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Underfunded pensions have “been a problem forever” here

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* We’ve discussed this topic several times before, but it’s worth repeating…

Veteran statehouse journalist Charles Wheeler III read aloud an account Wednesday evening of state officials being concerned about Illinois underfunding its pension obligations.

That concern is a commonly voiced today in Springfield, but many in Wheeler’s audience at Eastern Illinois University were audibly surprised to learn that the account he read was from 1917.

“It’s not something new. It’s been a problem forever,” Wheeler said. […]

The guest speaker indicated that pensions were a major topic of discussion at the constitutional convention in 1970 that resulted in a new Illinois Constitution. […]

“[The delegates to the convention] knew what they were doing. The voters knew what they were doing, it was clearly explained,” Wheeler said of the pension protection clause. He added that this clause has since maintained that, “Benefits that are earned cannot be taken away.”

…Adding… Wow…

A 1916 committee was put together to study the public safety funds. one member noted that there were too many small funds writing that, "the insecurity of such small funds is so obvious as to require no comment“ https://t.co/hEdb2sl5oP

— Amanda Kass (@Amanda_Kass) October 17, 2019

And 103 years later, we’re still studying consolidation.

posted by Rich Miller
Thursday, Oct 17, 19 @ 9:05 am

Comments

The problem is not the benefit. It has been and continues to be that legislators refuse to be fiscally prudent.

Comment by Generic Drone Thursday, Oct 17, 19 @ 9:13 am
But what would have happened to the state if there had been a major recession soon after this 1917 discussion???

Comment by Excitable Boy Thursday, Oct 17, 19 @ 9:14 am
Then for whatever reason some politicians of both parties thought it was good politics to go after them or some of their funders wanted it.
It didn’t turn out to be good politics. Ask Pat Quinn and Biss and Nektitz and Rauner….

Comment by Not a Billionaire Thursday, Oct 17, 19 @ 9:17 am
I’ve noted before that I only see 4 options
1. Increased taxes
2. Reduced Services
3. Amend the constitution
4. Bankruptcy
Or any combination of the above.
Please, someone let me know what other option we have as a state.

Comment by Downstate Thursday, Oct 17, 19 @ 9:17 am
Illinois will need to start thinking about how to stop using defined benefit systems for state workers and move to defined contribution systems for their retirement plans. If/when that can happen then the future generations of tax payers dont have to be saddled with trying to pay pension obligations.

Comment by Maximus Thursday, Oct 17, 19 @ 9:19 am
There was a major recession in the late teens. The economy was very different very sharp up and downs from the late 1800s to the 80s.Since then it’s been about 2 sharp downturns with tepid growth.

Comment by Not a Billionaire Thursday, Oct 17, 19 @ 9:24 am
It would be interesting if it was a defined contribution system with a defined state contribution how often that the state would find a reason not to make it’s contribution. I suspect that would happen quite often.

Comment by OneMan Thursday, Oct 17, 19 @ 9:25 am
the 3% cola was and remains a huge error and is a driving force in pension cost. My pension has zero COLA, my SS is tied to a govt derived number. Illinois retirees have reaped tremendous benefit from 3% COLA, that almost any other american does not. Retired teachers/professors making over $100,000 PENSION yearly and growing is NOT and NEVER has been sustainable.

Comment by truthteller Thursday, Oct 17, 19 @ 9:30 am
I see your pension underfunding story from 1917 and raise you one teacher shortage story from 1921.

Comment by City Zen Thursday, Oct 17, 19 @ 9:30 am
=It would be interesting if it was a defined contribution system with a defined state contribution how often that the state would find a reason not to make it’s contribution. =

Exactly.
Also, most of the money owed is not pension contributions, it’s interest on the debt borrowed to make the missed payments.

Comment by TinyDancer(FKASue) Thursday, Oct 17, 19 @ 9:32 am
Downstate, bankruptcy is not an option that is available to states, so that is not an option. As for amending the constitution, even if that is done, at a minimum, all benefits earned to date are still owed. So it does very little to change our current unfunded liabilities. So in reality you have options 1 and 2.

Comment by Smalls Thursday, Oct 17, 19 @ 9:32 am
OneMan

In 19 years, the state hasn’t missed a contribution to my SURS Self Managed Plan (defined contribution). On paper, my employer matches my contribution; in reality it still comes from the state.

Comment by downstateR Thursday, Oct 17, 19 @ 9:33 am
=== But what would have happened to the state if there had been a major recession soon after this 1917 discussion===

What would’ve happened if the Titanic hadn’t sunk?

See how silly these things sound?

Comment by Oswego Willy Thursday, Oct 17, 19 @ 9:34 am
Downstate “Bankruptcy’? You’re late to the discussion here. States can’t go bankrupt, PERIOD! Amending the Constitution doesn’t go in reverse and therefore, doesn’t help the problem of underfunding. Services are reduced b/c of Rauners idiotic budget impasse and we’ve less State workers per capita of almost every State.
Therefore, your only option is to pay up as an Illinois taxpayer who benefitted from an usually low, flat State income taxes for decades and the services provided for by “shorting” the States contribution to the pension funds.

Comment by qualified someone nobody sent Thursday, Oct 17, 19 @ 9:34 am
=== Illinois will need to start thinking about how to stop using defined benefit systems for state workers and move to defined contribution systems for their retirement plans. If/when that can happen then the future generations of tax payers dont have to be saddled with trying to pay pension obligations.===

Change the Constitution.

Good luck.

Comment by Oswego Willy Thursday, Oct 17, 19 @ 9:35 am
Mr. Wheeler posits that the voters knew what they were doing regarding approval of the pension protection clause. I’d like proof of that. What he should say is that the voters should have done the work to understand what their delegates at the constitutional convention were doing. But, alas, that goes to the weakness of representative democracy.

Comment by Cook County Commoner Thursday, Oct 17, 19 @ 9:35 am
truthteller, I would love to see these teachers that are making $100k in retirement. Most teachers are well below that number. Now administrators… that’s where you start getting the big numbers like that at.

Comment by Fixer Thursday, Oct 17, 19 @ 9:37 am
OW, it was snark. I had an event in 1929 in mind.

Comment by Excitable Boy Thursday, Oct 17, 19 @ 9:40 am
As is in the article, a component in paying for pensions is having the rich finally, after many decades, pay a higher state income tax. We’ve already reformed pensions but not the tax code.

Comment by Grandson of Man Thursday, Oct 17, 19 @ 9:44 am
===it was snark. I had an event in 1929 in mind===

You could label as such or actually explain the 1929 event in context.

Drivebys have a way to be misunderstood.

=== Mr. Wheeler posits that the voters knew what they were doing regarding approval of the pension protection clause. I’d like proof of that.===

Elections have consequences.

We had a referendum to have another constitutional convention. It failed.

Choices.

Comment by Oswego Willy Thursday, Oct 17, 19 @ 9:45 am
=Mr. Wheeler posits that the voters knew what they were doing regarding approval of the pension protection clause. I’d like proof of that.=

Good luck with that. The pension plan that existed at the time pension protection clause was implemented was much different than it is today. Without doing the research, if there were COLAs at that time (aka automatic annual increases - AAIs) they were noncompounded and less than 3%.

Also, many folks in the private sector had defined benefit plans as well. The creation of ERISA decimated defined benefit plans in the private sector because of all the compliance risk and strict funding requirements. These issues do not apply to public plans.

Comment by Davos Thursday, Oct 17, 19 @ 9:46 am
==I’ve noted before that I only see 4 options==

==4. Bankruptcy==

You don’t see four options because your number 4 options isn’t a legitimate option. I wish people would stop even talking about it because it’s nonsensical.

Comment by Demoralized Thursday, Oct 17, 19 @ 9:49 am
==Illinois will need to start thinking about how to stop using defined benefit systems for state workers and move to defined contribution systems for their retirement plans.==

They could do that now for new workers.

Comment by Demoralized Thursday, Oct 17, 19 @ 9:52 am
Downstate, for crying out loud, #3 and #4 on your list are not options. Even assuming you could get the GA and governor on board (no), for #3 you would have to get both the IL SC and SCOTUS on board (again, no), and for #4 you would have to get Congress AND SCOTUS on board. IT. WILL. NOT. HAPPEN.

You are wasting everyone’s time, not least of all your own, with pipe dreams. Stop it.

Comment by Perrid Thursday, Oct 17, 19 @ 9:55 am
Sold our house and are renting until High School is done in a few years. I’ll miss Chicago, but it’s not worth the cost as taxes continue to spiral out of control.

Comment by Dybalat Thursday, Oct 17, 19 @ 9:58 am
==Truthteller== AAI , not a true COLA. Sorry you don’t have a COLA. Corporations have systematically stripped the middle class benefits since the late 70’s. It seems your response is..”thank you sir may I have another and hey, you forgot to stick it to those State workers over there”. When the AAI was put in, interest rates were higher so it wasn’t excessive. There are probably outstanding Illinois bonds paying higher rates than current. Should we lower the rate paid on them ? If contracts no longer mean anything. Any changes need to be negotiated…with me(Individual retirees)..

Comment by Anotherretiree Thursday, Oct 17, 19 @ 10:14 am
So what you’re saying is that for 102 years, Illinois government has been unable to find a solution to the pension issue. But apparently, the General Assembly will get it right at attempt #103.

Give me a break.

Pension benefits were over-promised, under-funded and now are at catastrophic levels.

Comment by Romeo Thursday, Oct 17, 19 @ 10:15 am
=== … folks in the private sector had defined benefit plans as well. The creation of ERISA decimated defined benefit plans in the private sector because of all the compliance risk and strict funding requirements. ===

The proverbial “it was regulations” argument. The role of the corporations with their schemes to siphon assets from pension funds was a major factor as well. Try reading, “Retirement Heist, How Companies Plunder and Profit from the Nest Eggs of American Workers,” by Ellen E. Schultz.

Comment by Norseman Thursday, Oct 17, 19 @ 10:16 am
==Corporations have systematically stripped the middle class benefits since the late 70’s.==

The same corporations the pension funds are heavily invested in.

Comment by City Zen Thursday, Oct 17, 19 @ 10:19 am
Cap at 100,000 max; no matter how many state of Illinois taxpayers pensions your in..stop multi-pension abuse.

Comment by Downstate Chairmen Thursday, Oct 17, 19 @ 10:19 am
==state of Illinois taxpayers pensions==

What does that even mean. It’s the worker’s pension. Can we please stop this “taxpayer” nonsense. Enough with the ignorance.

Comment by Demoralized Thursday, Oct 17, 19 @ 10:32 am
A legal option would be to do whatever is possible to improve investment returns. Returns for most of the Illinois and large municipal plans have been horrible since the last recession. For the sake of every taxpayer and plan participant hire a firm such as Blackrock and take the investment authority away from these mostly lay boards

Comment by Sue Thursday, Oct 17, 19 @ 10:36 am
==A legal option would be to do whatever is possible to improve investment returns. ==

Problem is that nobody wants to focus on things like that. They are still twisting themselves into pretzels trying to figure out how to take away current employee’s pensions.

Comment by Demoralized Thursday, Oct 17, 19 @ 10:39 am
===The creation of ERISA decimated defined benefit plans in the private sector because of all the compliance risk and strict funding requirements.===

I don’t think ESISA decimated plans. It forced corporations to get their plans to full funding. This combined with accounting rule changes in the 80s which required that the cash balances to be shown as assets, not liabilities led to some big pension raids during the M&A frenzy. Still, the private pensions weren’t yet dead. By the end of the 90s, many plans were still over-funded. Then, quoting from Ellen Schultz: “Many, like Verizon, used the assets to finance downsizings, offering departing employees additional pension payouts in lieu of cash severance. Others, like GE, sold pension surpluses in restructuring deals, indirectly converting pension assets into cash.” So, the rich and connected…did…what they always do.
Here’s a link to Schultz’ article: https://tinyurl.com/y4ry2scr
Check out her book the article was promoting as well. Fascinating and sickening at the same time.

Comment by Proud Sucker Thursday, Oct 17, 19 @ 10:43 am
==Pension benefits…now are at catastrophic levels.==

Seems a bit hyperbolic. To me, “catastrophic” would mean funds can’t meet current benefit obligations. Which funds are having this problem?

Comment by yinn Thursday, Oct 17, 19 @ 10:46 am
Maximum - “Illinois will need to start thinking about how to stop using defined benefit systems for state workers and move to defined contribution systems for their retirement plans.”

At the risk of this comment being deleted for violating “Illinois specific” … after the 2008 crash Utah and Georgia, which had been fully funded, looked into this. Both found that in the first decade it would be =more= expensive than keeping their then existing defined benefit program.

Comment by Anyone Remember Thursday, Oct 17, 19 @ 10:52 am
Only thing missing from the 1970 constitution was a sentence requiring the government to actuarially fund the pensions at the onset.

Comment by Chicagonk Thursday, Oct 17, 19 @ 10:57 am
Best would been to not mention employee benefits. Such a strange constitution we have.

Comment by Dybalat Thursday, Oct 17, 19 @ 11:19 am
There are only two options.

1. Increased taxes
2. Move out of the state

Pensions can’t be modified, states can’t declare bankruptcy and services can’t or won’t be cut.

Comment by SSL Thursday, Oct 17, 19 @ 11:32 am
Dybalat
The pension clause was put in when firefighters pointed out, correctly, that Home Rule would permit cities to abolish pension plans if they deemed them to be too expensive. (While still not covered by Social Security, in 1970 they weren’t covered by Medicare, either.) The delegates looked at it, agreed, it was debated vigorously (with some opposed), and it was adopted. And Home Rule is a rather strange thing.

Comment by Anyone Remember Thursday, Oct 17, 19 @ 11:35 am
Of course the State could require thru legislation for participants to make larger contributions without the respective employers “picking up” any increases. Participants always cry that they have made their contributions but for many of them they don’t come out of pocket since the contributions are made on their behalf. Better then raising taxes on everyone else

Comment by Sue Thursday, Oct 17, 19 @ 11:41 am
==Of course the State could require thru legislation for participants to make larger contributions ==

I’m pretty sure the court ruled that you can’t raise the contribution amount without offering something in return. Doing so was also ruled to be diminishing benefits.

==but for many of them they don’t come out of pocket since the contributions are made on their behalf==

Teachers perhaps but not state workers.

Comment by Demoralized Thursday, Oct 17, 19 @ 11:56 am
=the 3% cola was and remains a huge error and is a driving force in pension cost.=

@truthteller- you need to change your handle since what you stated was false. Eric Madair who did the most extensive study of the pension liabilities pegged the AAI as 4% of the problem. You can Google his study.

Comment by JS Mill Thursday, Oct 17, 19 @ 12:02 pm
SenDems still have a section of their website housing the pension research and related materials

http://www.illinoissenatedemocrats.com/21-brochures/public-information-brochures/1149-pension-debate

Comment by Michelle Flaherty Thursday, Oct 17, 19 @ 12:11 pm
=Participants always cry that they have made their contributions but for many of them they don’t come out of pocket since the contributions are made on their behalf.=

This dynamic was bargained for. Such employees gave up higher pay, or other benefits for the tax benefit of a lower gross salary.

Comment by Davos Thursday, Oct 17, 19 @ 12:12 pm
Demoralized- contribution levels have changed periodically- not an impairment. Davis- things change and asking participants for more money while asking taxpayers for more seems like a pretty fair exchange

Comment by Sue Thursday, Oct 17, 19 @ 12:19 pm
Asking for is one thing. Requiring… that might be a stumbling block. I do agree with your other suggestion, though, Sue.

Comment by Fixer Thursday, Oct 17, 19 @ 12:32 pm
=contribution levels have changed periodically- not an impairment.=

I did not realize that a Supreme Court justice comments on Cap Fax.

Comment by Davos Thursday, Oct 17, 19 @ 12:36 pm
My real objection to JB asking for his fair tax(I am going to be subject to) is he isn’t doing ANYTHING to address state spending. If Pritzker wants more from taxpayers he shouldn’t be adding to the fiscal crisis by introducing new and increased spending

Comment by Sue Thursday, Oct 17, 19 @ 12:36 pm
Davis - but folks who have worked on the cases do

Comment by Sue Thursday, Oct 17, 19 @ 12:38 pm
Sue. I agree.

Comment by Blue Dog Dem Thursday, Oct 17, 19 @ 12:38 pm
With regard to the 3% AAI: Those not in government pension programs would think that if that AAI were decreased or eliminated, pensioners would just have to supplement with their retirement savings.

What they refuse to accept as fact is that when you work at a public job, the vast majority of people cannot save much if anything toward their retirement because—-yes they are—-paid so little compared to their counterparts in the private sector.

All you hear about is the small number of high pensions, high salaries. But in a state that has to legislate that the starting pay of a teacher must be $40,000 (whoopee—–would qualify for government help living in a collar county) and there would be many who receive a sizable pay hike at $40,000………..it tells you that college educated professionals at least in Education are making pennies.

The pension was the assurance that a professional wouldn’t be forced to live in poverty after a life of service to others. Take less along the way, have security at the end

Comment by Anonymous Thursday, Oct 17, 19 @ 12:51 pm
The contribution % was raised to the current 4% in 1989, (at least for SERS employees). The enhancement offered in exchange was the 3% AAI. Eventually, I think the state will “offer” tier 2 the option of paying more for an enhancement to their current pension, such as a reduction in the current age of 67, etc.

Comment by Just A Dude Thursday, Oct 17, 19 @ 12:56 pm
== Illinois will need to start thinking about how to stop using defined benefit systems for state workers and move to defined contribution systems for their retirement plans.==

As a state employee I’m not opposed to my money going into a 403b going forward with the state making a contribution towards it like businesses do their employees, but would we state employees be constantly having to fight the state to contribute also? One other thing, if new and current employees are contributing to a contribution plan, who’s going to fund current retirees?

Comment by Alex Ander Thursday, Oct 17, 19 @ 12:59 pm
I see some posters always recommend changing state DB plans to DC plans. TRS has a great report on this providing information about states that went from DB plans to DC plans and now have switched back to DB plans. In many instances they found the DC plan did not save money. Remember if the state goes to a DC plan the employees will have to enter Social Security if not currently in that. The state cannot delay or reduce payments to SS. At the same time the state would have to continue to meet the DB obligations. Ultimately this would cause larger fiscal pain that it gains. Think of all consequences before recommending. If you want to see the TRS report here is the link https://www.trsil.org/news-and-events/pension-issues/defined-benefit-vs-defined-contribution

Comment by illinifan Thursday, Oct 17, 19 @ 12:59 pm
== contribution levels have changed periodically ==

Partially true. Yes, contribution levels were changed but ONLY in conjunction with a new or expanded benefit … and it was optional for the individual employee to accept it reject said change. And not all systems had such a change. Thinking back on SERS, it was completely non-coordinated (no SS also) prior to 1972 and they paid a higher State pension contribution rate than employees do today. There was a transition period where SERS employees could choose to convert to the Tier 1 coordinated plan with a lower enployee State pension contribution rate and pay the employee portion of SS … which was actually more in total than just being in the non-coordinated plan. Some people opted to convert, some people didn’t. You still have elserly (75+) SERS retirees collecting a non-coordinated pensions today. For some it was a good decision, for others it was a bad one.

Digression …

My mom was one who didn’t. She worked to age 67 with 45 years of service (maxed out). At the time she did not convert, it was assumed that mom would also be able to collect on dad’s SS as a spouse … but they later came up with government pension offset rules that prevented her from doing so … not even as a widowed surviving spouse. In dad’s case, he had to retire early due to on the job injuries and barely lived long enough to collect SS … he did get a few years of disability but passed away relatively young for his generation. So n dad’s case, he paid into SS for his entire career and only collected about 4 years of benefits in total.

End digression …

Bottom line … contribution changes were always voluntary and always had a new / perceived improved benefit associated with the change. And the changes were voluntary at the individual level.

Comment by RNUG Thursday, Oct 17, 19 @ 1:05 pm
==contribution levels have changed periodically- not an impairment==

I think you’re wrong. I think you may want to double check the court ruling because I seem to remember RNUG discussing this before and I thought that the court ruling said no contribution increases without something in return.

Comment by Demoralized Thursday, Oct 17, 19 @ 1:10 pm
==contribution levels have changed periodically- not an impairment==

I just looked at the Supreme Court ruling and in a footnote on p. 15 of the ruling the Court discusses increased employee contributions and notes that the state may do so in exchange for an added benefit or some other consideration. So, I had remembered correctly. No increased contributions without something in return.

Comment by Demoralized Thursday, Oct 17, 19 @ 1:17 pm
RNUG I was a Cook County hire and when we converted to being state employees when the state took over all public assistance programs I remember having to make that choice of SERS only or coordinated benefits. I am happy I went with coordinated benefits especially in light of WEP and GPO

Comment by illinifan Thursday, Oct 17, 19 @ 1:21 pm
==asking participants for more money while asking taxpayers for more seems like a pretty fair exchange===

This completely ignores the fact that the shortfall is dominantly due to the state not making their contributions on time.

Employees already paid their share. Why should they help pay the state’s portion too? What would keep the state from shorting their payments again in the future if the employees helped clean up the state’s mess now? ILSC mentioned this as part of their reasoning.

Comment by Jibba Thursday, Oct 17, 19 @ 1:23 pm
If you were designing a pension plan from scratch, you should build in some flexibility for state and employee contributions to change to account for poor performance (or go down in good times so employees can share in rewards as well as risks). But you can’t start now when the lack of funding from the state is the major portion of the shortfall. The state and taxpayers need to pay up.

Comment by JIbba Thursday, Oct 17, 19 @ 1:28 pm
AlexAnder and illinifan,
I believe the state would have to match the required salary amount on every one of your checks for a 403b.

There would be pain initially because a pension plan is difficult to phase out. It requires the state to pay current retirees and at the same time pay into the 403b plans of current employees. Potentially it could be so difficult to phase out that we cant do it.

Comment by Maximus Thursday, Oct 17, 19 @ 1:28 pm
==Employees already paid their share. Why should they help pay the state’s portion too?==

Because the state subsidized their salaries and benefits by shorting the pensions.

Taxpayers (the ones not on the govt payroll) already paid their share. Why should they pay twice?

Comment by City Zen Thursday, Oct 17, 19 @ 1:28 pm
=== Taxpayers (the ones not on the govt payroll) already paid their share. Why should they pay twice?===

Elected officials of ALL taxpayers made the choice. Keep up. Elections have consequences.

Trying to divide public workers and “taxpayers” is an old IPI trick of disguised class warfare. Good on you continuing it, lol

Oh, sorry…

=== Because the state subsidized their salaries and benefits by shorting the pensions.===

You keep your eve off the bargain, your partner is required to do the same. Contract clause kinda stuff.

Comment by Oswego Willy Thursday, Oct 17, 19 @ 1:32 pm
Maximus - “Potentially it could be so difficult to phase out that we cant do it.”

Bill Brady’s 2010 proposal to close out the pension systems? Issue 50 year bonds.

Comment by Anyone Remember Thursday, Oct 17, 19 @ 1:34 pm
===Taxpayers (the ones not on the govt payroll) already paid their share. ===

They did not. Because there is a deficit, tax rates have not been high enough to support the spending authorized by the GA. You might disagree on what that spending entailed, but you and all taxpayers are on the hook for it through your elected representative. Democracy, and all.

Comment by Jibba Thursday, Oct 17, 19 @ 1:35 pm
== Potentially it could be so difficult to phase out that we cant do it. ==

As noted, there are a number of studies showing such a conversion costs more for at least the first 10 years or so before any potential cost savings can start to phase in. It is why, as above mentioned by others today, States that tried it ended up reverting. And it is how we ended up with Tier 2 designed to partially subsidize Tier 1 … less painful transition than the alternative.

Comment by RNUG Thursday, Oct 17, 19 @ 1:39 pm
==Taxpayers (the ones not on the govt payroll) already paid their share. ==

Sign. Another “taxpayer” comment. We. Are. All. Taxpayers. Enough already.

==Because the state subsidized their salaries and benefits by shorting the pensions.==

Here we go with your goofy argument again. You’re becoming as bad as LP with your broken record talking points. You really do straddle the border of trolldome.

Comment by Demoralized Thursday, Oct 17, 19 @ 1:40 pm
==Taxpayers (the ones not on the govt payroll) already paid their share. Why should they pay twice?==

By the way, the employees also paid their share, plus taxes that help fund the pensions. So they already paid twice.

Another dumb argument from you.

Comment by Demoralized Thursday, Oct 17, 19 @ 1:42 pm
- illinifan - , while I started working for the State in 1970, I wasn’t on the full time payroll until 1972. At that time you didn’t get a choice … you were coordinated.

Comment by RNUG Thursday, Oct 17, 19 @ 1:44 pm
RNUG,

The long term benefit of phasing out pensions and replacing them with a 403b type plan would be huge. We just need a small loan from the federal government to start us out

If we were starting a brand new state in the USA we would definitely not use pension plans as the retirement system.

Comment by Maximus Thursday, Oct 17, 19 @ 1:45 pm
I don’t believe employers are required to make contributions to a 403b. they can if they want but they don’t have to. So if the state would change to one, they could get out of contributing at all. Yes, that would solve part of the pension problem, no more contributions required by the state. But, where would workers come from with no real benefit for working for the state and lower wages than the private sector.

Comment by anonime Thursday, Oct 17, 19 @ 1:47 pm
To keep things in perspective … the State has been messing up the pension funding for over 100 years, but the State has also managed to always pay the pensions over the same period.

Comment by RNUG Thursday, Oct 17, 19 @ 1:47 pm
==Trying to divide public workers and “taxpayers”==

Still waiting for that govt paycheck. Until I receive one, there’s a divide, whether you want to see it or fall in.

==tax rates have not been high enough to support the spending authorized by the GA.==

Sure they were. The spending just went to the wrong account. Time for a wire transfer.

Comment by City Zen Thursday, Oct 17, 19 @ 1:48 pm
==Until I receive one, there’s a divide==

No there is not. You’re trying to make a distinction where there is none. You either pay taxes or you don’t. Pay taxes? Then you are a taxpayer. Quit being so dense.

Comment by Demoralized Thursday, Oct 17, 19 @ 1:50 pm
=== Still waiting for that govt paycheck.===

Your trolling here is quite tiresome.

Apply, interview, accept, get that check.

=== Until I receive one, there’s a divide, whether you want to see it or fall in.===

Is that you Bruce Rauner. How pathetic you are to continually play social class warrior as a “taxpayer advocate”. That’s some serious IPI insanity, lol

Do you want a link to a CMS-100 application?

Same tune, different day. You want a pension, get a job in the public sector.

Comment by Oswego Willy Thursday, Oct 17, 19 @ 1:52 pm
CZ avoids the question. What would keep the state from shorting their payments again in the future if the employees helped clean up the state’s mess now? ILSC mentioned this as part of their reasoning.

Snark does not illuminate.

Comment by Jibba Thursday, Oct 17, 19 @ 1:57 pm
==CZ avoids the question. ==

He’s too busy trying to educate us all on the various classifcations of taxpayers that he’s created in his own mind.

Comment by Demoralized Thursday, Oct 17, 19 @ 2:01 pm
I believe, with a 403b, the State will also need to make employer SS contributions. Since between 50% and 75% of the participants in the 5 State pension systems are currently non-coordinated, adding SS would be a budget buster … and the Feds don’t let you defer SS payments.

Comment by RNUG Thursday, Oct 17, 19 @ 2:01 pm
For Sue, CZ and others who would like the State to unilaterally cut Tier 1 pension benefits: would you have an issue with the State unilaterally reducing bond returns or decreasing payments to State contractors as well?

Comment by Original Rambler Thursday, Oct 17, 19 @ 2:17 pm
Until they’ve actually successfully collected the $200B from people, the state constitution is just a piece of paper ordering it. If it could be done, they would just do it. It’s like winning a court judgement. It means nothing if you can’t collect.

Comment by Don’t count your chickens Thursday, Oct 17, 19 @ 2:18 pm
==Your trolling here is quite tiresome.==

Hard to hear you from way down in that pit, though it sounds like we speak the same language.

==CZ avoids the question.==

Not all my comments make it through. Wait, did this one? Missed opportunity.

Comment by City Zen Thursday, Oct 17, 19 @ 2:19 pm
=== Hard to hear you from way down in that pit===

Yeah, that’s your conscience, not me.

Burying honesty for anger does that to folks.

LOL

Comment by Oswego Willy Thursday, Oct 17, 19 @ 2:25 pm
==But what would have happened to the state if there had been a major recession soon after this 1917 discussion???== In the scheme of things, I think 12 years is “soon after” the 1917 discussion.

Comment by SAP Thursday, Oct 17, 19 @ 2:29 pm
People who want a government employee paycheck while not working for the government, well, that’s “free stuff.” And right wingers try to convince people that government handouts are terrible, lol. When people make this ridiculous and hypocritical argument, they are in the abyss of reason.

The state “subsidized” the richest all these decades by not taxing them more than everyone else. And some or their professional shills cry the crocodile tears of how bad Illinois is after enjoying low tax rates for decades.

Comment by Grandson of Man Thursday, Oct 17, 19 @ 2:47 pm
“Because the state subsidized their salaries and benefits by shorting the pensions”

So that’s what they did with the missed contributions. I always wondered what was so important to divert from an obligation.

Comment by anonymous Thursday, Oct 17, 19 @ 3:23 pm
== Still waiting for that govt paycheck. Until I receive one, there’s a divide, whether you want to see it or fall in. ==

You couldn’t afford to receive one as you claim to be in the high tax bracket (a realm of no gov’t workers).

Comment by R A T Thursday, Oct 17, 19 @ 3:49 pm
=== Still waiting for that govt paycheck.===

Um, wake up and grow up. Your “payout” is waking up every day in a high income state in the good old US of A with all of the opportunities and and amenities that comes with that. Contrasted with, say, Syria.

Comment by Hieronymus Thursday, Oct 17, 19 @ 3:53 pm
Everyone on here is a pension expert it seems. Yet no one has ever said what the pension system would be like had every past budget paid the contributions like they were supposed to. So why are pension recipients taking so much heat when the legislators misappropriated funds. If a private company misappropriated funds and failed to pay into pensions wouldn’t the Securities and Exchange Commission get involved, or some other legal recourse happen to them for not paying?

Comment by Question Thursday, Oct 17, 19 @ 3:54 pm
==Because the state subsidized their salaries and benefits by shorting the pensions.==

subsidized … along with the rest of the entirety of state spending. The “state”, in order to pay for a portion of this entirety, rather than match this spending to tax revenues, cravenly “borrowed” this portion from unwilling lenders, namely, the pension funds.

Comment by Hieronymus Thursday, Oct 17, 19 @ 4:03 pm
If the pension obligation had been paid every year like it’s supposed to be paid it would look just like IMRF. Funded at somewhere around 96%

Comment by Anonymous Thursday, Oct 17, 19 @ 4:04 pm
This is and always will be an “issue” for the next election. Nibbling around the edges allows for the issue to be relevant the next time. If there is ever a time when payments are not made to individual annuitants the ya got a real issue. Until then, ya got a political football to be kicked back and forth to see who fumbles the ball.

Comment by Elliott Ness Thursday, Oct 17, 19 @ 4:16 pm
“Because the state subsidized their salaries and benefits by shorting the pensions” You could also say the State saved children from being abused and killed.

Comment by Skeptic Thursday, Oct 17, 19 @ 4:19 pm
Hier, Illinois as a whole is not a high income state. It is above average though.

Comment by Dybalat Thursday, Oct 17, 19 @ 4:19 pm
“This completely ignores the fact that the shortfall is dominantly due to the state not making their contributions on time…”

Not really.

According to the CGFA the total increase in the unfunded liabilities of the pension funds since the initiation of the ramp in FY1996 is about $115 billion. Insufficient State contributions contributed $51 billion of the increase but changes in assumptions and demographics have added another $50 billion. Since the ramp was initiated demographic factors and changes in assumptions have contributed almost as much of the increase (43%), as have insufficient State contributions (44%). The inability to predict funding requirements decades in the future is one of the problems with a defined benefit system. If the benefits cannot be modified the risk of failure to make accurate predictions fall entirely on the employer.

Comment by CapnCrunch Thursday, Oct 17, 19 @ 4:24 pm
- You could label as such or actually explain the 1929 event in context. -

Ok Sherrif Willy, I’ll try to live up to your standards for blog commenting.

Comment by Excitable Boy Thursday, Oct 17, 19 @ 5:27 pm
*Sheriff, heh

Comment by Excitable Boy Thursday, Oct 17, 19 @ 5:27 pm
=== I’ll try to live up to your standards for blog commenting.===

Not mine, but of those far better at commenting.

If you need to be a victim, I’m sure that’s also not part of good commenting.

Comment by Oswego Willy Thursday, Oct 17, 19 @ 5:29 pm
It’s time to consolidate. Get it done

Comment by Illinifan Thursday, Oct 17, 19 @ 7:10 pm
According to COFGA, underfunding by the state is the single largest source of unfunded liability ($30B). The nearest other source is changing assumptions ($17B), followed by other factors ($11B) and poor returns ($7B). I never said it was the only source but it is clearly the dominant one. If fully funded on time, the pension “crisis” would not exist. Tax increases needed to solve the other problems would be far less painful.

Comment by Jibba Thursday, Oct 17, 19 @ 10:16 pm
Sorry, quoted the TRS line for the liability numbers, not the total. But the totals for all systems say the same story…lack of state funding is the single largest contributor ($51B), without which there is no crisis. The next highest is changing actuarial assumptions ($32B).

Comment by Jibba Thursday, Oct 17, 19 @ 10:29 pm
==If fully funded on time, the pension “crisis” would not exist.==

And every other aspect of employee compensation - from salaries to health benefits to sick day accruals to the final wages upon which that pension is calculated - would be lower.

Comment by City Zen Friday, Oct 18, 19 @ 8:29 am
=== And every other aspect of employee compensation - from salaries to health benefits to sick day accruals to the final wages upon which that pension is calculated - would be lower===

Show your work.

You’re saying, if i read this, that labor would be making “less” had the pensions been fully paid.

So, please show this. Thanks.

Comment by Oswego Willy Friday, Oct 18, 19 @ 8:35 am
So nothing has changed in a century, but we keep doing the same thing?

Comment by Anonymous Friday, Oct 18, 19 @ 9:08 am

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Underfunded pensions have “been a problem forever” here

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