It’s always nice to be recognized even if it is, as is the case in this editorial in the Las Vegas Review-Journal as an object lesson:
Illinois provides a case study for why Nevada’s elected officials should pursue pension reform sooner rather than later.
The Illinois Policy Institute published some shocking research last month on the state’s education system. For every dollar the state government spends on education, 39 cents goes toward pensions. In 2000, just 12 percent went to pensions. In 2000, spending on teacher pensions was $640 million. Today, it’s $5.8 billion. That’s a ninefold increase.
Non-pension spending increased too but at a much slower rate. It didn’t even double.
Every dollar that goes toward pensions is a dollar that doesn’t go toward hiring teachers or lowering taxes. Most teachers, presumably, would prefer to see that money in their regular paycheck, too. Further compounding the problem is that significant portions of these payments are paying off previously incurred debts. The current students have less because previous generations didn’t set aside enough money to pay for their promises.
Nevada’s pension situation isn’t as bad as Illinois, which is perhaps the country’s leading fiscal basketcase and is the poster child for what happens when public employee unions have the key to the public fisc. But that doesn’t mean everything is rosy in the Silver State.
Over the last 20 years the number of students enrolled in Illinois has declined from 1% to 4% per year even as spending per student enrolled has increased sharply. The state’s teacher pension obligation has increased more than tenfold over the same period.
The math is pretty simple. Fewer people in the state, rising obligations, failure of elected officials to fund pensions fully, sharply increasing spending per taxpayer. It will require an amendment to the state’s constitution to correct the situation and politicians understand they won’t keep their jobs if they do what’s necessary.
Baaah. If the rich would just pay their fair share everything would be OK………
Separately, I see Joe Biden is doing the one thing he does well, blame others. He’s on TV telling us the problem with debt, spending and taxes is the republicans, particularly the last administration. The Dems are going to save the country, you see.
One of the key aspects of leadership is to deal with your financial and other realities as they are, and deal with them. Scapegoating is for losers. Joe Biden doesn’t have a leadership bone in his body.
“Most teachers, presumably, would prefer to see that money in their regular paycheck, too.”
Absolutely not. A defined pension is much better than any stock market investment, tax deferred or not, part because there is an implicit State guarantee. Or, in the case of Illinois, an explicit, constitutional guarantee.
Precedent has been made with the multi employers pension funds bailout.
Local officials will likely kick the can down the road until it reaches such an untenable status a Federal bailout will be the only option short of default.
Illinois Policy Institute leaves out that workers hired after 2010 are now only eligible for much less generous pensions and have to work until age 67 to get full benefits (as opposed to age 55 or sometimes lower previously). This appears to be the only thing Rauner (Republican governor) was able to accomplish. Rumors of anticipated lawsuits continue for violating laws (presumably ERISA), but I’ve not seen any actually reported.
I’ve also been told that the State has an increasing number of unfilled positions, but it didn’t sound any different to me than in other job sectors currently. Still, a lot of the workplace situations in public sector jobs is less than appealing.
Poor analytical skills or bad memory Drew? Trump blamed Obama for everything he could think of. Then there is always his famous line about coronavirus. “I don’t take responsibility at all,â€
I dont follow Illinois much but if the public unions are really running things as the author claims, why didnt they insist on having adequate monies placed into their pensions fund? From outside the state it looks like the pension fund was just used as a piggy bank to fund whatever was wanted and not necessarily for the pension.
Steve