Mismanagement at a pension system(s), that couldn't be, could it?

From John Curry, June 16, 2010

STRS retirees...misery (and a similar pension experience) loves company, doesn't it? Had management at STRS planned ahead, like OPERS did, the STRS retiree spousal subsidy wouldn't have been trashed, would it?

John

http://www.sj-r.com/firstinprint/x767633158/Mismanagement-has-turned-state-pension-systems-into-morass

Mismanagement has turned state pension systems into morass

By SEAN F. DRISCOLL
GateHouse News Service
sj-r.com, Jun 15, 2010
Illinois’ modern pension systems were created with a simple goal: to help public employees secure their financial futures in the wake of two world wars and the Great Depression.

But a half-century of mismanagement has turned the state’s pension systems into a financial morass saddled with a $78 billion debt. The General Assembly for decades has drastically underfunded the systems while simultaneously sweetening the amounts it pays into the funds — without allowing for the spending increase. Meanwhile, downstate police and fire pensions, created by the legislature but funded with local property tax dollars, only get more generous, sucking up municipal tax revenues and crippling local spending.

Calls for pension reform have reached a crescendo in the state, but it’s been business as usual in Springfield. Today, as the state grapples with a budget crisis of historic proportions, legislators are considering either selling bonds or declaring a pension holiday — forgoing the annual contribution to the funds — neither of which will do anything to remedy decades of chronic underfunding.

Most of Illinois’ pension funds, in fact, are on a collision course with insolvency, threatening not only future benefits but retirees’ current benefits, which totaled $6.5 billion in the 2009 fiscal year.

“This is an unavoidable problem that the state of Illinois should be dealing with now, and it will not be made any smaller by gimmicks like skipping the pension contribution or selling bonds,” said Laurence Msall, president of The Civic Federation, a nonpartisan state government research organization. “The size of the pension deficit has gotten so big that without significant structural reform, the pension system will not be able to continue as an ongoing program."

(Read complete article here.)