Janus v AFSCME and the truth about Illinois pensions in one graphic, by Ted Dabrowski and John Klingner

Here’s the short answer to why Illinois is broke: promised pension benefits have skyrocketed and tax revenues and incomes have not. From Ted Dabrowski and John Klingner at wirepoints.com:

One graphic perfectly captures the absurdity of Illinois pensions over the past three decades.

It’s what Justice Samuel Alito described as Illinois’ “generous public-employee retirement packages” when writing for the majority in the Janus v. AFSCME decision. “Illinois’ pension funds are underfunded by $129 billion as a result of generous public-employee retirement packages” he wrote.

Alito didn’t use the graphic below, but he could have because it makes his point.

In 1987, pension promises made to active workers and retirees in the state’s five state-run pension plans totaled just $18 billion. By 2016, they had ballooned to $208 billion.

That’s a cumulative 1,067 percent increase.

Contrast that to the state’s budget (general fund revenues) which was up just 236 percent over the same time period. Or household incomes, which were up just 127 percent. Or inflation, up just 111 percent.

Promised pension benefits have blown past any ability of the state, the economy or taxpayers to pay for them.

Read the report: Illinois state pensions: Overpromised, not underfunded

Wirepoints released a report on these booming benefits earlier this year, and while it received strong coverage online nationally, Illinois’ traditional media didn’t want to touch it. The findings interfere with the narrative that’s repeatedly promoted by public sector unions and politicians – that the crisis is all the taxpayers’ fault for failing to put in enough money towards pensions.

The report proved a lack of dollars wasn’t the issue. Illinois pension assets – buoyed by taxpayer contributions – also grew far faster than the same economic indicators in the graphic above. But taxpayer contributions could never keep up with the state’s explosive growth in promised benefits.

Overpromising is the real culprit of the pension crisis. Freezing and reversing that growth in promised benefits is the fair, and only, way to fix things.

The above graphic gives taxpayers every right to demand concessions from their public servants. The Janus ruling will hopefully give them more power to demand them.

And union members have a strong incentive to come to the bargaining table. After all, it’s their retirements that are teetering on the edge of insolvency in a state just one notch from junk status.

But If the unions won’t deal, Illinois should go ahead and freeze salaries, cut the subjects of collective bargaining, move to defined contribution plans, reduce headcounts and work with the feds on a form of state bankruptcy. With the constitution currently preventing any changes to pension benefits, those are the only levers taxpayers have to save this state from collapse.



3 responses to “Janus v AFSCME and the truth about Illinois pensions in one graphic, by Ted Dabrowski and John Klingner

  1. Stephen Douglas

    Straight line logic?

    Ignoratio elenchi

    True but irrelevant. (Or, half true but irrelevant.)

    “Promised pension benefits have blown past any ability of the state, the economy or taxpayers to pay for them.”…


    “The report proved a lack of dollars wasn’t the issue.”

    All other factors in the chart are for present annual dollar values.
    The “Promised state pension benefits” are accrued liabilities.

    Accrued liabilities, as John Klingner says, are the present value of the total amount state workers are owed in pension benefits over the next 30 years. Not an appropriate comparison.

    For instance, to compare the growth in median family income from 1987 to 2016, the proper comparison would be to either…

    Total pensions paid out in 2016, or

    Average pensions paid in 2016.

    That is how much benefits have grown in thirty years.

    The stunning red line is how much benefits will grow in the next 30 years. Not a valid comparison.


    • You make a valid point. It would have been more accurate to compare actual payouts over time, real dollar payout amounts, to real dollar revenues and incomes. I didn’t catch that, and thanks for pointing it out.


  2. Stephen Douglas

    Nobody caught it… Almost.

    There is a discussion here…


    One post sums up the problem succinctly…

    Posted by Analyst on February 7, 2018 at 10:49 am

    Thanks . Sadly , this gets into the public realm and people adopt its conclusions . There needs to be accountability and someone ( not sure who) needs to call out shoddy research , this makes it harder for food [sic. good?] analysis to get heard .


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