Illinois’ pension savings greater than originally forecast? Not so fast
You may be hearing about rosy new pension estimates coming out of Springfield, but don’t be too quick to bite. A memo recently released by legislative leadership points to “good news” coming from a new analysis of Senate Bill 1 to be included in Illinois’ upcoming bond offering on Feb. 6, 2014. The memo claims...
You may be hearing about rosy new pension estimates coming out of Springfield, but don’t be too quick to bite.
A memo recently released by legislative leadership points to “good news” coming from a new analysis of Senate Bill 1 to be included in Illinois’ upcoming bond offering on Feb. 6, 2014. The memo claims the bill’s total savings will be even larger than originally projected when the bill was passed on Dec. 3, 2013.
But there are three reasons to be wary of the new estimates:
- The numbers touted in the memo are not the official numbers awaited from the state’s official number crunchers, the Commission on Government Forecasting and Accountability. COGFA has asked the state’s actuary, Segal Co., to release an official scoring of SB 1. Those results are expected in the next few days.
- A look at the memo’s numbers show that the $160 billion in savings originally touted by House Speaker Mike Madigan and the bill’s other sponsors now total only $145 billion. That’s a drop in expected savings of $15 billion.
That shortfall confirms what many legislators feared: that the passage of a bill not officially scored, vetted and debated would result in savings far less than promised.
- The memo also claims, paradoxically, that the state’s unfunded liability will be reduced by $24 billion, $3 billion more than originally predicted. Those claims are being made even though the state savings over 30 years will be $15 billion less. That’s hard to reconcile.
Which leads to questions regarding accounting gimmicks that have yet to be answered. Do the memo’s unfunded liability numbers take into account new rules that will increase the unfunded liability by $6 to $8 billion in 2016? If they don’t, we can expect a large part of the pension savings to be wiped out in 2016.
There were at least five reasons why passing SB 1 was not a good idea. But if the savings that Madigan had predicted don’t pan out, then the deal will have been a major step backward.
It’s too early to accept a rosy scenario. Let’s wait for COGFA to do a complete and transparent scoring.