Unfunded public employee pensions threaten the financial future of governments across the country. In some states and localities, the crisis chickens have already come home to roost, spurring bankruptcies; in others, the clucking is getting much louder.
The State of Illinois may have the worst problem, having funded only 51 percent of its pension liabilities, the lowest level of any state in the nation. Every household in the Land of Lincoln owes $34,000 for this unfunded liability. For those living in Chicago, add the unfunded municipal pension liability and the burden more than doubles to $76,000 per household.
The underlying problem is the distorted political calculus of public pensions, which are negotiated by politicians who want the political support of the powerful unions, which they might win by promising future benefits they won’t be around to pay for.
This generalized political manipulation is so systemic that it reaches more specific absurdity. Consider the case of Steven Preckwinkle, political director of the Illinois Federation of Teachers. He was able to use a loophole in legislation, for which he lobbied, to snag a huge increase in his pension.
Preckwinkle had never taught in a classroom. Yet, by substitute teaching for just one day, he qualified for the much more generous pension given to Illinois teachers. Moreover, Preckwinkle’s pension benefits are calculated on his whopping $245,000 annual salary as a union lobbyist, not on a teacher’s pay.
Is this Lincoln’s government of, by and for the people? Or just for political insiders like Preckwinkle?
This is Common Sense. I’m Paul Jacob.