1. The Road to Hell is Paved With Bad Public Pensions: An Analysis of Illinois’ Public Pension System
Trevor Rogers

2. The System As of 2016, roughly $130 billion in pension debt
What does this mean?
Per capita debt of $10,150
Labor Force per capita debt $19,800
Perspective
National per capita debt would be $3.24 trillion
Morningstar Funding
Illinois – 40%
Texas - 82%
California – 76%
Wisconsin – 99.9%

3. The System Defined Benefit Defined Contribution
Sets amount- employer makes up differences of return compared to defined benefit
Defined Contribution
Employee gets only value of investment at retirement
401(k)
Taxpayers are on the hook in defined benefit plan
COLA- 3% cost of living adjustment added annually
Social Security has this at similar amounts
Double dip system
Most state employees retire in their 50s

4. The System Tier One Tier Two Old pensioners prior to 2011
Enacted in 2011
Subsidize Tier One
Pay higher amounts

5. History Illinois has traditionally had pension issues
Has gotten rapidly out of hand more recently
Gov. Jim Edgar Plan
Unanimous bill passing that pushed payments back through 2045
Blagojevich and Quinn both borrowed to pay for pensions
Further “kicked the can down the road”
Pensions have blown up in last 8 years

6. Graph

7. Graph

8. Illinois’ 3 issues tied to pensions
Migration
Budget
Political Corruption

9. Migration One resident every 5 minutes
Would lose population of Springfield in just over a year
What issues does this cause?
Tax revenue
Political accountability
Tax hikes

10. Budget Constitutionally mandated balanced budget Stop gaps
No balanced budget since 2001
Only 15 times since 1970
Spends record amount even without budget
Nearly $40 billion
Court decrees
Prevention of reform

11. Political Corruption 6 governors either arrested or indicted
Blagojevich and Ryan
Long history out of Chicago
Property tax
Madigan, Cullerton property tax firms

12. How Did we Get here? Political Patronage Union power and influence
88% of public sector union donations went to Democrats
86% of General Assembly had taken money from
Illinois is not a right to work state
People must be in union for certain jobs

13. Charts

14. Charts

15. What Can Be Done? 3 options: Keep on the same path
Make reform to the defined benefit system
Complete overhaul with constitutional amendment

16. Same Path
Potentially the dumbest idea ever
Not solvent

17. Reform Defined Benefit System
Been discussed for a while
Little movement
Rauner and Cullerton plans
Rauner-transition all new state employees
Cullerton-most recent budget, only 5%
Move to 401(k) plans
Still would not cover existing debt
Reality is this: there are many ways that this plan could happen

18. Complete Overhaul
Would alter benefits still to be given out to retirees
Would need constitutional amendment
Reform Article 8, Section 5
Would get Illinois out of its mess
Potential reform with one time payout to retirees
Short of estimated return, but comes at once