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.
posted by Rep. John Fritchey @ 2/27/2006
12 comments
12 Comments:
Have you checked into the Municipal League IMRF fund? It is doing fine, of course it is not set up so elected officials can tap into it when they want to. Hopefully that one will stay out of reach for you all in Springfield!
SHAME...
You were part of the majority that helped exacerbate this problem by skipping $2.3 billion in pension payments and now you have the gall to complain about it.
Every dollar skipped today will cost many dollars in the future. Without making the necessary pension changes, you are PART of the the problem
So much hypocrisy around this issue. Those righteous Republicans who helped underfund pensions for years are now making it their battle cry. Where were these self-annointed saviours of the pensions when George Ryan and other before him helped create billions in new obligations without a revenue stream.
When is the media going to wake up to this hypocrisy? When will the media finally begin to take on the GOP for failing to support helping the pensions by the sale of $10 billion in pension obligations bonds in 2003? When will the media take on the GOP for failing to support reforms that will save taxpayers $70 billion over the next 30-40 years?
The rain may fall, but not just on Democrats. This crisis did not begin last year, and the GOP fear-mongers who are convincing retirees that their pension funds have been emptied should be ashamed of themselves.
Anon 10:36
While it is true the GOP has had dirty hands on the pension problem we as democrats campaigned and won based on changing "business as usual". This looks just like business as usual to me. We have control of all three branches and this is the best we can do? We are so far behind in paying bills it is not even funny and we come up with more give away programs. We need to pay our bills first, make our pension payments on time and then look for new programs. The path we are on is a disaster and sometime in the not too distant future voters will figure out that we democrats have absolutely ruined Illinois. I am guessing we will have another long dry spell for democrats in Illinois when this is all said and done. We had a chance to govern and have failed. I'm still very much a democrat but am so disappointed in what we have brought about that it is not even funny. I have never been a fan of term limits but I'm thinking the only way we dump these people who make these messes is to do away with their unlimited terms.
Let me break it down for everybody. Neither side has clean hands on this issue. But that won't stop either side from blaming the other.
I'm more interested to hear thoughts about how to fix it. New revenue sources would be one, but nobody's going to acknowledge that in an election year, so...?
I hate quoting Gore here; I believe that it was him who suggested a lock box? At any rate it at least made for good humor on SNL. Maybe we should look at how they are paid in the first place to base their pensions on. We ought to base state workers pay like the federal government per region. It may make some difference in there insane pensions we pay out. Again I will show my youth here, but are there many corporations that pay 70--80% pensions like the State of IL does?
You wanted creative revenue streams here you go....
Cubs losing tax.
Every 10 games lost is assesed a $5 million tax. Every series swept by the Cardinals they are assessed a $1 million tax, 500k payable to the taxpayers of MO. Every corked bat $2 million in tax. If they reach say $50 million in taxes and refuse to pay, the State uses emminent domain to take the stadium then sell it back to the Cubs for a huge loss to them of course.
Now that's funny. Sad, but funny.
As Rep Fritchey said, no ones hands are clean on this one. However, to say hypocrisy on the Republicans part is a stretch. When the pensions were shorted in the past it was done so with democratic majorities in one of the chambers. More importantly the Republicans learned from past mistakes and past the Pension Reform Act of 1995 (by the way the Reps were in charge that year)
From that year forward the state has always met the obligation of that 50 year plan to bring the pensions up to 90% funded. Not until last year was a payment skipped. (now who is in charge?) To make things worse they implemented a FIVE year plan to short the pension funds.
And don't come back with pension reform that were passed last year. The state will not realize those alleged savings for 30 years.
I agree with Rep Fritchey, this is a major problem for not only the state but many towns as well. And its only going to get worse.
The pension problem has been steamrolling down the track at us for sometime. Since may people have been aware of this potential disaster, what have our elected officials in Springfield been doing? Pontificating??? 83% of people in the private sector have NO PENSION PLANS. Numerous companies have ended their pension plans and turned them into 401k's. Why have we, City, State, County, CTA and all other entities even looked into this? There is no Guarantee Pension Benefit Fund to cover this, just us lowly taxpayers who are struggling to pay their high property taxes. How can we justify paying some politicians 3 and 4 pensions of over $280,000.00 per year, when their highest years salary has been $67,000.00. It's time for these fat cats to give back some of their pension money as a good faith gesture. I have a great idea. How about raising the age where they can collect any pension money to 70. Let them pay in for a longer period without raising what they can collect. Put me on the budget committee. I have a pencil with a big eraser. Eliminate the pensions and let hem live on Social Security.
Anon 9:22
Nice daydreaming but the pension problem is with obligations to present and future pensioners that are ALREADY INCURRED, not future debt. State constitution prevents any diminishing of benefits for state pension plans. And if, somehow, the state government participates in a plan to cut the benefits of its own workers, it just gives license to corporate America to follow their lead. Do you agree with the royal screwing corporations have given their loyal pensioners over the last 10 years, while corporate executives have been getting golden parachutes?
Anon 9:22
As usual, the business world is already leading (with court approval) and sloughing off liability on the taxpayer.
While the Hon. Fritchey is straight up on highlighting the issue, he's less so on solving the problem.
Defined Benefit systems have to die, just as the dinosaurs did. The comet/climate/environment killed them, and trying to keep them on life support only prolongs the death.
GM is dying from Defined Benefit. Social Security is dying from defined benefit, and United Airlines poisoned the taxpayer by passing the Queen of Spades defined benefit to the US taxpayer.
Defined benefit is dead. Get it through your heads. Defined Benefit is draining dollars from your child's head, your mother's homestead, and just abut everything else that rhymes with "ed".
John can talk about 'hard rain' all he wants. The Sun ain't coming out until some one has the 'testicular virility' to KILL defined benefit.
No one will. There are too many pigs feeding at the trough. It won't die until you run out of hosts for your parasites.
IN closing, I'm with you on Executive parachutes. An honest political system would have shut down United, and sold off their gates and planes to fund the Pensions, and sent the execs to the poor house.
But for a nation that saved Chrysler out of a "too big fail" dogma, what did you expect?
Integrity? Hard rain indeed, John.
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