I see that Walter Russell Mead is proclaiming the Illinois Teachers Retirement system a scam.
What a coin-kee-dink. I just received a review copy of Illinois Pension Scam by Bill Zettler. It was published April 1, 2012, but this is no April Fool's Joke.
I have linked to Zettler's work before, particularly his columns at Champion News. He has covered public pension issues, but he has particularly focused on the Illinois Teachers Retirement System, and in this book much of his previous work online on the TRS and its problems has been organized into a useful whole.
A few notes on the motivation of the text — some may say that Bill hates the teachers, and he certainly doesn't spare them from questions as to whether they deserve the amount of pay and benefits they're getting in Illinois, but this is an act of charity, in the traditional sense.
The TRS is in an awful position, even under fairly optimistic assumptions allowed under current public pension accounting. But that reality does catch up eventually, and the teachers could find themselves in the same situation as the Prichard pensioners. If they do not wake up to the problems of their pension plan, they could end up with a lot less than they thought they were promised.
It is not a friendly gesture for someone to tell you to step on the gas as you're barrelling toward a cliff. The person trying to get you to stop, even to the extent of shooting out your tire, is actually trying to help you.
I doubt public union members will take it that way, again especially due to the specific detailing and comparisons of salaries in Illinois to those in neighboring states. Why, Zettler asks, are Illinois teachers and educational administrators paid a lot more, by a wide margin, than Wisconsin's teachers? Zettler loads the back of the book with appendices chock-full of tables of actual dollar amounts.
Yes, this is a book with a lot of numbers in it, but no, it's not as scary to approach as you think (except for the not-terribly-bright future for TRS itself). Zettler is not heavy on theory and projections. Zettler doesn't go "full actuary" here – he tends to go for very concrete numbers and examples, with actual people he can point to. For example, one of Zettler's appendices lists top pension payments (more than just TRS).
But more to the point, this book was never intended to be read in a linear fashion. Definitely start at the front, but the part you want to look at is Zettler's introduction. He points to very specific material to look at where he builds his argument. This book is more a vade mecum that would be perfect for legislators, taxpayer groups, and yes, even public unions. Because most of Zettler's arguments center around very concrete, non-theoretical situations. If public unions want to make sure they can get the benefits they desire, they have to realize what the numbers actually are. I know that the likely result will just be ostriching, and blaming the messenger, but at a less than 50% funded ratio (recall: that's using a very optimistic assumption of 8.5% returns, and when said returns do not materialize, the falsity of that funded ratio becomes more evident.)
While the book is full of a lot of substance, it does have a failing: it is in need of a professional editor, both for the formatting of the pages and for just regular text editing. Now, I am a grammar zombie, so even small things give me spasms. But I think there are so many errors that it's obvious to even the casual reader, and this undermines the seriousness of the material and its credibility. Yes, I know, it shouldn't, but that is life. If you want to sell books professionally, you need to make sure you put out something of good quality. I even have an editor I can recommend. I have already written to the author about this, and I hope the book gets an upgrade by the time the e-book format is available.
But back to the meat. In addition to detailing the various aspects that are ultimately undermining the safety of the TRS pensions, Zettler has his own recommended reforms, the most important concept of which is limiting the taxpayer liability to something that is supportable in the long run. I do not agree with all of Zettler's arguments, nor all his proposed reforms, but I think it's important to have a work such as this which is rather comprehensive in looking at the history of one public pension plan, and looking at its possible future(s).