by Adam Andrzejewski
May 10, 2011
“I want the truth.”
“You can’t handle the truth.” A Few Good Men, 1992
The Illinois pension liability truth- it’s not $80 billion but more like $210 billion.
According to Professors Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester, the state’s pension liability is $85 billion only if current workers are fired today. Otherwise, current contracted benefits for state workers will put Illinois an additional $70 billion in the hole. Furthermore, Illinois inflates pension asset growth by an unheard of “risk free” 8.25% per year. Using a more reasonable 4% rate of return adds another $60 billion of taxpayer liability.
Here’s the pension truth: total taxpayer liability of $210 billion. Please read the recent op-ed by Marc Levine in Crain’s.
There are only 13 million residents of Illinois. Every man, woman and child owes $16,000 in public pension debt. Have a family of four? Your family owes $64,000. You own a private company with 200 employees? For the government pensions, your company employees collectively owe $3.2 million.
Illinois Pension truths:
1. Illinois pension liability tops the 50 states for the worst funded. 2. The entire 67% income tax hike went to fund the pensions. It wasn’t enough. 3. The system is unsustainable and getting worse. Benefit payouts to retirees have nearly doubled since 2002.
We can do something about it. Pension reform is being pushed by House Republican leadership with the help of the Civic Committee of the Commercial Club of Chicago. House Bill 149 is needed now more than ever:
• Giving current state workers three options: They could stay in the current system and pay higher premiums to cover the true costs of their benefits. They could go into a new system of more financially manageable benefits. Or they could go into a defined contribution system, similar to a 401(k) plan.
• Giving new state workers two options: They could go into the new system of more financially manageable benefits or go into the 401(k)-style plan.
• Gradually pays off the huge unfunded liability with a set, reasonable yearly payoff amount through 2045.
But it won’t be easy to pass in the final few weeks of session. Lawmakers will be under extreme pressure from unions and other vested interests in Springfield to oppose it and embrace the status quo. That’s why Illinois needs your help.
Can your member of the General Assembly handle Illinois’ “pension truth”? Ask them.
Call your state representative – Look up their name and phone number. Explain your strong support for House Bill 149. Get your family and friends to do the same. We are a strong grassroots voice. This is real reform that matters in Illinois.
Together, we will bring a new day to Illinois. House Bill 149 is part of that mission.
On April 27th, at the Gateway Center in Metro East, For The Good of Illinois PAC hosted Presidential candidate Gov. Tim Pawlenty, Phyllis Schlafly, Rep. Dwight Kay, Sen. Sam McCann and Sen. Kyle McCarter. It was a watershed moment in Illinois politics. Click here to watch all the speeches.
Help us continue to fight for transparent, accountable and limited government in Illinois with a $25, $50 or $100 donation. Click here to donate online. Thank you.
No comments yet