By: Mark Glennon*
Updated 5/31/15 (adding Crain’s where indicated)
There’s simply no way to justify the Sun-Time’s characterization of Chicago’s proposal to address its pension crisis, now contained in a bill before the General Assembly. This evening, the headline in the Sun-Times is, “Pension proposal to save city taxpayers $843 million over 5 years, projections show.” The article goes on to say that, “the legislation aims to strike a balance between curbing pension costs and providing enough money to keep the funds paying out benefits to retirees.”
Flat wrong. The bill does nothing to reduce costs. It would push off the amount the city pays in. Report it as “can-kicking,” if you want, or use some other term, but that’s all it is, so report it that way. Chicago has been paying in only about one-fourth of what it should be to properly fund its pensions, a plain fact that that most reporters have ignored, and now it wants to do more of the same. This crisis was allowed to get to the stage it is in part because of shoddy reporting like that.
Update: But Greg Hinz at Crain’s went further to spin the can kick into something different. His headline calls it a “plan to fund police, fire pensions.” He writes that it would require the city “to shore up the financially weak pension funds that cover police and firefighters and the measure would require the city to come up with hundreds of millions of dollars a year more than it does now.” It’s a reduction in near term contributions that are scheduled under a 2010 reform law passed by a Democratic General Assembly and signed by Quinn.
Sure, buried deeper in the article Hinz mentions, as did the Sun-Times, what the real facts are. But he knows most readers are quick ones who read headlines and parts of stories. He knows exactly what he is doing. Nobody know how to spin news better than reporters when they want to, and Hinz wants to spin this favorably for can-kickers.
That error was probably just sloppiness, but then there’s Natasha Korecki, Sun-Times political reporter, who has gone shameless with bias. Where do you start?
Today, her story says, “Gov. Bruce Rauner has demanded that state lawmakers deliver a package of reforms to him by Sunday.” The headline emphasizes the “demand” as well. There was no demand. Watch the press conference yourself if you want to see how untrue that is. Most of the other media characterized it fairly, saying things like, “Rauner Cautiously optimistic for Illinois Budget Deal by Sunday.”
Recently, Korecki wrote about an Illinois House vote over right to work. Most of the press properly described it as a vote on a sham bill put up by Speaker Madigan, on which right to work supporters refrained from voting. But Korecki’s headline screamed, “Right-to-work goes down in flames in Illinois House with zero yes votes.” Just the spin Speaker Michael Madigan hoped for.
Back on the subject of pensions, this evening I got an email from a pension actuary in Maryland, who grew up in suburban Chicago. He’s been watching with horror what’s happening in Chicago. He wrote in his email,
It’s hard to fathom how bad the finances are w/r/t pay and benefits of govt ‘ees. Poor taxpayers of Illinois !! The unions (many places around the country too) simply bargained for pay and pensions exorbitantly too large and unaffordable. It’s going to blow up — no doubt. Well in many ways it already has, the taxpayers have been getting shafted like crazy…. Another way to look at the mess is that Liabilities for the non-Actives (retirees) are 6.6B out of the 10B Accrued Liability (AL). There’s only ½ the money in all the assets to cover Retirees !!! That means NONE for the Actives. And Actives are earning extra pension each year worth $.2B.
Think hard about what that means. It’s ugly. If you don’t understand it, don’t expect an Illinois reporter to explain it. Few have really tried to understand pensions. Those are the kinds of facts they should be explaining, not repeating political bunk about “savings” that really are just deferrals.
Find some honest actuaries who will talk, reporters, and not those paid by the pensions to paint the rosy picture that has deceived us. And, Sun-Times, either label Korecki as an opinion writer or get rid of her.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.