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Truth in Accounting Hosts Balanced Budget Talk for Legislators 4/5/2012
Illinois Sen. Heather Steans (D-Chicago) and Rep. David Harris (R-Mount Prospect) joined Truth in Accounting at an April 2nd Legislative Workshop in Chicago, co-sponsored with the Illinois Chamber of Commerce. Click heading for full press release.
Illinois Sen. Heather Steans (D-Chicago) and Rep. David Harris (R-Mount Prospect) joined Truth in Accounting at an April 2nd Legislative Workshop in Chicago. Workshop presenters included Doug Whitley (Illinois Chamber), Andy Shaw (Better Government Assn.), Sheila Weinberg (Truth in Accounting), Sean McShea (Ryan Labs Asset Management), Thomas White, Esq. (Rimon, PC), and Allan Ettinger (Morgan Stanley Smith Barney).
Weinberg talked about the history of “balanced budgets” in Illinois and how the full cost of a proposed bill is rarely presented to legislators. One example given was a 2002 Illinois teachers’ early retirement package, which while saving $61 million of salary costs in 2003, added $2.4 billion to the state’s unfunded pension liabilities. In addition, actuarial assumptions used to calculate state pension obligations continue to expect investments to annually earn over 7%, which may be understating the true level of obligation. The Teachers’ Retirement plan is using an 8.5% rate of return assumption.
Illinois pension funds have oversight by Trustee Boards and are monitored by both Senate and House Pension committees. “There is not a strong oversight role by the legislators,” commented Sen. Steans. By some accounts, state of Illinois’ employee pension plans are underfunded by more than $80 billion.
One way to better monitor the financial health of Illinois pensions is to take a look at each plan’s Projected Benefits Schedule, which denotes a “run-off” date when the plan no longer has assets. Financial experts on the Workshop panel stated at least one of the Illinois pension plans could be out of assets as early as 2018.
The Illinois Chamber is providing comment on a proposed Fiscal Notes Reform Act, which would require all bills presented to the Legislature include information on how the bill’s passage would affect the state’s level of unfunded liabilities.
Truth in Accounting plans to hold additional Legislative Workshops on this topic prior to the November elections.
About the Institute for Truth in Accounting The Institute for Truth in Accounting (IFTA) is dedicated to promoting honest, accurate, and transparent accounting at all levels of government and business. As a non-partisan, non-profit organization, the IFTA works to expose accounting deficiencies while promoting better, more accessible delivery of accurate government financial data—and, in turn, providing a foundation for more informed public policy. IFTA provides its expertise to develop more effective accounting standards and deliver accurate government financial information to policymakers, opinion leaders, and citizens, so they can all work for a more secure financial future. www.truthinaccounting.org.
Institute for Truth in Accounting Nancy Mathieson 847-226-8589 Contact TruthInAccounting.org