The head of Illinois’ largest pension plan strongly suggested that cuts in cost-of-living benefits are inevitable for more than 360,000 teachers and retirees outside of Chicago.
In an interview with Crain’s editors and reporters, Richard Ingram, executive director of the underfunded Illinois Teachers’ Retirement System, said state politicians will have few other options if they want to make meaningful progress on closing the gap between promised pension benefits and the available funding.
via Crain’s Chicago Business.
What’s missing from this article is any analysis as to how much longer the pensions can survive should the state cut or reduce the COLA. Mark my words — cutting the COLA is NOT a FIX. It is a band-aid at best.
Bloomberg L.P., the big New York financial data firm, is holding its fall municipal-financing conference on Wednesday, and guess what the title is for the special panel on the Land of Lincoln? Try Land of Entropy. Yes, sports fans, the panel titled “Illinois Treading Water” is set for 1:45 p.m. and, according to a synopsis, not too much good will be said about our fine state.
“California debt is beating Illinois bonds by the most in three months as investors choosing between the two lowest rated U.S. states reward efforts to bolster the finances of the nation’s biggest pension in California,” it says. But though they passed a version of pension reform in California, nothing good has happened here.
“Illinois lawmakers failed to advance any measures in a special session Aug. 17,” the synopsis says. “Standard & Poor’s cut the state’s credit.” And, at last check, “Illinois carried a backlog of about $8 billion in unpaid bills, not including pension obligations.
“More: Illinois’ ratio of pension assets to liabilities is “the lowest among U.S. states.” It concludes, “What is the outlook for significant defaults in the state? How can Illinois get its fiscal house in order?”
via Crain’s Chicago Business.
Rahm, Michael Madigan, Pat Quinn, John Cullerton, and the rest of The Machine will go down in history as fiddling while Illinois burned.
[Chicago’s] Chief Financial Officer Lois Scott reminded council members that absent significant changes to pension plans, the city will be forced to drastically cut services, raise taxes or do both to close a funding gap that could reach $700 million in just a few years, aldermen said. …
… Lawmakers are looking to fix the state’s woefully underfunded pension system, but the city also needs changes from Springfield to repair its retirement funds.
… Absent a city pension overhaul, the fund for retired city firefighters would become insolvent in nine years, according to a city report issued two years ago. The police pension would go broke four years later. Funds for city laborers and municipal workers would be broke by 2030via Chicago Tribune.
These numbers are all wrong. These pension claim they’re going to earn 8% on their money year after year. That simply has not happened in a decade and they are tens-of-millions of dollars behind where they claimed they would be be even two years ago.
Kudos to my friend Anthony Curran who suggested we start a Pension Death Watch. I think it’s a great idea.