Pension Crisis

Illinois Racing Against California for Biggest Pension Disaster


It wasn't just one guy raiding the piggy bank, unfortunately.
Credit: pasukaru76 / photo on flickr

We've noted that California's modestly bipartisan efforts to reform public employee pensions have collapsed and the state's pension program is now giving a big thumbs up to workers spiking the system with a host of bonuses. But the Washington Times wants to remind us all that Illinois is just a big of a disaster and efforts to reform pensions there have been just as problematic:

If the Illinois Teachers Retirement Service (TRS) had to pay out all of its pensions today, it could only afford to give its members 40 cents on the dollar.

Yet the number of six-figure pensions TRS has been doling out has increased 24 percent this year compared to last, with about 6,000 retired educators collecting more than $100,000 annually, according to records obtained by Open the Books, an online aggregator of local spending that tracks educator salaries, pensions and vendor spending.

The group's Labor Day report found more than 100,000 retired Illinois educators had been paid back what they invested into the system just 20 months after leaving work, a financial burden linked to union collective bargaining, which can cost taxpayers $2 million or more per teacher over the course of retirement.

Just as in California, Illinois passed some very modest reforms to the pension system, only to have them challenged by the unions. A judge has approved a temporary injunction blocking implementation.

The Washington Times piece helpfully explains how this crisis is a result of behavior by all sides. To the extent the pension crisis gets talked about at all, the debate comes in two flavors. Either the fault is due to the workers milking the system through pension spikes, driving up obligations to amounts that are simply not reasonable; or the fault is due to politicians raiding pension funds or failing to pay their share in favor of spending the money on crony capitalism projects like stadiums. The reality is, both complaints are true (and there are even more reasons for the crisis than just the two). It's important to note that union leaders and pension fund operators knew full well that the pensions were underfunded and were fine with it because they benefited in the short term:

TRS is Illinois's biggest retirement reserve, making up half the state's pension funds. For years the state legislature allowed the pension to go underfunded so it could spend money on other things. State educators and union executives used the borrowed cash to hire more teachers, boost salaries and improve local facilities.

Read the whole story here.

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  1. Looks like the Reason staff finally got around to seeing The Lego Movie.

  2. I’d just sit back with a glass of bourbon and an evil chuckle if I didn’t know for a fact that the FedGov will bail out these funds with my tax money.

    1. Stop crushing my dreams sf!

    2. Back to the bourbon, SF. The amount is too staggering – IL will eventually “go Detroit.”

      Maybe they will dump folks onto the Pension Benefit Guaranty Corp so they can get $.15 per $1?

      1. All it takes is for America to once again make the mistake of electing a Chicago machine politician to get the IL fund bail-out.

        California can and will be bailed out by any one because of their staggering number of electoral votes.

        Cinnamon Whiskey

        6 cinnamon sticks
        1/2 Demerara sugar
        1/2 cup water
        18 oz Jim Beam

        Lightly crush sticks and combine with water and sugar in a small saucepan. Bring to a boil, stirring occasionally. Boil for two minutes then move off the burner. Allow to cool completely. Strain completely in bourbon and mix. The resulting amount should fit perfectly in a 750 ml bottle.

        1. Yeah, CA will get some bailout, since they swing large electoral vote dick.

          IL is slimming down (ie. people are escaping) and has less clout every Census.

  3. OT:
    NY Times FINALLY covers the horror show across the pond….…..share&_r=0

    Fucking finally – maybe the left will HAVE to acknowledge it now…

    1. I love the bit where they report that most convicted pedophiles are white, right in the middle of story about how non-white pedophiles are not pursued because PC. Although they do try to cover up the racial pass given to the Pakis with accusations of sexism.

      I don’t think this could happen in this country, because guns. Way too many fathers have them here, and I suspect enough would be willing to use them if they were treated by Our Masters the way these Brits were treated. A few shootings, and this would be national and with the lid off, it would come to an end.

    2. 1) There’s been an Official Report – the Times can’t just pretend it didn’t happen. They need to get on top of the story and Counter the Right-Wing Spin.

      2) “When parents reported their daughters missing, it could take 24 hours for the police to turn up, Ms. Jay said. Some parents, if they called in repeatedly, were fined for wasting police time.”

      In short, scum.

        1. This is *below* the usual standard of cop behavior.

          1. I mean, there’s excessive force, there’s shooting dogs, there’s protecting rogue officers, and then there’s this sex abuse stuff which would make Cardinal Law go “wow, that’s messed up.”

  4. I see more stories about teachers pensions than I do for ‘public safety employee’ (police, correctional guard) pensions. Is that because there are more teachers than public safety employees, or do teacher’s unions get better deals than police/guard unions? Does anyone have any data on this?

    1. It’s because right wing libertarians hate teachers. Duh.

      1. Since the sources drawn upon are usually something like the WT I suspect it has more to do with their leanings if that’s the case.

    2. Teacher’s unions are *slightly* less likely to shoot you in the face if you make an enemy of them

    3. I see more stories about teachers pensions than I do for ‘public safety employee’

      Perhaps you should subscribe to more news outlets.

      Is that because there are more teachers than public safety employees?

      In part, but also because teachers are a dime-a-dozen, whereas boot-stumping armed thugs are deemed necessary by your ordinary “The Middle”-like citizen.

      Not to disparage The Middle itself, because I love that show and love Patricia Heaton. It is just a figure of speech.

    4. I think it has to do with the fact that there are a lot more teachers therefore creating a much larger strain on the budget overall.

    5. A little of both, I’d say. NJ reports about 117k full time teachers employed in 2013; there’s no quick fact sheet on total cops, but FBI data from 2012 on municipalities w/ more than 50k residents shows only 8,600 total employees, including non-officers.

      Taking the per capita average of 27 per 10k and applying it to the roughly 8.9m residents gives a total of 24k LE employees, though this probably overstates things since the per capita employment figures decrease as town population does.

      Teachers and others in the education sector are getting a better deal than cops and firemen here in NJ, and I would think they tend to carry a higher salary than public safety folks when the benefit calculations are made, but that’s just an educated guess on my part. Public safety folks should draw pensions for longer, but I don’t think that would be enough to overtake the other factors.

      1. though this probably overstates things since the per capita employment figures decrease as town population does.

        Ignore this, I was reading the table wrong.

  5. The unions also use the underfunded pensions as a rallying cry to get the teachers to support 6% annual raises – they tell the rank and file “you should ask for your money this way because the pension system will collapse and it won’t pay you.”

    Of course, these huge raises only put the pension fund in worse shape.

  6. Because of the story about the nuclear boar on the AM Links, I read the alt-text as “It wasn’t just one guy radiating the piggy bank, unfortunately.”

    1. I wish someone had radiated the IL pension funds…

  7. For years the state legislature allowed the pension to go underfunded so it could spend money on other things.

    You get one guess which TEAM has had a deathgrip on the IL Legislature for the past many, many years? HINT: the Speaker of the IL House has been in that position since 1983, with only a two year break 1994-1996. His daughter happens to be the IL AG. Reform will only come when he dies.

    1. You’re just a crypto SoCon Teahadist infiltrating libertopia.

  8. What’s with the Lego people?

  9. HA!
    You guys in IL are pikers. PIKERS, I tell ya! You wanna see a rat-hole suck up that dough? CA is #1!

  10. ‘labor relations’ now means govt workers negotiating with govt workers to decide how much non-govt workers need to pay govt workers.
    – iowahawk twitter feed

    1. Unions are the only thing keeping society together!


  11. When a state and a few cities (e.g., Illinois and Chicago), literally run out of pension money, Congress will very quickly pass a statute expanding the remit of the PBGC to include state & local governments. the law will also stipulate that Federal statutes override state constitutions. State & local governments will have the option of going through Federal bankruptcy court. If the courts rule in their favour, the local authority can then “dump” its pension obligations on the PBGC. The local authority also has to turn over its pension assets to the PBGC, but this is no skin off the local authority’s nose. Local authorities will have to pay X$/year/employee to the PBGC. They can easily afford this, by underfunding their pension plans. The PBGC insures pensions up to 54K/year. This truncates all large pensions, and complete saves ordinary pensions. The unions will publicly yell, but privately accept this. The current spiking of pensions is silently intended to get retirees as close to the 54K ceiling as possible. The ceiling does not have to be 54K. The strategy I am speculating holds for any fixed ceiling holding for all employees.

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