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Illinois’ real pension crisis: Finding enough taxpayers to pay the bills

By   /   October 22, 2013  /   15 Comments

By Benjamin Yount | Illinois Watchdog

SPRINGFIELD  —  The top Democrat in the Illinois Senate says the state’s worst-in-the-nation pension debt is not a crisis. And he’s right.

Senate President John Cullerton points out that Illinois’ pension debt merely is slowly bankrupting the state.

WHO IS GOING TO PAY? Andrzejewski says Illinois cannot afford the generous pensions promised to public workers.

WHO IS GOING TO PAY? Andrzejewski says Illinois cannot afford the generous pensions promised to public workers.

Cullerton said the real crisis, in his mind, is making sure there is enough tax revenue to pay the states’ nearly $9 billion a year pension payment. But he is wrong.

Cullerton should be worried there are enough taxpayers to pay the bills.

Illinois have close to 1 million government workers — teachers, state employees, local cops and firefighters, and federal employees all due some sort of public pension.

But there only 4 million workers in both the public and private sectors combined, and the total public-sector pension debt is astronomical.

“The entire gross domestic product (GDP) of Illinois, the measure of all goods and services produced in the state, is only $644 billion,” Adam Andrzejewski, founder of the watchdog OpenTheBooks.com told Illinois Watchdog. “The teachers’ retirement plan is underfunded by estimates of $100-$200 billion. That’s up to one-third of everything produced by the entire economy in a year. It’s a crisis verging on bankruptcy.”

Andrzejewski said there is no way 75 percent of workers in Illinois can continue to guarantee 90 percent of the costs for “gold plated” public pensions for just 25 percent of workers.

“Those government employees have guaranteed salaries, generous sick time and vacation packages, most have 80-100 percent paid health insurance,” Andrzejewski said. “None of this is found amongst rank-and-file employees in the private sector.”

State Rep. Tom Morrison, R-Palatine, said Illinois needs to head off its real crisis and end defined-benefit public pensions.

VOTE WITH THEIR FEET: Morrision says taxpayers can veto pension costs by leaving Illinois.

VOTE WITH THEIR FEET: Morrision says taxpayers can veto pension costs by leaving Illinois.

“The taxpayers that we are counting on to help subsidize retirements are getting more and more concerned about (paying) higher taxes,” Morrision said.

Morrison is one of a handful of lawmakers pushing for a 401(k)-style retirement plan.

“You preserve what (public employees) have earned up to this point,” Morrison said. “But going forward, you give them the ability to control their own retirement plans.”

Current pension reforms would only tweak the system for public employees. Illinois still will be facing billions of dollars in retirement costs while having to scale back services to the public.

Morrison said Illinois cannot afford to pay so much for pensions for so few.

“While (public employees) have a guarantee in the Constitution that says pension benefits cannot be diminished, there’s nothing in the Constitution that forces taxpayers to stay in Illinois,” Morrison said.

Contact Benjamin Yount at BYount@Watchdog.org and find him on Twitter @BenYount.

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  • FedUp

    Me and my federal pension are leaving Illinois as soon as possible after I retire. No way in hell I’m paying the ridiculous property, sales and income taxes in this state into my golden years.

  • Mike Henebry

    Fedup. You do realize that as a pensioner, you do not pay IL income tax?

  • Nonsense

    I’ll be damned if I am going to flee oppression, these bums who took the path of least resistance,(with the aid of patronage) can go to hell. Some openly brag they put in 28 years. Hell I have twice that much time and am still working and enjoying it. Trashy parasites and their glorified welfare.

  • Patrick Tucker

    The real problem was the Leg. Leaders skipping the required contributions over decades. If they had paid their part and the money had been invested by the retirement systems, there would be plenty of money to pay the retirees. The Leg. Leaders misused the money for pet projects and now want to say the pension is the problem. They speaketh with forked tongue.

  • hacimo

    well lets face it, the people who set up the current system and failed to fund it, and spent the money, are long since retired and no longer in office. The ones left holding the bad are the retirees who trusted tm and failed to look under the hood and our kids who are asked to pay the bills. A’int gonna happen. Some one s gonna get screwed. I hope the citizens of IL have a big enough state prison to hold them all. Personally I’m a republican and I’m laughing myself sick. Couldn’t happen to nicer people then the libbies in the land of Lincoln.

  • Patrick Tucker
  • MaryOK

    The pensions are lucrative. In 1999, they increased pension benefits and applied the increase to years already worked, This happened elsewhere, No way you can fund benefit increases for a 28 year employee and have them retire two years layer. They would have needed to fund those increases over an entire career, not just the last two, Public employee unions had a big band in this.

  • Patrick Tucker

    MaryOK:
    I don’t believe the benefits were increased in 1999. I believe they changed the 3 tier 10 year per segment benefit computation system and averaged it out 1.67% per for each of service. The present shortage is due to the underfunding by the Leg. Leaders.

  • Likely_Suspect

    Don’t ask for a bailout… Detroit isn’t getting any for their bankruptcy & neither is Illinois. Done unto thyself, suffer through like the rest of us. Hey Chicago, how’s that gun control working out for you, too?

  • Patrick Tucker

    MaryOK:
    I don’t believe the benefits were increased in 1999. I believe they changed the 3 tier 10 year per segment benefit computation system and averaged it out to 1.67% per year for each of service. The present shortage is due to the underfunding by the Leg. Leaders.

  • jdahunt

    Actually it was caused by the people who elected them year after year while knowing it wasn’t being funded….wanna know who that was……yep the very same people who are making the same statement you made..the public sector workers…..its all their fault for their votes and they are going to get to pay for that mistake when they most need the help.

  • Patrick Tucker

    jdahunt:

    Thank you for being someone who finally admitted that the system was being underfunded by the GA.

  • GameTime

    Screw ‘em! They should be paying their own health insurance and their pension funds should be shifted to the Social Security Trust Fund! We’re tired of the double standards. Who are they, anyway? Every single government employee should have to buy their own health insurance and should be on the Social Security fund for retirement. They are not better than the people who pay them!

  • GameTime

    Who cares? Every single government employee should be paying his or her own health care and paying into the social security system for retirement. The taxpayers are tired of floating their double-standard boats.

  • Patrick Tucker

    Ok. Prior to 1998 retirees from the state received premium free health insurance if they retired after 8 years of service. This was a trade off instead of receiving a payraise. Starting in 1998 the state changed the requirement from 8 years to 20 years. For every year less than 20 the retiree has to pay 5% of the actual premium cost. Was this negotiated? Nope. And now we have to pay some of the premium cost again. Negotiated? Nope.

    All the government employees I know have been paying into Social Security since 1972. Teachers do not, but that saves you the taxpayer the 6.2% matching amount. But, if a teacher tries to draw Social Security(earliest at age 62) after retiring from teaching based on social security paid in for non teaching jobs they did during the summer etc. their teacher retirement benefits are reduced. It is some government rule called offset. Read it and see if you can figure out the logic.

    You guys keep making the comments and I will keep doing the research and giving you the truth. Or, you can keep getting the info from the water cooler or coffee shops. As has been said, you never want to mess up a good story with the facts.