By: Mark Glennon*
You read that headline right. We have some good news for a change, on two fronts. Not huge but we’ll take it.
We’ve long been among the “carnival barkers”, as Gov. JB Pritzker calls us, in part for criticizing how Illinois reports its finances. Illinois politicians usually cherry pick parts of the financial picture that have improved while hiding bad parts that have more than cancelled out the improvement.
Progress on reducing Illinois’ list of accounts payable, for example, means little if other debts are ignored and run up. Growing unfunded pension liabilities, we’ve long said, are the big ones usually ignored, thereby routinely hiding Illinois’ abysmal performance. Yet the media, Pritzker and many other politicians often cite the reduction of accounts payable, alone, as if it’s a fair index of the state’s financial performance.
Comptroller Susana Mendoza, however, is now including the most recent year’s pension performance along with her accounts payable report, at least on Twitter. And, to her credit, she’s using the most recent numbers available, even though they were dismal.
Here is the report she circulated this week on Twitter. Note the huge pension losses at the bottom, which are for the 2022 fiscal year that ended on June 30. We wrote about those results here on Monday.
The second piece of good news is that COGFA, the Commission on Government Forecasting and Accountability, is singling out how badly the state underfunds its pensions. Its most recent preliminary pension report on state-sponsored pensions singles out that Illinois continues to far underpay what its actuaries say it should pay to the state’s five state-run pension funds. Their report, which is also covered in our Monday column, shows that for 2024, the state will underfund the plans by $4.4 billion.
This is important because growing debts are where Illinois buries its dogs, particularly pension debt. Those growing debts do not even show up in budgets, which is part of why many Illinois politicians in both parties make meaningless claims about “balanced budgets” every year.
State lawmakers often also claim that they “funded what the actuaries told us to fund,” or something to that effect.
No. The state usually funds only what’s scheduled by state law, set by politicians themselves. That number is far lower, every year, than what the actuaries say in their reports the pensions need.
On that point, there’s interesting history. If you go back eight years or so ago, pension actuaries, too, were failing to say that the state’s funding was inadequate.
That changed thanks largely to persistent complaints by a gutsy, smart actuary named Tia Sawhney and an equally smart, gutsy village trustee of La Grange named Jim Palermo. Among their work were guest columns in Wirepoints in 2014 here and here, respectively.
As reported by the New York Times Wirepoints was with them and others who complained in 2015 to the Actuarial Standards Board about various actuarial disclosure matters, including the funding inadequacy.
Most Illinois pension actuaries then began to include bold face warnings in their annual reports that the statutory funding did not meet actuarial standards.
We are happy to have been part of that successful effort and glad to see Mendoza and COGFA move in the same direction. We hope Mendoza begins including pensions and the entire state fiscal picture in all her reports.
Too bad Pritzker and so many others stick to the old formula of denying, pretending, extending and pretending. We will keep barking.
*Mark Glennon is founder of Wirepoints
Related columns from Wirepoints:
- Illinois pension debts jump back up to $140 billion, state shortchanges its annual contribution by $4.4 billion
- Illinois governor disregards state actuaries to claim “balanced” budget
- Illinois Pensions – Overpromised & Overgenerous
- Illinois owes $68 billion in health benefits to government retirees.
- Why Your Pension Is Doomed – WSJ
- Solving Illinois’ Pension Problem: Why It’s Legal, Why It’s Necessary, and What It Looks Like
- Illinois pension shortfall surpasses $500 billion, average debt burden now $110,000 per household
- Wirepoints’ Pension Solutions Page
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.
They should stop making any contributions. The sooner it goes down the sooner the pain ends. Right now, it is an ongoing pain in the ass for the taxpayer.
End all pensions right now and let the funds go bankrupt. The courts can order payments but cannot make money appear that is not there. Let the government employees get a real job.
Really? Really? Throw pensioners under the bus?
I’m surprised at your callous comment and even more surprised by the 6 up votes you received.
Maybe you haven’t read the callous comments of some who don’t care what happens to the taxpayers, or whether any public services will be cut. Public be damned, the pensioners will be paid every penny. No negotiations.
Just to be clear, I don’t receive a pension – public or private – so over time I’ve saved money for my retirement because I knew I wasn’t in line for a pension and you can’t live on social security. Pensioners were assured that their retirements were secure and that they’d collect the benefits PROMISED to them … by the state. Consequently they don’t have savings to support themselves post retirement. “No negotiations.” You’re right … that ship has sailed. Over decades unions “negotiated” with politicians while supporting their buddy’s political campaigns; a self-serving, but tolerated, situation for taxpayers. Many,… Read more »
Why not negotiate a settlement that means all give some but nobody gets devastated, neither the pensioners nor the public? Various plans have been proposed, but we are told that not even a small change can be considered. Sounds like many don’t care if the rest of us rot so long as we keep paying their pension. I, too, saved for retirement, knowing that I did not have a pension. I will be retiring next year at age 67. You mention concern about people in their 70’s and 80’s not having the stamina to keep working. Should I have to… Read more »
I understand your concerns – I don’t want to work in my 80s either and with inflation and a down market, that’s a distinct possibility. There are no easy answers and, based on restrictions the IL constitution and now Amendment One, no answers. P.S. The current crop of teachers includes some very bad apples, and teachers colleges are producing more woke activists. Policies from the ISBE add to the problems. Students are being indoctrinated and we can only expect more of the same. It’s a tragedy for both students and society as the crop of the ‘can’t do math and… Read more »
Contracts and promises are broken all the time. Most often by government. Illinois toll roads were supposed to be free after the bonds were paid off. When something is broken you do your best to fix it for both sides. Many of the pensioners are multimillionaires off the taxpayers who are living on almost nothing. Some of us do not think that is FAIR. People and businesses are fleeing Illinois and destroying the opportunities for future generations, some of us do not think that is a good thing.
Illinois taxpayers are in deep doo-doo, thanks to corrupt deals struck without any thought of affordability or the future.
I’d say it’ll get better; it won’t. I expect a continuing decline for the state, an increase in taxes at all levels, and a continuing exit of both citizens and businesses.
Pessissmistic? No, realistic. After last month’s election nothing will change in Illinois – except fewer taxpayers and an increase in hand-outs to government dependents. How about some guaranteed income???
Stupid chickens returning the old guard.
What about fiscal honesty and pensions? Where does the money go? We know the money comes from taxes and all of us, but then where does it go? There is always a pension deficit. Until we know the “pension fund” truths we’ve gained nothing and we keep losing.
What do you think happens? Taxpayers cannot keep pace with the growth of pension liabilities. Pension benefits grow 8x faster than personal income. The pensions are underfunded because they are not affordable for taxpayers. According to actuaries, the state should have paid an extra $4.4 billion into the pension funds. We already know all the problems.
What about the unfunded liabilities of the state retiree healthcare funds (THIS / TRIP, SEGIP, and CIP) as those also cannot be diminished or impaired per the Illinois Supreme Court ruling in Kanerva v Weems.
Meh. What’s another $60 billion or so that almost nobody ever mentions, which is entirely unfunded? We tried to do an update on that number but data are horribly opaque. Will do so when we can.
Retiree healthcare is thus about 30% of the $200B total state level retirement benefit unfunded liabilities ($140B pensions + $60B retiree healthcare), yet was not included in Mendoza’s example.
Illinois state level retiree healthcare (THIS / TRS, SEGIP, and CIP).
Illinois state level pensions (TRS, SURS, SERS, JRS, and GARS).
All of which are state sponsored Ponzi schemes.
Here are the unfunded liabilities of the State of Illinois state level retiree healthcare funds as listed in the FY 2020 Actuarial Valuation reports of the retiree healthcare programs. The FY 2020 actuarial valuations appear as FY 2021 measurement dates in financial reports and for instance Illinois Auditor General audit reports. SEGIP / HIRF / GIPF $34,911,897,307. TRIP / THISF $22,055,375,581. CIP / CCHISF $1,735,532,863. Total $58,702,805,751. Sources: GASB 74 and GASB 75 Actuarial Valuation reports for the aforementioned programs listed under the Recent Publications section of the Commission on Government Forecasting and Accountability (CGFA) website at https://cgfa.ilga.gov and the Audit… Read more »
FTR, she’s been reporting pension numbers like this since the beginning of the year.
Here’s the thing about the IL Comptroller position: It should be politically agnostic. Her job is not to identify or advocate new streams of revenue, just to point out if/when revenue isn’t enough to match what’s being spent. Judy Baar Topinka was relentless in calling out the governor’s office and GA on financial issues.
In my experience, every pensioner I’ve spoken with expects that their pension will be cut in the future either through default or bankruptcy, and many are trying to ‘get theirs’ now before the default happens. PFF is only person who believes otherwise. I think that cutting pensions in the future through BK or some other supreme court finding will be easier because nearly everyone receiving a pension expects to have their pension cut.
As annoying as PFF is I don’t entirely disagree with him. A deal is a deal. But my more nuanced take is that the deal is the result of decades of criminal collusion between corrupt Illinois politicians (mostly Democrat but some RINO’s too) and Illinois public sector unions. Votes and boots-on-the-ground at election time in exchange for grossly above-market wages and obscene pensions. A multi generational quid pro quo with the taxpayer stuck with the bill. It is flatly a RICO criminal conspiracy and the IL taxpayers shouldn’t be on the hook for it. The numbers are relentless; there will… Read more »
Well said, but I sense a PPF rebuttal coming soon. He’ll disagree a little with what you said, and water is a little wet.
The thing is that PPF gets it. He’s not stupid. He knows that the double-dippers; triple dippers, pension spikers and one-day-in-the-job with a lifetime pension need to get haircuts first. In some cases beheadings. But to admit that means to admit that the entire stack of cards is a fraud and will collapse at any moment. More humbly it also means admitting that PPF is a participant in the multi generational fraud and is a criminal co-conspirator; fleecing their neighbors while pulling the wool over their eyes. Maybe not at first, but at some time there was a self realization… Read more »
“””—double-dippers; triple dippers, pension spikers and one-day-in-the-job with a lifetime pension need to get haircuts first.—“”” I agree whole heartedly… That being said, I put in a hard 36 years in L/E, rotating shifts & days off, forced overtime, missing out on many, many holidays & family functions… Not to mention the stress on my body from going from 0 – 100 at the drop of a hat, over & over… But, I did this “willingly” because I knew there was a benefit at the end, a decent pension… I played by the rules, contributed my 10 – 11% a… Read more »
Well said, Joey. While we at Wirepoints are harsh critics of our pension system and want it reformed, know that our ultimate hopes including making the system reliable and sustainable — something pensioners can count on. It is not that today.
On the other hand, many of us here want to completely and utterly destroy the pension system in order to save it.
You mean like the lefts “great reset”…?
Well stated. Individuals didn’t create this mess – the collusion between unions and politicians did.
A deal is a deal and you, Joey, held up your end of the bargain. So in spite of all the commentary, you are not a “… criminal co-conspirator fleecing your neighbors.”
Thank you for your service – hope you are enjoying retirement. Being on the job can take a serious mental and physical toll that can only be imagined by civilians.
I suppose their thinking is that given how much support Illinois Dem’s received at the polls last month, evidencing how little chance there is that a majority of Illinois voters concern themselves with the state’s finances, they might as well put the pension debt out there.
Prevents them from being accused of having hid it by critics when they return to taxpayers for more of our money.
One way or another, be interesting to know the truth of why they included the unfunded pension debt in Mendoza’s report. Wasn’t an accident that they did.
It’s been there since they began this report in January. My take is that they were happy to include it initially because the numbers worked in their favor. It would have been cynical of them to remove it now when the tides turned.
https://www.wsiu.org/podcast/wsiu-infocus/2022-01-19/illinois-comptroller-susana-mendoza-launches-new-financial-transparency-project
The elections over, so for the machine no more rainbow & lollipop accounting. It’s time to tell the truth and start scarring the crap out of chump taxpayers for ever higher taxes. Especially since fed covid $bucks$ will soon be gone
Whoopie! Pop open the champaign! What? Never mind. Sigh.