Illinois is on track to become the first state to declare bankruptcy since 1933:
Now Comptroller Susana Mendoza is warning that new court orders in lawsuits filed by state suppliers that are owed money mean her office is required to pay out more than Illinois receives in revenue each month. That means there would be no money left for so-called “discretionary” spending — a category that in Illinois includes school buses, domestic violence shelters and some ambulance services.
“I don’t know what part of ‘We are in massive crisis mode’ the General Assembly and the governor don’t understand. This is not a false alarm,” said Mendoza, a Chicago Democrat. “The magic tricks run out after a while, and that’s where we’re at.”
It’s a new low, even for a state that’s seen its financial situation grow increasingly desperate amid a standoff between the Democrat-led Legislature and Republican Gov. Bruce Rauner. Illinois already has $15 billion in overdue bills and the lowest credit rating of any state, and some ratings agencies have warned they will downgrade the rating to “junk” if there’s no budget before the next fiscal year begins July 1.
Good job, guys.
Now imagine this crisis on a national level, when the national debt exceeds $30 trillion and the interest payments cost more than defense (about a decade down the road).
The Chicago Teachers’ Pension Fund (CTPF) paid out $1.5 billion last fiscal year, mostly on benefits to retirees.
But it only earned $7.8 million on its investments, according to a filing it made with the Illinois Department of Insurance.
The Chicago Teachers’ Pension fund operates like a Ponzi Scheme, but it is allowed to do so because the fund is taxpayer-backed. Bernie Madoff’s private Ponzi scheme cost investors $18 billion; he received 150 years in prison.
In addition, it cost CTPF $35.8 million in investment expenses to earn that $7.8 million, according to the filing, meaning it actually lost $28 million between July 1, 2015 and June 30, 2016.
Years like 2016 elucidate how the fund, which is supposed to pay for the current retirements of some 28,000 former CPS teachers and administrators as well as provide future benefits to another 29,000 active ones, is running out of money, and time.
This caught my eye:
Annual payouts to beneficiaries have risen 61 percent since 2007, from $906 million to $1.46 billion. The average CPS teacher salary has risen, too, by 58 percent, from $59,458 to $94,064.
A 58% average salary increase in 10 years? Yeah, that’s perfectly normal and sustainable.