Here’s where I invite you to share your comments on:
“What’s Worse Funded Than Teamsters’ Central States? Chicago’s Pensions” and the path from 94% to 27% funding for the municipal employees’ plan.
“The Problem With Chicago’s Pensions Is That There Is No Low-Hanging Fruit” (with a self-explanatory title).
“Chicago Pensions: Is There Hope For Reform?” – because we need to be honest about benefit cuts.
“Is Chicago The Next Detroit?” – the differences between the two cities matter.
“Actuary-splaining Chicago’s Pension Liability: A Deeper Dive” – in which I try to explain the crash in funded status for non-experts.
“No, Pension Obligation Bonds Aren’t A Form Of ‘Refinancing’” – don’t be fooled by the politicians!
“More On Chicago Pension Underfunding – It’s The Demographics, Stupid”
“Will Chicago’s New Mayor Solve Its Pension Funding Crisis?“
Image:
https://commons.wikimedia.org/wiki/File:20090524_Buildings_along_Chicago_River_line_the_south_border_of_the_Near_North_Side_and_Streeterville_and_the_north_border_of_Chicago_Loop,_Lakeshore_East_and_Illinois_Center.jpg; flickr user mindfrieze [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
Read Wayne Winegarden, Ph.D’s January 2016 report for the Pacific Research Institute, titled “Calfenia’s Pension Crowd-Out” – It’s subtitle ought to be “the inevitability of math”. I can e-mail a pdf copy to you if you are interested. Thanks for your great Forbes article on the current state of pension plan insolvency in Chicago.
It is interesting to compare Chicago and New York, provided you include the Chicago
Public School pension in the calculation to bring it closer to an apples to apples
comparison. Also necessary to add New York’s social security contribution which in
Chicago’s case is included in the pension figures. Finally, it is necessary to adjust
for retiree health care costs where New York’s burden is much higher than Chiicago’s.
My back of the envelope calculation is that currently New York is spending about
50, 000 per full time employee for pensions, social security and retiree health care.
As the Chicago spend ramps up over the next few years, Chicago will reach roughly
the same 50,000 level – 3Billion per year for about 60,000 employees – including the
teacher population.
One can argue that New York is wealthier than Chicago and can more easily afford
this incredible cost per employee. But I believe Chicago can cope if it were able to
enact a city income tax even at a level much lower than New York such as 1.5 Pct.
I think both cities are in miserable shape but for some reason, the image of
Chicago is much, much worse.
It’s sounding more and more likely that Chicago and the state will require a state constitutional change to allow reductions in benefits so that city and state employees and retirees will have pensions that can be relied upon.
I think that the pension plan dilemma examination should include the multiple counties in Texas, which withdrew from social security 30-40 years ago, but have more sound pensions, because of the range of investments. I live in CA, which has Cal-pers, & Cal-ters for public employees & teachers, respectively. They struggle, due to a wide variety of influence, but the unions requiring the appointment of un-trained individuals to the boards is a detriment to their results. Ideally, people would take the tesponsibility for their retirements for themselves, & render all the government machinations moot.
It’s time for Chicago and Illinois to make the difficult but necessary decisions and change the constitution to allow benefit reductions and other changes to help save their pension systems before it’s too late. All they need to do is look to the Central States retirement benefit changes to see how delays in proper management created the recent need to lower benefits to approximately 50% of what expected. If Chicago and Illinois act now, the systems can be saved. If not, they will eventually run out of money. The actuaries need to demonstrate this information to Chicago and Illinois leaders so that they can take responsible action — now — so that retirees won’t be looking to Medicaid for assistance — a still greater drain on Illinois finances.
Sure, take money away from retirees that they were promised while politicians get to keep theirs.
These people educated your children and you, kept your families safe, RISKED THEIR LIVES FOR YOU!
You should be ashamed to even think of cutting their pensions!
Anyone with a defined pension (Police & Fire-maybe others),has their social security cut in half due to Rostenkowski passing that law. Will they get full SS if you steal their pension? Will you support and encourage that?
Here are some easy solutions for Chicago pensions that none of you “educated” people have even thought of:
Eliminate pensions for all elected and appointed officials, retired and future retirees.
Make elected officials participate in the same insurance programs as those in the affordable care act.
Take back the parking meters and use that revenue to pay the pensions. The company has already paid off the purchase price and is now all in on profit.
Eminent domain for the good of the people just like when the city takes property away from people to build a project, that usually enriches a company and not the citizens.
Prosecute Rich Daley for selling it and then becoming enriched by working for the company–no sweet deal there eh. Why has no one even mentioned that or started that process?
Amend the State income tax to tax pensions earned in the city and state the same as the state income tax BUT dedicate that money to go into each SPECIFIC FUND from which the payment comes from to help stabilize them. Example teachers taxes to teachers pensions, police taxes to police pensions, firefighter taxes to firefighters pension funds.
Now these are some real solutions that won’t hurt retires, need no constitution changes and will create revenue for pension funds.
dishonest, deceitful political leadership chicago and statewide have gotten us where we are, instead of a watch dog mentality we have a lap dog mentality on the part of so called “journalists” considering the gravity of former Mayor Daley’s action s one would have anticipated a fire storm insted we only heard some tittering, we have “journalist” supporting the idea that mayor Emanuel actually improved on the mess , the voters are under informed, misinformed and treated to charateration that have no basis in fact
Chicago is on a vector similar to Detroit, but a decade behind. The upper middle class have not deserted Chicago, but as taxes rise and service declines (as both will) we may well see a quiet exodus. Not as dramatic or rapid as Detroit in the 1967-1977 range, but maybe every bit as poisonous to the financial and political health of the city.
Chicago has an organized class of political parasites who pretty much look out for each other, and do their best to restrict membership in the class to loyal types who support the criminals in the class. Detroit has a much more diffuse political parasite class, less organized, with no loyalty to keeping the larger criminal class going. Dteroit’s parasitical class is winnowing, but left behind is a population that is unsuited to providing any of the ingredients for organic economic growth or development.
Last is that bankruptcy did not resolve the financial issues the City of Detroit faces. It lowered the volume, and bought some time, but the fact remains that future obligations far outpace any prospect of local tax generation to support. Maybe Gilbertville an Ilichburg (owners, managers, and municipal development administrators of Midtown) will lead the rump of the Detroit hustings into a genuine rebirth, and the growth they all hope for. Right now, that prospect is (charitably) exceedingly uncertain. Smart people in Chicago would be paying attention, but I have a feeling that a lot of them simply plan on leaving.
Given the data you provided in your Actuary-splaining post, it is hard for me to understand how you can justify any support from the state of Illinois or even worse from the federal government to bail out these pensions. They have consistently been over-promised and underfunded by those who had any responsibility for the long term health of the system. Voters from outside of Chicago had no opportunity to influence the choices made by Chicago, and should bear none of the costs.
I expect the federal government will eventually have to do something to support the generation approaching retirement, who have done nowhere near enough to provide for themselves; but I think that support should be based solely on need, not on their path to that need. Members of pension systems that have been underfunded for decades have no excuse for being unprepared for the possibility that they would get less than needed, any more than those who have been putting their retirement into 401(k)s that would only cover their needs if they averaged 10% returns forever. The ‘we were promised!’ wail leaves off the important clause, promised by who? If you are a member of a Chicago pension, you were not promised anything by Illinois or the US, and deserve nothing from them.