Tag: Wirepoints

Illinois Bill Would Give State Treasurer Voting Control On Pension Assets – Wirepoints

Mary Pat Campbell

Link: https://wirepoints.org/illinois-bill-would-give-state-treasurer-voting-control-on-pension-assets-wirepoints/

Excerpt:

Count on the Illinois legislature to find a way to further maim its crippled pension system.

Senate Bill 2152 would strip pension trustees of control over how to vote shareholder matters and vest the power in the state treasurer, currently, Michael Frerichs.

Still worse, the treasurer would then be bound to comply with the Illinois Sustainable Investing Act on how he votes on behalf of stocks owned by the pensions. That law requires officials like the treasurer to include “sustainability” considerations in how public money is invested. It’s basically a progressive policy agenda also known as ESG (Environmental, Social, Governance). It’s often ridiculed as “woke capitalism,” and includes the goals of zero fossil fuels, “equity,” gender and identity politics, and pretty much any other social justice fad in vogue.

….

Shareholders, including pensions, usually have the right to vote on key corporate issues such as board of director elections, rights offerings, mergers and acquisitions. For interests in private investment partnerships, which pensions also hold, voting powers include other major matters. If the bill becomes law, Frerichs, or whoever is treasurer, would hold a proxy for all those votes and execute ballots, voting as he alone decides — a huge concentration of power in one individual.

The bill would eliminate any fiduciary obligation to vote shares in a way that maximizes their value, diluting that goal with progressive’s political agenda. Today, pension managers are fiduciaries for pensioners – a strict, legal standard — but the treasurer would not be if the bill becomes law.

Author(s): Mark Glennon

Publication Date: 17 Mar 2023

Publication Site: Wirepoints

Reality check: New actuarial report says Illinois’ biggest pension, TRS, sunk $6 billion further into the hole in FY 2022 – Wirepoints Quickpoint

Mary Pat Campbell

Link: https://wirepoints.org/reality-check-new-actuarial-report-says-illinois-biggest-pension-trs-sunk-6-billion-further-into-the-hole-in-fy-2022-wirepoints-quickpoint/

Excerpt:

The first actuarial report is out for an Illinois pension for fiscal year 2022, which ended on June 30. It’s for the TRS, the Teachers Retirement System, which accounts for well over half of Illinois state-level pension debt.

Unfunded liabilities grew about $6 billion from $74.7 billion to $80.7 billion on a fair asset value basis. Its funded ratio worsened from 46.2% to 43.8%. The drop occurred despite a one-time, special contribution by taxpayers to the fund of $173 million that was in addition to their annual, scheduled contributions.

Expect Illinois’ other pensions to suffer similarly dismal results as their 2022 reports are published.

Author(s): Mark Glennon

Publication Date: 7 Dec 2022

Publication Site: Wirepoints

Backlash Against ESG Investment Of Taxpayer Money Grows, But Illinois And Chicago Carry On – Wirepoints

Mary Pat Campbell

Link: https://wirepoints.org/backlash-against-esg-investment-of-taxpayer-money-grows-but-illinois-and-chicago-carry-on-wirepoints/

Excerpt:

But those scorned sectors have been the better investments this year, and tech companies have been hammered. Only 31% of actively managed ESG equity funds beat their benchmarks in the first half of 2022, compared to 41% of conventional funds, according to Refinitiv Lipper, as Reuters recently reported. So far this year, 19 of the 20 best-performing companies in the S&P 500 are either fossil-fuel producers or otherwise connected with fossil fuels.

Consequently, ESG funds “have been hit by unprecedented outflows in the market downturn, as investors prioritize capital preservation over goals such as tackling climate change,” wrote Reuters.

Predictably, the issue has become political since state and local officials invest trillions of dollars owned by taxpayers. Republican candidates generally oppose ESG investment of public funds, and five positions — in Kansas, Iowa, Missouri, Nevada and Wisconsin — flipped from Democratic to Republican in recent races for state auditor, controller or treasurer. Of the 50 directly elected positions, Republicans won 29 and Democrats won 19, according to a recent Roll Call report.

Illinois Treasurer Michael Frerichs, however, is among the Democratic officials not backing off on ESG. “We are in it for the long term” is the title of an open letter he recently signed along with 13 other Democratic state financial officers criticizing efforts to stop ESG use of taxpayer money. The letter is astonishingly hypocritical. It says those who want to ban ESG investment of public money are “blacklisting financial firms that don’t agree with their political views.” That, of course, is precisely what ESG does.

Author(s): Mark Glennon

Publication Date:19 Nov 2022

Publication Site: Wirepoints

New York loses $19.5 billion in population exodus, IRS confirms

Mary Pat Campbell

Link: https://www.thecentersquare.com/new_york/new-york-loses-19-5-billion-in-population-exodus-irs-confirms/article_c805dfd6-dde6-11ec-8d0e-4f667cd41881.html

Excerpt:

The Internal Revenue Service this week released more troubling data for New York, with the federal agency showing more high-earning taxpayers leaving the state.

Tracking returns filed in 2019 and 2020 showed that 479,826 people left New York for another state or country in those years. Over the same timeframe, just 231,439 people moved to the state. That means the state suffered a net loss of 248,387 residents.

And, of course, those people took their money with them. The IRS figures show the moves generated an economic exodus of more than $19.5 billion.

New Jersey and Florida were the biggest beneficiaries. More than 84,500 people moved from New York to New Jersey and took $5.3 billion. By contrast, only 37,127 New Jersey residents moved to New York and brought $2.2 billion in income.

….

Wirepoints, in its analysis, noted New York suffered the worst net loss of income of any state, with the $19.5 billion representing a 2.5 percent decline in adjusted gross income. 

Author(s): Steve Bittenbender

Publication Date: 28 May 2022

Publication Site: The Center Square

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/

Graphic:

Excerpt:

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

Senator Martwick At It Again, Leading Move To Increase Chicago Pension Liability By Billions – UPDATED – Wirepoints

Mary Pat Campbell

Link:https://wirepoints.org/senator-robert-martwick-at-it-again-leading-move-to-increase-chicago-pension-liability-by-billions-wirepoints/

Excerpt:

Illinois State Senator Robert Martwick (D-Chicago) is pushing ahead with legislation that, according to a Bloomberg report, could increase Chicago’s police pension obligations by another $3 billion in total through 2055. An earlier city estimate put the cost at $2.1 billion. Senate Bill 2105 would do that by removing a birthdate restriction on eligibility at age 55 for a 3% automatic annual increase in retirement annuity.

Where would Chicago get money to cover the additional liability? No answers.

….

Chicago’s police and firefighter pensions already are in utterly abysmal shape, having just 18% and 23%, respectively, of the assets their actuaries say they should have. Together with two other pensions sponsored by the city, Chicago officially reports about $33 billion of unfunded pension liabilities. But using more realistic assumptions, Moody’s estimates the total unfunded liability at $60 billion. Moody’s also reports the city of Chicago’s total debts as a percentage of annual revenues are at 735%, the highest of any major city in the country.

….

It’s as if Martwick is saying, “We rob banks routinely so you might as well make it legal for us to rob banks.”

Author(s): Mark Glennon

Publication Date: 28 Jan 2022

Publication Site: Wirepoints

What Illinois didn’t tell you about its celebrated early payment of federal loan – Wirepoints

Mary Pat Campbell

Link: https://wirepoints.org/what-illinois-didnt-tell-you-about-its-celebrated-early-payment-of-federal-loan-wirepoints/

Excerpt:

In fact, the state originally did intend to pay off the Federal Reserve loan with other federal bailout money from ARPA, the American Rescue Plan Act, according to The Bond Buyer. But the “Treasury threw a wrench in repayment prospects” when the initial federal guidance barred the use of ARPA aid for debt repayment. “The state lobbied for a change in a letter to Treasury Secretary Janet Yellen. But as state tax collections turned rosier, state leaders opted instead to cover repayment with tax collections,” says The Bond Buyer.

The bottom line is that all of us, as federal taxpayers, will bear the cost of the federal bailout, for Illinois and other states, whether through higher taxes to repay the Treasury or inflation created by Federal Reserve money creation. And Illinois will be worse off because only Illinois borrowed extra and incurred interest costs.

So, no, Governor Pritzker, paying back this loan ahead of schedule doesn’t mean Illinois achieved a “level of fiscal prudence not seen in our state for decades.”

Author(s): Mark Glennon

Publication Date: 7 Jan 2022

Publication Site: Wirepoints

Comptroller Mendoza claims Illinois paying its bills but needs more federal bailout to avoid a big one – Wirepoints Quickpoint

Mary Pat Campbell

Link: https://wirepoints.org/comptroller-mendoza-claims-illinois-paying-its-bills-but-needs-more-federal-bailout-to-avoid-a-big-one-wirepoints-quickpoint/

Excerpt:

As for Mendoza’s claim that Illinois is paying its bill, that’s simply not true. The state entirely ignored the hole in its unemployment fund in its current budget and future budget forecasts. In reality, the state will not just have to repay the loan but must also restore the fund to a sound balance, which will probably take another $1.5 billion at least, which was the balance before the pandemic. Nor does Illinois pay its full bill for the 800-pound gorilla, pensions. Year after year it contributes far less to its pension funds than actuaries say is required to prevent unfunded liabilities from growing.

Mendoza supported her claim that Illinois is paying its bills by saying, as she frequently does, that Illinois shrunk its bill backlog by about 80% since its historic high of $16.7 billion during the 2015-2017 budget impasse.

Author(s): Mark Glennon

Publication Date: 3 Jan 2022

Publication Site: Wirepoints

Lightfoot messages indicate how flippantly state government stuck Chicago with higher pension cost – Wirepoints Quickpoint

Mary Pat Campbell

Link: https://wirepoints.org/lightfoot-messages-indicate-how-flippantly-state-government-stuck-chicago-with-higher-pension-cost-wirepoints-quicktake/

Excerpt:

You may recall earlier this year when the General Assembly passed a bill that Gov. JB Pritzker signed to increase certain pension benefits for Chicago firefighters. The new law is expected to cost Chicago some $850 million and could drop the funded status from what was an already abysmal 18% down to an even-worse 16%.

Well, it appears that Illinois Senate leadership didn’t even bother to talk to Chicago Mayor Lori Lightfoot before mandating that additional burden.

The Chicago Tribune has released Lightfoot email and text messages it obtained on a number of matters. One went from Lightfoot to Senate President Don Harmon. “A courtesy call regarding the fire pension bill would have been helpful, particularly since there is no funding for it,” Lightfoot said. “When that pension fund collapses, I will be talking a lot about this vote.”

Author(s): Mark Glennon

Publication Date: 31 Dec 2021

Publication Site: Wirepoints

Comptroller Mendoza claims Illinois paying its bills but needs more federal bailout to avoid a big one – Wirepoints Quickpoint

Mary Pat Campbell

Link: https://wirepoints.org/comptroller-mendoza-claims-illinois-paying-its-bills-but-needs-more-federal-bailout-to-avoid-a-big-one-wirepoints-quickpoint/

Excerpt:

Most states have either repaid what they borrowed for their unemployment funds or never borrowed in the first place. Illinois is one of ten states with loans still outstanding. The other states that joined Mendoza’s request to the Treasury are, like Illinois, heavily Democratic — New York, Colorado, Pennsylvania, Connecticut, New Jersey, Massachusetts and Minnesota. A recent research report detailed how federal pandemic bailout money, in general, has gone disproportionately to Democratic states.

As for Mendoza’s claim that Illinois is paying its bill, that’s simply not true. The state entirely ignored the hole in its unemployment fund in its current budget and future budget forecasts. In reality, the state will not just have to repay the loan but must also restore the fund to a sound balance, which will probably take another $1.5 billion at least, which was the balance before the pandemic. Nor does Illinois pay its full bill for the 800-pound gorilla, pensions. Year after year it contributes far less to its pension funds than actuaries say is required to prevent unfunded liabilities from growing.

Author(s): Mark Glennon

Publication Date: 3 Jan 2022

Publication Site: Wirepoints

Illinois pension shortfall surpasses $500 billion, average debt burden now $110,000 per household – Wirepoints Special Report

Mary Pat Campbell

Link:https://wirepoints.org/illinois-pension-shortfall-surpasses-500-billion-average-debt-burden-now-110000-per-household-wirepoints-special-report/

Graphic:

Excerpt:

The $110,000 per household is an average across the entire state, but the precise burden for Illinoisans differs depending on where they live. The debt burden on Chicago’s one million households is larger because of the city’s deeper debt crisis. There, each household is on the hook for $180,000 for their share of state and local retirement debts.

Illinoisans living outside of Chicago, meanwhile, face an overall average burden of $90,000 per household. For comparison purposes, the burdens for Chicago and non-Chicago households, based on official state and local retirement debts, are $95,000 and $53,000, respectively.

Author(s): Ted Dabrowski and John Klingner

Publication Date: 17 Nov 2021

Publication Site: Wirepoints

One chart tells you much about Chicago’s property tax and its pensions – Wirepoints Quickpoint

Mary Pat Campbell
One chart tells you much about Chicago’s property tax and its pensions – Wirepoints Quickpoint

Graphic:

Excerpt:

The above is only for taxes that fund the city’s main operating account — its Corporate Fund. Property tax bills in the city include separate charges for the school district and other overlapping taxing districts.

Also, since money is fungible, it’s a bit arbitrary for the city to budget a portion of the property tax to pensions. The city has other revenue sources, though the property tax is the biggest.

Still, the chart makes the point everybody should know: Pensions are a huge and growing crisis. They are the 800-pound gorilla in the room — for Chicago, the state and most of its municipalities.

Author(s): Mark Glennon

Publication Date: 19 August 2021

Publication Site: Wirepoints