Rockford state Rep. Dave Vella (D) has filed a bill which would prohibit future legislators from receiving a taxpayer funded pension when they leave office.
Vella also announced his decision to refuse a pension.
“We need to make sure we are not wasting resources to fund unnecessary perks for politicians,” said Vella. “As our state continues to face financial problems, we should not be adding new financial burdens by promising to pay for the retirements of career politicians.”
Because the state systemically underestimates its pension debt, it also underestimates the taxpayer contributions necessary to keep the debt from growing each year. During the past decade, officially-reported growth in pension debt outpaced the state’s initial projections by $24 billion. Growth in annual taxpayer contributions exceeded state estimates by about 15% per year on average, causing taxpayers to contribute $7.6 billion more than projected during the decade. Still, that extra money has not slowed a mushrooming pension debt. The state’s regular upward revisions demonstrate Moody’s method, which is more in line with private sector standards, is more accurate.
Because employee contributions to the pension funds and benefits paid out are both fixed by state law, taxpayers must make up for any shortfall caused when investment returns miss rosy targets. For example, the largest of Illinois’ five state pension systems, the Teachers’ Retirement System, reported a 0.52% return on investment in fiscal year 2020, which included the first four months of the COVID-19 pandemic. That was far short of the TRS’s 7% return target and helped grow the debt.
Readers, I have long been of the opinion that it’s a sensible approach to enable savers to choose among multiple retirement funds, so that they are able to reflect their particular ethical concerns, whether this means an “ESG” (environmental, social, and governance-issue focused) fund or a religious-screening approach, such as excluding companies which donate to Planned Parenthood (Ave Maria Funds) or which are in the alcohol industry (GuideStone Funds).
But no state official should be using investors’ money to play politics — not the money of individual investors through state-run IRAs or the retirement savings accounts of state employees, and not the money of public pension funds. And, frankly, I find it appalling that these sorts of actions aren’t universally considered to be wholly out of bounds — but I suppose living in Illinois (newly-declared the third-most-corrupt state, with Chicago as the most-corrupt city), I suppose I should lower my expectations. Readers in the remaining 49 states, however, should watch carefully.
* The Illinois Hotel & Lodging Association live-tweeted testimony today by Chicago Federation of Labor President Bob Reiter to the Senate Tourism and Hospitality Committee about the city’s convention business…
@BobReiterJr from @chicagolabor during IL Senate Tourism Cmte. hearing: Decisions made now will impact the #travel industry for this summer and beyond. Without a roadmap, current regulations are causing events to be canceled as far out as 2022.
@BobReiterJr: Other states like Nevada & New York are moving ahead w/ changes to allow for events to reopen. We have been working w/ health experts on protocols and believe events should resume w/ 50% occupancy cap and no maximum as long as precautions are implemented.
A balancing act needs to be had that protects people’s health but also need to look at what needs to be done to get people back to work. 25-30,000 union hospitality & convention workers are out of work & are making the decisions b/w paying for healthcare, mortgage or buying food
Only the statutory contribution is not what the state owes to meet its obligation and prevent more debt. “Statutory” should be translated as the legislature made up a number and blew it out their collective butts.
The actuarial amount owed, the amount actually needed to keep from growing the liability is several billion more that the statutory amount.
They short the pension system every year, after year, after year, after year. And this year again.
The state assumes the pension funds will continue to earn an average of nearly 7 percent a year, while Moody’s lowered its assumptions for 2020 to just 2.7 percent: “the FTSE Pension Liability Index, a high-grade corporate bond index Moody’s uses to value state and local government pension liabilities, fell to 2.70% as of June 30, 2020, from 3.51% the prior year.”
Moody’s also reported that the asset-to-payout ratio for the state’s funds are now equal to about seven years’ worth of payouts.
Gov. J.B. Pritzker’s administration has a Wednesday deadline to start turning over documents justifying why it ordered restaurants to limit their operations during the COVID-19 pandemic.
Attorney Greg Earl, with Myers, Earl and Nelson P.C., represents Geneva-based FoxFire restaurant, which sued the governor last fall.
“FoxFire is continuing this fight because what happens if another strain, that’s what we’ve heard of, another strain from Europe or South Africa hits and the governor decides to put in another 30-day window,” Earl said.
The governor has already issued 12 months of executive orders related to the pandemic. His most recent order issued Feb. 5 expires March 7.
It has been over a year since the COVID-19 recession began in February of 2020. After going through a brutal loss of 31.4% in the second quarter and an immediate, rapid rebound of 33.4% in the third quarter last year, the economy appears headed for a recovery. Overall, the U.S. economy shrank by 3.5% in 2020, compared to 2019. This was the worst growth since one year after World War II. In January, personal income rose 10% and consumer spending jumped by 2.4%, the biggest increase since June of 2020, both of which mostly resulted from the COVID-19 relief payments by Congress. Housing markets are still robust, partly supported by low mortgage rates. However, the employment report in January showed weaker-than-expected data. The unemployment rate fell to 6.3% from 6.7% mostly due to a decrease in the labor force (i.e. people gave up looking for jobs). The economy gained 49,000 jobs, which was lower than expected. Inflation, currently at 1.5%, is persistently below the Fed’s average goal of 2%. Having said that, the outlook on the U.S. economy has improved as daily COVID-19 infection cases are falling and more dosages of the vaccines are being administered. In addition, $1.9 trillion is ready to be pumped into the economy once a third COVID-19
relief bill passes Congress. However, the recovery rate will not be as fast as the rate seen in the third quarter of the previous year.
Author(s): Julie Bae
Publication Date: February 2021
Publication Site: Illinois Commission on Government Forecasting and Accountability
The state lost nearly 80,000 people in the year that ended July 2020, according to an analysis of U.S. Census data. That’s 22,000 more than were lost the year before and the seventh consecutive loss of population in the past 10 years. Illinois led the nation in population decline for the past decade at 255,000.
Illinois House Speaker Emanuel “Chris” Welch, D-Hillside, told the Economic Club of Chicago on Wednesday the state has been losing population for years. Without details, he said the state needs to support small and big businesses. He also said leaders need to unite on messaging.
Former House Speaker Michael Madigan, after 50 years as a member of the Illinois House and a contributor into one of the state’s five pension funds, the General Assembly Retirement System, will receive an annual pension of around $85,117, about 85% of his final salary.
In July 2022, his pension will rise to about $148,995 due to padding lawmakers built into the system for themselves over the years. He’ll receive a guaranteed 3% raise on his pension each year, no matter what the actual cost of living is.
During those 50 years in office, Madigan contributed from his own paycheck about $351,000 toward his retirement account. He quickly will start receiving far more than he put in.
Despite the record increase in pension expenditures in the past several decades, Illinois’ pension system remains the nation’s worst by multiple measures. According to Moody’s Investors Service, Illinois’ pension debt was equal to 500% of the state’s revenues in fiscal year 2018 and almost 30% of the entire state economy, both the highest rates in the nation. At the same time, Illinois’ credit rating has been in precipitous decline and now sits at the lowest credit rating in the nation.
As pension debt continues to increase, so do required pension contributions. Pension contributions now consume 26.5% of the state’s general funds budget, up from less than 4% during the years 1990 through 1997.