Saturday, January 19, 2013

Chicago is Underwater


It's too early to tell but Richard M. Daley's malfeasance may have  destroyed our city.  He spent all of the money and didn't consider the possibility of an economic slowdown. If the city is to be saved and continue to exist as we know it, bitter medicine has to be taken. 
Attention City of Chicago homeowners, employees and retirees. It looks like that side job you have been working for the last 20 years is going to become handy. That pension they kept talking about, that health care, that civic pride, that great tradition, that this, that that....................it was all just a bunch of wishful thinking. Read the full report and blame it on the management. Press Release

Pew Study Finds 61 Cities' Retirement Systems Face $217 Billion Gap

Sixty-one key cities across America have emerged from the Great Recession with a gap of more than $217 billion between what they had promised their workers in pensions and retiree health care and what they had saved to pay that bill, according to a report released today by The Pew Charitable Trusts. The new report includes the most populous city in each state, plus all others with populations over 500,000.
For pensions, these cities had a shortfall of $99 billion in fiscal year 2009, the most recent year with complete data. The rest of the shortfall—$118 billion—was for retiree health care and other benefits. Because some cities are slow to report their results, a complete set of data was available only through fiscal year 2009. Over the long term, cities and states strengthen their fiscal position if they have policies that aim to fully fund their pension and retiree health care obligations.
Between 2007 and 2009, 16 cities consistently did well in funding their pensions, while nine cities underperformed. Wide disparities exist in how well prepared cities are to fulfill their pension obligations to employees. Milwaukee, Wisconsin had a surplus at the end of fiscal year 2009, with enough money to cover 113 percent of their liabilities. At the other end of the spectrum, pension systems in four cities—Charleston, West Virginia; Omaha, Nebraska; Portland, Oregon; and Providence, Rhode Island—were the most poorly funded, with Charleston trailing all the cities at 24 percent.
“Cities like Charlotte, Milwaukee, and San Francisco show that pension obligations can be met in a sustainable and affordable way that benefits employees and taxpayers,” said David Draine, senior researcher at the Pew Center on the States. “On the other hand, rising costs for poorly funded pension systems can crowd out funding for other city priorities like roads and education, lead to tax increases, or threaten retirement benefits.”
While investment losses during the Great Recession depleted cities’ pension funds nearly across the board, the new Pew report found another factor made the difference between the best- and worst-funded pension systems.
“Having studied 61 cities and the 50 states, the better-funded plans all share one characteristic; they have the discipline to pay their annual pension bills,” Draine said.
Nearly six out of 10 cities made at least 90 percent of their annual payments in all three years studied. Among those jurisdictions, pension funds weathered the recession better and their funding levels dropped only half as much as cities with poor funding habits.
How cities interact with their state can also have an influence on their pension system. For example, in Wilmington, Delaware, the six city-managed pension plans were on average 69 percent funded in 2010. In contrast, the pension fund managed by the state, which includes Wilmington police officers and firefighters hired since 1993, was 96 percent funded. Wilmington has since decided to enroll new general employees in the state-run plan.
However, in Louisville, Kentucky, most of its employees are enrolled in two state-run retirement plans. While the city consistently paid 100 percent or more of its required contribution in fiscal years 2007-2010, its pension savings kept losing ground because the state required cost of living adjustments without ensuring they would be funded. That mandate substantially contributed to the unfunded liability facing the city. 
“When city leaders lack the authority to fix their underfunded pension systems, it can further strain budgets,” said Draine. “Both city and state policymakers will need to work together to put these poorly funded plans back on a firm footing.”
For pensions, the 16 best performing cities included in the Pew study are: Albuquerque, New Mexico; Baltimore, Maryland; Charlotte, North Carolina; Dallas, Texas; Denver, Colorado; Des Moines, Iowa; Los Angeles, California; Milwaukee, Wisconsin; Salt Lake City, Utah; San Antonio, Texas; San Francisco, California; Seattle, Washington; Sioux Falls, South Dakota; Virginia Beach, Virginia; Washington, D.C.; Wichita, Kansas.
The nine worst performing cities included in the Pew study are: Charleston, West Virginia; Chicago, Illinois; Fargo, North Dakota; Jackson, Mississippi; Little Rock, Arkansas; New Orleans, Louisiana; Omaha, Nebraska; Philadelphia, Pennsylvania; Portland, Oregon.
Besides pensions, many localities also have promised health care, life insurance, and other non-pension benefits to their current and future retirees, but few have started saving to cover these long-term costs. As of 2009, only Los Angeles, California and Denver, Colorado had even half of the money needed to fulfill their promises to employees. Thirty-three cities had set aside nothing to pay for this bill coming due.
About the Methodology: 

Researchers examined the retirement plans listed in each city’s Comprehensive Annual Financial Report (CAFR). Principally from these documents, Pew collected the actuarial value of assets and liabilities for each defined benefit pension plan and other post-employment benefit plan that a city participated in for fiscal years 2007, 2008, and 2009. Because some cities are slow to report their results, a complete set of data was available only through fiscal year 2009. The report also includes 2010 data for 40 cities. 
The Pew Charitable Trusts is a nonprofit organization that applies a rigorous, analytical approach to improve public policy, inform the public, and stimulate civic life.   

29 comments:

  1. Anonymous1/19/2013

    RAISE INTEREST RATES NOW IF BILLIONS OF DOLLARS ARE COLLECTING 10 TO 15 PERCENT INTEREST EVERY YEAR THIS WOULD NOT BE A PROBLEM!

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    1. Anonymous1/20/2013

      Except for the huge cost of borrowing which fuels our economy. Car loans would skyrocket, and mortgage rates would too. These two key areas of our economy would be dealt another huge blow and both industries are still very very weak. In 2006 there were over 30,000 permits for new construction in Illinois. In 2012 ? Approximately 3,600 permits. If there is nothing to build or no ability for people to refinance their homes, there will be no jobs for bricklayers, excavators, landscapers, roofers, carpenters, carpeting and flooring installers, painters, etc..etc. Raising interest rates would kill the already limping economy, which would in total, hurt revenue....

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    2. Anonymous1/20/2013

      Raise interest rates? Unbelievable how ignorant that statement is. You still don't get it.

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  2. Anonymous1/20/2013

    Don't Worry! Now we will be able to elect another Democrat Bill Daley to Governor. You remember the great job he did for Barack getting small businesses up and running. Hopefully with the Madigan Children, Cullerton children, Daley's children, Vanecko's, and whoever Sandi and Jesse tell us we have to elect we will be fine. Keep voting Socialist sheeple.

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  3. Anonymous1/20/2013

    I know I should;t say this but is it possible Mayor Daley II was really a half wit?

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    1. Anonymous1/20/2013

      Daley knew exactly what he was doing, robbing you blind. You idiots who kept electing him and gave him total control are to blame. Why is it Illinois is in such a hole but Nebraska and Kansas are joining Texas, Tenn., Florida and others with no state income tax, and still able to pay there bills?
      Daley, Madigan, Quinn, Cullerton, LaHood, what have you done for us EVER???

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  4. Anonymous1/20/2013

    How is it Milwaukee is in the clear and Chicago isn't?

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  5. Anonymous1/20/2013

    How many times did Daley have to take the bar exam.

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  6. Anonymous1/20/2013

    How is it that Indiana is in the clear and Illinois isn't.

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  7. Anonymous1/20/2013

    Why is it that Rahm Emanuel worked for Obama who thought the solution to our economic woes was to borrow more money, "stimulate" the econonomy through more and more government spending. But when he becomes Mayor he acts just like the Republican Congress? Could it be because when he is the Mayor -he is responsible for raising the additional cash any new spending would require? After all he cannot print money like Obama.

    Chicagoans - the party is over. We do not have the ability to spend more money, or even the amount of money we were spending during the good times. It is not there and you cannot squeeze blood out of a turnip as the saying goes. If you have a job, especially a government job, get down on your knees and thank God for it. Stop complaining - you sound like a five year old who does not understand where money comes from....(it comes from taxPAYERS - those who work in the private sector and whose money is taxed to fund YOUR government salary)

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    1. Anonymous1/20/2013

      rahm is not that bad

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    2. Anonymous1/21/2013

      I did not say that he was. I was just pointing out that deep down even Democrats know they are building a house of cards higher and higher and which will eventually collapse because it cannot be sustained.

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  8. Anonymous1/20/2013

    never rely upon a lawyer that had to take the bar exam more than once. if he let himself down you can imagine what he will do for you.

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  9. Anonymous1/20/2013

    Where does one start with this pension mess. Police/Fire could be toast by 2019 according to the Civic C'Tee. County pension under the watchful eye of Preckwinkle and this kid Gainer so you be the judge. Parks seem Ok for now and the city well who knows. Let's look at the Chicago teachers. Ya I know about the payment issues and you bet shame on CPS. Look,go back to 1981 when the President of the school board caved before the CTU and gave the teachers this pension pick up. Big mistake!
    Over 100% in raises last 15/16 years that includes lane and step. Funding ratioo since 05 down at least 25/30% and soon to be in the same boat with police and fire. New teachers since 1-11 lesser benefits but hells bells that won't help short tern.
    Foolish payment of medical that is not in the constitution Cullerton and the teachers benefit is modest compared to the rest. I'd ditch medical asap.
    Ding a lings in the legislature are lost it seems. Last, incredible waste of money on non classroom teachers.

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    1. Anonymous1/20/2013

      WE GOT TROUBLE. PLENTY OF IT.

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  10. Anonymous1/21/2013

    All they got to do is raise water bills and maybe the police can write a few extra tickets for a while. I sure it will be ok after that.

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  11. Anonymous1/21/2013

    I can imagine where the city of chicago became cook county and cook county become the city of chicago. or maybe the city could pick up dupage and will county too, why not? Makes sense.

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  12. Anonymous1/22/2013

    they already raised the water bill from $250 a year to $1000 a year...i can only hope you are being sarcastic.

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  13. Anonymous1/22/2013

    I was watching Obamas speech yesterday. I thought he was talking about a civil war battle, then I find out he was talking about a gay bar in NYC. OMG. And the majority of Americans voted for this guy? My friends, Obama is screwed up and it seems that a majority of the voters are screwed up. And if that is the case how far behind Rome can we be?

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  14. Anonymous1/23/2013

    I was amazed listening to the news today. The city has to pay LAZ 60million dollars for additional parking, such as festivals etc.. How is Daley not in jail?

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  15. Anonymous1/23/2013

    WE can all thank Jeremiah Joyce(D-19th Ward) for his tremendous leadership in helping to get Rich Daley elected Mayor....if not for him, it never would have happened.

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    1. Anonymous1/23/2013

      Mr. Joyce has done much for our neighborhood. If it wasn't for him we would all be living in Orland Park now. Besides how did he know Richie was going to flip out.

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    2. Anonymous1/24/2013

      Yep, I agree, I think all the closed down businesses in the neighborhood look great

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    3. Anonymous1/24/2013

      The stores are vacant because of the economy. Not because of Joyce. You cant even blame Daley for that.

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  16. Anonymous1/24/2013

    hey mr blogger my streetlight is out again on an off for a month. where do i report it to.

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  17. Anonymous1/25/2013

    311 or the 19th ward site.

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  18. Anonymous1/28/2013

    Everybody a happy camper with your tax bills today?

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    1. Anonymous1/28/2013

      look at the pension shortfall. daley screwed us good.

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  19. Anonymous1/29/2013

    This comment has been removed by a blog administrator.

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