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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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So the big picture plan has the assets of all these individual plans combined into one big fund. The plans are significantly under funded today. So there will be some administrative cost savings and projected higher return. Also there is a range in funding levels from below 20% to 80+ percent. In the future consolidated plan will there be any benefit for those local governments that have made more appropriate contributions or negotiated more responsible salary and benefit packages? Or will the responsible local governments assume the liability for those local governments that failed to fund at appropriate levels for… Read more »
For now, there is no full consolidation like that proposed. No municipality would share liabilities with another under the proposal. It’s just a proposal to consolidate investment management. However, I agree there is risk of it morphing into something bad like that, which will be the subject of my monthly Crain’s article later this week.