“We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein
I’m Shocked! Shocked to Find That Illinois Can’t Make Its Pension Payments!
From Bloomberg Business:
Illinois will delay payments to its pension fund as a prolonged budget impasse causes a cash shortage, Comptroller Leslie Geissler Munger said.
The spending standoff between Republican Governor Bruce Rauner and Democratic legislative leaders has extended into its fourth month with no signs of ending. Munger said her office will postpone a $560 million retirement-fund payment next month, and may make the December contribution late.
“This decision is choosing the least of a number of bad options,” Munger told reporters in Chicago on Wednesday. “For all intents and purposes, we are out of money now.”
There’s no reason why this should come as a surprise, we’ve known this day would come, and it finally has.
This is of course being blamed on the budget impasse in Springfield. But the lack of a budget isn’t responsible for this, it only moved the date forward.
Click to Enlarge
As can be seen in these graphs, even though Illinois has been making its pension payments in full for the past several years, the level of underfunding continues to increase. That’s because the system itself is fundamentally broken, and there are only one of two things which can be done, though I have no rational hope that either will happen:
- Propose an amendment removing the pension guarantee language from Article XIII, Section 5 of the Illinois Constitution, or
- Both sides sit down and agree that the current system needs to be scrapped in favor of a defined contribution system. There’s nothing in the Constitution that says that those to whom the promise of undiminished or unimpaired pension benefits have been made can’t voluntarily make concessions that would help relieve the pressure on the system.
Why would they want to do that? It’s simple. As I said in an earlier post, even though the Constitution promises that benefits shall not be diminished or impaired, there’s no corresponding Constitutional requirement that the pensions be funded. That was left to the Legislature. When the money’s gone, it’s gone for good.
Illinois has had ample opportunity to fix this mess, but the unions that are holding this state hostage refuse to do what’s clearly in their own best interest. There will come a day, and it will be soon, when the payments won’t merely be delayed, they’ll come to an end. While that’s going to hurt a lot of people, they’ll have no one to blame but the union bosses and their Legislative truffle pigs who formed the unholy alliance and made them a promise they knew would never be fulfilled.
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According to Illinois Dept. of Revenue, Fund Max Rate And Statute Reference:
There is NO MAXIMUM statutory rate for property tax levy to fund pension benefits for school employees.
See last line for statutory (no ) max rate on pension funding.
Interesting to also note that you can drive a fleet of school buses through the gaps in PTELL “protections”.
The Transportation Fund statutory rate cap was lifted, so now schools just tax however much they want in Transportation Fund, and transfer it later to general funds.
EDUCATIONAL DISTRICTS (FEWER THAN 500,000 INHABITANTS)
Max
Statute
Statute
Statute
Statute
Special Comments
002
Education (Grades 1 through 8)
3.50000%
105 ILCS 5/17-2
105 ILCS 5/17-2.2
105 ILCS 5/17-3
Subject to Backdoor Referendum
002
Education (Grades 9 through 12)
3.50000%
105 ILCS 5/17-2
105 ILCS 5/17-2.2
105 ILCS 5/17-3
Subject to Backdoor Referendum
002
Education (Grades 1 through 12 (Unit))
4.00000%
105 ILCS 5/17-2
105 ILCS 5/17-2.2
105 ILCS 5/17-3
Subject to Backdoor Referendum
003
Bonds & Interest (Area Vocational Building)
No rate Limit
105 ILCS 5/19-30
003
Bonds & Interest (Building Sites, Playground, etc.)
No rate Limit
105 ILCS 5/19-2
003
Bonds & Interest (Building and Repair)
No rate Limit
105 ILCS 5/32-5.6
003
Bonds & Interest (Exhibition Facilities)
No rate Limit
105 ILCS 5/19a-4
003
Bonds & Interest (Fire Prevention, Safety, Energy Conservation)
No rate Limit
105 ILCS 5/17-2.11
003
Bonds & Interest (Funding – Techers’ Wages or other Claims)
No rate Limit
105 ILCS 5/19-8 through 10
Subject to Backdoor Referendum
003
Bonds & Interest (Non-High School Tuition, Other Claims and Judgements)
No rate Limit
105 ILCS 5/12-13,14
003
Bonds & Interest (Non-High School Tuition and Other Claims)
No rate Limit
105 ILCS 5/12-15,16
003
Bonds & Interest (Refunding)
No rate Limit
105 ILCS 5/19-15
105 ILCS 5/19-18
003
Bonds & Interest (Temporary Relocation)
No rate Limit
105 ILCS 5/17-2.2d
105 ILCS 5/2-3.77
003
Bonds & Interest (Working Cash Fund)
No rate Limit
105 ILCS 5/20-2
105 ILCS 5/20-4
105 ILCS 5/20-7
Subject to Backdoor Referendum
004
Operations and Maintenance (Grades 1 through 8)
0.55000%
105 ILCS 5/17-2
105 ILCS 5/17-2.2
105 ILCS 5/17-5
Subject to Backdoor Referendum
004
Operations and Maintenance (Grades 9 through 12)
0.55000%
105 ILCS 5/17-2
105 ILCS 5/17-2.2
105 ILCS 5/17-5
Subject to Backdoor Referendum
004
Operations and Maintenance (Grades 1 through 12 (Unit))
0.75000%
105 ILCS 5/17-2
105 ILCS 5/17-2.2
105 ILCS 5/17-5
Subject to Backdoor Referendum
004
Operations and Maintenance (Health Care Purposes)
0.54400%
105 ILCS 5/17-2.2b
Subject to Backdoor Referendum
030
Transportation (Grades K through 8)
No rate Limit
105 ILCS 5/17-2
105 ILCS 5/17-2.2
Subject to Backdoor Referendum
030
Transportation (Grades 1 through 8)
No rate Limit
105 ILCS 5/17-2
105 ILCS 5/17-4
Subject to Backdoor Referendum
030
Transportation (Grades 9 through 12)
No rate Limit
105 ILCS 5/17-2
105 ILCS 5/17-4
Subject to Backdoor Referendum
030
Transportation (Grades 1 through 12)
No rate Limit
105 ILCS 5/17-2
105 ILCS 5/17-4
Subject to Backdoor Referendum
031
Working Cash
0.05000%
105 ILCS 5/20-3
032
Fire Prevention, Safety, Energy Conservation and School Security
0.10000%
105 ILCS 5/17-2.11
033
Special Education Purposes (Maintaining Only K – 8)
0.40000%
105 ILCS 5/17-2.2a
033
Special Education Purposes (Maintaining Only 9 – 12)
0.40000%
105 ILCS 5/17-2.2a
033
Special Education Purposes (Maintaining K – 12)
0.80000%
105 ILCS 5/17-2.2a
036
Capital Improvement
0.75000%
105 ILCS 5/17-2
037
Area Vocational Education Building Fund
0.05000%
105 ILCS 5/17-2.4
057
Lease of Educational Facilities and Computer Technology
0.10000%
105 ILCS 5/17-2.2c
087
Capital Development Board – Rental of Buildings
No rate Limit
105 ILCS 5/35-1 through 5/35-31
088
Summer School
0.15000%
105 ILCS 5/17-2
098
Temporary Relocation
0.05000%
105 ILCS 5/17-2.2c
105 ILCS 5/2-3.77
119
Health Insurance for Employees
No rate Limit
105 ILCS 5/17-2.6
151
Non-High School Indebtness
No rate Limit
105 ILCS 5/12-26
152
Non-High School (Tuition)
1.60000%
105 ILCS 5/12-11.1
161
Employees’ Pension (IMRF, Social Security & Medicare)
No rate Limit
40 ILCS 5/17-171
40 ILCS 5/21-110
40 ILCS 5/21-110.1