
==Make the school districts, universities and agencies responsible for the full actuarial cost of pensions for the portion of salaries over $107K and for any raise exceeding CPI+2% without exception; give the them 3 years to catch up on the pension contributions.==
terrific idea - one of the problems, past and present, is that those making payroll decisions are only bearing part of the costs of those decisions.
changing the funded goal or changing the ramp isn’t a bad idea either given the budget crunch and the recession today, but those measures don’t do anything to help in the long run.
Comment by Robert Friday, Nov 18, 11 @ 11:58 am
$545 per every man, woman and child in IL (excluding illegals) next year.
At that growth rate, it’ll be $7B in 2013, and 10.29B in 2015. Can these politicians pronounce “unsustainable”?
What’s the total tax income to the State of IL?
Comment by Carpe Diem Friday, Nov 18, 11 @ 12:00 pm
Can you say graduated income tax? How about expanded sales tax ?
Or repeal the ramp up
For the 100 percent funded folks it doesn’t have to be even 90 percent funded simply because 90 to 100 percent of employees won’t be retiring at once. Not to mention the economy will rebound eventually. And don’t even get me started on the skipped payments that were used to fund all sorts of programs that all of you tax payers use
Comment by Farker Friday, Nov 18, 11 @ 12:02 pm
Well we better hurry up and give away those hundreds of millions to the CME and Sears. When does Madigan stand up at admit that as king of Illinois he ran this state into the ground. But at least his wife and daughter and son in law have nice tax payer incomes.
Comment by Fed up Friday, Nov 18, 11 @ 12:05 pm
The two tier only affects recently hired teachers. There aren’t enough of them to make much of a difference (although it could affect assumptions going forward). The other things affecting how much is required to fully fund are:
1. salary spiking which results in payouts larger than anticipated
2. Poor return on investments (assumes 8% or 8.5% but the FED is holding its rate down and the economy is not doing well)
Comment by mamaS Friday, Nov 18, 11 @ 12:14 pm
Did you see… the Illinois Policy Institute article? It says
In fact, workers who retired between July 1, 2009 and June 30, 2010 after 30 or more years on the job could expect initial average annual benefit payments of:
• $68,208 in the State Universities Retirement System;
• $65,109 in the Teachers’ Retirement System; or
• $38,916 in the State Employees’ Retirement System.
This far exceeds the $28,000 Social security payment for someone retiring at age 67 after working at least 35 years and paying in at the max.
Comment by mamaS Friday, Nov 18, 11 @ 12:19 pm
Observer:
Your comment doesn’t even make sense. Nobody’s pension in this state is taxed, so taking state employee pensions wouldn’t make us live like everyone else. It would make you a special class. Guess what, I didn’t create the problem either. And enough with this crap from non-state employees about “living like the rest of us.” Come work for the state and see what a panacea it is. Also, nothing in this world ever prevented you from working for the state if you believe it is such a good gig. I don’t take for granted one second the job I have but I am sick and tired of people assuming I am part of some privledged class. I’m not in a union so you can’t make any arguments about my salary. I would argue, in fact, that I am worse off as a state employee than I would be in the private sector because every private sector friend I have still receives raises and bonuses while I have had none for years and have taken furlough days. Perhaps you should focus your ire on the creators of the problem - our elected officials - instead of what the general public always does, which is crucify state employees. Or maybe you can tell all of those millionaires looking for those tax breaks to knock it off.
Comment by Demoralized Friday, Nov 18, 11 @ 12:24 pm
Observer,
You won’t pay State income tax on your retirement savings either, assuming you are using a 401K or IRA plan.
Union,
I can only answer about the SERS program. From the 50’s until now, the State made some minor tweaks to things, funded it somewhat better part of the time, and otherwise pretty much ignored it.
One change in the SERS fund was in the early-70’s (72 ?) when new hires had to take a reduced State pension benefit and join the Social Security program. Existing employees were offered a one time non-revokable choice (IRS rules) to stay in the original State system w/o SS at the old rules (contribution & payout) or convert to the combined State / SS system. This had the long term effect of making the State responsible for a smaller State pension but it also required the State to pay the SS employer portion every year, increasing the State’s overall costs in the near term (being defined as from 0 to about year 20 or 25). Very similar to what last year’s two tiered bill did with similar effects of larger payments early with eventual savings 20 or 30 years down the road … assuming you fund the system as required.
Another change in the 80’s (if memory is correct) was that new SERS employees had to work 20 years for State paid health insurance. They become eligible for the State health insurance upon retirement at 8 years of service (believe that is an IRS rule) but retirees had to pay for it on a sliding scale; once 20 years of service were reached you could retire with it paid by the State. This change addressed the people who worked for companies like SW, AC & AT&T, retired early and then worked 8 years for the State strictly to get the insurance.
Team Sleep,
Notice all the above changes applied to only new hires or allowed the existing employees to keep what the had contracted for with no change in employee contributions or benefits … unlike the current SB512 proposal … so they passed the Constitutional test. You can’t change contracts retroactively …
Comment by Retired Non-Union Guy Friday, Nov 18, 11 @ 12:25 pm
mamaS:
What’s your point?
Comment by Demoralized Friday, Nov 18, 11 @ 12:25 pm
@MamaS -
Wow!
$39K a year in 2040…based on the past 30 years of inflation, that will be worth $13,830 in today’s dollars.
Comment by Yellow Dog Democrat Friday, Nov 18, 11 @ 12:27 pm
It is important, as “Demoralized” points out, to not blame the state workers for this - it is the politicians fault that these deals were made.
Having said that, $65k average pensions for teachers - wow! Again, not the fault of the teachers for good negotiating. But Illinois really should start to tax pensions - public and private - above a certain amount. (e.g., exempt the first $30k of retirement income)
Comment by Robert Friday, Nov 18, 11 @ 12:31 pm
mamaS,
SURS and TRS don’t get Social Security, and in exchange for a higher State contribution rate, get a higher pension.
Recalling some old financial planning advice, retirement planning had 3 legs: (1) pension, (2) Social Security & (3) personal savings (IRA, 401K, etc.). Teachers didn’t get the choice of #2. And for a lot of the long time retired employees, 401K plans (actually 403B) for quite a few years were not even an option, so our tax deferred personal retirement savings were limited by the IRA caps.
Comment by Retired Non-Union Guy Friday, Nov 18, 11 @ 12:39 pm
Maybe Soyboy could increase the price of all the Asian carp he is selling to China I bet that could raise some serious cash
Comment by Fed up Friday, Nov 18, 11 @ 12:51 pm
==The pension is a safety net, not a cushion.==
It is? Really? What are the teachers supposed to live on in retirement? Why have they been contributing 9%/year into this system? (And no participation in Soc. Sec.)
If the state would have paid SURS and TRS the 6% every year they did not have to put into Social Security, SURS and TRS would be relatively healthy.
Comment by Pot calling kettle Friday, Nov 18, 11 @ 12:54 pm
===The pension is a safety net, not a cushion===
No. You’re thinking of Social Security.
Comment by Rich Miller Friday, Nov 18, 11 @ 12:55 pm
For all of you commenting who obviously are or expect to collect a state or local gov pension, I suggest you scamper over to your union high priest and ask a couple of questions. For instance, can a court order the general assembly to raise taxes to pay my largesse? Or, what police power does the court have to force the assembly to obey its orders when voters are outside the state capitol with pitchforks? My advice: If you need the pension beyond the next ten years, get a plan b. Or do nothing and hope the voters remain as dumb as they have been in the past.
Comment by Cook County Commoner Friday, Nov 18, 11 @ 12:58 pm
Bitter -I’ll see your SNAFU and raise to FUBAR.
Comment by Hawkeye Friday, Nov 18, 11 @ 1:26 pm
Is there a legal reason we have to pre-fund a future liability at all? I know it’s required for private companies’ pensions and for good reason. If the private company goes under, the PBGC ends up picking up the tab. If the state goes under, I think my pension is going to be the least of my worries. So, unless there’s a legal reason to worry about, why not implement a pay as you go system? This would be a huge relief on immediate and near-term budgets and, because of that, there could be room for negotiations to protect pensioners (state guarantees timely payout, etc) and protect taxpayers (limit maximum annual payout from all state systems to IL median household income, limit abilities to increase benefits, etc).
Comment by thechampaignlife Friday, Nov 18, 11 @ 1:32 pm
Cook County Commoner,
Yes, Federal courts can order States to take action. Remember slavery? Desegregation of schools? Almost every 14th Amendment case? Since contract law is the basis of all commerce, they would have to rule to enforce a valid contract. And it’s tough to argue there is no valid contract when the State Constitution explicitly uses Federal contract law verbiage.
How, exactly, a federal court would do so is pretty much conjecture at this point. As I’ve pointed out previously, the Fed court system will try to duck the issue if they can. My guess is, when forced into it, the Fed court would rule it is a valid contract and must be paid, and then rely on some of the same logic that prevents State’s from declaring bankruptcy that it was up to the State to determine how they would fund it using their State power to raise revenue.
Comment by Retired Non-Union Guy Friday, Nov 18, 11 @ 1:39 pm
thechampaignlife,
We retirees already have a guarantee … it’s called the Illinois State Constitution
Comment by Retired Non-Union Guy Friday, Nov 18, 11 @ 1:41 pm
===it’s called the Illinois State Constitution ===
Constitutions can be changed.
Just sayin…
Comment by Rich Miller Friday, Nov 18, 11 @ 1:51 pm
Everyone is freaking out over the $5.9 billion certified payment for FY 2013, yet nobody mentions that HA 2 to SB 512 calls for a $6.0 billion payment in FY 2013. Those 30 Republicans Cross claims to have on board for 512 - wonder if they’re aware of this.
Comment by The Ogden Avenue Shoplifter Friday, Nov 18, 11 @ 1:54 pm
Observer, you have something in common with public employees. Until lately they too had been self funding their pensions. That’s the problem, no one else was paying in.
Comment by Michelle Flaherty Friday, Nov 18, 11 @ 2:22 pm
Does anyone know what the State’s projected annual payments will be over the next 34 years to get to 90% funding? $85 billion divided by 34 is $2.5 billion per year. Can we identify a dollar amount that could keep the state at current funding levels between now and 2045? Why do we need to use he next three decades to compensate for the underfunding of the last 3 decades? For instance, can we use 9 good funding decades to make up for 3 bad ones in order to reduce the shock to current and future taxpayers (who might not have directly benefited from skipped payments and have their own retirement account to fund by themselves)?
Comment by davis Friday, Nov 18, 11 @ 2:25 pm
When I took con law in college, the professor stressed that constitutions (federal or state) must be recognized as living, breathing documents. They can be changed. Judges can find faults with laws and amendments and prior precedence. We could’ve had a con-con in 2008 but we did not. We could pass an amendment to the Illinois Constitution which alters the pension but we have not. This does not mean that our leaders won’t take up the challenge, although it would be interesting to see whether the Illinois Supremes would agree with such an alteration to the state constitution.
Comment by Team Sleep Friday, Nov 18, 11 @ 2:46 pm
I’m tiring of hearing the state’s obligation referred to as the cost of the pensions. It isn’t. Most of the ‘cost’ is debt service - ramp based recognition of past failures by the GA. Normal cost is the actual pension cost - a large portion of the unfunded liabilities actually belongs in the unpaid bill stack… but admitting that would make it tougher to make public employees the bad guys.
Comment by countryboy Friday, Nov 18, 11 @ 2:50 pm
=== Constitutions can be changed. ===
Yes, but those changes are not retroactive, especially when it comes to Contracts.
If they were, NO contract would be worth even the paper it was printed on.
Comment by Yellow Dog Democrat Friday, Nov 18, 11 @ 4:46 pm
=== We could pass an amendment to the Illinois Constitution which alters the pension but we have not. ===
Yes, Team Sleep, but as your Constitutional Law prof probably told you, changes to the Constitution are not retroactive.
Which is why, for example, you can’t adopt a Constitutional Amendment abolishing the Office of State Treasurer until Rutherford’s current term is over.
From Article 1, Section 10, Clause 1 of the U.S. Constitution:
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.” (emphasis added)
Comment by Yellow Dog Democrat Friday, Nov 18, 11 @ 5:18 pm