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* Click here for background if you need it. Here’s Adam Schuster with the Illinois Policy Institute’s response to the Center on Tax and Budget Accountability’s defense of its pension obligation bond proposal…
The CTBA plan does use the POBs to reduce contributions, but in the long-run rather than the short-run/Blago-style. It reduces the contributions by both lowering the funding target and extending the pension ramp, both of which violate Actuarial Standards of Practice from professional actuary associations.
Hertz correctly points out that a recession is increasingly likely, but then comes to the exact opposite conclusion about what this should mean. Just prior to a recession is the worst possible time to play an arbitrage gamble with taxpayer money, which is what this plan does. It would be like going all in on a Black Jack hand knowing the dealer has 21. This will likely make our pension repayment even more expensive than already envisioned by CTBA.
Hertz’s admission that arbitrage benefit “isn’t really the point” tells us what their true motivation is here. Potential arbitrage benefit is the only positive aspect of their plan. But that’s not their goal; their goal is to trade soft debt for hard debt by putting taxpayers on the hook for these bonds, which cannot later be made cheaper through reform like the pension debt can.
Hertz claims to be worried about the service cuts being caused by the rapidly growing pension payments, but the CTBA plan explicitly puts pension payments above those services with its $11 billion cash infusion. That insulates pensions from the risk of economic downturn while also restricting the amount of revenue available for the services Hertz claims to care about, by making them hard debt.
You know what our alternative is, because I’ve seen you write about it. I know you think a federal contracts clause challenge is likely. We’ll have more on that soon, but for now its worth noting that Arizona did not face such a challenge despite a virtually identical situation. They have the same pension clause and their court also struck down a prior round of reforms, claiming they diminished benefits. And yet they’ve successfully amended their constitution twice now.
Arizona hasn’t yet faced a federal court challenge. That doesn’t mean it won’t. Or that it wouldn’t be challenged here.
…Adding… Schuster has a new post up on the topic. Click here.
…Adding… From comments…
Not weighing in on the CTBA proposal itself, but it’s worth pointing out that the IPI response seems to misunderstand (or misrepresent) it in several ways. First, IPI writes that CTBA’s proposal “reduces the contributions”, which isn’t really true. In the short-term CTBA’s proposal would increase contributions above what’s required under current law. Yes the CTBA proposal does not conform to actuarial standards, but making payments that align with actuarial best practices would require dramatically higher pension contributions (both above current law and CTBA’s proposal). Second, IPI is critical of the proposal’s use of POBs because it’s an “arbitrage gamble,” but this is simply not what CTBA is proposing. In CTBA’s proposal the POBs are meant to be a revenue source for making pension payments that are higher than required under current law in the short term. This using POBs for budgetary relief. POBs resolve CTBA’s issue of wanting to increase pension contributions without cutting other aspects of the budget or simply raising taxes. It’s also worth pointing out that Quinn issued two POBs for budgetary relief (in 2010 and 2011). The Blago POB was issued for arbitrage reasons; however, once issued Blago used some of the proceeds for budgetary relief (which was a different use than original proposed). Blago’s use of POB proceeds for budgetary relief is one source of criticism; however, it remains to be seen whether the arbitrage play materializes as the bonds aren’t paid off. As of 2017, investment returns have actually exceed the 2003 POB interest rates. (see p. 121 http://cgfa.ilga.gov/Upload/FinConditionILStateRetirementSysMar2018.pdf)
Last, I think people should realize that CTBA’s proposal actually has several distinct policy components that can be independently debated. 1) switching the amortization method (aka debt repayment schedule) from level % of pay to level dollar. Doing this alone requires higher pension payments; 2) changing the funded ratio target from 90% to 70%; and 3) using POBs to make part of the state’s pension payments.
I know who that commenter is, by the way, and the person knows this topic well.
posted by Rich Miller
Tuesday, Dec 11, 18 @ 9:27 am
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The key to understanding this is the distinction between “soft debt” versus “hard debt” with the core question being whether the State will renege on promised pension benefits.
IL politics has circled around this question for decades. But unless there is a constitutional path to renege on promised benefits, the so-called soft debt already is hard debt.
Comment by Hamlet's Ghost Tuesday, Dec 11, 18 @ 9:33 am
California ranks 26th in the nation in terms of unfunded pension debt- 68% funded with at 254 billion in debt even though they have a progressive income tax that tops out at 13.3%.
The San Fransisco Chronicle calls the public sector pensions unsustainable but in Springfield we continue to ignore the problem
https://www.sfchronicle.com/opinion/editorials/article/Editorial-California-s-golden-pension-rights-13452464.php
Comment by Lucky Pierre Tuesday, Dec 11, 18 @ 9:38 am
IPI trying to invalidate the law and the ISC…. Again..
Broken record.
“When are you guys gonna fold up your tent?”
Comment by Anonymous Tuesday, Dec 11, 18 @ 9:39 am
LP - so what youre saying is that the state income tax doesnt negatively impact the ability to draw residents and businesses? Nice admission.
You and your crew still havent explained how you plan to get around the state constitution.
Comment by Anonymous Tuesday, Dec 11, 18 @ 9:41 am
If it’s this sort of nonsense and insist over dinner invites the democrats need to move on without them.
Comment by Not a Billionaire Tuesday, Dec 11, 18 @ 9:43 am
So, why,I wonder, the big heat on pensions from the right in Illinois just now? Much more than we have seen the past few years. Ahh yes, the progressive income tax proposal. If they can only cut pensions they could then argue that proposal is not needed. I sense a sense of frantic panic.
Comment by wondering Tuesday, Dec 11, 18 @ 9:46 am
IPI is living in la la land, where the state can rob pensioners. And yeah, if you can just write off debt, just say “No, I’m not paying you” that is the easiest, least painful solution (for the one paying the debt). If you come back to reality, the CTBA’s solution is better than the current ramp. It is insanely irresponsible to have any kind of ramp, back loading the payments. It’s saying “We don’t have $100 today, so we’ll just pay $200 tomorrow. I’m sure we’ll find it somewhere.” Insanity. The unfunded liability is projected to GROW until 2028. This means the plan, the stated, written down goal, is to go deeper into debt for another decade before digging ourselves out of it. Why, for God’s sake?
As for the arbitrage aspect, sure, it is a risk. So is ignoring reality and going about business as usual, or assuming that we can somehow just write off the debt. I don’t like the idea of having a goal of 70%, I think we should keep the 90%, at least, but push it back to ease the burden some. And not back load it and hope the next generation can fix the problem.
Comment by Perrid Tuesday, Dec 11, 18 @ 9:47 am
==their goal is to trade soft debt for hard debt==
Someone made this observation on yesterday’s post.
This does seem like a backdoor way of forcing the state into making a full pension payment (paying the bond) and essentially calling a bluff that the state won’t have the guts to cut services to make the bond payment and will be forced into a tax hike. Win-win from a pro-government/spend perspective.
The more digging into the details of this plan, the more devious the intentions appear. Not a good look for the CTBA.
Comment by City Zen Tuesday, Dec 11, 18 @ 9:49 am
I thought the IPI would hate this idea since it would ruin their argument about the pension debt ever increasing.
Leveling payments will make state finances more stable. I would have liked to see even more of the pension debt converted to bond debt, but leveling pension payments is a worthy goal.
What the IPI fails to consider here is that in an economic downturn, POBs might be able to be refinanced at a lower rate, which cannot happens with the pension debt. I hope thePOBs have a call provision which will allow for that possibility.
Comment by A Jack Tuesday, Dec 11, 18 @ 9:50 am
Does the IPI’s plan also include having AZ’s Republican majorities in both houses come on over to Illinois and amend our constitution for us? If not, I would be curious to see their plan for convincing Illinois’ Dem supermajorities to go for it (or for doing so in a convention if that’s their jam). They wouldn’t waste everyone’s time talking about something with no chance of passing, would they? Or are we to infer that the IPI thinks Illinois just hasn’t reached the crisis stage yet that will surely convince those Dem supermajorities of the need to cut benefits via amendment?
Comment by AZ Tuesday, Dec 11, 18 @ 9:59 am
“Not a good look for the CTBA”
I see this more as an insistence that we finally face the truth.
Comment by Hamlet's Ghost Tuesday, Dec 11, 18 @ 10:01 am
All they are trying to do is get the democrats into a pension fight again. I think have you called up your tent is a good response.
Comment by Not a Billionaire Tuesday, Dec 11, 18 @ 10:01 am
…but in Springfield we continue to ignore the problem.
LP, A lot is being talked about regarding pensions in Springfield. Pensions are certainly not being “ignored”.
You would like to ignore the solution, which is, pay up.
Comment by don the legend Tuesday, Dec 11, 18 @ 10:06 am
The Speaker ignored the pension debacle for the past 4 years for purely political reasons.
With a billionaire Governor and total control of Springfield they will have to work to solve the problem that will crowd out all of their progressive programs and proposals for decades.
Comment by Lucky Pierre Tuesday, Dec 11, 18 @ 10:07 am
The entire IPI arguement is based on a hope and a prayer that some how, some way, some day, some sort of benefit cut will survive a constitutional challenge. Hope ain’t a plan.
Comment by Roman Tuesday, Dec 11, 18 @ 10:07 am
==I know you think a federal contracts clause challenge is likely. We’ll have more on that soon,==
If anyone still held any doubts that responsible conservatism is completely dead, here’s your answer. Going the full-trump route, apparently even honoring contracts is no longer sacrosanct in today’s gop. Explains IPI support for Rauner these past four years. Is a sad day when Democrats turn out to be the only responsible grownups in the country.
Comment by Lester Holt’s Mustache Tuesday, Dec 11, 18 @ 10:09 am
Last I saw it was reported California had a budget surplus and the governor wanted to add revenue to a rainy day fund. Surplus money could also be used to pay debt.
The elephant in Illinois’ room is the low state income tax rate the rich have paid for decades. The millionaire surcharge would have brought in a billion dollars more a year for education. That frees up other money. This is the best chance I’ve seen to make a progressive tax a reality in Illinois, to right-size the tax code and make top incomes pay a higher rate, like most of our neighbors.
Comment by Grandson of Man Tuesday, Dec 11, 18 @ 10:10 am
A few days ago I made the point the AZ and IL pension clauses are similar but not identical.
AZ had the contract statement and the guarantee statement in separate sentences / items. Both those sentences contain external references to exceptions. While you can read them as combining to mean the same as the IL clause, it is weaker. You can read that as meaning the AZ Legislature intended for some exceptions to exist to the pension protection.
In IL, the drafters of the Pension Clause put it all in one run-on sentence with no exceptions or exclusions. The minutes of the 1970 Con-Con made it clear to they intended it to be ironclad with no exceptions … and that is how the courts here have interpreted it.
So IPI’s claim the two are identical is false. Similar, yes. Exactly the same, no.
Comment by RNUG Tuesday, Dec 11, 18 @ 10:13 am
==Ahh yes, the progressive income tax proposal. If they can only cut pensions they could then argue that proposal is not needed.==
If our pensions were 100% funded, don’t you think people would still be pushing for a progressive income tax? There are number of initiatives in states not in as dire straits as us that are either pushing to move to a progressive tax (MA) or implement a millionaire’s tax (AZ).
Comment by City Zen Tuesday, Dec 11, 18 @ 10:15 am
Pritzker also specifically ran on a progressive income tax and won by a landslide. The desperate, flailing efforts to stop it are just impotent and weak. It’s going to happen.
Comment by Anonymous Tuesday, Dec 11, 18 @ 10:15 am
@RNUG - It is still worth tracking challenges to AZ’s constitutional changes in federal court. AZ being in the more liberal 9th circuit compared to IL being in the more conservative 7th.
That being said, I do not see any constitutional change in Illinois happening without the support of the unions, so this is certainly a very unlikely scenario at this junction.
Comment by Chicagonk Tuesday, Dec 11, 18 @ 10:18 am
The IPI is still pushing the myth that unearned pension benefits can be changed to reduce the pension debt.
Comment by RNUG Tuesday, Dec 11, 18 @ 10:24 am
What state do these guys live in?
And that first sentence is so hilariously bad.
We really need to, as a state, ignore these guys. They add nothing to the conversation other than inaccuracies and bad ideas.
Comment by From the 'Dale to HP Tuesday, Dec 11, 18 @ 10:28 am
== It is still worth tracking challenges to AZ’s constitutional changes in federal court. ==
Yes, we need to track it and follow the arguments.
I just wanted to be clear that the IPI is being misleading about AZ situation being exactly the same as IL.
Comment by RNUG Tuesday, Dec 11, 18 @ 10:30 am
===Both those sentences contain external references to exceptions===
Those are the recent amendments, I think.
Comment by Rich Miller Tuesday, Dec 11, 18 @ 10:32 am
@RNUG
It does say virtually identical, not identical. And the AZ court interpreted it in the same way anyway.
Comment by Political Animal Tuesday, Dec 11, 18 @ 10:38 am
===virtually identical===
Virtually is doing a lot of lifting… we’ll see
Comment by Oswego Willy Tuesday, Dec 11, 18 @ 10:44 am
With a good chunk of Tier one reaching age 60 in the next ten years, the changing of unearned benefits is a mute point. A large portion of benefits have already been earned and that debt is cast in stone. So delaying a constitutional solution to tinker with potentially unconstitutional solutions is simply a bad idea.
Comment by A Jack Tuesday, Dec 11, 18 @ 10:45 am
The IPI railed against the Edgar Ramp and blamed Jim Edgar for a huge portion of the State’s budget ills, but now they are against a proposal to flatten the ramp. With apologies to the Coen Brothers, never look for logic in the chambers of IPI.
Comment by SAP Tuesday, Dec 11, 18 @ 10:55 am
The ISC has ruled that pension debt is debt, period. This IPI fantasy of hard vs soft debt is why we haven’t moved to bond out more of the pension debt (earning interest at 7.5%) with much lower bonded interest. That, as CTBA states, will save us 67 billion minimally (assuming a very conservative estimate of a 6.5% bond interest rate) over the long run. When the market tanked in 2008, those who could remain invested in the market, have since recouped all of their losses and are once again in the plus column.
IPI loves the ramp in that it forces the state to play off pensions vs services, or raising taxes enormously to allow the state to pay both the pension ramp and maintain needed services. CTBA gives the state the breathing room it needs, and saves 67+ billion through 2045. And, here’s the kicker. When you read the CTBA proposal, it contains actual numbers. You’ll notice the IPI fever dream doesn’t. Funny that.
As for the 70% funded in 2045, that doesn’t mean the higher funding level can’t be achieved going forward. Eventually, 100% will be paid either out of the fully funded pension funds, or out of GF.
Reamortization replaces the unrealistic pension ramp with a sustainable course going forward. And that’s what IPI hates the most. They want to use Illinois as a test case for some sort of state level bankruptcy, arguing that the state has no alternative, even when CTBA has presented a detailed (and legal) alternative now.
Comment by PublicServant Tuesday, Dec 11, 18 @ 11:02 am
IPI will do what it does. Throw stink bombs and mislead.
The CTBA plan needs to withstand the analysis of the experts, not IPI.
Comment by Norseman Tuesday, Dec 11, 18 @ 11:06 am
Not weighing in on the CTBA proposal itself, but it’s worth pointing out that the IPI response seems to misunderstand (or misrepresent) it in several ways. First, IPI writes that CTBA’s proposal “reduces the contributions”, which isn’t really true. In the short-term CTBA’s proposal would increase contributions above what’s required under current law. Yes the CTBA proposal does not conform to actuarial standards, but making payments that align with actuarial best practices would require dramatically higher pension contributions (both above current law and CTBA’s proposal). Second, IPI is critical of the proposal’s use of POBs because it’s an “arbitrage gamble,” but this is simply not what CTBA is proposing. In CTBA’s proposal the POBs are meant to be a revenue source for making pension payments that are higher than required under current law in the short term. This using POBs for budgetary relief. POBs resolve CTBA’s issue of wanting to increase pension contributions without cutting other aspects of the budget or simply raising taxes. It’s also worth pointing out that Quinn issued two POBs for budgetary relief (in 2010 and 2011). The Blago POB was issued for arbitrage reasons; however, once issued Blago used some of the proceeds for budgetary relief (which was a different use than original proposed). Blago’s use of POB proceeds for budgetary relief is one source of criticism; however, it remains to be seen whether the arbitrage play materializes as the bonds aren’t paid off. As of 2017, investment returns have actually exceed the 2003 POB interest rates. (see p. 121 http://cgfa.ilga.gov/Upload/FinConditionILStateRetirementSysMar2018.pdf)
Last, I think people should realize that CTBA’s proposal actually has several distinct policy components that can be independently debated. 1) switching the amortization method (aka debt repayment schedule) from level % of pay to level dollar. Doing this alone requires higher pension payments; 2) changing the funded ratio target from 90% to 70%; and 3) using POBs to make part of the state’s pension payments.
Comment by RalphLawerenceTillman's ghost Tuesday, Dec 11, 18 @ 11:32 am
=their goal is to trade soft debt for hard debt by putting taxpayers on the hook for these bonds, which cannot later be made cheaper through reform like the pension debt can=
Or maybe they simply want to put Illinois on solid, consistent footing by paying the bills.
We know that the IPI and their radical right wing followers don’t want that. But that didn’t work for them in the last election cycle. They only have yelling at the clouds as their option now.
Comment by JS Mill Tuesday, Dec 11, 18 @ 11:32 am
==both of which violate Actuarial Standards of Practice from professional actuary associations===
There is literally no way for us to follow these standards given our current financial situation. It will take decades to get to a place where we can follow standards.
Making consistent payments for decades is our only way out of this mess, and we better start now. Using reamortized/level payments and a longer timeline are the only real ways to make it bearable to make payments for the long period of time needed to dig our way out.
Where do you want to be in 50 years? I’d rather be at 70% and on the way up, rather than still mired in a morass of indecision or recovering from some ill-conceived plan hatched to steal from pensioners and bond holders.
Comment by Anonymous Tuesday, Dec 11, 18 @ 11:42 am
“Just prior to a recession is the worst possible time to play an arbitrage gamble with taxpayer money, which is what this plan does.”
But it’s a great time to throw everyone in a 401k, of course.
Comment by Shark Sandwich Tuesday, Dec 11, 18 @ 11:44 am
==When you read the CTBA proposal, it contains actual numbers.==
Numbers and a chart. Where do I sign?
==Reamortization replaces the unrealistic pension ramp with a sustainable course going forward.==
Then re-amortize through 2045. That solves the ramp problem.
Comment by City Zen Tuesday, Dec 11, 18 @ 11:52 am
Thanks for the laugh Shark Sandwich.
Comment by Anon Tuesday, Dec 11, 18 @ 11:57 am
===Numbers and a chart. Where do I sign?===
If you want to try to refute the CTBA numbers, please do. At least they’re there, as opposed to IPI’s word salad.
=== Then re-amortize through 2045. That solves the ramp problem. ===
That is , of course, negotiable. Pritzker isn’t take-it-or-leave-it Bruce.
Comment by PublicServant Tuesday, Dec 11, 18 @ 12:00 pm
=So, why,I wonder, the big heat on pensions from the right in Illinois just now?=
I’ve also noticed that the corporate editorial boards are starting to recycle pension anomalies where individuals (via legislation) scammed state pension funds. These anomalies are presented as if they were a factor greater than the skipped taxpayer payments. I recall about 20 years ago that this tactic was used by the BGA, Sun-Times, and Tribbies to fire up the angry mob for pension “reform”. - Here we go again…
Comment by Deadbeat Conservative Tuesday, Dec 11, 18 @ 12:04 pm
==but in Springfield we continue to ignore the problem==
Ever heard of Tier II? That was hardly ignoring the problem.
The problem with people like you is that reforms such as those aren’t good enough. You won’t be satisfied until you reduce pensions for current workers. The Supreme Court has said no - time and time again.
You can continue your ongoing whining about Madigan if that makes you feel better. I suggest you grow up, though, and stop acting like a child.
Comment by Demoralized Tuesday, Dec 11, 18 @ 12:04 pm
==This does seem like a backdoor way of forcing the state into making a full pension payment==
Heaven forbid.
(I thought that was the whole point - make the pension payments.)
And lest we forget……Pension funds only need to be 100% funded today if everyone retires today, and that just ain’t gonna happen.
Comment by TinyDancer(Sue) Tuesday, Dec 11, 18 @ 12:06 pm
“Then re-amortize through 2045. That solves the ramp problem.”
I’m with CZ on this one. Might only take an income tax increase of a couple of percent to pay all that $125B debt off in 25 years. Glad you recommend that, thanks for your leadership on this issue.
Comment by Jibba Tuesday, Dec 11, 18 @ 12:14 pm
== If you want to try to refute the CTBA numbers, please do. ==
You can criticize CTBA for some of their philisopy and positions, but their numbers are usually pretty solid. About the only thing to nitpick on their numbers is where they have to make assumptions. But anyone trying to predict the future has to make assumptions, and they normally pick middle of the road assumptions.
Comment by RNUG Tuesday, Dec 11, 18 @ 12:14 pm
School districts are already having trouble finding and retaining new teachers. This is partially thanks to the tier 2 pensions. Cutting pensions even more will cause even more of a crises for the school districts, they will have to raise teacher salaries substantially to keep teachers long term.
Comment by DuPage Tuesday, Dec 11, 18 @ 12:25 pm
==If you want to try to refute the CTBA numbers, please do.==
Already done in spades yesterday.
==I thought that was the whole point - make the pension payments.==
Good job completely ignoring the phrase just after that.
==Pension funds only need to be 100% funded today if everyone retires today==
Are 40% retiring today? Are 70% retiring in 2045? Why have target levels at all?
Your peter pan rationalization though has forced me to removed you from consideration for honorary placement in the Society of Actuaries.
Comment by City Zen Tuesday, Dec 11, 18 @ 12:28 pm
==Your peter pan rationalization though has forced me to removed you from consideration for honorary placement in the Society of Actuaries.==
Arrogant much?
Comment by Demoralized Tuesday, Dec 11, 18 @ 1:06 pm
==Why have target levels at all?==
And that is a completely ridiculous and childish argument. You could make that juvenile argument for pretty much anything.
Comment by Demoralized Tuesday, Dec 11, 18 @ 1:07 pm
Tier II was passed in 2010. It did not solve the problem but it did cleave state workers into the have and the have nots.
Irrefutable that the Speaker ignored for purely political reasons, bipartisan pension reform passed by the Senate that would have been signed by the Governor and would save 1 billion dollars a year
Comment by Lucky Pierre Tuesday, Dec 11, 18 @ 1:14 pm
===would save 1 billion dollars a year===
And even if he had agreed to it, Gov. Rauner would’ve refused to put it back into the system.
Comment by Rich Miller Tuesday, Dec 11, 18 @ 1:16 pm
==would save 1 billion dollars a year==
You can’t receive savings on a plan that is unconstitutional.
Comment by Anonymous Tuesday, Dec 11, 18 @ 1:20 pm
==It did not solve the problem==
And, yes, it did solve a problem going forward. But that’s not good enough for some of you. You want current employee pensions cut. And that isn’t going to happen. And yet you continue to waste your breath talking about it.
Comment by Demoralized Tuesday, Dec 11, 18 @ 1:21 pm
==the Speaker==
Also, you really need to move on. The whiny blame the Speaker didn’t work. Your guy got trounced trying that game. And yet you continue the argument. That argument is a loser. And it’s a big loser.
Comment by Demoralized Tuesday, Dec 11, 18 @ 1:24 pm
===Already done in spades yesterday.===
No, what you were harping on yesterday was Matire saying (approximately) 80% in March and now saying 70%. That was you conveniently leaving out a few words here and there…
In yesterday’s post Martire said:
the funded ratio is actually higher under the CTBA reamortization than under the current ramp through the mid-2030s.
In the longer term, it’s important because it means that, fifteen years from now, if the state decides it wants and is in a position to increase its funded ratio target for 2045, it will be in no worse, and maybe a better, position to do that than under the current ramp
Rich even placed the last phase by Martire in bold type. Maybe you missed that? I’m not seeing any refutation of the CTBA numbers in Spades lol. Just you complaining about Martire changing from 80% to 70%.
Comment by PublicServant Tuesday, Dec 11, 18 @ 1:25 pm
==Are 40% retiring today? ==
Beats me. Tried the Google. Anyone know?
Comment by TinyDancer(FKASue) Tuesday, Dec 11, 18 @ 1:41 pm
==Arrogant much?==
On this topic? Apparently.
Lots of mental gymnastics here to justify purposely under-funding the pensions. Just admit the true cost of a properly funded pension is either beyond the taxing capacity of the state or the willingness of workers to accept a lower salary that properly represents how expensive their deferred compensation is. Or both.
A plan to fund pension withdrawals with an ever increasing amount of recent deposits is not a plan. It is a masquerade.
==fifteen years from now==
In fifteen years, they will say fifteen years from now. Always later with the CTBA. I wonder why? Scratch that, I know why, and I think you do too.
Comment by City Zen Tuesday, Dec 11, 18 @ 2:57 pm
==properly==
Proper in who’s eyes? Yours? What is “proper?”
Comment by Demoralized Tuesday, Dec 11, 18 @ 3:14 pm
==Are 40% retiring today? ==
No.
The biggest mass retirement SERS (actual state employees under the Governor) happened the end of 2002. In round numbers, 11K out of a total of 77K … a total of 14%.
I don’t expect we will ever see that large s mass retirement again.
Comment by RNUG Tuesday, Dec 11, 18 @ 3:48 pm
==… a total of 14%…I don’t expect we will ever see that large mass retirement again.==
Thanks.
So…as I was saying…the pension funds only need to be 100% funded today if everyone retires today.
That takes way some of the hysterics and immediacy.
Full funding should be the goal, but let’s put the shortfall into proper perspective.
Comment by TinyDancer(FKASue) Tuesday, Dec 11, 18 @ 4:09 pm
Masquerade, Mental Gymnastics? Look who’s talking, CZ. What I’ve been able to glean in terms of your preferred solutions is (1) the employees take a pay cut to properly fund their pensions. That’s a joke right? Never gonna happen, but I know it’s your wet dream.
(2) Raise taxes enough to have the pensions properly funded, according to you, by when? Got a timeframe and any numbers in mind?
CTBA’s plan, on the other hand, is doable, and is likely going to be the starting point for negotiations going forward. Yours, if you actually would clearly articulate it, doesn’t seem very realistic with the sparse details you’ve offered so far.
Comment by PublicServant Tuesday, Dec 11, 18 @ 4:16 pm
Budgets are moral documents.
They most be not only fiscally balanced, but also morally Balanced.
Welching on our promises to public servants is not gonna fly because the people of Illinois are moral people and our leaders in Springfield are not amoral.
Comment by Yellow Dog Democrat Tuesday, Dec 11, 18 @ 5:41 pm
The biggest problem I have is we just keep pushing the cost down the road. The cost isn’t going away, we’re just making our kids and grandkids pay for the cost of services we got yesterday. It’s wholly unfair, and is just as immoral as changing one’s pension.
Comment by Shemp Tuesday, Dec 11, 18 @ 10:07 pm
== The biggest problem I have is we just keep pushing the cost down the road. The cost isn’t going away, ==
Actually, it slowly is going away. The last of the Tier 1 employees were hired in 2010. Assuming they were about age 25 when hired (almost every State position requires degree these days), and assuming current life expectancy of about 83, most every Tier 1 retiree will be deaf and gone by 2068.
More realistically, the biggest block of Tier 1 retirees were the 2002 ERI participants. The youngest of those were age 50 at retirement in 2002. With standard assumptions, they will all be gone by 2035, most of them by 2030.
So all the State has to do is keep the funds sufficiently liquid to pay the ongoing benefits. They’ve managed to do that for about 100 years now. And for the past almost 50 years (since 1970), the funds have floated up and down between 40% and 90% funded. So it may not be pretty, and it may require some painful payments, but the State will probably muddle through.
Comment by RNUG Wednesday, Dec 12, 18 @ 12:39 am
===we’re just making our kids and grandkids pay for the cost of services we got yesterday===
And we paid off debts left to us by previous generations. Attempts to instigate intergenerational warfare solve nothing. No debt is better than debt. That’s a given. The politicians of both parties thought they could eventually renege on their contractual obligations because of the false premise that the pension debt was a SOFT debt. The Supreme Court set them straight, and yet, IPI still attempts to promote the idea that somehow Pension debt isn’t hard debt. That’s what ideologues do. They have zero credibility. The question is how best to handle paying off the debt that Illinois has going forward. The current pension ramp is part of the problem. Going forward, it needs to be replaced. CTBA’s plan does that, and allows Illinois to legally move towards fully funding the pensions, legally managing Illinois debt, while allowing the state to care for its citizens, breathless, disingenuine rants from the far-right aside. Those who continue to waste time legally solving the problem are truly the ones kicking the can down the road.
Comment by PublicServant Wednesday, Dec 12, 18 @ 6:39 am
That obviously should read illegally. Sorry about that.
Comment by PublicServant Wednesday, Dec 12, 18 @ 6:47 am
US life expectancy is 78.7 years. According to the CDC.
Comment by Anonymous Wednesday, Dec 12, 18 @ 8:19 am
==And we paid off debts left to us by previous generations. Attempts to instigate inter-generational warfare solve nothing.==
You scored 9.8 on the pommel horse.
Comment by City Zen Wednesday, Dec 12, 18 @ 8:44 am
Almost identical to your score on the victimhood meter.
Comment by PublicServant Wednesday, Dec 12, 18 @ 9:07 am