Unfunded Pension Liability
Published by Al Adomite on June 9th, 2008
Not sure where to start with this one. The state, in I believe 1995, decided to set a 50-year plan to get the state’s unfunded pension liability (debt) under control. Like all good things set course by Governor Edgar, the pension system was set adrift afterwards:
With Illinois facing a $42 billion unfunded pension liability, some are accusing the Teacher Retirement System of helping to bankrupt the state.
But state and teachers’ union leaders say otherwise.
“Illinois’ $42 billion unfunded pension liability has grown because of the state’s chronic history of shortchanging the pension funds, amounts that must be repaid plus interest compounded annually,” said Eva Goltermann, a spokeswoman for the Illinois Teachers Retirement System.
It is not, she said, “because teachers’ pensions are overly generous.” The average monthly retirement annuity provided through the TRS is $3,344.
That last number is interesting, because the state’s pension debt ($42 billion) divided by the state’s population (let’s keep that at an even 12 million) equals out to about $3,500 per person or about $14,000 per family of four. That’s not debt the taxpayers owe for today’s education, that is debt we owe for yesterday’s education.
I guess that’s why, in my book, leasing the lottery (which was supposed to help fund education) is such a lousy deal, capital bill or not.
The Bloomington Pantagraph outlined the three likely solutions. You won’t like any of the three:
- Raise income taxes (unfair to taxpayers)
- Redefine teachers benefits (unfair to teachers)
- Pass a pension bonding bill (paying off mortgage with a credit card)
Lawmakers will likely be called back to Springfield at some point this summer to address $2 billion in overspending in this next year’s budget. However, none of that is in anyway tied to this debt.
I think this $42 billion debt is a high crime. Shorting teachers is unconscionable.
Is there another way to get the state out of the hole? If not, which plan would you support?
Filed under State Issues
June 9th, 2008 at 1:15 pm
I am not sure how redefining future benefits for some current and future teachers is unfair to teachers. The whole monopolistic labor hold on the education system has not worked well based on the quality of the end product.
June 9th, 2008 at 2:02 pm
The environment in Springfield would have to change drastically to make option #2 (redefining teacher benefits) possible.
I listed it as an “option” because the Pantagraph did, but it’s not realistically an “option” other than for the Republican caucus talking points. Not unless the IEA would go for it, which is about a 99.99% chance of NO.
Given the current majority-minority structure in Springfield, option #1 (raise taxes) is more plausible than #2 anyway. Option #3 is what the legislature has chosen under Ryan and Blagojevich.
I would like to think the state could live up to the promise that they made to our teachers. That being said, the IEA and IPACE likely supported many of the legislators that have voted to put the system in jeopardy, so they’re not completely as innocent as the Pantagraph article makes them sound.
We’re headed towards option #1 or #2. After Obama ‘08 in Illinois, the voters in Illinois will likely have picked a legislature that will choose option #1.