“Moody's data is particularly influential -- it can potentially affect state and local governments' credit ratings, which in turn can move the interest rate at which those governments can borrow money. The credit rating agency's declarations can shape budget decisions in states that are debating the long-term affordability of their public pension systems…
“In a 2011 report, Dean Baker of the Center for Economic and Policy Research argued that while projected multi-trillion-dollar shortfalls may seem like a crisis requiring major pension benefit cuts, those shortfalls should be considered in the context of overall public budgets over the time that the pension benefits are scheduled to be paid out.
“‘The size of the projected state and local government shortfalls measured as a share of future gross state products appear manageable,’ Baker wrote. ‘The total shortfall for the pension funds is less than 0.2 percent of projected gross state product over the next 30 years for most states. Even in the cases of the states with the largest shortfalls, the gap is less than 0.5 percent of projected state product.’
“Earlier this year, the taxpayer watchdog group Good Jobs First published a study showing that in many states and cities, the size of annual pension shortfalls is dwarfed by the amount spent on subsidies to corporations. Unions say that means there's plenty of money to meet pension obligations, but that lawmakers are choosing to spend the money elsewhere.”
For the complete article, Click Here.
From the video segment of Ty Fahner talking about compelling
Bond Rating Agencies to lower Illinois' ratings:
Fahner: “The Civic
Committee, not me, but me and some of the people that make up the Civic
Committee… did meet with and call – in one case in person – and a couple of
calls to Moody’s and Fitch and Standard & Poor's, and say, 'How in the hell
can you guys do this? ...You're an enabler to let the state continue. You keep
threatening more and more and more.' And I think now we backed off because we
don't want to be the straw that breaks the back. But if you watched what happened
over the last few years, it's been steadily down... We have told [the Bond
Rating Agencies] that they are being irresponsible..." Click
Here for the two-minute video.
I believe it is unfair to group all the public pensions into one group. I have no idea how well the other public pensions are doing, however, I look at the balance sheet for TRS. A couple of years ago, TRS paid out 4 billion a year and took in 6 billion. Recently, I read on TRS that it paid out 6 billion and took in 9 billion. I cannot understand such a change in a couple of years. One year TRS made .8% on investments and then the next year 12%. But, the number of working teachers has dropped due to cut backs, at least in my district by 20% of the staff. So, according to TRS, TRS is sustainable.
ReplyDelete