-- Connecting the dots between our economy, government and business --
"The net pension liability across the city’s four retirement funds rose about 5% to $37.2 billion as of Dec. 31, up from $35.4 billion a year earlier.... The chronic lack of adequate contributions helped fuel Chicago’s ballooning pension liability — the biggest single weight on the city’s budget and credit ratings."
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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How about we cut spending? Here’s a good idea: Give all parents a school voucher at 75% of the current CPS spending per student and then eliminate CTU and CPS and outsource education? The abysmal failure of CTU, with less than 1 in 4 kids functioning at grade level, proves that maybe the free market is a better way to achieve education in Chicago. That’s a massive savings right there and a gigantic improvement in kids education.
unfortunately, I believe, Amendment 1 more or less put the kibosh on any chump taxpayer hopes of outsourcing or consolidating any– public sec collective bargained jobs, city departments, or Illinois CRAZY 7,000 units of gov…….$$$EQUITY$$$
Then the public sector union scum deserve their bags of Gravy Train when Illinois (and the other house-of-cards blue states and cities) collapse into financial ruin. They can hug their security blanket mantra “States can’t go bankrupt”. That will fill their evil stomachs I’m sure. They will deserve a well earned agony.
Nope. They will just keep collecting their paychecks (and pensions for retirees) while other services are cut. You can hug your own security blanket that “public sector unions are scum” to keep you warm. Maybe suck your thumb with your free hand when services are cut and/or taxes are raised, public employees get additional pay raises, and pensions increase 3 percent every January.
Furloughs and layoffs are on the table for all the employees.
Sure they are. That’s adorable. Absolutely adorable.
Unfortunately, I believe Amendment 1 closes the door for all practical purposes on any taxpayers hopes of outsourcing, competively bidding or consolidating any collectively bargained public sec jobs, city depts or any of Illinois CRAZY 7,000 units of gov.
Best way to cut spending is furloughs and layoffs – that may get some peoples attention. There’s no public employee job that can’t be eliminated.
Historically and actuarially, do the liabilities always grow faster than the assets? COLA seem to make this relationship likely even with unrealistic assumptions that actuaries often use.
Are actuaries permitted to assume that contributions will grow if history shows that’s not the case?
How, in short, may auditors’ reports say that these systems are enterprises able to meet their so-called contract obligations? Why are system trustees not filing for bankruptcy or reorganization to protect active employees from depletion of system resources by current retirees? Is this a denial of equal protection?
Just askin’.
It would be interesting to see what firs make investments with Chicago’s pension money, what returns they get and what the city/pension funds are charged for this service. Want to bet the city is getting a poor rate of return while paying top dollar to the firm’s managing this pension money?
I believe the Chicago Teacher Pension Fund return is around 7 to 8 percent over a 15 year period. No doubt they are not getting the best returns for the amount they paid.
What return do they get on the funds that are spent on things like the immigrants rather than being put into the funding balance accounts? Just asking…
“they paid”? or taxpayers paid?….could make for a good WP conversation
Are talking about Pension Returns?
Or
About money spent on teachers for Zero education results?
The city, elected by taxpayers, doesn’t control the pension funds. For the most part, in city, each union controls their own pension fund…your just on the hook for constitutionally guaranteed not to be diminished bill.
this Second City Teacher piece from other day gives you an idea of outstanding professionalism over at CTU/CTPF….chump taxpayers are of no concern: (https://secondcityteachers.substack.com/p/ctpf-director-gives-state-of-the)
The state constitutional pension protection clause puts ALL market risk, change in discount rates, change in “macro trends”, etc on chump taxpayers to make up difference. While union pension funds and fund managers are under no obligation to perform. The “not to be diminished” is 100% chump taxpayers problem—-$$$EQUITY$$$
As the voters intended according to the 1970 constitutional amendment.
You are overstating the degree and extent that the intention of voters may be extrapolated from approval of a constitutional amendment. Clearly, a constitutional amendment may have unforeseen consequences and those consequences may be detrimental. I believe your theory could be successfully challenged in court and refer you to https://crsreports.congress.gov/product/pdf/LSB/LSB10624. You would of course assert that the IL Sup Ct has already decided this issue in terms of a case protecting post-hire benefit improvements, but the Court has not (as far as I know) dealt with the problems of the unforeseen and widespread fiscal emergencies that are now being experienced… Read more »
“but the Court has not (as far as I know) dealt with the problems of the unforeseen and widespread fiscal emergencies that are now being experienced by public employers and with the constitutional separation of powers that make legislative bodies responsible for public expenditures (appropriations) and taxes” Well I don’t want to make “bold” assertions like Trump or Biden that fall short of the whole truth. So instead I’ll just provide words from the ILSC. As this opinion has previously observed, our economy is and has always been subject to fluctuations, sometimes very extreme fluctuations. Throughout the past century, market… Read more »
The ILSC decision also addressed “widespread fiscal emergencies”. During the Great Depression Chicago attempted to get out of paying raises for judges. The affected judges were protected by a provision in the constitution that prevented their compensation from being diminished. I mean, it was the Great Depression, surely the courts would allow this change during such unprecedented times? For its defense, the city claimed that a large part of the taxes from 1929 to 1932, inclusive, were not and could not be collected, and because of “the reassessment of property in Cook county the levies and extensions of taxes were… Read more »
Thanks to your many postings, most of us know what the IL Sup Ct said. The constitutional provision and that court’s interpretation continue to have increasingly detrimental results for citizens and taxpayers of Illinois in terms of increasing taxes, failing public schools, public debt (also a contract) and reductions in public health, welfare and safety. It is past time for that interpretation to be challenged again, with all the state and federal legal authority that is available together with constitutional initiatives together with increased publicity about superintendent pensions and growing deficits and corresponding impositions of tax … not to mention… Read more »
You stated that as far as you knew the court hadn’t addressed this issue. “but the Court has not (as far as I know) dealt with the problems of the unforeseen” I then provided information that you had just confirmed you didn’t know. Now you provide the following statement. “Thanks to your many postings, most of us know what the IL Sup Ct said.” Why state that you are not aware of the facts and then pretend that you knew all along in the next comment? Also, what does “it is past time” mean? What legal basis is that to… Read more »
The opinion language states that the Illinois “economy is and has always been subject to fluctuations, sometimes very extreme fluctuations. Throughout the past century, market forces have periodically placed significant pressures on public pension systems.” The key point is market forces such as fluctuations — and those that were known at the time of adoption of the amendment. The court was talking about periodic economic fluctuations such as interest rates that impact the computation of liabilities — the higher market interest rates, the lower the calculated liability that must be funded. Demographics such as increasing longevity are not periodic… Read more »
“Demographics such as increasing longevity are not periodic market forces. Likewise, collectively bargained salary increases are not periodic market forces.” Are you trying to claim that the legislature didn’t think salary schedules would increase or they thought that life expectancy would remain stagnant? The point of the ILSC decision was to reiterate that the legislature knew about all these things and none of this was unforeseen. That’s why they wrote the following: The General Assembly had available to it all the information it needed to estimate the long-term costs of those provisions, including the costs of annual annuity increases, and… Read more »
Your starting point was “what the voters intended according to the 1970 constitutional amendment.” Are you saying that voters understood the parameters involved when determining actuarial costs? I doubt that most members of the GA understood those parameters either then or now. In any event, the court was focused only on the “state’s share.” The “cost of annual annuity increases” recognized that salaries and seniority were likely to increase with the result that monthly and annual pensions (in dollars) would go up but did not necessarily understand the full impact of salary inflation, deficit spending, organized political pressure and other… Read more »
“Now is the best time to get these legal issues clarified”
This issue has been clarified. You are pretending the court left some opening that wasn’t argued 9 years ago. You are somehow claiming the court wasn’t told about some unforeseen items even though they went out of their way to say the GA knew about all this. Life expectancy and annual raises won’t get you back to the court house.
Shylock : I’ll have my bond, I will not hear you speak. I’ll have my bond, therefore speak no more.
I think it will be a fun day to watch the expressions on peoples faces when the inevitable pension bomb drops. If, in Chicago, they are like people in my downstate liberal utopia they will probably have a dumbfounded look on their faces as they wonder “how did this happen?” These people love to cheer new buildings for the municipalities and exclaim how wonderful life is at any given new spending project including my favorite, new pickleball courts. Mention the pension issue and risk being called an old sourpuss or much worse. Eat drink and be merry the Illinoisans say… Read more »
Now is the time, before the DNC Convention, for the CPD, to make real, concrete demands.
Why? JB and BJ wont allow CPD to “Police” and JB won’t call out the National Guard during this upcoming massive “fiery but mostly peaceful protest” riot. JB ‘s Pritzker for President Campaign Kick Off won’t be spoiled by reality and the national Pravda Media will suppress any negative stories. After the four of years of continuous lies about Biden’s dementia, suppressing the 2024 DNC Chicago Riots will be easy peasey. Your Second Amendment tools will be the only thing to protect your home and business during that week of chaos.