Is the debt crisis coming to Oak Park?

Opinion: Columns

Share on Facebook
Share on Twitter
Print

Jack Crowe

You've heard about the Greek debt crisis. You know that Illinois is facing its own debt issues as it fails to pay $6 billion in old bills and has no plan to pay $83 billion in unfunded pension liabilities, including teacher pensions.

Is the debt crisis coming to Oak Park? New information from Cook County Treasurer Maria Pappas suggests that some local entities are whistling in the dark. See cookcountytreasurer.com.

Her report states that local governments in Cook County collectively owe $140 billion in debt. This includes $34 billion in unfunded local government pension obligations.

There are lots of interesting tidbits in the report. Did you know that, on average, local taxes in Cook County increased 48 percent over the last 10 years? Did you know each household in suburban Cook is now responsible for $35,000 of local government debt?

According to national experts cited by Pappas, the best practice is for government pensions to pay 80 percent of their pension obligations upfront and earn the remainder through low risk investments. The average Cook County local governmental entity has squirreled away only 53 percent of its pension obligations.

Like a gambler down on his luck, these entities roll the dice on riskier investments to try and make up the difference. According to the experts, a government seeking an 8 percent return on investment has only a 1 in 3 chance of achieving that over a 30-year period.

So Oak Park and River Forest High School has funded its pension obligations at about 69 percent, not the best in class, but not the worst either. Still, the high school is seeking an aggressive 7.5 percent return on its pension investments. "Come on, lucky seven!"

In contrast, School District 90 in River Forest has funded 67 percent of its pension obligations, but it is seeking a miserly 5 percent return on investment. The River Forest schools are not hoping to hit the long ball to make up for a pension-funding shortfall.

Now let's look at District 97 in Oak Park, which has an unfunded pension liability of $14 million. With only 42 percent of its pension obligations funded, District 97 is in worse shape than the State of Illinois, which is the worst state in the Union at pension funding. And District 97 wants, hopes, and needs annual investment returns of 7.5 percent to true up the pot. Good luck.

It's not OK for local boards to throw up their arms and shout, not paying today for the pension costs they are incurring.

Bad as this is, the real debt crisis is just around the corner. Our state legislators are awaiting a call from House Speaker Mike Madigan telling them it is time to shift tens of billions in unfunded state pension liabilities for teachers onto local school districts.

State Sen. Don Harmon, state reps Camille Lilly and LaShawn Ford and other state legislators should think about all this before they vote on "reforming" state teacher pensions.

Love the Journal?

Become our partner in independent community journalism

Thanks for turning to Wednesday Journal and OakPark.com. We love our thousands of digital-only readers. Now though we're asking you to partner up in paying for our reporters and photographers who report this news. It had to happen, right?

On the plus side, we're giving you a simple way, and a better reason, to join in. We're now a non-profit -- Growing Community Media -- so your donation is tax deductible. And signing up for a monthly donation, or making a one-time donation, is fast and easy.

No threats from us. The news will be here. No paywalls or article countdowns. We're counting on an exquisite mix of civic enlightenment and mild shaming. Sort of like public radio.

Claim your bragging rights. Become a digital member.

Donate Now

Reader Comments

5 Comments - Add Your Comment

Note: This page requires you to login with Facebook to comment.

Comment Policy

Reality  

Posted: June 4th, 2012 10:41 AM

If the village would've only started fulfilling there obligations and funding the pensions like they were told decades ago, we wouldn't be here right now. Credit Card payment due.......

Brian Slowiak from OIak Park  

Posted: June 2nd, 2012 6:17 PM

"Is the debt crisis coming to Oak Park?"The debt crisis is here, right now.We have to ask?

Paul Hamer from Oak Park  

Posted: May 30th, 2012 5:46 PM

Observer makes a good point. I think it would make a great story for the Wednesday Journal to do on Oak Park's total indebtedness. Not that I doubt the Observer. I once asked the person who is paid to know in our Village what our debt limit is and the response was "I don't know, I have asked, but no one will tell me"!

Peter Traczyk  

Posted: May 30th, 2012 11:46 AM

Dan - why do you continue to give Jack Crowe a soapbox from which to spout his continued inaccuracies? There is one pension plan for all public school certified staff - the Teacher's Retirement System of Illinois (TRS). No school district anywhere in the state calculates it's own pension liability; nor do they make investment return assumptions. Jack Crowe slanderously implies that somehow our local school districts have separate pension plans and manage them irresponsibly. No local school district is responsible for the pension mess that state legislators have created. Don't get me wrong here. I agree with Jack that there are tremendous problems with state pension funding in Illinois. I agree that there are profound structural problems when benefits are paid by the state on wages controlled locally. All of us should be paying attention to the legislative proposals to transfer significant pension costs back to local districts and taxpayers. What I'm tired of is the WSJ giving Jack a forum from which to print easily verifiable inaccuracies. This is not the first column in which Jack has made statements which are factually incorrect. It's lazy journalism to allow featured editorialists to just make it up. Share your opinion Jack, but get your facts right first. Better yet, Dan should assign you an editor. Want to learn more about TRS? www.trs.illinois.gov There's a comprehensive history of the plan for you to read there Jack.

Observer  

Posted: May 30th, 2012 9:06 AM

OP is in debt $127 million, plus $30 million TIF deb, plus $94 million in unfunded pension obligations for a total of $251 million. That is over $5,000 per resident. Thank you VMA. You certainly know finances.

Facebook Connect

Answer Book 2019

To view the full print edition of the Wednesday Journal 2019 Answer Book, please click here.

Quick Links

Sign-up to get the latest news updates for Oak Park and River Forest.


            
SubscribeClassified
MultimediaContact us
Submit Letter To The Editor
Place a Classified Ad

Classified Ad