-- Connecting the dots between our economy, government and business --
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.
SIGN UP HERE FOR OUR FREE WIREPOINTS DAILY NEWSLETTER
“…the benefits accrued by “Tier I” employees, especially given their generous retirement-age and COLA provisions, are significantly richer than the combination of Social Security and a typical private-sector retirement plan provision.” Sorry, but I am not at all convinced that this statement is true, at least not if you compare apples with apples. According to the June 2017 actuarial valuation report (the latest available) the total employer normal cost of SURS benefits accrued in 2018 was projected ro be 12.29% of payroll. Broken down, it is 15.45% for Tier 1 employees and 2.69% for Tier 2 – see Table 20… Read more »
The comparison should not be between two robber barons working for government entities, or comparing two entitles with artificial barriers to entry as in teaching, but between the public sector and the private sector and then within that, between union and non-union.
Maybe teachers get 10% in the private sector but try real businesses. The most common 401K plan match in the private sector equates to 2.7% of salary. SS is another animal altogether as it is punitive for anyone making over $66,996 a year (2019)
Is % of payroll a fair way to look at this? I’d be interested in the actual cost of funding the pension for a tenured prof aged 50 making $175K per year compensation (exclusive of health benefits and other perks). Since the prof is tenured he/she may or may not decide to retire early since the job stress is probably minimal unless he/she needs to write grant proposals to keep the salary coming. The retiree health is probably a big component of the retirement package and there is no substantial advance funding for that. The prof probably has a ton… Read more »
++++++++++++++++++++++++++
But for the most part students would be better served by younger faculty and online courses. Economic realities will probably bring this about in the next couple of decades, but meanwhile the resources of taxpayers and students are being shifted to those whose contributions to the society and the economy are vastly over-valued.
+++++++++++++++++++++++++++++
Bingo. Teacher led classroom instruction is a 17th century model which time has passed. Technological delivery is superior in most respects.
Adam, your article is at best, incomplete. Are you aware that the University of Illinois spends 53% of it’s total budget on retirement costs? And are you aware that are nearly 20,000 retired educators who collect 100k+ pensions? (20,000 X $100,000 = $2,000,000,000) Those “Tiny Minority pensions” cost Illinois 2 BILLION PER YEAR! (Illinois currently spends nearly 28% of its State budget on pension costs) And here is the best part: Illinois is losing residents faster than any state in the union. Out migration is going to accelerate in the coming years, as the new Governor will impose higher taxes… Read more »
I can appreciate your in-depth analysis of what is really two peas in a pod (private academia vs. public academia), but you miss the boat so entirely, that it’s not even worth a detailed rebuttal for everything else. When you own a real business in Illinois, and compare what you make versus what the public sector receives…it is absolutely shocking. I am embarrassed to correct people on the difference between their perceptions of what we private sector entrepreneurs make and what we really make. I notice that the most glaring gap comes from people in academia, who don’t have a… Read more »
The sad thing in all this is the person writing, while a respected actuary, inadvertently sidesteps the real underlying issue, which is, all defined benefit plans with a COLA are inherently fiscally unsound and presume returns that are not certain. Which is to say, the very foundation of the concept of a defined benefit plan is a house of cards.
Scary, so the mob’s plan to save the state is to pay a premium to go further into debt! What a great idea for the Dumb and Dumber Democrats.