Munger suspends payments. More pension theft in Illinois.

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Senator Kwame Raoul, “It depends on what the premise of what he wants. He could say he wants to put me in slavery. Right? Should I meet him halfway?”

There were a lot of frightened public employee pension recipients yesterday when the news flashed that Illinois Comptroller Leslie Munger said she didn’t have the money to make pension payments.

I got tons of email and more than a few phone calls.

I posted twice on this yesterday, including reposting an email that TRS Communications Director Dave Urbanek sent out explaining it did not impact what TRS was paying out to annuitants.

This has been a point of confusion since the state budget battle began. We do not receive our pensions directly out of the state budget. Our monthly pension check comes out of TRS funds, which are completely separate.

Where do TRS funds come from? We teachers pay into it. We have never missed a payment. Our school districts pay a small amount into it. The state of Illinois pays into it. Until a few years ago the legislature more often than not failed to fund it at the level they were supposed to and took frequent pension holidays. And then there is the return on investments.

You don’t need to be an expert on high finance to see that the last source – return on investment – is fully dependent on all the others. The more we have to invest, the more we get in return. The current situation in which we are less than 50% funded means TRS has less to invest and receives less in return.

The rate of return on TRS investments has been pretty good over the years. Which means if we were funded at the level we were supposed to be, we would be in great shape and there would be no pension crisis now.

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When Comptroller Munger fails to make the state’s $560 million payment in November, that is money that cannot be invested or bring a return. With no budget agreement there will be another missed payment to TRS in December. These are dollars lost on investments that are lost forever, even after the missing payments are made up, if they are made up.

Why is there no budget agreement?

Because Governor Rauner will only agree to a budget if the legislature votes to include his union-busting turnaround agenda.

Without a budget, only those programs that are federally mandated or court ordered will be paid.

And first in line ahead of even those payouts are the banks that hold bonds, the state’s debt.

Because state debt is a profit center for Rauner’s friends on Wall Street.

Some have called on the Democrats and Rauner to compromise, meaning that the Democrats would agree to some of the union-busting demands of Governor Rauner.

I’m with Democratic Senator Kwame Raoul on this.

“It depends on what the premise of what he wants. He could say he wants to put me in slavery. Right? Should I meet him halfway?”

Meanwhile our pension theft continues.

12 thoughts on “Munger suspends payments. More pension theft in Illinois.

  1. The Governor would love to see the State Of Illinois and all Pensions go completely bankrupt and get rid of them. By playing these games the Governor is hurting the Pensions down the road big time. I’m beginning to wish Blago was still Governor.

  2. Fred,
    Not funding a large pension payment is like a snowball rolling downhill. It can only get bigger,
    It’s the power of compounding. Missing a $1,000,000 payment that would earn 5% means you have to deposit $1, 050,000 the next year to be even, and on and on and on…….
    Pretty soon you are talking real money.

    • Yes. I would call a 100 billion dollar pension liability real money. That has been our point, Johnnyboy. Over 70 years of missing payments is the cause of the current crisis. But see Ralph Martire and the CTBA for a plan that would reamortize the debt combined with – wait, wait – a change to the way we raise revenue.

  3. It is interesting to note how well the pension bashers understand compounding when it comes to annual increases, but not when funding the pensions. I thought the Supreme Court ruled on this issue.

  4. Interesting how the state views employee earned compensation like it is their money instead of the employee’s money. Illinois acts like it is doing us a favor when it pays the compensation that is earned and owed to us. We are expected to wait until it is convenient for them to pay. Meanwhile bond holders get their money NOW.

    I wonder if this could be considered a 14th amendment issue? Why are bond holders a special class deserving of special treatment? Both payments are constitutionally mandated, but when does the state ever miss a bond payment? Will T.R.S. be paid back investment earnings lost because payment was delayed?

    We completed all the work the state asked us to complete. The state promised to pay us deferred compensation as a part of our earnings. Now it is due. Some like to rant about the “private sector”. What happens to a “private” employer who fails to pay its workers? Don’t we deserve to be paid too? In addition we have always paid our own pension payments in full and on time. Why are bond agreements “iron clad” while our agreements are conditional?

    It stops being the state’s money when we complete the work. It is our money and it should be paid now. If payments cannot be made in full to everyone who is owed money, shouldn’t everyone be paid something instead of paying your “friends” and stiffing others? If someone has to wait, shouldn’t everyone have to wait?

    Maybe it is a 14th amendment issue? Unless some of us are “more equal” than others.

  5. Even Quinn paid the pension systems in full and on time. Rauner defaults on pension payments within months. “It will be paid in full by the end of the fiscal year.” Munger said they may have to skip another 1 or 2 months payments. So we can believe she will be able to do a double or triple payment in the spring? I don’t believe it.

  6. And a little off-thread, but an announcement was also made that the State of ILL-Annoy will not be making payouts to lottery winners of as little as $600.
    Good grief–are people STILL buying lottery tickets &, if so, just WHERE is that money going?
    Oh, wait, I know–where it was supposed to go in the first place–to funding public education! And I have a bridge I can sell you…
    Actually,perhaps it IS going to public schools…charter schools are public schools, right?

  7. Hope interested parties protecting our pensions are lawyering up now…current administration of this miserable state does not seem to care that the Illinois Supreme Court ruled in retirees’ favor.

  8. Will there be any penalty for a late payment to replace lost earnings? Isn’t this a diminishment of active employees earnings in the actuarial sense ?. Will a fiduciary require a greater contribution in the future because of this diminishment? There will be a domino effect when this isn’t compounded,but no one will be responsible in the future!

    • This from TRS’ Dave Urbanek: “There will be no interest rate applied to the delayed state payment for November. State government appropriations to all agencies that are part of that government do not fall under the Illinois Late Payment Act.”

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