Government As Malpracticed

Illinois lawmakers announced on the slowest news day of the year that they had come up with (in secret) a plan to fix the state’s underfunded pension system without releasing any details and this somehow qualified as news even though this story did not originate on facebook or twitter (presumably).

Of interest is not the plan itself, which seems to be modeled on what New Jersey tried in 2011 (cut COLAs, lower benefits for new hires, guarantee that contributions will be made), but aspects of the propaganda campaigns being rolled out, some of which are funny without comment:

$100 billion in official underfunding and this ‘reform’ will save $160 billion over 30 years 

Per a Yahoo story the plan will be “reducing the employee contribution.” A sweetener that will definitely underfund benefits further in exchange for tweaks in underlying benefits, a 401(k) that nobody will elect unless it means more money for them, and a COLA reduction that has a 50/50 chance of being overturned in the courts.

The funding guarantee allows retirement systems to sue Illinois if lawmakers don’t make the full contribution to the fund each year. That full contribution being what legislators define it to be, in cahoots with obliging actuaries, and presumably would be more than happy to deposit……..IF THEY HAD THE MONEY!!!  How is being able to sue Illinois, a parlor game in some areas, going to bring that money (other people’s money) into existence?

8 responses to this post.

  1. Posted by randyrap@aol.com on November 28, 2013 at 5:50 pm

    can we have one day of rest from the bad news! lol

    Reply

  2. Posted by Tough Love on November 29, 2013 at 1:17 am

    John, I believe the $160 Billion (in your first bolded sentence) is supposed to be $160 Million.

    Reply

  3. Thanks for ridiculing us in Illinois — seriously. The state remains in denial because our media don’t understand this stuff. They lap up that propaganda you rightfully laugh at. We republish pieces like this in hopes somebody will wake up eventually.

    Reply

  4. The biggest whopper came from our Governor Quinn, who said yesterday: “When I proposed the creation of a conference committee in June, I asked members to draft a plan that eliminated the unfunded pension debt and fully stabilized the systems, and this plan meets that standard.”

    In fact the deal would cut just 20% off the unfunded liability according to its supporters. http://wp.me/p2Oseh-20H

    Reply

  5. Help! Today we got the “details” on that pension deal in Illinois. The distortions really are in full swing, and we would love to have you take a closer look and comment as you can. We have no John Bury in Illinois, which is part of our problem. What passes for expert pension analysis appeared here, in the most closely followed blogs in the state, which also includes the sole details released about the plan: http://capitolfax.com/2013/11/29/a-quick-analysis-of-the-pension-reform-proposal/
    While I know that it’s crap I’m not an actuary and we need actuaries who can rebut this kind of thing credibly.

    Mark Glennon

    Reply

    • Posted by Tough Love on November 30, 2013 at 2:41 am

      Just read it.

      Unnecessarily complicated (and certain to bring about years of litigation).

      The State gov’t of Illinois needs to declare a fiscal emergency and hard freeze ALL of the DB Plans for all CURRENT employees. Replace them (for FUTURE service) with a modest DC Plan with a 3-5% of pay Taxpayer “match” just as is common practice in the Private Sector.

      Nothing short of this will prevent the entire State from becoming insolvent (even though there isn’t a snow-balls-chance-in-hell that they would do so). While the linked changes do produce some savings, those savings are woefully inadequate and deferred WAY too far into the future year to prevent that insolvency.

      To summarize…it’s business-as-usual for Illinois politicians….,a plan with no “meat” on the bones.

      If you are depending on anywhere near your full promised pension to survive in retirement, I suggest you seriously start working on a “Plan B”.

      Reply

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