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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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As I said in an earlier post, I intensely dislike Pritzger’s plan to extend the amortization of the unfunded liability and cut contributions to the state plans by roughly $800 million annually. So out of concern for the effect this might have on the plan I am a member of (SURS), I did some excel modeling, and here is what I found. Provided the state makes the contributions it is supposed to make, which are quite manageable in the long run because they only grow at about 3% annually, and allowing for the growth in benefit payments that actuaries project,… Read more »
My view has always been that “running out of money” isn’t really the test of anything. Eve if it happened, that’s really just the end point of a process of moving to full pay-go, where the state would just pay benefits. The larger issue is how much the pensions are costing us and the overall volume of the state’s legacy debt. The goal, which I think should be shared by everybody, is restoring the state to competitive total tax burdens and competitive service levels. That goal cannot be achieved if the state’s legacy debt makes it an extreme outlier. Andrew,… Read more »