By: Mark Glennon*
A different and more heartbreaking way to look at the Illinois pension fiasco is contained in a report just issued by the National Council on Teacher Quality, Doing the Math on Teacher Pensions. They calculated unfunded teacher pension liabilities on a per pupil basis for each state. That’s appropriate because today’s students will be paying much of the bill, and it’s direct spending on their educations that is reduced by pension costs.
Illinois, no surprise, is worst in the nation, with $27,000 per pupil (page 78). For our neighbors, Wisconsin is $30; Indiana, $11,000; Iowa, $7,000; and Michigan, $15,000. The report is based on state-reported numbers, so real ones are probably worse (and are unquestionably much worse for Illinois). The teachers’ pension represents about 60% of Illinois’ unfunded state level pension liability.
That sadness should turn to anger when you consider how public unions in Illinois propose to address teacher pension debt, as well as all other state pension debt (aside from raising taxes). The only proposal they’ve embraced is from the labor-funded Center for Tax and Budget Accountability. You’ve probably heard countless times from the CTBA and other pension reform opponents that the cause of the problem is underfunding by the state. That’s their mantra, and it should be self-evident — if the pensions had been fully funding we wouldn’t have a problem.
Well, guess what their solution is? Less annual funding from the state, but string it out for a longer period — all the way until 2060! They call it “re-amortization.”
“Re-amortization” in fact is nothing more than deeper underfunding — kicking the can down the road harder than ever. CTBA’s Executive Director, Ralph Martire, has been peddling “re-amortiztion” for several years. You’ve probably seen him on television with reporters who act intrigued when he says “re-amortization” solves the problem, but never ask what it means.
Here’s the CTBA’s own chart that they used in legislative testimony, comparing annual Illinois pension funding under current law to the lower, strung-out contributions they propose in red. They cut it off at 2045, though their extended contributions would last until 2060:
Come to think of it, maybe the CTBA has a point. Their plan would lower per-pupil pension liabilities. Never mind that the pupils’ kids would be passed part of the bill and that spending for their educations, too, will be reduced to pay pensions. Public unions love it.
*Mark Glennon is founder of WirePoints