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* The latest Illinois Issues article includes this quote from a study of the Illinois pension system…
“The general condition of the pensions operating under the laws of Illinois may be correctly described as one of insolvency. That is to say, viewed from the standpoint of sound finance and of having the necessary reserves to carry out the payment laws, there are immense deficiencies in the existing funds.”
That study was conducted 100 years ago, in 1917.
* And then there’s this…
Why does the state’s Constitution include such strict, locked-in language for pensions? At the 1970 Constitutional Convention, delegates were aware of a persistent problem in Illinois. Pension funds were suffering, and police and fire unions led a fight to protect their benefits. In the 1930s, when New York state was faced with the same problem, it established a new clause that made sure New York was stuck with the benefits it had promised. Under the threat, the state got its act together and shored up pension payments.
Illinois delegates took the language from New York with the hope that if it worked there it could work anywhere.
Of course, it didn’t work
This is Illinois, after all.
* The piece also takes a look at Senate President John Cullerton’s proposal, so click here and go read the whole thing. Good stuff.
posted by Rich Miller
Friday, Feb 24, 17 @ 12:51 pm
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===That study was conducted 100 years ago, in 1917.===
Not necessarily trying to defend our pension system but I believe everyone has always been paid even with those dire predictions. I always felt the % funding level was too high. But I will let the experts fight that battle.
Comment by Been There Friday, Feb 24, 17 @ 1:07 pm
Time to forget about the ratings agencies and go full on paygo. Why a going concern like a state need to have fully funded pensions is beyond me. We’ve not missed a payment in these hundred years so I think it’s probably safe. He’ll if GEARS is still cutting checks SERS will be just fine. I know can’t ignore the rating agencies but really, the idea that will miss checks going out is a little laughable even with the way things are going now.
Comment by Me too Friday, Feb 24, 17 @ 1:08 pm
If the consideration model is unconstitutional why are legislators so reluctant to vote for it?
The fact that this has proposal has been gathering dust for almost two years while the funds deteriorate further is a disgrace and the legislature should be ashamed.
Comment by Lucky Pierre Friday, Feb 24, 17 @ 1:12 pm
All healthy pension systems have one thing in common….they make the proper actuarial payment. When you don’t for many years, you end up with a large unfunded pension liability. The reality is that tax payers of Illinois have been receiving services that they have not been properly taxed for — instead the pension system was used. This is an issue as the ISC stated that is mostly of the states own choosing.
Comment by facts are stubborn things Friday, Feb 24, 17 @ 1:20 pm
The pension protection clause was put into the Illinois constitution because they foresaw politicians attempts to “not pay”.
Comment by DuPage Friday, Feb 24, 17 @ 1:21 pm
So why is a fund still paying out to begin with if there is no money? They should just keep paying out the pensions until the fund reaches “$0″ if it hasn’t already. Lets not kid ourselves, employees probably did not/don’t put anything into their fund if they have to, but get 100-1000X more out. Sweet. I wish I had a state job.
Comment by Anonymous Friday, Feb 24, 17 @ 1:23 pm
@ DuPage - Friday, Feb 24, 17 @ 1:21 pm:
=The pension protection clause was put into the Illinois constitution because they foresaw politicians attempts to “not pay”.=
Yes, agree and also to hopefully force the legislature to make the proper actuarial payments. The idea being that if you know there is no way to welch on the benefits, you had better make the payment.
Comment by facts are stubborn things Friday, Feb 24, 17 @ 1:24 pm
Out of everything I’ve seen so far in government, pensions provide the most dangerous avenue for one generation to profoundly bankrupt future generations. Deep and crushing debt can be pushed forward in time to swamp a completely different era of citizens. People can blame Rauner, and even more so people can blame Madigan…but it’s the underlying dynamic of the entire system that is truly to blame.
Comment by Liandro Friday, Feb 24, 17 @ 1:24 pm
Anonymous, there are plenty of state job openings. In fact, many positions are quite difficult to fill because working for the state is not what most people believe it to be.
Comment by Consideration Friday, Feb 24, 17 @ 1:25 pm
=The private sector was first, and many voters don’t seem to think public employees should escape the same fate.=
Envy politics. “I got screwed, so why shouldn’t they?”
=…employees probably did not/don’t put anything into their fund if they have to, but get 100-1000X more out.=
My Social Security payments have been 0 since I started in higher ed back in ‘98. That’s because the state assured the Feds that they would make contributions to the state pension system on my behalf in lieu of Social Security payments. In the meantime, they did no such thing and used the money to keep taxes artificially low. Now people like you claim state workers should just suck it up despite the fact that people like you enjoyed the benefit of the theft of my Social Security payments.
Comment by MSIX Friday, Feb 24, 17 @ 1:34 pm
Oh my, Cullerton keeps hoping that his shell game will work. The thing he and the anti pension folks refuse to recognize is the 9.4% the state is and was suppose to pay is a deal. They at least had some flexibility of when to pay. With 401k and social security there is no flexibility, pay or else. And those two total, of all things, 9.4%. Illinois has had and now has a ridiculously low income tax rate. 3rd lowest in the nation of those states with one. This is for political effect. But, the result is out of control property tax and insolvent pensions. The likes of Cullerton will continue to worm and squirm, but math is math.
Comment by wondering Friday, Feb 24, 17 @ 1:34 pm
The pension fiasco can not be blamed on Rauner as he inherited the problem. Madigan on the other hand was part of the bargain in 1994, so he has known of the problem for at least 23 years and sat back and watched it grow to its mammoth state.
Comment by Arock Friday, Feb 24, 17 @ 1:34 pm
Why does no one ever discuss that if they did away with the pension then the state would probably be federally required to pay social security. So the savings would be 1%. How many payments would the be able to skip? Is 1% the difference between being financially solvent?
Comment by Game_saver2001 Friday, Feb 24, 17 @ 1:36 pm
Has the state paid into the pension funds or have they used the money for other expenses?
Has the state paid into the pension fund at the same rate that they would have been required to do if state workers had Social Security/Medicare instead of their pensions and access to a health care benefit?
I think the answer to both questions is NO.
Comment by Anonymous Friday, Feb 24, 17 @ 1:36 pm
== The reality is that tax payers of Illinois have been receiving services that they have not been properly taxed for==
…and government employees have been receiving excess compensation that should have instead gone to fund their pensions.
Comment by City Zen Friday, Feb 24, 17 @ 1:37 pm
=…and government employees have been receiving excess compensation that should have instead gone to fund their pensions. =
Explain please. In detail.
Comment by MSIX Friday, Feb 24, 17 @ 1:40 pm
–If the consideration model is unconstitutional why are legislators so reluctant to vote for it?–
Do you truly not see the humor in that statement?
Comment by wordslinger Friday, Feb 24, 17 @ 1:43 pm
This was a rare article that actually placed the blame where it belongs. The state has been derelict in their responsibility to adequately fund workers’ pensions. Workers have no choice to pay their part. In my case, 9.4% went automatically into the fund. Can others say the same? So there is no blaming workers. They did their part.
I also like the statement that a handful of pension recipients get large pensions. The vast majority do not. Hello? People need to believe that because it is a fact. It’s been far too hystericallly convenient to blame the pensioner/worker. But that is factually wrong.
Comment by AnonymousOne Friday, Feb 24, 17 @ 1:46 pm
Cullerton’s solution regarding the pension crisis would be held unconstitutional.
It is time to fund the pension requirements OR LET THE FUND RUN OUT OF MONEY AND FACE THE CONSEQUENCES.
Comment by MOON Friday, Feb 24, 17 @ 1:48 pm
Geez, you handwringing justifiers of screwing people!
Ever heard of death?
The generation of Boomers clogging up our pension system won’t be around as long as you imagine. We are going broke because the generation of Boomers are bigger than the following generations following them.
But not for long.
Trust me, they’ll die off just as fast as humanly possible. There’s just so many of them! Trust me, the average Boomer retiree isn’t ripping off the state, It just looks that way because there’s so many of them.
This problem will resolve itself, thanks to the grim reaper.
The Tier One retirees are aging out and the substantially less substantial Tier Two employees are replacing them.
So don’t get your knickers in a knot over a problem Father Time will fix quicker than any of Rauner’s fixes could.
Don’t screw old people because you think they’ll cost you forever. Death has the final laugh.
Comment by VanillaMan Friday, Feb 24, 17 @ 1:49 pm
@1:23 pm ==Lets not kid ourselves, employees probably did not/don’t put anything into their fund if they have to, but get 100-1000X more out.==
State employees pay into their fund at a higher rate than Social Security/Medicare.
Illinois public school teachers pay 9.4% of each paycheck into their pension fund. State workers pay about 8.5%.
Comment by Anonymous Friday, Feb 24, 17 @ 1:50 pm
Liandro, with respect I strongly disagree with your position on pensions as the key to insolvency. It’s not the pensions, it’s the debt from improper funding that “pays it forward” to the next generation. Look at either well funded pension systems (we have a fine example in Illinois) or the government entities around the world that have been hurt or crushed by too much debt.
Comment by Arthur Andersen Friday, Feb 24, 17 @ 1:52 pm
Read it when it first came out.
I had an issue with this statement:
== he says that “for whatever reason, [those] courts have interpreted similar provisions to protect not just accrued benefits but to actually freeze in place the benefits you were promised as of the date of your employment,” Schanzenbach says. ==
It’s not the courts, and not whatever reason, it’s the Pension Clause adopted by the Illinois citizens in the 1970 Constitution (and similar pension clauses in NY, AZ and CA).
I will admit the article does go on to explain the Pension Clause and it’s background. And it gives both sides of Cullerton’s proposal.
Comment by RNUG Friday, Feb 24, 17 @ 1:58 pm
== also to hopefully force the legislature to make the proper actuarial payments. The idea being that if you know there is no way to welch on the benefits, you had better make the payment. ==
Yes. And the minutes of the 1970 Con-Con make it clear that was the delegates intention.
Comment by RNUG Friday, Feb 24, 17 @ 2:01 pm
Isn’t it rather silly to think that state government can “build a new economy,” or revamp the school-funding formula, or act rationally in regards to future pension liability when it can’t enact an annual maintenance budget?
For crying out loud, you have to learn to crawl before you walk.
Comment by wordslinger Friday, Feb 24, 17 @ 2:01 pm
== It is time to fund the pension requirements OR LET THE FUND RUN OUT OF MONEY AND FACE THE CONSEQUENCES. ==
From the recent court rulings, the consequences are clear: the State will have to pay the pension, on time, with current tax revenue … leaving even less for State services.
Comment by RNUG Friday, Feb 24, 17 @ 2:05 pm
===That study was conducted 100 years ago, in 1917.===
That was well before Madigan became Speaker. I think he was only in his second or third term by 1917.
Comment by 47th Ward Friday, Feb 24, 17 @ 2:05 pm
== The Tier One retirees are aging out and the substantially less substantial Tier Two employees are replacing them. ==
Anecdotal but factual - Three of my state retiree friends have died in the past week.
Comment by RNUG Friday, Feb 24, 17 @ 2:06 pm
=== Illinois public school teachers pay 9.4% of each paycheck into their pension fund. State workers pay about 8.5%.===
In my district the tax payers pick up the teacher pension contributions.
Comment by blankster Friday, Feb 24, 17 @ 2:06 pm
== In my district the tax payers pick up the teacher pension contributions. ==
That was your, presumably elected, school boards choice.
Question: Was the pickup done in lieu of a raise?
Comment by RNUG Friday, Feb 24, 17 @ 2:09 pm
==In my case, 9.4% went automatically into the fund. ==
I’ve actually wondered about that. Is our money going into the fund when it’s taken out of our check, or does the state get to play around with it, too?
Comment by HangingOn Friday, Feb 24, 17 @ 2:16 pm
School boards budget X number of dollars for employee compensation. However that works out……if a district picks up the cost of employee contribution to pension, believe me, they are getting less in salary. Some get their undies in a knot over the idea that the taxpayers are paying for this pension. Guess what? THey’re paying their salaries too because these are services provided to the public. Who else should pay? Mother Goose?
Comment by Anonymous Friday, Feb 24, 17 @ 2:17 pm
==State employees pay into their fund at a higher rate than Social Security/Medicare.==
Will my social security check be based on 75% of my highest salary? Will I get to keep all of it or will I have to redistribute some of my contributions if I made too much? Give me those rules and I’ll gladly contribute an extra 3%. It sure beats the 12% 401(k) contribution I make on top of 6.2% SS contribution.
Comment by City Zen Friday, Feb 24, 17 @ 2:26 pm
==75% of my highest salary==
Does some Agency I don’t know of give out that much? Mine is like a 3rd of my pay according to my statements, not 75%. And I have to work til 60 to get that.
Comment by HangingOn Friday, Feb 24, 17 @ 2:32 pm
if both sides in the contract agree then it can be changed. So why would an employee agree. By not entering into an agreement the contract remains the same is my assumption
Comment by golfman-r Friday, Feb 24, 17 @ 2:32 pm
==Question: Was the pickup done in lieu of a raise?==
That only works once. Once the pick-up is in place, what are the raises going forward? In the following contract, if your school district gives out 3% raises w/ no-pick-up and mine gives out 3% raises with a pick-up, where’s the savings? Should my district’s raises be perpetually smaller than average because I also pick-up some of the pension?
Comment by City Zen Friday, Feb 24, 17 @ 2:34 pm
@HangingOn - That’s TRS rules. 34 years of service = 75% payout based on highest salary.
Comment by City Zen Friday, Feb 24, 17 @ 2:37 pm
Not sure if JS Mill is on here today. Plenty of School administration has the contribution picked up by their school boards. If you did more research I would suspect it’s over 60% of the suburban Chicago jobs. Simple math says at some point people will be stiffed by TRS. There will be a way out of this obligation by our state. I have no idea how, but all of the lack action of legislators for many years proves this point. The state constitution will not save pensioners when almost nothing else can be funded.
Comment by Echo The Bunnyman Friday, Feb 24, 17 @ 2:45 pm
Anon- the reality is most Illinois teachers put zero into the plan since the Districts pay both the employee and employer contributions. Sure say it was in lieu of raised- that’s BS. Who wouldn’t like a pension guaranteed regardless of market performance. Only public employees today have this benefit as virtually all private sector employers abandoned defined benefit plans over the last 25 years requiring employees to bear the risk or benefit of the market
Comment by Sue Friday, Feb 24, 17 @ 2:49 pm
==That’s TRS rules==
Ah. Well, I’m not TRS. May be something to make up for the lack of Social Security. I pay into my retirement and SS, they don’t. So, guess it’s not all state workers.
Comment by HangingOn Friday, Feb 24, 17 @ 2:57 pm
I think if we aren’t going to make our contractually obligated payments to our pension recipients, we should allow them to not pay their contractually obligated payments like mortgages, taxes, and credit cards.
Comment by Carhartt Representative Friday, Feb 24, 17 @ 2:58 pm
Sers formula is 45 years = 75% of salary
Comment by Anonymous Friday, Feb 24, 17 @ 3:03 pm
We are sprinting towards a show down between the state legislature and the ISC and/or the legislature and the voters. Besides writing words on paper ordering the legislature to pay up and/or raise taxes so it can pay up, what can the ISC do? The separation of powers arguments will be interesting. But before this debacle reaches the state level, there should be a few meltdowns in local government pension plans providing a preview of the big show.
Comment by Cook County Commoner Friday, Feb 24, 17 @ 3:03 pm
Having an elected Supreme Court guaranteed the recent decisions since they were thinking politically. The decision stating that retiree health care was subject to the same guarantee as pensions was beyond ridiculous as the constitution’s pension clause doesn’t address health care. As long as the Dems rule the State at both the legislative and judicial branches the fiscal bleeding will continue and is only going to get worse
Comment by Sue Friday, Feb 24, 17 @ 3:09 pm
===We are sprinting towards a show down===
Sprinting? Hmmm.
Meandering.
Limping.
Staggering.
Inching.
Crawling.
Slithering.
Plodding.
Definitely not sprinting.
Comment by 47th Ward Friday, Feb 24, 17 @ 3:13 pm
One argument not raised in the recent pension case is why does the guarantee protect the COLA first imposed in 1990 by Jim Thompson 20 years prior to the ConCon which came up with the guarantee. The Supreme Court in this State like everything else other then the Governor’s office is a puppet of the Democratic Party shafting the citizens
Comment by Sue Friday, Feb 24, 17 @ 3:14 pm
Why are SERS and Judges exempt from this Cullerton proposal?
Comment by Aaron1976 Friday, Feb 24, 17 @ 3:15 pm
@Sue,
My understanding is I pay .5% toward that AAI every paycheck. Every employee does. Per current payroll that’s over 20 million per year being paid in by employees. If the state wants to refund all that money at once, maybe employees will reconsider it. Should only cost maybe 750 million or so to refund it…
Comment by HangingOn Friday, Feb 24, 17 @ 3:19 pm
A debt that cannot be paid, will not be paid. Cash out as quick as you can.
Comment by Puddintaine Friday, Feb 24, 17 @ 3:19 pm
==I think if we aren’t going to make our contractually obligated payments to our pension recipients, we should allow them to not pay their contractually obligated payments like mortgages, taxes, and credit cards.==
That can happen today. It’s called bankruptcy.
Comment by City Zen Friday, Feb 24, 17 @ 3:19 pm
Just to put it into perspective. I’m Tier1 and I did the math, if I want to retire at 60 years old, after 22 years of service, under the current system and have the same net pay as if I was still working, then the first year I would need a supplemental income of a little over $1,200 per month or $14,800.00 per year. With the 3% compounded COLA that comes with the current system, by the time I’m 68 I will no longer need any supplemental income and the total of that annuity would be just over $100,000. At 60 years old Option 1 raises that total annuity to $258,000 and Option 2 raises it to $250,000. If I wait one more year to retire, no change in the pension drops that annuity to $70,000, Option 1 drops to $157,000 and Option 2 drops to $193,000. The bottom line is, I plan to retire at 60 so either option will cost me around $150,000 more than no change to the system.
Comment by Gruntled University Employee Friday, Feb 24, 17 @ 3:23 pm
@HangingOn - But when the ConCon came out, your 0.5% AAI contribution only netted you 1.5% simple interest. After the ConCon, that percentage doubled. Then, the interest formula changed from simple to compounded as Sue stated.
In theory, you should only be entitled to the formula that was in existence when you were first hired. In another theory, you should only be entitled to what was in effect the day the ConCon went into effect. Of course, those are logical albeit moot points as the courts see it otherwise.
Comment by City Zen Friday, Feb 24, 17 @ 3:25 pm
In their sophistry, Madiar and the professor both gloss over a critical point about “consideration.” In contract law, a thing is not “consideration” unless (1) it is freely exchanged between 2 parties in a bi-lateral bargain; and (2) the recipient agrees that the thing has value. In the Cullerton approach, there is no “consideration” — Cullerton and Madiar are simply using that term as a kind of fig-leaf. There is no bi-lateral bargain, and the pensioners aren’t given the chance to determine if the thing that is offered has any value to them.
Comment by Loop12 Friday, Feb 24, 17 @ 3:27 pm
Let’s get serious- If Mike Madigan wanted pension reform he would submit another bill get it signed into law and then have alias appoint Mike Kasper to be the special assistant AG to defend the State before the Supreme Court. With that scenario who doesn’t think the Supreme Court wouldn’t know what it needed to do?
Comment by Sue Friday, Feb 24, 17 @ 3:40 pm
Have Lisa appoint Mike Kasper
Comment by Sue Friday, Feb 24, 17 @ 3:41 pm
== should only be entitled to the formula that was in existence when you were first hired==
I was hired in 2013. What was the rule then?
And even if you’re Cher, you can’t turn back time. Just because you don’t agree with a rule or law doesn’t mean you can take rights from people. I’m sure there are tons of people who wish I’d never gotten the right to vote…
Comment by HangingOn Friday, Feb 24, 17 @ 3:45 pm
The pension trolls are out this afternoon!
Comment by Old and In the Way Friday, Feb 24, 17 @ 3:50 pm
Then wouldn’t you be tier 2.
Comment by Anonymous Friday, Feb 24, 17 @ 3:51 pm
== I was hired in 2013. What was the rule then? ==
Should be under the tier 2 rules … unless you previously worked for the State.
Comment by RNUG Friday, Feb 24, 17 @ 3:56 pm
@Anonymous - Friday, Feb 24, 17 @ 3:03 pm:
=Sers formula is 45 years = 75% of salary=
Alternative formula is 2.5% per year with a max of 80%
Comment by Anonymous Friday, Feb 24, 17 @ 3:59 pm
Sorry the 3:59pm Anonymous was me.
Comment by facts are stubborn things Friday, Feb 24, 17 @ 4:01 pm
@HangingOn - You’re Tier 2. So you don’t get Tier 1’s automatic 3% compounded COLA’s that I was talking about above. You actually get something closer to the original 1.5% simple interest that was in effect during the ConCon.
But as a Tier 2 employee, you do get my sympathies. But that won’t keep you warm during retirement.
Comment by City Zen Friday, Feb 24, 17 @ 4:05 pm
- Sue - Friday, Feb 24, 17 @ 3:14 pm:
=One argument not raised in the recent pension case is why does the guarantee protect the COLA first imposed in 1990 by Jim Thompson 20 years prior to the ConCon which came up with the guarantee. The Supreme Court in this State like everything else other then the Governor’s office is a puppet of the Democratic Party shafting the citizens=
It is not a COLA it is a AAI and the con con was in 1970.
Comment by facts are stubborn things Friday, Feb 24, 17 @ 4:06 pm
Facts for those who care, previously stated here ad infinitum:
1) SERS basic formula members pay zero toward the AAI. ZIP.
2) A plurality, but not “all” by any means, of school districts have agreed in bargaining to pick up all or a part of pension contributions in lieu of salary increases. Sue is flat wrong and she has likely never read one collective bargaining agreement.
3) Echo, how does your “simple math” deplete the $48 billion assets in the TRS trust fund? Are you Dick Ingram?
4) Teachers pay 9.0%, not 9.4% of their pay into TRS. No State employee pays 8.5% as stated above. You know, when you don’t even know what’s coming out of your check, don’t expect us to explain employer normal cost to you.
5) The State has never “promised to pick up my pension…contributions in lieu of my Social Security Contributions. That is freaking ridiculous. You switched pension systems. You will get the fattest pension per year of service credit and dollar contributed among the Big 3 systems. I wouldn’t worry about calling the Sheriff about those “stolen SS contributions.”
Comment by Arthur Andersen Friday, Feb 24, 17 @ 4:08 pm
@Sue - Friday, Feb 24, 17 @ 3:09 pm:
=Having an elected Supreme Court guaranteed the recent decisions since they were thinking politically. The decision stating that retiree health care was subject to the same guarantee as pensions was beyond ridiculous as the constitution’s pension clause doesn’t address health care. As long as the Dems rule the State at both the legislative and judicial branches the fiscal bleeding will continue and is only going to get worse =
health care is a pension benefit and therefore subject to the pension protection clause.
Comment by Anonymous Friday, Feb 24, 17 @ 4:10 pm
Cullerton’s pension reform idea might be constitutional (although who knows with the IL supreme court), but I don’t think it will move the needle very far. Rather than try to reform the pension obligations, we should be forcing all units of government to account for the present value of their pension obligations. The biggest issue with the pension clause in the constitution is not that it is strict, but that it didn’t require the government to fund the pensions.
Comment by Chicagonk Friday, Feb 24, 17 @ 4:11 pm
has there ever been an accounting of the total actuarial amount due which was shorted by the state and the interest gain/loss from the amount shorted since the Con Con? How bad would the debt be if not shorted? ISP alternative formula employees pay 12.5%. The state used to pay a portion but workers picked up entire pension contribution in lieu of raises to insure money was going into the system. I assume all of an employees contributions went to SERS. If not, the state owes me interest on the money it borrowed from me without telling me.
On another topic….why do people think bankruptcy would be good for state government? It’s now honorable and acceptable for a sovereign, which is what state is, to walk away from its commitments? Sad
Comment by Retired State Worker Friday, Feb 24, 17 @ 4:15 pm
Anon- respectfully you are just plain wrong. Every federal Court which has looked at this very same issue has held that employer retiree healthcare promises were not entitled to the same protections as pensions and were enforceable only so long as the employers collective bargaining agreement was in force. The Courts until the late 80’s bought your logic but beginning on the 90’s union retiree health care for life was ruled unenforceable. Health care IS NOT a pension benefit other for public sector employees in Illinois
Comment by Sue Friday, Feb 24, 17 @ 4:18 pm
=unless you previously worked for the State==
I worked for the local jail and was in their pension system. Got to see one of my childhood friends come through to get bailed out twice in 1 week. Ah, memories….
Comment by HangingOn Friday, Feb 24, 17 @ 4:20 pm
== has there ever been an accounting of the total actuarial amount due which was shorted by the state and the interest gain/loss from the amount shorted since the Con Con? ==
There have been multiple studies. Ralph Martire and the Comptroller under Judy are two.
Comment by RNUG Friday, Feb 24, 17 @ 4:21 pm
==It’s now honorable and acceptable for a sovereign, which is what state is, to walk away from its commitments?==
It’s about as honorable as forcing the bill on someone who didn’t make that commitment.
Comment by City Zen Friday, Feb 24, 17 @ 4:24 pm
@Sue 2:49pm
Having been an employer for a ten-year stretch some time ago, I can tell you that it is the TOTAL cost to put an employee in a position that is relevant. I’d just as soon pay it all to the employee, directly, but that is not possible (e.g. mandatory SS, Inc. Tax W/H). It is totally erroneous to say that a benefit is “free” to an employee - it is just an accounting artifact, but a very real part of their compensation; not at all “BS”.
Now, the case where nominal salary is foregone in lieu of a “free” pension contribution pick-up, I suspect the only reason an employer would propose that is to actually not pay it into the fund, otherwise why not just pay it to the employee as part of their nominal salary and then deduct it right back out again as their half of the contribution?
Comment by Hieronymus Friday, Feb 24, 17 @ 4:25 pm
==has there ever been an accounting of the total actuarial amount due which was shorted by the state and the interest gain/loss from the amount shorted since the Con Con?==
Has there ever been an accounting of the reduced wages and benefits employees would have received in lieu of those pension payments?
Comment by City Zen Friday, Feb 24, 17 @ 4:26 pm
=In my district the tax payers pick up the teacher pension contributions.=
It is a part of their compensation. And the teachers pay taxes on their compensation, if the pension is figured into their compensation they are paying income tax on the amount.
=accounting of the total actuarial amount due which was shorted by the state and the interest gain/loss from the amount shorted since the Con Con? =
Eric Madair did a study of the entire shortfall. If you google him you will find his incredibly exhaustive study.
=Not sure if JS Mill is on here today. Plenty of School administration has the contribution picked up by their school boards. If you did more research I would suspect it’s over 60% of the suburban Chicago jobs. Simple math says at some point people will be stiffed by TRS. There will be a way out of this obligation by our state. I have no idea how, but all of the lack action of legislators for many years proves this point. The state constitution will not save pensioners when almost nothing else can be funded.=
AA and RNUG are more expert in the numbers than I am, but your final statement is wrong. The court has been clear, the pensions will be paid.
Just like social security bailouts, we will all pay for it.
As it stands, the diverted pension funds (into roads and other pet projects as well as just about everything else the state does to keep taxes low) are now a required debt payment. Illinois citizens reaped many benefits from those diverted funds or borrowing.
Had the bill been paid, the current budget/spending plan would be $6.5 Billion better off. Nearly balanced.
Comment by JS Mill Friday, Feb 24, 17 @ 4:30 pm
Hieronomous- you do know that the employee is not taxed on the adjusted income going into TRS and other State pension plans? The cost to the employer of the pickup here unlike in your case is paid by taxpayers so like everything else who cares. Employees in the private sector pay income tax on their income without reduction for SS. You really can’t compare comp between private and public sector employees who are not in SS
Comment by Sue Friday, Feb 24, 17 @ 4:36 pm
Thanks RNUG.
It’s amazing how paying what was owed mitigates the problem. IMRF is similar to the state system, with the small difference of not being able to skip payments. It’s funded at close to 90%.
It the state owed bond holders 100+ billion, would there be the same argument to short them? Or does this only apply to employees?
Comment by Retired State Worker Friday, Feb 24, 17 @ 4:46 pm
===with the small difference of not being able to skip payments===
And no 3 percent compounded COLA.
Comment by Rich Miller Friday, Feb 24, 17 @ 4:49 pm
The topic of Social Security benefits should be banned in any discussion of pensions. They are not comparable. No one ever was expected to live in total on their SS benefit. A pension on the other hand? Yes, that was intended to be your retirement income. Social Security was intended to be a Supplement to retirement income, that’s why you contribute so little to it and get less than a pension would pay. Besides, it is a federal benefit, unlike state pensions.
Comment by Anonymous Friday, Feb 24, 17 @ 4:53 pm
==Arthur Andersen at 4:05==
Teachers paid 9.4% from each paycheck until 2016. Please use correct facts. It’s not as if no one ever paid 9.4%
Comment by Anonymous Friday, Feb 24, 17 @ 4:57 pm
https://www.ssa.gov/history/idapayroll.html
Comment by Anon Thursday, Mar 2, 17 @ 12:59 pm