What will it take for Mayor Lightfoot to lead the city towards sustainable pensions?
Forbes post, “Mayor Lightfoot Is Still Not Ready To Lead On Pensions”
What will it take for Mayor Lightfoot to lead the city towards sustainable pensions?
And so. Its always pointed out she is a black lesbian !! The FIRST!! also ” married ” to a white woman. And so. Exactly how does that contribute to any supposed but clearly not evident ability to deal with the pension crisis issues ? Chicago is the most corrupt violent bankrupt city in the country. Now with black lesbian mayor. !!!😐😰😐😰
Respectfully, Bill Barrett, Chicago is not bankrupt due to its economic engine and overall size compared to other US cities. Fiscal issues to be sure but not bankrupt. Also, more importantly, Chicago is not the most violent city in the country. It is actually not even in the top 20 most violent cities according to the most recent FBI stats.
https://www.usatoday.com/picture-gallery/travel/experience/america/2018/10/17/25-most-dangerous-cities-america/1669467002/
You are right on the mark.
There is no easy fix. 15 years ago the pension was 85% funded. This made Mayor Daley comfortable avoiding payment of the cities portion. He literally stole the people’s money. Add in
corruption and we are where we are now. City employees do not have a choice. They must pay into the pension and early employees did not pay into social security and Medicare. They were told they would have a pension and health insurance upon retiring. Mayor Rahm was successful in discontinuing to provide insurance in 2017. Now retirees have to find their own insurance and are not eligible for Medicare.
I say go after the bureaucrats who’s stole the money and insurance.
I support Mayor Lightfoot’s suggestion that a statewide taskforce be charged with the responsibility to solve both the state and city pension fund challenges. Pension reform in Illinois will not work without both the state and City of Chicago coming to agreement. All stakeholders should have input to any set of solutions, short- and long-term. However, it will take strong leadership and commitment from everyone involved. The first step in most challenges is to come to agreement on a mission and vision for the future. An actuary can assist with providing a number of possible solutions, but leadership must come from the top.
There is one FIRST & NECESSARY requirement………… a constitutional amendment that will allow, at a minimum, MATERIAL (think 50+%) reductions in the value* of future service pension accruals for ALL current workers. Yes ALL, INCLUDING Safety workers and Judges.
* reductions in “value” can be accomplished via DB pension formula-factor reductions, older retirement ages, actuarially correct early retirement adjustment factors, elimination/reduction in COLA-increases, etc.
Without doing the above ……….. NOTHING will work, PERIOD.
————————————-
FWIW, that Constitutional Amendment SHOULD also explore reduction in PAST service accruals ………. as they VERY well may be NECESSARY, in additional to FUTURE service accrual reductions.
Tough Love, please calm down. Ranting, shouting, and extreme solutions are counter productive, and it can’t be good for your own health. 50 percent reductions is a non-starter without serious compensating wage increases.
It is a catch 22 situation, and not just a Chicago problem. More and more, this problem needs a federal solution.
“Drastic benefit reductions for current retirees would be unfair….”
(Andrew Biggs, and many others.)
Emphasis on the word “drastic.”
Especially in the extreme states, Illinois, New Jersey, Connecticut, Kentucky, etc., which blatantly underfunded their plans for two to three decades. The “blame” is widespread, but the math is irrefutable. What can’t be paid, won’t.
Taxpayers, current workers, and current retirees will each need to share the sacrifice, but in what proportion? There have been suggestions of “progressive” cuts, as in no cuts for pensions under a certain threshold ($30k? $50k?) and increasingly higher percentage cuts for pensions over $100k. But those are simplistic and ignore the relative generosity of the pension. Big difference between a 40 year employee with a $40k pension and a 20 year employee with that same pension.
And, obviously, “a minimum, MATERIAL (think 50+%) reductions in the value* …” for all, won’t work. It’s not just that it’s not “fair”; it is also not pragmatic, as far as attracting and retaining a qualified workforce.
Before the first check bounces, it is time for a blue ribbon national panel to recommend guidelines on ways to equitably share the sacrifice.
It’s a toss-up whether New Jersey or Illinois will be first to crack, but there surely will be others to fall.