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.
Answer Book 2019
To view the full print edition of the Wednesday Journal 2019 Answer Book, please click here.
Sign-up to get the latest news updates for Oak Park and River Forest.
|Submit Letter To The Editor|
|Place a Classified Ad|