10 suggestions to save Illinois from bankruptcy

Every night in Chicagoland over 150,000 men, women and children can be found sleeping in alleys, under viaducts, in abandoned homes, in parks, empty garages, subway trains – wherever they can find shelter. They are part of a larger, tragic trend: in the United States an estimated 2.5-3.5 million are homeless, half of them chronically...

Julie Schmidt and co-author Bill Zettler propose 10 steps to save Illinois in their article Illinois pension debacle poster child:

"Is there a way out of this mess? While one does exist, we suspect the lust of the patronage armies which have returned and kept Democrats in the majority for almost a decade, will be decidedly unwilling to negotiate “austerity” measures of any kind. If they would like a way out though, here are ten steps to fiscal sanity we would suggest:

1. Increase Employee Pension Contributions to at least the level of private sector employees or 12% (7.65% Social Security plus 4.4% 401K). SAVINGS: $700 million per year; $54 billion over 35 years.
2. Reduce the automatic Pension Cost Of Living Allowance (COLA) to 0% until the budget is balanced and then make it CPI or 1.5%, whichever is less. SAVINGS: $180 million per year; $13 billion over 35 years.
3. Pensions would be taxable for all retirees with income over $50,000 per year. SAVINGS: $125 million per year; $10 billion over 35 years.
4. Eliminate all early retirement plans with their automatic 6% increases and sick leave pension accruals. Extend the average salary for pension calculations to an average of the last 8 years. SAVINGS: $110 million per year; $15 billion over 35 years.
5. Sell state assets if “The Price Is Right.” Including, but not limited to, the Lottery, Toll Way, Thompson Center, and Thomson Correctional Center. Use the proceeds to pay down the unfunded pension liability and payoff the pension bonds. As a bonus, eliminate state employee pensions-a long-term source of corruption, since the taxpayer is responsible for the pension shortfall. Let the state pay for it rather than the innocent taxpayer. SAVINGS: $20-30 billion off of the $80 billion unfunded liability saves at least $900 million per year; $70 billion over 35 years.
6. Consolidate the five pension systems into one to increase transparency, oversight, and administration. SAVINGS: $30 million over 5 years.
7. Make high salary school districts pay their own pension costs. Controlling teacher salaries at the local level is a function unavailable to state taxpayers, and therefore they should not be liable for it. Under the current reverse Robin Hood of “rob the poor and give it to the rich” pension system, taxpayers in poor districts pay state taxes to fund outrageous pensions in another. I am sure progressives would agree that the poor should not pay for the benefits of the rich. SAVINGS: $1.6 billion of 2011’s $5.3 billion pension contribution.
8. Use cash buyouts to lower pension obligations. Offer cash buyouts on terms advantageous to the state for any member eligible for a future pension, not just those at retirement age. This proposal could get rid of a lot of dead weight and decrease the unfunded liability. Any new employee hired would have a pension based upon a new and lower cost plan. SAVINGS: 2,500 buyouts per year would save about $500 million annually.
9. Make public employees pay for 50% of their healthcare premiums, pre- and post-retirement. SAVINGS: $1.1 billion per year in 2011; $65 billion over 35 years.
10. One-half of the current and all future unfunded pension deficits would be paid via reduced pensions until the deficit is paid off. Taxpayers would pay the other half. Why should taxpayers be liable for poor investment performance, increased retiree benefits, and poor mortality estimates? SAVINGS: $2 billion in 2011; $200 billion over 35 years.

This 10-point plan could save the state well over $5 billion a year and, over the next 30 years, will completely pay off the pension deficit. There is no other viable solution available."

Read the full article here at Breitbart