Thursday, December 05, 2013

AMERICA - Should Pensions Be Part of Debt-Shedding

"Chicago Pursues Deal to Change Pension Funding" by RICK LYMAN, New York Times 12/5/2013


First came the State of Illinois, now comes the City of Chicago.

The hard-fought passage here Tuesday of a landmark bill trimming retirement benefits for state workers, aimed at fixing the vastly underfunded pension system, has become instantly relevant to the nation’s third-largest city, which has its own pension systems in various stages of financial collapse.

And if anything, the reckoning in Chicago is even nearer and more difficult than the one the state had faced, putting its Democratic mayor, Rahm Emanuel, in a difficult position under a tight deadline.

Under state law, the city must increase its contributions to its workers’ pension funds by $590 million in 2015, to a total annual contribution of $1.4 billion for current and future retirees.  If no pension deal can be reached by November of next year, when the city will draft its next budget, the city will either have to raise taxes or cut services or some combination of both.

But city officials are hoping there is now momentum on their side to force a compromise solution.  They come armed not only with Tuesday’s state vote but also with a federal judge’s ruling, also on Tuesday, to formally send Detroit into bankruptcy.  Chicago is not facing bankruptcy, but the Detroit case produced a development being watched closely by cities and unions across the country: It explicitly permitted changes to public pension funds to help the city shed its debts and reorganize.

"States and cities grapple with cuts to pensions that workers have already earned" PBS Newshour 12/4/2013


SUMMARY:  Illinois joined other cities and states in cutting pensions as way to curb costs.  Should public employees who have already earned their retirement be subject to cuts?  Judy Woodruff talks to Andrew Biggs of the American Enterprise Institute and Steven Kreisberg of the American Federation of State, County and Municipal Employees.

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