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Illinois Public Pensions, Municipal Bankruptcy and Illinois taxes

The unfunded liabilities facing government pension plans have gained increased public scrutiny during the past year. Governing entities and taxpayers are beginning to recognize the potential consequences of public pension liabilities.

Headlines have exposed municipal bankruptcies, such as Detroit and numerous cities in California. In some extreme cases, pension liabilities have been one of the key drivers for municipal bankruptcy filings and reduced pensions could wind up as the solution for the budget shortfall.

Current data indicates that pension liabilities are expected to persist or even get worse. In late 2012, an actuarial firm found a $1.2 trillion gap for the largest 100 U.S. public pension plans.

Morningstar has analyzed pension data managed by each of the 50 states. Overall, they found the fiscal health of state pension plans varies drastically, with some states having exceptionally strong plans, while others are facing severe funding shortfalls.

The research found that the majority of state pension systems are having problems.  The funded ratio, which is calculated by dividing the pension plan’s assets by its liabilities, serves as a good measure of the plan’s ability to meet its obligations.

The (unfunded liability per capita) represents the amount each person in the state would have to pay to fully fund the pension liability. Since many of these plans have multiple contributors, the state is not solely responsible for paying the full liability.

However, as the other pension contributors are usually local government entities, the unfunded liability will still be funded by state taxpayers, either through payments to the state or the underlying entity that contributes to the pension fund – such as the Rockford School District and the Illinois Teacher’s Retirement System.

The 2013 Morning Star report shows that state plans on average are 72.6% funded with an (unfunded liability per capita) of roughly $2,600 and has a wide variation between the individual states.

Wisconsin remains the strongest system in the nation, with a 99.9% funded ratio with an unfunded liability of $18 per capita. A total of 12 states have funded ratios of at least 80%, which is considered to be strong by Morningstar.

Illinois continues to have the worst funded system in the country with a 40.4% funded ratio and a $7,421 per capita unfunded liability.  A family of four, therefore, owes almost $30,000 for the (5) Illinois pension systems.

The poor fiscal health of the Illinois pension system is due to a combination of reasons, including historical borrowing from the plans by the state, state law requiring annual funding of less than the annual required contribution (ARC), and below-expected investment returns.

According to the Morning Star report, based on the Illinois’ current projections, the aggregate funded ratios for the state’s plans are expected to remain below 50% through 2020 unless further reforms are passed.

Morningstar believes significant reforms will be necessary for the state pension system to be solvent over the long term. Research shows that pensions play an integral role in determining a state’s fiscal health and overall credit quality.

As a result of our state’s pension systems, the credit rating has been downgraded, resulting in millions more being paid in interest on the money the state is forced to borrow to balance its budget in accordance with the state constitution.

What do you think the odds are now that the General Assembly in Springfield will reduce the income tax as planned in 2015, or even worse, force a progressive tax on the backs of Illinois taxpayers, which will result in higher taxes for anyone making over $30,000 or possibly an even lower income according to some estimates?

Retirement income, including IRAs, 401Ks and Social Security, regardless of income, is not currently taxed in Illinois. However, the subject has already been discussed in 2010 by Illinois Senate President John Cullerton, who suggested that limiting the state’s “generous” retirement income tax break “would just be a matter of fairness.”

Wouldn’t it be ironic if private Illinois retiree’s pensions would be taxed to fund the retirement pensions of public employees because of the state’s mismanagement of the state’s pension funds?

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89 Comments

  1. Interesting that Carol offers all these accusations, yet provides no links to her sources. Where I come from, we have a word to describe such unsubstantiated attacks-HOGWASH!

    The last that I heard, we are innocent until PROVEN guilty. We are not required to prove our innocence, in America.

    (Actually, we have several other words and phrases that describe Carol’s type of comments, but they are not suited for use in civil conversation);-)

  2. Carol,
    Still no proof, so you change the subject back to slavery. Now how ludicrous can you get as the AZguy pointed out ” just blather without any substance.” seems to be what you excel at.
    Why should we prove anything? You are the one making the accusations. Carol, when did you stop beating your husband? How about you prove you didn’t beat your husband.
    So it appears you take offense to Washington owning a quarry, since you haven’t proved he inappropriately was the supplier for the capital.
    “Did you ever see the bill for that carriage he ordered”
    No I did not, do you have a copy or is this just something else you made up?

  3. CarolF964

    Wilson
    Why don’t you google Washington’s financials and take the time to read them and you’ll discover the mention of that carriage and all his holdings.
    They used to teach with pride that stone from The first President’s quarry helped to build the capitol of the United States.
    After you’ve read all about the carriage, I’m sure you’ll be the first one to tell SNuess he should say, “sorry.” Right?
    Naw! That would be far too ego bruising for the poor fellow. I don’t require an apology. I’m just happy to help you with your educations.
    Knowledge is a thing best shared or it has no value.
    Learned that in the Antique Business when I use to tell people who brought in items to ask their values and I told them for free, histories, values, and how to care for the items. I left charging to do an “appraisal” for money to the competition across the street. Funny thing happened, I got first choice of items people wanted to sell before the competition which helped business. After all, you can’t order antiques from a catalog very easily. Even ebay won’t have exactly what a collector wants the day they want it in these more modern times.
    You have google and a computer so ask and the question.
    Let me know how that read goes for you?

  4. Carol,
    I have become like you I don’t need to goggle, or follow your non existent links to information.
    I know you are wrong, so why bother.
    Did you know Washington’s quarry supplied all the stone for DC?

    “Knowledge is a thing best shared or it has no value.”
    When you discover some let us all know.

  5. CarolF964

    Be as lazy as you like, Wilson.
    “You can lead a horse to water but you can’t make it drink.”

  6. Carol, go look in the mirror. You never offer proof, you never provide links. I provide links and you’re too lazy or self righteous to use the link and get educated.

    Why should I waste my time proving you are wrong again and again, when you refuse to accept the facts.
    The feeble attempts you do make which you think provides proof are just new assertions related to something completely different.
    Blather is all you provide.

  7. Carol, I tried Googling about George Washington’s “quarry”, and the results? NOTHING!

    I did find out about the Hone Quarry, which is next to the George Washington National Forest, and the George Washington Monument & Memorial Tour and 2013 Quarry Project, but I can find nothing than has anything to do with your delusional accusations.

    Therefore, I call “shenanigans” on your inane blathering, and further, refuse to accept anything that you post as real, without verifiable documentation. The Daily KOS, and Media Matters don’t count as “verifiable”.

    Let us know when you return to reality, as attempting to refute your Leftist delusions is a total waste of keystrokes.

  8. CarolF964

    Snuss
    Google Washington’s Financials, not quarry. There are several very interesting accounts of his holdings including the carriage I mentioned.
    One article is his handwritten journals of the bills he paid.
    What I said about the quarry was something taught in school. If you look at his holdings, his suggested use of materials, firing of those who didn’t agree, I’d say the school lessons were correct in the stone was quarried from his property.
    I doubt it wouldn’t be uncommon for a good many of the Founding Fathers to have had business with the government. What they saw was a new customer for the products they sold and would have been fools not to have taken advantage of the opportunity. If you put that behavior into today’s world, it doesn’t look very good.
    How does the first president, Father of his Country, insist you buy stone from his quarry?
    Fire those who don’t agree when they try to change the plans for D.C.?
    In today’s world you’d have numerous committees investigating. In the world they lived in, it was no big deal, but business as usual. So when you decide to quote one of these gentlemen, you might decide to take a look at their world they are referencing and if it truly fits ours of today in the same way.
    Was it the actual structure of gov they are talking about, or those with differing opinions who were a part of that government?
    A good many of their writings were about differences of opinion which related to the time they occupied in this world. Little was ever about the actual government when you take it all into context of a lifetime. Jefferson’s quote about refreshing the tree of liberty with blood from time to time, sat out the war in France. His saying about nothing worse than an unfair tax, certainly didn’t mind financing the entire new gov based on tariff taxes. And so it goes.
    The gov. documents they help to create were the important work they did and should always be given credit for in our history. As for the rest, you need to take that with a grain of salt, and not make it your bible of how gov should be today.
    They were businessmen first and a good many of them slave holders for business reasons. I think I recall seeing bills Washington sent the gov for the cost of his expenses at Valley Forge including slaves. It’s just how they lived, SNuss.

  9. CarolF964

    By the way, I don’t tell you which articles to read, because that should be your choice when many are offered.
    I did say how you can find that choice if you have an interest in Washington’s financials.
    Here’s a slice of trivia about Martha Washington I got from a book with First Ladies favorite recipes some years ago. Did you know she served guests ice cream? It described how difficult it was to make and how impressed guests were to be offered it. She also did wine. Don’t recall her favorite recipe, because I was so impressed she did ice cream.

  10. “I think I recall” Carol, you sound like a true liberal attack someones credibility and reputation with innuendos and false statements.

  11. CarolF964

    Now, now, Wilson, I’ve read a good many of your links. The only absolute reading I recommend is Dr. Suess. A very wise teacher of human behavior in his books. Some very much about choice which is what I offered when I said to look up Washington’s financials. There’s a buffet of articles for you to read if you have an interest, not just one that supports my opinion in the matter.
    My husband quoted Dr. Suess just the other day in referencing stupid in real estate matter: “sometimes we are winners and sometimes we are losers, we never can win against so many Possers.” This is from Soola Soolu, which we all know is on ” the banks of the beautiful river Wahoo, where there never have troubles, except very few.” The book ends, “now my troubles are going to have troubles with me.”
    There are so many things geared to giving you your opinion, I’d think you’d be delighted when I disagree with you, I give you choice. Guess not. Call up Limbaugh, he’ll be happy to give you your opinion for the day.

  12. Carol,
    you are amazing, totally impervious to the world and reality.
    Why should I have to Google something that you claim, but provide no corroborating information. Why should I do what should be your responsibility? Why should I waste my time when time and time again your facts are fantasy?
    I am glad your husband can quote Dr. Seuss and I won’t dispute that, I can only guess Dr. Seuss’s books reinforce the fantasy world you seem to reside in.

  13. So Carol, One might infer from your posts that you would equate George Washington to Ray Nagin? Since you seem to believe Washington took questionable advantage of his position.

    Please don’t come back with a discussion of you expertise with antiques.

  14. So you think it was wrong of him to ride in a fancy carriage? I know you have no problem with the current President and the extravagant lifestyle he lives.

    Unlike our current administration,
    “George Washington proved to be an able administrator. He surrounded himself with some of the most capable people in the country, appointing Alexander Hamilton as Secretary of the Treasury and Thomas Jefferson as Secretary of State. He delegated authority wisely and consulted regularly with his cabinet listening to their advice before making a decision. Washington established broad-ranging presidential authority, but always with the highest integrity, exercising power with restraint and honesty. In doing so, he set a standard rarely met by his successors, but one that established an ideal by which all are judged.
    http://www.biography.com/people/george-washington-9524786?page=7
    During his first term, Washington adopted a series of measures proposed by Treasury Secretary Hamilton to reduce the nation’s debt and place its finances on sound footing”

    Google it, Washington married into money.

  15. CarolF964

    Wilson
    Did I say he was a lousy President?
    I think you’ve confirmed he was a businessman which is what I said all along. You also confirmed he was a slave holder. And that you’d rather listen to others read the material than do so yourself, even when it includes commercials.
    You keep missing the point. You can’t place Washington nor Jefferson etc. into today’s world, as they don’t fit it. So their quotes belong in history and not to today.
    Washington spent more than 400 days of his term in office at home in Mt. Vernon. By today’s standards, the press would be up in arms he wasn’t at work in D.C.. Back in his day he’d spent enough time to conduct the business of government.
    He was no Boy Scout, but married well and increased the fortune, dying a very very very wealthy man. So you must think the classroom curriculum was incorrect?
    Possible, but not likely since they didn’t include the chopping down of the cherry tree. I think with all his holdings, it’s reasonable to believe he owner the quarry and sold the stone he recommended be used. There would have been no reason to lie about it as it was felt that was an important part of linking Washington to the Capitol in a very positive light. As time passes, things change and are omitted from text books. If you recall, the Vietnam War wasn’t mentioned for sometime in text books about American History. Was that a cover-up?
    Guess only JRM is interested in Ted’s topic. And he did a good job with it. As usual, you’ve been side-tracked.

    • Carol, remember the phrase “Those who ignore history are doomed to repeat it”?

      Most of what our Founders did and said, in creating this Constitutional Republic, are still as valid today, as then.
      A few examples:

      The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government.”-Patrick Henry

      “Necessity is the plea for every infringement of human freedom. It is argument of tyrants. It is the creed of slaves.” William Pitt in the House of Commons November 18, 1783

      “Government is not reason; it is not eloquence. It is force. And force, like fire, is a dangerous servant and a fearful master.” George Washington

      “The Constitution of most of our states (and of the United States) assert that all power is inherent in the people; that they may exercise it by themselves; that it is their right and duty to be at all times armed and that they are entitled to freedom of person, freedom of religion, freedom of property, and freedom of press.” Thomas Jefferson

      A general dissolution of principles and manners will more surely overthrow the liberties of America than the whole force of the common enemy. While the people are virtuous they cannot be subdued; but when once they lose their virtue then will be ready to surrender their liberties to the first external or internal invader. Samuel Adams, letter to James Warren, February 12, 1779

      On the other hand, the duty imposed upon him to take care, that the laws be faithfully executed, follows out the strong injunctions of his oath of office, that he will “preserve, protect, and defend the constitution.” The great object of the executive department is to accomplish this purpose; and without it, be the form of government whatever it may, it will be utterly worthless for offence, or defense; for the redress of grievances, or the protection of rights; for the happiness, or good order, or safety of the people. -Joseph Story, Commentaries on the Constitution, 1833

      Those gentlemen, who will be elected senators, will fix themselves in the federal town, and become citizens of that town more than of your state. George Mason, speech in the Virginia Ratifying Convention, June 14, 1778

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      Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.-Thomas Paine

  16. Carol,
    exactly, they lived in another time, but your original post insinuated that he, Washington illicitly benefited by having DC built with stone from his quarry, yet all you can offer is your opinion. Did you apologize to Snuss? “So, Carol, will you now apologize for your false accusations against President Washington?”

    Changing the subject doesn’t change what you stated. I am glad that now you appear to see Washington in a better light I question how sincere your change of heart is.
    I get the feeling you lived back then because you seem to know more than the historians.

    Your silence on the extravagant lifestyle of our current President and how he compares to Washington’s leadership and honesty says volumes about you.
    As you well know classroom curriculum is often incorrect, especially now days, but I find you incorrect 90% of the time.
    Did you ever attend school and write a paper? I am guessing you got an F on every one, since you never provide any references but yourself.
    Bibliography; Carol thinks so, so it is.

  17. CarolF964

    Was the stone free or was it paid for as the article Snuss suggested reading clearly said?
    I’m sure a good portion of those who don’t understand what I said on any level are busy today signing Rand Paul’s petition to become a part of his law suit against the President.
    It’s a classless action suit, so be sure to sign up for it.

  18. Carol, you get another “F” by bringing another totally unrelated subject to the discussion, this to avoid your inability to provide references to support anything you asserted.

  19. Perhaps Carol would respect the opinion of a Constitutional Law professor who actually voted for “The Messiah”, but now fears that he is over-stepping his Constitutional authority, ruling by executive order:

    A noted liberal Georgetown University law professor who represented members of Congress in a lawsuit over the Libyan war, represented workers at the secret Area 51 military base and served as counsel on national security cases says Barack Obama is a danger to the U.S. Constitution.

    The comments from Jonathan Turley came during a House Judiciary Committee hearing Wednesday.

    Chairman Rep. Bob Goodlatte, R-Va., asked him: “Professor Turley, the Constitution, the system of separated powers is not simply about stopping one branch of government from usurping another. It’s about protecting the liberty of Americans from the dangers of concentrated government power. How does the president’s unilateral modification of act[s] of Congress affect both the balance of power between the political branches and the liberty interests of the American people?”

    Turley replied: “Thank you, Mr. Chairman. The danger is quite severe. The problem with what the president is doing is that he’s not simply posing a danger to the constitutional system. He’s becoming the very danger the Constitution was designed to avoid. That is the concentration of power.”

    Turley explained that the “Newtonian orbit that the three branches exist in is a delicate one but it is designed to prevent this type of concentration.”

    Read more at http://www.wnd.com/2013/12/liberal-law-professor-obama-is-the-danger/#iuubKmjxc0Xk7tBL.99

  20. Snuss, why leave the link?, you know she won’t go and read it.
    You are obviously some right wing nut posting lies from FAUX news.

  21. @ Wilson: Because I refuse to mimic her failure to back up her comments with documentation. Also, it helps to educate the under-informed voters. There are far too many who are dazzled by the smoke & mirrors of the Obama regime, and the RINOs.

  22. JRM_CommonSense

    It appears now that the proposed “soda tax” is going to save medical costs and save the state. “NOT!” Just a another political joke to make us think these “jokers” are doing their jobs.

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