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The
March 23, 2010, Marketplace Morning Report, produced by American Public
Media and broadcast on National Public Radio (NPR), included a story discussing
Illinois' state pension system debt.
While
discussing options lawmakers should consider, Marketplace quoted Illinois
budget analyst Laurence Msall who advised Illinois lawmakers to "adopt
a model for a well-run pension fund that is headquartered right here,
west of Chicago, in the city of Oak Brook." The whole story, including
a link to the broadcast, can be found below.
Illinois
deals with deep pension debt
Critics of Illinois's budget are calling for reform to the state's pension
assessment. The retirement system is nearly $80 billion in debt, the largest
unfunded pension liability in the nation. Jay Field reports.
Listen
to the story
TEXT
OF STORY
STEVE
CHIOTAKIS: States are gonna have to pay nearly $3 trillion in
public pension benefits in the coming decades. And while many states are
on track to handle these hefty bills, a handful, such as Illinois, are
in big trouble. Reporter Jay Field has more.
JAY
FIELD: Illinois budget analyst Laurence Msall has this bad news
to share:
LAURENCE
MSALL: The state has not been funding its promises to its employees
and its retirees, and instead has either borrowed or just skipped payments.
Using
the pension money to cover essential services like education, without
having to jack taxes. That's left the state retirement system nearly $80
billion in debt -- the largest unfunded pension liability in the nation.
MSALL:
And that is why we're calling for very significant reform of the pension
system in Illinois.
For
one thing, Illinois plans to reduce benefits for new lawmakers and judges.
But Msall says there's something else Illinois can do: It can adopt a
model for a well-run pension fund that is headquartered right here, west
of Chicago, in the city of Oak Brook.
Louis
Kosiba runs the Illinois Municipal Retirement Fund for city workers from
librarians to trash collectors. Last year, it earned a 25 percent return.
LOUIS
KOSIBA: In 1994, I ran the Chicago Marathon. And that is probably
the most physically demanding thing I did, until I climbed to the top
of Mt. Kilimanjaro.
Summiting
Kilimanjaro is something people have to do slowly. Kosiba says he's worked
at the fund the same way.
KOSIBA:
Analyzing the risks that you take, it means having a broadly diversified
portfolio.
And
the fund has one other big reason for its success: The state legislature
gave its Board of Trustees special power to force municipalities to pay
into the fund, even when they're broke.
When
Illinois lawmakers set up state pension plans decades ago, they saw no
reason to do the same. They figured the state would always make good.
But it hasn't. And now reformers say it should adopt the same rule the
municipal fund did to break the cycle of shirking and borrowing.
In
Oak Brook, Ill., I'm Jay Field for Marketplace.
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