By: Mark Glennon*
We’ve been closely covering the confusion and potentially extensive use of “intercept” rights of Illinois’ police and firefighter pensions, as well as IMRF — the big statewide pension for municipal employees. That right allows a pension that doesn’t receive its required annual contribution to force the state comptroller to seize state money otherwise flowing to the sponsoring city or town and forward the money to the pension.
House Bill 4684, which passed both houses of the General Assembly, would grant a similar right to SURS, the State University Retirement System. For community colleges, county treasurers could also be forced to intercept county money.
The bill is on Governor Rauner’s desk and there’s no indication yet whether he will sign it.
The bill would be yet another case of Illinois pensions being, um, detritivorous. (My high school daughter offered that when I asked her for the right word — something about feeding on dead animal or plant matter.) Basically, the pensions are taking dibs on the bones — trying to ensure they get paid when it becomes clear not everybody will.
Why stop with SURS? That’s the obvious question. Won’t the rest of the state pensions try to get something similar?
The bill was sponsored by Rep. Robert Martwick (D-Chicago). You may remember him from earlier this year when he floated the idea of the state trying to float a $107 billion bond offering to pay off state pension debt. Financial experts immediately scoffed.
Interestingly, however, this bill for SURS passed both houses unanimously — no opposition from reformers or fiscal conservatives. As best as I’ve been able to determine, there are two explanations.
The first is the bill was intended to remedy a piddly contribution delinquency by Chicago State University — something like $13,000. Obviously, that’s no reason to pass such a broad measure.
The second is a growing sense of resignation among financial reformers. “Sure, just take the whole thing…Let the pensions take everything…Just blow it up.” I hear comments like that more and more frequently, as I did when asking around for an explanation of the vote.
Detrivitorous. Positively, indubitably detrivitorous.
*Mark Glennon is founder and executive editor of Wirepoints.
For further background on the intercept and Harvey’s plight, see these earlier articles:
Special Report – Beyond Harvey: Many Illinois municipalities running out of options
Why a bankruptcy option for municipalities is essential – Testimony before Illinois House committee
Second domino falls in Illinois: North Chicago revenues garnished for pensions
Harvey, the first domino in Illinois: Data shows 400 other pension funds could trigger garnishment
IMRF Enters The Pension Intercept Mess: Implications For Hundreds Of Illinois Towns And Cities
A set of state lawmakers want to extend CPS’ current school closing moratorium to February 1, 2027 – the same year CPS is set to transition to a fully-elected school board. That means schools like Manley High School, with capacity for more than 1,000 students but enrollment of just 78, can’t be closed for anther three years. The school spends $45,000 per student, but just 2.4% of students read at grade level.
Hopefully, all media will get the message, in Illinois, too.
Ted joined Tom Miller of WJPF to talk about Illinois’ highest-in-the-nation property taxes, why lawmakers don’t want to touch the tax’s cost drivers, just how much Illinoisans’ tax burden has grown over the decades, why Gov. Pritzker failed to meet his promise to reform property taxes, and more.
These votes in the Illinois legislature are surprising because they will impose short term pain on the agencies whose funds are intercepted in order to fund long term pension liabilities. Legislators have been expert at putting off short term pain by underfunding long term things such as infrastructure or pretending long term liabilities such as pensions don’t matter. These intercepts do represent a big change. Your big word is correct and fighting over the carcass has begun. I would guess that in the initial stages that retirees will win with funding intercepts but the resulting decline in services and layoffs… Read more »
Yes Mark I agree however the Financial reformers have the right idea. How many years now have people been trying to push for reform only to come up empty handed? When all else fails its time to blow up the system. We saw it with the election of Trump and its time to see it with the pension system. Yes there will be a lot of pain and suffering but its entirely self-inflicted as these politicians and voters that put them in office have had YEARS of warning about this but choose to do nothing.
Before the Puerto Rico hurricane, some lawmaker said she hoped that the island would suffer a hurricane or some kind of disaster which would force the island to come clean about what it owed. She was vilified as racist but of course that’s exactly what happened. If the University system has to pay more for pensions, then tuition will go up and students will finally have to become aware of the pension crisis. That’s happening at UCLA, where students are outraged at Mark Yudof’s $350K pension.
https://www.pbs.org/wgbh/frontline/film/blackout-in-puerto-rico/
Since SURS is funded by the state, I’m guessing Chicago State’s delinquency is for pension spikes exceeding 6%. If that’s the case, it’s funny that CSU has money for 6% raises but can’t pay the penalty.
I’m having trouble understanding the politics on this one. If you are a reformer, wouldn’t you at least want your vote on the record to be against such “hit the gas and go over the cliff” measures? Why did they run for office in the first place? If they’ve given up their mandate then it can only mean that they just simply don’t care anymore, because the system has beaten them down. Or, it is something more cynical, where they stand to get more by “going along to get along,” and everyone has jumped on the bandwagon, voters by damned.… Read more »
I’ve always advocated that the state should make pension payments first THEN pay all other operating costs, but keeping revenues the same (no tax hike). I wonder if they’re trying to make this mandatory so that they can shove a tax hike down our throats, as in “Don’t blame me, it’s the law!” Could this be their end game? I’ve noticed one side slowly building a story to have everyone accept a higher/progressive tax as if there’s no other choice.
But these are not organisms feasting on dead animals. They are people feasting on other people. Isn’t the better comparison zombies…real or otherwise. Urban dictionary has a good description: The brain (of the zombie or pension Ponzi scheme) retains base facilities, namely gross motor function (to continue taking from taxpayers). In its near-mindless state, it grasps no remains of emotion, personality, or sensation of pain (from taxpayers).
Wow!
Illinois will be a terrible place to live,no matter what.
Already is.