-- 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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Oh, that’s real hoot. The end of the article says they’d like to contribute $700M which is what the “actuarial tables” recommend.
Get this……the unfunded liability is $10B and at the 7.5% assumed investment earnings rate they use to make the Liabilities look artificially small, just INTEREST ON THE UNFUNDED, is $750M. So they’d need THAT much cash contrib to keep from sinking into WORSE shape.
To pay Normal Cost amortize the Unfunded over 20 years, they’d need cash contribution of more than $1.1B/year, which is more than 50% of payroll.
Bingo, Steve. I wrote about those exact numbers before. Even without amortization it would take about $970M just to keep the pension from sinking further.
And Bingo/Touchee Mark !! Maybe the most frightening fact about these over-promised plans gratis of govt union power (School system, police, fire, “laborers” ) is that plan assets are NOT enough to cover the liabilities/benefits earned for the RETIREES getting monthly checks now. Which means ASSETS are essentially ZERO for all the current 80,000 active employees. That might be the
biggest hoot of a fact to prove the fiscal insanity……RIGHT THERE !