Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Soon Illinois will be going to the Feds to allow some type of state bankruptcy, unless of course a Democrat gets in and sends billions and billions to poorly run blue states AGAIN with the hopes they will actually pay the debt not create yet more new obligations. It’s good to have a dream….
Have to be a Constitutional change to go forward with any proposal. This could affect existing employees but only after the Constitution was changed. Benefits prior would still be in effect, and changes would be after that date. In effect, they would have a two tier system. Obviously, new employees would be immediately affected. Retired employees obviously would not be affected despite any other claims. They have a Contract and SCOTUS would back that. The only thing that could possibly change that reality is if the State went bankrupt. And even then pensioners would have claims to any new income… Read more »
Pensions should be capped and means tested. Six figure public pensions are obscene. The Illinois public pensioners have protected themselves well in the Illinois Constitution. That leaves taxpayers little choice but to leave.
“Means Tested”. Sounds like a solid DEM Party proposal.
The IL Sup Ct has transformed unreasonable expectations into constitutional rights. To me, this is like a promise of infinite water from the Colorado River or from emptying aquifers. Phoenix, RIP. Some (mostly active or retired public employees) claim their expectations trump other long-held expectations based on laws or contractual promises. State and local legislatures (not courts) have the constitutional power to appropriate contributions to pension systems and for other public purposes. Paying the lawyers will come before pension contributions when the fight begins to investigate the scope of the “separation of powers” clause. Five, ten years; how long? Whenever… Read more »
No. Why even ask the question. That ship sailed long ago. You live there? Too bad. You are forever on the hook.
Path to reform? Ha! Democrats have instead further enshrined public pensions and put into place enormous hurdles to reform. The pension reform needed is to set a cutoff date after which new public employees receive a 401k with matching features as has been done in the real world – the private sector – since the 80’s.
The problem with the switch to a 401K is finding the cash to fund both the accumulated unfunded obligations and the employer match dollars. When this has been done in the private sector, the pension funds were much better funded. Some compromises on things like the annual cost of living adjustment and the pension formulas (career average versus last four years, for example) will be needed if there is any chance to avoid pay as you go funding and the associated diminished governmental services.