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* Yvette Shields at the Bond Buyer…
The picture for Illinois’ state employee pensions has become bleaker, with a $12 billion increase in unfunded liabilities that already top the $100 billion mark and a $1 billion increase in the state’s scheduled contributions next year.
The updated data comes from fiscal 2016 draft actuarial reports released by the state’s five retirement funds and its preliminary contribution requests for fiscal 2018, which were approved by the system’s boards at recent meetings.
The cash-strapped state tentatively will owe $8.8 billion to the state’s five funds in fiscal 2018. That’s up 12.7% from the $7.8 billion the state is paying in fiscal 2017, which began July 1.
The state’s unfunded liabilities, meanwhile, rose to $126.5 billion in fiscal 2016 from $112.9 billion a year earlier and the funded ratio deteriorated to 39.2% from 40.9%.
The funds must submit a preliminary contribution amount by a Nov. 1 state deadline.
Emphasis added because… wow.
…Adding… Lots more here.
posted by Rich Miller
Wednesday, Nov 9, 16 @ 1:33 pm
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I just wish these releases would refer to employees and teachers so the public would have a better perspective. 85% of liability is for downstate teachers IIRC.
Comment by LTSW Wednesday, Nov 9, 16 @ 1:40 pm
Fortunately rhe $$100 billion that was not collected in taxes was invested by the private sector at much higher rates of return. That wealth is available now to pay the debt.
Sounds like snark, but that is the logic of taxes rhat don’t cover costs.
Comment by Last Bull Moose Wednesday, Nov 9, 16 @ 1:43 pm
How likely will Federal bankruptcy be an option for states with our new Republican legislature and President?
Comment by Robert the 1st Wednesday, Nov 9, 16 @ 1:45 pm
No worries — priorities first.
Flick a couple of switches on workers comp, twist a couple of nobs on collective bargaining, and it will start raining silver dollars.
Because that’s how “the economy” has always worked, all over the world.
Comment by wordslinger Wednesday, Nov 9, 16 @ 1:46 pm
I see allowing the States the protections of the bankruptcy court as a very low priority. Right after granting Puerto Rico independence.
Comment by Last Bull Moose Wednesday, Nov 9, 16 @ 1:55 pm
Or you could just propose a constitutional ammendment to restrict the future earnings from the 3 percent COLA.
If we can have a safe roads amendment how about a safe pensions ammendment?
Comment by Lucky Pierre Wednesday, Nov 9, 16 @ 1:55 pm
–How likely will Federal bankruptcy be an option for states with our new Republican legislature and President?–
How sad is it the Republicans are now known as the Party of Bankruptcy?
The president-elect and our governor certainly have been leading practicioners of bankruptcy, breaking contracts and deadbeatism.
Comment by wordslinger Wednesday, Nov 9, 16 @ 1:55 pm
==How likely will Federal bankruptcy ==
My thought all along. I couldn’t see another endgame for Rauner with the backlog growing so large. I think this is a real possibility now. Of course, the bondholders will take a hit as well.
Comment by Anotherretiree Wednesday, Nov 9, 16 @ 1:56 pm
== Robert the 1st - Wednesday, Nov 9, 16 @ 1:45 pm:
How likely will Federal bankruptcy be an option for states with our new Republican legislature and President?==
Zero chance.. Congress can’t even get a transparency act passed which would force debt disclosure to keep tax exempt bond status…
Comment by Liberty Wednesday, Nov 9, 16 @ 2:01 pm
That’s funny. I was claiming a “zero chance” of a Trump Presidency yesterday…
Comment by Robert the 1st Wednesday, Nov 9, 16 @ 2:08 pm
Anotherretiree- I agree. I think Rauner is intentionally growing the backlog to some extent. Crisis creates opportunity.
Comment by Robert the 1st Wednesday, Nov 9, 16 @ 2:11 pm
Wordslinger,
Usually the party that has control of cities and states for decades that run up huge debts they can’t pay back would be the “party of bankruptcy”.
I notice there are no red states on the verge of bankruptcy.
Comment by Lucky Pierre Wednesday, Nov 9, 16 @ 2:11 pm
Not sure what the big deal is. Rauner just got a gold box dropped from heaven.
I’m sure the GOP majority will make it so state’s can declare bankruptcy, abrogate all unpleasant contracts, and outlaw unions.
Once this happens — who cares? Four years from now, the same folks that voted Trump (and Rauner) in office will simply vote them back in office.
There’s no political downsides anymore. It’s a free-for-all.
Comment by Bobby Catalpa Wednesday, Nov 9, 16 @ 2:12 pm
None of it is shocking, and it is only going to get worse as actual investment returns fail to meet the assumed rates of return.
Comment by Shemp Wednesday, Nov 9, 16 @ 2:13 pm
== Or you could just propose a constitutional ammendment to restrict the future earnings from the 3 percent COLA. ==
Changing the AAI was already rejected by the courts.
Comment by RNUG Wednesday, Nov 9, 16 @ 2:22 pm
Currently no options for Federal BK. I’d watch the Puerto Rico situation though as that could set a precedent for any future federal BK legislation related to states. It all depends on if the oversight commission established by the Feds is willing to give pensions a haircut that’s relatively equal to the haircut that bond holders will get. Since several states are in similar situation with pension debt, this is becoming more and more likely.
IMO this is how the pension debt story in Illinois will end. Illinois will not correct this on their own.
Comment by BK Bro Wednesday, Nov 9, 16 @ 2:22 pm
Sorry. This MUST be paid. No many left for raises in new contracts, discretionary spending, capital work not safety related and expansion of ANY program that costs more than it saves. This is what decades of political malfeasance and Corruption leads to.
Comment by Illinois Bob Wednesday, Nov 9, 16 @ 2:27 pm
=85% of liability is for downstate teachers IIRC.=
You do not recall correctly. All public school teachers outside of the Chicago Public School System are in TRS. That includes the very large number of suburban teachers (out numbering so called downstate teachers).
Bankruptcy is simply idiotic. Basically advocates are saying we will welch anytime we want or because I do not have it you won’t get it.
Sounds like real grown ups. How about paying a debt owed?
Comment by JS Mill Wednesday, Nov 9, 16 @ 2:27 pm
It’s only a taxpayer liability to those who choose to stay/can’t leave.
Comment by Romeo Wednesday, Nov 9, 16 @ 2:32 pm
As the story says, the lowered discount rate and higher life expectancy assumptions accounted for about 3/4’s of the increase.
Also, under the current ramp plan, the pension debt will continue to grow until around FY2029. If you don’t want the debt to grow, the ramp needs to be charged to flat payments about $1.5B to $2.0B higher than the current payments.
If you’re not willing to pay the extra amount now, then we will be reading these stories for the rest of our life.
Comment by RNUG Wednesday, Nov 9, 16 @ 2:39 pm
No worries. Mendoza can just right a check.
Comment by whiggy Wednesday, Nov 9, 16 @ 2:41 pm
So why would anyone whine about this growing debt and at the same time, wallow in the abyss of not looking for any kind of remedy? This is what kids do. Whine and complain while sitting on their….
Yes, I believe Rauner is deliberately doing nothing to grow this into an ever greater monster in hopes that the crisis will become so unbearable that somehow it won’t have to be paid. Should retirees be stiffed (yet again), just remember that taxpayers will still be paying for them one way or another. You can’t just dump them off of a bridge and they disappear. Since they were public employees, entitled to a public pension they paid their part of, they will get public funds to live on one way or another.
Comment by Anonymous Wednesday, Nov 9, 16 @ 2:42 pm
Keep in mind we do not have a pension problem, but rather a debt problem due to the fact that our officials did not make the required pension payments. The pension dollars were spent on other programs which were not paid for.
Comment by facts are stubborn things Wednesday, Nov 9, 16 @ 3:22 pm
===but rather a debt problem===
It ain’t just a problem.
Comment by Rich Miller Wednesday, Nov 9, 16 @ 3:28 pm
The purpose of the bankruptcy laws is to give people a fresh start, even if that means hurting some of the creditors.
If a corporation can be a person, why can’t certain government entities? At the very least, it shouldn’t be an unquestionable bad.
Comment by lake county democrat Wednesday, Nov 9, 16 @ 3:30 pm
- JS Mill -
The use of BK even by cities that are afforded access to it in other states is extremely rare. There are market consequences to declaring BK - no one hopes to be in BK. Interest rates will probably always be higher for cities/eventually states that do declare BK. That’s the price Illinois will eventually pay. Short of an economic miracle or a tax hike way bigger than what pols are proposing, there’s just no way Illinois can ever pay down that debt.
Safe roads amendment is a clue to the future. Road funds go to roads. General taxes go to pensions. Whatever is left over from general taxes goes to other services. The “whatever is left over” is going to get smaller and smaller every year.
Comment by BK Bro Wednesday, Nov 9, 16 @ 3:40 pm
–Usually the party that has control of cities and states for decades that run up huge debts they can’t pay back would be the “party of bankruptcy”.–
Harrumph, approved partisan talking point, harrumph, approved partisan talking point…..
LP, if you ever paid attention to anything beyond your own robotic talking points, you’d understand that shorting pensions has been something Republicans and Democrats have agreed upon in Springfield since the beginning.
And no states are “on the verge of bankruptcy” as they are going concerns with sovereign powers. It’s not a matter of “can’t,” it’s “don’t want to.”
Republicans, certainly in Illinois, are the Party of Bankruptcy as they, starting with the governor, are the ones advocating it.
Comment by wordslinger Wednesday, Nov 9, 16 @ 3:58 pm
==Usually the party that has control of cities and states for decades that run up huge debts they can’t pay back would be the “party of bankruptcy”.==
There is moral bankruptcy, and there is financial bankruptcy.
Comment by City Zen Wednesday, Nov 9, 16 @ 4:06 pm
==It’s only a taxpayer liability to those who choose to stay/can’t leave.==
It’s not a lie…if you believe it. - George Constanza
Comment by City Zen Wednesday, Nov 9, 16 @ 4:09 pm
JS Mill, I should have said TRS. That was my intent. I was involved in writing a report about the pension debt that the Auditor General issued back in the late 80’s. It was met with a “no big deal” by the legislature back then.
Comment by LTSW Wednesday, Nov 9, 16 @ 4:12 pm
I can’t believe we are even having this ridiculous bankruptcy discussion. I know some of you get all giddy about ways to get around the pension mess but when you get to this level of discussion it’s just ridiculous.
Comment by Demoralized Wednesday, Nov 9, 16 @ 4:14 pm
==The pension dollars were spent on other programs which were not paid for.==
Spent on employee compensation as well.
Comment by City Zen Wednesday, Nov 9, 16 @ 4:29 pm
Lucky Pierre- you forgot where you were posting. This is “shut up and pay for what we bargained for ourselves” land. We even have a constitutional amendment that says so.
Comment by Robert the 1st Wednesday, Nov 9, 16 @ 5:48 pm
….but wait. That wouldn’t be fair. Many of those having their taxes raised weren’t even born when these promises were made…
Comment by blue dog dem Wednesday, Nov 9, 16 @ 5:53 pm
BKBro at 3:40
Whatever is left over after paying pensions? Remember that the pensions were used to pay for all the whatever first and they were stiffed. That’s how we got here. Facts matter.
Comment by Anonymous Wednesday, Nov 9, 16 @ 6:09 pm
Illinois is a sovereign state, they have the ability to raise revenue. You would have to amend the US constitution
Comment by foster brooks Wednesday, Nov 9, 16 @ 6:24 pm
=== How about paying our debts? ===
Almost all GOP legislators call themselves “fiscal conseravtives.” That used to mean paying debts, not welshing on them. Not anymore.
Comment by anon Wednesday, Nov 9, 16 @ 6:26 pm
So if people don’t want to pay for overly generous benefits that politicians gifted themselves and special-interest groups in exchange for political support they are not “fiscal conservatives.” In some cases before they were even born. Got it.
Comment by Robert the 1st Wednesday, Nov 9, 16 @ 6:31 pm