Elaine Nekritz’s Response to Ralph Martire Pension Fix

22 Jan
Thanks so much for your response.  I am familiar with Mr. Martire’s proposal.
The reality is his proposal would require a payment of almost $9 billion into the pension systems next year. The current year payment is “only” $5.7 billion. We could decimate General State Aid for schools by about 75% in order to pay for it, or raise the income tax another 1%. I don’t believe either of those are good for Illinois.
Mr. Martire omits some very important points in his article. The first is that his payment amount does not include the going forward cost of the pensions…the cost that actually funds current teachers versus the cost of those already retired. Second, his proposal only truly works if the State is somehow magically able to turn the pension debt into bonded debt. The markets would never accept $85 billion worth of bonds from Illinois. Thus, his proposal ignores actuarial science, something I believe the Teachers unions and the Teachers Retirement System do not, in any way shape or form, support.
I have great respect for Mr. Martire and I wish there was a painless way out of this mess but I do not believe Mr. Martire has a solution that is tenable.
Thanks.
Elaine

 

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3 Responses to “Elaine Nekritz’s Response to Ralph Martire Pension Fix”

  1. Tim Furman (@tbfurman) January 22, 2013 at 6:10 pm #

    I sent this to Ralph Martire for comment. We’ll see.

  2. Laura Szakmary January 22, 2013 at 10:26 pm #

    So breaking contracts and violating the constitution (which she has sworn to uphold) is a better alternative than raising the income tax to 6 percent, when many states already have income tax rates that exceed that level and they are doing just fine? WTF?

  3. schooltechconnect January 24, 2013 at 1:37 pm #

    Lengthy response from CTBA to Nekritz here; http://www.schooltechconnect.com/2013/01/nekritz-vs-martire.html

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