I’m Shocked! Shocked to Find That Illinois Can’t Make Its Pension Payments!

From Bloomberg Business:

Illinois will delay payments to its pension fund as a prolonged budget impasse causes a cash shortage, Comptroller Leslie Geissler Munger said.

The spending standoff between Republican Governor Bruce Rauner and Democratic legislative leaders has extended into its fourth month with no signs of ending. Munger said her office will postpone a $560 million retirement-fund payment next month, and may make the December contribution late.

“This decision is choosing the least of a number of bad options,” Munger told reporters in Chicago on Wednesday. “For all intents and purposes, we are out of money now.”

There’s no reason why this should come as a surprise, we’ve known this day would come, and it finally has.

This is of course being blamed on the budget impasse in Springfield. But the lack of a budget isn’t responsible for this, it only moved the date forward.

Click to Enlarge

Click to Enlarge

As can be seen in these graphs, even though Illinois has been making its pension payments in full for the past several years, the level of underfunding continues to increase. That’s because the system itself is fundamentally broken, and there are only one of two things which can be done, though I have no rational hope that either will happen:

  • Propose an amendment removing the pension guarantee language from Article XIII, Section 5 of the Illinois Constitution, or
  • Both sides sit down and agree that the current system needs to be scrapped in favor of a defined contribution system. There’s nothing in the Constitution that says that those to whom the promise of undiminished or unimpaired pension benefits have been made can’t voluntarily make concessions that would help relieve the pressure on the system.

Why would they want to do that? It’s simple. As I said in an earlier post, even though the Constitution promises that benefits shall not be diminished or impaired, there’s no corresponding Constitutional requirement that the pensions be funded. That was left to the Legislature. When the money’s gone, it’s gone for good.

Illinois has had ample opportunity to fix this mess, but the unions that are holding this state hostage refuse to do what’s clearly in their own best interest. There will come a day, and it will be soon, when the payments won’t merely be delayed, they’ll come to an end. While that’s going to hurt a lot of people, they’ll have no one to blame but the union bosses and their Legislative truffle pigs who formed the unholy alliance and made them a promise they knew would never be fulfilled.

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One Response to I’m Shocked! Shocked to Find That Illinois Can’t Make Its Pension Payments!

  1. susan says:

    According to Illinois Dept. of Revenue, Fund Max Rate And Statute Reference:

    There is NO MAXIMUM statutory rate for property tax levy to fund pension benefits for school employees.

    See last line for statutory (no ) max rate on pension funding.
    Interesting to also note that you can drive a fleet of school buses through the gaps in PTELL “protections”.
    The Transportation Fund statutory rate cap was lifted, so now schools just tax however much they want in Transportation Fund, and transfer it later to general funds.

    EDUCATIONAL DISTRICTS (FEWER THAN 500,000 INHABITANTS)
    Max
    Statute
    Statute
    Statute
    Statute
    Special Comments
    002
    Education (Grades 1 through 8)
    3.50000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-3
    Subject to Backdoor Referendum
    002
    Education (Grades 9 through 12)
    3.50000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-3
    Subject to Backdoor Referendum
    002
    Education (Grades 1 through 12 (Unit))
    4.00000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-3
    Subject to Backdoor Referendum
    003
    Bonds & Interest (Area Vocational Building)
    No rate Limit
    105 ILCS 5/19-30
    003
    Bonds & Interest (Building Sites, Playground, etc.)
    No rate Limit
    105 ILCS 5/19-2
    003
    Bonds & Interest (Building and Repair)
    No rate Limit
    105 ILCS 5/32-5.6
    003
    Bonds & Interest (Exhibition Facilities)
    No rate Limit
    105 ILCS 5/19a-4
    003
    Bonds & Interest (Fire Prevention, Safety, Energy Conservation)
    No rate Limit
    105 ILCS 5/17-2.11
    003
    Bonds & Interest (Funding – Techers’ Wages or other Claims)
    No rate Limit
    105 ILCS 5/19-8 through 10
    Subject to Backdoor Referendum
    003
    Bonds & Interest (Non-High School Tuition, Other Claims and Judgements)
    No rate Limit
    105 ILCS 5/12-13,14
    003
    Bonds & Interest (Non-High School Tuition and Other Claims)
    No rate Limit
    105 ILCS 5/12-15,16
    003
    Bonds & Interest (Refunding)
    No rate Limit
    105 ILCS 5/19-15
    105 ILCS 5/19-18
    003
    Bonds & Interest (Temporary Relocation)
    No rate Limit
    105 ILCS 5/17-2.2d
    105 ILCS 5/2-3.77
    003
    Bonds & Interest (Working Cash Fund)
    No rate Limit
    105 ILCS 5/20-2
    105 ILCS 5/20-4
    105 ILCS 5/20-7
    Subject to Backdoor Referendum
    004
    Operations and Maintenance (Grades 1 through 8)
    0.55000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-5
    Subject to Backdoor Referendum
    004
    Operations and Maintenance (Grades 9 through 12)
    0.55000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-5
    Subject to Backdoor Referendum
    004
    Operations and Maintenance (Grades 1 through 12 (Unit))
    0.75000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-5
    Subject to Backdoor Referendum
    004
    Operations and Maintenance (Health Care Purposes)
    0.54400%
    105 ILCS 5/17-2.2b
    Subject to Backdoor Referendum
    030
    Transportation (Grades K through 8)
    No rate Limit
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    Subject to Backdoor Referendum
    030
    Transportation (Grades 1 through 8)
    No rate Limit
    105 ILCS 5/17-2
    105 ILCS 5/17-4
    Subject to Backdoor Referendum
    030
    Transportation (Grades 9 through 12)
    No rate Limit
    105 ILCS 5/17-2
    105 ILCS 5/17-4
    Subject to Backdoor Referendum
    030
    Transportation (Grades 1 through 12)
    No rate Limit
    105 ILCS 5/17-2
    105 ILCS 5/17-4
    Subject to Backdoor Referendum
    031
    Working Cash
    0.05000%
    105 ILCS 5/20-3
    032
    Fire Prevention, Safety, Energy Conservation and School Security
    0.10000%
    105 ILCS 5/17-2.11
    033
    Special Education Purposes (Maintaining Only K – 8)
    0.40000%
    105 ILCS 5/17-2.2a
    033
    Special Education Purposes (Maintaining Only 9 – 12)
    0.40000%
    105 ILCS 5/17-2.2a
    033
    Special Education Purposes (Maintaining K – 12)
    0.80000%
    105 ILCS 5/17-2.2a
    036
    Capital Improvement
    0.75000%
    105 ILCS 5/17-2
    037
    Area Vocational Education Building Fund
    0.05000%
    105 ILCS 5/17-2.4
    057
    Lease of Educational Facilities and Computer Technology
    0.10000%
    105 ILCS 5/17-2.2c
    087
    Capital Development Board – Rental of Buildings
    No rate Limit
    105 ILCS 5/35-1 through 5/35-31
    088
    Summer School
    0.15000%
    105 ILCS 5/17-2
    098
    Temporary Relocation
    0.05000%
    105 ILCS 5/17-2.2c
    105 ILCS 5/2-3.77
    119
    Health Insurance for Employees
    No rate Limit
    105 ILCS 5/17-2.6
    151
    Non-High School Indebtness
    No rate Limit
    105 ILCS 5/12-26
    152
    Non-High School (Tuition)
    1.60000%
    105 ILCS 5/12-11.1
    161
    Employees’ Pension (IMRF, Social Security & Medicare)
    No rate Limit
    40 ILCS 5/17-171
    40 ILCS 5/21-110
    40 ILCS 5/21-110.1

    Like

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