Retirement plans to consume 22% of the Chicago’s budget in 4 years

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non-starter

Burnsville, MN

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Mar 12, 2013
 

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Illinois Settlement Shows Worst Pension’s True Cost: Muni Credit

By Brian Chappatta & Michelle Kaske - Mar 11, 2013 7:01 PM CT.

Illinois taxpayers are learning the price of having the worst-funded U.S. state pension system.

The state settled yesterday with the U.S. Securities and Exchange Commission over charges it misled investors from 2005 to 2009 about shortfalls in retirement funds. Yet buyers in the $3.7 trillion municipal bond market are still penalizing Illinois.

Investors demand 1.3 percentage points of extra yield to own 10-year debt of the state and its localities, almost seven times the average in 2005, when the SEC said the inadequate disclosure began. Illinois had its credit rating cut by Standard & Poor’s in January, leaving it the lowest of any state, after lawmakers failed to bolster its pension or whittle down a backlog of $9 billion of unpaid bills.

“Where other states are making progress, they’re not,” said Daniel Solender, who helps manage $19.5 billion of munis at Lord Abbett & Co. in Jersey City, New Jersey.“It definitely makes you more hesitant to increase positions on the bonds.”

Illinois joins local governments nationwide facing growing retiree burdens after the 18-month recession that ended in 2009, including Chicago, its largest city. States and localities are grappling with more than $2 trillion in unfunded public-employee retirement costs, Moody’s Investors Service said in July.

Settlement Precedent

Illinois failed to disclose how much it was underfunding its plans as it sold $2.2 billion in bonds, the SEC said. The fifth-most-populous state became the second to settle over such charges. New Jersey resolved a similar case in 2010, as did San Diego in 2006.

Illinois neither admitted nor denied the SEC’s findings in the settlement, which didn’t include fines, according to a statement from Governor Pat Quinn’s Office of Management and Budget. Abdon Pallasch, an assistant budget director, said the administration would have no further comment beyond the release.

“It goes back to an era, which wasn’t that long ago, where there just wasn’t as much attention placed on pension obligations,” said Howard Cure, director of muni research in New York at Evercore Wealth Management LLC, which oversees $4.5 billion.“You’re not talking about small, infrequent issuers.”

“The state knew that the plan was unmanageable, but failed to disclose the significant risks to those who bought its bonds,” Elaine Greenberg, Philadelphia-based head of the SEC’s municipal and pension enforcement unit, said in an interview.“We hope that our heightened scrutiny of pension disclosure will continue to serve as a warning to other state and municipal issuers.”

Chicago is an example of how difficult it is for municipalities to slow the growth of pension burdens.

The Chicago Police Sergeants’ Association yesterday rejected a deal that Mayor Rahm Emanuel called a “framework” for pension change. The administration has warned that retirement plans will consume 22 percent of the city’s budget -- about $1.2 billion -- within four years, unless the state legislature restructures them.

Illinois and its municipalities pay the highest interest rate among the 19 states tracked by Bloomberg.

“We will all be paying for the mishandling of the pension funds for many years to come,” Illinois Comptroller Judy Baar Topinka said in an e-mailed statement.“It is critical that we learn from the state’s mistakes and never again play games with our pension systems.”

S&P downgraded Illinois Jan. 25 to A-, six steps below AAA, after lawmakers were unable to produce a plan to shore up the pensions, which have just 39 percent of assets needed to cover projected obligations. No other U.S. state has a ratio that low.

Delayed Sale

The state of about 13 million delayed a $500 million general-obligation offering in January five days after the downgrade, citing unfavorable market conditions.
Bridgework

Lincoln, NE

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#2
Mar 12, 2013
 

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IL is not alone. There are almost $3 trillion in unfunded state pensions in the US.
Bushwhacked

Kent, WA

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Mar 12, 2013
 

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Funny, you believe there's an option to America paying their contractual debt ??? It would destroy our credit rating worldwide, if our own citizens cannot trust their government.
non-starter

Burnsville, MN

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Mar 12, 2013
 

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Funny, you think that underfunding pensions by spend now and pay later Democrats is a viable option? Tell me, when was the last time Republicans held sway in Chicago?
Bushwhacked

Kent, WA

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#5
Mar 12, 2013
 

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So, we'll cherry pick problems and pretend they're totally partisan ?? GFY !!! LMAOROTFU~! You lost the Boeing bet, misquote, and are a general POS troll.

“The one and only Smart Liberal”

Since: Aug 12

Former MN Tax Payer

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Mar 12, 2013
 

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non-starter wrote:
Funny, you think that underfunding pensions by spend now and pay later Democrats is a viable option? Tell me, when was the last time Republicans held sway in Chicago?
Big Bill Thompson, 1931.

Been Democrats ever since.
Bushwhacker

Kent, WA

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#7
Mar 12, 2013
 

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So, we'll cherry pick problems and pretend they're totally partisan ?? GFY !!! LMAOROTFU~! You lost the Boeing bet, misquote, and are a general POS troll.
non-starter

Burnsville, MN

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#8
Mar 12, 2013
 
Bushwhacked wrote:
So, we'll cherry pick problems and pretend they're totally partisan ?? GFY !!! LMAOROTFU~! You lost the Boeing bet, misquote, and are a general POS troll.
You already showed your hand on the Boeing bet, you were going to claim that the planes are already flying, even though the FAA has not allowed the 787 to resume commercial flights. Your month is long past up. As for trolls, you are the biggest one on the Minneapolis page. As for committing to things they couldn't pay for later, a lot of Democratic controlled cities and states are in the same boat now. California, Illinois, Michigan, New York, and on and on. They have one thing in common, pensions woefully underfunded by historically Democratic party contolled state and city politicians.
non-starter

Burnsville, MN

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#9
Mar 13, 2013
 
Bushwhacker wrote:
So, we'll cherry pick problems and pretend they're totally partisan ?? GFY !!! LMAOROTFU~! You lost the Boeing bet, misquote, and are a general POS troll.
Isn't Chicago's pension underfunding Bush's fault, you twisted troll?
Bushwhacker

Kent, WA

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#11
Mar 13, 2013
 
non-starter wrote:
<quoted text>Isn't Chicago's pension underfunding Bush's fault, you twisted troll?
Poor picker, cherries are outta season and you're an unhappy loser, for a reason...
non-starter

Burnsville, MN

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#12
Mar 13, 2013
 
Cherry picking? Really?

Tim Cavanaugh

Ending California’s Numbers Game

New rules and more audits should make the pension crisis harder to hide.

22 January 2013

Thanks to upcoming changes in accounting and budgeting standards, along with a push for a thorough audit of state and local public finances, California’s long history of fuzzy-math pension budgeting may be coming to an end. Two rules changes—by Moody’s Investor Services and the Government Accounting Standards Board (GASB)—set to take effect this year and next, will require that pension funds make more conservative investment projections and disclose liabilities more clearly. Meanwhile, an audit of California’s finances last year cast a harsh light on the state’s fiscal structure and is prompting calls for a more comprehensive look at how both Sacramento and city governments handle their finances.

At issue is the state’s long-term pension liability. Thanks to a combination of excessively generous contracts, unrealistically rosy investment projections, and lowballing of future costs, the state’s government-employee retirement and health plans are chronically underfunded. Unlike many states, where pension and health-care shortfalls loom in the future, California is seeing shortfalls in current budgets.

“Although politicians have been crowing about balanced budgets,” says Dan Pellissier, president of the advocacy group California Pension Reform,“the budget only balances if you ignore about $9 billion a year in unfunded pension liabilities. CalSTRS (California State Teachers’ Retirement System) is underfunded by about $4 billion a year; CalPERS (California Public Employees’ Retirement System) is underfunded by about $2 billion. And retiree health care systems need about $4.7 billion a year to fully fund them, of which we’re only paying $1.7 billion because we’re doing it on a pay/go basis—only paying the bills as they come up.” The problem is equally acute in municipal governments. Los Angeles, for example, is engaged in a long debate over how to fix unrealistic funding and liability projections.

http://www.city-journal.org/2013/cjc0122tc.ht...
non-starter

Burnsville, MN

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#13
Mar 13, 2013
 
New York State Pension $71 Billion Underfunded, Empire Center Report Says

By Michael Quint

New York state’s $132.8 billion pension plan is underfunded by $71 billion and annual taxpayer payments to keep it sound may more than double to almost $4 billion during the next five years, a report says.

Increased payments are needed by the third-largest U.S. public pension to recover from a 26 percent decline in assets in the year ended March 31, 2009, and to cover benefits lawmakers increased over the past decade, the Empire Center for New York State Policy said.

“The traditional pension system exposes taxpayers to intolerable levels of financial risk and volatility,” said the Albany-based center, a project of the Manhattan Institute, which opposes taxes and promotes outsourcing to private companies and reduced spending.

New York Comptroller Thomas DiNapoli described the fund as strong during his election campaign.

The pension is fully funded, even though the market value of investments is less than needed to pay all benefits because assets “include the current value of all future contributions employers and employees will make,” its annual report says.
Bushwhacker

Kent, WA

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#14
Mar 13, 2013
 
Was there a point, besides the bushwhacker depression is a problem, putz ??? "man", you're a complete WHINER ~!!!!
non-starter

Burnsville, MN

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#15
Mar 13, 2013
 
Bushwhacker wrote:
Was there a point, besides the bushwhacker depression is a problem, putz ??? "man", you're a complete WHINER ~!!!!
Oh, I get it now, Bush made those Democratically controlled political machines overspend on pensions, benefits, and salaries. What a Svengali that Bush was. You made the cherry picking argument, whiny slewchebag. Unfortunately for you, once again the facts do not bear out your useless arguments. You are the weakest link. Good-bye.
Bushwhacker

Kent, WA

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#16
Mar 13, 2013
 
Childish name calling ?? Geez, the childish behavior of the "poor loser" contingent is EVER EVIDENT !!! LMAOROTFU~!

Sure, Bush left a peachy economy with unfunded wars, housing crisis, and blather idiot teabaggers....

Now lie, misquote, and KMA !!!
Bridgework

Lincoln, NE

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#17
Mar 13, 2013
 
Bushwhacker wrote:
Childish name calling ?? Geez, the childish behavior of the "poor loser" contingent is EVER EVIDENT !!! LMAOROTFU~!
Sure, Bush left a peachy economy with unfunded wars, housing crisis, and blather idiot teabaggers....
Now lie, misquote, and KMA !!!
Childish name calling such as you have done in this thread? If hypocrisy was a disease yours would be terminal.
non-starter

Burnsville, MN

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#18
Mar 13, 2013
 
Oh, I get it now, Bush made those Democratically controlled political machines overspend on pensions, benefits, and salaries. What a Svengali that Bush was. You made the cherry picking argument, whiny slewchebag. Unfortunately for you, once again the facts do not bear out your useless arguments. You are the weakest link. Good-bye.
Bridgework

Lincoln, NE

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#19
Mar 13, 2013
 
non-starter wrote:
Oh, I get it now, Bush made those Democratically controlled political machines overspend on pensions, benefits, and salaries. What a Svengali that Bush was. You made the cherry picking argument, whiny slewchebag. Unfortunately for you, once again the facts do not bear out your useless arguments. You are the weakest link. Good-bye.
You forgot that most of these unsustainable pension agreements are also from decades before he took office. Have you also seen how Slew Jumbo rants about the post office having to pre-fund their pension obligations?
Bushwhacker

Kent, WA

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#20
Mar 13, 2013
 
Bridgework wrote:
<quoted text>
You forgot that most of these unsustainable pension agreements are also from decades before he took office. Have you also seen how Slew Jumbo rants about the post office having to pre-fund their pension obligations?
The pre-funding of Po pensions started in 2006, nice whiff !
non-starter

Burnsville, MN

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#21
Mar 13, 2013
 
Bridgework wrote:
<quoted text>
You forgot that most of these unsustainable pension agreements are also from decades before he took office. Have you also seen how Slew Jumbo rants about the post office having to pre-fund their pension obligations?
I didn't forget it, I find it ludicrous to have to discuss Bush over the issue of publically funded pensions in Democratic stronghold cities, counties, and states. You know that red state/blue state argument? The vast majority of the severely underfunded pensions are in blue cities/counties/states. Coincidence? I think not.

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