A Hard Rain's Gonna Fall
At every level of government, this problem is getting nothing but worse. From the latest issue of Crain's comes another story about major pension shortfalls:
Cook County and city of Chicago governments have $14.4 billion in unfunded liabilities in their collective pension plans, according to a report to be released Monday by the Civic Federation, a tax policy group. Plans covering most city and county workers had assets covering 72% or less of their liabilities at the end of 2004, according to the report — well under the 90% figure considered desirable in the private sector.I have said before that the pension issue is a sword of Damacles hanging over governments throughout our state. I think that in the past, government pension funding practices were arcane enough to escape the attention of the public. But those days are over, and the public is aware of, and understands, the problem.
Without significant intervention, sooner rather than later, pension obligations are going to put the ability to provide basic services at risk. And if elected officials don't act to correct the problem, it may well put some of them out of office.
THIS JUST IN - But wait, there's more...from today's Crain's comes this bit about the CTA pensions going down the tubes...
A retirement plan that pays health benefits to 11,000 Chicago Transit Authority retirees and their dependents is likely to be insolvent in 10 months, according to the plan's actuary.I had been given a heads up that this issue was coming down the tracks (so to speak), but I suspect that this is worse than anybody expected. Read the whole article.
A report delivered Thursday to the board of the $1.2-billion Retirement Plan for Chicago Transit Authority (CTA) Employees projects that, without a cash infusion or benefit cuts, the health portion of the fund will likely be unable to pay its retirees' health care bills by next January. The larger pension portion of the fund appears to have the resources to pay full benefits until at least 2011.
As late as 1995, the retirement plan was at least 85% funded. But that gave the CTA and unions an excuse in negotiations to shift money from the plan to wages and salaries. Since then, the fund's ratio of assets to liabilities had declined to 39% as of Jan. 1, 2005.