We're going to need more people to grow our way out of the pension mess
Bill Testa's blog on Illinois pension under funding,
A final concern is the regional aspect of pension underfunding. States in the Midwest face a particular challenge in that much of their state and local work force is older and approaching retirement. In addition, some states face significant funding gaps and future liabilities that will only grow if left unaddressed. It is plausible that the pension problem is more acute in the Midwest, where projections for slow population and tax revenue growth will make it more difficult to grow the region out of the problem. For example research by the University of Illinois suggests that state pension programs should be 97% funded given the rate of income growth; current funding is at 62%. Further, the Civic Federation has found that Illinois has consistently shortchanged its pension contribution since the 1970s. For the state to reach its goal of being 90% funded in the next 40 years, it will need to come up with $275 billion. Illinois's five major pension funds are currently $35 billion underfunded. Considering that the general operating budget of the state is $43 billion, the size of the deficit seems particularly daunting.No way we grow our way out of this box without significant population growth. The only way we do that is more immigrants. We have to house people, build roads, get water, build schools, provide health care. Any candidate talking growth --and it's really the only option-- needs to talk about all the implications of it.
Check Testa's blog and you'll find a link to a half-day seminar on pensionssponsoredd by the Civic Federation on February 28, 2006.
I'm acrosss the street from Elgin and watching their annexation of land to the west. A friend tells me it's Elgin's municipal unions driving the growth. They expect the increased labor force will bail out their under funded pension plan.
Heck of a way to do urban planning.
17 comments:
Well, if your friend said so, it must be true...
The alternative to population growth is productivity growth, but it's unlikely that the state can do anything about that except hope that scientists and engineers continue to pump out the good ideas.
anon 4:58 lol... at least it's attributed. Elgin's Mayor Schock talks about the retail he sees coming on rt 47. That's pretty far west. I have no idea why they want to grow like that other they think the revenue is going to solve all sorts of problems for Elgin.
That pension problem is reaching a point where State workers might be expected to work past age 50!
Imagine the dire straits we must be in , with 51 year old State employees going to work each day.
Such drastic problems!
Rich links to a Trib Editorial on it today. Trib says,
...lawmakers need to be honest as they debate Blagojevich's new building plan in coming weeks. With the pension noose tightening, the state can't afford to take on more debt, even for worthy goals. Borrowing costs money, and the state is going to need every penny it can squeeze--and then some--to keep its pension-fund-payment schedule.
The problem will not go away. This is serious.
And they're right.
Too bad JB Powers shows such ignorance.
State workers all tend to have to work past age 50. The rules governing most workers when the retire is called the rule of 85 which means when your current age plus your years of service total 85 then you may retire without significant penalties.
A retiree at age 50 would had to work 35 years putting their starting age at 15.
Maybe you are thinking of those on the alternative plan which is primarily state police troopers and correctional officers. You can argue with them on whether their jobs are stressful enough to allow them to retire by age fifty or not.
Or maybe I am thinking of the ploy George Ryan used right before the last election allowing most any state worker to retire at age 50, only to be trumped by the new Governor Blago who allowed most any state employee to retire at age 48 and receive 60% of their pension, and all of their medical coverage.
The 35 years is turned on and off at the whim of our governors to buy votes from state workers.
JBP
For a kind of interesting view from the inside, take a look at Fritchey's blog today.
Wow so JB Powers uses irregular occurences to expect 'state workers' (a little general don't you think) to retire at age 50. Do you think current state workers are banking on another buyout to coincide with their planned retirement date?
Ryan instituted an early buyout which allowed employees to purchase 5 years of age/service. Still quite a few passed on it since it often resulted in a lower pension. Many of these people were not replaced.
Can you fill me in on Blagojevich's plan to allow 60% of salary and full medical coverage at age 48?
Anon 12:47,
Irregular like a clock.
Lets see. Blago could buy a few votes by allowing early retirement again. So yes, I would expect there this to happen again.
Right after his election, Blago continued and extended Ryan's early retirement to younger workers. You are welcome to go look it up yourself, if the media ever reported on such things.
JBP
JBP-
With regard to Blagojevich extending Ryan's early out to accommodate younger people, I am gonna have to call Bull****.
He didn't. No one did. Of course telling me that your proof is unavailable since the media didn't cover it tries to give you a nice out.
Do you at least have any anecdotal evidence? Any cases you could cite?
I think if you go to the SERS website you may find something on early retirement. I couldnt get in just now, but there was something not too long ago describing the early retirement programs that Blago initiated.
They weren't nearly as generous as Ryan's early retirement initiative
and one, I believe, allowed employees to cash out without pension benefits but with some multiple of their SERS contributions to date and the other
one allowed one to keep some portion of the pension.
Hardly anybody signed up. Why would they? They can retire on the job, given the bloated nature of Illinois state government.
anon 4:38 Check my earlier post on the costs of the early retirement cancellation program.
Anon 4:29,
You have reached a point of being an early retirement denier. Since you do not like it being posted that the state had a wasteful early retirement program, you deny that it ever happened.
It is posted, it happened, and we are paying for it. It is still happening for teachers.
JBP
JBP-
Sorry, it was I who wrote as anon 4:29 and the earlier noonish one as I forgot to check other and put in my handle.
Actually I don't deny the early retirement program happened as my father retired under the early out put forth by Ryan. I acknowledged that.
Your post was as follows:
Right after his election, Blago continued and extended Ryan's early retirement to younger workers. You are welcome to go look it up yourself, if the media ever reported on such things.
That part is bull****. Blagojevich did not continue and extend Ryan's early out program to anyone least of all younger employees.
Blagojevich did enact his own plan to help shrink the state payroll. It was called the alternative retirement cancellation payment. In return for resigning, you got back twice what you put into SERS in return for forgoing any of your pension. Those people did not retire. They quit.
Any employee who quits instead of retiring gets back their pension payments plus interest. This incentive gave you double. It wasn't retirement in any way, shape or form.
As to whether it happens for Teachers, I don't know. We weren't talking about teachers. Your comments specifically addressed state employees and you were wrong. Accept it.
You tried to make some witty little comment on how state workers somehow retire at age 50. Under current rules that is wrong. Retirement age is 60 unless you have worked 25 to 30 years and then there are other rules that apply: rule of 85 etc.
You then tried to make a witty, little comment on how Ryan offered ERI and Bagojevich continued and expanded Ryan's program. That was wrong on the second part. Alternative Retirement Cancellation does not result in retirement but is instead an incentive to quit.
You then tried to imply that it happened but the big, bad conspiratorial media refused to publicize it. That is just silly but I encourage you to provide proof at which point I will apologize.
Then you tried to attack me by calling me a 'retirement denier'. Whatever dude. Provide some evidence of any of your statements. You sound like you have no real concept of working for the state and instead base your 'thoughts' off stereotypes.
-Gish
So, Gish,
You are saying:
1) Getting paid for not working is not equivalent to retirement.
2) Althought retirement at age 48-50 has happened three times in the last 12 years, State Workers are working to age 60 or the rule of 85.
3) Although early retirement is only vaguely published in the Tribune or Suntimes, there is adequate press coverage of it. It is not a campaign issue.
Call it what you will, there have been 3 programs where state workers can walk off with large amounts of loot at age 50 or younger in the last 12 years.
As for having no real concept of working for the state, that is true, as working for the State is almost entirely a fictional entity. Getting paid by the State for not working, I am familiar with, as are 42,649 "retirees" + the relatively few that took Blago's buyout.
JBP
JB Powers-
It is clear where your slant is. Sounds as if you don't think highly of state workers. I guess there isn't much I can do to change your mind. I guess mostly I don't care.
You can tell me to call it what I will but I was pointing out the errors in your statements.
State workers (high risk aside) simply cannot retire at age 50. The ERIs did not likely produce many under 50 workers retiring either due to the cost of purchasing both age credits and time credits required to reach the rule of 85. Blagojevichs plan was simply not retirement. It was resignation with a severance package which is fairly prevalent in private industry.
You made your comments. I am just trying to correct them where I see falsehood but I guess it doesn't matter since you have already stereotyped state workers.
-Gish
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