I love Illinois because it is a showcase of government mismanagement and corruption. Very few places on earth are willing to so publicly display this level of greed and malfeasance. Today
Jim Tobin president of
Taxpayers United of America released the results of its annual study of the top government pensions in the State of Illinois. The full report is at this link:
You need to read the following excerpts and think carefully about the amount of money that is involved:
Illinois House Speaker, Michael Madigan (D), and Senate Majority Leader, John Cullerton (D), continue their political charade of pension reform while the number of six-figure pensioners grows 47% in one year to 9,900.
The purpose of our study is to put some perspective around individual pensions, to put them in terms to which the average taxpayer can relate. Illinois taxpayers, whose average household income is $53,234, and struggle with 9.3% unemployment need to know how much Illinois’ government retirees are being paid not to work and the astronomical accumulation of those payments over an average lifetime.
We actually expanded our list from the top 100 to the top 200 since there are so many six-figure pensioners now. The top 200 are all over $189,000a year.
Still topping our list of Illinois’s government elite in annual payouts is Tapas Das Gupta, retired from the University of Illinois at Chicago. He collected a cool $439,672 in his last annual pension payment and will accumulate a stunning $5.2 million in lifetime pension payments.
Beverly Lopatka retired from DuPage Government HSD 88 at the ripe old age of 56 and has an annual pension of $399,652, with a staggering estimated lifetime payout of $11,524,643. Her contribution of the estimated lifetime payout would be only 0.8%.
The highest lifetime payout estimate goes to Larry K. Fleming, retired from government school district Lincolnshire-Prairie View 103. Having retired at the age of 55 with a cushy annual pension of $258,163, he will accumulate a breathtaking $11,868,155 in pension payments over a normal lifetime.
Jim Tobin is not a person to just point out a crisis he also proposes solutions:
Without sweeping and immediate reform, Illinois’ government pension system will collapse by 2015. It’s mathematically impossible to tax your way out of this problem. Illinois has more than 9,900 retirees collecting more than $100,000; in 2020, that will be over 25,000 six-figure pensioners. Real pension reform must include raising the retirement age to 67, increasing employee contributions by 10%, increasing healthcare contributions to 50%, eliminating all COLA’s, and replacing the defined benefit system with a defined contribution system for all new hires.
This is the solution that can be used to solve the unfunded pension liability crisis all across America.
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I think Hayek, Friedman and other founders of modern conservatism are turning over in their graves if this "study" is an example of what passes for scholarship these days by self-styled "conservatives" who have forgotten about contracts and the rule of law. Folks, PLEASE, read the Illinois and U.S. Constitutions: pensions are contractual obligations and cannot legally be diminished, any more than coupon interest and principal payments on bonds can be diminished, no matter how much you try to villify the recipients of these payments.
ReplyDeleteI'm sure the $17 Trillion Federal debt problem would become much more manageable, too, if we could simply reduce contractual payments on outstanding bond issues. Moreover, I am willing to bet that the average holder of these bonds is far wealthier than the average Illinois pension recipient, so you could plausibly argue that they "need" to receive their promised payments even less. But as a true conservative who has actually read Hayek and Friedman's works, I would never advocate such economically and morally destructive policies.
Yes, it is true that pensions are contractual obligations and cannot legally be diminished. It is also true that bankruptcy has in the past and will in the future diminish pensions and other contractual obligations.
DeleteAs I read Jim Tobin's solutions to this underfunding crisis (raising the retirement age to 67, increasing employee contributions by 10%, increasing healthcare contributions to 50%, eliminating all COLA’s, and replacing the defined benefit system with a defined contribution system for all new hires) I do not know if he is suggesting that these changes be applied to existing retirees or just to working members who have yet to retire. Changing contractual obligations to the existing retirees would violate the legal status of those contracts. But it is not a violation of contract law to negotiate new contract terms with current employees who are still working and it would not be a violation of contact law to change the terms of retirement benefits for all new hires.