You might call it the fiscal equivalent of a Chicago winter—unending bad news filled with bone-chilling figures that just won’t stop arriving. I’m talking about state government worker pensions, the monster that continues to eat alive Illinois and our collective ambitions to fund education, spur economic growth, fight COVID19 and keep our taxes down. Two current
You might call it the fiscal equivalent of a Chicago winter—unending bad news filled with bone-chilling figures that just won’t stop arriving. I’m talking about state government worker pensions, the monster that continues to eat alive Illinois and our collective ambitions to fund education, spur economic growth, fight COVID19 and keep our taxes down.
Two current examples from a saga I got sick and tired of writing about 10 years ago:
The first is what Gov. J.B. Pritzker talked about in his big fiscal 2022 budget speech the other day. Or, more precisely, what he didn’t talk about.
The state continues to pony up more and more every year to pay retirement costs for its workers and public school teachers around Illinois. Pritzker’s proposed 2022 budget would allot almost $9.4 billion to pensions just from its operating account, or general funds, up from $8.2 billion as recently as 2020. That’s almost a quarter of all general funds spending.
Yet, despite that staggering cost, Illinois is farther behind than ever, with total unfunded liability in the state’s pension funds of $141 billion, up $3.8 billion, or 2.8 percent, since last year. The reason why is that the state still isn’t contributing what is actuarially required just to tread water. In fact, it continues to sweeten some benefits, that on top of the 3 percent compounded cost of living hike that most workers get annually.
So what’s Pritzker going to do about it? Hey, he’s only governor. After saving some relatively small change last year by consolidating the investment functions of downstate and suburban police and fire funds, he’s gone silent. All Pritzker said about pensions in his budget speech was the spending plan includes “full required pension payments.” Those would be the insufficient payments required by law, not the actuarial figure.
I’m not saying solving Illinois’ pension mess will be easy. It won’t. But dead silence surely won’t solve it. Voters hired Pritzker to fix problems. On this huge problem, he’s been a sad failure.
Which leads to pension story number two. That’s the utter turmoil that seems to have overtaken one of the larger public retirement systems in the state, the $11-billion Chicago Teachers’ Pension Fund, which receives a nice chunk of Chicago homeowners’ property-tax payments every six months.
When I last looked at the fund in October, its executive director and other key officials had just resigned, one commissioner had been censured by other board members, and board President Jeffery Blackwell was publicly complaining of an agency “culture of intimidation, intentional misinformation, discrimination, slander, misogyny, fear-mongering, blatant racism, sexism and retaliatory actions.” But interim Executive Director Mary Cavallaro said in a statement there was no reason to worry, and that, “the fund is committed to ensuring financial stability, operational efficiencies, and seamless service to members.”
Well, guess who now has resigned—with a blast? That would be Cavallaro. “I can no longer tolerate the chaos and toxicity of the boardroom, along with the vile disrespect and insults directed towards me, the leadership team and the hard working staff of the fund by certain misinformed trustees,” she said in a letter to the board. “I have grave concerns about the ability of fund operations to sustain the continued loss of key staff members because of bad trustee behavior and poor board governance.”
So guess who the new interim executive director is, elected on a narrow 5-3 vote, according to insiders? That would be Blackwell, who in an unusual view of conflict of interest will be supervising himself, and who according to some sources is interested in getting the job permanently after a search firm makes its recommendation of who to hire, perhaps by June 30. But there’s no reason for concern, says a spokeswoman. “The board’s duty is to set policy, and the executive director is responsible for the day-to-day operations of the fund. There is nothing in statute or policy which prohibits this appointment.”
So far, neither the Chicago Teachers Union nor Chicago Public Schools wants to say much about this situation. Pretty sad. And pretty revealing.