Sorry guys. The state legislature owes the pension funds. Unions have a lot more clout than students. This is not a pretty picture. Terry Savage of the Sun Times reports:
- "Under Gov. Blagojevich the state borrowed $10 billion to make required pension contributions, with some of the borrowings to be invested in the stock market. The belief was that stock market investment returns would beat the 5 percent cost of interest on the bonds, helping to fill the gap between promises and reality. Unfortunately, the stock market didn't cooperate.
Then in January 2009, this column highlighted the growing budget deficits and late payments to state providers, such as nursing homes, pharmacies, day care centers and other providers. We called it the "Coming Pension Wars" -- as the state and municipalities are forced to raise taxes or cut services to pay the promised pensions, along with current bills. In just the last year, the situation has become even more dire.
In November 2009, the state's Pension Modernization Task Force sent its recommendations to Gov. Quinn. The Task Force concluded that Illinois' unfunded pension liability exceeds $61 BILLION! And that number is growing exponentially."
Emperor has no clothes: Pensions are short cash :: CHICAGO SUN-TIMES :: Terry Savage
Illinois is broke
Illinois Airs Plan on Deficit - WSJ.com
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6 comments:
So what's your suggestion? That states cut the pensions of all past and future university retirees.
In keeping with the latest,what's in it for me, trend in the country. All of us non-governmental employees can go along with that idea. Just don't try and touch my retirement in the private sector.
They shouldn't be allowed to borrow from the pension funds of state employees, beginning first with fiscal caution. I do have a state pension; I'm STRS. What we're seeing at the state level is also at the federal, and soon there will be no private companies for those pension funds to invest in. But yes, tuition will need to go up. The young are going to have to pay for all those entitlement programs put in place since the 1960s.
I agree that "fiscal caution" should be foremost in any financial action and that borrowing from pension funds shouldn't be allowed. But I don't lay all our problems at the feet of government. A huge number of the private firms these pension funds invested in, didn't do us any favors either due to their reckless and shortsighted business practices.
Specifically? The legislature borrowed on the assumption the bubble would ever expand. Business is so heavily regulated by gov't, that they hire legal eagles to find ways to get around them, thus pushing the envelope even further. But if private business had done what Illinois, California and other states have done, their CEOs would be hauled in front of Congress and grilled. Plus, now the states that have gone on the "let's tax the millionaires" are seeing them move out.
It's unbelievable that Obama was able to completely hose this thing up in such a short period of time. And right after Bush had fixed the problem.
Glenn will be explaining how this happened on an upcoming show.
I'm sure you think that's a fabulous witty remark, but tripling the mistakes Bush made was probably not the way to go.
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