Results 1 to 18 of 18

Thread: Illinois Pension Shortfall Worsens To $134 Billion Despite Strong Markets, Increased Contribs

  1. #1

    Illinois Pension Shortfall Worsens To $134 Billion Despite Strong Markets, Increased Contribs

    The Illinois Commission on Government Forecasting and Accountability (COGFA) has released its latest state pension report. The numbers confirm what taxpayers already know and what Illinois politicians continue to ignore: Illinois needs massive pension reforms.
    COGFA says that the state’s pension debt rose by more than $4 billion despite strong stock markets, a booming national economy and billions more in taxpayer contributions.
    The total shortfall for Illinois’ five state-run pension funds – for teachers, state workers, university employees, judges and lawmakers – rose to $133.5 billion in 2018 compared to last year’s $129.1 billion in 2017. The plans’ fiscal year ended June 30, 2018.

    The teachers’ fund earned 8.3 percent on its investments and the state employees’ fund earned 7.7 percent, both exceeding their 7 percent return targets. The university employee fund earned 8.3 percent, outpacing its expected return target of 6.75 percent.

    Taxpayers also poured more contributions into the pension funds than ever before.
    Illinoisans contributed $8 billion dollars to the pension funds in 2018, $6 billion more than what they contributed in 2008.
    It just shows how unmanageable Illinois pensions have become. Billions in taxpayers contributions and above expected investment returns didn’t even make a dent in Illinois’ accumulated pension debt. In fact, the situation worsened for taxpayers and pensioners alike over the year. The pension hole is now larger by more than $4 billion.
    Insolvent
    Collectively, the five pension systems have just 40.2 percent of the funds they need today to be able to meet their obligations in the future, up slightly from 39.8 percent the year before. The university employee fund, SURS, is the best funded of the five pension funds, but its funded ratio fell by nearly 2 percentage points to 42.6 percent.
    Most notable is the funding ratio for the state lawmaker pensions. It’s just 15.1 percent funded. Any way you measure it, it’s broke. Only a yearly bailout by taxpayers keeps that plan afloat.

    Uncontrolled benefits
    Lawmakers typically blame the current pension crisis on a lack of taxpayer dollars. But the pension funds are crisis today due to over 30 years of uncontrolled benefit growth, not a lack of funds.
    What COGFA’s report fails to mention – and what the media has failed to report on – is that total pension benefits owed to state workers grew 1,061 percent between 1987 and 2016, swamping the state’s economy and taxpayers ability to pay for them.
    Total benefits promised (the accrued liability) have grown 4.5 times more than personal incomes (238 percent) and six times more than state revenues (176 percent) over the period.

    And when you compare accrued liability growth across states, Illinois is also an outlier. Wirepoints performed a 50-state analysis of pension promises and found Illinois had the 4th-fastest growingpension liabilities of all states between 2003 and 2016.
    That growth in benefits has made it impossible for the state to escape the pension crisis.
    Stellar investment returns and growing taxpayer contributions aren’t enough to fix things so long as politicians refuse to do anything about the growth in pension benefits and the overwhelming pension debt burden.
    A period of collapse
    Illinois’ pension funds have collapsed – putting both state workers and taxpayers at risk – during one of the longest bull markets in history.
    Since the end of the Great Recession, the S&P 500 index has recovered and grown by 200 percent.
    During that same time, Illinois’ pension shortfall worsened by 72 percent, or $56 billion. In fiscal year 2009, the unfunded liability was “just” $78 billion. Today, it’s nearly $134 billion.

    Some of the growth in debt was due to the pension funds changing their actuarial assumptions, including SURS dropping its assumed rate of return in 2018. Regardless, the systems’ overall downward trend is clear.
    And the warning this trend provides is even more stark: if the state’s pension debts continue to worsen during a period of remarkable market returns, imagine how those funds will fare when the next recession inevitably hits.
    Illinois needs comprehensive reforms more than ever
    What’s important to note is that the reported $133.5 billion in debt is the rosy scenario for Illinois.
    The state’s actuaries still calculate the pension shortfalls assuming investment return rates of nearly 7 percent, on average.
    When more realistic rates are used – those that can be guaranteed – the shortfall increases to more than $250 billion for the five state funds. That’s what Moody’s calculates is the true shortfall for Illinois.
    Add to that all pension shortfalls in municipalities, plus the state’s $73 billion in unfunded health care obligations, and the burden on taxpayers becomes unbearable.
    If Illinois properly paid its debt according to actuarial standards, 50 percent of the state’s budget would be consumed by retirement debts alone. Illinois is the outlier when it comes to that statistic and it’s one of the key reasons why the state is just one notch away from a junk rating.



    More at: https://www.zerohedge.com/news/2018-...kets-increased

    Quote Originally Posted by Pauls' Revere View Post
    SIGN MY PETITION TO "SELL CHICAGO TO CANADA":

    URL: https://petitions.whitehouse.gov/pet...chicago-canada

    Forward to whoever if you like. Lets see if this happens! LOL
    Quote Originally Posted by presence View Post
    government pensions should be considered odious debt

    cross that line item right the $#@! off and move on
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



  2. Remove this section of ads by registering.
  3. #2
    Just think where that goes when the next , overdue stock market decline really kicks in .
    Do something Danke

  4. #3
    I suggest selling chicago to canada to start with and using that money towards state expenditures , then people from chicago could not leave to infect the midwest they would be foreigners .
    Do something Danke

  5. #4
    "the city of Peoria has been forced to eliminate 22 firefighter and 16 police positions even after they made 27 layoffs earlier this year. Besides eliminating employees, they are now looking at adding a tax of $50-$300 to per resident try to cover their own pension schemes as pension spending continues to consume everything.

    Pension costs are forcing Peoria to cut 38 emergency worker positions and to raise property taxes further. … Your taxes are going to pay for the retired people and services have to be cut because they cannot afford current employees. Talk about total mismanagement. ….
    "Let it not be said that we did nothing." - Dr. Ron Paul. "Stand up for what you believe in, even if you are standing alone." - Sophie Magdalena Scholl
    "War is the health of the State." - Randolph Bourne "Freedom is the answer. ... Now, what's the question?" - Ernie Hancock.

  6. #5
    Quote Originally Posted by AZJoe View Post
    "the city of Peoria has been forced to eliminate 22 firefighter and 16 police positions even after they made 27 layoffs earlier this year. Besides eliminating employees, they are now looking at adding a tax of $50-$300 to per resident try to cover their own pension schemes as pension spending continues to consume everything.

    Pension costs are forcing Peoria to cut 38 emergency worker positions and to raise property taxes further. … Your taxes are going to pay for the retired people and services have to be cut because they cannot afford current employees. Talk about total mismanagement. ….
    Sooner or later people will refuse to pay for those ridiculous pensions.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  7. #6
    "Let it not be said that we did nothing." - Dr. Ron Paul. "Stand up for what you believe in, even if you are standing alone." - Sophie Magdalena Scholl
    "War is the health of the State." - Randolph Bourne "Freedom is the answer. ... Now, what's the question?" - Ernie Hancock.

  8. #7
    "Let it not be said that we did nothing." - Dr. Ron Paul. "Stand up for what you believe in, even if you are standing alone." - Sophie Magdalena Scholl
    "War is the health of the State." - Randolph Bourne "Freedom is the answer. ... Now, what's the question?" - Ernie Hancock.

  9. #8
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



  10. Remove this section of ads by registering.
  11. #9
    Illinois cannot be saved . It needs to go belly up . Once new public servants are hired they can be given a 401K to contribute to .
    Do something Danke

  12. #10
    Universal basic income is the answer.

    And those who want to pick on IL for its unfunded liabilities - as though IL is not serious about pensions? Let me tell you somethin!

    Illinois is so serious about its pensions, that its constitution secures these pensions! There's no way IL will not make good on its debt to State, local, or school pensions.


    Quote Originally Posted by http://www.ilga.gov/commission/lrb/con13.htm
    SECTION 5. PENSION AND RETIREMENT RIGHTS
    Membership in any pension or retirement system of the
    State, any unit of local government or school district, or
    any agency or instrumentality thereof, shall be an
    enforceable contractual relationship, the benefits of which
    shall not be diminished or impaired.
    (Source: Illinois Constitution.)
    I challenge anyone to look in any other State's constitution and find such a commitment. Now, IL's constitution says nothing requiring a budget to be passed each year, but that's besides the point.

    FK you IL... Fkkkk you.

    Gulag Chief:
    "Article 58-1a, twenty five years... What did you get it for?"
    Gulag Prisoner: "For nothing at all."
    Gulag Chief: "You're lying... The sentence for nothing at all is 10 years"



  13. #11
    Quote Originally Posted by oyarde View Post
    Illinois cannot be saved . It needs to go belly up . Once new public servants are hired they can be given a 401K to contribute to .
    Federal bailout and federalized like D.C. without voter representation.

    We're being governed ruled by a geriatric Alzheimer patient/puppet whose strings are being pulled by an elitist oligarchy who believe they can manage the world... imagine the utter maniacal, sociopathic hubris!

  14. #12
    Quote Originally Posted by Pauls' Revere View Post
    Federal bailout and federalized like D.C. without voter representation.


    Better yet, make it like Puerto Rico so it doesn't get EC votes.

    We can consider giving statehood back to the red counties only later.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  15. #13
    Governor JB Pritzker’s administration has now made clear it will seriously consider the latest idea to address Illinois’ pension crisis – transferring public assets directly to state pensions. It recently announced the formation of a task force on the subject.
    At its core, the concept is exceptionally simple. In practice, however, it’s exceptionally subject to smoke and mirrors and would further obscure a pension system that’s already far too opaque. More importantly, asset transfers do nothing to improve the state’s overall fiscal health.
    Just convey ownership of some public assets to the pension, for free, in addition to the cash contributions taxpayers make now. That’s all this is about. Maybe the Illinois Lottery or Illinois Tollway for state pensions. Maybe Midway Airport or its water system for Chicago pensions. Those are examples of assets that have been mentioned that might be handed over.
    Illinois state pensions are officially reported to have assets about $130 billion less than what they need to have on hand to pay for pension benefits already earned. Turn over ownership of the tollway and some other assets and, voila, the thinking goes, that shortfall would shrink by whatever the transferred asset is worth.
    The first problem should be obvious – the state, as a whole, would be no better off. Whatever assets the state owns – which are your assets as taxpayers – would simply be moved over to the pension funds for the sole purpose of covering benefit obligations. But the pensions are really just a unit of government because Illinois courts have made clear that the sponsoring unit of government is liable directly to pensioners if pension assets ever fall short. So, pensions might be made more secure by an asset transfer, but the government’s overall balance sheet remains the same.
    Not true, I’ve heard some proponents of asset transfers say. They claim there are certain public assets where the value of the asset can only be fully unlocked through a transfer to a pension. Just selling or leasing the asset to some third party, they say, wouldn’t work. I’ll believe that when I see an example.
    If you’re wondering at this point whether accounting shenanigans might be at play, you’re right to be concerned. Some valuation would have to be placed on the asset transferred in order to understand a pension’s true position. But public assets don’t have clear market values. What’s the Illinois Lottery really worth, for example? Experts will have different opinions, but the temptation will be to inflate the value in order to make pension financial statements look better.
    And how on earth will actuaries decide what rate of return to assume on those assets? Currently, Illinois pensions assume about 7% per year. That’s already extremely controversial, with Nobel economists being the harshest critics. This will make heads explode in the actuary world.
    Over time, the value of the asset will change. The lottery’s value, for example, will drop markedly if Illinois expands other forms of gambling as rapidly as planned. Does anybody really expect pensions to honestly report that changing value, given their sordid history distorting their position with phony numbers on things like discount rates and mortality projections?
    And even if honest valuations are used, another temptation will be to transfer assets that are on the books at lower valuations. That would improve a government’s reported balance sheet when it’s valued fairly in the pension after transfer, but the government’s position wouldn’t really improve at all.
    In the private sector, where asset transfers to pensions are sometimes done, that accounting trick is the whole point – take an asset that’s been heavily depreciated to less than fair value and give it to the pension at fair value, which magically improves the consolidated balance sheet. That’s a sensible tactic for a private company to improve its reported position, but for governments, from a taxpayer’s viewpoint, it doesn’t change the economic realities.


    What about management and control of a public asset by a pension? Would you really want a pension managing Midway Airport, for example? No, advocates of asset transfers say, the whole transaction would be set up like a triple net lease, where the governmental unit would continue to be in control. Only the cash flow would be diverted to the pension.
    But think about that and all kinds of questions are apparent. If the city truly kept control, it would have every incentive to reduce charges for parking, landing and gate fees, which is how airports make money. They’d be sure to cover operational expenses, but nothing would truly be left for the pension, making the whole deal unfeasible. If, on the other hand, the pension could determine those charges, well, heaven forbid that.
    The complexity of asset transfers would be mind-boggling for major things like airports, water and sewer systems. They are tied up by layers of mortgages and covenants protecting bondholders. Disentangling them, if that’s possible at all, would be a matter few officeholders or taxpayers would ever understand.
    Other questions are endless. Ask them and one thing will come to mind – Chicago’s disastrous parking meter deal. In that case, a public asset was transferred not for pensions but to cover city operating expenses, but the concept is similar, and similar risks of having a bad deal foisted on the public should be apparent.
    If this is getting confusing, take a look at the attached example. It’s from a company promoting the idea of asset transfers – Colliers International, an investment manager and real estate services company. It puts the concept in glowing terms, a “brilliant strategy,” using as an example the transfer of an office building used by an Arizona town to it’s underfunded pension.
    Read that, and you’ll understand why the concept is getting attention. But ask yourself whether town residents are really better off because of the transaction. They owned the office building. It was worth what it was worth. They used it to pay their pension. Total assets and total liabilities for the town and its pension, combined together, didn’t change.
    Our view on this is the same as our view about other ways to throw money at pensions. Don’t do it unless and until the pension system is reformed. Otherwise, Illinoisans will see that their assets are being tossed into a bottomless, corrupt pit. Don’t do it all unless the economic consequences and future reporting will be transparent and certain (which is probably impossible for most assets). Don’t just give away the assets. Demand reform concessions from current workers in Tier 1, who can negotiate collectively, and Tier 1 is where all unfunded liabilities are.
    The Pritzker Administration has shown no interest in any of that.
    Prepare for smoke and mirrors.

    https://www.zerohedge.com/news/2019-...ions-be-afraid
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  16. #14
    Back in December we noted that the lack of basic economic common sense by its politicians led the state of Illinois to a $134 pension shortfall. Now, the latest Democrat failing to understand simple math, and that the answer to fixing a debt problem is not more debt, is billionare Illinois governor J.B. Pritzker.
    Pritzker is said to be preparing his first address on the state's budget for Wednesday, where he will address his desire to issue $2 billion in bonds in order to raise cash for the state's horrifically insolvent retirement system. This is the same tactic that the state tried in 2003 which, of course, failed miserably. All the while, in the years following 2003, Illinois' credit rating has moved closer and closer to junk with the state just one notch above the embarrassing level.
    Pritzker's deputy governor, Dan Hynes, thinks that the bond sale might be a way for the government to shirk its annual contributions to the funds, which is what happened 16 years ago after Governor Rod Blagojevich’s $10 billion debt sale. After the 2003 debt sale, the state failed to make sufficient annual payments into pension funds from 2005 to 2008, which added nearly $12 billion to the state's obligations.

    The hilarious thing is that even while advocating for selling more debt, people involved are claiming to have "learned from their mistakes." Robert Martwick, a state representative who chairs the House’s pension committee told Bloomberg: "This time you have people who understand the devastating effects of doing what he did."
    No, Bob. You don't.
    The borrowing is part of a new plan that includes – you guessed it – raising taxes, and other clinically insane and brutally useless ideas for addressing a $134 billion shortfall, like handing government assets, including office buildings, over to the retirement system. Hynes said that the $2 billion debt sale would supplement Illinois' annual contribution and would be yet another wager on the stock market. He hopes that investment earnings will reduce the amount that the state owes.
    Thus, the Ponzi-like house of cards continues to grow.


    More at: https://www.zerohedge.com/news/2019-...uing-more-debt
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  17. #15
    Best solution is declare the state insolvent and default on all obligations. Layoff 75% of all state employees. Cut off all services.

  18. #16
    Illinois seems desperate to drive away every able body citizen who can possibly leave.

    Illinois is considering several bills that will without a doubt drive more businesses and individuals out of the state. One of them is likely illegal.
    Gas Tax Hikes

    Please consider Bill Seeks to Increase Illinois' Gas Tax to Fund Road Repair.
    Illinois lawmakers are considering raising the state's gas tax by 19 cents a gallon and hiking vehicle fees to pay for transportation infrastructure repairs.
    Legislation introduced last week proposes the state's first gas tax increase since 1990 and could raise an additional $2 billion in revenue each year, the Chicago Tribune reported. But it also would hike the electric-vehicle fee from $17.50 to $148, and increase truck registration fees by $100.
    The fees for driver's licenses would double under the proposal, from $30 to $60, while passenger vehicle registration would increase from $98 to $148.
    Where Would the Money Go (Part 1)

    "Doubling the state gas tax would bring Illinois to the second-highest overall gas tax burden in the nation, notes the Illinois Policy Institute.
    Supposedly these tax hikes would go for road repairs. Perhaps about 10% would. The rest would go to bail out bankrupt Illinois' pension plans.
    Netflix Tax

    Next, please consider ILLINOIS BILL WOULD EXPAND CHICAGO’S ‘NETFLIX TAX’ STATEWIDE.
    House Bill 3359 would create the “Video Service Tax Modernization Act” and “Entertainment Tax Fairness Act,” which would impose new taxes on satellite and video streaming service providers and subscribers. Users of those services would pay a 1 percent tax “for the privilege to witness, view, or otherwise enjoy the entertainment,” while companies would pay a 5 percent tax on their gross revenues.
    Chicago currently stretches the definition of its 9 percent citywide “amusement tax” to include online streaming services such as Netflix and Spotify, as well as Playstation rentals.
    The legality of Chicago’s “Netflix tax” is dubious. The Liberty Justice Center, the Illinois Policy Institute’s litigation partner, sued the city on behalf of streaming service customers in 2015, after the expansion of the tax to online services went into effect. The city tax was previously applied only to ticketed live entertainment performances and events.
    The Center argued expanding the tax to online services violates the 1998 Internet Tax Freedom Act, a federal law. The Act prohibits taxes that discriminate against electronic commerce levied by any government body, including state governments, suggesting Illinois could expose itself to similar legal risks should HB 3359 become law.
    Where Would the Money Go (Part 2)

    This tax hike is even easier to state. No matter what anyone says, 100% of this money would be diverted to bail out bankrupt Illinois' pension plans.
    Constitutional Amendment

    These hikes are on top of a major Constitutional Amendment change to make the Illinois state income tax "Progressive". Rest assured it will dramatically increase taxes on the middle class no matter what these parasites say.
    Get the Hell Out

    I repeat my caution of last week: An Illinois' Demographic Collapse Is on the Horizon.
    Get Out As Soon As You Can!
    Yes, we live in Illinois. I expect to be out of this hell hole within 18 months. Plans are underway.


    https://www.zerohedge.com/news/2019-...hiking-gas-tax
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



  19. Remove this section of ads by registering.
  20. #17
    Quote Originally Posted by oyarde View Post
    I suggest selling chicago to canada to start with and using that money towards state expenditures , then people from chicago could not leave to infect the midwest they would be foreigners .
    No, you've no right to trap me there. I plan on leaving soon. I am not, under any circumstances, going to be trapped here. Call me a refugee, IDGAF, I'm not stayin'. Nope, nope, nope.

  21. #18
    When governments have more pensioners than employees

    The Chicago Tribune editorial board reports:
    The Metropolitan Water Reclamation District of Greater Chicago has 2,042 active employees and 2,408 pensioners. The village of Niles has 225 employees and 580 retirees. The village of Oak Park has 369 employees and 648 pension beneficiaries.

    The village of Elmwood Park has 122 employees and 396 pensioners. The village of Oak Lawn has 295 employees and 553 retirees. The city of Blue Island has 170 employees and 404 beneficiaries.

    Just the non-teaching personnel at Lemont-Bromberek Combined School District 113A: 132 employees, 486 retirees. ...
    "Let it not be said that we did nothing." - Dr. Ron Paul. "Stand up for what you believe in, even if you are standing alone." - Sophie Magdalena Scholl
    "War is the health of the State." - Randolph Bourne "Freedom is the answer. ... Now, what's the question?" - Ernie Hancock.



Similar Threads

  1. Replies: 5
    Last Post: 07-10-2018, 01:18 PM
  2. Illinois Justices Overturn State Landmark 2013 Pension Law
    By AuH20 in forum U.S. Political News
    Replies: 14
    Last Post: 05-13-2015, 02:17 PM
  3. California facing higher $16 billion shortfall
    By Brian4Liberty in forum Economy & Markets
    Replies: 1
    Last Post: 05-14-2012, 10:30 AM
  4. California's $500-billion pension time bomb
    By WayBehind in forum U.S. Political News
    Replies: 7
    Last Post: 04-06-2010, 07:22 PM
  5. Bailouts: FHA Shortfall Seen at $54 Billion May Lead to Bailout
    By bobbyw24 in forum Economy & Markets
    Replies: 0
    Last Post: 10-08-2009, 09:20 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •