Election Recap: IV + BS = SOS


Mix Ignorant Voters with a Broken System and you get the election results we got last week which changed nothing, chastised nobody, and were a disaster for real public pension reform in this nation.

In Oregon, Montana, New Hampshire, and San Diego candidates who proposed moving public employees into Defined Contribution plans were defeated.  In New Jersey a feel-good public question upbraiding judges passed easily though it will have no significant effect on funding levels.  But the height of irrelevance in reform might have occurred in Illinois where Public Pension Amendment, HJRCA 49 was voted down, 1,748,601 No Votes to $2,213,269 Yes votes.

This amendment would have required a supermajority (60%) to raise benefits for public employees anywhere in the state (as if anyone outside of Union County, NJ were raising benefits) though a supermajority was needed for it to pass which it didn’t get for reasons explained in an article in Pensions & Investments:

Illinois was one of two states along with Michigan where a constitutional amendment relating to pensions and benefits was rejected. Illinois, which the Pew Center on the States has said has the worst public pension funding of all states, saw a measure fail that would have required a three-fifths supermajority vote by the General Assembly, city councils and school districts to enhance any public employee pension benefits.

“I think some voters were just simply confused and didn’t know what the amendment was doing, and frankly, who could blame them,” said Diane Cohen, general counsel of the Liberty Justice Center, a public interest litigation center started by the Illinois Policy Institute, Chicago. “It wasn’t very informative, and it was simply fake reform.”

Although the simple majority to increase benefits will now remain in the state, which has a funded status of 45%, the Illinois Commission on Government Forecasting and Accountability a non-partisan legislative service agency, reports that benefit increases in 2011 accounted for only 1% of the increase in pension debt among Illinois’ five public pension systems, while 51.2% of debt was attributed to insufficient employer contributions.

“We don’t need the constitution to amend pension reform,” Ms. Cohen said. “We can move to defined contribution plans for public employees, stop the cost-of-living increases for retirees and raise the retirement age. There’s a lot that can be done short of an amendment.”

Yes a lot can be done but presenting these otiose ‘solutions’ to a confused electorate leaves us in the Same Old State.

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12 responses to this post.

  1. Posted by Tough Love on November 15, 2012 at 12:32 am

    John, Unless the Illinois population as a whole is dumber than rocks OR the amendment (Illinois where Public Pension Amendment, HJRCA 49) was worded in a very confusing way (perhaps suggesting the OPPOSITE of it’s intent) ….. how & why did a citizenry in such dire straights overwhelmingly vote down this rather minor but much needed reform ?

    Reply

  2. My guess would be that there are more citizens who are benefitting from the public gravy train than not and their unions got out the vote. Whether or not they are dumber than rocks remains to be seen. They want what they feel they are entitled to and that’s why passing any kind of significant reform (fixing the problem) will never happen.
    I’m wondering if I will be reading about the pending collapse of the pensions systems for the next 30 years. No one that I know both professionally or personally seems overly concerned. Same logic applies to NJ–why would a state in such dire financial straights vote for more debt and borrowing for colleges at this time?

    Reply

    • Posted by Tough Love on November 15, 2012 at 2:39 pm

      I’m quite certain that we will be … “reading about the pending collapse of the pensions systems” …. starting in the next 2-3 years.

      Reply

  3. Posted by muni-man on November 15, 2012 at 4:37 pm

    Real state solutions will never happen – these systems are far too corrupt and self-serving to accommodate that. The real solution, albeit extremely messy and bitterly contentious, will be an economic one that will trump legal niceties and FORCE severe cutbacks on the gooberment gamesters well before the decade’s out. Wacko stuff like secession movements now underway in a number of states are just a harbinger of some really scummy stuff that lies ahead. I’m sure there will be games aplenty with the fiscal cliff too, but there’s gonna come a point in the fairly near future where market forces will just flat-out crush those who don’t clean up their act, including the U.S., the states, and the Eurozone. Then the real craziness will begin!

    Reply

  4. Posted by Eric on November 15, 2012 at 6:58 pm

    Tough Love:
    MJ’s point is well taken regarding reading about the pending collapse of the pensions for the next 30 years. You seem to agree by stating that we will be reading about it starting in the next 2 to 3 years. Either way it is still pending.
    Eric

    Reply

  5. Posted by Javagold on November 15, 2012 at 7:21 pm

    you have to remember that any household with just one public leech will have EVERY voter in the house vote for to keep the pension fraud to continue….plus the union thugs are very well organized and probably get out 100% of the vote

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  6. Java, that’s a big part of my point. Too many publics on the taxpayer dime. I would also bet that the seniors voted all the same politicians in as well b/c they don’t want heir piece of the pie sliced smaller still. I think that it is too far gone to change anything of significance. In fact, I am convinced that nothing will change. They will nurse it along by making small changes here and there but let’s face it, there isn’t going to be any financial collapse with pensions. It would have happened already. After the election results, with NJ voting for the bonding debt and CA voting in the tax increases…..I think that tells us all we need to know and I would bet that we will still be reading about the coming pension collapse for years to come. YAWN! I think I need to find another blog!

    Reply

    • Posted by Tough Love on November 15, 2012 at 9:42 pm

      Quoting …”They will nurse it along by making small changes here and there but let’s face it, there isn’t going to be any financial collapse with pensions. ”

      Well, in a few places there certainly will Ill-yes, NJ-??.

      But what WILL happen in many many places is that the Taxpayers will indeed get fed up (with BOTH the Public Sector Unions/workers & the politicians) as their taxes rise and services diminish all to fee the Public Sector pension & benefits beast…. with FAR FAR more than they get.

      The upshot of that won’t directly lead to financial failure of these Plans, but may be the tipping point for real MATERIAL change … e.g., a hard freeze on further Plan growth for Current workers, a 50% reduction in the accrual rate for Future Service of Current workers, or a hybrid …. a modest DB + DC Plan combination like the current Plan for Federal Gov’t workers.

      Reply

      • Posted by Anonymous on November 16, 2012 at 10:56 am

        TL. At least you are willing to say that the plans wont fail financially and that’s a lot coming from you.

        Reply

        • Posted by Tough Love on November 16, 2012 at 11:25 am

          What I meant by “won’t directly lead to financial failure of these Plans” was a “timing” issue.

          If the Plan “actives” are stupid enough to allow Plan assets to actually run down to zero …. effectively paying out all THEIR contribution to current retirees …. sure, almost all Plans plan still have 10-20 (even 30 years) before that end.

          Now, do you really think the active will let that happen?

          Reply

  7. TL, the taxpayers can get fed up as much as they want and things will not change as we all will still have to pay whatever tax increases are placed upon us. The publics will not complain even though they pay real estate taxes, etc. b/c it is a wash for them and there appear to be way more taxpayers at the public tough than not. That doesn’t count the other “47%” receiving some form of government assistance. For some it is survival, for others it will be a very comfortable retirement at someone else’s expense.

    Reply

    • Posted by Tough Love on November 16, 2012 at 11:41 am

      Quoting …”TL, the taxpayers can get fed up as much as they want and things will not change as we all will still have to pay whatever tax increases are placed upon us.”

      Yes (short of moving away), but the legislators have to pass those tax increases, and long before taxes become increased sufficiently to fully fund existing promises, I’m betting those politicians will change sides (aligning with the citizeny vs the workers) and materially cut (or freeze) future benefit accruals.

      What’s not clear to me is, if we are in true dire straights (and I think John feels we will be) just from the accrued liability for PAST service, how will that be addressed if the tax increases even for THAT are unacceptably too great.

      Reply

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