{"id":7684,"date":"2018-01-01T13:49:02","date_gmt":"2018-01-01T19:49:02","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/?p=7684"},"modified":"2018-01-01T13:49:02","modified_gmt":"2018-01-01T19:49:02","slug":"governance-stupid-recommended-resolution-illinois-state-legislature","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2018\/01\/governance-stupid-recommended-resolution-illinois-state-legislature.html","title":{"rendered":"It’s the governance, stupid! My recommended resolution for the Illinois state legislature"},"content":{"rendered":"\n<\/head>

\"Illinois<\/p>\n

Imagine if your local school district promised its teachers generous raises \u2014 well in excess of what its property tax revenue could fund.\u00a0 Knowing that they\u2019d all get voted out of office if they raised tax rates, the school board decided instead to fund it with a bond issue, coming due a generation or two in the future, after they\u2019re all retired and living in Florida.<\/p>\n

\u201cThat\u2019s absurd,\u201d you say?\u00a0 \u201cGovernment bonds are only for infrastructure-type uses, say, building a new school that\u2019ll be around for generations to come,\u201d you say?<\/p>\n

But that\u2019s exactly what happens when schools, or state or local governments in general, promise teachers and other government workers pensions that are unfunded.\u00a0 That\u2019s also the case when pensions are underfunded, or when they\u2019re deemed \u201cfully funded\u201d only according to a optimistic projection, or when they\u2019re well-funded in principle but can be gamed by local governments or employees, or, really, any time the government is on the hook to make up for investment losses, longer-than-forecast life expectancy, and so on.<\/p>\n

We\u2019ve all\u00a0seen reports about the tremendous\u00a0impact that pension contributions are having on state and local budgets.\u00a0 Every property tax bill informs us of the portion of our taxes that are going just to pay for pensions, to make up for failure to fund pensions in prior years.\u00a0 Earlier this year, prior to the state education funding deal, Forrest Claypool and the Chicago Public Schools even filed a lawsuit<\/a> seeking pension bailout money from the state.<\/p>\n

At the same time, pro-state-pension groups are organizing in defense of defined benefit pensions for state and local pensions.\u00a0 They provide good value for the money, they write, because a defined benefit pension is, on average, less costly to provide than a defined contribution (e.g., 401(k)) contribution that produces the same level of retirement income.\u00a0 A website called ProtectPensions.org, sponsored by the National Public Pension Coalition, makes the pitch that pensions are cost-efficient and provide a dignified retirement for \u201cnurses, firefighters, teachers and librarians\u201d in a way that 401(k) plans couldn\u2019t.\u00a0 The National Institute on Retirement Security produced a report, \u201cWin-Win: Pensions Efficiently Serve American Schools and Teachers,\u201d which, as its title suggests, defends traditional pensions for teachers, as a win for the teachers and the schools both, because they encourage teachers to stay on the job.\u00a0 And Americans have become accustomed to\u00a0the idea that teachers and state workers accept lower pay than they otherwise would, because it\u2019s made up for\u00a0a more generous retirement benefit than the rest of us receive.<\/p>\n

But that\u2019s missing the point.<\/p>\n

Eliminating defined benefit pensions for public workers, pensions in which the state itself is on the hook for future benefit payments, is a matter of good governance.\u00a0 It\u2019s a matter of Illinoisians paying for what they purchase, in this case, the work of the employees, now, rather than borrowing and leaving the bill for their children and grandchildren.\u00a0 And it\u2019s key for eliminating opportunities for legislators, local school boards, and everyone in-between to game the system by deferring contributions, finding loopholes to grow pension benefits, and the like.<\/p>\n

I am not saying that Illinois should eliminate benefits that workers have already earned.\u00a0 But the legislature should give us the ability to vote on whether to amend the constitution to eliminate the guarantee that state and local workers, even 20 year olds who have just been hired, are guaranteed the same generous pension formula that is in existence upon their hire, all the way to retirement age.\u00a0 And it\u2019s one thing for teachers and other state workers to have reasonable and appropriate retirement benefits; it\u2019s quite another to have far more generous provisions, including very generous early retirement benefits, than the rest of us.<\/p>\n

(Note:\u00a0 the above was an article that I had originally intended to submit for publication; hence, the brevity and general lack of links.)<\/p>\n

Image:\u00a0\u00a0Illinois state capitol; https:\/\/commons.wikimedia.org\/wiki\/File:Illinoiscapitol2.jpg<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

Imagine if your local school district promised its teachers generous raises \u2014 well in excess of what its property tax revenue could fund.\u00a0 Knowing that they\u2019d all get voted out of office if they raised tax rates, the school board decided instead to fund it with a bond issue, coming due a generation or two […]<\/p>\n","protected":false},"author":2209,"featured_media":6853,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[791],"class_list":["post-7684","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-public-pensions"],"yoast_head":"\nIt's the governance, stupid! My recommended resolution for the Illinois state legislature<\/title>\n<meta name=\"description\" content=\"Imagine if your local school district promised its teachers generous raises -- well in excess of what its property tax revenue could fund.\u00a0 Knowing that\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2018\/01\/governance-stupid-recommended-resolution-illinois-state-legislature.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"It's the governance, stupid! 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