Local Pension Problems

A couple of year ago McHenry County Blog posted the status of area municipal and fire protection district pension.

The percentages of unfunded liabilities varied widely with the McHenry Township Fire Protection District being way way overfunded.

Others, however, were in as bad shape as Chicago pension funds.

Proposals were made by the Illinois Municipal League to combine the funds, but I must admit, I never looked into the initiative closely enough to figure out the details.

(My Village of Lakewood is mercifully in the Illinois Municipal Retirement Fund, which has a low unfunded liability.)

Mentioned by Governor JB Pritzker in a front page article in the Chicago Tribune yesterday was the following:

“If they would consolidate simply the investment dollars they had, let alone other functions or liabilities, just the investment dollars, the improvement there would have a substantial impact on those pension funds.”

That sounds logical.

You can find the figures a Friend of McHenry County Blog found from 2012 through 2016 here.


Comments

Local Pension Problems — 11 Comments

  1. If they consolidate the investment dollars, they will consolidate the liabilities soon afterwards.

    The State will not allow cash strapped towns like Harvey or East St Louis to default on their pensions, and it doesn’t have the cash to bail them out.

    The State will solve the problem by making it somebody else’s problem.

    The towns that have been responsible will end up footing the bill for the towns that haven’t.

  2. What is the total pension debt for Crystal Lake and percentage that is unfunded for 2019?

  3. Of course Pritzker would want that.

    Consolidate all the dollars to the most connected crony investment firms.

  4. Pete, it appears that the 2016 data is the most recent available.

    For the CL Fire Dept, pension assets are $30,370,000 and liabilities are $43,363,000, or a funding percentage of 70.04%.

    For the PD, assets $35,715,000 and liabilities $60,311,000, or 59.22%.

  5. A quote to think about:


    “When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.”

    ― Frédéric Bastiat

  6. Let me see if I’ve got this straight:

    Some governments have more fully funded their pension funds than others.

    So if we take from those that were more responsible and mix their money with that of governments that were less responsible, the situation will somehow be improved?

    And taxpayers of the more responsible governments won’t be bailing out governments that were less responsible?

  7. Illinois is like listening to a bunch of sleazy car salesman, debating the best gimmick to rip you off.

    Hey dumb asses, I’m standing right here.

  8. Thanks BigOrange.

    The total debt taxpayers in Crystal Lake for these two funds alone is around $37 Million dollars.

    Funny how the most recent figures are two plus years old and likely worse.

    Who’s been in charge of Crystal Lake during all of this and responsible?

  9. With Pension Advice Like This, Chicago And Illinois Are Doomed:

    Mayor Lightfoot is already floundering for solutions to meet near-term scheduled contributions, first asking for a state bailout and now perhaps a sales tax on services.

    The unfunded liability is already nearly $30 billion.

    Yet Chicago should just pay more and more into the pensions even as the hole deepens?

    It’s a similar story for the state’s pensions.

    https://wirepoints.org/with-pension-advice-like-this-chicago-and-illinois-are-doomed/

  10. The most current unfunded liability (net pension liability) measurement date was 2017 for IMRF, Police, and Fire, per the City of Crystal Lake’s 2018 CAFR:

    IMRF: $3,778,684

    Police: $29,874,336

    Fire: $16,121,589

    Total: $49,774,609

    plus OPEB (Other Post Employment Benefits aka retiree healthcare) unfunded liability: $4,220,448

    Grand Total pension + OPEB unfunded liability (net pension liability) for the City of Crystal Lake unit of government as of the 2017 measurement dates found in the City’s 2018 CAFR: $53,995,097.

    Let’s round up to $54M.

    That is $54M that should be in the pension fund, but is not.

    It’s missing money.

    The main problem being the rate of return on zero is zero.

    Lowballing the actual combined assumed rate of return (discount rate) at 7%, if the $54M was in the funds, the estimated investment return would be $53,995,097 x .07 = $3,779,657.

    Having an unfunded liability for decades, and a significant unfunded liability, creates major taxpayer debt.

    +++++++++++

    The actual assumed rates of return (discount rates) follow:

    IMRF – 7.5%

    Police – 7.25%

    Fire – 7.25%

    OPEB – 3.97%

    ++++++++

    What happens to the unfunded liability if the investment funds return 1% less than projected?

    The unfunded liability increases significantly.

    IMRF: $12,618,568

    Police: $39,121,508

    Fire: $23,578,935

    OPEB: $4,690,612

    Overall pension & OPEB unfunded liability (net pension liability) if the investment funds return 1% less: $80,009,623.

    Yikes.

    That’s about $26,014,526 bigger than the aforementioned $53,995,097, which is about a 48 percent increase in the unfunded liability (net pension liability).

    ++++++++

    The projected return is also known as the discount rate.

  11. Nice job Mark and thanks for the great information.

    Who was running the show in Crystal Lake while these millions were being run up?

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