From this editorial nicely titled: “Your Daley reminder: Fix pensions now, not ‘later’”, we read:
Taxpayers are furious. Check our email and you’d see how deeply this corruption — diabolical yet evidently legal —offends citizens writing fat pension checks to the pols. One Tribune reader, a state employee, synthesized the rising outcry:
The same people who failed to fund pension systems year after year created golden parachutes for themselves while crippling a retirement system for hundreds of thousands of people. The Illinois Constitution promised them a modest pension, and they paid in contributions sufficient to fund it — except for the criminal irresponsibility of these elected officials.
State lawmakers enabled these schemes, just as they enabled fat public pensions for other of their cronies — labor leaders included. But lawmakers also realize that voters have learned the secret passwords of government in this state: Stick around, play ball, keep quiet, and you’re set until you die.
They may be unpleasantly surprised, these legislators. Daley had best be squirreling away the money as best he can, because who knows how long it will last.
By the way, remember that dumbass parking meter deal? Which has turned out to be a big loser for Chicago? Would you like to know Daley’s current gig?
While former Mayor Richard Daley was in office, Chicago was paid about $1.2 billion for a 99-year lease of the meters. Daley last year landed a job with the firm that helped negotiate the parking meter deal.
I’m sure that was just a coincidence.
But let’s get back to the original editorial. Let’s see what the Illinois taxpayers may be peeved about:
Judging by the anger washing over Illinois, many of those citizens also now realize who will be told to bail out pension systems that exhaust their assets: Illinois taxpayers, most of whom can’t dream of retirements like those they endow for public workers. Given that rising awareness, this piddling constitutional amendment won’t counterbalance what the Tribune and WGN exposed last week:
• Obscure provisions of Illinois law let Daley, who earned $17,500 a year as a legislator, now collect a General Assembly pension of $117,629 a year. His maneuvering also let him avoid more than $400,000 in pension contributions. His city of Chicago pension? That’s an additional $66,149. Total: $183,778 as of his retirement last May.
• Twenty-one retired aldermen collect pensions averaging $81,000 a year. Compounded annual increases of 3 percent will, over their expected lifetimes, lift the average pension to $165,000 a year. The stories disclosed how one ex-alderman will, over the 30 years that pension fund actuaries expect him to live, collect $4.2 million. His contributions to the fund, plus expected investment returns, will cover $1.1 million of that. Taxpayers will cover the rest.
• For the 21 retirees, lifetime payouts will total $57 million. Their contributions and the expected investment returns will cover $19 million of that. Oh, and 53 more former or current aldermen are in the pipeline for similar largesse from the city’s severely underfunded pension system — and its severely upset taxpayers.
As I mentioned in an earlier post, the General Assembly pensions are the worst-funded of all the Illinois state pensions. Even given the rather optimistic assumption sets allowed under public pension valuations, it comes in at a whopping 21% funded ratio as of June 30, 2011.
Do I have to tell you that that’s not good?
Here’s the thing with greedy politicians. They figure that the $235 million hole is actually relatively small when set next to the absolute unfunded amount of the teachers pensions. For the same valuation date as GARS above, the Illinois Teachers Retirement System pensions come in at 46.5% funded. But due to the size of the fund, that tots up to a $43.5 billion hole.
Let me do some math for you. $235 million is 0.5% of $43.5 billion.
Obviously, the pols thought that, with their pensions sequestered away in their own plan, when compared to the other plans, the total liability is mere chump change. They could make the argument that their pensions could easily be pay-go.
Oh, and they could.
But if I were an Illinois teacher, I’d be demanding that legislators’ pensions be on a par with what they get from the Quinn proposal. Actually, I’d ask for something even harsher.
I don’t know about the constitutionality here, but seems to me one can’t have a valid contract where one party is on both sides (i.e., the legislators). Saying some constitutional blather regarding the sanctity of contracts does not work for me when it’s legislators promising themselves benefits.
It seems to me that a total obliteration of the politicians’ pensions is called for. A total wipe-out of GARS, with its assets distributed amongst the various Illinois pension funds.
It’s a very modest proposal. The GARS assets wouldn’t even make up 0.5% of the TRS hole.
But it would be a nice start in warning politicians that actually, yes, there can be repercussions to not being responsible with regards to public pensions.
UPDATE: Well, this is a start, but I like my idea better.