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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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I made a short video that I refer to in my tweets about the CTU strike, where I look at the CPS balance sheet. I have a feeling that not one single person who has watched the video has a clue what the numbers mean.
https://www.youtube.com/watch?v=Uf3e54W_6fc&t=114s
“Pensions are contractual obligations that must be paid”
I often see this statement, which is inaccurate. The correct statement is: Pensions are contractual obligations that should be paid.” The common law of contracts contains several doctrines of exception permitting the reformation and extinguishment of contractual obligations, several of which appear applicable to government pensions.
As a recovering lawyer, I agree with you. Impossibility, for example. Or a trustee’s obligation to marshal trust to assure fair treatment to all current and prospective beneficiaries. Or modifying contract obligations that tend to nullify state sovereignty.
The problems I see include the amount of discretion that Illinois courts would have in ruling adversely as they have done for many years. Would there be a right to a jury trial under the federal constitution and would a challenge to the existing law on contracts present a fact question where a jury trial could be demanded?
Other than conflating a stock (pension debt) with a flow (annual spending on schools), which any economist will tell you is an invalid comparison, the article makes some excellent points. Pensions are contractual obligations that must be paid, but raises and employer health insurance contributions (at least for those still working) are discretionary. To give away massive raises, and essentially not require any meaningful increases in employee contributions toward health insurance, when the city is already up to its eyeballs in debt is sheer madness. And yes, on top of spending money now on the raises, there will be an… Read more »