STUMP » Articles » Public Pensions Quicktakes: All about Illinois and Chicago » 26 July 2015, 12:30

Where Stu & MP spout off about everything.

Public Pensions Quicktakes: All about Illinois and Chicago  

by

26 July 2015, 12:30

In addition to the foreordained ruling for Chicago pension reform, there are a few other Illinois stories that came by.

Someone pointed out to me that the Chicago pension reform ruling came 100 years to the day after the Eastland disaster Chicago: a boat tipped over while near dock and over 800 people drowned.

Read to the end to see Clarence Darrow making sure nobody got convicted for this foreseeable disaster.

Just like what will happen with the foreseeable disasters of Illinois and Chicago pensions.

WHAT IF WE JUST DON’T FUND THE PENSIONS?

Mark Glennon at Wirepoints has an idea:

Specifically, the city argued that it’s not liable on the underlying obligation directly to pensioners if the pensions ever run dry. Surprisingly, as we wrote before, that’s an open issue. Yes, the city is liable to make the annual payments to pensions required by state law, but those payments can be whatever the legislature feels like setting.

That issue is critical in the long run because, if the city is right, one constitutional route to real pension reform would be simply to stop funding the pensions and begin funding some alternative at more affordable levels. No liability on the old pension would attach to the city.

…..
Why might that be good news? With a super-majority in the Illinois General Assembly unwilling to really tackle the pension crisis, Illinois may be forced into a different strategy: Just don’t fund the damn things.

Well, that’s one way to “deal” with the issue.

I am not a lawyer nor a law-talking/understanding person. All I know is that if you don’t pre-fund the pension, and try to match the cost accrued by that service that year, the pensioners come into increasingly precarious situations.

Because it doesn’t much matter what the law says when the money runs out.

People have not quite “got” that not fully-funding the pensions is ultimately the same thing as not paying the full promises made. But if they stopped funding outright, and then let the till run dry… yeah, they might “get it” then.

Mish had his pre-take:

Here’s Where to Start

Bankruptcy legislation to allow municipal bankruptcies
Pass Right-to-Work legislation
Scrap prevailing wage laws
Property tax freeze
Freeze defined benefit pension plans
Pension reform
Fair redistricting
Reform worker’s compensation laws

That’s a big list of things that needs to be done, and Madigan is on the other side of every one of them.

Some of these would be a harder lift than others. I have a feeling they’re going to get bankruptcy legislation before all that other stuff.

HEY RETIREES, WANNA MAKE A LITTLE MONEY?

I suppose that’s one way to try to break a strike:

The administration of Gov. Bruce Rauner has been contacting retired state employees to determine if they would be willing to return to work on short-term contracts in the event of a strike.

The calls apparently have been made over the last several weeks as the Rauner administration and the largest state employee union, Council 31 of the American Federation of State, County and Municipal Employees, have continued negotiations on a new labor agreement.

…..
AFSCME said the fact the administration is contacting retirees about returning to work “is the smoking gun that shows Gov. Rauner is seeking to cause a crisis.”

“It echoes his repeated threats on the campaign trail to shut down state government and the public services it provides in order to strip the rights of public service workers and drive down their middle-class standards of living,” said AFSCME spokesman Anders Lindall. “Our union has never had a strike in state government. State employees don’t want to be forced to strike.”

Veto expected

The General Assembly passed a bill in May that calls for an arbitrator to be brought in if either the state or union declares an impasse to contract talks. The bill also prohibits either a strike by workers or a lockout by the governor.

The administration testified against the bill, and Rauner is expected to veto it. He has until Aug. 4 to act.

“We hope he will sign it,” Lindall said. “If he fails to do so, we will seek an override.”

AFSCME’s last contract with the state expired June 30. The Rauner administration agreed to extend the contract terms for one month while negotiations continued. That agreement will expire Friday unless it is extended.

Throw it on the pile of everything yet resolved in the Illinois legislature/governor fight.

DON’T PAY THE REAPED

I was wrong about politicians’ goodies being the easiest thing to cut.

There’s something that should be easier:

SPRINGFIELD, Ill. (AP) – Illinois Gov. Bruce Rauner has signed legislation that aims to stop the state from accidentally sending welfare benefits to dead people.

The Springfield bureau of Lee Enterprises newspapers reports (http://bit.ly/1RTTsR1 ) that the Illinois Department of Human Services now must review death records monthly to determine if any deceased people are receiving aid.

Two recent state audits have found millions of dollars have been paid in Illinois to dead people. One found $3.7 million was paid last year to 1,111 people recorded as deceased and another found $12.3 million was paid for medical care to 2,850 dead people in 2013.

The law means the department must cross-reference its list of recipients with electronic death records from the Illinois Department of Public Health. Recipients who have died would have benefits immediately canceled.

As someone at the Actuarial Outpost noted: did this need a law?

Couldn’t, ya know, the state executive make an administrative order for those particular departments (under the executive) to do regular audits?

Now, I kind of do understand paying for medical care for dead people…. in that, usually, a lot of people accrue some medical costs right before they die, and the hospitals would like to get paid for that care. But I assume they mean something other than that.

Again, let’s look at what the per capita expenses are:

  • $3.7 million for 1111 people = $3K per person
  • $12.3 million for 2850 people = $4.3K per person

What I would like is a comparison against the medical expenditures Illinois usually makes.

According to the Kaiser Family Foundation, their expenditures was $16.7 billion in FY 2014.

$3.7 million out of $16.7 billion is 0.02%.

No, not 2%. 2 basis points.

So yay, let’s not pay dead people for anybody, but this is not going to fix Illinois’s fiscal trouble. These don’t even make rounding-error level fixes.

It still makes me wonder why a law had to be passed for this. I guess to get around the pols who are trying to get their dead friends/constituents’ beneficiaries to keep getting the money. This may be rounding-error stuff to the state, but it isn’t to individuals.


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