Chicago pension crisis

SP Intel Report- November 11, 2015

Chicagoland

Moody’s Predicts Chicago’s Unfunded Pension Liabilities Could Grow For At Least Another Decade

Regrettably, the City of Chicago’s pension crisis is far from being resolved. From a press release out of Moody’s Global Credit Research division Tuesday:

New York, November 10, 2015 — Today, Moody’s Investors Service released a scenario analysis of the City of Chicago’s (Ba1 negative) possible pension funding paths. The scenarios incorporate the city’s recently adopted property tax increase as well as the outcomes of two key decisions pending with the State of Illinois (Baa1 negative) and the Illinois Supreme Court. The analysis indicates that, despite significantly increasing its contributions to its pension plans, Chicago’s unfunded pension liabilities could grow, at a minimum, for another ten years.

“Chicago’s statutory pension contributions will remain insufficient to arrest growth in unfunded pension liabilities for many years under each scenario,” Moody’s AVP-Analyst Matthew Butler says in the new report, “Chicago’s Pension Roadmap: A Scenario Analysis.”

(Editor’s note: Bold added for empashis)

You can read the entire press release on Moody’s website here.

National

U.S. Adults Over 30 Are Less Happy Than Their Predecessors

I spotted the following yesterday on the MarketWatch website. Catey Hill reported Monday night:

It all goes downhill after 30 — at least when it comes to happiness.

“Adults over 30 are less happy than their predecessors,” concludes a study published online Thursday in the journal Social Psychology and Personality Science, which examined happiness data from more than 50,000 adults, gleaned from the General Social Survey, carried out by NORC at the University of Chicago, a nonpartisan, independent research organization, which has collected information about American adults since 1972.

From 2010 to 2014, adults over 30 had an average happiness score of just 2.18, compared with 2.24 a decade ago. That’s significant considering happiness scores were measured on a tiny scale from just 1 to 3, with 1 being “not too happy” and 3 being “very happy.” (The data used five-year cohort periods so that single year fluctuations were smoothed out.)

(Editor’s note: Bold added for emphasis)

A graph within the article depicted happiness scores by age over time. Something stood out right away for me looking at the measure for the “30 or older” crowd. Happiness scores rose from around 1993 until 2001- then plummeted ever since. In 1993, I remember older classmates of mine at the University of Illinois at Urbana-Champaign saying the job market was pretty rough (but better than recent years where graduate school was a popular option). Lots of bad economic news as well back in 2001. Hill added later:

What’s perhaps even more interesting is that, for the first time ever, adults ages 18 to 29 were happier than adults over 30

(Editor’s note: Bold added for emphasis)

The authors weren’t sure why “younger adults are happier than older ones for the first time in at least 40 years.” I’d like to offer up one possible explanation for some in that demographic:


“Cartman sends his mother to the store”
YouTube Video

In all seriousness, I come across a lot of miserable stuff on a daily basis while conducting research for this blog and other projects. I try to keep upbeat by remembering:

1. While I still see a financial crash in store for us, I don’t envision the end of the world taking place. Although it could be the end of the world as we know it (TEOTWAWKI).
2. Life ain’t fair. Nobody’s perfect. Just do the best you can.
3. God’s got my back. And I’ll try to be the best Christian I can.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Hill, Catey. “Americans over 30 are more miserable than they’ve ever been.” MarketWatch. 9 Nov. 2015. (http://www.marketwatch.com/story/americans-over-30-are-more-miserable-than-theyve-ever-been-2015-11-09). 11 Nov. 2015.

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Chicago Requires $754 Million In New Revenue, Cuts To Balance Books

For a couple of years now, regular readers of Survival And Prosperity have witnessed me blog about higher fees/fines/taxes and reduced government services as Chicago’s financial reckoning day draws closer.

I fear the pace of all this is about to pick up.

Hal Dardick reported on the Chicago Tribune website late Friday afternoon:

Mayor Rahm Emanuel must come up with at least $754 million in new revenue and budget cuts to balance the city’s books, according to preliminary 2016 budget estimates the administration released Friday.

A little less than half — $328 million — would cover increased payments to the police and fire pension funds that Emanuel and aldermen did not account for in this year’s budget. That number could be even higher if the mayor doesn’t get the pension relief he’s seeking from Springfield.

In addition, City Hall must figure out how to close a projected $426 million hole in next year’s budget, an annual financial analysis showed. The shortfall comes as Emanuel has been borrowing at high interest rates to keep the city afloat.

Unlike previous years, Emanuel is not taking a property tax increase off the table. At a news conference this week, the mayor would not rule out a politically unpopular property tax hike, saying he’ll wait to show his hand until September, when he rolls out “a full budget with all parts in there.”

(Editor’s note: Bold added for emphasis)

Chicago property owners are probably hoping for an endless summer- considering what could be in store for them next month.

A significant property tax hike in and of itself might not be enough to make Chicagoans think about moving out of the city. However, sustained pressure on household finances from all applicable fees, fines, and taxes could do it, particularly if government services (public safety comes to mind here) steadily erode.

You can read the entire piece on the Tribune website here (registration required).

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Chicago’s Financial, Job Woes Highlighted In Huffington Post Piece

Chicago-area readers are probably getting sick of my negative posts about Chicago, Cook County, and Illinois. I don’t like blogging about all the bad news either. However, I feel compelled to point out the massive challenges facing the city, county, and state I was born in and continue to love in an attempt to help turn them around (unlikely at this point), or at least assist residents survive these entities slamming into that proverbial brick wall (much more probable).

That being said, this past weekend I came across an interesting article about a number of Chicago’s woes by local journalist Hilary Gowins. While there’s plenty of dreadful material being written about the “Windy City” these days, what made Gowins’ piece particularly “interesting” is where it can be found- on The Huffington Post website. From the often left-leaning (in my opinion) online news aggregator and blog:

Behind a veneer of affluence, gilded by the prosperity and staying power of neighborhoods such as the Gold Coast, River North and Lincoln Park, the city’s foundation is crumbling beneath the weight of perilous debt. Chicago and its sister governments are officially on the hook for more than $32 billion in unfunded pension debt. With just over a million households in the city, that staggering figure means each Chicago household is on the hook for $32,000 to cover these liabilities. Chicago’s pension debt exceeds the state’s total proposed operating budget for the upcoming fiscal year.

At the same time the city’s obligations are skyrocketing, its population is growing at a snail’s pace, gaining just 6,000 residents in 2013 after a decade of population decline. With 2.7 million residents as of 2013, Chicago’s population is the same as it was in 1920

(Editor’s note: Bold added for emphasis)

Gowins added this as well:

But today, despite activity on the tech front, job opportunities are scarce. The Chicago area has 46,000 fewer people working compared to before the Great Recession, according to the Bureau of Labor Statistics…

(Editor’s note: Bold added for emphasis)

There’s plenty of people around these parts who would be quick to blow smoke up your behind and tell you the economy in Chicagoland area and beyond is in full-blown recovery, and quit worrying about the larger financial picture.

Sorry, but the numbers (such as the above) show otherwise.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Gowins, Hilary. “Chicago’s Problems Run Much Deeper Than a 76-foot Hole.” The Huffington Post. 1 May 2015. (http://www.huffingtonpost.com/hilary-gowins/chicagos-problems-run-muc_b_7131348.html?ncid=txtlnkusaolp00000592). 5 May 2015.

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