By: Diane Benjamin
“One of the best-funded pension plans in the country is the nearly 90 percent funded Illinois Municipal Retirement Fund, which has long had the ability to enforce payments into the plan.”
IMRF funding isn’t a problem. That’s why pension spiking penalties were enacted, the fund couldn’t afford to pay pensions for employees with magic pay increases in their final year of employment. The magic came from getting paid for unused comp time months before actual retirement. Bloomington continues to waste money paying the penalties instead of changing the payout policy.
Police and Fire pensions aren’t as well managed. They haven’t demanded funding and investment income is below expectations. I’m sure you’ve heard Harvey Illinois got some of their state money seized for pensions. The same thing happened to North Chicago. Many other cities are at risk.
The first sentence comes from this article: http://www.governing.com/week-in-finance/gov-finance-roundup-harvey-illinois-bankruptcy.html
The Police and Fire Unions have not done enough to ensure their members pensions are protected. The last paragraph in this story should be a wake up call:
There is a potential silver lining. The severity of the situation could spur state legislators to pass a bill now under consideration in the Illinois House that would set up a clear procedure for helping distressed cities, including establishing an oversight board and allowing Chapter 9 bankruptcy. The Civic Federation has helped author the bill. “We’d hope that anyone who talks about trying to help Harvey would look at doing something more comprehensively,” says Msall, “that creates a structure for the state to help all local governments.”
If the bill passes, lots of cities will become distressed. Paying into pensions diverts money from the fun stuff City Councils would rather do. Bankruptcies will increase, except the employees covered by IMRF won’t be affected, just the people who risk their lives to protect us.
I found the article below while looking at pension funding. It is a comprehensive look at what happened to Illinois beginning with Jim Edgar. It contains some startling graphics:
http://www.governing.com/topics/politics/gov-illinois-rauner-budget-rating.html
Jim Edgar makes himself sound brilliant while pocketing a pension of:
The one minute video below from openthebooks.com shows other pensions, some names you will know.
Sound isn’t needed.
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The Mayor and Council have been warned many times. Expect more tax increases.
Municipal bankruptcy must be allowed in Illinois (currently it is not). The major of Danville is begging for it. Many other municipalities need it. Harvey and North Chicago are bankrupt, but since no path exists for formal bankruptcy they are simply undergoing an informal chaotic bankruptcy wherein they decide who to lay off (police and firemen) and who not to pay (bondholders, pension funds and some vendors). To save these municipalities the state needs to give them a path (bankruptcy) to shedding legacy debt and returning to fiscal stability.