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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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Send the checks to Florida so they can live in Luxury homes at age 42 and drive luxury cars and own nice boats.
Life is good retiring with a $150,000 year pension with 3% increases at age 42. Collect over $7,000,000 in a lifetime of pension money all paid for by the moron taxpayers of Illinois.
Illinois “land of Slavery”
The Chicago Tribune article is a commentary about private sector multi-employer pensions written by two lobbyists that are former US Representatives.
The following article provides more insight into what is happening with multi-employer pensions at the Federal government level.
One of the two, the Teamsters Central States Southeast and Southwest pension fund, located in Rosemont, is horribly underfunded and seeking a Federal bailout.
http://www.forbes.com/sites/ebauer/2020/05/26/multiemployer-pension-update-the-story-of-the-green-zone-teamsters-plan/#44b923eb67af
The ‘I got mine’ mentality
https://www.zerohedge.com/markets/why-san-francisco-trouble-19000-highly-compensated-city-employees-earned-150000-pay-perks
No sympathy. These people chose of their own free will to be spectators in funding their own retirement. They chose to blindly follow and totally depend on their unions and Big Government to fund their retirements.
“They” is the government leaders who set the rules and not the ones using them to their advantage as most people tend to do. Change the rules by changing the “they” who make them.
“Anthony worked six nights a week and gave up raises in exchange for contributions to his pension for 25 years”
What public sector worker in Illinois ever passed up a raise in exchange for a pension contribution? No one. The truth is they’ve always gotten raises and improved health care benefits every year. And all those compensation enhancements were paid for with money that should’ve gone into the pension systems instead.
True. Every public contract is larger than the previous one and negotiations are always retroactive if needed to. The Palatine school district a while back made a 10 year deal with over 40% in raises and no increase in healthcare costs. No one is giving up raises today to enhance pension benefits later. Besides pensions are based on the 4 highest earning years not the average earnings.
The Tribune’s main focus is private sector multi-employer plans but public pensions are perhaps intended also. As to public pensions, can we imagine paying pensions to those who drive empty buses while withholding them from those who aren’t required to show up for work? As to Teamsters etc., this is calling for a bailout which would presumably be at the federal level because states like Illinois and municipalities can’t even fund their own pensions. Government receipts are down because incomes are down and home values are down [at least in Chicago]. Meanwhile public debt at all levels is at unprecedented… Read more »
No, an aristocracy of pension obligations does not exist. Public is in tenuous straights, so too are these pensions.
The courts disagree. Bondholders and pensioners are first in line and therefore the highest class.
Public sector – wouldn’t this require bankruptcy and even then the court could exercise a level of discretion to maintain public services. Private sector – PBGC caps benefits and multi-employer plans have very low caps. PBGC can recover some assets from what’s left of the employer sponsor, but with Teamsters etc there is no way to recover from companies that went out of business in previous decades. I think the rule in private-sector bankruptcy is that secured debtors can get at their collateral. Pensioners have a claim to whatever has been set aside in trust, but as to unfunded benefits… Read more »
I was referencing public sector state pensions not private pensions. The funding level of public pensions in Illinois have absolutely nothing to do with the states obligation and requirement to pay them. The courts have stated in past rulings that pensioners have no right to a set level of funding but they will step in and force funding before the funds run dry if necessary. The reason I point this out is many people hear about the underfunded pension obligations and they think, “who cares? let the fund run dry and then those public pensioners can live like the rest… Read more »
Correct me if Im wrong but didnt the supreme court rule Illinois is obligated to pay the pensions however there is nothing to forcing them to do so if they choose not to. The obligation does not mandate a fiscal crisis be created. Essentially IL could just say FU and pay them whatever they want. Ya, bond ratings may take a beating short term but hell, long term it’s a great strategy?
Sort of going “Judge Roy Bean” on us there, aren’t you pardner? Do what you want and when you want, damn the consequences. Seems like you advocate for lawbreaking to be the norm to me. Society as we know it would be set back to days of well more than a century-and-a-half ago if what you advocate were part of the norm for governmental behavior.
You may want to go back and review what happened during the budget stalemate a few years ago. The courts were more than willing to force the state to spend money even without a budget. The courts have also said they are willing to step in and force payment into pension funds if it should become necessary. There is no FU clause for the legislature.
I have learned from this website that Illinois courts have ordered appropriation by governmental entities to fund pensions. Other states have determined that such an order would violate the separation of powers doctrine in violation of the US and state constitutions. State and local legislatures have power of the purse and generally hold discretion about how to appropriate revenues. If there were to be a Chapter 9 bankruptcy, the “contract right” theory would be out the window and once the money in the pension fund was spent, the pensioners would be general unsecured creditors. Any recourse to taxpayers themselves would… Read more »
Keep in mind these words from the ILSC ruling in 2015 During the Great Depression, for example, the city of Chicago omitted from its annual appropriations for 1932, 1933 and 1934 a portion of the funds necessary to pay the full salaries of the chief justice and 36 associate judges of the city’s municipal court. The affected judges were subject to a provision of the Illinois Constitution that prevented their compensation from being diminished during their terms of office. …….the city claimed that a large part of the taxes from 1929 to 1932, inclusive, were not and could not be… Read more »
Bankruptcy overrides that, as would a state constitutional amendment.
What bankruptcy Mark? There isn’t one for states. There are a lot of forces from pensioners, vendors, and bondholders that make that a very difficult needle to thread. You’ve also noted that any bankruptcy law would not force a state but merely give them the option. The state would need to pass a law to seek bankruptcy. Would the Illinois Supreme Court step in before it ever hits federal court and stop such a law? Would the federal courts even touch it on appeal if bankruptcy is voluntary anyway. Wouldn’t they just let the state work it out on their… Read more »
As the financial overreach of IL government pans out, and more revenue streams exit, the failed policies and ever increasing costs will only compound. Taxing those who cannot afford to leave will cost more than any gain in revenue. Again, you have won a pile of ash. Congratulations! Enjoy that Constitution, if only it could promise happiness.
Clearly you are a propoganda shill for the evil public sector unions. Illinois will go bankrupt. Period. If not via legal means then when the state simply runs out of money because the credit markets run dry. Argue, stamp and whine all you want but it is inevitable. Enjoy your Gravy Train. I’ll step over you when you beg in the street. As a thief from the hardworking taxpayers you deserve your fate.
Excellent, another realist does exist!
I’m good TPG. Never worked a public sector job in my life and I’m not paid by any union. I don’t have a pension (private or public) and I’m invested in the market. Took a little hit with my tech stocks today but I’ll be fine. I am merely pointing out the problem with the strategy. Do you actually believe pensioners will be homeless and on the streets even with a bankruptcy? You’re delusional. Even in Detroit pensioners retained 95.5% of their pension. You actually think some teacher or police officer is a thief because they took a job with… Read more »
The gaslighting is strong with you. What is your solution then?
Remember, the American tradition is to expunge onerous tyrants at the barrel of a gun. FOID cars applications are exponentially rising in IL.
You remind me of the CTU members in support of Jeff Bezos getting the guillotine because his net worth jumped to 200 billion. Perhaps you have more in common with them then you think? The far left wants to go after capitalists and you want to go after teachers, police officers, and firefighters. The far left thinks police are “hunting” black people and want to defund them while the far right thinks public sector workers are thieves and want them to be homeless or worse have their life ended at the barrel of a gun. Just as I alluded to… Read more »
I see only straw man arguments coming from you.
What is your solution?
Place a freeze on pension increases. Those receiving keep receiving, unless the state legally bankrupts itself. Those currently working sign away their future pensions for 401k accounts and current pay increases, no future pensions for them. This puts them solidly at the whim of market forces and reduces debt overhang. It is messy, but at least it’s some forward movement. Please research the ‘Boston Tea Party,’ as this is history and not rhetoric. Possibly you never learned this in whatever education you received. Now, I have suggested something. Please put something constructive forward, else you have proven my straw man… Read more »
Your suggestions around “freezing pension increases” and current workers “sign away their future pension” are not allowed by the courts. You haven’t really suggested anything because it would be tossed out as unconstitutional. I’m only guessing that is why you brought up the Boston Tea Party as you are alluding that unless pensioners give up their pensions then it will result in the next American Revolution. Not sure what that looks like? This summer has shown what happens when the police stand down. Not sure that’s a winning strategy to go after those folks. As far as suggestions How about… Read more »
Very smart, winner of the forum debates.
Please run for office, your drive can be useful there.
largely agree with that, except if there were a state constitutional amendment that wiped out all state law issues. Then, pension reform would survive under federal law, which is all that would be left. Upcoming parts of our paper will give the detail that we have given before.
Mark,
You have stated in the past that the language in the amendment would have to be very clear. My point or question is whether or not the ILSC would step in and dilute such language? Would the ILSC allow ballot language that would allow for a reduction in pensions when they have already stated that such impairment violates the US constitution’s contracts clause? Not sure how you get language on the ballot unless it clearly states it’s for those not yet holding pension member rights, such as new employees. Which kind of defeats the purpose.
The constitution can be amended to override court interpretations that people have decided they don’t like, and I don’t think any state supreme court would say they can’t.
The concept is to amend the state constitution to say that pension obligations can be changed, overriding the pension protection clause, state contract clause and anything else in the state constitution. You seem to think that courts have the power to stop amendments, thereby ensuring that their earlier rulings last forever. That’s not the case. As far as state bankruptcy, though that is not on the table now, I again see now way a state court would stop it. If the federal law authorizing it was constitutional, which most experts think it would be, and if the state then chose… Read more »
For what it’s worth, a retired pension lawyer agrees with you. “Contracts, however express, cannot fetter the constitutional authority of Congress. Contracts may create rights of property, but when contracts deal with a subject matter which lies within the control of Congress, they have a congenital infirmity. Parties cannot remove their transactions from the reach of dominant constitutional power by making contracts about them.” Norman v. Baltimore & Ohio R. Co., 294 U. S. 240, 294 U. S. 307-308 (1935). Cited with approval in a pension case, Connelly v PBGC https://supreme.justia.com/cases/federal/us/475/211/ See also https://scholarship.law.campbell.edu/cgi/viewcontent.cgi?article=1230&context=fac_sw I have also wondered whether ILSC supreme court… Read more »
Take a look at page 42 at how readily a lower court in Illinois brushed off claim that the residential eviction ban violated the federal Contract Clause. https://s3.amazonaws.com/jnswire/jns-media/dc/ea/11453813/landlords_v_pritzker_ruling.pdf. And go to their last sentence in that section. The court even made a fact finding that the eviction ban was necessary to protect the public interest, thereby overriding the Contract Clause. And that was in the context of dismissing a request for a preliminary injunction. I am a little rusty on whether a conclusive finding can be made in that context, but it sure seems like a reach. The best that… Read more »
My computer or a foolish key stroke deleted a longish reply. However, I think minimal due process for the landlord would have required some assertion that the tenant fell within a group that needed protection [such as an affidavit of job loss or illness]. Issuing this ruling on the basis of judicially noticed facts and assertions of inadequate pleading – without any fact finding at all – undercuts all the findings. And surely the judge knew that his appeal for guidance from appellate courts would put the issues on hold for months. Landlord-tenant laws are already stacked in favor of… Read more »
Thank you. As a former lawyer, too, there are some things I keep up on but not others, like procedure, where I appreciate help.
All this naval gazing is great, but what will come of it? Nothing.
The financial well has been run dry. Good luck, you may be correct, but yours will be a Pyrrhic victory. A promise drawn against nothing yields nothing. Once basic services are threatened, federal oversight will be deemed necessary and all state debts will be slashed to ensure survival of the state itself. The public pensions will be interesting relics, like the $2 trillion Zimbabwe notes available to collectors on eBay. Reference Puerto Rico, and their recent financial ‘adventures.’
But how do they force a state to pay? Unless they have a military and intend to use it IL can just simply pay 80 cents on the dollar if they feel like it.
Correct, and since teachers don’t want to go back to work and cry cry cry and have proven they are non essential ah no need to preserve there pensions