Illinois is #1. No doubt about it as it leads the league in several vital statistics. Let's consider a few.
The state is billions of dollars behind in paying its overdue bills, is essentially bankrupt, its public employee pension liabilities are underfunded by approximately $100 billion, its politics have long been dysfunctional, its elected state officals frequently end up in prison, and the Democratic Party run city of Chicago's murder rate, local politics, union dominance and public schools are a tragedy of epic proportions.
In other words, it's just business as usual in the Land of Lincoln as more details emerge from the latest fiasco, the SEC's case involving fraud by state of Illinois officials over a long period of time.
Thus, the pensions are not only grossly underfunded, but the state has been lying to its citizens and its lenders about the solvency of the fund over the past several years. And I thought Detroit was bad.
SEC v. Illinois says this:
"The Securities and Exchange Commission announced civil fraud charges Monday against the state of Illinois, which means it's now official: The Land of Lincoln has the nation's most reckless and dishonest state government when it comes to pension liabilities.
This week's order from the SEC reports that in multiple bond offerings from 2005 to 2009 "the State of Illinois misled bond investors about the adequacy of its statutory plan to fund its pension obligations and the risks created by the State's underfunding of its pension systems."
Unlike Illinois officials, the numbers don't lie. The state's five main pension funds are 40% funded, with a shortfall of close to $100 billion—and much more by some private estimates. It's hard to express how irresponsible politicians have to be to dig a hole this big. By comparison, the average state plan is funded at 75%, which is itself dangerously low.
Even Illinois politicians admit that their pensions ought to be 90% funded, and in 1994 they pretended they were enacting reform with the ironically titled "Pension Funding Act." But the law's methodology "structurally underfunded" the state's obligations and "backloaded the majority of pension contributions far into the future," says the SEC.
By 2009, one of the pension system's actuaries warned of "significant funding peril" while the Governor's budget office raised "serious concerns about the financial strain," says the SEC. But "this information was not disclosed to bond investors.". . .
In Illinois, there's little sign of reform, which suggests the SEC has more work to do. . . . As usual, there were no individuals charged, only an institution, and the institution neither admitted nor denied anything but merely promised to behave in the future.
Kudos to the SEC for shining a light on accounting practices that would get private market participants thrown in jail. But frauds are not committed by buildings or desks or chairs. They are committed by the people who occupy them, and the commission should hold them accountable."
Summing Up
Of course, any public officials caught lying in Illinois should be held accountable for their actions. But lying and cheating in Illinois politics is nothing new.
Are we going to try to arrest them all? If so, we'd better get busy and build some more prisons. But then Illinois can't afford to operate the prisons it already has. Oh well, maybe we can just round them up and shoot them. Just kidding. Maybe deport them instead. But who would want them? Italy maybe.
This pension fraud is a genuine biggie involving lots and lots of people who knew or should have known what was happening from day one. In fact, the public pension scandal undoubtedly involved criminal behavior. But that's not all.
It also included official gross negligence and the at least equally dangerous but willfully ignorant behavior on the part of many of the state's elected officials, bureaucrats and outside consultants as well. And lest we forget, lots of accountants, actuaries and lawyers participated in the scheme over the years, too.
Of course, the best way to clean house in Illinois would be to throw all the bums out and start anew. But that's simply not the way things are done in Illinois politics. Besides, the old bums would most likely be replaced by new bums with different names but the same old habits.
In my view, the good citizens (and there are millions of them) of the Land of Lincoln have been willing to accept far less from their politicians than what they have every right to expect. Regrettably, they're getting the kind of government that they deserve.
The state of political corruption in Illinois is epidemic, and it looks like it will remain that way for a long time to come.
Will Governor Quinn ride to the rescue? Are you kidding me? No way.
Who then? Well, that's a great question for which there is no readily apparent answer.
That's my take.
Thanks. Bob.
No comments:
Post a Comment