That said, all 50 states, even including Illinois, are better positioned than our Social Security system where no money is in the till. At least Illinois has some monies set aside, albeit not nearly enough.
NOTE: People who pay taxes in Illinois also pay federal taxes, of course.Thus, they're on the hook, along with future taxpayers, whether they realize it or not, to fund both the state and federal obligations.
Thus, the underfunded entitlements hole in America generally, as well as Illnois specifically, is indeed deep and getting deeper by the day.
And we're not even including Medicare's unfunded situation in today's discussion.
As a result, Illinois and all other U.S. taxpayers are facing a most difficult issue, even if their individual state's financial funding problem somehow gets solved, which it most certainly won't, at least not anytime soon.
States with lowest pension funding has the summary:
"Here’s a look at five states with the lowest funding percentages in 2010, according a report from the Pew Center on the States:
1.ILLINOIS: Had 45 percent of the $138.8 billion it owes long term. Consistently failed to make full contribution from 2005 to 2010. Lowered benefits for future employees in 2010. Negotiating a proposal to reduce cost-of-living increases.
2.RHODE ISLAND: Had 49 percent of the $13.4 billion it owes long-term. Consistently made full contributions from 2005 to 2010. Overhauled system last year, creating new hybrid retirement plan, cutting cost-of-living increases, increasing the retirement age.
3. CONNECTICUT:Had 53 percent of the $44.8 billion it owes long-term. Made full contribution three times from 2005 to 2010.
Cut pension and retiree health benefits in 2011. Governor has proposed a plan to reach 80 percent funding by 2025.
4.KENTUCKY: Had 54 percent of the $37 billion it owes longterm. Failed to make full contribution from 2005 to 2010. Lawmakers raised retirement age and changed benefit calculations in 2008 and have suspended cost-of-living increases next two years.
5.LOUISIANA: Had 56 percent of the $41.4 billion it owes long-term. Failed to make full contribution three times from 2005 to 2010. Lawmakers approved benefit cuts for new employees. In 2012, a hybrid plan was created for new employees.
Although the situation is deplorable, in fact Illinois is 45% better funded than are our nation's Social Security and Medicare plans. In Illinois at least some money is in the till. There's nothing but an IOU at the national level.
And that national IOU apparently and unknowingly is from future taxpayers to the current workers. That's because the contributions of current workers and their employers are being used to pay today's beneficiaries.
In other words, nobody is properly funding the future benefits. It's "assumed" that future workers and their employers will write those checks.
Seems to me like a giant Ponzi scheme of sorts.
So Illinois "only" has to find an extra seventy five billion dollars or so and all will be right with the world. At least with respect to the state's pension liabilities.
Stay tuned to see how our illustrious "public servants" plan for all these promised benefits at the state and national levels to be funded in full, as well as by whom and by when, too.
And how in the world we hope to stay abreast of ongoing annual pension contributions at the same time, while keeping the rest of the government public services funded, too.
We'll try to discuss this enormous debt and entitlements debacle in greater detail in future posts.
My guess is that it isn't at all well understood by We the People.
And for those few politicians who do genuinely understand it, they're afraid to own up to what they've done or, perhaps better said, not done about paying the promises made over the years.