Excerpt:
Cash basis accounting allows governments to ignore long-term liabilities, such as the pension and health care promises they made to their government workers, teachers, and firefighters. It also allows governments to shift money around or borrow money to make the budget appear balanced. This method is so deceptive that the IRS does not allow corporations making more than $26 million per year to use it.
In his address, Gov. Pritzker highlighted that the budget includes the “full required pension payments,” which amounts to $9.3 billion. These payments are based upon a pension funding scheme so outrageous that an SEC official called it a “balloon payment on steroids.”
After the state was charged with securities fraud for making such claims in bond offerings, the state had to start being honest in its bond offering documents. In the official statement related to the Illinois General Obligations Bonds of October 2020 is the following quote: “The State’s contributions to the retirement systems, while in conformity with State law, have been less than the contributions necessary to fully fund the retirement systems as calculated by the actuaries of the retirement systems.” These actuaries say the amount required to properly fund the pensions is $14.5 billion, which is $5.2 billion higher than the amount included in the Governor’s budget.
Author(s): Sheila Weinberg
Publication Date: 17 February 2021
Publication Site: Truth in Accounting