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| | |-+  Illinois to Spend More on Pensions Than on Education
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Author Topic: Illinois to Spend More on Pensions Than on Education  (Read 893 times)
krazen1211
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« on: August 06, 2012, 11:30:11 pm »
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http://www.foxbusiness.com/economy/2012/08/06/illinois-to-spend-more-on-pensions-than-on-education/

The state of Illinois faces at least $83 billion in unfunded liability between its five pension systems, and is on track to spend more on its government pensions than on education by 2016, a new study released by Governor Pat Quinn’s office says.

Among states, Illinois stands out for setting aside a huge 12% of its annual budget just for its chronically underfunded pension.





Buh buh buh, we need government spending to, uh, invest in the children, they say! Load of bull. Taking 12% of your paycheck and shredding it, well, I guess that's like the Social Security Tax.
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Joe Republic
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« Reply #1 on: August 06, 2012, 11:38:20 pm »
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Public sector pensions and public education spending all in a single krazey thread?  I like the efficiency of your outrage these says.
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muon2
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« Reply #2 on: August 07, 2012, 12:07:56 am »
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Fine to moan, but the IL Constitution makes it clear that a public pension benefit cannot be diminished or impaired for employees already in the system. There is no matching language to force spending to maintain the pension funds, so in a series of holidays and borrowing against the fund on top of changing actuarial value, the unfunded portion has ballooned. Each dollar not spent on pensions in the year it accrued has cost the state 10 to 15 dollars in liability today.

Still the Constitution trumps legislative action, and the only changes have been for employees hired after Jan 1 2011. There are proposals circulating that can dent the liability, but nothing with majority backing.
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« Reply #3 on: August 07, 2012, 11:25:18 am »
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Fine to moan, but the IL Constitution makes it clear that a public pension benefit cannot be diminished or impaired for employees already in the system.

And, that recent amendment to the Illinois Constitution is subject to repeal.
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« Reply #4 on: August 07, 2012, 11:37:48 am »
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So when Illinois can't borrow anymore, it does what? Assuming pensions are not further touched, state operations would look like what in order to balance the books? Must you empty out the prisons, or what?  In other words, can the state function somehow with that level of non pension cutbacks without going into supernova mode?

Or do you just raise taxes some more, and bribe industries to stay that you want to stay as part of a crony capitalism regime?  Pity states can't BK.

In short, what's the f'ing plan Mike?  
« Last Edit: August 07, 2012, 01:00:17 pm by Torie »Logged
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« Reply #5 on: August 07, 2012, 12:26:48 pm »
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In short, what's the f'ing plan Mike?
They don't have a plan, all they can do is make fun of the messenger.
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« Reply #6 on: August 07, 2012, 05:38:30 pm »
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Illinois is not a well-run state.
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krazen1211
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« Reply #7 on: August 07, 2012, 06:36:52 pm »
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Illinois is not a well-run state.

On the contrary. Given the lavish wages of the unionized employees and their bosses and the choking deathgrip these people have acquired on the treasury (along with a bizarre constitutional guarantee aiding such), it seems quite well run for the intended purpose.


New Jersey incidentally has the same thing, where state pensions are guaranteed but the state, thanks to Democrats, has no actual legal obligation to fund them. The laws of mathematics will soon enact vengeance upon the public sector unions in these states.
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muon2
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« Reply #8 on: August 07, 2012, 09:52:23 pm »
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Fine to moan, but the IL Constitution makes it clear that a public pension benefit cannot be diminished or impaired for employees already in the system.

And, that recent amendment to the Illinois Constitution is subject to repeal.

It was passed in 1970 as a whole Constitution, not an amendment. It takes 2/3 of each legislative chamber and 60% of the popular vote to amend. There is an amendment moving forward to cause all future pension enhancements to require a supermajority legislative vote, but there has been no sign from either party of a move to remove the existing clause.

So when Illinois can't borrow anymore, it does what? Assuming pensions are not further touched, state operations would look like what in order to balance the books? Must you empty out the prisons, or what?  In other words, can the state function somehow with that level of non pension cutbacks without going into supernova mode?

Or do you just raise taxes some more, and bribe industries to stay that you want to stay as part of a crony capitalism regime?  Pity states can't BK.
 

A year ago there was a GOP plan to shift costs from the state to current employees. It was moved to the floor, but not called for a vote. This year the Gov and Senate Dems have offered a plan that provides the choice between retirement health care or COLAs, but if extended to the schools really only works by shifting risk from the state to local school districts that already have some of the highest property tax rates in the country.

There have been rank and file bills as well to solve the problem, but leadership is not going in that direction. The real driver will be the ratings threats to IL bonds.
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« Reply #9 on: August 08, 2012, 12:40:53 am »
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Public sector pensions and public education spending all in a single krazey thread?  I like the efficiency of your outrage these says.

Basically this, but for once, krazen has a point. I'd rather have overspending on education than on pensions.
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« Reply #10 on: August 08, 2012, 04:58:12 am »
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It is absurd to say that a given level of spending on pensions is 'overspending'.  If the State has employed persons, it must give them proper, full, comfortable pensions as per contract for their years after age 60.  The same should be required of 'private' employers.

How could anything else be accepted as reasonable?  Are people suicidal (or desirous of starving to death after a certain age?)?
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« Reply #11 on: August 08, 2012, 06:11:19 am »
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It is absurd to say that a given level of spending on pensions is 'overspending'.  If the State has employed persons, it must give them proper, full, comfortable pensions as per contract for their years after age 60.  The same should be required of 'private' employers.

How could anything else be accepted as reasonable?  Are people suicidal (or desirous of starving to death after a certain age?)?

No because they have been fully compensated for their employment through the paychecks they recieved down the years they were employed. Paying people for doing nothing is an absurdity. If people want a nice retirement they should save.
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« Reply #12 on: August 08, 2012, 07:44:27 am »
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It is absurd to say that a given level of spending on pensions is 'overspending'.  If the State has employed persons, it must give them proper, full, comfortable pensions as per contract for their years after age 60.  The same should be required of 'private' employers.

How could anything else be accepted as reasonable?  Are people suicidal (or desirous of starving to death after a certain age?)?

No because they have been fully compensated for their employment through the paychecks they recieved down the years they were employed. Paying people for doing nothing is an absurdity. If people want a nice retirement they should save.
for most people that is a fantasy. how are can you reliably live off a 401k, figure out what your money will be worth with inflation, anticipate how long you will live and in what sort of condition, etc.? you cant, you can only guess. of course this is a fiscal trainwreck but you can hardly blame the unions for wanting to 'get theirs' under such conditions.
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That has got to be one of the most retarded proposals I have read on this forum.

Don't worry, I'm sure more will crop up shortly.
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« Reply #13 on: August 08, 2012, 05:12:28 pm »
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It is absurd to say that a given level of spending on pensions is 'overspending'.  If the State has employed persons, it must give them proper, full, comfortable pensions as per contract for their years after age 60.  The same should be required of 'private' employers.

How could anything else be accepted as reasonable?  Are people suicidal (or desirous of starving to death after a certain age?)?

No because they have been fully compensated for their employment through the paychecks they recieved down the years they were employed. Paying people for doing nothing is an absurdity. If people want a nice retirement they should save.

Pension benefits are often determined to be part of compensation, given in exchange for direct salary increases. Courts in most states have held that a pension benefit that is part of an employment contract deserves protection under the contracts clause of the US Constitution. Individual cases often depend on whether pension changes are substantial and if so was there sufficient basis for the state to break the contract. This is particularly true for employees already retired and benefits already accrued to current employees.
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Torie
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« Reply #14 on: August 08, 2012, 06:05:18 pm »
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I wonder if a certain assemblyman in Illinois has an opinion as to when one might expect the Illinois bond rating to take another dump given the course that has been set under the spell of the Sirens.  Yes, it does seem that this movie needs a crash and burn scene to keep the plot going.
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krazen1211
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« Reply #15 on: January 07, 2013, 01:04:56 pm »
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http://www.pjstar.com/news/x1671799355/House-committee-to-take-up-pension-reform-bill

The bill will include details of a new plan outlined late last week that includes higher employee contributions, a limit on cost of living increases to pension benefits and a mechanism to ensure that the state makes its required pension contribution each year.

The bill does not include shifting pension costs to local school districts, something that's derailed some previous reform efforts. House Speaker Michael Madigan, D-Chicago, said lawmakers could defer discussion of the cost shift if it meant a reform bill could be passed now without it.

Rep. Elaine Nekritz, D-Northbrook, said Sunday, when the House reconvened in Springfield, that she thinks the bill will be approved by the House Personnel and Pensions Committee, but she made no predictions beyond that.




A great battle for the treasury is brewing in Illinois.
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« Reply #16 on: January 07, 2013, 02:39:49 pm »
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It is absurd to say that a given level of spending on pensions is 'overspending'.  If the State has employed persons, it must give them proper, full, comfortable pensions as per contract for their years after age 60.  The same should be required of 'private' employers.

How could anything else be accepted as reasonable?  Are people suicidal (or desirous of starving to death after a certain age?)?

No because they have been fully compensated for their employment through the paychecks they recieved down the years they were employed. Paying people for doing nothing is an absurdity. If people want a nice retirement they should save.

Don't say the s word around opebo Tongue

for most people that is a fantasy. how are can you reliably live off a 401k, figure out what your money will be worth with inflation, anticipate how long you will live and in what sort of condition, etc.? you cant, you can only guess. of course this is a fiscal trainwreck but you can hardly blame the unions for wanting to 'get theirs' under such conditions.

Assuming they are running a standard 60/40 portfolio they should be able to withdraw 4% upon retirement, increase this amount with inflation, and still have your principal left over. Median real household income was about $50 000 in 2009, which works out to a 401(k) worth $1 250 000. Over 30 years of saving, this shouldn't be too hard to obtain.

Even in this terrible decade, it was still possible to come out ok. The 60/40 portfolio quoted above made about 3.8% per year from 2002-2012.
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« Reply #17 on: January 07, 2013, 02:48:15 pm »
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Damn state legislators!  Tongue
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« Reply #18 on: January 07, 2013, 03:01:58 pm »
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Illinois is not a well-run state.
This may be a fair enough point, but pensions and education are not 100% mutually exclusive domains of spending. Being a teaching is an extremely demanding job choice. Proactively managing the progress and behavior of 150 students, many of whom are frequently leaving and joining the group, is crazy stressful and difficult. The lure of the pension/not spending the golden years under a bridge is one of the few things that keeps many good teachers going. That, and the sense of reward from the few students who give a crap. Otherwise, they may as well take a generic job at MegaCorp that pays the same 45k/year. You get what you pay for.
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« Reply #19 on: January 07, 2013, 03:25:35 pm »
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Only now?

I'm not 100% sure, but I think Rhode Island's total pension liabilities is greater than the rest of the entire state budget combined and has been for decades.
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