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 the three largest of the state’s five pension funds for this June 30, after giving effect to the bill, and assuming it’s upheld by the courts. They total about $78.2 billion. There are two other pensions not covered in the report — one for the judges, which was not addressed by the bill and one for legislators. They are small, totaling about $2 billion in unfunded liabilities, so the grand total hole for the five state funds is about $80 billion.


Recall that the total before the pension bill was roughly $100 billion, so the “comprehensive” bill lowered the unfunded liability by only about 20%.


Also remember that these are the state’s numbers, which are based on assumptions that financial economists unanimously say are bunk. Moody’s, the ratings service, has been saying the true unfunded liabilities are roughly 1.5 to 2 times greater than the official numbers.


The bill’s supporters have spun it by focusing on how much less taxpayers have to contribute over the next 30 years. That’s nice, but a distraction, because it all comes down to how much is owed to current employees that they’ve already earned, for which we’ve set aside nothing. That’s the unfunded liability — $80 billion — that we still have to pay.  Shame on Quinn, other bill supporters and most of the media for suggesting anything close to ‘problem solved’ on our state pensions.

h&m

Sort by:   newest | oldest | most voted
Jim Palermo
There is a disconnect in the discussion of last year’s pension bill. The reduced growth in pension benefits will be painful for many retirees, but the magnitude of the pain shouldn’t be confused with adequate pension reform. Many years ago there were retirement promises negotiated between labor and elected officials that had just a slim chance of being financially sustainable. Subsequent so-called reforms merely postponed the day of reckoning. That day is here, and the impossible promises are about to be broken. Increasing the retirement age for new employees and suspending COLA increases for retirees isn’t going to cut it. Real tax reform that makes Illinois an… Read more »
wpDiscuz