News

State and local pensions need national attention

The Hill, 11/10/2016

From the tiny Citrus Pest Control District in California to the giant Illinois Teachers Retirement System, pension woes have settled in across the nation. This massive and growing disaster – that currently stands at nearly $2 trillion in debt for our country – must be a priority of our next President.

A federal solution to Chicago’s public pension mess

The Chicago Tribune, 09/08/2016

If you experienced sticker shock with your latest real estate tax bill, or worry about what’s around the corner with proposed big increases on your water and sewer bills, you ain’t seen nothin’ yet. Chicago’s pension debts are finally starting to gobble the city. Chicagoans have two options: Swallow hard and take the massive increases as a cost of living in this great city, or fight for a better solution.

The State Pension Funding Gap: 2014

The Pew Charitable Trusts, 08/24/2016

The nation’s state-run retirement systems had a $934 billion gap in fiscal year 2014 between the pension benefits that governments have promised their workers and the funding available to meet those obligations. That represents a $35 billion decrease from the shortfall reported for fiscal 2013. The reduction in pension debt was driven primarily by strong investment results, with public plans in fiscal 2014 averaging a 17 percent rateof return.

Between a rock and a hard place

Pensions & Investments, 08/22/2016

As public pension plans disclose a second consecutive fiscal year of lackluster returns, amid projections of diminished investment earnings for the next decade, more public asset owners will have little choice but to lower rate of return expectations, consultants and analysts said.

Kansas issued a $1 billion pension bond a year ago. How is it doing?

Topeka Capital-Journal, 08/20/2016

A year after Kansas issued a $1 billion bond to boost its public pension system by investing the proceeds, the state expects weak returns, though an official advised looking at performance over the long term.

Maryland pension system misses earnings target

The Washington Post, 08/16/2016

Maryland’s public pension system missed its annual target for returns by more than six percentage points in fiscal 2016, marking the second consecutive year that the retirement program fell short of its goal.

A tale of two state pension crises

The Hill, 08/16/2016

The national debt—$19 trillion and growing—gets most of the attention, but America’s march towards a fiscal cliff is by no means confined to Washington, D.C. Taxpayers across the country are facing state-created financial crises of their own. Our neighboring home states of Kentucky and Illinois epitomize this crisis.

The state’s pension reality gap is about to get even wider

Crain’s Chicago Business, 08/10/2016

Think a $111 billion pension funding shortfall is huge? Wait until reality takes another bite out of Illinois public employee retirement plans. Shrinking investment returns, historically low interest rates and general volatility in capital markets are forcing state plan administrators to reconsider their assumptions about how much their portfolios will grow over the long term. The State Employees’ Retirement System of Illinois, which has a $30 billion funding shortfall, last month reduced its assumed investment return for fiscal 2018 to 7 percent from 7.25 percent. And this week, the chief of the Teachers’ Retirement System of the State of Illinois, with a $62 billion deficit, told Bloomberg News that the state’s largest pension plan is reviewing its investment return assumption.

How to Save Public Pensions, No Federal Bailout Needed

Wall Street Journal, 07/17/2016

The pensions of states and local governments are, collectively, trillions of dollars in the hole. This debt is crippling budgets and will dump an enormous burden on future generations.

Emanuel closing in on deal to save city’s largest pension fund

Chicago Sun-Times, 06/29/2016

Mayor Rahm Emanuel is closing in on a deal to save the largest of Chicago’s four city employee pension funds that calls for a mix of cost cutting, employee tradeoffs and new revenue from beleaguered Chicago taxpayers.

Public employees paying more into U.S. pensions, uptrend seen extending

Reuters, 06/29/2016

After years of steady inflows, the rate for retirement contributions by public pension employees has increased and is expected to continue rising, an effect difficult to produce but helped along by the impact of regulatory reforms, analysts say.

Kentucky, home to the worst-funded pension plan in the US

Financial Times, 06/10/2016

Armed police officers are not a usual sight at pension board meetings. Yet last month a number of state troopers were on standby when the board of Kentucky’s second-largest public pension scheme, which oversees $16 billion of assets, convened.

New Jersey top court sides with state in high-stakes pension case

Reuters, 06/09/2016

The New Jersey Supreme Court ruled on Thursday that retired public employees do not have a contractual right to receive increasing cost-of-living adjustments, a decision that is expected to save the state billions of dollars.

Mihalopoulos: COLA — It’s the real thing driving pension mess

Chicago Sun-Times, 06/07/2016

Nearly 27 years ago, many public servants in Chicago’s school system and in Illinois were promised what seemed reasonable at that time of high inflation.

U.S. State And Local Pensions Couldn’t Survive Under Tougher International Accounting Standards

Forbes, 06/01/2016

State and local government pensions admit to being underfunded by over $1 trillion. But using the tougher accounting standards applied in other countries, state and local pension deficits would rise five-fold. The sad reality is that many state and local government plans couldn’t survive without bad bookkeeping.

New ‘market based’ data show mind-blowing reality of Illinois pension debt

Wirepoints, 05/15/2016

The Stanford Institute for Economic Policy Research recently published a splendid new database, Pension Tracker, that includes “market based” numbers on state and local pension debt. For Illinois, the numbers are simply astounding.

Emanuel keeps Wall Street waiting on pension overhaul

Chicago Tribune, 05/11/2016

When the Illinois Supreme Court decisively rejected Mayor Rahm Emanuel’s plan to keep two city worker pension systems from going broke, City Hall told nervous credit-rating agencies it would have an alternate fix within weeks.

Treasury Secretary Jacob Lew puts a face on a Puerto Rico debt crisis

The New York Times, 05/09/2016

As Washington remains deadlocked over a solution to Puerto Rico’s rapidly worsening debt crisis, the Treasury secretary, Jacob J. Lew, traveled here on Monday to put human faces on the dry numbers underlying the island’s woes, seeking to pressure Republicans in Congress to move quickly on a rescue package.

Should big foundations fill Chicago’s pension hole?

Crain’s Business Chicago, 05/03/2016

If taxing the rich won’t cure Chicago’s pension woes, how about something that arguably would be just as satisfying to the 99 percent: Getting the city’s huge foundations to come to the rescue?

The US public pensions crisis ‘is really hard to fix’

Financial Times, 05/01/2016

Eighteen months after Rahm Emanuel, a former White House chief of staff, became mayor of Chicago, he addressed a news conference about his priorities. “[Number] one is retirement security and pension reform so we can give taxpayers and the public employees retirement security, which is something we can’t say today,” the mayor said in November 2012.

Public pension plans: can we Minnesotans handle the truth?

Star Tribune, 04/22/2016

For the third time in 10 years, legislators are considering financial repairs for Minnesota’s public pension plans. The message this time is that there’s nothing fundamentally wrong with our pension system; our retired public employees are just living longer than expected.

The pros and cons of a bankruptcy for CPS

FOX Chicago, 01/21/2016

Ed Bachrach, former CEO of the Bachrach men’s apparel chain and now a pension activist joined Good Day to talk about the pros and cons of a bankruptcy for CPS.

Chicago SHOULD declare bankruptcy

ChicagoNOW, 01/20/2016

For some analysts, bankruptcy would be a disaster for Chicago. For others, it would be impossible because it isn’t permitted (yet) by state law. But here’s a school of thought asserting that bankruptcy for Chicago (and Chicago Public Schools) is not only possible, but advisable.

The Watchdogs: Chicago paid record borrowing-related fees in 2015

Chicago Sun-Times, 01/10/2016

The cash-strapped city of Chicago paid $74.7 million in fees last year to banks, law firms and other businesses that helped it borrow money — a record tab that will rise as more fees get tallied and one that comes as the city pays higher costs to dig itself out of its deep financial hole.

FOX 32 Sunday: Ed Bachrach

FOX 32 Sunday, 10/04/2015

FOX 32 Sunday sits down with founder of Center for Pension Integrity Ed Bachrach to discuss Chicago’s financial crisis.

Tax hike is no magic cure for pensions

Crain’s Chicago Business, 10/03/2015

Chicago aldermen face a truly tough vote soon on Mayor Rahm Emanuel’s call for a record $543 million property tax hike for the cash-short police and firefighters’ pension funds. Though voters aren’t happy, the good alder-people probably don’t have a choice. Both retirement systems are just a few years from insolvency, and even die-hard conservatives won’t find enough waste to cut to solve the problem without adding new revenue. That doesn’t mean the pain will end with this one vote, though.

Chicago property tax increase huge, but grossly inadequate to address City pension trouble

Reboot Illinois, 09/29/2015

A little publicized and inconvenient truth is that for 2014 the unfunded liabilities for the five major pension plans increased by $4.3 billion. Now comes the Mayor suggesting an increase in the City’s property tax levy of $500 million for only the police and firefighter pension funds. How can revenue of $500 million make a dent in the liability owed to ALL of Chicago’s beneficiaries?

Opinion: Where is Labor on Chicago pension crisis?

Chicago Sun-Times, 09/14/2015

Everyone, from elected leaders to pundits to financial experts to people on the street, has been talking about the pension crisis in Chicago, and the enormous, crushing debt the city faces. Just to maintain our current level of debt – not come anywhere near solving the problem – would take nearly half of the entire city budget, and that’s every year!

Do the math: Pension crisis was created—and fueled—by politicians

Crain’s Chicago Business, 08/12/2015

I want to commend Dave McKinney for his story in Crain’s on Illinois’ pension disaster,which pointed out key actions that governors and legislators purposely took that created the financial crisis.

Opinion: Stop failing, tell the truth about pension mess

The Chicago Sun-Times, 07/13/2015

Stephen Stills wrote a line in a famous Crosby Stills & Nash song. “We never failed to fail; it was the easiest thing to do.”

Letter: Pension Theatre

Crain’s Chicago Business, 07/13/2015

The most recent act in pension reform theater for the Chicago Teachers’ Pension Fund showcases pain and sacrifice, but does it solve the problem? It all sounds so ominous—big borrowing, big last-minute payments, two tax increases and a major layoff. Everyone will bemoan the pain, and then we will get the report from the fund in January for the year ended June 30. It will show that the unfunded accrued liability will go up at least $1.6 billion and the funding ratio will slip to around 48 percent, its first time south of 50 percent.

Want to soak the rich? Look at the property tax

Crain’s Chicago Business, 07/11/2015

I shake my head every time an alderman, Chicago Teachers Union leader or other Bernie Sanders fan suggests that the way out of Chicago’s financial mess is to soak those filthy rich corporate fat cats.

Opinion: Top 10 reasons why Illinois fell into financial abyss

The Chicago Sun-Times, 07/09/2015

The State of Illinois can’t pay its bills — literally. Without a budget for the new fiscal year, the state’s bank account is frozen (with some exceptions). […] You may be asking: How did Illinois get into this mess?

Jim Nowlan: Addressing Chicago’s mess

The News-Gazette, 07/07/2015

We are in the lull before the storm in Springfield, as politicos watch intently — and rather helplessly — as the longstanding alpha male (Speaker Mike Madigan) is challenged for dominance of the pride by newcomer Gov. Bruce Rauner.

Former Bachrach CEO working to solve city’s pension crisis

FOX, Good Day Chicago, 07/02/2015

CHICAGO (FOX 32 News) –With no action from Springfield, Mayor Emanuel is pulling out “Plan B” making good on a more than $600 million payment to the teacher’s pension fund but cutting 1,400 jobs in the process. Ed Bachrach, founder of the Center for Pension Integrity talks about the issue.

A retailer’s second career: Trying to fix city pensions

Crain’s Chicago Business, 06/26/2015

A decade after stepping away from the men’s apparel business, Ed Bachrach, former chairman and CEO of Bachrach Clothing, has refashioned himself into a policy wonk who wants to solve the city’s pension crisis.

Deal to buy more time for CPS goes down in flames

Crain’s Chicago Business, 06/23/2015

A legislative effort to give Chicago Public Schools more time to solve its financial crisis came up well short today, as the Illinois House failed to pass a bill that would have allowed the cash-strapped system to put off a huge pension payment until August.

Emanuel: CPS ‘at the breaking point,’ can’t make pension payment without classroom cuts

The Chicago Sun-Times, 06/22/2015

Chicago Public School finances are “at the breaking point,” Mayor Rahm Emanuel said Monday, arguing the cash-strapped school district cannot afford to make a $634 million teacher pension payment due June 30 — at least not in full.

Chicago Eyes A City Income Tax On Residents, Suburbanites Who Work Here

CBS Chicago, 06/11/2015

With a huge budget deficit ahead, Chicago city government is desperately searching for new income.

Emanuel prepares to borrow $1.1 billion to juggle Chicago debt, pay bills

The Chicago Tribune, 06/11/2015

Mayor Rahm Emanuel’s cash-strapped City Hall is preparing to borrow $1.1 billion to complete his debt restructuring plan, pay off a major court judgment and cover police back pay, among other costs.

City Hall working to get teachers pension fund to accept partial payment

The Chicago Sun-Times, 06/11/2015

Mayor Rahm Emanuel’s hand-picked school team is trying to persuade the Chicago Teachers Pension Fund to accept a partial pension payment — as little as $200 million of the $634 million due June 30 — because the Chicago Public School system doesn’t have enough cash on hand to make the full payment and still pay its employees.

“In the Loop” Chicago Finances Special Edition

WYCC, 06/11/2015

Could Chicago become the next Detroit? Watch WYCC PBS Chicago’s “In the Loop” segment to hear Citizens for Pension Integrity committee members Ed Bachrach and Terry Savage discuss Chicago finances.

CPS may get short-term fix, but long-term woes are enormous

Crain’s Chicago Business, 06/10/2015

As the weather warms up and Chicago Public Schools’ finances head toward a June 30 meltdown, there’s some good news for parents wondering if Junior’s school will open this fall. And some bad news, too.

City income tax should be on the table, mayoral ally says

The Chicago Sun-Times, 06/10/2015

Chicago needs so much new revenue to solve a $30 billion pension crisis and shed its junk bond rating, it’s time to consider imposing a first-ever city income tax, according to one of Mayor Rahm Emanuel’s staunchest City Council supporters.

Emanuel won’t move on local solution to pension crisis until Springfield goes first

The Chicago Sun-Times, 05/28/2015

Mayor Rahm Emanuel said Thursday he will not move on a local solution to Chicago’s $30 billion pension crisis until he sees what state lawmakers are prepared to do to help the city.

Borrowing to Replenish Depleted Pensions

The New York Times, 05/27/2015

Facing a shortfall of more than $50 billion in his state’s pensions, and with no simple solution at hand, Gov. Tom Wolf of Pennsylvania is proposing to issue $3 billion in bonds, despite the role that such bonds have already played in the fiscal woes of other places.

Brown: Could the city walk away from pension obligations?

The Chicago Sun-Times, 05/19/2015

Nobody involved in the city pension crisis would want it to come to this, I’m sure, and there are plenty of assurances all around that it never will.

Moody’s: Chicago debt may be junk, but look on the bright side

Crain’s Chicago Business, 05/18/2015

In the midst of a storm of controversy about its junk-bond downgrade of Chicago, Moody’s Investors Service has issued a follow-up report that could ease concerns about the city’s financial future, but only a little.

Chicago Faces Critical—but Not Insurmountable—Financial Problems

Advisor Perspectives, 05/18/2015

Chicago’s decades of poor financial decision making will come to a head as Mayor Rahm Emanuel starts his second term today. His battle to enact pension reform and stabilize finances will shape his legacy and Chicago’s future.

Brainstorming on pension fix abounds after Illinois high court rejected law

The Chicago Tribune, 05/16/2015

Treat the state’s crushing pension debt like a home mortgage and refinance it. Offer public workers a deal to cut pension bills. Fire them all. Let the dust settle on pensions and do nothing to change them. Raise more tax revenue — big time.

The piper is here, and he wants his money

Crain’s Chicago Business, 05/16/2015

Judgment Day has arrived.

Why Chicago’s pension reform could still survive

The Chicago Tribune, 05/12/2015

The Illinois Supreme Court ruled Friday that the state’s pension reform law is unconstitutional, but Chicago’s reform of the pension systems for laborers and municipal employees should still survive a legal challenge.

FOX 32 Sunday: Ed Bachrach

FOX News Chicago, 05/10/2015

FOX 32 Sunday sits down with Founder of Citizens for Pension Integrity, Ed Bachrach, to discuss Illinois pension reform.

FOX 32 Sunday: Andrea Zopp, Ed Bachrach

FOX News Chicago, 05/10/2015

FOX 32 Sunday sits down with Andrea Zopp and Ed Bachrach to discuss Illinois pension reform.

State high court strikes down pension reform

Crain’s Chicago Business, 05/08/2015

The Illinois Supreme Court today unanimously ruled as unconstitutional a major pension reform bill for state government workers and public school teachers outside of Chicago.

Chicago’s solvency at risk as pension liability grows -Moody’s

Reuters, 05/01/2015

Chicago’s $20 billion unfunded public pension liability is on track to grow significantly regardless of the outcomes of litigation over the constitutionality of benefit cuts or legislative action, Moody’s Investors Service said on Friday.

Emanuel outlines plan to end longtime debt practices

FOX News Chicago, 04/29/2015

Mayor Rahm Emanuel has offered steps to phase out years-old debt practices he hopes will help improve Chicago’s financial problems. … As the mayor was speaking, by coincidence, a website proposing a solution to the pension issue went live, sponsored by a newly formed, non-partisan group calling itself ‘Citizens for Pension Integrity.’ It offers an easy to understand explanation, and a do-it-yourself calculator for taxpayers and government workers to “share the pension pain.”

Can a cartoon character rescue Chicago pensions?

Crain’s Chicago Business, 04/28/2015

A fledgling civic group is proposing a way to solve the city’s pension woes, introducing a cartoon character named Lock Box Bob to the debate.

S&P eyes Chicago credit downgrade if no pension fix this year

Pension&Investments, 04/09/2015

Chicago could lose its A+ credit rating if the city does not implement a plan to “substantially” fund its pension plans this year, Standard & Poor’s Ratings Services said in a news release Thursday.

Emanuel’s re-election present: Chicago’s fiscal nightmare is just beginning

Thomson Reuters, 04/08/2015

Rahm Emanuel may have been elected to a second term as Chicago’s mayor on Tuesday but now he faces a stark choice: inflict pain on the city’s population in the form of unpopular measures such as higher taxes or kick its problems further down the road and risk a fiscal crisis that could even lead to bankruptcy later.

Why you shouldn’t trust Emanuel or Garcia on property taxes

Crain’s Chicago Business, 04/04/2015

Long and bitter experience has taught me that there are two things you never trust politicians to talk truthfully about: their future electoral plans and whether they’re going to raise taxes.

Not-so-great debate avoided property tax reality

The Chicago Tribune, 03/17/2015

Mayor Rahm Emanuel gave an unimpressive performance at Monday night’s debate, the first of three he will have with challenger Chuy Garcia in advance of the April 7 runoff election.

Emanuel vows to earmark casino revenues exclusively for pensions, not schools

The Chicago Sun-Times, 03/17/2015

Mayor Rahm Emanuel changed gears Tuesday and pledged to dedicate the jackpot of revenue from an elusive, publicly owned Chicago casino toward solving the city’s $20 billion pension crisis and the $10 billion in unfunded pension liabilities at the Chicago Public Schools.

Chicago’s financial crisis by the numbers

The Chicago Sun-Time, 03/13/2015

Chicago’s four public employee retirement funds are short nearly $20 billion. Each pension fund has just a fraction of the amount it needs to pay promised benefits.

Cracks starting to appear in public pensions’ armor

The New York Times, 02/25/2015

First in Detroit, then in Stockton, Calif., and now in New Jersey, judges and other top officials are challenging the widespread belief that public pensions are untouchable.

Longer lives hit companies with pension plans hard

The Wall Street Journal, 02/23/2015

When General Motors Co.’s pension plan took a big hit earlier this month, it joined hundreds of companies facing growing pension shortfalls as Americans keep living longer.

Chicago pension reform lawsuits put on hold

Reuters, 02/23/2015

Lawsuits seeking to void a law aimed at shoring up the finances of two Chicago pension funds have been put on hold pending a ruling by the Illinois Supreme Court on a law affecting state public retirement funds, participants in the litigation said on Monday.

We need Illinois’ Supremes to put the pedal to the metal on pensions

Crain’s Chicago Business, 02/20/2015

Whatever you think of Bruce Rauner’s proposed budget, it’s largely hypothetical. The new governor’s blueprint for resolving Illinois’ fiscal crisis hinges on a huge assumption that could be punctured by the Illinois Supreme Court at any time.

Chicago’s untenable pension situation

Reuters, 02/18/2015

The headline certainly sounds dire: Chicago sees fiscal doomsday if court suspends pension changes. The reality might live up to the rhetoric. The state of Illinois is in nearly untenable financial straits, with an unfunded estimated pension liability of a dizzying $111 billion owing to a long history of failing to fully pay into the pension fund. It sought relief in the form of the state’s Pension Reform Act, which brings cost-of-living payouts into line with inflation rather than a straight 3 percent annual increase. But the bill, which went into effect Jan. 1, was quickly struck down by a Springfield court, and now sits before the Illinois Supreme Court, which is expected to rule on it soon.

Rauner budget plan: Big cuts, pension reform, increased education spending

Belleville News-Democrat, 02/18/2015

Rauner proposed a budget plan that he said would save billions by reforming pensions and Medicaid, while also providing a $300 million boost to K-12 education. He said lawmakers must be willing to make unpopular decisions to make up for a more than $6 billion budget hole next year.

Illinois’ pension mess likely to get worse when high court rules

Crain’s Chicago Business, 02/11/2015

Sometime in the next few weeks—the date has not yet been set—the Illinois Supreme Court will hear arguments on what many believe will be its most significant case in decades.

Nobody’s crying wolf about Illinois’ fiscal crisis

Chicago Sun-Times, 02/10/2015

Low-income parents face day care crisis as state funding runs out. State funds running out for court reporters. Illinois rehabilitation facilities for mental health services and developmental disabilities could be short funds by more than $100 million.

Ducking financial reality in mayoral race

Chicago Sun-Times, 02/01/2015

Over at Cook County Circuit Court, four unions fought to block a new law that lowers costs on two of the city’s four grossly underfunded pension systems. If successful, the suit could drive a city already facing monstrous pension bills beginning this year over the financial cliff.