Tag: Illinois

City Of Chicago Shunning Fossil Fuel Investments. Who Benefits? Russia. – Wirepoints

Mary Pat Campbell

Link: https://wirepoints.org/chicago-shunning-fossil-fuel-investments-as-nation-struggles-with-higher-energy-costs-wirepoints/

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The timing on Wednesday was impeccable. I was looking at the price of oil, which was up four percent that day and about to pass $100/barrel. Energy stocks were up over one percent despite a horrible day for the rest of the market.

That’s when an email popped up with a story in Crain’s headlined “Chicago moving to divest from fossil fuels.”

….

So, with inflation raging, gasoline moving towards $4.00/gallon and Russia murdering Ukrainians with the help of American oil purchases, Chicagoans can take comfort knowing that the city will refuse to invest in oil and other fossil fuel production and thereby “will be sending a message that Chicago is permanently leaving dirty energy in the past and welcoming a clean energy future for generations to come.”

That’s from Chicago Treasurer Melissa Conyears-Ervin. She and members of the City Council, with Mayor Lori Lightfoot’s support, are pushing for an ordinance to mandate that the city divest its funds from fossil fuel companies, as Crain’s reported.

In fact Conyears-Ervin had already made oil and gas divestment office policy. The new ordinance would make the change permanent going forward. Her office has already removed $70 million in fossil fuel-associated bonds from the city’s portfolio, she says.

How wise has it been lately to be shunning fossil fuel investments? Here’s a chart comparing performance year-to-date of the S&P 500 to XLE, an ETF basket of mostly oil and gas companies. While the market in general is down some 10% the oil and gas stocks are up over 21%.

Author(s): Mark Glennon

Publication Date: 25 Feb 2022

Publication Site: Wirepoints

‘We Don’t Have Actuarial Numbers Relative To This Amendment’: Illinois’ Tier 2 Pension In Their Own Words

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2022/02/20/we-dont-have-actuarial-numbers-relative-to-this-amendment-illinois-tier-2-pension-in-their-own-words/

Excerpt:

In Illinois, this resulted in a Blue Ribbon Pension Commission under Gov. Rod Blagojevich, which issued a report in 2005 with some recommendations which were adopted and others which, well, never saw the light of day. As might be guessed, the changes actually implemented were small scale, but included an anti-spiking measure, a reduction in the guaranteed interest rate used to calculate a minimum pension benefit, and a reduction in the categories of state employees eligible for the more generous alternative formula. This legislation, Public Act 94-0004, also required that any new benefit increase henceforth must be paired with a corresponding funding increase, and must sunset after five years (though recall that this didn’t stop the legislature from increasing benefits for Chicago Firefighters or non-Chicago Police and Fire pensions, both of which involve the state dictating benefits and localities funding them).

In recognition of the small nature of these changes and the very large debts still remaining, the bill also created yet another commission, with no effect, and in subsequent years, still more commissions met. In 2009, the Illinois Pension Modernization Task Force held a series of public meetings, but produced no majority-approved report, only a work product with findings and minority reports.

It is in that context that the Illinois Tier 2 pension system came into being — which avid readers will recall is a new set of benefits for public-sector employees in Illinois hired after January 1, 2011, a set of benefits with changes made that “looked good” to legislators at the time but had no actuarial review, and as a result will sooner or later fail the “safe harbor” test, in which state and local public pensions must provide better benefits than Social Security in order to opt out of the Social Security system. And why didn’t the law have an actuarial review? Because it was created behind closed doors — which makes it all the more worthwhile to repeat the exercise of reading the legislative transcripts of the day it was brought to the floor of the Illinois State House and Senate for a vote.

Author(s): Elizabeth Bauer

Publication Date: 20 Feb 2022

Publication Site: Forbes

Comptroller asks for upgrade to Illinois’ worst-in-nation credit

Mary Pat Campbell

Link:https://www.thecentersquare.com/illinois/comptroller-asks-for-upgrade-to-illinois-worst-in-nation-credit/article_464a70c6-8862-11ec-b879-afe32c50f8c6.html utm_term=0_3386e99c24-8d6a8659cc-71461060

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Illinois Comptroller Susana Mendoza is asking the credit ratings agencies to upgrade Illinois’ worst-in-the-nation status.

S&P Global has Illinois at BBB. Moody’s has the state at Baa2. That’s after upgrades from the agencies last year. Fitch has Illinois at BBB-.

“My office is doing everything possible to manage the current backlog of bills and address Illinois’ finances head-on,” Mendoza said in a letter to the agencies that her office announced Monday. “The Illinois Office of Comptroller urges you to consider these positive factors and progress made in strengthening Illinois’ financial position when evaluating Illinois’ creditworthiness.”

Mendoza said in the letter she has paid back recent borrowing from a federal program. Illinois was the only state to borrow from the Federal Reserve’s Municipal Liquidity Fund for a total of $2.6 billion.

Author(s): Greg Bishop

Publication Date: 8 Feb 2022

Publication Site: The Center Square

CHICAGO’S $43,100 DEBT PER TAXPAYER DRIVEN BY PENSION DEBT

Mary Pat Campbell

Link:https://www.illinoispolicy.org/chicagos-43100-debt-per-taxpayer-driven-by-pension-debt/

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Chicago once again earned a failing grade from Truth in Accounting in their latest Financial State of the Citiesreport thanks to over $38 billion in debt – $43,100 for each taxpayer.

Every Chicagoan would have to send the city that amount just for Chicago to pay the bills it owes. Chicago has just $9.9 billion available to pay $48.6 billion in bills. The Windy City came in 74th out of 75 cities studied in the report, only besting New York City’s massive $204 billion debt with a per-taxpayer burden of $71,400.

The city’s financial failings stem from pension promises the city cannot afford to keep. “Chicago’s financial problems stem mostly from unfunded retirement obligations that have accumulated over the years. The city had set aside only 23 cents for every dollar of promised pension benefits and no money for promised retiree health care benefits,” the report notes.

Author(s):Justin Carlson

Publication Date: 8 Feb 2022

Publication Site: Illinois Policy Institute

Appeals panel: No pension benefits for ex-Chicago cop Anthony Abbate, convicted in videotaped beating of female bartender

Mary Pat Campbell

Link:https://cookcountyrecord.com/stories/619782204-appeals-panel-no-pension-benefits-for-ex-chicago-cop-anthony-abbate-convicted-in-videotaped-beating-of-female-bartender

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A state appeals panel has ruled a Cook County judge was wrong to declare Anthony Abbate — a Chicago police officer convicted of a 2007 aggravated battery targeting a female bartender — remained entitled to his pension.

Cook County Circuit Judge Anna Loftus ruled in favor of Abbate in a lawsuit against the Retirement Board of the Policemen’s Annuity and Benefit Fund of the City of Chicago, which stripped Abbate’s pension following his conviction. Loftus determined the battery had no connection to Abbate’s service as a police officer and therefore couldn’t be used to invalidate his pension.

The Illinois First District Appellate Court ruled on the pension board’s appeal in an order issued Feb. 7. Justice Aurelia Pucinski wrote the opinion; Justices Michael Hyman and Carl Walker concurred. The order was issued under Supreme Court Rule 23, which may restrict its use as precedent.

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According to Pucinski, the pension board also said “Abbate used his position as a police officer to interfere with a criminal investigation into his own conduct at the bar” and cited testimony from a federal civil trial in which a jury found in favor of the bartender against Abbate and the city. The panel rejected Abbate’s arguments alleging the pension board failed to support its conclusions and selectively included evidence.

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The panel further rejected Abbate’s argument it should only consider a specific section of the Illinois Pension Code, explaining it would consider other cases interpreting similar forfeiture provisions, such as those affecting the General Assembly, Illinois Municipal Retirement Fund members and others.

Author(s): Scott Holland

Publication Date: 7 Feb 2022

Publication Site: Cook County Record

Actuarial Assumptions and Valuations of the State-Funded Retirement Systems

Mary Pat Campbell

Link:http://www.auditor.illinois.gov/Audit-Reports/Performance-Special-Multi/State-Actuary-Reports/2021-State-Actuary-Rpt-Full.pdf

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The combined total of the required Fiscal Year 2023 State contribution
for the six retirement systems was $10.97 billion, an increase of $0.14
billion over the previous year. Cheiron verified the arithmetic calculations
made by the systems’ actuaries to develop the required State contribution
and reviewed the assumptions on which it was based.

The Illinois Pension Code (for TRS, SURS, SERS, JRS, and GARS)
establishes a method that does not adequately fund the systems, back
loading contributions and targeting the accumulation of assets equal to 90%
of the actuarial liability in the year 2045. This contribution level does not
conform to generally accepted actuarial principles and practices. Generally
accepted actuarial funding methods target the accumulation of assets equal to
100% of the actuarial liability, not 90%.

According to the systems’ 2021 actuarial valuation reports, the funded
ratio of the retirement systems ranged from 47.5% (CTPF) to 19.3%
(GARS), based on the actuarial value of assets as a ratio to the actuarial
liability. If there is a significant market downturn, the unfunded actuarial
liability and the required State contribution rate could both increase
significantly, putting the sustainability of the systems further into question.

Author(s): Frank J. Mautino

Publication Date: 22 Dec 2021

Publication Site: Office of the Auditor General, State of Illinois

‘The Pension Bill Has Something For Everybody’: A Look Into How Illinois Lawmakers Justified Their Pension Benefit Boosts

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2022/02/03/the-pension-bill-has-something-for-everybody-a-look-into-how-illinois-lawmakers-justified-their-pension-benefit-boosts/?sh=207f9a5233bb

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In my prior article, I laid out the Illinois General Assembly’s repeated unanimous, near-unanimous or strong bipartisan majority support for a series of bills increasing pension benefits for public employees from 1989 – 2000.

….

With respect to the SERS benefit increase, the Senate debate centers around collective bargaining. As Senator Jones says in the May 31, 1997 transcript, “I think Senator Collins had worked hours, and many hours and years to sponsor this piece of – this legislation so that we can arrive at the point we are today. So I – I stand up gladly and proudly to – to support you in this endeavor, but I think we should know where the real, real support originally came from and how it all came about. And it came about as a result of collective bargaining legislation.” (Again, all transcripts can be viewed online.)

On the House side, there was more discussion. The CGFA’s summary notwithstanding, there were a number of benefit boosts, including a “30 and out” provision. It was explained by Rep. Poe that the bill was “funded” by the fact that during the AFSME contract negotiations, the union accepted a reduced wage increase (relative to what they’d otherwise have demanded) in order to achieve this pension benefit increase, and it was taken on faith that the bill was indeed therefore truly “paid for,” when it ought to simply have been met with incredulity instead.

….

This is, of course, exactly the core of the reason why public sector unions are fundamentally so ripe for abuse, when the individuals who nominally have the role of “employer” gain so much politically from providing these generous benefits.

This brings us to the Teacher’s equivalent and the transcripts of May 21 – 22, 1998. Here the path of the bill was not as simple, as the speaker delayed moving the bill out of the Rules committee.

….

Finally, we have transcripts of the 1989 COLA/pension funding bait-and-switch bill to read. Again recall that this bill was wholly rewritten through negotiations, and presented in its final form on the day it was voted upon, June 30, 1989. 

….

“The pension bill has something for everybody, folks. It’s been designed in such a way that everybody’s got something in here.” 

But as Schuneman continues to speak, it is clear that he is cynical about this design and in fact he is concerned about the cost, and he continues talking about the pension debt as the equivalent to paying the minimum payment on a credit card – but gets no traction. The next speakers are far more interested in clarifying the (even more generous) benefit boosts for General Assembly members, and after some side-tracking Jones picks up his “something for everything” point but not with Schuneman’s cynicism but sincerely calling for passage, citing the governor’s support (and with no mention of costs or the funding plan): 

“Sure, there is something in here for everyone. The Office of the Governor came out very strongly for the workers of the State of Illinois and in strong support for the compounding of the increases for State Employees and retirees. So, let’s give me a favorable vote on this bill, and we will do good for the people who work hard for the State of Illinois.”

Author(s): Elizabeth Bauer

Publication Date: 3 Feb 2022

Publication Site: Forbes

ILLINOIS CAN SAVE $577M ON PENSIONS BY ADDING A DATE TO A LAW

Mary Pat Campbell

Link:https://www.illinoispolicy.org/illinois-can-save-577m-on-pensions-by-adding-a-date-to-a-law/

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Essentially, all pension debt stems from Tier 1 benefits promised to state employees hired before 2011, like Crenshaw. Tier 2 employees hired after 2011 will likely pay more than their benefits will be worth to subsidize Tier 1 benefits.

Implementing optional Tier 3 plans is one of the solutions to Illinois’ woes set out in the Illinois Policy Institute’s Illinois Forward 2023. The General Assembly passed Tier 3 plans during the fiscal year 2018 budget process. A technical error left an implementation date out of the language, and it hasn’t been corrected since. Lawmakers could fix this oversight for fiscal year 2023, which begins July 1, 2022.

“A lot of times we’re not given the intricacies of how a Tier 3 or alternative pension plan could benefit us,” Crenshaw said.

Author(s): Dylan Sharkey

Publication Date: 3 Feb 2022

Publication Site: Illinois Policy Institute

Keep fiscal responsibility in Illinois’ next budget

Mary Pat Campbell

Link:https://chicago.suntimes.com/2022/2/6/22917731/pritzker-budget-legislature-pensions-college-illinois-health-insurance-editorial

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For example, Pritzker wants to set aside $500 million to pre-pay pensions. To do that, he would take $300 million out of the unexpected extra revenue this year, and $200 millino will come out of the 2023 General Fund budget.

In Illinois politics, pension underfunding is like the weather. Everyone complains, but no one does anything about it. Why? It’s hard to do, and laboring to fix pensions doesn’t resonate with voters. There is little political bang for the buck. That’s why state pensions have been underfunded year after year for a century.

There is value in prepaying pension debt beyond what is required by the so-called ramp, as Pritzker proposes. Because of double compounding — less money must be borrowed to be repaid with interest and investments on the added money yield more returns — $500 million spent now will save the state $1.8 billion later.

Author(s): Editorial Board

Publication Date: 6 Feb 2022

Publication Site: Chicago Sun-Times

Pritzker budget proposal to include extra $500 million in pension payments

Mary Pat Campbell

Link:https://chicago.suntimes.com/2022/2/2/22914390/pritzker-budget-proposal-illinois-2023-general-assembly-spending-debt-pensions

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Citing an improved economic outlook in the COVID-19 pandemic, Gov. J.B. Pritzker’s latest budget proposal will devote an extra $500 million to Illinois’ nearly insolvent pension funds, pump $200 million into a “rainy day” fund and tamp down the state’s unpaid bill backlog — all while providing $1 billion in tax cuts, freezes and rebates, administration officials said Wednesday.

Pritzker was scheduled to outline the ambitious $45.4 billion election-year spending plan during his “State of the State” speech at noon in Springfield, in a downsized event held at the Old State Capitol Building due to a massive winter storm sweeping the state.

In a media preview ahead of the speech, the governor’s top advisers claimed the new spending plan keeps the state on track to end in the black for back-to-back years for the first time in 25 years.

Author(s): Mitchell Armentrout

Publication Date: 2 Feb 2022

Publication Site: Chicago Sun-Times

ILLINOIS FORWARD 2023: ONLY PENSION, BUDGET REFORM CAN SAVE TAXPAYERS WHEN FEDERAL AID ENDS

Mary Pat Campbell

Link:https://www.illinoispolicy.org/reports/illinois-forward-2023-only-pension-budget-reform-can-save-taxpayers-when-federal-aid-ends/

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Spending in the state budget actually has increased – significantly – under Gov. J.B. Pritzker relative to baseline expectations in the state budget. Even if lawmakers and the governor make no further increases to spending in the fiscal year 2023 budget, which is unlikely given that Pritzker has proposed spending increases in each February budget address of his term, then total spending during Pritzker’s first term will be up nearly $5 billion, or 3% higher than when he took office.

Author(s): Adam Schuster

Publication Date: accessed 2 Feb 2022

Publication Site: Illinois Policy Institute

The Pension Combine? Illinois’ Public Pension Unfunding Has A Long And Bipartisan History

Mary Pat Campbell

Link:https://www.forbes.com/sites/ebauer/2022/01/30/the-pension-combine-illinois-public-pension-unfunding-has-a-long-and-bipartisan-history/

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Newcomers to the state of Illinois may find it odd to see the word “bipartisan” show up anywhere in reference to Illinois, but they forget that the state’s history includes jailed governors from both political parties.

….

Nothing especially persuasive emerges from these studies, except for one: “Polarization and Policy: The Politics of Public-Sector Pensions,” by Sarah Anzia and Terry Moe, published in 2017 at Legislative Studies Quarterly.

Their main argument: before the Great Recession, in those states with un/underfunded pensions, both parties were the cause of the underfunding. Simply put, the public at large simply had no interest in pension funding, but was very much interested in a high level of government services and a low level of taxation. There was therefore no incentive for politicians of either side to fund pensions.

….

And a review of the history of Illinois’ pension funding is a case study in how this pre-Great Recession bipartisan pension funding indifference played out. The whole history was outlined in great detail in a 2014 report by Eric Madiar, who at the time served as Chief Legal Counsel to Illinois Senate President John J. Cullerton; while the objective of much of his document is to argue a political point, his history lesson is extremely helpful, and starts with a 1917 report by the Illinois Pension Laws Commission lamenting that pension plans were not being funded and calling for the legislature to begin to fund pensions when benefits are earned. Throughout the 40s, 50s, and 60s, dire reports were issued by similar commissions, to no avail, with the result that the Illinois constitution of 1970 essentially treated the pension protection clause as an alternative to funding pensions.

….

So there you have it: a century-long legacy of unfunded pensions in Illinois.

Author(s): Elizabeth Bauer

Publication Date: 30 Jan 2022

Publication Site: Forbes