-- 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.
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In the article, Ralph Martire and Daniel Hertz reference a September 2007 US GAO report when claiming a pension 80 percent funded is considered healthy according to the federal Government Accountability Office. “The systems have just 40.1 percent of the assets needed to pay for the retirement benefits earned by state employees, well below the 80 percent level considered healthy according to the federal Government Accountability Office.[i]” “[i] United States Government Accountability Office. “State and Local Government Retiree Benefits: Current Status of Benefit Structures, Protections, and Fiscal Outlook for Funding Future Costs.” September 2007. https://www.gao.gov/assets/270/267150.pdf” An American Academy of Actuaries… Read more »
I think the CTBA has been referencing that 2007 report since 2007. Seriously, check the footnotes of their presentations and this source (or something similar) is often cited to support the 80% funding. What’s amusing is that their re-amortization plan uses a 70% target funding to justify the payment schedule. In other words, they counter their own research assumptions.
it would seem another forbig issue for asset transfer to work –if asset, like tollway, was handed over to pension then pension has option of trying takeover management and run tollway at a profit. But why would pension want to take that risk? Instead, they would try and lease or sell asset. BUT, what entity would want to lease or purchase asset like tollway if it came with all the restrictions of having to hire state IDOT workers who I’m sure would file grievance claims to keep there jobs (same situation as North Riverside trying to privatize there fire dpt).… Read more »
The Bury Pension blog covered the NJ lottery sale too as well as the proposed tollway sale: https://burypensions.wordpress.com/2019/02/12/murphys-fix-for-nj-pensions/#more-13968