Of course there will be the typical gnashing of teach and demagoguery from the public sector union leadership on these proposed changes. The rank and file public union members are starting to see that changes must occur or they will not receive a pension at all in future.
The real intention of this plan is to shore up Illinois’ terrible credit rating – worst in the country and only 2 steps above junk status. Last year Illinois paid an astounding $6.8B of interest on the $86B of unfunded pension liability. Any further credit downgrade would dramatically increase our cost of borrowing which the state can no longer afford.
At the end of 2010 they were $135 billion according the state actuaries but perhaps as much as $270 billion by critics. And those numbers do not include taxpayer liabilities of $17 billion for Pension Obligation Bonds and perhaps another $40 billion for retiree health care. Notice that all of these liabilities, somewhere in the range of $200 to $325 billion, are TAXPAYER liabilities and not employee/retiree liabilities. That is the problem.