January 2018

Illinois Considers Perilous Path to Fund Pensions

January 31, 2018
Max Marchitello
Desperate times call for desperate measures, or so the saying goes. Staring down a financial crisis, Illinois is considering a fiscal Hail Mary: a massive fire sale on public debt. While Illinois’s finances certainly are in real trouble, issuing the largest public bond in history may do more harm than good. Here are 5 issues to consider.
Funding
Pension Politics
State Pension Plans
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Garden State Crowd-Out: How New Jersey’s Pension Crisis Threatens the State Budget

New Jersey’s pension systems are some of the worst-funded in the United States. The Rockefeller Institute of Government at the State University of New York classifies a government pension system that is below 40 percent funded as in "crisis.” New Jersey’s system is well below that mark. A combination of elected officials granting retirement benefits to workers without having the means for them and public-employee groups negotiating increased benefits when there was no funding source led to this situation.

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Just How Expensive and Generous Are Teacher Pension Plans?

January 22, 2018
Chad Aldeman
People may assume that an "expensive" retirement must obviously translate into one that's also "generous" for workers. But that's not the way teacher pension plans work.
Funding
State Pension Plans
Teachers and Social Security
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Thanks to Rising Benefit Costs, San Diego Needs Your Help Cutting Its School Budget

January 12, 2018
Chad Aldeman

This afternoon, I spotted a tweet from a San Diego parent: 

There's something particularly wrenching about being asked what services should be cut at your kid's school to pay for increased employee pension & healthcare costs, when most working parents don't have pensions. https://t.co/Vs6uMojuSt cc @sdschools

— Ashley Lewis (@AshleyJPL) January 12, 2018

 

I followed the link to the survey, and a message from the San Diego Unified School District said it was seeking input on how to resolve a growing budget shortfall due to "increases in costs outside of the district’s immediate control, such as healthcare costs, utilities expenses, and state retirement contributions that are all expected to rise for the foreseeable future." 

In the pension world we call this "crowd out." Benefit costs are slowly crowding out the discretionary money available for states, districts, and schools to spend on other priorities. San Diego is now seeking input on what to prioritize in its cuts. Here's it's proposed list: 

Funding
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