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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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The flaw in this plan is that most of the proposed pension savings come from greatly reducing retiree cost of living adjustments – a.k.a. the 3% automatic annual increases or AAI’s – and this will never be allowed by the Illinois Supreme Court (even if the pension protection clause in the state constitution is modified) because these AAI’s are earned benefits. In each of the state retirement systems, legally, a specific, dedicated percentage of an employee’s contributions while working is used to fund this benefit for the employee in retirement, so with this structure you simply cannot change the rules… Read more »
You and Ralph Martire can continue repeating until you are red in the face that the US Constitution would be an obstacle even if we a amended the IL Constitution, but it won’t make it true, as the Rhode Island case last year showed (applying federal law). And by the way, under the “general contract principles” you mentioned, pensions would have been adjusted long ago under established reasons for modification like impossibiity of performance, mistake and fraud.
I’m not sure why AAI couldn’t at least be adjusted to reflect what the AAI benefit was when the employee was hired. For example, only employees hired after 1990 would be eligible for compounded COLA and everyone else would be simple-interest COLA. Better yet, what would prevent the state to revert back to the original 1.5% simple COLA?
Once there is any benefit increase you can’t go backwards, say our courts, regardless of what the rules were when hired.
How about debts that cannot be repaid, will not be repaid…I have no intention of paying your pension Andy. Go find some other rubes to pay it for you. The state will eventually run out of money, and some day, likely in my lifetime, the checks will just stop being sent. You can cry and scream all day but the IL bank account will be empty, with too many pensioners on the dole and too few tax payers to foot the bill. What then?
Read the article sorry to say there isn’t a single politician in Springfield with enough brains or brain power that could figure this solution out or implement it. Maybe Illinois policy should go and run things in Springfield.
Brain power? I think they have plenty of brains that are directed at being re-elected, They do a pretty good job of it too getting re-elected, securing well paid jobs for their families while the rest of us suffer.