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Summary and audio linked here.
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.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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Based on previous court rulings it will almost certainly be found unconstitutional, because it changes terms for existing employees who became members of a pension system on their first day of employment (thereby directly violating the plain language of the pension protection clause). The state could probably achieve something similar by not giving raises to employees, but that would have to include all employees, not just those who are tier 1 pension system members, and it would thus lead to huge staffing problems. I suspect the state is already having problems recruiting new employees under tier 2 and not giving… Read more »
I think you are probably right, and the unions will challenge this based on what they’ve said in the past.
A salary freeze would not have to include all employees. A Tier 2 employee should have a higher salary than his Tier 1 equivalent as their retirement benefit is smaller. Just create 2 salary schedules: freeze Tier 1 and let Tier 2 have its normal increases, thereby having no impact on attracting new employees. No age discrimination as Tier 1 contains folks in their 20’s. In fact, a Tier 2 employee should file a discrimination suit for doing the same job as a Tier 1 employee for lower pay.