Saturday, August 19, 2017

Cook County’s Outrageous Attempt To Charge Plaintiffs $17 Million In Beverage Tax Case – WP Original

Sanctions against the county's lawyers? Maybe, but without a firm and unequivocal decision against Cook County a dangerous precedent will be set.

One Chart Shows Awful Fiscal Trajectory of Chicago Area and Illinois – WP Original

And here's a promise: The trend will continue.

Education Funding Bill is a Monstrosity of Unknown Proportions – Wirepoints Original

Shame on everybody who has let SB1 get as far along as it has with such little understanding, Republicans and Democrats alike.

Rauner’s New Staff, Extremism and the Stockholm Syndrome – Wirepoints Original

That which can't pass the establishment in the General Assembly and its enablers in the press is "too radical" for Illinois.

The Importance of Being Scared (in Illinois) – WP Original

"If you are protected from dark things then you have no protection of, knowledge of, or understanding of dark things when they show up.”

New Financial Statements: Cook County Bleeding Red Worse Than Ever – Wirepoints Original

And check out the ten-year record of huge losses.

Outrageous Giveaway to Muni Bond Buyers Hidden in Massive Budget Bill – Wirepoints Original

We are being looted. The muni bond industry is going all out to keep raising the credit card limit and sucking every ounce of blood out to ensure it gets repaid.

The Many Ways Illinoisans Won’t Pay Higher Taxes – Wirepoints Original

It's not just that people are moving out.

Progress for Illinois? Here’s a Small Hint. – Wirepoints Original

Read this and guess where it's from.

Most House Members Don’t Know What’s in the $36 Billion Spending Bill Passed – Wirepoints Original

"We have no idea what's in it." - House Minority Leader Jim Durkin

With All Reforms Now Off the Table, Illinois Faces Disaster No Matter What – WP Original

Illinois has a financial crisis, not a budget crisis.

Speech Muzzlers Triggered: Chicago’s Theater Community On The Attack – WP Original

Together we make great theater -- unless you disagree with us, in which case you're a bigot.

New Study Details How Pensions Exploit New And Younger Teachers – Wirepoints Original

Illinois gets an 'F' as you'd expect, but we have plenty of company on this.

Why You Shouldn’t Believe The Illinois Budget Deficit Numbers Released This Week – Wirepoints Original

True numbers are 2X or 3X worse and show the genuine bind Illinois is in -- not just an ego clash between Rauner and Madigan.

Would Congress Authorize Bankruptcy for Illinois and Other States? Yes, Inevitably. – Wirepoints Original

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. -Arthur Schopenhauer.
And thanks to ZeroHedge for republishing this article.

COGFA: State of IL Revenue Up In May But Still Down For Year – WP Original

Up 7% for the month but still down 3.5% for the year-to-date.

Video: IL State Senator, Clueless About Bill He Sponsors, Blames Questioning On His Mexican Heritage – WP Original

Truth is, most of the rest of the legislature doesn't know what the bill does either. It still passed. Same with most of what they rushed through this week.

Better Government Association Could Use Some Better Pension Research – WP Original

The fog of misunderstanding about Illinois' crisis remains thick.

Unbelievable: Illinois House Votes With Senate To Hand Over Public Assets To Bondholders – Wirepoints Original

Watch the video of the bill's sponsor, Rep. Barbara Flynn Currie, lying shamelessly about its purpose.

Brace for a Major Worsening in Illinois’ Fiscal Crisis – Wirepoints Original

A far deeper crisis for Illinois is inevitable, we've long said, but it's now more imminent because that certainty is becoming more obvious.

New Stanford Study Exposes Illinois Pensions as the Farce They Are – Wirepoints Original

Using a "market value" discount rate, just to keep Illinois pensions from sinking further into debt, the state would have to contribute "well over twice of what it actually contributed." Chicago and Cook County are toast, too.

Why Won’t Illinois Political Reporters Ask Meaningful Questions? – WP Original

Just ask, and keep asking. It's really not that hard.

NOTE TO READERS: New Software and Other Changes

By: Mark Glennon* We've switched over to a new software program, so please excuse us if we are down for a bit and you encounter bugs. If you do see any problems we don't fix, let us know by email linked here. Yes, we will be restoring a comments section. Cosmetically, it should look pretty much the same as soon as we are finished. However, the new software is more robust and will allow us to add other functionality as we...

Illinois Isn’t Puerto Rico, But…. – Wirepoints Original

...Stockton and San Bernadino weren't either. Not being Puerto Rico doesn't mean you can't run out of money and go bankrupt. And it doesn't mean Puerto Rico won't frame the debate about how to resolve government fiscal crises.

COGFA: State Revenue Weakness Continued in April – WP Original

Total tax receipts compared to April last year were off 1.3%. However, transfers from the federal government increased, putting total sources $216 million ahead for the month (a 6.5% improvement for the month). For the fiscal year to date, however, the decline remains troubling.

How About an Illinois March for Math? – Wirepoints Original

It’s hard to see thousands of people rallying to the cry, “no unsustainable pension systems,” but it might do more good than yelling about “science.”

Myth on Top of Myth: Illinois’ Bill Backlog and the Temporary Tax Increase – WP Original

"If only Illinois had extended the temporary income tax increase we'd be in good shape." Wrong.

Crony Capitalism’s Latest Scheme for Illinois is Green – WP Original

“Sweet,” the guys who sell renewable energy hardware must be saying.

Sellouts, Handouts and Bailouts: The Illinois General Assembly is Out of Control – WP Original

By: Mark Glennon* It's hard to overstate how bad the Illinois General Assembly has become. Let's look at just three sets of bills this session that have gotten so far along, have so much support and are so crazy that you truly should be frightened. Foolish bills that don't go anywhere are an old story in Springfield. Sometimes they're just grandstanding for a particular interest group or lobbyist. Sometimes they're "fetcher bills" -- proposed by one guy so his buddy can fetch...

Simple Math Shows Absurdity of Illinois’ Progressive Tax Cure – Wirepoints Original

To pretend that progressive taxes like those proposed in Illinois are the answer, with little else is, is quack demagoguery.

‘The Privilege Tax’: Illinois House, Senate Bills Would Destroy the State’s Financial Sector. Really. – Wirepoints Original

The dumbest idea yet in this legislative session, which is saying something.

To Grasp Illinois’ Fiscal Predicament, Take Off Six Zeroes – Wirepoints Original

  By: Mark Glennon*   Billions are harder to fathom than thousands. Former Illinois Comptroller Leslie Munger had a good way to illustrate Illinois' financial status: Just take off six zeroes.   For Illinois, keep in mind that each thousand below actually a billion. And for some perspective, one thousand seconds is less than three hours. One billion seconds is over 31 years.   For those of you not following the budget crisis closely, imagine you own some kind of service business (services are most of...

Is Bankruptcy for States Illinois’ Answer? A Primer. – Wirepoints Original

  By: Mark Glennon*   Could a formal bankruptcy proceeding for the State of Illinois be the answer to it's fiscal crisis? If you think that's out of the question, as many do, you're wrong. On the contrary, though Congress isn't working on it now, the option is quite viable, though subject to obstacles and open issues. The question is certain to gain growing national attention as a number of states sink further into insolvency, so it's time to get up to...

My Near Death Experience – Wirepoints Original

  By: Mark Glennon* Five years ago this week I almost died off a beach on the Atlantic near Fort Lauderdale. I tell this not just because some of you are heading soon to a beach for spring break. Instead, regardless, you can take away from my experience what I did. I had enjoyed swimming in waves all my life. I'd been pulled out before, but no big deal. I float easily, and swimming to the left or right as you're supposed...

A Horrible Bill Illustrates Illinois General Assembly’s Bumbling Dysfunction – Updated – Wirepoints Original

By: Mark Glennon* You might remember when the capitol lights almost were shut off a couple years ago because the bill wasn't getting paid. That was avoided but, figuratively, the lights are off. Consider what the story of House Bill 2584 says about how our General Assembly works. The bill would give a massive windfall to existing bondholders that they didn't bargain for. But the real story is about how such a bad bill could get as far as it has,...

Study Says Illinois Doesn’t Know All it Spends on Higher Ed. Not Unusual. – Wirepoints Original

  By: Mark Glennon*   A new study by Pew Charitable Trusts tried to measure how much states spend on higher education. The challenge is measuring spending in the form of tax breaks like Illinois and most states provide. Most states simply don't know and Pew couldn't fully measure it, they concluded. Only nine states have enough data to really tell, Pew says. Illinois is not among those nine that know. And higher education isn't the only place where that kind of...

How New Trier High School Educated Us All – Updated – Wirepoints Original

  By: Mark Glennon*   UPDATE 3/22/17: On school board member had the courage to dissent, John Myefski. Kudos to him, and regrets for wrongly including him with the rest of the board. See an article linked here about a subsequent board meeting.   The day itself mattered little -- one high school's all day seminar on racial civil rights, controversy over which captured national headlines. The enduring, bigger lesson is something different -- its about how much lasting harm can be done by...

Two Sets of Numbers We Want From Illinois. Now. – Wirepoints Original

  By: Mark Glennon*   I'm fed up with the entirely fictional debate about the Illinois budget being played out in the press. One cause is the the state's failure -- at all levels -- to give us meaningful, current numbers. Let's start with two:   First, Governor Rauner's office, Senate Republicans and Senate Democrats alike are consistently claiming that the pending pension bill, Senate Bill 11, would save about $1 billion per year. The press repeats that claim without challenge. But the bill...

Illinois’ Grand Bargain: 12 Bills But One Overriding Question – Wirepoints Original

  By: Mark Glennon*   Step back from the trees and see the forest as you go through the "grand bargain" legislative package Springfield is considering. The details matter less than one overarching question about breaking the death spiral Illinois is in: Will the grand bargain slow the flight of people and employers from Illinois or accelerate that exodus? I hope you already know why that question is paramount. Nothing matters unless the exodus is stopped. State revenue is declining. The tax base is...

‘Like a Broken Record,’ IL State Revenue Dropped Again in February; Downward Projection Expected – Wirepoints Original

By: Mark Glennon* Base revenues for the State of Illinois fell again in February (compared to last Feburary) according to today's report from COGFA, the Commission on Governmental Forecasting and Accountability. "Like a broken record," COGFA says, monthly declines reflected weaker income taxes along with poor federal sources. For the fiscal year-to-date, base receipts are off $1.453 billion, or 7.5%, compared to the same period last year. "Weakness is widespread, and has resulted in year over year losses in key areas...

Illinois Bill to Prioritize Bondholders Over the Public Must Be Stopped – Updated – Wirepoints Original

  By: Mark Glennon* What could be worse than bankruptcy for an Illinois town or city? An assetless bankruptcy. That's when even a formal bankruptcy proceeding can't help because there's nothing to work with. It's when the bank owns everything and nothing is left. That's when it's lights out. The concept applies regardless of whether a formal bankruptcy proceeding takes place. But that's just what Senate Bill 10 would make more likely. It's one of the twelve bills comprising the "grand bargain" now...

Wirepoints’ Mark Glennon Joins WBEZ’s Tony Sarabia for Discussion on New Trier High School’s Controversial Seminar Day on Racism – Audio

Comment: Special thanks to Joan Oh, on the other side, for being so gracious -- in stark contrast to so many on her side who have sent us the most hateful, vile, intolerant emails imaginable.

The Closing of New Trier’s Mind – Wirepoints Guest

  By: Chris Robling*   New Trier Township High School has been a national model at least since World War II. Today, unexpectedly, it models the nation’s divisions over how to discuss – and act on – inequities based on race.   Few public high schools can compare to New Trier’s past – or present. Life Magazine’s October, 1950 Special Issue “U.S. Schools, They Face a Crisis,” put a New Trier girl on its cover and presented the school as a Valhalla of secondary...

Does the Grand Bargain Budget Package Violate Illinois’ Constitutional ‘Single Subject’ Rule? – Wirepoints Original

  By: Mark Glennon*   I’ll ask a leading authority on Illinois' single subject rule about it and the “grand bargain” budget solution under discussion in Springfield, but first a little background.   The single-subject clause of the Illinois Constitution is in Article I, § 8(d), paragraph 2. It provides:   Bills, except bills for appropriations and for codification, revision or rearrangement of laws, shall be confined to one subject. Appropriation bills shall be limited to the subject of appropriations.   But the grand bargain is a gigantic...

Bondholders Taking Dibs on Public’s Bones While Illinois Taxpayers Snooze – Wirepoints Original – Updated

  By: Mark Glennon* Most readers' eyes surely glazed over when they read last week about the cat fight between two of the agencies that rate credit for Chicago Public Schools. What's far more important than that dispute is what it illustrated: The municipal bond community is way ahead in putting itself before everybody else with a stake in the financial crises gripping CPS, Chicago, other muncipalities and the State of Illinois. They've been hard at work securing positions to ensure...

Authoritarians at the Gate: How One High School is Ripping its Community Apart – Wirepoints Original

By: Mark Glennon*   Not since the Vietnam War have I seen as much strife and personal hostility within an otherwise friendly community.   Thank the administration of New Trier High School in north suburban Chicago. This story is about the madness on college campuses now being crammed down into a public high school. More importantly, it's about an angry brawl now growing rapidly.   Oblivious to how identity politics have divided the country, the school is holding an attendance-mandatory All-School Seminar Day with the...

Good Move: Former Comptroller Leslie Munger Named Deputy Governor – Wirepoints Original

*Mark Glennon   Governor Rauner today hired Illinois' previous Comptroller, Leslie Munger, as Deputy Governor.   "Deputy Governors" are essentially close advisors to the elected governor. Their duties are whatever are assigned to them by the governor. Rauner has another already, Trey Childress. Munger's duties will include work with the budget and social service agencies.   Munger is a welcome addition to Rauner's team. She managed the impossible situation in the Comptroller's office with smarts and integrity, where she earned the respect of the media.   I...

January’s COGFA Report: Further Decline in State Revenue – Wirepoints Original

By: Mark Glennon*   Tax receipts and other revenue for the State of Illinois declined again in January, continuing an ominous trend, according to the monthly report released today by COGFA, Illinois' Commission on Governmental Forecasting and Accountability.   Comparing last month to January of 2016, overall base revenues were off $167 million, or 5.4%. For the fiscal year-to-date (that started in July), base receipts are off $1.031 billion, or 5.9%.   COGFA writes:   The past months performance did little in the way of alleviating concerns...

Mad World: Dysfunctional Thought in a Rigged System — Rep. Jeanne Ives — Wirepoints Guest

  By: Rep. Jeanne Ives*   No one should be surprised that group think instead of rational choices surround the 13 interconnected bills of the “Grand Bargain” under consideration in the Illinois Senate. It is wholly predictable given the longevity of the Senate leaders involved. They’ve been working together for nearly two decades. They put in place many of the policies now taking a toll on our state. They are the beneficiaries of generous pensions when they retire, excessive pay for their...

Mark Glennon Is One Of The Most Dangerous Men In IL – VIdeo – Upstream Ideas

"Glennon's facility with translating the Illinois Ruling Class' fantasy math into the tangible human costs it imposes makes him a dangerous man to Illinois pols and a must-read for Illinois residents." Flattered.

Illinois Considers New Tax Called (Are You Ready?) the ‘Business Opportunity Tax’! – Wirepoints Original

  By: Mark Glennon*   The introductory language in the bill is so perfect. The tax is imposed "for the privilege of doing business in the State."   And the rationale for how much tax is paid is pure genius: The more you pay employees in Illinois, the higher your tax. That's right, it's based on how big your Illinois payroll is. Whether you have any money, any revenue or any profit doesn't matter.   It's in SB-9, a bill introduced today in the Illinois Senate....

Horrible ‘Grand Bargain’ for Illinois Budget is Strike Three for Sen. Christine Radogno – Wirepoints Original

  By: Mark Glennon*   Illinois Sen. Christine Radogno (R-Lemont) took the lead with Senate President John Cullerton (D-Chicago) to negotiate the "grand bargain" budget proposal for Illinois now being widely discussed. Let's review her record. I've spoken before several times to Radogno about the primary budget issue for Illinois -- pensions. It was clear to me that she simply doesn't know what she's doing. Let's look at just two strikes against her already on the record.   Strike 1 was the blatantly foolish...

Ignore Meaningless ‘Budget’ Numbers in Illinois’ Fiscal Debate – Wirepoints Original

  By: Mark Glennon* From news reports about the "grand bargain" budget solution on the table in Illinois you might be thinking, “Well, I don’t like these tax increases, but it looks like this deal would fix our state budget problems by covering the budget hole with new taxes. Let’s do it and get this over with.” Huge mistake. The real numbers don’t come remotely close to a solution. That’s primarily because government budget numbers are nearly useless. Bill Bergman is an expert...

‘Fake Policy’ on Pensions is a Key Piece in Pending Illinois Budget Deal – WP Original

  By: Mark Glennon*   If I offer you an equal trade for something which you are free to accept or reject, have you sacrificed or given anything up? Of course not, yet the notion that you'd have somehow made a big concession is behind the "pension reform" piece of the Illinois budget deal now being discussed.   We're talking about the "consideration" approach to pension reform, which has long been pushed by Illinois Senate President John Cullerton (D-Chicago) and his go-to lawyer on...

It’s Happening – WP Original

  By: Mark Glennon* The figure I deeply admire in The Big Short, Mark Baum (Steve Eisman was his real name), had a simple reaction when financial screens began to bleed red as the subprime mortgage market collapsed and the Great Recession began: "It's happening."   Illinois' descent isn't like that. No single day, month or even year will be marked on a chart to stick in the history books. But it is happening. Illinois is gradually bleeding out through ever deeper wounds...

Illinois Tax Revenue Declining Like We’re in a Recession, Slipped Again in December – WP Original

By: Mark Glennon*   The monthly report on state revenue was published today for December by COGFA (Illinois' Commission on Government Forecasting and Accountability). It's dismal again.   Overall base revenue slipped compared to last December by $257 million, continuing a trend. For this fiscal-year-to-date (which started 7/1/16) compared to last year, state revenue is off by about $1 billion.   "Perhaps most unsettling, says COGFA,  "is that the last time the Big Three experienced a combined decline during the first half of a...

Freeze Property Taxes NOW or Illinois Homes Will Become Roach Motels – WP Original

  By: Mark Glennon*   A tipping point is at hand in Illinois. It’s the point when potential homebuyers conclude they’ll never cash out whole because of increasing taxes and declining values:  Buyers can get in but can’t get out -- a Roach Motel. A buyers' strike can follow, speeding the spiral downward.   Excessive property taxes are driving the potential disaster. A property tax freeze is essential, immediately, to head it off.   The evidence starts with effective property tax rates for towns and cities...

Four Ways Illinois Failed to Confront Reality in 2016 – WP Guest

By: Dalton*   Political dysfunction in Illinois runs deep. Chicago is the epicenter of the state’s political dysfunction and from Chicago emanates a broken politics that has polluted the state. Yet it’s not just a Chicago problem. Few if any political actors are rising to the occasion to present an honest assessment of the state’s crippled fiscal, political and economic reality, along with a message about an alternative vision for the future.   Even with divided government, Illinois’ head-in-the-sand approach to impending catastrophe...

Clueless: Illinois Dems Proudly Celebrate Year’s Legislative Accomplishments – WP Original

  By: Mark Glennon*   Illinois Senate Democrats posted their "Top 10 New Illinois Laws for 2017." If it weren't labeled as being for Illinois, you'd seriously have to wonder if it was from some thriving, growing state. Where is there anything significant to help beaten-down employers, grow the tax base, end the state and local fiscal crises, stem the flight of people and companies or address the 800-pound gorilla -- pensions? Zip. Nothing.   It's not that these things are bad. Most...

Another Banner Year for Boneheaded Chicago Leadership: Six Examples – WP Guest

By: Dalton*   The Seinfeld-inspired Festivus holiday has launched a bold new tradition of airing one’s grievances at the end of the year. And a Festivus-style airing of grievances is a tailor-made tool to take on the state of Chicago policies and politics.   In the immortal words of Frank Costanza:   “The tradition of Festivus begins with the airing of grievances! I gotta lot of problems with you people. Now, you’re going to hear about it!”   The list below captures certain issues that get to...

Rahm’s Reaction to a Wirepoints Article in Those Personal Emails Tell Us How He Thinks – WP Original

By: Mark Glennon*   On October 16, 2015 I wrote an article here, The Shock and Awe Budget Address Rahm Should Have Given. It outlined the drastic steps Chicago should have taken to avoid doom.   In the batch of personal emails of Mayor Emanuel recently released is an exchange between Rahm and Henry J. Feinberg in which Feinberg included a copy of my article to urge him to consider serious reform. I don't know Feinberg but know of him: He's a very...

Who is AFSCME at Impasse With? Illinois Taxpayers, That’s Who. – WP Guest

By: Dalton*   All the resources at stake in the AFSCME state union negotiations are extracted from private-sector taxpayers. AFSCME’s high pay, 37.5 hour work-week, platinum level healthcare, generous pensions and lifetime health insurance benefits are billable to Illinois taxpayers. And because the union wants even more, there is an impasse in negotiations. In reality, AFSCME is at impasse with taxpayers, not Rauner.   The entire transfer of resources being negotiated at the bargaining table is from taxpayers to the union. Rauner is...

Manufacturing Job Creation Not Everything: Motivation Also Needed – WP Original

  By: Mark Glennon*   "About a third of our applicants fail the drug test. Another third lack basic life skills -- like showing up for work on time. We're left with the remaining third to find the particular skills we need, and that's hard."   That was told to me earlier this year by a veteran at a major Illinois manufacturer who is is also working hard developing one of the state's manufacturing corridors. I'm leaving that corridor's name out because I don't...

Most outrageous opinion piece of the year on pensions is from pension executive director today – WP Original

By: Mark Glennon* I must have fallen asleep outside last night in the -12°. I can't be reading correctly the guest opinion piece in this morning's Crain's, "Beware the Siren Call of 'Pension Reform.'"  Only cessation of my neurological activity can explain my understanding of it. First, just a little background on the author, which I do think I remember correctly: Louis Kosiba is Exectutive Director of IMRF (the Illinois Municipal Retirement Fund). That's the pension that is unique in Illinois...

Expansion Coming to Wirepoints — a Note to Readers

  By: Mark Glennon*   Our readership numbers continue to set new records and we're sure grateful for your support. It's especially nice to see the appetite for what we think are the stories truly important to Illinois' economy and government. Special thanks to other publications that have quoted or reprinted us, including the Wall Street Journal, New York Times, Zerohedge and others.   I'll be making Wirepoints a full time career now instead of just the hobby it has been over the last...

The Joke is on Illinois Taxpayers: Dallas and IMRF Pensioner Savings Accounts Compared – WP Original

  By: Mark Glennon*   A crisis in the Dallas police and firefighter pension has captured national and international headlines thanks largely to a particular form of savings account offered to its members. Illinois’ second largest public pension, IMRF, also offers a particular form of savings account to its members. IMRF is not in crisis and its savings account is different, but the way it’s most different isn’t good for Illinois taxpayers.   The Dallas pension has experienced what you can think of as...

‘Sanctuary’ Efforts Poisoning Efforts for Real Immigration Reform – WP Original

  By: Mark Glennon*   If there's any major officeholder in Illinois in either party who opposes comprehensive immigration reform, including a path to normalization for illegals already here, I don't know who it is. That includes the Republican Congressional delegation and Governor Rauner. I support it, too, in case that matters.   "But," as GOP USA wrote yesterday, "cities that adopt 'sanctuary' policies make it much it more difficult to enact sensible immigration reform because they don’t discriminate between a non-dangerous undocumented immigrant...

Ominous Decline in State of Illinois Revenue Continued in November – WP Original

  By: Mark Glennon*   Total revenue for Illinois continued to decline in November. That's based on comparison of both this November to last November and this fiscal year through November to last year.   That bad news is in the monthly briefing from COGFA, Illinois' Commission on Governmental Forecasting and Accountability. "Last month’s briefing mentioned concern with FY 2017 revenue performance—that concern continues to grow," says COGFA.   For this November, the bright spot was an increase in personal income tax revenue, which exceeded last...

NBC5 Chicago Spins Saturday Night Live as Real News – WP Original

  By: Mark Glennon*   The top listed story on the "News" section at NBC5 Chicago's site right now is headlined, Even During a Security Briefing, SNL's Trump Would Rather Be Tweeting. The same story is in their "Entertainment" section. What's the difference if you want to conflate the two?   According to the story (not the sketch but the story), "a theory that has taken hold" that the sketch is accurate -- that Trump tweets to "distract the media from his business conflicts...

Thanksgiving in Illinois: Be Thankful Today is Not Tomorrow Because Tomorrow Will be Worse – WP Original

By: Mark Glennon*   Illinois and many of its municipalities, including Chicago, are bleeding red with no end in sight. It doesn't matter whether one side or the other capitulates or compromises in the state's budget negotiations because nothing approaching a truly balanced budget is being considered. There is no such budget solution to be had.   We began writing here four years ago by warning that a humanitarian crisis will come, the cost of which would exceed the combined damages of Hurricanes...

Universities Demanding Place in Election’s ‘Biggest Loser’ Contest – WP Original

  By: Mark Glennon*   Nobody should have been surprised. You'd think they'd realize they're admitting their own incompetence. But the supposed scholars in all things pertinent to society, democracy and social justice are falling over themselves to signal their shock at the election results. Petitions and statements from faculty and administrators are flying on pretty much every campus in America. The common denominators in their messages jump out: surprise at the election results and, of course, assurance to their students that...

Big Implications for Illinois: U.S. Appellate Court Upholds Local Right-to-Work – WP Original

  By: Mark Glennon*   The 6th U.S. Circuit Court of Appeals today upheld a Kentucky county’s right-to-work ordinance, validating enactment of right-to-work at the local level. (The case is UAW v. Hardin County, 6th U.S. Circuit Court of Appeals, No. 16-5246.)   Lincolnshire, Illinois passed a right-to-work ordinance last December. If upheld by the courts, it would bar private employers from requiring workers to join unions and set the precedent for other Illinois towns, cities and counties to do the same. That ordinance...

Illinois’ True Budget Hole is About 2X What’s Being Negotiated. It Won’t be Plugged. – WP Original

By: Mark Glennon*   Governor Rauner and legislative leaders were widely reported today to be discussing how to fill a budget hole of about $7 billion. The real number is closer to twice that, and probably much higher. They won't come close to eliminating the true deficit. Here's why:   That $7 billion is the difference between total income and total expenses projected for the 2018 fiscal year, which will start July 1 of next year. (The budget projected for the remainder of...

Best of the Web: Trump vs. Political Correctness – Wall Street Journal

Our article on the GrubHub affair is cited in this WSJ article. Our shameless self-promotion here.

Trump’s Likely Impact on Illinois’ Economy, Part 2 – WP Original

  By: Mark Glennon*   Yesterday we covered the likely effects on Illinois from Trump's appointment of a ninth justice to the Supreme Court, which are alone are huge. Below is the rest. What Trump actually will do is uncertain and credibility isn't exactly his hallmark, but he has made a firm pledge on a specific 100-day action list and other priorities are starting to emerge from public statements by him and his transition team. For better or worse, here's what we...

Yuge: Trump’s Likely Impact on Illinois Economy, Part 1 – the Supreme Court – WP Original

  By: Mark Glennon*   Straight to the point, we'll focus in this first part just on the impact of Donald Trump's appointment of a ninth justice to the United States Supreme Court. That appointment almost surely will be a hard core conservative, as Trump has promised, tipping the balance back towards a reliably conservative majority from the current 4 - 4 ideological deadlock. Many national issues will be determined by the new court that affect all states, but we'll focus here...

Maybe the Smarmiest and Most Hypocritical Election Reaction Yet is from Evanston/North Shore YWCA – WP Original

By: Mark Glennon* "We need to build bridges.... The more we talk about the divisions, without finding common ground, the more polarized we become as a nation." With whom do we we need to do that? With those who we say gave a "national affirmation of everything that is antithetical to what we aspire to and hold as our most cherished values." "We need to reach out, build connections and coalitions, build a more inclusive and united voice." Inclusive and united...

Cook County, Your New Soft Drink Tax Will Go Towards Pensions, and Appears to be Illegal – WP Original

  By: Mark Glennon*   Cook County on Thursday slapped another $224 million tax on its residents, this time in the form of a "sugary drinks" tax.  According to the Chicago Tribune, the tax will add 72 cents to the cost of a six-pack of soda or 68 cents for a 2-liter bottle. The tax also will be imposed on fountain drinks at a penny an ounce, bringing the tax on a 7-Eleven Gulp to 32 cents and on a Double Gulp...

Election Made You Suicidal? Better to Jump Than Take This Sun-Times Columnist’s Advice – WP Original

  By: Mark Glennon*   Neil Steinberg of the Sun-Times yesterday gave his suggestions for folks contemplating suicide over Trump's election. Yes, it was a serious article, because calls to suicide prevention lines indeed jumped Wednesday. (Anybody truly feeling suicidal over the election or anything else should stop here and call the prevention hotline at 1-800-273-8255.)   Never mind some of the others on his list of life-savers, which include flying a flag, learning Spanish and going to Margie's Candies. It's this gem I'd...

The Real Lesson in Grubhub CEO Telling Trump Supporters to Resign (Plus an Earlier, Personal One) – Updated – WP Original

  By: Mark Glennon*   A firestorm broke out today in the national media over an email by the Founder/CEO of Chicago-based GrubHub, Matt Maloney, to all employees, essentially telling Donald Trump supporters to resign. There's a major learning experience to be had in this affair. It's not just the usual story about intolerance on the left. It's about how an exceptionally bright person can be exceptionally blind to the certainty of self-inflicted harm. It's about why the phrase "just don't get...

Why This Election Wasted Illinois’ Time – WP Original

  By: Mark Glennon*   Regulars here may have noticed there hasn't been much to read in the last couple weeks. The reason should tell you something -- something discouraging, which I'm sure is just what you want to hear.   We aggregate the best stories we can find about the role of governance in Illinois' economy, with a particular focus on our state and local fiscal crises. But we try to avoid politics, which is usually rather different. We haven't found much lately.   Attention...

The Last Straw: President of the United States Encourages Illegals to Vote – WP Original

  By: Mark Glennon*   There is no room for any different interpretation of Obama's words. In an interview Friday and now made public, President Obama encouraged illegal immigrants to vote and assured them that no repercussions would follow. The complete interview with actress Gina Rodriguez is linked here. The relevant portion starts at the 3:20 mark. I've tried to avoid writing about the presidential election, but this is far too much to ignore.   I never thought I would see the day when...

Not Good: Illinois Tax Revenue Declining – WP Original

  By: Mark Glennon*   This is very bad news indeed. COGFA, the Commission on Government Forecasting and Illinois, just released its Illinois state revenue report for October and the fiscal year to date (which began July 1). Tax revenue continues to drop, despite the supposed economic recovery.   Comparing this October to last October, overall base revenues fell $304 million. Receipts from the individual income tax, corporate income tax and sales tax all declined, although transfers the state gets from the Federal government...

My, What an Exceptionally Stupid and Irresponsible Headline Rewrite by Crain’s – WP Original

  By: Mark Glennon*   Yesterday, Bloomberg ran a syndicated story under its headline, "New Jersey Tops Illinois as State With Worst-Off Pension System." The story covers what you would expect -- how horrible the problem is for both states, how it's crowding out other spending, causing credit downgrades and so on.   But Crain's published that Bloomberg story under this headline: "Illinois' pension woes are not so bad after all." No, the story said no such thing!   As we've said from the start on...

A Protest I’ll Be Marching In – WP Original

  By: Mark Glennon*   I've never marched in a protest before, but this one's important -- and personal.   A woman in my area has organized a demonstration for Tuesday calling for criminal prosecutions over the program to incite violence to stifle political activity, which was recently exposed in the Project Veritas videos. Lives were put at risk. Homeless and mentally ill people were among those paid to start fights. The primary video is linked here. The video is “absolutely prima facie evidence...

The Usual Suspects Helped Kill the Fair Map Amendment – WP Original

By: Mark Glennon*   Who helped kill the widely popular constitutional amendment to take politics out of how legislative maps are drawn? The assumption all along seems to have been that House Speaker Michael Madigan had just picked up the phone to one of his lawyers to make it happen. The Illinois Supreme Court killed it in August, though supporters had collected over 500,000 signatures to put it on the ballot next month.   Turns out Madigan got some help. Tom Kacich at...

Provoking Violence to Disrupt Political Activity Must be Stopped Cold – WP Original

  What we obtain too cheap, we esteem too lightly. -Thomas Paine   By: Mark Glennon*   It's the ugliest and most frightening scandal at least since Watergate, and it's centered in Chicago. Clear video evidence shows a concerted effort by the Democratic party to incite violence to disrupt political activity of Donald Trump and others. If you haven't seen the must-see video, it's linked here. The central figure is Chicagoan Robert Creamer, husband of Rep. Jan Schakowsky, who is properly implicated, too. Creamer is...

Illinois Treasurer Churns $12.5 Billion Portfolio Every 3 – 4 days — $1 Trillion Per Year – WP Original

  By: Mark Glennon*   Illinois Treasurer Michael Frerichs said last week on CNBC that his office does a staggering $1 trillion per year of investment activity. Why? That's an astonishing amount of churn for a portfolio with a consistent balance of $11.5 to $14 billion.   To illustrate, let's take five zeros off everything.   Suppose you have an investment account, the balance of which is always $115,000 to $140,000. It fluctuates between those numbers as you deposit new money and pay bills, but always...

Either Leslie Munger Stays as Comptroller or a Darwin Award Goes to Illinois – WP Original

  By: Mark Glennon*   There's a referendum of sorts on the ballot next month and it's huge. It will capture the fundamental direction in which Illinoisans want to take the state. It's simple and direct, and presents a choice that couldn't be more stark.   It's the election for Comptroller: Leslie Munger versus Susana Mendoza.   Before we get the the bigger implications of the race, the office itself is important. It's not just that the Comptroller has the job of picking, to some extent,...

Time for Illinois to Learn Another Dirty Word: ‘OPEB’ – WP Original

By: Mark Glennon*   It's an overlooked add-on to our pension crisis, and it's huge. Like pensions themselves, the problem won't be solved until we size it correctly and understand it fully. But with OPEBs, that's more easily said than done.   OPEBs -- Other post-retirement employee benefits -- are primarily healthcare benefits granted to pension system members. Once promised to state and local workers in Illinois, they are constitutionally guaranteed along with pension benefits themselves, thanks to the 2014 Kanerva decision by...

Clinton vs. Trump: Polls, Focus Groups or Cookie Index? – WP Original

  By: Mark Glennon*   In our endless quest for objective data, I stopped in at Bennison's Bakery in Evanston, IL to get the latest on their Trump v. Clinton index. With this reading, people have to put their money where their mouths are. Or maybe vice versa. Whatever.   They've been selling Clinton and Trump cookies and closely watching the numbers and trends, posting up to the minute totals behind the counter.   Hillary is clearly running away with it, with 1346 Clinton cookies sold...

Junior High Kids Put National Debates to Shame – WP Original

  By: Mark Glennon*   Seventh and eighth graders chose the questions for their two candidates for the U.S. Congress in a forum Tuesday evening. Check out how issue-focused, straightforward and productive their questions were, as well as the coverage of it, in the Chicago Tribune article linked here. "Policies, not personalities, mark WJHS students' questions to Schakowsky, Lasonde" -- that was the Tribune's appropriate headline.     What a contrast to the national debates and so much of the media's coverage. Nothing about Miss...

Illinois Revenue Decline Continues – WP Original

  By: Mark Glennon*   The monthly report is now out for September from Illinois' Commission on Government Forecasting and Accountability. It shows monthly and year to date revenue collection by the state compared to last year.   Not good. Revenues continue to decline.   For the fiscal year to date (which started July 1), total base revenue is down $145 million. That's a 2.1% decline from the same period last year. According to the report, "both personal and corporate income taxes have disappointed. At least...

Illinois Treasurer Will Punish Taxpayers, Blameless Shareholders and Employees for Wells Fargo Scandal – WP Original

  By: Mark Glennon*   Illinois Treasurer Michael Frerichs today announced suspension of all State of Illinois business with Wells Fargo.   A number of Wells Fargo employees -- a huge number even by Wall Street scandal standards -- recently were found to have fraudulently opened millions of phony bank and credit card accounts and charged fees on those accounts.   Is Frerichs punishing the guilty? No, he is punishing Illinois taxpayers, blameless shareholders and employees who've done nothing wrong.   The Illinois Treasurer is an administrative office....

Catalog of Failure: 21 Ways Illinois Progressives Betray the Poor and Middle Class – WP Original

  "The chief cause of problems is solutions." - Eric Sevareid   By: Mark Glennon*   If Illinois Progressives were true to what they're supposed be about -- helping the little guy --  we should all be one. But they're not. Policies they've enacted and now propose are a catalog of unintended consequences, naivete, virtue signaling, willful ignorance and stuff that just doesn't work.   Before the list, one note: Progressives will react to some of this by saying, "That's why we want a progressive income tax."...

You’re an Idiot and a Lunatic for Questioning ‘Safe Spaces,’ ‘Microagression,’ Says President of Northwestern – WP Original

  By: Mark Glennon* Never mind that he's talking about many who his university educated, including me. Any of you who question campus preoccupation with safe spaces, trigger warnings and microagressions are idiots and lunatics. That's what Northwestern University President Morton Schapiro told new students this past week in his welcoming address. Articles about his comments include those in CampusReform and The Daily Northwestern. “Look for safe spaces,” Schapiro told the freshman, and he pledged that “if you can’t find them, we...

Oregon Pension Official Reduced to Tears. Illinois Should be So Lucky – WP Original

  By: Mark Glennon*   "Rukaiyah Adams, the normally polished investment professional who is vice chair of the Oregon Investment Council, broke down in tears last week as she spoke of passing a record $22 billion in unfunded promises to future taxpayers."   The full story on that is linked here.  Notice the candor of the discussion: "Experts openly acknowledged they're understating the magnitude of Oregon's problem. They're relying on optimistic assumptions about investment returns. And they're holding down required pension payments below what's...

Chicago Municipal Pension Proposal Would Worsen Unfairness for New Hires – WP Original

  By: Mark Glennon*   Pension excess in Illinois is widely reported -- and accurate. Less known is that, for many at the bottom, the story is quite opposite. Many new workers won't get an adequate retirement benefit unless they work a full career in the system, or at least until vesting in ten years. The new proposal for MEABF, Chicago's municipal pension, would make those workers still worse off, robbing them of meaningful retirement benefits for what may be a large...

Should a Trustee of an Underwater Pension Cut Payouts Now to Save for Future Claims? – WP Original

By: Mark Glennon*   It's a question several readers have asked in various ways, so let me take a crack at it. To illustrate the issue most clearly, think of a worker or new retiree in one of the worst funded of the hundreds of police and firefighter pensions in Illinois, in a muncipality that's also sinking fast:   I'm retiring soon and my pension is bleeding down to zero. The pension continues to pay out full amounts due to those already retired....

A Watershed Recommendation of Bankruptcy for Illinois and Chicago Goes Unnoticed – WP Original

  By: Mark Glennon* William Isaac knows insolvency when he sees it, and how to deal with it. As Chairman of the Federal Deposit Insurance Corporation from 1981 to 1985, he was on the forefront of the banking crisis at the time. He founded The Secura Group, a leading consulting firm in financial regulation, and is a respected voice in the world of finance. Bankruptcy, not just for Chicago, but for Illinois as well, he says. "The city and the state should act...

Chicago’s Municipal Pension Proposal Makes the ‘Edgar Ramp’ Look Like Kansas – WP Original

By: Mark Glennon*   Here's what Chicago taxpayers face under the proposal passed today by the Chicago City Council's Finance Committee, supposedly to stabilize one of the city's four pensions, MEABF:   This year and next, taxpayers will contribute $163 million to the fund. The ramp up thereafter is $267 million in 2018, $344 million in 2019, $422 million in 2020, $499 million in 2021 and $577 million in 2022.   Then, the real shocks start. Beginning in 2023, the taxpayer contribution will be based...

Shifting Grounds in the Battle Over Illinois Public Pension Assumptions – WP Original

  By: Mark Glennon*   It's truly absurd that actuarial assumptions have become a mortal issue for Illinois state and local government, but that's where our defined benefit pension system has left us.   The most impactful assumption is the rate of return pensions will earn on assets they have. The typical assumption of about 7.5% is universally ridiculed by financial economists. Why have overly optimistic assumptions persisted? In Illinois in recent years, that answer has been pretty clear: Pension trustees -- both those...

Past the Breaking Point: Tax Revolts Brewing in Illinois – WP Original

  “What we need is to work in moderation, not in the extreme." -Illinois House Speaker Michael Madigan   "Yeah my blood's so mad feels like coagulating." -Barry McGuire, Eve of Destruction   By: Mark Glennon*   They're sprouting. Tax protest and revolt groups, long predictable in Illinois, are popping up. Articles today in the Northwest Herald and Illinois News Network describe some of them, perhaps the most notable being Illinois Tax Revolution. Others are under discussion or in formation. I've heard from them here.   Most are focused on...

Why You Should Love the New Name for Chicago White Sox Home: ‘Guaranteed Rate Field’ – WP Original

By: Mark Glennon*   Don't ridicule the new name for the home field of the Chicago White Sox, formerly, U.S. Cellular Field. It's now Guaranteed Rate Field.   This could be a great opportunity to educate the general public about the primary thing bankrupting Illinois, Chicago and many other towns and cities.    Defined benefit public pensions, most of you probably know, account the lion's share of our state and local fiscal crises. And what's the main thing wrong with them? It's that they take...

Illinois Is ‘Draining its Savings Account’? Better Check the Numbers. – WP Original

  "Financial watchdogs" fretting over a "rainy day fund" that's almost meaningless, in more ways than one.   By: Mark Glennon*   "Illinois drains state's savings account due to budget crisis" was the headline on an Associated Press article yesterday. It was widely republished across Illinois today.   Somebody needs to wake up and take a broader look at the money on hand in the Illinois Treasurer's office. The most recent balance posted by that office (as of the end of July) is $14 billion, up...

Failure of New Pension Accounting Standards Shows in Chicago Police, Fire Pension Reports – WP Original

  Even under the new accounting standards, Chicago's police and fire pensions are using a single discount rate of about 7.1%, though both are under 25% funded. By: Mark Glennon* The public pension world mostly cheered the arrival of new pension reporting standards from GASB -- the Governmental Accounting Standards Board. A meaningful step towards more realistic reporting on pension deficits seemed here. In particular, a central problem has been that pensions typically assume very high rates of return on investments they hold,...

Emanuel Administration Using Repealed Contribution Schedules for Police and Firefighter Pension Numbers – WP Original

  By: Mark Glennon*   In picking which decepton to write about in the City of Chicago's PR offensive last week about the its finances, I'm suffering from  the "paradox of choice." That's what occurs when you're overloaded with too many choices, making it difficult to decide.   I'll go with this one for now -- the numbers for Chicago's police and firefighter pensions. Had it been honest, the city would have prefaced its pension numbers by saying, "Let's assume we didn't kick the...

Illinois Congresswoman’s Hypocrisy on $15 Minimum Wage Shows Its Flaw – WP Original

  By: Mark Glennon   Hiring a Field Organizer, says a posting by Illinois Congresswoman Jan Schakowsky: "Hours are very long and irregular." Responsibilities include maintaining "7 day per week presence in office."   Pay: $2,000 per month.   The problem is that Rep. Schakowsky is an outspoken supporter of a $15 per hour minimum wage -- the "Fight for 15" movement, it's called. That would be $2,400 per month even if the job took only 40 hours per week, which it apparently doesn't. In fact,...

Chicago’s Friday Bunk Dump – WP Original

  By: Mark Glennon* Fridays in the summer are a great day to dump news you don't want scrutinized, as reporters will tell you. Today, we got a new financial report from the city, the actuarial reports for its police and firefighter pensions and news of a private offering by Chicago's school district. The Report First, the city released a carefully written, glitzy, Annual Financial Analysis, linked here. At least they put it online this year, a departure from the past, but that's...

Pensions, Politicians: Just Publish the Damn Actuary Reports – WP Original

  By: Mark Glennon*   Among the most inexcusable and infuriating parts of our pension scandal is the difficulty of getting actuarial reports, which all pensions get annually. Some Illinois municipalities publish theirs promptly. Most do not. Try to get them and you'll often get jacked around.   Here are three recent experiences:   Cook County On July 8, 2016 I FOIAd Cook County's office of the President, thinking they should have the actuarial report for 2015, though it was not yet on their website. On July...

Cook County Pension Liability Leaps by 130% in 2015 by Switching to New Accounting Standards – WP Original

  By: Mark Glennon*   If you follow our pension problems closely, you probably think Cook County faces an unfunded pension liability of about $6 billion, which makes it about 60% funded. That's how it has been very commonly reported over the last year.   Under the new accounting standards of the Governmental Accounting Standards Board, which are now gaining wide acceptance, the unfunded liability in fact was $15.3 billion and was 36% funded as of 12/31/15. Details are contained in an actuarial report...

Eternal Doom: The Implication of Democrats’ Legal Positions for Illinois Pensions – WP Original

  By: Mark Glennon*   If a leading voice for Illinois Democrats and public unions on the legality of pension reform is correct, this is the consequence: No Illinois constitutional amendment, act of the United States Congress or Federal bankruptcy can ever, for eternity, reduce unfunded liabilities in our municipal and state pensions. Only voluntary trades made at the discretion of  pensioners, which obviously can't accomplish much, are permissible, he says. Statewide, those unfunded liabilities total $371 billion, according to recent data...

Could a Bankruptcy Court Cancel Chicago’s Hated Parking Meter Deal? – WP Original

  By: Mark Glennon*   A bankruptcy filing is the ugly inevitability for Chicago, we’ve said, but here’s one interesting, potential sweetener: Bankrupt municipalities have the option of cancelling most contracts and leases they don’t like, and that might include Chicago’s despised deal that privatized parking meters.   Regardless, think of this as a lesson in one part of bankruptcy. Arcane bankruptcy topics like this, unfortunately, will be critical to the recovery of dozens of insolvent municipalities across Illinois that face bankruptcy.   First, a little...

As City, CPS Face Budget Gaps, Bankruptcy Option Looms: WirePoints’ Mark Glennon on Chicago Tonight, WTTW – Video

Not an option, but a sad necessity. I repeat my challenge that I've made repeatedly here: Show us the alternative.

Rahm’s Excellent Perpetual Money Machine – WP Original

  By: Mark Glennon*   Why didn't somebody think of this sooner? Mayor Emanuel has proposed authorizing the City of Chicago to buy bonds issued by Chicago Public Schools. (The full, proposed ordinance is linked here.) The same taxpayers can be both lender and borrower! No need for the muni market and their blather about junk bonds. And no need for those boring, pesky offering statements and disclosures -- CPS and the city can just use mirrors. Heck, why not take the...

For Illinois’ and Everybody’s Sake, Put the UK at ‘Top of the Queue.’ Now. – Updated – WP Original

By: Mark Glennon*   Think what you want about whether Britain was wise to exit the European Union, but, now that it's coming, Illinois should be demanding, as should everybody, that the administration reverse its stated position that the United Kingdom go to "the back of the queue." The administration is aggravating a manageable, near term disruption and may help blow it into a major crisis.   It matters immensely. Illinois companies export almost $2 billion annually to the UK. Tens of thousands...

Orlando as a Fundraising Opp: Blatant Ethics Violation by Illinois Congresswoman – WP Original

  By: Mark Glennon*   The righteous needn't concern themselves with rules, laws or standards of fundamental decency, evidently.   I received this blast email this morning from my representative in Congress, Jan Schakowsky, who has been leading the sit-in on the House floor: I just wanted to update you on what’s going on in the House. It’s been 24 hours and despite House Republicans' best efforts we’re still here, standing together and demanding that Speaker Ryan allow a vote on commonsense gun-safety legislation. The bottom line...

Bankruptcy Code Amendments Should Now Be Illinois’ Imperative – WP Original

  Illinois is falling further behind the curve by ignoring the inevitable. It's priority should be influencing Congress to amend the Bankruptcy Code to make it a fast, efficient, predictable means to a fresh start, with the general public's interest made paramount. By: Mark Glennon* In the dozens of articles you probably read in the last few months about our fiscal crisis, what's the universal omission? A solution. No analyst, officeholder or commentator has offered one. No combination of survivable tax increases and...

Why Unions Cheered Can-Kick on Chicago Pensions: Automatic Tax Levy, Casino! – WP Original

  By: Mark Glennon*   If you're scratching your head about why public unions are thrilled with the override of Governor Rauner's veto of SB777, which reduces taxpayer contributions in the near term for Chicago's police and fire pensions, here's why:   Overlooked by our ace press corps is the funding guaranty in the bill. Starting in 2020, taxpayer contributions increase to whatever-it-takes, sky's-the-limit, annual contributions sufficient to fund the pensions, and property taxes automatically increase to cover those amounts. The bill also mandates...

Chicago Laborers’ Pension ‘Rescue’ is Just Another Can-Kick – WP Original

  By: Mark Glennon*   "We'll worry about fixing the pension in five years and hammer new workers for now." That's a pretty fair summary of the plan for LABF (Chicago's Laborers' pension) released by Mayor Emanuel's office yesterday -- as far as we can tell from the horribly inadequate information it provided.   Here's what we know, from piecing together a number of news stories on the plan:   Taxpayer contributions into the fund will increase over five years to a point where they...

Lessons for Chicago from Detroit’s Bankruptcy: By the Book – WP Guest

  By: Joe Mathewson*   As the City of Chicago prepares to borrow still more to pay current bills, we taxpayers are constrained to wonder: where’s the plan to reduce the billions of debt for which we’re ultimately responsible? The total is already soaring beyond an impossible, unimaginable $30 billion!   We can learn from a new book, Detroit Resurrected: To Bankruptcy and Back, by Nathan Bomey, who covered the complex 2013-2014 court process for the Detroit Free Press.  Four lessons stand out:   1. Most...

What? Chicago Pension Liability Jumped $11.5 Billion in an Instant? – UPDATED – WP Original

By: Mark Glennon*   Bloomberg today reported that Chicago's unfunded pension liability jumped by a staggering $11.5 billion. For a little perspective, keep in mind that the total unfunded liability for Chicago's four pensions as commonly reported has been only about $20 billion.   Shocked? You shouldn't be. We wrote two years ago that this is one of the "insane implications of keeping two sets of books." Get used to it. That $11.5 billion increase was for just one of Chicago's four pensions....

New ‘Market Based’ Data Show Mind-Blowing Reality of Illinois Pension Debt – WP Original

  By: Mark Glennon*   The Stanford Institute for Economic Policy Research recently published a splendid new database, Pension Tracker, that includes "market based" numbers on state and local pension debt. For Illinois, the numbers (linked here) are simply astounding.   Pensions, governments and reporters use "actuarial based" numbers, which are built on assumptions typically set by politically appointed pension trustees. Those assumptions include, most importantly, high earnings expectations for pension investments -- the "discount rate" -- typically, about 7.5% --  which no reputable...

Just What’s in that $700 Million Social Services Bill, Crammed Through in an Hour? – WP Original

  By: Mark Glennon*   High fives abounded Thursday in Springfield after both houses of the General Assembly approved spending $700 million on social services. But has anybody really taken a good look at all that's in it? Not many in Springfield, evidently: It went through House committee in the morning and was called for vote that afternoon, only about an hour after members received a staff analysis.   How many times have we seen this before, both in Springfield and Washington? Cram bill...

The Illinois Municipal Retirement Fund’s Shameful Bragging Tour – WP Original

  "Gall: Brazen boldness coupled with impudent assurance and insolence." -  Merriam-Webster Dictionary By: Mark Glennon* IMRF, the Illinois Municipal Retirement Fund, went on a "statewide informational tour" last week. It was basically a brag fest. Illinois taxpayers should be appalled. IMRF is the second largest pension fund in the state. It covers 100,000 employees and retirees of 3,000 Illinois municipalities who are not policemen, firefighters and those covered by state pensions. Among its boasts is that it will be reducing contributions made by...

WirePoints’ Mark Glennon Interview on AM560 on that $12.2 Billion Sitting with Illinois Treasurer

Audio of the interview linked here. The article discussed in the interview is linked here.

Does the Illinois Constitution prohibit taxpayer relief from pension promises? – WP Guest

  By: Joe Mathewson*   As the need for taxpayer relief from the unconscionable debts our elected leaders have amassed becomes more and more acute, two questions arise:   1. When will the Illinois legislature, due to adjourn at the end of May, address (and pass!) the necessary permissive legislation to authorize municipalities, including school districts and other special districts, to file for bankruptcy protection under Chapter 9 of the U.S. Bankruptcy Code? The City of Chicago, the Chicago Public Schools and other debt-ridden...

CTU Has the Answer: New or Higher Taxes on Vehicles, SSA, Star Wars, Personal Property Rental, Rideshare, Millionaires, Financial Transactions, Progressive Income, TIFs, Hotels, Commercial Property and, Yes, a Head Tax – WP Original

By: Mark Glennon*   “We have a recovery plan that the school district and the city council should consider," says Chicago Teachers Union President Karen Lewis in release yesterday. “We look forward to working with you and members of the city council."   Read the whole list in their "revenue recovery plan" contained in the release, but here's the real gem: They'd like to reinstate arguably the most job-killing, despised, idiotic tax in history -- the head tax. That's a per-employee tax on...

$12 Billion Sits Unused With Illinois Treasurer. Why? – WP Original

  By: Mark Glennon*   What sense is there letting $11.5 to $14 billion of state money sit around indefinitely, unused, invested mostly short term and earning little? The Illinois Treasurer's holdings are an important part of the state's overall situation, so the question should have an obvious answer. It doesn't. In fact, digging into the question exposes a subject so nontransparent that the general public, and probably most legislators, can't be expected to assess it.   Here's what we know: As of the...

The Confiscation Continues: New Study Shows Illinois Property Tax Over 2X National Average, Highest in U.S. – WP Original

  By: Mark Glennon*   CoreLogic, a California-based financial data firm, today released its analysis showing average Illinois property taxes of 2.67%, over twice the national average of 1.31%. Illinois is the highest in the nation.   Even those averages disguise the personal tragedy inflicted on hundreds of thousands of families whose rates far exceed that, robbing those owners of their home equity. We looked in detail in November at those averages for Chicago's south suburbs, where average rates exceed a suicidal 5% per...

New Jersey’s Warning to Illinois on Flight and Inequality – WP Original

  By: Mark Glennon*   One person's move from New Jersey to Florida for tax reasons had New Jersey leader's "freaking out" this month, according to the Associated Press. It should have Illinois' leaders freaking out, too, along with anybody concerned about inequality, which should be all of us.   That individual was hedge fund manager David Tepper. Florida has no income tax and Tepper was paying 9% in New Jersey. He is estimated to be worth over $10 billion and his departure to...

‘Why Are Conservative Girls So Pretty?’ — The Great Debate Begins

  By: Mark Glennon*   Hey, that's not our our question or our headline, so chill.   It is, though, for a rather serious article yesterday in the right-leaning publication, The Federalist. The left's response came fast with two pieces in The New Republic, linked here and here, and they added pictures, like the one on the right.   I won't touch this with a pole, so you read the articles and decide for yourself. The fate of the nation may turn on this.   I have been...

Baffled by Conduct of Chicago Teachers? You Probably Haven’t Read ‘Rules for Radicals’ – WP Original

  By: Mark Glennon*   Why on earth, you might ask, would the Chicago Teachers' Union be so anxious to strike against a school district so clearly unable to meet their demands? And what sense is there in hurling extraordinary insults against the guy who would have to sign off on most of what they want  -- Governor Rauner? Today, CTU President Karen Lewis said Rauner is “a new ISIS recruit.” She asked, “Has Homeland Security checked this man out yet? Because...

Dems Have Answer for Illinois Fiscal Crisis: Tax Cut for 99%, Soak the 1%! – WP Original

  “When the people find that they can vote themselves money that will herald the end of the republic.” - Ben Franklin   By Mark Glennon*   Unbelieveable. State Rep. Lou Lang (D-Skokie), a major lietenant of House Speaker Michael Madigan, today proposed a graduated income tax under which 99% of Illinois taxpayers would get a cut. One-percenters would see rates increase gradually up to 9.75%. More specifically, according to the Chicago Tribune:   Under Lang's proposal, taxpayers who are married and filing a joint return...

Illinois’ Pension Quicksand: A Quick Way to Measure it – WP Original

  By: Mark Glennon*   For those of you frustrated by obscure pension reporting, here's a simple way to look just a few numbers and get a pretty good feel on one important measure: How much would it cost per year just to stay even? That is, what does it take from taxpayers to keep a pension from falling further into the abyss? Then, compare that to what taxpayers are actually putting in. I'll do that for Illinois pensions, which, as you...

Finally, A Serious, Productive National Debate About Trade? Don’t Count On It – WP Original

  By: Mark Glennon*   It's a lesson I first learned over thirty years ago as a law clerk one summer in the State Department's Office of Trade, and it's been reinforced ever since:  If you intend to get seriously educated on foreign trade agreements, beware, because you probably won't succeed on your own. Few topics are this complex and few are so endlessly subject to deceitful arguments -- straw man simplifications, ivory tower theory, cherry-picked numbers and self-interested distortions. All sides...

Report: Chicago Among Four Cities With Largest Exodus of Millionaires in the World Last Year – WP Original

  By: Mark Glennon*   A recent report by New World Wealth identifies which cities and countries had the largest net inflow and outflow of millionaires in 2015. Chicago had the third largest net outflow based on the raw numbers -- 3,000, and fourth by percentage -- 2%.  The full report is linked here.The other top cities for outflows, according to the report are in the chart below.     According to IBTimes, "the report was based on data collected from investor visa programme statistics...

Onward Towards the Abyss: Chicago’s Pension Decision – WP Original

  By: Mark Glennon*   It only gets worse. Last week's Illinois Supreme Court decision was no surprise, but the real news was about reaction to it, or, more specifically, non-reaction. Chicago remains cracked up on denial. The numbers are insurmountable without radical reforms, almost certainly including bankruptcy.   The decision itself: The primary holding was widely expected. The court had earlier made clear that cuts in pension benefits are unconstitutional. The invalidated reform law would have cut benefits paid by two of the city's...

Hate-Baiting and Race-Baiting Turned Surreal in Chicago on Friday Night – WP Original

  By: Mark Glennon*   I was at the Illinois GOP event at the Palmer House in Chicago Friday night, which was the other target of protesters along with Donald Trump's cancelled event at UIC. Before going, I read an email from my U.S. Congresswoman, Jan Schakowky, calling for protests at both events. It read:   Donald Trump, Bruce Rauner, and Ted Cruz are going to descend on Chicago to spread their message of intolerance, racism, and hate. We need to stand up to...

Huge, Blind Reliance on State Exposed by Illinois Fiscal Crisis – WP Original

  By: Mark Glennon*   Did you know Catholic Charities is Illinois' largest social service provider and gets 70% of its funding from the state? I didn't. Perhaps the most surprising aspect of Illinois' financial crisis is the depth of its impact on social services commonly thought to be privately funded or otherwise not heavily reliant on state money. Same, to some extent, for higher education.   Was the plight most of them face today foreseeable? Definitely. Avoidable? Not so clear.   Major cutbacks loom for...

My, What a Foolish Comment by the Chicago Tribune’s Chairman – WP Original

  By: Mark Glennon*   Michael Ferro is the Chairman and largest shareholder of Tribune Publishing, owner of the Chicago Tribune. This week, he said:   I now understand how important it is to have real journalism in the world and we're starting here with our properties around the country. Bloggers can't be the ones deciding public opinion, deciding presidential races.   As for the first part of his comment, let's just say it's good he "now" understands the importance, whatever that indicates.   But as for the...

Pension Lawsuits and the Blame Game: Detroit is Harbinger of the Inevitable – WP Original

  By: Mark Glennon*   Detroit last week gave us a glimpse of what to expect on a much larger scale in Chicago and across the country as the sheets are gradually pulled off on public pensions.   Reality ultimately invalidates wrong assumptions. In the public pension world, that means taxpayer liabilities eventually will spike. Scapegoats will be found, fairly or not. Lawsuits will come. Heads must roll as anger erupts -- all financial meltdowns are that way. Officeholders and voters bear primary responsibility,...

Municipal Bankruptcy Brings Joy to Taxpayers – WP Guest

  By: Joe Mathewson*   Chicago Public Schools’ desperate and very costly quest for buyers of its recent $725-million bond issue (cut from $875 million) is a harbinger of peril ahead, not only for CPS but for the City of Chicago and other Illinois local governments and special districts relying fatuously on borrowing to pay current expenses.   If the Illinois legislature finally passes a pending bill permitting municipalities and special districts to seek relief in U.S. Bankruptcy Court, there might be a parade...

The Civic Federation Has Lost Its Way – WP Original

  By: Mark Glennon*   The Civic Federation had a long, proud history providing an important check on state and local financial management. It sounded the alarm loudly long ago about Illinois' problems: "Doomsday is here," said its President, Laurence Msall, six years ago.   No more. A noticeable change occurred about three or four years ago. Since then, the alarms have softened. Critical issues are overlooked or given lip service. Limp pension reform proposals dominate. Dire implications of its own research pass without...

Kumbaya Won’t Fix Illinois – WP Original

  By: Mark Glennon*   "Politicians, do your jobs." "Compromise." "Can't we all get along?" In the endless repetition of calls like that, the underlying thought is that "passing a budget" means spending cuts now painfully felt will go away.   They won't. They can't. It doesn't matter whether one or the other side caves completely or they split the difference -- for a number of years, that is, until longer term solutions hopefully can pass and take hold.   As Comptroller Leslie Munger recently pointed...

New Study Details Illinois Pension Excess at the Top, Hardship Below – WP Original

  By: Mark Glennon*   Public union leaders forever pound their chests about wealth inequality and how our pension system protects the middle class. In fact, Illinois public pensions may be the worst tale of two cities. The gluttony bankrupting us is at the top, which includes union leadership, but it's very a very different story for the rest.   A great new research piece on Teacherspensions.org, a project of Bellweather Education Partners, looks at it for Illinois teachers. Remember from earlier stories that...

Illinois Fire and Police Pension Actuary Facing Actuarial Discipline – WP Exclusive

  By:  Mark Glennon*   WirePoints has learned that the Actuarial Board of Counseling and Discipline (the ABCD) recently recommended that Timothy Sharpe, actuary to dozens of troubled Illinois fire and police pension funds, be expelled from membership in the American Academy of Actuaries. If the Academy implements the recommendation, it will be very unusual since only 11 actuaries have been expelled from the Academy since 1975 and only 20 have been otherwise publicly disciplined (http://actuary.org/content/public-discipline).   The recommendation is the result of separate...

Fight or Flight? – WP Original

  By: Mark Glennon*   Boy, do I get emails here. A regular one in particular makes me squirm. It's not any of the insults like "vulture capitalist" or "pension thief."  Those are fine. Have at it.   It's when I'm asked by Illinoisans, usually young ones, whether they should leave. I'm uncomfortable playing career planner, especially when financial interests have to be balanced against personal issues like leaving one's home and family. Most importantly, there's no single answer. But I can't escape the...

Updated: What Are the CTU and CPS thinking? No, seriously. – WP Original

  By: Mark Glennon*   In its statement yesterday announcing rejection of the contract offer made by Chicago Public Schools, the Chicago Teachers Union included this:        CPS’ uses this math to plug its budget hole: $200 million from the state for pensions $150 million from the state in a school aid formula change $170 million from a new local property tax levy for pensions $150 to $175 million from eliminating the teacher’s pension pickup and from increased healthcare costs.   That's about $700 million. But the offering documents...

Municipal Bankruptcy Debate Begins in Illinois: Expect Mass Ignorance and Distortion – WP Original

  Behold the Chicago Cubs.   By: Mark Glennon*   The inevitable is here. The real importance of Governor Rauner's proposal to authorize optional bankruptcy for Chicago Public Schools and the city is putting bankruptcy into the mainstream narrative. That's good, and years overdue, but it also means we'll be doubling down on the confusion, ignorance and political distortion that has plagued the debate about our fiscal crisis.   On this site we will focus hard on ensuring that all good articles about municipal bankruptcy for...

More Pension Deceit and Hypocrisy from Union-Backed CTBA – WP Original

  By: Mark Glennon* The Center for Tax and Budget Accountability today released a report titled, Public Pensions: Frequently Asked Questions. The "average" annual pension benefit for Illinois statewide pensions is just $45,832, says the report. Sounds pretty reasonable, which is why "averages" like that have been central to public unions' messaging about pensions for years. It's bunk. While it might be true in a very literal sense, it's so misleading and incomplete that it can only be described as dishonest. Here's why: "Average"...

Who Is To Blame for the Status of the Chicago Teachers’ Pension Fund? – WP Guest

  Preface: The following was submitted by “A Recovering Pension Actuary” – somebody I believe to be knowledgeable and credible who asked to be kept anonymous. I certainly think it's true that actuaries shouldn’t bear too much blame for the problems with Chicago Teachers’ Pension Fund and our other unfunded pensions. Beyond that, I’ll let you judge for yourself. -Mark Glennon   No one blames the coroner for a homicide that he examines; people hold the killer accountable. Likewise, we shouldn’t castigate...

Schakowsky Draws a Determined Opponent for U.S. Congress: Joan McCarthy Lasonde – WP Original

  By: Mark Glennon*   Jan Schakowsky won't get another free pass this November when she seeks reelection for an eighth term in Congress.   She'll face a committed newcomer, Joan McCarthy Lasonde -- a fiscally sensible, socially moderate, pro-choice Republican.   After an initial career in marketing, Lasonde has been active in a range of community, political and advocacy groups. Most recently, she was a founding member of The Policy Circle, an intriguing and influential new women's organization we'll be writing more about shortly. She...

New Study: Chicago has worst unfunded pension liability as a percentage of revenue among major cities – WP Original

By: Mark Glennon*   A new study by the Center for State and Local Government Excellence looks at city unfunded pension liabilities under new governmental accounting standards. Some cities, unlike Chicago, participate in state-wide pension "cost-sharing" plans. The new standards require each city to include its shared liability in such plans, which increases their reported liability. This new study reflects those changes and measures unfunded liability as a percentage of each city's revenue.   Despite those negative adjustments for other cities, Chicago is...

To Judge Rauner’s First Year, Step Back, Think Broadly – WP Original

  "There is no history, only biography." -Ralph Waldo Emerson   Don't look just at the trees as you read the articles grading Bruce Rauner on this first inauguration anniversary -- whether his specific and tangible changes were enough given the legislature he had. That's important, but there's more.   See the forest. Consider the entirely of what changed since he arrived.   It's an entirely new paradigm in Springfield. Once forbidden topics are now debated. Major directional change finally is at least on the table. Most...

A Galling Boast in Chicago’s Bond Pitch: Haves Replacing Have Nots – WP Original

  By: Mark Glennon*   One particular piece of bragging in the offering materials** for Chicago's upcoming bond sale caught my attention. No, it wasn't any of the silly ones like "stable population and business base" or "proven record of implementing reforms." And, no, it wasn't any of the obvious ones like "commitment to raising revenues."   It was this one: "gaining high income households rapidly, rising median family income." That seems harmless on its face, but what's it really saying? Let's think about...

The Machine Must Be Destroyed – WP Original

  "Carthage must be destroyed." - Cato the Elder, Roman Senator   By: Mark Glennon*   The core identity of moral and fiscal bankruptcy in Illinois government cannot be denied. It controls the Illinois General Assembly, Chicago and Cook County.  "The machine" isn't often used to describe it any longer, but the "Chicago way" now universally communicates its infamy.   It has defied its end as persistently as did Carthage before Cato. Carthage was a mortal threat to the Roman Republic in the second century BC and...

Subaverage Appreciation is Costing Chicago Area Homeowners a Fortune – WP Original

  By: Mark Glennon*   Home appreciation around Chicago is lagging behind national averages. How much is that costing homeowners? Recently released data suggests roughly $12.3 billion per year is being forfeited by Cook County homeowners alone. Here are the numbers:   Start with the total market value of all homes in Cook County (excluding apartments). The most recently available estimate of that total is $348 billion as of 2013. That's according to a study recently released by the Civic Federation for Cook County...

Our Ten Most Popular Stories of 2015

  By: Mark Glennon*   These stories got the most page views on this site over the past year. This is perhaps a bit distorted towards more recent ones because our readership is increasing rapidly, but property taxes and pensions clearly are the biggest issues for readers here. Rightly so:   #1  Suicidal Property Tax Rates and the Collapse of Chicago’s South Suburbs   #2  Reality Shock: The Highest Property Tax Rates in Cook and Its Collar Counties   #3  New Workers Subsidizing Illinois' Surging $100,000/year Pension Club   #4 ...

Bankruptcy Offers No Easy Fix For Chicago Public School Finances – WP Original

  By: Mark Glennon*   Suppose bankruptcy for Chicago Public Schools could somehow entirely cancel all its unfunded pension liability, all its bonded debt, and let the school district switch over to a new retirement plan for future work funded at levels common in the private sector. Surely that would more than solve the district's budget problems and free up plenty of cash for education, right? After all, its commonly reported that the only hole to be plugged in CPS's new budget...

Ugly: Chicago Public School Teachers’ Pension Releases New Actuary Report – WP Original

  By: Mark Glennon*   Last week, the Chicago Public School Teachers' Pension Fund posted its actuarial report for the 2015 fiscal year that ended June 30. Like the four pensions for the city itself, that pension for the school district is a major item in Chicago's financial crisis.   First, a note about the report itself. It's the usual for public pension actuarial reports -- full of obfuscation, loose ends, hidden issues and terms used inconsistently. It presumably complies with accepted standards, but...

The Best, Worst, Wisest and Dumbest Quotes on Illinois’ Economy and Government of 2015 – WP Original

  By: Mark Glennon*   Steel yourself. Don't expect many laughs. This site is about economics, "the dismal science," and something more dismal, Illinois government. Here are the most notable quotes for 2015:   Truer words never spoken: “Nobody here really gives a fuck. Everybody here is sleeping. The engineers, everyone that’s here on midnights. They are all fucking sleeping somewhere.”  A security officer at a the water reclamation plant in southwest suburban Stickney.  He accidentally left the microphone open on his radio as...

Why Lincolnshire’s Right-To-Work Enactment Is So Important – WP Original

  By: Mark Glennon*   We told you early this year that right-to-work would likely come to Illinois but it would have nothing to do with what Governor Rauner or the General Assembly do in Springfield, and it would come locally. That's what happened last night in Lincolnshire, where the village board, by a five to one vote, made the town a right to work zone. This was not like other votes taken earlier this year by other towns, which were nonbinding...

Union Collective Bargaining Agreements Linked to Chicago Police Misconduct by Independent Study – WP Original

  "I could hire and fire at will." Adlai Stevenson III, calling for a return to how things worked when he was Illinois Treasurer from 1967 - 1970.   By: Mark Glennon*   Twelve months ago, the City of Chicago received a 70-page independent report on police misconduct with recommendations for changes. The lead authors were Ron Safer, Managing Partner at the Schiff Harden and formerly Chief of the Criminal Division at the U.S. Attorney's office in Chicago, and James O’Keefe, Ph.D., of A.T. Kearney....

It’s Just Math: Time for Illinois’ Pension and Fiscal Reform Opponents to Put Up or Go Away – WP Original

  By: Mark Glennon*   It comes down to a single question in Illinois. Everybody with an opinion about the financial mess should be forced to try to answer: What conceivable combination of tax increases and spending cuts would solve Illinois' state and local fiscal crises without drastic reforms including cuts in pension benefits and an agenda that grows the tax base?   There is none. For three years we've linked here to every significant article, report and analysis we can find, from all...

Reality Shock: The Highest Property Tax Rates in Cook and Its Collar Counties – WP Original

  By: Mark Glennon* Nobody of any political stripe or party can defend property tax rates now exploding in many communities surrounding Chicago. Aside from rank unfairness, some towns are on a clear road towards self-destruction. The resulting loss in home values is a personal tragedy for those who can least afford it, making this is an issue on which progressives and conservatives must agree. The crisis will worsen because stunningly large, further bills have just been stuck in the drawer,...

Suicidal Property Tax Rates and the Collapse of Chicago’s South Suburbs – WP Original

  "Don't go past the top of the curve." -Robert P. Inman, Professor of Business Economics and Public Policy, Wharton School By: Mark Glennon* Chicago's south suburbs are in a death spiral and property taxes are central to the story. Most numbers reported to date have been spotty, though anecdotes are common about abandoned properties and underwater homeowners unable to sell because of property taxes. This article collects the empirical data more comprehensively from a variety of sources, most of which have become available...

‘Rahm’s Ramp’: The Madness of Chicago’s Pension ‘Reform’ – WP Original

By: Mark Glennon*   If you're not exasperated  by Chicago's approach to pension "reform," you haven't been paying attention.   The absurdity into which it has descended is anything but "reform." Nothing good will come out of the Illinois Supreme Court's decision on the reform case it heard this week. In fact, upholding Chicago's reform law could constitutionally lock in pension funding obligations far beyond what taxpayers would endure. Here's a recap:   On Tuesday the Illinois Supreme Court heard oral arguments in the appeal...

Illinois Attorney General Lisa Madigan Sued for Refusing to Properly Defend Workers’ Comp Claims – WP Original

  By: Mark Glennon*   Late yesterday the Illinois Department of Central Management Services (CMS) filed a lawsuit against Illinois Attorney General Lisa Madigan alleging she is refusing to discharge her duty to properly defend the state against certain workers compensation claims.   The complaint, styled Tyrell v. Madigan, is linked here. The lawsuit was brought in the name of Tom Tyrell in his capacity as Director of CMS. It pertains to home care workers called "personal assistants." According to the complaint, there are...

Staged: A Particularly Dishonest ‘Town Hall’ Meeting on Budget With IL Rep. Robyn Gabel – WP Original

  By: Mark Glennon*   Robyn Gabel (D-Evanston) is a member of the Illinois House, representing the 18th District in Chicago's north suburbs. Monday evening I went to  what she had earlier described as a town hall meeting "to discuss the current State of Illinois budget impasse and my ongoing efforts to pass a balanced budget that protects our state's most vulnerable individuals."   As the meeting started Gabel said she wanted the meeting to be "as interactive as possible." An elderly man in...

New Workers Subsidizing Illinois’ Surging $100,000/Year Pension Club – WP Original

  By: Mark Glennon*   The number of public retirees receiving pensions over $100,000 in Illinois jumped this year to 7,407, up 1,384 since last year. The chart on the right shows the growth in that number since 2012.   The numbers are extracted from the  Better Government Association's pension database. They include only 17 pensions -- the statewide pensions and those for Chicago and the Cook County area.  They do not include retirees in the 655 pensions for police and firefighters outside of...

A Big Myth Persists: Defining Away Part of the Pension Crisis – WP Original

By: Mark Glennon*   Look, maybe it would be reasonable to argue that solving only part of our pension crisis is the best we can possibly do.   But it's another thing entirely to start the discussion simply by defining away a large percentage of the problem. Unbelievably, that's routine.   The latest culprit is an important reporter, Karen Pierog, who covers pensions for Reuters. Her columns are widely reprinted. Yesterday, in an article about the portion of an Illinois pension's liability that's funded, she...

‘Super Chapter 9’ Bankruptcy: Start Following the Debate – WP Original

  By: Mark Glennon*   If you haven't followed Puerto Rico's financial crisis, serious debate now focuses on authorizing it to file a "Super Chapter 9" municipal bankruptcy. As a territory, Puerto Rico currently cannot file under the Bankruptcy Code. That can be changed easily by Congress with the President's signature, however. They can also change Chapter 9 of the Bankruptcy Code to make it a faster, firmer and more predictable route to a robust recovery.   And the Bankruptcy Code, it's widely accepted,...

U.K. May Include Pensions in ‘Stress Tests.’ IL & U.S Would be PTSD Corpses if Fed Did Same – WP Original

  By: Mark Glennon*   The U.K.'s central bank was reported today to be considering expanding its stress tests to include pensions. Stress tests are done by central banks to gauge systemic threats to a nation's economy under different scenarios.   Memo to Fed in case you're considering same for U.S. public pensions (and we know you read WirePoints closely): No need to bother. Calling it "stress" would be looking backward. It would be more like examining a Post Dramatic Stress Disorder victim at the...

Why Jim Edgar Has Zero Credibility on Illinois Budget, Pensions: It’s Not Just the ‘Edgar Ramp’ – WP Original

  "Seems that not all recent Illinois governors end up in prison, but perhaps they should be jailed for this crap." -Actuary Mary Pat Campbell   By: Mark Glennon*   Former Illinois Governor Jim Edgar is getting lots of attention for his recent comments that Governor Rauner should give in to Democrat and public union positions to resolve the state's budget impasse. Rauner shouldn't "hold the budget hostage" by demanding reforms as a precondition to the tax increases that budget resolution necessarily entails, Edgar said.   Here's...

The Shock and Awe Budget Address Rahm Should Have Given – WP Original

  By: Mark Glennon*   If Mayor Emanuel was intent on halting Chicago's downward spiral and if we had a General Assembly in Springfield willing to authorize him to do it, his budget address would have included things like this:   Upon completion of this speech I am ordering implementation, as rapidly as law allows, of the emergency financial measures I will describe.   Each of these measures can and will be accomplished either through voluntary agreement, legislation or bankruptcy. It is important to understand the...

Chicago’s Pension Pit in Simple Numbers – WP Original

  By: Mark Glennon*   If you understand nothing else about Chicago's budget, learn these few, basic numbers on its pensions and property taxes.   The chart below is from the city's new proposed budget and reflects the historic property tax increase everybody is fretting about. It shows that 60.7%  -- about $786 million -- of those taxes are budgeted to go to pensions in the coming year.     But remember that's not nearly enough for the pensions.  The city would have to be contributing $1.7...

Intergenerational Theft: Illinois Teacher Pension Debt Per Student Rivals College Loan ‘Crisis’ – WP Original

  By: Mark Glennon*   Illinois is among the worst states in the college student debt "crisis," as it's often called. Per student college debt here averages $28,543, according to the Institute for College Access & Success.   But look at unfunded teacher pension liabilities on a 'per student' basis and you get about the same. That's the calculation made for all fifty states by the National Council on Teacher Quality in a report earlier this year. Illinois is the very worst by that...

Meet Mr. and Ms. Average. Firefighter & Teacher. Retired at 58. Cash Value of Pensions? About $3.5 Million – WP Original

  By: Mark Glennon*   Mr. Average was a Chicago firefighter who retired last year. His wife worked outside the home, as in most families today. Ms. Average taught in a Chicago suburban school and she retired last year, too, when both of them were 58 years old. Mr. Average worked 30 1/2  years as a firefighter and Ms. Average worked 33 years as a teacher.   What is their combined pension? How much money would a couple without a pension need to be...

Russia’s Pravda Ridicules Fiscal Management of Chicago, Kankakee – WP Original

  By: Mark Glennon*   An article today in Russia's Pravda lectures us: "If you've studied cost accounting at a graduate level, did cost accounting work and you look at publicly available financial data from these cities, it's like looking at nightmare on main street parts I, II, III and IV about to happen."   "Chicago or LA, which one is more likely to collapse first? Chicago," they say.   And, "Kankakee County IL or Perry County KY? Kankakee County is more likely to go belly...

Updated: New Biennial Report on All Illinois Pensions Shows Unfunded Liabilities Up $14 Billion – WP Original

By: Mark Glennon*     The Illinois Department of Insurance publishes, every two years, a compilation of data submitted by all of Illinois' 672 public pensions. Hot off the press, here is the link to its latest, which the department just posted.   If you don't understand how flawed our pension system is, you might think this would be good news: Net pension assets grew from $139 billion to $158 billion and the funded status actually improved a bit from 49% to 50% since...

A Must-Watch Video for Pension Crisis Followers: Actuaries ‘Enable and Abet’ the Crisis

  By: Mark Glennon*   If you have a serious interest in how our public pension crisis arose and continues to grow, invest 40 minutes watching the video linked here. It's a recent presentation by Jeremy Gold, a nationally prominent independent actuary who has been speaking up boldly about his profession's failure. His slides are linked here.  "I'm here to tell you a story about how a profession failed to fulfill its duties to the public and thus enabled and abetted the...

Salary and Pension Hikes Far Beyond Inflation Account for Most of Chicago Property Tax Raise – WP Original

  By: Mark Glennon*   How could a city that seems so prosperous be so broke? Why the big tax hikes?   Aside from pensions, the most obvious reason is average pay increases far beyond inflation. Those excess pay increases account for over half of Chicago's proposed $588 million property tax increase. And as for pension benefit hikes exceeding inflation, well, you better sit down.   Let's look at just police and fire salaries. Suppose average pay was the same today as in 1985, adjusted upward...

OK, Who’s the Joker Who Gave Rahm A Different City’s Budget Address to Read? – WP Original

  By: Mark Glennon*   Man, what a screw up. Mayor Rahm Emanuel yesterday gave Chicago's annual budget address. The one he gave must have been meant for a different city. All we know for sure is it had nothing to do with Chicago.   I'm thinking maybe it was for Pflugerville, Texas. Don't laugh. I've been to Pflugerville. They have their act together. They even have their own song. Maybe some speechwriter stuck the budget address for another city into Rahm's teleprompter.   Let's go...

‘The Silo Effect’: Illinois’ Extreme Case Explains So Much – WP Original

  By: Mark Glennon*   The Silo Effect is a new book by the Financial Times' U.S. Managing Editor, Gillian Tett. Read it thinking about Illinois and its municipalities and you'll cringe, even though it's not expressly about that. The silo effect permeates Illinois government as well as coverage of our financial crisis by ratings agencies, municipal bond analysts and the press.   "The silo effect" is Tett's term for an old problem at which she takes a modern look: In large organizations and...

Chicago Firefighter and Police Salaries and Pensions, Then and Now – WP Original

  By: Mark Glennon*   Compensation for firefighters and police is the third rail nobody wants to talk about. The key numbers are below, including what happened over the last thirty years.   Both the police and firefighter pensions have only about one-forth of the assets they should have to pay benefits promised -- officially, that is. The real numbers are worse and we will be writing separately about that.   There's good reason why most of us lay off the subject of compensation for police...

Illinois’ Forgotten, Monstrous Healthcare Liability to Public Pensioners – WP Original

  By: Mark Glennon*   It still hasn't sunk in. Our state pension crisis is nearly always quantified by the press as a "$111 billion unfunded liability."   What's most conspicuously overlooked is that, thanks to the Illinois Supreme Court's decision in the Kanerva case last year, lifetime healthcare is also a constitutionally protected benefit for Illinois pensioners that can't be diminished or impaired. That liability is entirely unfunded. It's a pay-as-you-go system. Taxpayers many decades from now will pay for healthcare for today's...

Turning Point: Is Illinois’ Broken Pension System Now Discouraging Public Service? – WP Original

  "Ask not about your retirement security."   By: Mark Glennon*   A major turning point is coming soon that will change the pension debate, and it may be here already -- a hopelessly broken retirement system driving people away from government service.   The primary argument for our public defined benefit pension system is usually this: The security it offers is needed to attract good employees, and public workers accept lower pay (arguably) than private workers in exchange for more generous retirement benefits.   Is that still...

Why Chicago’s $500 Million Property Tax Increase Won’t Solve Much – WP Original

  By: Mark Glennon*   You're dead wrong if you think the $500 million property tax increase now proposed for Chicago, the largest in its modern history, will solve much of its pension and fiscal crises. It won't come close. You need look no further than the city's own financial statements to see why.   Chicago's 2014 Comprehensive Annual Financial Report was released in July (after the June 30 deadline required by law). Page 83 shows that, for the year ended this past December,...

Illinois, NOW You’re Figuring Out That SB-1 Pension Reform Was a Gimmick? – WP Original

  By: Mark Glennon*   J. Fred Giertz is emeritus faculty at the Institute of Government and Public Affairs at the University of Illinois. Last week, he wrote an article widely republished across Illinois. It asks whether maybe, just maybe, SB-1, the pension reform law now invalidated, was a sham and a can-kick. There's a big lesson here about how startlingly far behind the curve much of Illinois is on the pension crisis and the workings of the General Assembly.   Maybe the legislature...

Chicago Doubles Down on a Hairbrained Housing Ordinance – WP Original

  By: Mark Glennon*   Suppose we agree that something locally produced -- anything, widgets let's say  -- is unaffordable for many people. And suppose we want to make those widgets more affordable. How does this solution sound? Pass a law ordering local widget makers to sell 10% of their widgets at a lower price. If they don't, make them pay a fee and give the fee to the government to make widgets.   Put it that way to an average 12-year-old and I...

Donald Trump, We Don’t Do Ethnic Cleansings – WP Original

  By: Mark Glennon*   It would take the equivalent of loading over 500 trains to ship all of Illinois' illegal aliens out. Nationally, it would take over 30,000 trains using Donald Trump's number of illegals here.   More than seven times the number of Albanians who Serbs tried to force out of Kosova in 1999 would be forcibly removed from the United States if Trump had his way. Not since World War II has so large an ethnic cleansing as Donald Trump wants...

Bloated Pensions for Many Will Mean Retirement Hardship for Some in Illinois, But How Many? – WP Original

  By: Mark Glennon*   Few things irk real pension reformers more than the constant claim by opponents that protecting pensions is about defending the little guy. The opposite is true. Let's explain and look at some numbers.   First, we'll start with a premise, which is that most state and local pensions in Illinois as now scheduled will not be fully paid for the simple reason that they can't be. One way or another, whether by default, bankruptcy, constitutional amendment or whatever, cuts...

This Should be Clear: Chicago Not Liable on Pension Obligations – WP Original

An update on a crucial issue getting no attention.

Updated – He’s Back: Dave McKinney, Pensions, and Partisan Reporters – WP Original

Update 9/2/14. Dave McKinney has accepted a job a Reuters, and apparently will cover Illinois issues. This is a tragedy. Political reporters are not financial reporters. They just don't know what they are talking about, regardless of bias. Can't one major news agency, aside from The Bond Buyer, please assign somebody to Springfield who understands fiscal issues?   By: Mark Glennon*   What on earth was Crain's thinking when it added Dave McKinney as a political columnist? Yesterday, it published a major piece...

Hey Rahm, Cheerleaders Don’t Win Games – WP Original

  By: Mark Glennon*   Last week, a union leader and Mayor Emanuel teamed up to dump on Governor Rauner for repeatedly saying our business climate is bad. "I think now that the election is over, the governor needs to switch from a detractor-in-chief to a cheerleader-in-chief," said Jorge Ramirez, Chicago AFL-CIO. "Having your agenda should not come at the expense of running down either the city or the state you're out there promoting," Emanuel added.   Cheerleading before candor, in other words. It's...

Are We Crazy in Chicago? Seriously, That Is. – WP Original

  “Why, sometimes I've believed as many as six impossible things before breakfast.” ― Lewis Carroll, Alice in Wonderland   By: Mark Glennon*   Is some form of madness behind the response of Chicago and Cook County to the death spiral they are in? Let's first look at the headlines from just this past week because, like Alice, you may quickly find six crazy things you'll have to accept:   - Two weeks after raising Cook County's sales tax to the highest in...

Another Record Month for Our Readership and a Note to Our Readers – WP Original

By: Mark Glennon*   July is another record month for our online traffic, which continues to surge.   Special thanks to some particularly well-informed readers who give us feedback both online and by email, especially you in the actuarial and muni bond industries.  Suggestions and criticisms are welcome. You can take our online, anonymous survey by clicking here.   And thanks to the growing list of media that have been quoting, linking or republishing us, which included The New York Times this month. We send...

Harshest Critics of Public Pensions are Nobel Prize Winning Economists – WP Original

  By: Mark Glennon*   Nobel Prize winning economists aren't the hyperbolic type. They usually speak in measured tones, careful to protect the precision of their academic  viewpoints. Two of them have spoken openly about public pensions, including one about Illinois pensions. They are uncharacteristically harsh.   First, there's William F. Sharpe, a Stanford professor who won 1990 Nobel Prize for Economics for his work in developing models to aid investment decisions. The Financial Analysts Journal interviewed him last year. Here's what he said:   Is...

The Madness Continues: What You Need to Know About the Chicago Pension Decision – WP Original

  By: Mark Glennon*   A Chicago trial judge, Rita Novak, today ruled that the pension reform law for two Chicago pensions is unconstitutional. Her full opinion is linked here.   That ruling was entirely predictable and is a correct application of the Illinois Supreme Court's ruling earlier this year invalidating SB-1, a pension reform law for state pensions. Like it or not, the supreme court said you can't cut pension benefits. The reform law for Chicago's pensions would have cut benefits. It's that...

Illinois’ Tier 2 Pension Reforms: A Particularly Interesting Comment by a State Rep – WP Original

  By: Mark Glennon*   You'll recall that in 2010 Illinois passed, to widespread, bi-partisan applause, the "Tier 2" pension reforms. Under it, state and local workers starting after that year were put into a second category with far lower benefits.   Well, in hearings last week on a new pension reform proposal by Governor Rauner, Rep. Michael Zalewski (D-Chicago), said this:   "I think its fair to say members of this this committee have genuine concerns that when we created Tier 2 it wasn't designed...

Why Illinois’ Pension Crisis Will Worsen Even Faster Than Before – WP Original

  By: Mark Glennon*   If you think pensions for Illinois and its municipalities are in awful shape and worsening, just wait.   Illinois' five statewide pensions report their positions annually, as of the end of June. Those reports will come out late this year. Most Chicago area pensions and many other municipalities report as of year end, so their 2015 reports won't come out for another year. They will be uglier than anything we have seen. Most, almost certainly, will show funding levels...

Down the Drain: Cook County’s New Pension Report and its Sales Tax Increase – Updated – WP Original

By: Mark Glennon*   Make no mistake about where the additional one percent Cook County sales tax will go, along with much more -- into its pension. Ninety percent of it will go initially into the pension, according to Cook County Board President Toni Preckwinkle, with that portion decreasing later. But will it?   The pension's actuary just released its annual valuation report for the year ended in December. That document should be a key item informing voters and county board members about...

Why Michigan’s Approach for Detroit’s Schools is Better Suited for Chicago’s – WP Original

  By: Mark Glennon* The Detroit Public School District, like Chicago's, is struggling for its financial life. Michigan Governor Rick Snyder earlier this year proposed a plan roughly comparable to the restructuring of General Motors that created a “new GM” to replace the old one, which allowed the new one to shed unaffordable debts and contracts. Under the plan proposed for Detroit schools, the "old school district” would be left in place to liquidate certain debt obligations of the Detroit Public Schools....

The Key Number in Chicago’s Pension Crisis Nobody Has – WP Original

  By: Mark Glennon*   With tax increase proposals "popping up like weeds," as one headline put it today, voters, particularly in Chicago, are justified in asking if those increases will solve much, or would just throw good money at an insoluble problem. This should be an all-important question for them: How much would taxes have to increase to properly fund the eleven overlapping pensions Chicago taxpayers are responsible for?   Incredibly, no source provides anything close to a useful answer. Without that answer,...

Tax Rate Objection Lawsuits Challenge Funding Needs of a District – WP Original

  By: Nancy Mathieson*   Most property owners are familiar with remedies for challenging their property’s assessment for tax purposes, but there’s a rarer, broader remedy occasionally asserted. In a typical property tax appeal, the owner tries to have his taxes reduced by challenging the assessor’s market value estimate, or its assessment related to similar neighboring properties.   In contrast, tax rate objection lawsuits generally involve groups of taxpayers looking for recourse. The lawsuits typically allege the taxing bodies are levying more than they...

Pure Treachery: IL Attorney General Lisa Madigan Seeks to Halt Paychecks to State Workers – WP Original

  By: Mark Glennon*   Illinois Attorney General Lisa Madigan went to court yesterday to stop state worker paychecks during the government shutdown or to allow payment of no more $7.25 an hour -- the minimum wage. That action, together with the background story behind it -- use of the courts to deliberately sabotage an agreement both workers and the state want -- comprise one of the most sordid chapters of Illinois politics in recent memory.   First, that background. As the July 1...

Why Rahm’s press conference on CPS was a major failure – WP Original

  By: Mark Glennon*   Chicagoans and bond investors are now demanding to hear solutions that are adequate, quantified, verifiable, long term and politically viable. Mayor Emanuel held a press conference today specifically addressing Chicago Public Schools, but he offered none of those elements, nor even an indication that they are considered important. Sentiment, therefore, will erode further. And the mysterious loan from the Chicago teachers' pension to CPS was ignored, adding to its mystery.   Here's what Rahm said:   - It's morally disgraceful that...

Wholesale ‘Reconstitution’ of CPS: The Only Real Option? – WP Original

By: Mark Glennon* For the Chicago Public School system, it's not just the near term cash crunch or the $634 million payment to its pension scheduled for the end of this month. CPS is a financial basket case -- structurally and fundamentally insolvent. A dose of reality was administered recently by a financial report prepared by Ernst & Young, which has been widely discussed. Among it's conclusions: CPS has effectively been running a deficit for the past four years of about...

From Ireland: Much in Tech Startups Familiar to Illinois, But Not All – WP Original

  Múineann gá seift. (Need teaches a plan.) -Gailic proverb   By: Mark Glennon*   A strange sense of  familiarity often strikes visitors to Ireland from Chicago, and no doubt from much of America. That's no surprise given the ethnic background of so many of us, but spend some time looking at the technology startup community here and you'll find it goes a wee bit furter. (They need to learn to pronounce th properly, as we do in Chicago -- d.)   Illinois' startup sector indeed has...

Pekin Perplexed by Pension Pickle — Predictably – WP Original

    He who asks is a fool for five minutes, but he who does not ask remains a fool forever." -Chinese Proverb   By: Mark Glennon*   Sorry to single you out, Pekin, Illinois, but we will use you as an example of the pension crisis now facing Illinois municipalities. Actually, we have noticed you because at least some of your city officials are asking good questions, which your local paper has reported. On that count you are ahead -- most towns like you are...

Illinois Municipal Bankruptcy: Updates and Further Thoughts – Updated – WP Original

 Updated 6/14/15 where indicated in italics. By: Mark Glennon*   HB298,  a bill to authorize Illinois municipalities (cities, towns, school districts, counties, etc.) to file under Chapter 9 of the Federal Bankruptcy Code, was introduced in the Illinois House earlier this year by Ron Sandack (R-Downers Grove). The bill was assigned to the Rules Committee, often a procedural purgatory, though prospects seem to be brightening a bit.   When introduced, it was typically shrugged off by most of the General Assembly's controlling Democrats, but...

A WirePoints Article That Should Have Saved Taxpayers Millions – WP Original

By: Mark Glennon*   “Prepare to get sick,” we wrote, and “stop this now,” we put in bold face. That was on Thanksgiving Eve last year when we wrote here about a $224 million, clearly questionable spending binge quietly announced that afternoon by then lame duck Governor Pat Quinn. Many of the handouts, all with borrowed money, appeared to be pay off for political friendships or wasteful. Nobody else wrote about it.   Well, this week the Sun-Times wrote in detail about the...

The Civic Federation Reawakening? We Need the Business Community Now. – WP Original

By: Mark Glennon*   The Civic Federation of Chicago has a long, proud history as a watchdog for fiscal responsibility, particularly on pensions, providing an almost indispensable voice for the business community. They slipped in recent years, however, which raises some bigger questions about our whole business community. We will come back to that later, but first a bit of good news.   Yesterday, The Civic Federation published a piece on the funding changes for Chicago police and fire pensions recently passed by...

Comments Submitted for the Actuarial Standards Board Hearing on Public Pensions

  By: Mark Glennon*   The Actuarial Standards Board is the standards setting body for actuaries in the United States, including actuaries who prepare the reports for public pensions.  On July 9 in Washington, the Board is holding public hearings on improvements and changes to be made in those standards. Unquestionable, deficiencies in those standards have been a leading cause of the pension crisis now strangling Illinois, Chicago and many other municipalities. Below are the written comments I submitted to the Board...

‘Whistling Past the Graveyard’: An Actuary Looks at the New Chicago Pension Bill – WP Original

By: Mark Glennon*   Steven Bourg is an enrolled pension actuary from Maryland. He has been watching events in Illinois and emailing me recently. By sheer coincidence, we discovered that we grew up within a few blocks of each other in Park Forest, a Chicago suburb, at the same time, but we've never met. (Must be some virus in the water there that induces hostility to pension scams.) Anyway, he did a quick take on the rough numbers for the bill...

Your Cook County Property Tax Bill Would Have to Jump 51% Just to Halt Further Bleeding in County Pension – WP Original

  By: Mark Glennon*   How much would your Cook County property taxes have to increases just to stop the bleeding in the county's pension -- just to halt the unfunded liability from growing? Well, Cook County Board President Toni Preckwinkle has been saying the unfunded liability is now growing at about $30 million per month, or $360 million per year. Let's assume that's right --a silly assumption because it's probably much worse -- but let's go with her numbers.   Now, Cook County's...

Chicago’s Botched Pension ‘Reform’: A Preview for Other Illinois Municipalities – WP Original

  By: Mark Glennon*   Consider this:   - Chicago is negotiating to undue a key part of its 2014 pension reform, even while it fights in court to uphold the law. - The law it's attempting to save in court is the very one that contributed to the credit downgrades and liquidity panic of the past few weeks. - Now, Chicago has concluded that it's not liable for pension obligations after all. It might be right, but the argument is being squandered.   That's only part of...

An Absolutely Crucial Issue for Chicago, Other IL Municipal Pensions is Unanswered – WP Original

By: Mark Glennon*   If Chicago or another Illinois municipality let its pensions run dry, either willfully or not, would that municipality be obligated to pay the pensions' obligations? 'Yes' has been the widely assumed answer, but it's in fact an open question, and the answer has monumental implications.   We were the only ones who saw the significance at the time, but buried in a few articles a couple weeks ago was mention that Chicago now claims it is not legally liable....

Mr. Market says Chicago bonds are junk – WP Original

By: Mark Glennon*   Moody's says Chicago's credit is junk bond equivalent, but Fitch and S&P say 'no.'   Take your pick, but the market now says its junk. One way to look at it is comparison to the two largest corporate junk bond exchange traded funds, HYG and JNK. Both of them are trading with yields under 6%. To make an apples-to-apples comparison, you can skim through current yields on Chicago's taxable general obligation bonds here at the EMMA site, now usually...

Why the ‘consideration’ approach to pension reform is a gimmick – WP Original

  By: Mark Glennon*   Senate President John Cullerton has rekindled his idea that meaningful constitutional pension reform can be accomplished by offering a swap to pensioners -- accept lower benefits in exchange for some sweetener. It's called the "consideration" approach, and most of the press is reporting it as a serious alternative to the approach recently invalidated by the Illinois Supreme Court. Here's what the City of Chicago, also searching desperately for a means to accomplish meaningful reform, said about it...

S&P, slated to rate upcoming Chicago bond sale, goes comparatively easy on downgrade. Hmmm. – WP Original

By: Mark Glennon*   S&P yesterday downgraded Chicago's general obligation bonds to A- from A+, which the agency said was three notches above "junk" level. That's comparatively mild since, on Tuesday, Moody's Investors Service on Tuesday pushed Chicago's credit rating into its "junk" category.   Chicago plans to price offerings of $201 million and $182 million on May 19, as reported yesterday by Bloomberg.   And guess who is one of the two agencies slated to rate the new offering, hired by the city? S&P.   You...

No. We Will Not ‘Just Pay Up’ for Pensions – WP Original

  By: Mark Glennon*   "We will just have to pay up." That's the conclusion many are now saying we must accept after the court decision invalidating Illinois pension reform.   No. We shouldn't, we won't, and we can't.   When, since Sherman's army burned Atlanta and marched to the sea, has anyone done more harm to an American city and state than our leadership has done to Chicago and Illinois? They remain in super-majority control of our legislature. Unless and until they turn around, we...

Reporters, Politicians Vie for Dumbest Reactions to Illinois Pension Ruling – WP Original

  By: Mark Glennon*   With fear palpable in Illinois since invalidation of pension reform, you'd think reporters and politicians would now be up to speed on basic facts about Illinois pensions. Nope. Most heads are still in the stand. Denial, delay, extend and pretend still rule.   Among the most foolish reactions:   Rahm kicked it off by saying that Chicago's pending reform plan is "not affected" by the ruling.  Dan Mihapolouos from the Sun-Times backed him up on television, saying that Chicago is different...

What You Need to Know About Illinois Supreme Court’s Sweeping, Historic Pension Ruling – Analysis – WP Original

  By: Mark Glennon*   The Illinois Supreme Court today invalidated SB-1, the Illinois pension reform law from 2013. Though the ruling was anticipated, its consequences are staggering. The reform law was voided in its entirety. The "police powers" defense -- the argument that the state should not have to pay pensions because it's too broke -- was rejected as a matter of law and no trial will proceed. The court said the constitutional pension protection clause, which says pensions cannot be...

Other States Balk at Multibillion Dollar Cost While Illinois Spends Blindly on Energy Alternatives – In Depth – WP Original

By: Mark Glennon*   "Wait a minute," I said to an Illinois House member at a recent forum, and repeated the question to be sure I had her answer right: "You're a leading sponsor of a massive rewrite of our energy policy that may cost billions of dollars, but you're telling me you have no idea how much it costs?   "Yes," she answered.   She is not alone and that was no isolated incident about one bill. Cost to consumers for sustainable energy is...

Bill would levy special tax to fund Chicago teacher pension, reduce Chicago school funding – WP Original

  By: Mark Glennon*   It has received little attention, but a bill (HB3695) recently proposed in Springfield would levy a special property tax in Chicago payable directly into the pension for Chicago teachers. It would be matched by a corresponding reduction in funding for the Chicago school system. By levying a tax at the rate of 0.26% on all property covered by the school system, the bill would raise an estimated $160 to $180 million for the pension, which would be...

About that Surprise Jump in Revenue for Illinois – WP Original

  By: Mark Glennon*   Despite the rollback in personal income tax rates from 5% to 3.75% in January, which also shrank withholding rates paid over to the state each month, April personal income tax receipts actually increased compared to April last year by 3.8%, or $96 million. Total tax receipts of all sources for the state also increased slightly, by 0.3%. That's according to the monthly report released by the Commission on Government Forecasting and Accountability.   According to COGFA's executive director,   March was...

Unfunded Mandates Are What Keeps Illinois Mayors Up At Night – WP Original

  By: Nancy Mathieson*   When a group of local mayors met at Congressman Bob Dold’s (IL-10) recent roundtable discussion, it didn’t take long for them to realize they already had a consensus about their most worrisome issue. (Hint: it’s not rising property taxes.)   What keeps these mayors up at night is the proliferation of unfunded mandates: new regulations that require local governments to perform certain actions with no additional funding. According to the Illinois Municipal League, state lawmakers have introduced a total...

‘Staggering,’ Says New Report on Chicago’s Pension Contribution Shortfalls – WP Original

  By: Mark Glennon*   A research report recently issued by Nuveen Asset Management provides another take on the total annual liability Chicago taxpayers would face if they properly funded pensions for the city's overlapping layers of government. Brace yourself.   Chicago has been contributing to its pensions only about one-forth of what Nuveen calls Annual Pension Cost -- "the amount determined by actuaries to keep the plans solvent." (We note that S&P recently said essentially the same thing.) The unpaid portion of the...

Legislation introduced to drive capital out Illinois — in effect – WP Original

  By: Mark Glennon*   You might think Illinois would value the presence of venture capital funds, hedge funds, real estate funds and private equity, which is one of its major assets.   A bill has been introduced in Springfield to slap a special 3% annual tax on the managers of those and any other investment vehicles that have their principal places of business in Illinois and have at least $10 billion under management.  It's sponsored by Rep. Christian Mitchell (D-Chicago) and is in...

Bankruptcy for Illinois Municipalities: Things We Know and Things We Can’t Know – WP Original

  By: Mark Glennon*   Since the 'B' word is now being spoken in Chicago and other Illinois cities, here are some key things to keep in mind as the debate about bankruptcy for Illinois municipalities emerges:   • First, Springfield has not yet authorized its towns, cities, counties and other local units to file bankruptcy, though a bill has been introduced to do that by Reps. Sandack and Ives. Only municipalities in states that have authorized bankruptcy can file under the Federal Bankruptcy...

A Frightening Week Awaits CPS and All of Chicago – WP Original

  By: Mark Glennon*   There's no point in sugarcoating this. The financial crisis at the Chicago Public School District may come to a head this week, and the impact will extend beyond the school system. A CPS bond sale is scheduled for Tuesday, which is widely seen by financial markets as a test of whether it has a pulse. Here is a summary of key points from various sources:   • CPS is just about out of cash, and its cash could be...

Public Bankruptcy Talk Isn’t ‘Dangerous.’ Denial and Dereliction Are – WP Original

  "Bliss just isn't worth the price." -Rich Miller   By: Mark Glennon*   Dangerous talk of Chicago schools bankruptcy, -- that's the headline description today in a Crain's story by Greg Hinz about Governor Rauner's comments on the Chicago Public School system. Rauner is "pushing CPS or other governmental units into bankruptcy," Hinz goes on to claim.   Really? Here's what Rauner actually said:   I'm concerned that the Chicago Public Schools could end up needing to go bankrupt. That's very possible. We have a mess. They would...

Why Progressives Should Support Repeal of Illinois’ Pension Protection Clause – WP Original

By: Mark Glennon*   A core goal of progressivism is fundamentally right and noble -- helping those most in need. But what actually works is where their views split with the rest of us, and that's certainly true on pension reform. Illinois progressives appear universally opposed to repeal of the pension protection clause in the Illinois Constitution. That shouldn't be so. All sides should agree: Repeal is essential to reforming many Illinois pensions in a way that protects rank-and-file workers with...

Open mic delivers priceless audio sample of Chicago area government culture – WP Original

  "Nobody here really gives a fuck."   By: Mark Glennon*   If you're not from around Chicago, get ready for a perfect audio lesson on what we're dealing with here, tough language and all. You locals will laugh and cry at what's too familiar.   Denis Lawlor is a security officer at a the water reclamation plant in southwest suburban Stickney.  He accidentally left the microphone open on his radio as he showed the ropes to a new employee, and the conversation was recorded. It's...

Rahm and Chicago Will Pivot or Perish – WP Original

By: Mark Glennon*   Rahm Emmanuel will become Bruce Rauner on steroids -- a relentlessly creative and radical turnaround artist -- or he and Chicago are finished.   The jig is up. The national press has tuned in. They are starting to say outright that Chicago is heading towards bankruptcy, as Bloomberg did today, even if most of our local media and Chicago voters remain far behind the curve. Denial, delay, extend and pretend won't fly anymore. The arithmetic of budgets and pensions...

Get The Lead Out, Illinois Supreme Court: Decide the Pension Case – WP Original

  By: Mark  Glennon*   The United States Supreme Court issued its written opinion in Bush v. Gore just one day after it heard oral arguments on the case, which decided the outcome of the 2000 presidential election. The case had gone through three previous courts in less than five weeks, which included detailed factual issues about "hanging chads" and all the rest.   The Illinois Supreme Court held oral arguments this March 11 on the pension reform law. The lower court ruling on...

Hey Indiana, Thanks for Helping Illinois’ Economy – WP Original

By: Mark Glennon*   Think what you want of the merits of Indiana's new religious freedom law -- that's your business.  And never mind that 19 other states, including Illinois, have laws arguably similar. This much is looking very clear: Illinois just got an early Easter egg.   Illinois wins from Indiana's new law because the business community is gushing scorn on it, fairly or not, with some businesses threatening boycotts. Stories about that are popping up so fast as I write this...

Illinois Taxpayers Are Guarantying 7.5% Return On Savings Account For Certain Pensioners – WP Original

Guess who's paying to subsidize and guaranty returns on a savings account not available to you?

Is Pension Reform Constitutional? Heck, yeah. Well, maybe, if we ask the right question – Guest Opinion

  Mitchell I. Serota, Ph.D., Fellow, Society of Actuaries   The Attorney General, though her Solicitor General, needs a more potent argument to convince the Illinois Supreme Court that pension legislation enacted in December 2013, which prospectively reduces defined benefit plan accrual rates for State employees, is constitutional. After last year’s judgment that even post-retirement medical benefits cannot be reduced once promised, the Supreme Court has indicated that the attempt at pension reform is not likely to pass Illinois Constitutional muster. Even...

Illinois Pension Case: Good for Nothing Except a Pretext, But Pretext for What? – WP Original

Let the politicians who bankrupted us have an excuse for changing positions, but insist they finally get it right.

Prediction: Right-to-work will come to Illinois, locally — WP Original

  By: Mark Glennon*   Here's a flat-out prediction: Home rule units of government in Illinois will begin enacting right-to-work locally, and it doesn't matter what Springfield does or does not do.   Over 200 cities and towns in Illinois have home rule status. Never mind the other aspects of what that means, and never mind what you think about right-to-work on the merits. Some or many home rule cities and towns will embrace right-to-work and their prospects for legally prevailing are high. The...

Lake County Board Chairman Sets Agenda for Unfunded and Unnecessary Mandates – WP Original

Aaron Lawler, Lake County Board Chairman since 2012, is setting an agenda to remove unnecessary mandates that cost taxpayers millions of dollars each year.

Public union members just 3% of Illinois, but such havoc – WP Original

An extraordinary feat, actually: so much power acquired by so few.

Econ 101 for Progressives: Corporations Never Pay Any Taxes – WP Original

  By: Mark Glennon*   It's not opinion or economic theory, but undeniable fact: Corporations don't pay any taxes. They collect them.   With the chorus on the left in Illinois growing ever louder to address income and wealth disparity by taxing corporations, that fact should be kept paramount, no matter what one's politics.   It make no more sense to deny that people, not corporations, ultimately pay corporate taxes than to deny that people pay taxes on houses, dogs or anything else. Exactly who ultimately...

New warning from S&P for Chicago: Read it carefully – WP Original

Serious as next year's problem is, the statement contains a much starker warning for the longer term. It quantifies just how far off Chicago is from addressing its pension crisis.

Bullseye: Why Gov. Rauner’s Order on Forced Union Dues is so Important for Illinois – WP Original

By: Mark Glennon*   If you follow the state and local fiscal crises, you know the bulk of our problems derive from 1) public pensions, and 2) for Illinois municipalities, unfunded mandates imposed by state government.   What's the root cause of both? Excessive public union power that bought unaffordable promises.   For pensions, that story is fairly well accepted. Less known is that municipalities have little discretion to control most of their budgets, particularly on payroll. Municipalities commonly pay an additional 60% on top...

WirePoints Adds Free Daily Email Digest of Select Stories, and a ‘Thank You’

By: Mark Glennon*   We've added the option of receiving a free daily email of all major stories we post. Just hit the green button on the right or on our home page and enter your email address. You'll receive a confirmation email and the daily digest each morning.   Our readership continues to grow rapidly. We thank our readers for that, and for the growing volume of facts and tips you send. We cannot answer or write about all of them, but...

Monthly state revenue report shows continuing drop – WP Original

By: Mark Glennon*   The January report from the Illinois Commission on Government Forecasting and Accountability shows further deterioration in total state revenues. Decreased revenues from expiration of the tax increase are now kicking in, contributing to a 9.8% drop in total state revenue for January 2015 compared to January 2014. Total revenues were declining slightly before the tax cut, however. Total revenue for the fiscal year to date (the last seven months) is down 3.9% compared to the previous year....

A Sadder Angle: Per Pupil Teacher Pension Debt in Illinois – WP Original

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...

Risk: The Illinois Pension Devil Seldom Acknowledged – WP Guest

  By: Tia Goss Sawhney*   In the Illinois public pension world risk is the devil seldom acknowledged, let alone carefully considered. Everyone not living under a rock knows that Illinois has a public pension plan problem – one that poses an immense financial challenge. The public pension plan challenge, however, is overwhelming when the massive risk, currently born by the state, is carefully considered.   Actuarial calculations for pension plans are based on assumptions with respect to events that will occur over...

New Study: Corruption and Pension Debt Go Hand-in-Hand – WP Original

  By: Mark Glennon*   A research report published by Morningstar yesterday empirically validates a central criticism of public pension plans -- that corruption and excessive public pension debt go hand-in-hand.   Morningstar's Director of Policy & Research, Scott Cooley, ran a simple correlation test between historical levels of corruption and unfunded pension liabilities for all states. Sure enough, corrupt states tend to have larger unfunded pension liabilities. The correlation "easily meets the test for statistical significance," concluded Cooley.   We've known from earlier studies that...

Fiscal Fog Lingers Over Country Club Hills – WP Original

By: Nancy Mathieson and Mark Glennon*   Country Club Hills, a suburb of Chicago, seems intent on making itself the poster child for poor financial reporting. A reader recently alerted us to its plight, which indeed looks bad, but just how bad is hidden by the shoddiest municipal financial reporting we have seen.   The city appears to be living day-to-day, short of cash, because its City Council minutes from last month say it’s issuing payment vouchers, just as it did last year...

Illinois emerging from denial; Chicago, other cities stuck in La La Land – WP Original

By: Mark Glennon*   It's a lesson you learn fast doing insolvency work: The first step towards recovery is admission of  exactly how bad things are. It's hard, as I learned doing that work as a lawyer. Emotions, outdated facts and ego get in the way. That's why control of insolvent companies is usually taken away from those responsible and banks with bad loans usually take the initial loan officer off the account.   Illinois, at long last, may be accepting reality.   Help came...

The ‘Tier 2’ Pension Mess in Illinois – WP Original

  By: Mark Glennon* Updated 1/16/14 As if Illinois public pensions don't have enough problems, it's becoming evermore apparent that the Tier 2 reforms enacted in 2010 are a mess. Some background: In 2010 Illinois created a second, lower level of pension beneficiaries for all state and local pensions, except for several Chicago pensions. Employees hired after 2010 became Tier 2 pension participants with far lower benefits. Tier 1 employees who started before that kept the same, more generous benefits they had before....

Monthly state revenue growth weak again for Illinois – WP Original

  By: Mark Glennon*   The Illinois Commission on Governmental Forecasting and Accountability released its December report. As has been the trend, state revenues are not increasing materially, and in aggregate are down for the year.   Comparing December 2014 to December 2013, state tax and fee receipts increased by $103 million or 3.2%. However, transfers to the state from the Federal government declined by $20 million, or about 7.9%. In total, including various refunds, state receipts increased by $72 million or 2.2% compared...

Expect No ‘Guidance’ on Pension Reform from Illinois Supreme Court – WP Original

Including healthcare liabilities, which the court recently decided are constitutionally protected along with pension benefits, the reform bill at issue would reduce unfunded liabilities by only 12%.   By: Mark Glennon*   Illinois needs a reminder about what kind of supreme court it has.   Pundits and politicians from both parties, including Governor-elect Rauner, regularly express hope that if the Illinois Supreme court strikes down SB1, the pension reform bill from 2013, it at least will provide "guidance" on what kind of reform it would...

Yes! Rauner to Appoint Leslie Munger as Illinois Comptroller – WP Original

By: Mark Glennon*   Governor-elect Rauner today announced he will appoint Leslie Munger of Lincolnshire to replace Judy Topinka as Illinois Comptroller.   Munger, new to politics, recently lost her race to incumbent Democrat Carol Sente for the Illinois House.   She is an exceptionally fine choice. We first noticed her early in her race against Sente. She struck us as a superstar in waiting, and we asked her to write this guest piece for us about the Illinois economy. As we wrote, she is...

Illinois Auditor General Report Kicks Off Another Year of Pension Madness and Underfunding – WP Original

By: Mark Glennon*   Each year, the Illinois Auditor General hires its own actuary and submits a review of the actuarial reports for each of the five state pensions and certifies the amount taxpayers will have to contribute. The most recent Auditor General report was released this week, linked here.   As it did last year, the report says, in bold face for each pension, "the statutory mandated minimum funding requirements call for inadequate funding" and the funding method "does not meet...

Wisest and Dumbest Quotes on Illinois’ Economy and Government in 2014 – WP Original

  By: Mark Glennon*   Don't expect many laughs in this because less-than-entertaining topics like pensions and budgets dominate in Illinois, but here are some of the notable quotes for the year about our economy and government:   Women can tell, so don't bother lying: "When it comes to pension promises made, for years Illinois politicians have been like the guy who tells you, 'I’ll call you in the morning.' Neither is going to come through on their promise." - Suzanne Devane, GOP 49th...

Ten fiscal and financial stories ignored by Illinois media in 2014 – WP Original

  By: Mark Glennon*   One raison d'être for WirePoints is the Illinois media's poor understanding of our fiscal and economic problems, which contributes to public ignorance about them. 2014 was more of the same.   Something's wrong when a few of us writing on nights and weekends see these stories while they go otherwise unreported. Here are a ten of them, which, all humility aside, we emphasized. Many of these relate to public pensions, which is appropriate because they account for the lion's...

DuPage County Looking to Save $80 million: Local Government Consolidation – Part 2 – WP Original

  By: Nancy Mathieson*   Dan Cronin, DuPage County Board Chairman, thinks consolidating and streamlining special purpose taxing bodies doesn’t have to do with the county absorbing their duties. The real issue he says is, “who really wants to take them on?”   DuPage is the second largest county in the state, and Cronin’s well-known streamlining efforts cover 900 employees in 24 agencies with budgets totaling $300 million. “Everyone wants the best in their towns,” he said in a recent interview. “The goal is...

Big Mistake: New Chicago Treasurer to Divert Pension Money to Economic Development – WP Original

  By: Mark Glennon*   Let's hope sincerity isn't among the attributes of Chicago's new Treasurer, at least when it comes to his action plan for city investments.   Kurt Summers was sworn in today as Treasurer and released a 90-day action plan that he described in a luncheon address at the City Club of Chicago. His comments are reported in a Sun-Times article linked here and the plan is linked here.   His plan contains a number of elements, but first on his list, and...

“Welcome Home Illinois” – Buying Votes with Bad Policy? – WP Original

  By: Mark Glennon*   Was the "Welcome Home Illinois" Loan Program a noble effort to help first time home buyers or a vote buying scheme premised on bad policy?  Here are the facts. Decide for yourself.   Governor Quinn announced the program in April 2014. It provided $7,500 to first time buyers to help cover the down payment, secured by a second mortgage on the home, and was administered by the IHDA -- the Illinois Housing Development Authority. About $80 million was disbursed...

$224 Million Thanksgiving Eve Binge by Pat Quinn! – WP Original

By: Mark Glennon*   Prepare to get sick.   Late today, in nine separate press releases, Governor Pat Quinn announced spending totaling $223.7 million from the infamous "Jobs Now" program passed in 2009 that was justified as stimulus for the Illinois economy at the depth of the recession. Today's press releases are linked here.   While most of the spending under the program has been for legitimate capital projects, Jobs Now has been highly controversial from the start. It was not used as stimulus during...

New Jersey Comes Clean on Pension Numbers; Will Illinois? – WP Original

By: Mark Glennon*   "Our state pensions are really only 33% funded, not 54% as we have been telling you." That's a pretty fair summary of what New Jersey officially said yesterday to its potential bond buyers. Adding in two large local pensions, the funded ratio dropped from 63% to 44%.   The statement was made in the form of a short, clear supplement to an Official Statement for a pending sale of New Jersey general obligation bonds. That supplement is linked here,...

Lame Illinois pension reform voided: Time for the real thing – WP Original

By: Mark Glennon*   A Sangamon County Circuit Court granted labor's motion to invalidate SB1, Illinois' pension reform law. The court's order is linked here.   The court granted labor's motion for a judgement on the pleadings, meaning that no trial is needed and the bill is void as a matter of law. No affirmative defenses are allowed, including the state's "police powers" argument that the state is too broke to pay its bills. That complex defense, which the state had prepared in...

Watch IL State Sen. Don Harmon Make a Fool Himself on Minimum Wage – WP Original

Don't try to talk evidence with a champion of the underprivileged capitalizing on the popularity of raising the minimum wage.

No Easy Task: Consolidating Illinois’ 8,466 Units of Government – WP Original

By: Nancy Mathieson*   Illinois is #1 on another list, this time comparing number of units of government to all other U.S. states. 6,963 is our number published by federal census records, which is actually lower than data provided by our own state records. Illinois Dept. of Revenue shows the state has 7,409 units of government and our own state Comptroller shows we have a whopping 8,466. How did we get here?   Illinois government units are either General Purpose, such as cities...

A No-Cost Proposal to Bring Business and Revenue Into Illinois – WP Original

  "Copy the Delaware General Corporation Law into Illinois law. Just copy it."   By: Mark Glennon*   If you've ever worked as an accountant, lawyer or paralegal doing corporate work, you already know this: Companies in Illinois and other states send a fortune to Delaware every year in filing fees, registered agent costs and related expenses.   It needn't be so. Illinois can keep its money here and money from other states could just as well be coming to Illinois instead of Delaware.   The numbers are...

Pension Transparency: Reform Rauner Can Make Alone – WP Original

By: Mark Glennon*   Public pension numbers are by far the murkiest part of Illinois' fiscal crisis, and the biggest. Pension numbers have been deliberately obfuscated for years by politicians intent on hiding problems and by many actuaries hired by those politicians who are willing to play ball. They've succeeded.   Reform is long overdue, and Governor-elect Rauner can do it alone after he takes office.   Readers here, and anybody who follows public pensions closely, are well aware of the gap between the numbers...

Bruce Rauner Defeats Public Unions, Media, Quinn – WP Original

By: Mark Glennon*   Pat Quinn is rightfully listed last in that headline. He is, and always was, a buffoon.   Rauner dropped the attacks on public unions after the primary, but that was unilateral disarmament. They disgraced themselves with a filthy campaign.   It's not as simple as liberal bias respecting the press, though that's been overt in some cases. Incompetence and simple, old-fashioned muckraking were the larger problems, and they permeated coverage of Rauner from the start.   Rauner also had to defeat a somewhat...

Entrepreneurs at the Polls

  By: Mark Glennon*   My daughter and friend with a hot chocolate stand outside polling place.   Expecting swat team from Quinn's regulators to arrive any minute to shut them down.   Somehow, the Quinn signs seem to have blown over. What a shame.   *Mark Glennon is founder of WirePoints    

A truly eerie pre-election evening in Illinois – WP Original

By: Mark Glennon*   Such a strange and scary feeling in Illinois tonight. I've certainly never felt something like this before an election. It's a sense of foreboding. As if a final assault from an enemy will come tomorrow over the walls protecting the village.  A warm breeze is blowing from the southwest now, but they say it will get harsh and cold again tomorrow.   Maybe it's my perspective and who I've been talking to. I'm not much of a Republican. I...

Needed: A security that ‘shorts’ Illinois if Pat Quinn wins – WP Original

By: Mark Glennon*   Over the past few months I've been trying to find some means to short sell Illinois to hedge against the chance that Pat Quinn wins. Is there perhaps a way to short sell real estate, or bonds issued by the state or its municipalities?   Through my work I am lucky enough to know some very savvy, accomplished financial types, so I have been asking them. No luck finding an easy means. Here's an email that's typical of the...

‘Illinois Math’ Ridiculed, Deficit for Illinois’ Biggest Pension Jumps by $5.9 Billion – WP Original

Another sad installment on Illinois' pension fiasco was released today. But this time, the actuary ridiculed the state's pension accounting and coined a wonderful new term, "Illinois Math."

$111,280,000,000: The cost to employ Illinois’ jobless at the price/job state paid to lure Cronus – WP Original

By: Mark Glennon*   The State of Illinois on Monday proudly announced it had succeeded in bringing Cronus Chemical Company into the state to build a new fertilizer plant.   Cronus will get $52 million in various incentives from the state, according to the Associated Press and other sources.   When operational, the plant will employ 175 full-time people at the plant, and another 25 full-time office jobs will come to Chicago. Construction of the plant also will employ about 1,000, but those jobs are...

Bloody Tuesday for Illinois Taxpayers: Tens of millions to fund Quinn’s new jobs claims – WP Original

By: Mark Glennon*   Not just another day in Illinois. The election is coming up, so open your wallets to fund the pork. Here's what we got today:   Cronus will build a fertilizer plant downstate employing 175, and 25 jobs will be created in Chicago. Cost: $52 million for just 200 permanent jobs!   Coyote Logistic will supposedly add 500 jobs in Chicago. Cost: $2.5 million to taxpayers.   Amazon: 1,000 jobs. Cost: Not known yet, but likely huge. According to the Tribune, "Without knowing where...

Wrongheaded: Civic Committee’s ‘What If?’ Initiative for Illinois Pensions – WP Original

A better question to be asking is, "What if SB1 is upheld?"

‘Et tu’ for state handouts, University of Chicago? – WP Original

By: Mark Glennon*   If there's a phrase synonymous with the University of Chicago, it's surely "free to choose." That's the title of an exceptionally influential book and television series from 1980 by Milton Friedman, the former U of C Nobel economist.   But don't ask if our kids were free to choose whether they should help pay for U of C's new incubator for entrepreneurs, the Chicago Innovation Exchange. Earlier this month, the State of Illinois announced a $1 million grant to...

How the Largest Municipal Fraud in U.S. History was Committed in Illinois – WP Original

How could the treasurer of an Illinois town with an annual budget of $6 million to $8 million steal over $50 million in two decades? Dixon embezzlement provides the toolkit, or the perfect storm, for fraud.

Updated: Slimiest campaign in Illinois is Rep. Carol Sente’s – WP Original

By: Mark Glennon* FURTHER UPDATE 11/4/14: Slime won. UPDATE: 10/24/14 The Chicago Tribune has the same view of Carol Sente in its endorsement today of Leslie Munger. Sente's campaign is "digusting," they said, and Munger is "smart as a whip."   What do you do if you're an Illinois House Democrat in a tough race and nobody is believing the usual fib that your opponent is a right wing nutjob? Why, you say she supports letting pedophiles work in schools -- that's if...

Illinois’ Most Pernicious Pension Lie – WP Original

By: Mark Glennon*   In the October 9 gubernatorial debate Governor Quinn said repeatedly that his administration has been making all appropriate payments into the state pensions. "I paid the proper amount in order to be actuarially sound," Governor Quinn said.   Here is what the state's own actuary said about that. It's in the State's Actuary Report (the "Report") released in December 2013 by the Illinois Auditor General which incorporates materials from the state's actuary, Cheiron. On the first one or two...

‘Socialism in the air’ as Sharkey assumes Chicago Teachers Union leadership

By: Mark Glennon*   Should our kids be taught how to function in a market based economy by those who are lead by somebody who despises it?   With Karen Lewis absent from her role as President of the Chicago Teachers Union for health reasons, Vice President Jesse Sharkey has assumed its leadership.   There was "Socialism in the air" as the International Socialist Organization fondly described their annual conference in 2013 at which Mr. Sharkey spoke -- "a long weekend of education, discussion and...

“Full” Pension Payments Aren’t Full in Illinois – WP Guest

By: Tia Goss Sawhney, DrPH, FSA, MAAA* In the October 9 gubernatorial debate between Governor Quinn and Bruce Rauner. Gov. Quinn said he deserves credit for making Illinois' full pension payment each year he's been governor — something his predecessors didn't do.  While Gov. Quinn deserves credit for making full pension payments when, in fact they have not always been made in the past, what exactly is a full pension payment? You may be surprised to learn that fiscal year 2013’s...

Attorney General Filings Summarized: Illinois is Screwed (and Nuts) – WP Original

By: Mark Glennon*   To grasp the real scope of the Illinois pension catastrophe, think hard about what the state said about itself in court this month, which has gone all but unreported. The governor and others in Springfield may want to talk to the attorney general to get their story straight.   Take the facts asserted by Illinois’ Attorney General in the pension litigation, add a few more facts that aren’t disputed, and it’s clear as day that the entire dialog...

Latest monthly update on state revenue: Meh

By: Mark Glennon*   Every month, the Illinois Commission on Government Forecasting and Accountability updates its numbers on how much revenue the state is collecting for its general fund. Its report for September has some good and some bad news.   Compared to September of last year, total tax receipts are up 1.7%, thanks primarily to a 6.5% increase in income tax receipts. Same story for year-to-date totals, which are up 3% compared to last year.   The bad news is that transfers from other...

Chicago, that universal taxi hailing system you want to build is already built! – WP Original

By: Mark Glennon*   Mayor Rahm Emanuel this week proposed a splendid idea for modernizing Chicago’s taxi hailing system and putting it on a level playing field with Uber and similar new services. His idea is to put out for bid the creation of a new dispatch system or app that would connect to all taxi fleets serving the city.   It’s such a splendid idea that it’s already built. A company named TripThru has been refining it over the last twelve months...

Economic suicide: New study of Chicago area effective property tax rates should leave you speechless – WP Original

By: Mark Glennon,* Updated 9/30/14   A study by the Civic Federation released yesterday computes true, effective property tax rates for Chicago area communities -- the property tax rate as a percentage of actual market value.   Some rates honestly have already reached what is effectively nothing less than confiscation. You have to wonder when taxpayers in many of these places will start grabbing their pitchforks. Residential rates of three percent and commercial rates of six percent are becoming common, and some are...

Worst Illinois pension commentary of the week – from Sen. Cullerton’s lawyer – Updated – WP Original

By: Mark Glennon*   UPDATE 9/29/14 -- See note at end of piece regarding more detailed article my Mr. Madiar.   What a sensible headline: With Illinois pensions, what's past is prologue. Instead of dwelling on the past we have to accept it and move on to solving the problem, right?   Yet Eric Madlar, Senate President John Cullerton's chief counsel, goes on to write about just one thing -- the history of underfunding. His big discovery is that underfunding goes all the way back...

Mind-blowing: The stealth price paid by Illinois homeowners for bad government – WP Original

By: Mark Glennon*   Home values in Illinois have lagged behind national averages in recent years, but the staggering total dollar cost to homeowners is never calculated.   Today, we'll put some numbers on the aggregate amount forfeited by homeowners and discuss the cause. We will do that by comparing home values here to national averages over the last ten years. That is, how much worse off are homeowners here than if their homes had appreciated at the national average?   We start with Chicago...

The one question to ask every candidate for the Illinois House – WP Original

By: Mark Glennon*   In private, few Illinoisans of any ideology would disagree that House Speaker Michael Madigan is at the core of most everything rotten in Illinois. Yet voters and the press forget that the Speaker is elected anew by House members after their own elections, which are coming again in November.   Will you vote to re-elect Michael Madigan as Speaker of the House? That question may seem partisan and pointless but it's not. It's the first question every House candidate...

Chicago has more retired police and firefighters than working – WP Original

By: Nancy Mathieson* Among the many reasons Chicago’s police and fire pensions are grossly underfunded are inadequate long-term planning, legislated benefit increases, pension holidays and overall kicking-the-can-down-the-road. Another factor working against Chicago is the imbalance between active and retired public safety officers. The New York City police pension received some unwelcome attention recently because the number of retirees it supports exceeds the number of active police on the streets. Little known fact: Chicago has the same upside-down relationship between its active...

The lessons we should have learned when Pat Quinn was Treasurer – WP Original

By: Mark Glennon*   A wonderful little story from a former Illinois reporter illustrates so much we should have learned twenty years ago when Pat Quinn was Illinois Treasurer. From Vincent Duffy, now a prominent radio journalist in Michigan:   I was an enthusiastic rookie reporter at an Illinois News Broadcasters Association convention, sitting in a session about making your daily stories even better. I took one bit of advice from that session that I still use today because it often yields great...

Teachers’ unions and Quinn double down on hypocrisy – WP Original

By: Mark Glennon*   Last week, the main political action committee supporting Pat Quinn used by public unions, particularly teachers' unions, signaled an ugly turning point.   The Illinois Freedom PAC released a piece titled Pay to Play Insiders Reward One of Their Own: Rauner.  It blasted Rauner because he had a fundraiser hosted by a former Illinois teachers pension trustee, Jim Bruner, who voted to invest in Rauner's old firm, GTCR.   Bruner, according to the piece, "along with convicted political fixer Stu Levine...

Meet the man who might re-elect Pat Quinn – WP Original

By: Mark Glennon*   If Bruce Rauner beats Pat Quinn in November it will be by a small margin -- probably less than five percent. That's been a widely accepted reality for a long time because Illinois is so heavily Democratic and Cook County Democratic turnout work, both legal and illegal, is so effective. That's especially clear in light of the poll released today showing Quinn with an eleven point lead over Rauner.   And that poll shows Chad Grimm of the Libertarian...

Busted: 45-year-old mortality data hid some pensions’ debt – WP Original

By: Mark Glennon*   If you were obligated to pay pensioners for their entire lives, would you estimate how much you would need using life expectancies from the 1960s for people born between 1914 and 1918?   Jean Lotus, a reporter at the Forest Park Review, just published a splendid article about a few Illinois municipalities recently doing just that. Outdated mortality tables are one way for governments to hide their pension problems from voters.   For more than a decade up to a couple...

Illinois as Unhappy with its Direction as Ukraine, Nigeria, Egypt…Yet Still no Fight – WP Original

In those places at least they are willing to fight for change, however wrongheaded some of them may be on the ends for which they fight and on violence as their means.

Monday morning quarterbacking Illinois pension bonds – WP Original

By: Mark Glennon*   A debate is emerging over whether Illinois' pension obligation bonds, seen through the rear view mirror, were wise.   The idea behind pension obligation bonds is actually pretty simple. Instead of the state funding its pensions, it borrows from the public by issuing bonds and uses the borrowed money to fund the pension, with the pension then investing the proceeds. Whether that works out depends, at least in part, on whether interest the state pays on the borrowed money...

A troubling report on state revenue – WP Original

By: Mark Glennon*   Each month, the Commission on Government Forecasting and Accountability issues an update on how much revenue the State of Illinois is taking in. The August report, including fiscal year-to-date numbers, came out last week. (The state's 2015 fiscal year started July 1).   Unfortunately, year-to-date total revenue numbers are actually down by 6% compared to the same period last year. (See page 7 of the full report, linked here.) Much of the decline is attributable to a decline in...

Labor Day 2014: Face it, we’ve failed workers – WP Original

By: Mark Glennon*   It seems simple enough that we should have figured out how to get it long ago -- an economy where people trade services and goods among each other rapidly enough and at high enough value that each individual can live in dignity. Yet, in Illinois and much of the world, that remains elusive, and it's that central failure that's key to the downward spiral of the middle class and sustained poverty.   There's no need to review the facts...

Lame: Illinois’ new law criminalizing public record destruction – WP Original

By: Mark Glennon*   Governor Quinn this week signed HB 4216 that criminalizes hiding or destroying public records by government officials.   Sort of.   It provides that, “Any person who knowingly, without lawful authority and with the intent to defraud any party, public officer, or entity, alters, destroys, defaces, removes, or conceals any public record commits a Class 4 felony.”   Nice idea, but the problem is that proving intent is always very difficult, and intent to "defraud" doesn't really fit this issue. Fraud is basically...

Has the A.G. already blown Illinois’ best defense on pension reform? – WP Original

By: Mark Glennon*   If the argument made by a coalition of public pensions in their court filing last week is correct (or if pension-friendy judges simply want to rule that its' correct), then the best and only plausible defense the state has for upholding pension reform will have been lost without ever having been presented. Then, it will be fairly be asked why that defense wasn't asserted earlier, and whether the Attorney General's office was out-maneuvered.   The issue is whether, strictly...

Not even fiddling while Illinois burns – WP Original

  An escalating pension crisis, a wasted summer, and The March of Folly.   By: Mark Glennon*   The fate of Illinois will not be determined by most of this summer's headline issues, important as some of them are. It will be determined by how the pension crisis is resolved -- or not resolved. Hundreds of billions of dollars owed with very little available for payment have crippled all the myriad levels of government in Illinois, and some 200,000 public pensioners who either need...

Worst opinion piece of the week: Defending democracy requires keeping our 8,466 units of government

  By: Mark Glennon*   The Founders would surely be proud to know how long democracy has survived, but this would no doubt make them shit. (Even Ben Franklin used that word sometimes so don't get upset.)   Efforts to consolidate Illinois' ridiculously high number of governmental units, 8,466, are now making some folks nervous.   The nervous ones are those who control most of those units because they provide armies of loyal campaign workers and contributors dependent on their political bosses for their paychecks.   But how...

Inadequate Actuarial Work meets Underfunded Pensions and Poor Journalism – WP Guest

  *Tia Goss Sawhney, DrPH, FSA, MAAA*   This article is in response to a recent article in the Forest Park Review, Police and fire pensions in the healthy zone, BGA report: Relative to neighbors, Forest Park funding above average and the rebuttal article in WirePoints, Bad Pensions Meet Bad Journalism: An Example and a Lesson . With one minor exception, discussed below, the WirePoints article presented a good analysis of the health of Forest Park’s pensions using the information readily...

Bad Pensions Meet Bad Journalism: An Example and a Lesson – WP Original

By: Mark Glennon*   Usually, Illinois' 600-plus municipal pensions are ignored by local papers. Maybe that's a blessing because, when they try, they often do readers a disservice.   This week the Forest Park Review ran a story headlined Police and Fire Pensions in the Healthy Zone. It provides a nice catalog of omissions, misunderstandings and outright errors that plague both the media's and public's understanding of the pension crisis. And it's agreat place for point-by-point exposure of many reasons why the Illinois...

$16 Billion to Fix VA Problems; in Illinois, Maybe Not – WP Original

By Nancy Mathieson   Last week Congress approved and the president signed into law a $16.3 Billion plan to ease health care delays at Veterans Affairs facilities amidst recent corruption scandals. However, according to Mike Peck, Superintendent of Lake County Veterans Assistance, a social services agency, "The money’s already there; it’s not a money problem, it’s a management problem.” The VA’s current budget is approximately $150 Billion. The behemoth VA has spent other large amounts in the past with little result. Four...

A Must-Read State Pension Analysis: The ARC and the Covenants

By: Mark Glennon*   A research report recently published by JP Morgan looks at pension obligations for Illinois and other states from several particularly useful and interesting perspectives. It's the best attempt we've seen to quantify how much of state budgets would be required to fix their pensions. Highlights are below, but if you really want to roll up your sleeves on public pensions, read all 26 pages, linked here.   The primary author is Michael Cembalest, who is known for seeing through...

Poll Shows Frightening Voter Blindness to Need for Illinois Pension Reform – WirePoints Original

By Mark Glennon*   There's a stunner buried in that poll released today, more surprising than showing Lisa Madigan is at risk of losing her Attorney General race to challenger Paul Shimpf. Question 20 asked 800 likely Illinois voters if they "support pension reform that would include a reduction in benefits to public employees."   70% said no!   A full copy of the poll is linked here. Had the question been worded differently the response no doubt would have varied somewhat, but that 70%...

Could NRI money have been decisive in Quinn’s 2010 election win? – WP Original

Different ways of determining whether Pat Quinn stole the 2010 election for governor.

“Global Warming Threatens Chicago Tourism” – Really? – WP Original

A travel and tourism adviser to the U.S. Commerce Secretary says global warming is hurting Chicago tourism.

A Week-In-The-Life of Illinois Pensions: Craziness is so Routine – WirePoints Original

New absurdities turn up routinely. Here's one week's worth.

How Online Auctions Move Real Estate in Chicago – WP Original

Fewer financing contingencies move properties quickly.

A Staggering Pension Decision Takes Illinois to the Brink – WirePoints Original

With the stroke of a pen last week the Illinois Supreme Court made subsidized healthcare insurance for public pensioners a constitutionally unalterable right. The economic impact is staggering.

Priceless: lllinois’ new five-year economic plan ignores cost – WirePoints Original

Don't ask the Quinn administration for the price of its new five-year economic plan for Illinois. They don't have it.

Insane implications of keeping two sets of books for pensions – WP Original

By: Mark Glennon*   Should the solvency of the state and many of its cities, and their capacity to fund schools and other essential services, be determined largely by arcane accounting assumptions set by pension boards of trustees or elected officials choosing to ignore professionally established accounting principles?   Public pensions in Illinois effectively soon will be keeping two very different sets of books because new accounting rules take effect next week.   One set of books will comply with the new Governmental Accounting Standard...

Oh, by the way, those troubled pensions now officially several times worse than you were told – WP Original

By: Mark Glennon*   Reality is on its way. This month marks the date of full implementation of new accounting rules that will dramatically worsen reported pension problems.   Public pension critics have been screaming for years about phony pension numbers based on bullshit assumptions. The accounting profession took matters into its own hands. Going forward it will require government pension accounting comparable to what's expected in the private sector. Specifically, the Governmental Accounting Standards Board has new rules known as GASB 67...

Insidious Unfunded Mandate in 2010 Pension Law Looms; Drastic Reactions Begin – WP Original

By: Mark Glennon*   Mostly unnoticed in a 2010 pension bill is a state mandate that towns and cities start a payment plan, in whatever-it-takes yearly amounts, to gradually improve their police and fire pensions to 90% of the funding they need.   And it has teeth. Cities and towns must increase property taxes sufficiently to make the payments. If required pension contributions aren't made, the state will automatically subtract the required contribution from the city or town share of sales and use...

Why Illinois voters should understand the Laffer Curve – WP Original

By: Mark Glennon*   "Please, don't go to the top of the curve!" That was the warning from a Wharton School professor of finance, Robert Inman, in a recent presentation he made at the Federal Reserve Bank of Chicago, speaking in general about tax rates for states and cities. What did he mean? Are Chicago and Illinois at the top of the curve? Those questions may seem obscure, but they're key to our future. Voters don't just need to asks whether more...

Please, no taxpayer funded handouts to the tech startup sector – WP Original

Ubi est mea. -The motto Mike Royko assigned to how things work around here ("where's mine?")   By: Mark Glennon*   Should Illinois taxpayers fund a grant for expansion of a co-working space for tech entrepreneurs, which was announced today? How about other subsidies to promote tech and entrepreneurship? And if public financing is sensible, shouldn't we pay for it ourselves instead of borrowing it from our kids through bond sales? What happened to "ask not...."?   My opinion, as one who has spent a large...

Illinois ‘Jobs Now’ Plan from 2009 still shoveling you-know-what – WP Original

By: Mark Glennon*   More "shovel ready" jobs?   Governor Quinn announced Saturday $20 million in state grants to 47 museums across the state. Opinions may vary about the virtue of those grants, but here's the thing: They were authorized in the "Jobs Now" bill Quinn signed five years ago, sold as a way to stimulate the economy at the height of the recession. Hundreds of millions of dollars on other projects have been announced over the last year under the same Jobs...

An Appalling Twitter Entry by the Illinois Education Association – WirePoints Original

By: Mark Glennon*   Most of you probably think kids should be taught that somebody's death is no time to insult them, even an enemy. Not the Illinois Education Association, evidently.   Yesterday came news that an outspoken critic of teachers' unions and public education, Jack Roeser, died. The IEA took that as an opportunity to tweet a link to its earlier article about him that says "he’s unencumbered by any feelings for children who attend public schools" and likened him to Mr....

The unfunded mandate in Chicago’s new pension law is worse than you think – WP Original

By: Mark Glennon*   "Guaranty provisions" have been highly controversial since municipal unions first began having them inserted into pension reform legislation in 2012. The new Chicago pension bill contains a real doozy that's been mostly overlooked.   As you probably know, the new state law requires Chicago to make payments into two of its pensions, starting at $50 million next year and increasing each year to $250 million in year five. Thereafter, the city must make payments sufficient to bring the pensions'...

The headlines should have been “Bill OKs More Taxpayer Debt to Chicago Pensions” – WP Original

By: Mark Glennon*   How does this pension reform plan sound? "We'll put billions of dollars into the pensions in distant years. Dunno where we we'll get it."   That's not reform and not a plan -- just unfunded debt -- but that's a pretty fair summary of the new bill many headlines are calling Chicago's "pension reform plan."   Yes, the bill awaiting Quinn's signature includes meaningful reductions in pension benefits that will help. But here are the facts of overriding importance, and these...

Wasn’t Obamacare supposed to keep patients out of costly emergency rooms? – WP Original

By Nancy Mathieson*   Almost 50% of emergency room doctors polled said they’ve experienced more patients coming through their doors since January 1st, the day coverage took effect for millions under the Affordable Care Act (ACA) - Obamacare.   But wasn’t keeping people out of hospital E.R.’s one of the selling points of Obamacare? We’re now finding out that healthcare coverage is not the same as access, especially in downstate Illinois where doctors are already in short supply and psychiatric facilities are...

The wheels could come off in Illinois sooner than expected – WP Original

“How did you go bankrupt?" Two ways. Gradually, then suddenly.” ― Ernest Hemingway, The Sun Also Rises   By: Mark Glennon*   How will rating agencies, bond investors, and Illinois employers react when the legislative session ends this Saturday? Here's what they will be seeing, by all indications to date:   -A slopped-together state budget that even supporters admit is full of borrowing, accounting gimmicks and can-kicking. -A Cook County pension bill that provides no clue how the county will meet financial commitments it contains, and...

Onward and Upward: We’re cranking it up at WirePoints and making some changes

By: Mark Glennon*   Our readership continues to grow nicely here at WirePoints, and you will be noticing the following changes:   Nancy Mathieson joining as Contributing Editor. Nancy has a 30-year career in business, securities regulation and public policy. She was formerly a Director of Market Surveillance at the New York Stock Exchange, where she managed a professional staff in investigating for securities trading violations. Most recently, Nancy was Operations Director at Truth in Accounting, a Chicago non-profit whose mission is to...

They’re toast: The impossible fiscal situation of many Illinois cities and villages – WP Original

By: Mark Glennon*   Why didn't you tell us? How could you have done this to us? That's the kind cry we'll soon hear from both taxpayers and retirees in many local Illinois police and fire pensions when they finally realize how little of their pensions will be paid. Officials and pensioners' unions haven't leveled with them, whether because of cowardice or failure to look at plain math.   Just what solution is even conceivable for cities like Springfield, Joliet, Rockford and many...

Obamacare in Illinois: by the numbers – WP Original

By: Nancy R. Mathieson*   The 2014 enrollment period for Obamacare health insurance was Oct. 1, 2013 to April 19, 2014. Open-enrollment for 2015 begins November 15th. Here’s a recap for Illinois:   Who signed up? The federal government reports more than 217,000 people in Illinois enrolled, with no differentiation made between those who bought and those who bought and paid. Of that total, 104,000 or nearly half enrolled between March 1st and April 19th. A new McKinsey survey reports a large majority...

The math is clear: Pat Quinn stole the 2010 election using taxpayer money – WP Original

By: Mark Glennon Can a candidate for governor pick up 32,000 votes by spending $50 million? Easily. Anywhere. That's over $1,500 per vote. In Chicago, you could get Mrs. O'Leary's cow elected at that rate.   Pat Quinn won the 2010 election for governor by just 32,000 votes, a margin of less than one percent. He spent $54 million on the "anti'violence" program that's now subject to multiple investigations and widely accepted to have been little more than a vote buying and...

Forget the false choice between defined benefit and 401(k) style plans for public pensions: A hybrid is better – WP Original

By: Mark Glennon A false choice dominates much of the public pension reform debate. Public pensions today are mostly "defined benefit plans." They promise retirees certain amounts hell or high water (in theory) -- irrespective of returns on the pension's underlying investments or the economy in general. Replacing them with something like the 401(k) plans common in the private sector is widely discussed. With those plans, the employees pick their investments and returns are uncertain.   A far preferable alternative to either...

Keeping our Families Together – WP Original

  By: Leslie Munger*   As parents, we spend our lives doing everything we can to help our children be successful – in sports, extracurricular activities, and most importantly, in school. Raising children is all consuming, from the day they are born until you send them off to college. And then, in the blink of an eye, college is over and they’re graduating and beginning their careers.   Our older son graduated last May from the University of Illinois with his B.S. in Mechanical...

The ultimate issue for broke Illinois cities surfaces: What kind of insolvency proceeding will the state allow? – WP Original

  April 16, 2014 By: Mark Glennon* If Springfield lawmakers eventually answer this right, an orderly, fair, though difficult proceeding would be available to desperate Illinois cities, but getting it wrong would be catastrophic: What form of insolvency proceeding will Illinois allow for its broke cities? Some of the folks who matter aren't just facing up to the ugly financial math but are raising that key question, which ultimately will drive dozens of issues critical to the future of many Illinois cities,...

Illinois legislature considering burdensome minority disclosure requirement for pension investment advisors – WP Original

April 12, 2014 By: Mark Glennon Illinois pensions outsource most of the work managing their money to private sector investment advisors. The Illinois legislature is considering requiring those advisors, as a condition to getting any work from the pensions, to disclose how many of their senior staff are minorities, female or disabled, and how many contracts they have with companies that are minority owned or using minority staff for their work. The full text is here, sponsored by Senator James...

To a few of the good guys behind the scenes in GrubHub’s formative years: Bravo – WP Original

April 9, 2013  By: Mark Glennon How did two young guys with a business plan become a two billion dollar public company in eight years?  GrubHub had some unsung champions on its side during its formative stage who deserve special credit, not just for their role at GrubHub but more broadly for what they've done to make Chicago the startup hub it has become. I served on GrubHub's board and with a firm that funded part of its 'B' round of...

Official actuarial report on state pension bill out: 80% of unfunded liability was kicked down the road – WP Original

March 27, 2014 By: Mark Glennon Still think the pension reform bill passed last year was "comprehensive," as the press and Governor Quinn called it? Based on the state's official numbers that it released yesterday, buried behind all the other budget and tax news from the state,  at least 80% of the unfunded pension liability was kicked down the road.   Specifically, Illinois released its actuary's official scoring of last year's pension bill, linked here.  It includes the expected unfunded liability for...

Illinois hiding from data essential to considering Madigan’s surcharge on the rich – WP Original

  March 21, 2014 By: Mark Glennon How much of the new revenue that would come from higher taxes on Illinois' rich would be cancelled out because they leave or change their residence? While anecdotal evidence is overwhelming, don't expect your lawmakers to have the most obvious empirical data they should have to answer. House Speaker Michael Madigan yesterday proposed a referendum to authorize a 3% surcharge on incomes over $1 million, which he claims will raise $1 billion per year. More...

The teachers union ‘enemies list’ scandal – more deceit, more facts – WP Original

March 17, 2014 By: Mark Glennon Last week we wrote about the liability issues raised by the "enemies list," as Bloomberg called it, whereby the American Federation of Teachers seeks to muzzle financial firms and people engaged in First Amendment protected speech the union doesn't like. The AFT recently expanded the list to target supporters of the 'Illinois is Broke' campaign, including Aon Corp and Chicago's GTCR.Pension & Investments, a sister publication of Crain's, has a further story today in...

Program by Teachers Union to Crush Political Activity on Pensions Expands in Illinois; Multiple Questions of Impropriety and Illegality Arise – Updated – WP Original

March 15, 2014 By: Mark Glennon Conduct taken by a major teachers' union should shock the conscience of anybody concerned about government abuse and respect for rights of free expression and association. The conduct raises serious questions about violations of constitutional rights, statutory rights and breach of fiduciary duties. The program, conducted by the American Federation of Teachers, has now expanded its list of targeted people and groups in Illinois. Here are the facts, as reported yesterday in stories linked...

The ‘scarlet letter’ tax Illinois pays for its dirty reputation – WP Original

Updated March 13, 2013 By: Mark Glennon Illinois, we already knew, pays a penalty rate to borrow money because of its bad credit rating, which taxpayers ultimately bear. What we didn't know is that, beyond that credit penalty, we pay a still higher rate because of our dirty reputation. An analysis by the Fiscal Futures Project at the University of Illinois' Institute of Government and Public Affairs found that even after controlling for different credit ratings and fiscal, economic and financial...

In Illinois Senate, Leadership in Both Parties Must Finally Acknowledge Full Severity of Pension Crisis – WP Original

March 6, 2014 By: Mark Glennon Springfield is taking its time about it, but soon, hopefully, it will legislate reforms of city and local pensions, including Chicago's, which are in desperate shape. If real reform is to happen, both President John Cullerton, head Democrat in the Illinois Senate, and Minority Leader Christine Radogno, chief of the Senate Republicans, need to face up to just how bad things are.Let's first be clear. Christine Radogno is no John Cullerton, and Radogno's...

UPDATED: Unions pour more money into phony ‘Republican’ PAC running negative ads – WP Original

March 5, 2014 By: Mark Glennon Over the past two days five labor unions contributed an additional $485,000 to the "Republican Fund for Progress and Jobs," which is using the money to fund the ad campaign against Bruce Rauner, Republican candidate for governor. Details are linked here.The fund is not Republican. Last month the Illinois Republican Party, by unanimous vote of its State Central Committee, issued a formal cease and desist  against the group, demanding that it stop using the...

Why is Bruce Rauner Running for Governor? Some Telling Comments from 2003

March 4, 2013 By: Mark Glennon Rich Miller at CapitolFax dug up some telling comments by Bruce Rauner from nine years ago. This speaks to the question of why he's running; why a gazillionaire would want to run for office in Illinois:  Ego? Power? More money?  I've already chimed in my support for Rauner, but I think this is a useful addition because I believe it's an accurate reflection of what he's about. From Miller's piece today: ake a look at...

In Depth: The Hidden Perils in Illinois Local Police and Fire Pension Plans – WP Original

February 27, 2014 by: James T. Palermo* Every Illinoisan who follows the news knows our five statewide public pension funds are in terrible condition. According to the Illinois Commission on Government Forecasting and Accountability (COGFA), the unfunded liability of those five statewide funds is approximately $100 billion. More conservative estimates using market based discount rates place the underfunding at closer to $200 billion. Though lesser known and not yet the subject legislative reform, the troubles facing Illinois municipalities are every...

Can 401(k) Style Pensions Work in Illinois’ Local Pension Plans?

February 23, 2014 By: James T. Palermo* An element of the recently passed but yet to be litigated Illinois pension...

Social Entrepreneurship Done Right: Ted Gonder and Moneythink Tackle Financial Illiteracy – WP Original

February 21, 2014 By: Mark Glennon* Financial illiteracy, it's pretty safe to say, is at the root of many of our problems: over-leveraged homeowners, voter ignorance about government fiscal problems, the retirement planning crisis, susceptibility to predatory lending...the list is long. Ted Gonder, a Chicago social entrepreneur, is taking on the challenge at the high school level. A not-for-profit venture that he co-founded, Moneythink, runs financial literacy programs for urban youth. I saw Ted do his thing recently in front of...

Colossal Deceit and Hypocrisy in Illinois Public Union Ad Campaign Against Rauner – WP Original

  "Would Cinda Klickna and her teachers' union like their pension investment in Bruce Rauner's firm rescinded, profits disgorged, and their vote for it annulled, since they think it's so tainted? Fat chance."   February 16, 2014 By: Mark Glennon Bruce Rauner is a sleazy profiteer who squeezed public pensions to make his fortune -- that's what the public unions are telling us in their $2 million media campaign underway now. In one case they often cite, GTCR, Rauner's old firm that...

Union, Democrat funded campaign to commandeer Republican primary launches: Just imagine if situation were reversed – WP Original

February 12, 2013 By: Mark Glennon Suppose right wing groups started pouring big dollars into an Illinois Democratic primary race through PACs they passed off as "Democratic," intending to knock out the guy they feared most before he got to the general election. And suppose the Republican Governors Association helped fund that effort. Screams about deceitful subversion of the primary would be deafening -- and those screams would be justified. That's the campaign unions and the Democratic Governors Association launched this week,...

Rich = Bad: Kirk Dillard’s new ads make unequivocal attack on wealth – WP Original

February 6, 2013 By: Mark Glennon Kirk Dillard, Republican candidate for Illinois governor, just released some new ads against opponent Bruce Rauner, a couple of which equate wealth with evil as unequivocally as anything that came out of Occupy Wall Street. The two ads are linked here:               They don't even mention Dillard's own name, their sole point being that Rauner's wealth makes him hypocritical, uncaring and unfit for office.   If there's a Democrat somewhere in the country engaging in class warfare...

Chicago can be the epicenter of an American energy revolution: Steve Forbes and Rahm Emanuel

January 15, 2013 By: Mark Glennon CNBC ran a rather extraordinary interview this morning with two guys who aren't exactly kindred spirits, Rahm Emanuel and Steve Forbes, agreeing that Chicago can be the epicenter of the energy production revolution underway in America.   Emanuel: "Washington is not talking about this.... The biggest revolution equal to the Internet is the energy independence in the United States."   Forbes: "Midamerica is going to have a real renaissance and Chicago is going to be the center of...

Econ 101 on the minimum wage debate in Illinois – WP Original

January 8, 2013 By: Mark Glennon   Last week Bloomberg ran a wonderful article titled 'Someone please help the New York Times with Econ 101.' It should have been directed it to us in Illinois, too.   It summarizes the evidence that, if you increase the minimum wage, you help those who keep their jobs but you also cause others to lose theirs. As a then-liberal-leaning Econ student long ago, it seemed clear to me that it was pretty much a wash and...

Brain Freeze? Illinois Spending Billions on Global Warming – WP Original

  January 6, 2013 By: Mark Glennon   If you've been outside today and need something to steam you up, this should work: Illinois is spending untold billions -- yes, billions -- of dollars every year to cool the climate.  It's "untold billions" because, while it's clearly in the billions, nobody bothers to measure the cost of many governmental programs to cool climate by lowering carbon emissions.   The long list of Illinois programs to fight global warming is below. Among them is the...

Illinois, forget the usual resolutions: 2014 is about duty – WP Original

  January 1, 2014 By: Mark Glennon   Forget the usual New Years resolutions, important as some of them may be. A generational call of responsibility far more important is upon every one of us in Illinois in 2014. This is about the fundamental obligations we owe back to society and core duties of citizenship.   You and I will answer for whether those who broke Chicago and Illinois -- financially, reputationally, and morally -- will stay in power. Each of us has an...

Bruce Rauner for Illinois Governor: 36 Reasons – WirePoints Original

  December 26 , 2013  By: Mark Glennon Straight to the point, here's why Bruce Rauner should be the Republican nominee for Illinois Governor: He's financially conservative and socially moderate -- like the majority of us, and we're fed up with the extremists in both parties. He's superbly competent in finance and management efficiency -- the things Illinois most needs. His career was in private equity, the best performing asset class of the investment world, and he was a superstar in it....

Thanks to a Local ‘Steed of Apollo’ for a Magical Christmas Eve – WP Original

December 24, 2013  By: Mark Glennon Had I known 45 years ago that someday I'd be introducing my son to Jim Lovell, Christmas Eve that year would have been still more magical than it was.   As a kid that night I was mesmerized along with pretty much everybody on the planet with a TV. The first people ever to leave Earth's orbit circled the Moon and Jim Lovell, along with the rest of the Apollo 8 crew, delivered an extraordinary broadcast....

Unions Looking to Subvert Republican Primary to Stop Bruce Rauner – WP Original

December 22, 2013  By: Mark Glennon   "I still can’t believe that no other media outlet has yet picked up on the fact that the unions and others are about to jump into the GOP primary against Rauner." That's from influential political reporter Rich Miller yesterday. Union bulletin boards are alive with discussion about the idea, with the Illinois Education Association -- a teachers' union -- apparently at the forefront of the possible effort.   Unions are freaked out that Bruce Rauner, an...

Nobel Prize Winner Flags the Central Lie in Illinois Pensions – WP Original

  December 19, 2013  By: Mark Glennon This year's winner of the Nobel Prize in Economics, Eugene Fama from the University of Chicago, recently made some blunt, grim comments about Illinois pensions that our media ignored. You can't assure payments of fixed amounts to retirees, he said in a recent interview, through a system built on the assumptions Illinois uses. Not by a longshot, and the consequences are huge. His words: The pension liability is much worse than people...

Unintended Consequences: Illinois doctors and patients face new challenges under Affordable Care Act – Guest Article

  December 11, 2013 By:  Nancy R. Mathieson* You may be following the story of South Carolina cancer patient...

Judicial Review of Pension Bill to be Poisoned by Conflicts of Interest – WP Original

  December 7, 2013 By: Mark Glennon   All core parts of the pension bill recently passed are suspect under the Illinois Constitution, which says pensions cannot be "diminished or impaired," and the bill will now go to Illinois courts for review.   Illinois judges, like judges everywhere, are supposed to avoid conflicts of interest and the appearance thereof. Disqualification of a judge is mandatory under the Illinois Code of Judicial Conduct if a judge or the judge's spouse, parent or child "has an...

The standout legislator in yesterday’s pension scheme hearings – WP Original

  December 4, 2013 By: Mark Glennon   In yesterday's hearings (more like a show trial) on the 325 page pension bill that most legislators had only a day to review, one young woman stood out: Rep. Jeanne Ives (R. Wheaton).   In the bill there's an option for state workers to participate in a 401k-type plan instead of a pension, though only five percent of workers may do so  -- that's to force most younger workers to stay in the pensions to subsidize...

Pension bill passes: now we’ll find out what’s in it. Here’s what we know so far – WP Original

  December 3, 2013 By: Mark Glennon   The pension bill has passed both houses and will be signed by Governor Quinn.   Savings from the bill will be material but hardly "comprehensive" or "sweeping" as many have claimed, eliminating at the most 20% of the official $100 billion unfunded pension liability, and that's undisputed. Expect that percentage to turn out much lower. Proponents focus on claims the bill will save $160 billion over thirty years, which the media are reporting as fact. It's...

Today’s Fat Cats Get Special Exemption Under Illinois Pension Deal – WP Original

  December 1, 2013 By: Mark Glennon   Under a particularly galling provision in the outline of the pension deal recently released, today's fat cats get special protection.   Means testing should be a key theme in any pension cuts. That is, small pensioners who really need their pension, who worked to a true retirement age and didn't spike or double dip, deserve more protection than fat cats with excessive pensions. Towards that end the pension deal appropriately includes a "pensionable salary cap" --...

Wow! Prominent IL Democrat in Smackdown Match with Leading Union Activist – WP Original

December 1, 2013 By: Mark Glennon   Professional wrestling was never this entertaining: a credentialed Illinois Democrat in a nasty smackdown with a leading union guy.   In one corner, David Ormsby: longtime political strategist and writer. Not exactly my kind of guy because most of his earlier career was working for the Cook County pols like Madigan and Daley who bankrupted Illinois and Chicago.   In the other corner, Fred Klonsky: union activist with a leading blog in the state for public employees. He's...

An independent, honest actuary’s response to the Illinois pension deal – UPDATED

  November 30, 2013 By: Mark Glennon John Bury is an actuary and a nationally recognized pension expert in New Jersey, who writes regularly about public pension plans around the country. I sent him the link to the outline of Illinois' pension deal that was released yesterday and asked him to take a look. He sent this response, which is also on his site: UPDATE (3:00 PM, 11/30/13): Mr. Bury wrote up his critique of the pension proposal point by point, which...

Let the unions kill the new Illinois pension deal

November 29, 2013  By: Mark Glennon   Today, key Illinois legislators released the list of "details" of their long awaited pension deal. The release is linked here. It's just one page. A draft of the actual bill is still kept secret. Most legislators haven't seen that yet, and may not until hours before the vote. Here are a few highlights and comments:   It won't save nearly enough to solve the problem, and it certainly isn't "comprehensive" -- as even some Republicans are...

Governor Quinn’s Whopping Lie About the Pension Deal – WP Original

  November 28, 2013, By: Mark Glennon   Yesterday, Illinois Governor Patrick Quinn issued a statement about the recent pension agreement among legislative leaders in which he said: When I proposed the creation of a conference committee in June, I asked members to draft a plan that eliminated the unfunded pension debt and fully stabilized the systems, and this plan meets that standard. (Emphasis added.) In fact, no more than about 20% of the unfunded pension debt would be eliminated under the agreement, which...

More evidence big taxpayers are fleeing Illinois – WP Original

November 7, 2013 By: Mark Glennon Spend some time collecting signatures on petitions in high income areas like Kenilworth, Lake Forest or Winnetka to put candidates on the ballot for Illinois elections and you'll too often hear something like this: "Sorry, I've changed my residence out of state," or "I vote in Florida now." Still more people joke about it, saying they intend to change their legal residence soon. I've heard it myself collecting signatures in those places and repeatedly...

Illinois, don’t throw the game to reform opponents: Reject what’s coming from the pension committee

November 3, 2013, By: Mark Glennon "We're at the one yard line." That's how State Rep. Elaine Nekritz recently described progress by the special Illinois legislative conference committee towards presenting a proposal to fix state pensions. Wrong football metaphor.   No, it's not that the committee will "punt" on pension reform. It's worse than that.   The right metaphor is from Green Bay Packers defensive back Charles Woodson last year about Bears' quarterback Jay Cutler. Woodson said the Packers will win because "Jay will...

New U of I Study: Outlook bleak for state, tax increases didn’t solve much – WP Original

October 29, 2013 By Mark Glennon   The Fiscal Futures Project is sponsored by the Institute for Government and Public Affairs at the University of Illinois and sponsored by the MacArthur Foundation. It recently issued three new research papers looking at the income tax increases of 2011 and subsequent effects on Illinois' budget when they sunset in 2015, linked here.   Among the conclusions: -- Illinois’ economy has been in worse condition than our Midwestern peers since January 2011. This can be attributed to...

New study totals city pension burdens as percent of their revenue: Chicago stinks

October 28, 2013 by Mark Glennon   The Center for State and Local Government Excellence is a non-partisan, non-profit research organization. They recently completed a comprehensive study measuring city pension burdens in a new way. They added all required pension contributions for a given city and compared the total to the city's total tax revenue. This approach makes sense, though it may be too kind to cities with relatively high tax collections like Chicago, making them look better. The average total...

Smash the Old Molds: Lt. Governor Candidate Evelyn Sanguinetti Will Surprise When You Hear Her – WP Original

October 13, 2013   Today I heard an important newcomer to Illinois politics speak: Evelyn Sanguinetti, candidate for lieutenant governor and Bruce Rauner's running mate. These are my impressions of how she comes across live and my take on reaction from the roughly 40 people she spoke to.   For some background, throw out the usual correlations and cross tabs for this one. This is a female, Hispanic, Republican who's not afraid to talk about the need for safety net programs. Her mother...

Here’s the very latest from Illinois’ pension reform committee – WP Original

  October 11, 2013   Pension reform in Illinois, as those who follow it know, is in the hands of a special committee of ten Illinois lawmakers. Direct from a committee member yesterday, here is the latest on the proposal they will likely end making to the Legislature:   - $138 billion reduction on pension outlays over thirty years (presumably, mostly through COLA changes), though members are still $12 billion away from full agreement on that number. -Those reductions are heavily back loaded. -Senate President John...

Corporate relocation incentives: A problem with no solution – WP Original

By: Mark Glennon*   October 5, 2013   State governments' love-hate view of relocation incentives ends up with love winning, and there's no clear way to change that.   Two Illinois legislative leaders put this question directly to a group of prominent investment professionals at a lunch meeting I sat in on a couple years ago: "How can we stop these demands for tax breaks from companies threatening to leave the state?"  Dead silence. Not one had an answer or even a thought. The...

The “average” public sector pensions numbers every Illinoisan should read

September 27, 2013 You've been lied to. Pension supporters and public employee unions have long gotten away with claiming average pension payments are in the thirty to forty thousand dollar range. That was dishonest.  Those averages include pensioners who worked part of their careers in jobs not covered by the pension, part time workers and early retirees.  Those retirees have additional retirement income from other sources. The relevant averages are for people who work a full thirty years in a...

Where it really matters, Chicago’s unfunded pension liability per household is a whopping $900,000 – WP Original

  September 27, 2013 If you follow the pension crisis you're probably especially alarmed by the per-person estimates of unfunded pension liabilities.  What's overlooked, however, is that most Chicagoans can't contribute meaningfully to paying down that debt, so the true numbers for those who would have to pay are far, far higher. Per capita income in Chicago is only $28,000, or about $48,000 per household. Almost half of Chicagoans are in or near official poverty. Will they be asked to pay...

The Real Moral of the $670,000 Capitol Doors – WP Original

  September 11, 2013 "What dumb ass signed off on this?"  If the the state was like a corporation its CEO would have that email in his face from everybody on his board of directors the morning after the papers first ran the story that $670,000 was spent on new capitol building doors. In a properly run larger company the CEO would probably answer something like,  "I'll find out and get back to you within the hour." And when that answer...

Superb negotiation strategy of pension reform opponents has them ahead — for now – WP Original

  September 8, 2013   We pension critics have to admit it. Though public opinion is now shifting a bit towards pension reform, it's a different story in Springfield where reform opponents are far ahead. That's thanks to superior negotiation strategy by  unions and the politicians they influence. Here's what savvy negotiators do and why reform opponents excel:   14.00 Normal 0 false false false EN-US X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} •Smart negotiators cry a river over things that mean little to them, tricking opponents into thinking...

Everything you need to know about actuarial standards in public pensions — in five short points

  August 30, 2013   Just about all numbers you see reported on public pensions come from actuarial consultants hired by the government, whose work accords with "industry convention."  That's very comforting to most taxpayers and reporters, lawmakers learned long ago. John Bury, an actuary and critic of his industry, says "industry convention" for public plan actuaries consists of five rules:   1. Keep contributions low.   2. Make valuation reports difficult to understand.   3. Keep contributions low.   4. Get paid as much as possible.   5. Keep contributions low.   Elegantly...

Even the first step towards fairness in pension reform is ignored in Illinois – WirePoints Original

  Pigs and Paupers, Pensions and Parity   August 25, 2013   If, in blinding contrast to reality, Illinois wanted to reform pensions fairly it would first have to define and tally up what might be called "the really-must-pay" priority pension claims.  That means pensions truly needed by certain retirees -- pensions in reasonable amounts that start at a true retirement age -- not the scandalous ones we read about so often for people still working, spikers and double dippers, or pensions that are...

“Reform” Committee Teeing Up Pension Liability for Huge Kick Down the Road – WirePoints Original

  August 23, 2013   An outline of ideas being considered by the 10-person Illinois pension committee circulated today. Links are here for Reuters and AP articles. The outlined ideas are not finalized but this does give us the best indication yet of what the committee is considering.   Kick the can.  Kick it hard.  Kick it out of the end zone. That's the summary. Here are the specifics in the outline:   - Set COLAs at half the inflation rate instead of the current flat...

Bankruptcy is not an option for Illinois cities or other units under current law

  July 29, 2013   Perhaps you've started wondering whether the Bankruptcy Code could offer a fresh start to Illinois, Cook County, Chicago, or other units of the state. Through bankruptcy, maybe they could cut some debt, renegotiate labor contracts, reduce pension liabilities, reschedule obligations, cancel bad contracts -- all things that happen in the private sector?  Bankruptcy occasionally works for people and companies so why not for government?   Don't count on it.   Most bankruptcies you know about are under Chapters 7, 11, and...

‘How Money Walks’ — Especially from Illinois

  If you wonder what out-migration does to Illinois' tax base, take a look at numbers compiled by Travis Brown, author of How Money Walks. They are devastating.   Between 1995 and 2010, based on data from the Census Bureau and and the IRS, 42 million Americans moved between states -- about one-seventh of the population -- taking with them $2 trillion of annual net adjusted gross income ("AGI", as defined by the IRS). Florida, Texas, and other low tax states hit...

“No pension reform, no paychecks”? Why not “no pension reform, no pension contributions”? – WirePoints Original

June 11, 2013 Governor Quinn now says he will withhold pay for state legislators until they pass a pension reform bill. Reaction is generally positive, most commentators saying this is smart politics and a good way to pressure lawmakers, though probably unconstitutional -- but never mind that technicality.   Shame on Illinois.  This is a dangerous gimmick. There's a profoundly important principle behind the Illinois' constitutional provision that says "changes in the salary of a member shall not take effect during the...

The money is gone — a timeless movie clip for IL legislators and public union bosses

    A financial advisor tries to explain what it means to "have no money" to Walter Matthau's character in A New Leaf linked here. Should be required viewing in Illinois.  

The Empire Strikes Back: Union-Supported Bill to Lien State Cash for Pensions Passes State Senate

  "Pension reform"? Or is it fairer to think of it as a lien on all state cash to ensure it will be spent on pensions ahead of other things. The Illinois Senate today approved  SB 2404 sponsored by Senate President Cullerton and municipal unions.  The proposal would cut pension obligations only a bit.  Greg Hinz of Crain's, who is hardly a pension hawk, says of the bill: "over the next 32 years, taxpayers still would have to put in...

Madigan offers his pension reform proposal – WirePoints Original

Illinois House Speaker Michael Madigan finally weighed in yesterday on pension reform, offering a proposal that will surely become the front runner. It already won approval today from the House Personnel and Pensions Committee. Cuts to pensioners -- and there are some -- largely mirror those in the earlier Nekritz-Biss proposal. Details are in the Reuters article here.   Overall, it's as bad as we should have expected.  First, like Nekritz-Biss, it does not reduce pension liabilities enough.  While a full...

What Illinois state-sponsored fraud should be telling us – WirePoints Original

Yesterday the Securities Exchange Commission issued an order that included findings that the State of Illinois committed fraud in  statements and omissions it made about its pensions in bond offerings during the Blagojevich years.   Governments have powerful incentives to understate their pension problems, and this chapter shows just one reason why.  The SEC focused on bond sales, and bond prices are based on overall financial health of the state.  Hiding pension problems lowers borrowing costs, but politicians have even bigger...

What Governor Quinn “meant to say” in his budget address: WirePoints Original

Governor Pat Quinn delivered his annual budget address today to a joint session of the General Assembly.  It was mostly finger pointing at legislators for lack of action on pension reform, but he covered other topics.  Below in regular print are real lines from the speech.  Beneath each line we've added, in italics, what he meant to say.   This is  an honest budget. There are no gimmicks or fake numbers in this budget. Glad I'm not CEO of a public company. ...

Parsing through some good news for Illinois — it’s tricky: WirePoints Original

  All's not lost in Illinois. Let’s pull together a few recent articles on the good stuff -- carefully. First, downtown Chicago is thriving. In a detailed, thoughtful piece in Crain’s, Greg Hinz recently called Chicago’s downtown the “hottest urban area in the U.S.,” and he backs it up with facts. Crain’s and Mr. Hinz often understate our problems, but downtown’s prosperity is real, albeit nuanced with paradox. Downtown Chicago is the top beneficiary of a genuine megatrend –- reversal of...

Udate on pension reform and baffling gamesmanship from Madigan – WirePoints Original

What's going on?  Take your guess. Earlier this week several leading legislators from both parties jointly sponsored a new, broad pension reform proposal described here.  That proposal is a serious one. Sponsors include Democratic Senator Elaine Nekritz and at least one bona fide fiscal conservative who understands numbers, Republican Representative David Harris. But afterwards House Speaker Michael Madigan, de facto ringmaster of Illinois government, proposed to the House for immediate vote a list of very specific and tough pension cuts, such...

Government workers, Quinn have deal for new contract – just don’t ask what it is – WirePoints Original

Congratulations, Illinois. Governor Quinn and AFSCME, the union representing some 35,000 state workers, announced they have reached a deal for a new contract. Just don't ask what the deal is or how much it will cost us. Neither AFSCME or Quinn are saying, and no terms are released. The contract must be ratified by AFSCME workers and details will come out as part of that process, but in the meantime you'll just have to trust our governor. That's the same...

Chicago Teachers’ Pension Sinks Further Into the Abyss

  As reported by Crain's this week, problems for Chicago Public Schools worsened with the release of a report showing it will have to come up with an extra $400 million for its pension next year, $70 million more than had been expected.  Bad as that is for Chicago schools, the broader lesson is much more frightening.   The report by actuarial consultants for the Chicago Teachers Pension Fund says the fund returned negative 0.4% last year, not 8% as it assumes...

Why Kekua — Manti Te’o’s girlfriend — has so much to do with our pension crisis – WirePoints Original

"Kekua" might be defined as "fiction copied from one story to another in the media echo chamber and assumed to be fact."  The infamous story of Lennay Kekua, Manti Te'o's girlfriend, was copied and repeated endlessly until somebody finally checked her out and learned she never existed. Virtually every news story one reads about Illinois pensions mentions our "$97 billion" unfunded pension liability.  That's the size of the problem, most everybody who follows the pension crisis will tell you.  Actually,...

If those unfunded pensions shown on your property tax bill made you sick, get sicker – WirePoints Original

Property tax bills in Cook County arrived last week and they include what seems like a nice step towards transparency about the pension crisis.  Not really.  It's much worse than it appears. For the first time tax bills show unfunded pension liabilities for units of government towards which your property taxes are paid directly.  They show just the ones funded by your own property taxes, which means most taxpayers will see roughly eight to ten units and their pension deficits....

Haves and Have Nots in Illinois Pensions – WirePoints Original

Illinois public pensioners range from the deserving, borderline impoverished to the undeserving, shameless pigs, yet those disparities are all but ignored in pension reform discussions.  The premise here is that haircuts are unavoidable and the haircuts will be large -- many pensioners will not get benefits nearly as big as they are scheduled to get, and no tax increases or other reforms will solve the problem, however unfair or immoral that result may be.  That premise is unassailable, as...

“Don’t frighten the children”- an actuary’s view of Illinois’ phony pension numbers

How could the state get away with lying about the size of the pension problem and why would the media be asleep at the switch?  Here's how it happens: The key number in the pension debate is the estimate of unfunded liability.  Illinois claims the total unfunded liability for the five state guarantied funds is $96 billion, a figure the media endlessly repeat without scrutiny. That figure changes dramatically if you change its underlying assumptions, particularly the annual rate of...

Updated: Bombshell provision in Illinois pension “reform” efforts – WirePoints Original

UPDATE- John Bury, a widely read actuary focused on pensions and quoted in this post, emailed me with his comments on this post, which I have copied below and they should be read. The Nekritz-Biss pension reform proposal being debated now in Springfield includes the "ironclad guaranty" below sought by unions to assure the state makes pension contributions.  This provision would effectively outsource budgeting for pensions to state courts. Never mind for now the other problems with the proposal. Beginning July...

Only a devastating shock will get real action on Illinois pensions, but what? – WirePoints Original

  "I think it's going to reach a point where there's either social disorder or bankruptcy before people will act." That’s what Richard Ravich said about Illinois. He led the New York Metropolitan Transit Authority during that city's financial crisis of the mid-1970s and co-authored a the recent bipartisan State Budget Crisis Task Force report along with former Fed chief Paul Volker. You already know if you’re a regular here that our financial plight is much more desperate than commonly understood and...

Lessons from “On the Waterfront” for Illinois progressives and unions – WirePoints Original

  “You’ve been off in Daisyland.” Terry Malloy   Let’s first be clear: Violent corruption of the kind depicted in Marlon Brando’s 1954 film On the Waterfront is mostly history. That’s not a problem today in Illinois. The problem instead is the broader issue underlying that movie, evident today in the Illinois pension crisis: how the pie in labor gets split up among the little guys and the big guys. Small, rank-and-file pensioners are competing with bigger pensioners for pieces of a pie that’s...

How insolvency is supposed to be managed versus how Illinois is managing it – WirePoints Original

Let’s look at where the Illinois fiscal crisis now stands through the lens of how insolvencies are supposed to be handled. Some basic principles about how to give a broke operation a clean start are below – and giving the state a clean start is what we need. I put those principles in bold followed by how we are doing on them: • List your liabilities honestly and accurately. Illinois does the opposite, vastly understating the scope of its problems....

Five reasons why defined benefit pension plans are poison and must be replaced ASAP – WirePoints Original

The pensions at the center of the storm for Illinois and its localities are “defined benefit” plans -- pensioners receive fixed amounts each month for the rest of their lives. Those amounts are usually subject to automatic annual increases or cost of living adjustments. Here are five reasons why defined benefit plans are hopelessly flawed and should be scrapped and replaced as rapidly as fairness and the law allow: • They are irrational at their core. They promise to pay...

Great summary of the Illinois pension crisis

You may or may not like libertarian politics, but if you want hard facts on the Illinois fiscal crisis you'd be wise to follow the research of the Illinois Policy Institute, a libertarian think tank. Yesterday they published this great snapshot summarizing how bad the real numbers are. WirePoints recently collected some of the research from outside the state saying essentially the same thing -- that the official numbers used by the state are off by at least 100% --...

Outside experts size up Illinois pension mess: twice as big as the state admits — WirePoints Original

  "A nation of sheep will beget a government of wolves." Edward. R. Murrow December 9, 2012, Updated January 9, 2012 A primary reason for the fiscal calamity in Illinois is sheepish acceptance of the state's narrative about pensions. The official unfunded liability of the five state guarantied pension funds -- the key number in the narrative -- is $96 billion, a number repeated endlessly and mindlessly by most of the media and some "pension reform" groups. It's nonsense.  Here are some of...

Illinois’ body parts likely to be divided among pensions and bondholders — WirePoints Original

December 6, 2012 Legislators in Springfield and public worker unions have said regularly that any pension reform measure should include a guaranty mechanism assuring that the state's contributions to pensions actually get made.  The pension reform proposal put forth today by a group of legislators headed by Senator Nekritz includes such a provision to intercept state cash and divert it to pensions.  Details are sketchy, but the mechanism will probably be in the form of legislation that automatically appropriates the...

Illinois teachers’ pension responds: says their assumptions are fine

    In the attached letter to the Wall Street Journal, the head of the Illinois Teachers Retirement System, the state's largest pension fund, responds an editorial in that paper.  The Wall Street Journal had criticized the pension's assumption that it can make 8% on its invested assets.  That assumption is key to determining the size of the pension's unfunded liability.   The Wall Street Journal is one of many voices to say that 8% is far too optimistic.  More importantly, new accounting...

WirePoints Original: Why Illinois lawmakers can’t possibly set taxes rationally

  Does the additional revenue that comes from a tax increase get cancelled out, in whole or in part, because taxpayers -- especially high earners -- leave or change their residence?   Astonishingly, nobody in Illinois government has attempted to answer these questions and the state has no data, no study, no clue.   I've asked several legislators from both parties and searched myself, but nothing is there.   The anecdotal evidence says the problem is severe.  Examples are reported publicly fairly often.  Tax planners...

Does Illinois violate its own budget and accounting laws? The state itself says yes — WirePoints Original

By: Mark Glennon*   One reason why Illinois is a fiscal wreck is that the state's budget and accounting are muck, and they are prepared -- according to the state itself -- in open violation of state law.   The governor and the general assembly are constitutionally required to prepare an annual budget.  A statute, the State Budget Law, requires that the budget for the general revenue fund and other key funds be prepared in accordance with "generally accepted accounting principles for...

Just who is endangering Illinois’ municipal pensioners? WirePoints Original

  We pension pessimists are actually pension villains -- the hardball folks happy to cut pensions, starve retired teachers, steal from cops, and so on. We villains overstate pension shortfalls so government will cut them off.  Right?   Consider instead if it might be the deniers -- those who say the pension and fiscal crises are manageable, mostly through tax increases -- who are really endangering pensions of rank and file municipal workers.   Illinois was broke long before the "Illinois is Broke" campaign...

WirePoints Original: Cost of fiscal storm coming to Illinois will dwarf damages from Sandy and Katrina

By: Mark Glennon* Illinois has yet to come to grips with the enormity of the catastrophe it faces faces from its fiscal mess. Comparison to devastating storms may help. Let's start with the high end of current damage estimates for Sandy -- about $50 Billion, as detailed recently in the Washington Post, using data from the National Hurricane Center.  Katrina was worse when it hit New Orleans and the Gulf Coast in 2005 -- $108 Billion, according to that same data,...

Indiana taxpayers get $360 Million in tax credits from surplus while Illinois wallows in deficits – WirePoints Original

  The difference in performance between Indiana and Illinois governments is truly difficult to grasp. Indiana has announced a $360 Million surplus that will allow it to give a credit of $111 to all taxpayers in the state.  Illinois faces never-ending tax increases and accumulated bills over $200 Billion. Illinois blames the recession. Illinois says it provides superior services.  Can anybody still say such things with a straight face? When Indiana Governor Mitch Daniels visited Chicago two years ago promoting his state, I...

WirePoints Original: If Illinois’ business climate is so bad, why are startups here flourishing?

Startups are thriving in Illinois and entrepreneurs in Chicago's tech community now have a dazzling ecosystem envied by most other places in the country.  Doesn't that prove things aren't so bad here?  Shouldn't Illinois be bragging about that proof? No,  entrepreneurship thrives in a down local economy and an otherwise hostile business environment for many reasons. Those reasons go beyond the obvious reality that many talented and experienced people cannot find good jobs.  Yes, those people often start new ventures and...

Recent Wirepoints Originals

Chump Media: Why Sham Votes Happen In Springfield – WP Original

The Wall Street Journal and FOX Business are among those who botched this one worst.

Rahm’s Ramp And The Fate Of Chicago’s Pensions – WP Original

The can has now been kicked on all four city pensions, as shown on the chart.

Plain English Video On Why Phony ‘Balanced’ Budgets Are Key To Our State And Local Fiscal Crises

If you don't know that state and local budgets are deceitful and nearly meaningless, or you don't know why that's so important to understanding our crisis, spend a few minutes watching the video.

Illinois Stumbles Through Fog Towards New School Funding Formula – Wirepoints Original

We know more now, but distortions abound and key points remain unreported or unknowable.

Cook County’s Outrageous Attempt To Charge Plaintiffs $17 Million In Beverage Tax Case – WP Original

Sanctions against the county's lawyers? Maybe, but without a firm and unequivocal decision against Cook County a dangerous precedent will be set.

One Chart Shows Awful Fiscal Trajectory of Chicago Area and Illinois – WP Original

And here's a promise: The trend will continue.

Education Funding Bill is a Monstrosity of Unknown Proportions – Wirepoints Original

Shame on everybody who has let SB1 get as far along as it has with such little understanding, Republicans and Democrats alike.

Rauner’s New Staff, Extremism and the Stockholm Syndrome – Wirepoints Original

That which can't pass the establishment in the General Assembly and its enablers in the press is "too radical" for Illinois.