The Pension Mess

I am suffering a bout of insomnia, and so I have been trolling the internet, attempting to become sufficiently world-weary so I can log more sleep.  The Sun Times site featured a story on state pensions, and promised a slide show of folks who have excessive pensions.  I will tell you that I am familiar and content with the notion of pensions for workers who contribute throughout their working life, with the employer mirroring the contribution.  In Illinois,for example, teachers may not collect Social Security if they choose to participate in the pension program.  It IS their security. I was not ready for the actuarial nightmare that Illinois has in its state pension program.  Now it is OUR problem. We pay.   There is massive gaming of the system: double dipping, massive retirement bonuses, short term, end of service pay increases to add to lifelong benefits- it is shocking.  The really eye opening part- and mind you, I did not want my eyes opened when I made that first click- is the chasm between what some state employees pay in, in total, relative to what they receive.  The financial model is ruinous, and we will have to fill the gap as taxpayers. This is an equal opportunity swamp; there are Republicans and Democrats, men and women.  To tease you into visiting this investigation, I will offer one example.  Arthur Berman, former state Senator, had a final salary in the General Assembly, of $56, 657.  His original pension was $119, 439 per year.  How does that happen?  He had a short term job with the Chicago Board of Education after he left the Senate.  He gets a 36% bump for longevity in the Illinois Senate (32 years) and receives 3% cost of living raises.  He is free to add to his income in his job as a lawyer. Here is why Illinois is going broke:  He paid in a total of $109, 203.  He has received $1.3 million since  2001.  He broke no rules, but he certainly benefitted from a system that the General Assembly constructed for themselves.  I wish him long life and health, and as a taxpayer here, I will help to make it so. Go see- you will be discouraged, but illuminated.  Pensions cost 800 million a month.  Investing pension dollars has been a treasure chest for many Illinois political donors.  The economy has contributed to the instability here, but it is time to shine a light.  We need an independent auditor to examine this mess, and a solution must be sculpted by someone other than beneficiaries.  

The greatest irony for me is that I am on a Village board, and pensions are a large part of our budget.  We must have our police pensions fully funded within 15 years by legislative mandate, yet the legislature has repeatedly changed the pension statutes, often creating greater and unforeseen obligations.  They have also imposed a tax cap upon us, so we cannot raise property taxes- our main funding option-to pay for the pension.  In a small Village, our choices are limited when we balance the budget:  we can cut services or personnel.  The State of Illinois can raise taxes, underfund the programs, or they could borrow.  They do all three.  Governor Quinn hopes to borrow 3.2 billion to fund pensions.   Guess who repays?  No wonder there is cynicism about government.  
I'm sorry- I am crabby when sleep deprived.  But bear with me and follow this story for the next few days.  We need a little righteous indignation.  Do we have the attention span for reform?  

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Tags: Illinois pensions



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  • "Do we have the attention span for reform?"

    My bet is, sadly, no.

    The majority of citizens in this country want only two things: to be comfortable in their own home and to be left alone. The concept of mobilizing to force elected officials to do the right thing is foreign to most people.

    Unless, of course Rush Limbaugh orders it be done.

  • Sooner or later, people will have to have the attention span. If you want to see where Illinois is headed if it doesn't fix this now, look at California. Over-promised and under-funded pensions are a huge part of its ongoing deficit crisis. I have no faith that the state will avoid bankruptcy within the next decade.

    How likely is it that the IL legislature could slap a cap on all pensions, and make it stick? Not just new ones in the future, but existing ones too. "If you're getting $400K today, too bad. You'd better scale back your lifestyle to survive on $70K (for the sake of argument) plus COLA." Can that be done so it would survive a court challenge?

  • Think the state has to reneg. Selling Midway Airport and the parking meters for the next 75 years for a little over $2B is only enough to cover the pensions for 3 months! What is left to sell?

    Agree with the cap. Force the issue. Pay in tiers bottom up. For as long as the monthly budget lasts. Should run out of money long before it comes time to pay that anesthesiologist his $8,600/week pension.

    Killer is the "final pay" basis. Which is conveniently still in the state's "reform" platform. To clean up the mess by 2045. "Final Pay" also mainlines corruption, where a timely bump in salary at an appropriate time leads to extra millions. Which is worth a few favors in return, n'est pas?

  • As a teacher, not only is the social security I earned and paid in while working summer jobs, etc. impacted but also the amount I would receive from my husband's social security if he precedes me in death. The state has not only borrowed against the pension system that is also funded by public workers and their employers but also they have not funded the funds to the full extent of the law. What a mess.

  • In reply to Readergirl52:

    I knew the state played with the money, and that the pensions were underfunded- the abuses are legal because they were written by legislators- but that does not make them right. It clearly is not financially sound. This report scalds my sensibilities. Ethical reform in Springfield will be hard to come by.

    When people retire, their top 4 years should be averaged, and the pension based on this. No piggybackng, doubledipping. It is a disaster.

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