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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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Why don’t we change our perceptions, there are so many ways to change. There are books to share with us about that
Getting tentative approval on so loosely described a concept is a bad idea. A lot like Obamacare where congress bought a pig in a poke. Among the questions that occur to me are: 1) Who sets the actuarial assumptions? 2) Who determines eligibility for disability pensions and assures that the disability persists? 3) Ditto for retiree health benefits. 4) Does ANYONE understand the liabilities being taken over and whether or not they’ve been calculated on a consistent basis? 5) What unknown contingent liabilities are being undertaken — oral promises or “understandings” that grew out of past practices? What lawsuits are… Read more »
Rare that I disagree with you, but I think many questions on that list won’t be an issue. The proposal is solely for centralized investing — administration of the assets. It’s sort of like how ISBI manages investments for some state pension money. Most of the functions you mention will remain as-is. In fact, some may criticize the plan for not going far enough in centralizing and consolidating those other administrative functions. We will have our own article up on this shortly. There is no substantive consolidation of assets or liabilities. However, some of your questions go to the issue… Read more »
Michigan has a Municipal Employees Retirement System that (at least superficially) resembles what I understood the IL proposal to propose. MERS was at first a state entity and then was spun-off to be an independent non-profit entity. Perhaps the Illinois proponents have figured out the multiplicity of issues. If this proposal could be accomplished without collective bargaining, that would avoid many obstacles at the outset. One of the obstacles in Michigan was municipalities wanting to pull out of the multiple employer arrangement when they didn’t like the actuarial reviews or the funding expectations of the statewide system. The withdrawal requirements… Read more »
All I know is I pity the lawyers who will have to write up the statutory amendments needed for this. Conceptually, however, we think its’ a good step and that savings will be meaningful but by no means “a momentous achievement in state history,” which Pritzker claims. These local pensions are a small part of our pension crisis and this fix is not replicable for the others. We will have an article out on it by tomorrow.
Fantastic cass, –doesn’t the articale say consolidation plan is already proposing adding certain overriding rules that would apply for all the 100s of differnt plans— benifits for serviving spouses for first responders killed in line of duty, and minimal funding for plans that pay less than ss? Point being that once all these plans are consolidated under one umbrela, as you point out, than its easy for state to add benifit goodies and change actuarial rules that override the 100s of individual plans. Also, seems this will allow all the 100s of pension plans to take on more riskie equity… Read more »
If we lived in an honest society, we’d already know how Pritzger, Madigan and their pals get paid to funnel more pension loot into the hands of “money managers.” This looks to me like JB-the-Hutt’s money-buddies want to cut out their competitors, the ones managing some of the loot now. Consolidation means ALL the loot gets put in one firm’s hands, and it is CERTAIN that (1) JB et. al. get a kickback and (2) the fees paid are exorbitant somewhere along the line. IL politicians don’t do JACK unless more $ comes their way as a result. If we… Read more »