If you find yourself in a hole, stop digging.
When it comes to pension systems, the State of Illinois appears shovel in hand, digging to the bottom. The state’s five public employee retirement systems face a combined unfunded liability of $100 billion dollars; they have only 40 percent of what they need to pay the benefits politicians negotiated with public employee unions — the lowest funding level of any state.
The Daily Herald, a suburban Chicago-area paper, calls a spade a spade: “The shortfall is due largely to decades of legislators skipping or shorting the state’s pension payments — a practice that allowed them to spend that money elsewhere.”
Today, Illinois’ legislators will trudge into Springfield for an expected vote to fix the broken system.
“This deal was made by Speaker Madigan and other politicians behind closed doors,” charges Illinois Policy Institute CEO John Tillman, who fears it makes matters worse.
The bizarre attempt at a fix allows the Legislature to be sued before the Illinois Supreme Court if it fails to make its required ongoing contributions into the pension fund.
The legislation also contains a guarantee clause prioritizing pension payouts before most other state spending. As Tillman says, “Not caring for the poor. Not public safety. Not education.”
And a much ballyhooed option for employees to switch to a 401(k)-style plan turns out to allow only 5 percent of employees to so choose, blocking the rest.
Pay what was promised, but stop digging! Move new workers to 401(k) style plans they can own, with employer contributions handed over every pay period.
This is Common Sense. I’m Paul Jacob.
1 reply on “Stop Digging”
Today Obama stated that he was pledging to spend #5 billion in AIDs research and funding. Which we have to borrow or print.