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Illinois Pension Debt Soars To $111 Billion
Authored by Benjamin VanMetre via IllinoisPolicy.org,
Pension debt in the Land of Lincoln is a big problem. So big, in fact, that it would take three years of a complete government shutdown, during which the entire general fund went toward pensions, just to break even. No funding for schools, no money for public safety and nothing for health care and human services.
Illinois’ unfunded pension liability grew to more than $111 billion this year, according to official estimates. That’s a $48 billion increase just since 2009.
That $111 billion pension shortfall means the state now has only 39 cents of every dollar it should have in the bank today to pay for future benefits. In the private sector, these funds would be deemed bankrupt.
Gov. Pat Quinn signed into law Senate Bill 1 last December, which is projected to reduce the state’s annual pension payment by more than $1 billion. But SB 1 is still bad news for Illinois. The bill may provide temporary relief, but it does nothing to fix the current defined-benefit system. And it keeps Illinois politicians in control of public-employee pension funds. Illinois’ history with politician-run pensions shows that’s a recipe for disaster.
SB 1 is currently tangled up in the courts. But as we wait for a decision, Illinois’ pension debt continues to grow. The state’s pension payment for the current budget year totals $6.9 billion, and without reform, that pension payment will balloon to $7.6 billion for the 2016 budget year; an increase of $681 million.
Illinois politicians have looted and mismanaged public-employee pension funds for decades. The system is no longer sustainable or affordable. With or without SB 1, the same politicians who got the state into this mess will continue to control and abuse the retirement security of public employees.
It’s time to take politicians out of the retirement businesses.
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Exponential, bitchez.
The solution is easy, instead of printing money to give to the super rich, print the money and give it to the pension funds.
But....but....but debt is an asset so I don't see what the problem is. /sarc
<Depends upon which side of the debt you're on. Though I suppose in the end it doesn't really matter.>
"It’s time to take politicians out of the retirement businesses."
Correction: It's time to take the politicians out.
The debt instruments in your wallet are assets, aren't they? AREN'T THEY?!?
License plate change:
ILLINOIS. LAND OF CANNIGULA.
What the heck, one hundred eleven billion is NOTHING, compared to the amount of 'official' debt the Debt-Bro has chalked up in the past 6 years. The Pentagram 'misplaces' this much in a week. Not to worry, though. Carbon Taxes are just over the horizon, and all this debt will soon be a thing of the past (won't it?). Obola is tapping Illinois politicians to manage the fund...
When Chicago files for Chapter 9 Bankruptcy, it will make Detroit's filing a poker petition by comparison, bitchez.
"The solution is easy, instead of printing money to give to the super rich, print the money and give it to the pension funds."
Publicus, exactly. In fact, why are we paying ANY taxes at all? Just print the money FFS!!! Think of how BULL(SHIT)ISH that would be!!
"It’s time to take politicians out of the retirement businesses."
LOL.
Too late.
Time to turn the police into "pirates" and let them go find the 'gold'!!!
LOL. No not really.
The incredible FACT is that it's ZIRP/NIRP that's going to state & local pension funds in.
The negative feedbacks loops of QE continue to strengthen. ZIRP pushed up all asset prices, including oil while making HY debt cheap and readily available. Suddenly, fracking is turning the US into the largest oil'n'liquids producer in the world, which de-stabilizes the Middle East and pisses off the enviro-freaks. Then there is the pension fund return assumption, and the conservative asset allocation (to fixed incomes). These pension liabilities are going to keep screaming upward. This is going to bring down a lot of cities and states . . . if it continues.
Hope they set aside like the ants and not the grasshopper. If not, then shit out of luck on this one.
jb
reason why they paid to have a senator from Illinois take the white house.....to get federal rescue
cant they just raise the annual rate of return to like...30% and it would be fixed...
Where is this mythical Detroit place of which you speak? It's an urban legend.
It means that Chicago really Illinios will be going bankrupt in the near future.
or stiffing the police retirees
Time to take pensions out of politics
No it really won't end well. Given the risk free drift of SPX equity indexing & belly-curve investing for the past 8 years vs. gold, commods, PE & neutral funds, Illinois is one of the better funds out there in terms of solvency. If we saw a sudden flash or heavy dollar flight on a blowout, most of these "funds" are running with 15% holes in their balance sheets, with a huge uptick in obligations post-2017. So, I can say the average US fund is about 20 to 28% underfunded at the moment in a 4% 10y ecosystem, with private funds spun off from Autocorps or restructurings in 2008 so far off the marks even if they all default on obligations due to contributions post-2001, they will still fail to meet dues post 2020.
The very best they can hope is to start purchasing physical assets, which the smart ones are doing. So in this scenario the default funds can spin off the assets as equity assets to the non pay-go pensioners. Also this will be the final nail in the cradle to grave workfare set up in post-war USA and general confidence in consolidated asset pools (and classes).
Cannot believe you got three up-votes for the unverified tripe you posted. Dead giveaway was your use of "So" to begin your third sentence, an immediate huge red flag signifying ignorance, used by "guests" on CNBS with alarming regularity.
The quality of comments, in addition to the imposition of multiple annoying ads on every reload of ZH and the paucity of the current spate of articles, has diminished the value of ZH over time, which, possibly could be tied to ZIRP and QE in terms of the laws of diminishing returns.
Truth up, I was banned from ZH a long time ago and re-upped with my current moniker, so the people running (ruining) this site aren't all that bright. I beat their system and it wasn't very difficult.
This isn't fight club. It's pussy club.
While I'm certain there are some regulars who probably are worth more than their weight in gold, the overall tenor and nomenclature has changed dynamically - and not for the better - over the past few years.
I'll probably hang around for a while, but, realizing that I come here because I'm too lazy to investigate matters myself, relying on spurious information being fed to me and all other visitors (see my comments below about how far off the numbers are in this article). I'll be surprised if I post much more in coming days.
ZH is nothing more than a glorified aggregator of altnews. Nothing big, and they have their preferred sources, making them only marginally better than MSM.
Yeah, Tyler, It's not my first night, so I don't have to fight, and, apparently, neither do you. You've allowed your own success to weaken your hands, slow your reflexes, diminish your vision.
You're just another punk. See you on the next block, maybe.
Meh, just follow Detroit's lead...oh wait...
Wrong solution.
Sell the assets to meet the cash outflow requirements and watch the financial system implode.
WHAT 'assets'? 18 million empty spraycans of Afro Sheen? 19 million empty spray cans of paint used to decorate the El trains?
Awesome
"The solution is easy, instead of printing money to give to the super rich, print the money and give it to the pension funds."
But, but how will the rich get richer, and the powerful more powerful?!
An American, not US subject.
"My guillotine may not be what they meant by "reduce carbon dioxide," "reduce methane," and "be renewable," but it's all I have to offer."
compared to the rest of us .gov emps are the super rich
Bitchez? You're an idiot.
It's all because of some "advisor" who wasn't on our staff.
Oh that's nothing. California has a $200 Billion dollar shortfall for its combined pensions, according to the radio this a.m. We make Illinois look like a bunch of pikers!
Not when you take the size of California's economy (in comparison to Illinois) into account.
Suggestion to Illinois state workers: retire as soon as possible and take the "lump sum payout" pension option.
Trust me, you won't like the alternative. This is a case where he who panics first panics best.
Nah, they will get paid. They (.gov) can pay it all, its denominated in $$Dollars. They can print them to infinity. You will get your paper back, plus a paltry COLA, but bread and gas will be thru the roof.
Detroit pensioners took a 30% haircut. They'll get paid a PORTION of what they were "promised". If it's underfunded and the agency responsible for it doesn't have a printing press in the basement, there will be signficant haircuts. That means basically state and local- anything below the Federal level.
Right the printing would only work if the Feds started bailing out the states...imagine the federal deficits, and debt to GDP ratios then? This give you some idea of some of the state and local spending and debt. Supposin' debts a problem? Supposin' we may lose control some day?
http://www.usdebtclock.org/
Forget the debt. Not the issue. The Federal Government is about CENTRALIZED CONTROL. They HATE the states. They'd LOVE to see them fail and have the Federal Government rule over everything. The only way a State is getting a Federal bailout for their pension is by signing away what little is left of their sovereignty.
Yuppers and PBGC will save the day. All theatrical and shit.
"Forget the debt. Not the issue. The Federal Government is about CENTRALIZED CONTROL. They HATE the states. They'd LOVE to see them fail and have the Federal Government rule over everything. The only way a State is getting a Federal bailout for their pension is by signing away what little is left of their sovereignty."
Exactly, you're proving my point that debt will be one of the largest levers. And they will lose control of the house of cards, though they've been able to prop it up for quite some time. Reset will happen.
http://www.usdebtclock.org/ - unfunded debt liability at the bottom of the clock. The state debt clocks (top left) do not show the unfunded liabilities of the states, but show interestingly debt to GDP of the states.
It’s time to take politicians out of the retirement businesses.
Too late! Who wants the bag of public pension shit now?
Much more appropos to permanently retire ALL politicians.
...with the same benefits afforded to their constituents, not lobbyists.
It's been tried before. Every time a public sector union is offered a 401k-style pension (with the government entity putting as much into the match as they did into the old defined benefit plan, I may add), it's been shot down. No, no, no, nothing too good for the unions. Must have best of everything.
When they get fucked like the Detroit pensioners got fucked and screm "But we were promised!" I won't care because it was a disaster of their own making.
Only 111B? The pentagram smokes that about 4 days. A 1% cut in bankster MIC welfare for 1 year will cover this.
I'd put in for a 100% cut.
Jump fuckers.
WELCOME... to Obamaville.
This is a liberal's dream come true. Time to increase government pensions some more.
How is such a thing even possible? And why aren't people being hung for it?
Because Illinoisians will never vote their Santa Claus away.
there were some errors made,, several paperwork miscalculations,, no harm no foul
Political corruption and looting are legal now.
It's time to fuck the public employees and cure the problem - give em ZERO- and then say your sorry and start over
Simple
Omen - Exactly what I expect to happen but pensions being cut to .40-.60 cents on the dollar. A false flag will occur to lrovide cover and why I hedge. I plan on having some sin luxuries and a decent meal during a few months of nasty disruption.
Trade ya a carton of butts for your gold necklace buddy and here is my cold barrel if you decide to try and take it instead of trade.
Don't expect me to cry a river for the cops getting pensions cuts either. Way too much ball busting by you guys the last 15 years.
By 2020 my forecast is we will be America 2.0. Next time, don't let a foreign power control the currency.
Unfortunately, just like in industry, your pension can go 'poof'. And so it shall, plan accordingly gravy train Bitchez!
Liberals don't like math.
Or reality.
They tend to fuck up their egalitarian dreams.
But conservatives, who are supposed to be good at math, can never accurately count the people their beloved wars kill.
Maybe they have a kind of color blindness: it makes brown people hard to count.
There are no "beloved wars" to a conservative. And if your refrence is to George W. Bush, he governed like a sodden Teddy Kennedy, HELL, he even let Kennedy write the education policy NO CHILD LEFT BEHIND. There was nothing CONSERVATIVE about Bush.
You are so easily misled it's tragic.
There is only ONE color for those in power, and it is GREEN. Those that have it get priveledge, and those that don't get the fucking SHAFT. Brown people and white people all look the same in the eyes of those who sell their souls for greed and avarice. 'Conservatives' wish to conserve the lie, and 'Liberals' wish to promote the lie. They hold hands and fuck each other in the ass and play golf together and meet at the Bohemian Grove and plan their shit at G-20 summits.
Get PAST the easy and misleading descriptions of these political types, before it's too late for you.
Dupe.
The congressional pensions are safe.
We owe some folks, some money.
No, seriously, Illinois has some really nice places.
The signs on the highways that say 'Now leaving Illinois', for example.
Wait, what?
It’s time to take politicians out of the retirement businesses.
Correction: It's time to take the public employee unions out of the retirement business.
FIFY
Do you mean to say that there is any difference between the heads of the public employee unions and the heads of state, county, and local governments? REALLY? One pays the other, and the other votes for the benefit of the first.
No, I agree with you, but, to lay all the blame on just the politicians isn't fair. The greedy public unions should be shouldered with some, don't you think.
Sorry to say, but a personal anecdote, settling an estate with my brother and sister, both of whom are teachers, i.e., public employees. I happen to be the executor (thank God for small favors), and they're fighting tooth and nail for every last penny, to the detriment of each other and/or me. I happen to be self-employed with no pension. To say that they're "better off" than I am would be putting it very mildly.
Compassion? Forget it. Fairness? They think I'm trying to screw them. Reality? I've done everything in my power to preserve the assets of the estate - including dipping into my own funds - without a penny or drop of sweat from them, but they don't even want to cover my legitimate expenses.
The greed runs deep in these people. Institutionalized inbreeding.
Really sick of paying for everyone else.
Re-read my response.
I don't think you quite understood what I stated.
No, I think I got it. Politicians, union bosses, same thing.
I was rambling. I've been drinking to ameliorate some of the madness engulfing me.
My bad. Once I get this estate settled I'm going back to writing poetry and gardening and generally not giving a damn about anything, so there's that.
Oh God, been there done that. Survivor trustee(s), executor(s), family caregiver(s) efforts, time, money, heartbreak all quickly forgotten! Suspicion, criticism but never any help. It is a thankless job except when it's done right and only thankful for the one in the know (you). Best advice, I am assuming its in a trust, make sure to have the lawyers do a valuation before you sell anything. The valuation price is your new acquisition price. You don't inherit capital gains of the deceased! (Although you do inherit their capital loss carryovers.) Even items given to the Good Will are inheritable. I feel the same way about the pensioners. Isn't it obvious? Besides the rich, isn't that what the f*n QE is all about? Along with the ZIRP? They'll grind us up for dog food if it helps them make payroll! There won't be any recovery in this economy.
Illinois to the DC US: "Brother, sister, can you 'print' a dime? We'll give you our sovereignty."
An American, not US subject.
They keep saying "out debt," but I didn't sign for shit, and neither did my kids, or their kids.
kchrisc, I get your "American, not US subject" drift, so where can I sign a waiver or release to relieve me of this onerous debt? Currently, I see I'm on the hook to the Fed for more than $51K and I don't have it handy. Think they'll take a check and call it "all square?"
"kchrisc, I get your "American, not US subject" drift, so where can I sign a waiver or release to relieve me of this onerous debt? Currently, I see I'm on the hook to the Fed for more than $51K and I don't have it handy. Think they'll take a check and call it "all square?""
Check your credit reports. I would bet that there is no line item for "Part of DC US Debt Accrued to You." So you're good to go.
An American, not US subject.
Thanks for that. What a relief.
On another note, I've always disliked teachers. Thought they were stupid. Some were. Some weren't. But, enough of them were pretty worthless, just collecting checks, and now, I suppose, pensions. Little did I know, as a wide-eyed kid, that I'd be paying for their retirements after having to indulge their incessant niggling for 12+ years of my life.
Fuck, just realized that now, I actually hate them.
Is that bad? Will I be punished? Should I go sit in the corner? Take a time out? Learn to blindly follow instructions and obey authority?
Damn, I'm 60 years old and learned more about electronics yesterday than I did in all those wasted years. I could actually wire a whole house, down to the breaker panel, with what I learned in four hours of being a helper.
"Education" for lack of a better term, in this country, is bullshit. Teach kids to read, write and do math, then teach them real skills, like car maintenance, how to grow crops, plumbing. Get rid of government... and teachers beyond the sixth grade. We'd all be smarter and better off.
I know. Such a scam isn't it? The only ones who make out are the teachers and professors.
Mad Max is lol.
Hang on a minute, folks. This figure may be underestimating the scope of the problem by orders of magnitude.
According to this report:
http://www.statebudgetsolutions.org/publications/detail/promises-made-pr...
Illinois is under water by $331,579,500,000 and the total of all states combined is $4.7 TRILLION.
Dat be's a lotsa muulah.
THAT'S more like it!
A Trillion here, a Trillion there, and pretty soon you're talking about REAL money!
Hey, you and I are maybe the only ones not watching the "big game" between the Steelers and Titans. I could care less. Between Thursday and Monday every week there's about 30 hours of college and pro football that I could watch, and, I actually make money from advertising to idjits who watch most of that. I may catch about 3 hours total in a week and it's about all I can handle without being totally bored to death.
Gettin' old, I guess.
Figures. The $111B is just one set of books.
Obomber has Rahm's back :)
Homer, when will that occur? Like tomorrow?
In all seriousness, I enjoy math problems, so I took a look at the national debt clock and figured we should reach $18 trillion in about 228 days, or about 7 1/2 months, or about the end of June, 2015.
Of course, that's just a "back of envelope" calculation and I have a slow computer CPU and am using an unsupported browser (working without a net). For more accurate measurements, consult an economist.
Easily solved...Population of Illinios is 12.88 million...just send everyone in the state a bill for $8,600...man woman and child.
The good news that Illinois can't print their way out of this mess like the federal government can with the Fed. This shitshow won't last much longer.
Illinois should just invade / start a shooting war with Missouri - or on second thought maybe Indiana would be easier to beat.
Illinois should go belly up in the next two years so Obama can 'save' them. If they try to hold things together until 2017 they may not get much help.
Illinois is far from alone -- if your retirement relies on any government benefits or corporate pension or dollar-based plans -- watch out!
Who needs defined benefits!! get a 401k or any other self funded bullshit retirement plan...forget your pensions be like us the 60% or so losers with very little chance at retirement...ha ha ha isn't life grand.
Wonder what the CAFR says about it. I looked at it but I am not an accountant. According to it (2013) they have it funded according to the law... but did mention some kind of a 50 year program...
I say Illinois should just keep the Ponzi going and work to restrict access to sites like this and this:
http://www.statebudgetsolutions.org/publications/detail/promises-made-pr...
and any other site that talks about math stuff or economics or hard things like, um, reality, fiat money, lying politicians *oops, too late*.
Maybe the state of Illinois could cut off internet access. Close libraries. Suspend civil liberties. Is that going too far?
But, if they did those things, think of the savings. Close all the skools. Fire all the teachers. Close some firehouses, fire the firefighters (that has a nice ring to it), burn the fucking state to the ground. Rinse (no pun intended and tough to do without fire-hoses), repeat.
I love the smell of burning ghettos in the morning. Smells like... victory!
Huzzah!
I make killer Bloody Marys. Just sayin'.
Relax, the unfunded pension comes out to a few hundred dollars per person per year over the 25 year peak payout years. Its not as doomy as it looks.
Markitect: You need a better calculator. It's $111 BILLION, probably $200 Billion with true actuarial tables. 11 million people, 3-4 million workers. It's $10,000+ per person, $50-100,000 per actual worker. This is what happens when you have too many on the government payroll. No fucking way they fix this without a default.
They're all calculating actuarial tables at 8%. Name one risk free investment, besides a Ponzi scheme that makes above 2%.
The five horse to show in the fifth at Aqueduct on Wednesday. Well, OK, it's not entirely risk-free.
Illinois? Isn't that where the Nobel Prize winning community organizer hails from?
Can someone explain why Boeing Aircraft moved its headquarters to Chicago several years ago?
Most of my relatives live in Northern Illinois.
The place is so corrupt on every level that it makes Somalia look like a cub scout meeting.
The morons keep voting it in, and they get what they deserve.
This ain't our first rodeo, Quinn: if that's the "official estimate" then the actual amount is between $200-300 billion.
It's not as big a problem as you may think, because this is how the politicians will resolve it:
1. Wait until the crisis hits, ie payments must be made and no money to pay, in order to use the CRISIS to compel compliance
2. Bail IN all the bond holders at a rate of 75% or more so that no jurisdiction that has pension payment liabilities also has to make interest or principal payments on bonds
3. Bail in the unions by a small rate, eg 5%-10%, to make a token show of compromise & contribution to solution
4, Increase ALL the taxes, ie sales, income, property, AND implement additional new taxes
The sheeple will bleet more, but continue to comply with the demands of their overlords.
But nobody saw it coming .....right.