SPRINGFIELD – Illinois' is drawing more and more national attention – and it isn't for good reasons. Illinois has become a leading indicator for other states and what not to do if they want their residents to be happy and prosper.
This time Forbes writer Elizabeth Bauer tries so hard to contain her disgust and dismay with Illinois' pension system and the state's new governor's solution – or perhaps it would be better to say "wound covering."
Bauer says the evidence is in. Democrats aren't concerned about pensions being appropriately funded. Instead, they're looking at the situation as early participants in a pyramid scheme – the kind of financial structure in which those that started the scheme are the only ones that come out smelling good.
Bauer writes:
The evidence continues to mount: Illinois's new elected officials and their advisors simply don't believe that it matters that public pensions are pre-funded. They view pension funds as something that exists on paper, and pension reporting as a nuisance to be avoided where possible, and ignored otherwise. Through their actions — and indeed their words — they are showing that they think of public pensions as pyramid schemes, in which new participants pay the retirees' pensions. And while that's true of Social Security, it's a terrible and terribly harmful approach for state-employee pensions.
And justification does Bauer have for saying this, she asks?
First, Prizker plans to revise the funding schedule from a target of 90% funding in 2045 to 90% funding in 2052. But it's not just a matter of redoing the math for a standardized formula, like refinancing a mortgage and adding more years to the payoff period. His office reports a reduction in contributions of $878 million in the 2020 budget, relative to what existing law would require. But the office has not made available the underlying contributions, and even Ralph Martire, executive director of the Center for Tax and Budget Accountability and member of Gov. Pritzker's Budget and Innovation Committee, said on the February 20, 2019 edition of Chicago Tonight (about the 18 minute mark) that
he didn't publish enough material for us to weigh in on those pensions and either support or not support what he did. One major concern we have is they reamortized, changed the ramp, the payment schedule, and they didn't point out what the new payment plan looks like, so I don't see what that new ramp is and we want the state to go to a level dollar so it doesn't always have this increasing payment obligation. That's what strains the fiscal resources.
Sure seems as if "change the target funding schedule" is really a rationalization for yet another pension contribution reduction to plug a budget hole.
In the end, Bauer says, they believe future benefits are paid by future state revenues.
In other words, spending money to buy up constituents and start more and more government programs among areas where Democrats have historically not been real popular will likely stir enthusiasm among hired help. That means more Democrats will be elected when the time comes, and more programs will be required, and pensions are set on the back shelf.
Pensions will be paid for when they're needed – not before – is their thinking. And why would those at the top of a pyramid scheme care about anyone's future but their own?
So watch for more "kicking the can down the road" from the Pritzker Administration.
In other words, Democrats say, seize the day and don't sweat the future. After all, none of them will be here to blame when the scheme falls apart at the end of the road.
Austerity just isn't fun. And why not delay for another day? Who will hold them accountable?
