Illinois to Spend More on Pensions Than on Education

[muon2]

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.

[muon2]

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.

[muon2]

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.