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  • The Fiscal Futures Project releases budget analysis | Institute of Government and Public Affairs
    package of fiscal policies in January 2011 These included temporary increases in the personal and corporate income tax rates and limits to General Funds spending Current law stipulates that the tax increases will begin to be phased out in 2015 The Fiscal Futures Project examined how often states have allowed temporary tax increases to sunset Between December 2007 and January 2013 13 states including Illinois enacted tax increases that were scheduled to phase out at a later date The project found that most states that passed temporary tax increases have allowed the taxes to expire but most also made modifications to the original phase out Read the Issue Brief here As Illinois faces its own looming sunset date many policymakers have asked how the tax increases have affected Illinois economy which is an important factor in the coming debates about whether or not to let them expire Using employment unemployment and average weekly earnings data The Fiscal Futures Project found that Illinois economy has been in worse condition than our Midwestern peers since January 2011 This can be attributed to many factors including the income tax increase Read the Issue Brief here Those other factors unpaid pension liabilities a backlog of unpaid bills and the resulting projected budget deficit are covered in depth in the project s latest Fiscal Projections Using a long term consolidated funds budget model the project found that the state faces a budget gap of 1 billion dollars in 2014 That gap is projected to grow to 14 billion by 2025 Even if the 2011 tax increases are made permanent Illinois will still face a budget gap of more than 7 billion by 2025 Making the tax increases permanent will not be a silver bullet for Illinois chronic fiscal condition Much of this is due to

    Original URL path: http://igpa.uillinois.edu/content/fiscal-futures-project-releases-budget-analysis (2016-02-17)
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  • The Fiscal Futures Project | Institute of Government and Public Affairs
    of the budget picture at the midpoint of FY16 Fact Sheet Policy Brief Still in the Penalty Box The 53 Million Financial Condition Penalty on Illinois January 2016 bond sale January 19 2016 This report analyzes the state s January 14 2016 sale of general obligation bonds in light of the ongoing fiscal crisis in Ilinois Fact Sheet Policy Brief Improving Budgetary Practices in Illinois December 7 2015 This report finds that Illinois does not follow basic principles of sound budgeting recommended by fiscal experts and suggests ways that Illinois and other states can reform practices to avoid fiscal crises in the future Policy Brief All Bad Things Come in Threes Illinois Third Type of Deficit Infrastructure Funding September 2015 On top of a shortfall of sustainable revenue to support state spending and a huge backlog of unfunded pension liabilities Illinois faces a third type of deficit a lack of funding for future construction of infrastructure projects This report uses debt affordability analysis to estimate that even if Illinois maintains its currently high debt burden the state would need tens of billions of dollars in additional revenue to pay for needed infrastructure Policy Brief Fact Sheet Full Report Apocalypse Now The Consequences of Pay Later Budgeting in Illinois Updated Projections from IGPA s Fiscal Futures Model January 2015 For years Illinois has been spending much more than could be supported by sustainable sources of revenue and covering the deficit by issuing IOUs New projections from the Fiscal Futures model put the magnitude of the underlying deficit at 9 billion for FY 2016 and growing thereafter The accumulated value of all the IOUs issued to pay for past deficits now totals 159 billion These IOUs represent claims on the state that when paid off will crowd out spending on other priorities

    Original URL path: http://igpa.uillinois.edu/fiscalfutures (2016-02-17)
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  • The long term budgetary effects of the pension reform bills | Institute of Government and Public Affairs
    questions remain about how the two main reform proposals SB1 and SB2404 will affect the state s long term fiscal picture Analysis by IGPA s Fiscal Futures Project shows that neither plan will balance the state s budget which is projected to run a deficit of 2 3 billion in FY2014 Click here to read Pension Reform Roadmap How do SB1 and SB2404 affect Illinois 10 year budget outlook The Fiscal Futures Project examined SB1 the Madigan Plan and SB2404 the Cullerton Plan and made projections based on several scenarios to estimate total cost savings into 2025 They found that SB1 has the greatest impact on the long term budget saving the state around 2 billion to 3 billion per year This is assuming the bill survives likely constitutional challenges In comparison savings to the state from SB2404 are around 0 5 billion to 1 5 billion per year depending on how participants respond to incentives to accept reduced pension benefits in order to keep health care coverage in retirement Illinois will continue to have serious fiscal problems even if efforts to reduce pension obligations are successful the authors said Of course it is also true that the state s

    Original URL path: http://igpa.uillinois.edu/content/long-term-budgetary-effects-pension-reform-bills (2016-02-17)
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  • The National Picture on Public Pensions | Institute of Government and Public Affairs
    that provides a compilation of data on the changes to current employees retirement contribution rates and post retirement cost of living adjustments COLAs that have been enacted in the United States since 2009 Click here to read the report The National Picture of Public Pension Changes What benefit reductions have other states enacted Illinois state pension system has the lowest funding ratio of any state with roughly 100 billion in unfunded liabilities That means that the state has promised to make these payments to workers when they retire but does not have the resources set aside to do so IGPA has conducted many analyses of this situation You can read all of IGPA s work on public pensions here Illinois lawmakers are voting on two pension bills before the end of May The current proposals being debated would increase employee contribution rates and or reduce post retirement annual COLAs for current workers Since 2009 these types of changes have been made to public employee pension systems in about half of all states but the details vary widely Post retirement COLAs have been reduced adjusted and tied to inflation and pension funding ratios Employee contribution rates have been increased in numerous

    Original URL path: http://igpa.uillinois.edu/content/national-picture-public-pensions (2016-02-17)
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  • Scholars propose six steps toward pension reform for SURS | Institute of Government and Public Affairs
    13 by IGPA All of IGPA s work on pensions can be found at http igpa uillinois edu pensions The most important take away is that we have constructed a sensible reform that we believe would be palatable to the employers the employees the retirees the taxpayers and the courts said Jeffrey R Brown the William G Karnes professor of finance at the U of I and a member of the IGPA faculty Our hope is that the General Assembly will see the wisdom of trying to do the same The six steps are divided into three broader categories reducing the normal cost and liabilities of the current defined benefit plan how SURS pensions should be funded going forward and reforming the so called Tier II program instituted for employees hired after January 1 2011 The individual steps are outlined in detail in the paper which is part of IGPA s ongoing contribution to the dialogue on pension reform in Illinois Generally they would do the following change the annual cost of living adjustment COLA change the value of the Effective Rate of Interest to eliminate what the authors say is a hidden subsidy shift contributions to colleges and universities increase employee contributions by an additional 2 percent require the state to amortize the current SURS unfunded liability and provide a new hybrid defined benefit defined contribution plan for new employees Taken together the six steps will significantly reduce SURS 19 3 billion unfunded liability as well as the annual cost of the pension system going forward the authors write They challenge lawmakers to correct the state s public pension problem saying that each passing day without reform threatens the excellence of higher education at the 65 colleges and universities that are part of SURS Brown s co authors include

    Original URL path: http://igpa.uillinois.edu/content/scholars-propose-six-steps-toward-pension-reform-surs (2016-02-17)
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  • Economic Review from REAL shows jobs increasing in Illinois | Institute of Government and Public Affairs
    Economics Applications Laboratory Economic Review from REAL shows jobs increasing in Illinois IGPA s Regional Economics Applications Laboratory REAL says Illinois had nearly 42 000 more jobs in December 2012 than in December 2011 However REAL s Illinois Economic Review says the state still shows a net loss of 270 000 jobs since the beginning of the recession in December 2007 Read the full review Attachment Size IER Jan 2013

    Original URL path: http://igpa.uillinois.edu/content/economic-review-real-shows-jobs-increasing-illinois (2016-02-17)
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  • Analysis | Institute of Government and Public Affairs
    Laboratory shows Illinois continued to add jobs in October Read the full review Illinois Economic Review shows continued steady economic recovery to pre recession job levels The Regional Economics Applications Laboratory has published its latest Illinois Economic Review Find it here Latest Illinois Economic Review provides analysis of Illinois employment picture The latest Illinois Economic Review from the Regional Economics Applications Laboratory REAL indicates a small decrease in the number of jobs in Illinois between July and August However the trends appear to be positive according to the review Read the full report Illinois Economic Review sees job growth continuing in 2016 The latest edition of the Illinois Economic Review from the Regional Economics Applications Laboratory shows the state s economy continuing its march toward peaks reached before the 2007 2009 recession The report forecasts job growth of between 26 000 and 44 000 in the coming 12 months Read the full report Illinois Economic Review forecasts job growth for Illinois in 2015 The latest edition of the Illinois Economic Review from the Regional Economics Applications Laboratory at IGPA forecasts job growth of between 60 000 and 62 500 in the coming 12 months Read the January report Illinois Economic Review from REAL posted for Oct and Nov data The Regional Economics Applications Laboratory has posted the Illinois Economic Review data for the months of October and November 2014 The 12 month forecast from November data indicates Illinois could add more than 50 000 jobs in 2015 Read the November report Read the December report Illinois Economic Review from REAL shows continued job growth in state The latest Illinois Economic Review from the Regional Economics Applications Laboratory indicates that the 12 month employment forecast for the state is positive However the projected growth continues to be small Read the full

    Original URL path: http://igpa.uillinois.edu/igpa-analysis (2016-02-17)
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  • How will limiting the cost of living adjustments affect the value of state pensions? | Institute of Government and Public Affairs
    Centers Office of Public Leadership Regional Economics Applications Laboratory How will limiting the cost of living adjustments affect the value of state pensions In a brief analysis released on January 17 Associate Director David Merriman takes a closer look at the proposals to adjust the cost of living adjustments COLAs a component of public employee pensions His calculations show that the proposals made in the General Assembly would significantly reduce the value of benefits even for claimants with a relatively small pension and a high discount rate Merriman computed illustrative estimates of the loss in benefits He compared the promised value of pension benefits under the current system to the promised value under the proposed system which would greatly limit the COLA The figure below which is explained in more detail in the paper download here PDF uses illustrative data to demonstrate the potential effect It shows the percentage reduction in pension benefits from the proposed change in the COLA at four pension levels from 25 000 to 100 000 and three discount rates 2 3 5 an 5 percent for a pension that starts in 2013 and is received for 20 years The reduction varies from a low of about 17 percent for an individual with a pension benefit of 25 000 in 2013 and a high discount rate to about 30 percent for an individual with a pension of 100 000 in 2013 and a low discount rate Merriman also states that although the calculations make clear that the proposed changes in the COLA would decrease the value of many individuals pension benefits the calculation alone cannot determine whether the proposed change in the COLA is appropriate Click here to read the analysis PDF Attachment Size COLA Reduction Affects Value of Pensions pdf 349 69 KB Related Content

    Original URL path: http://igpa.uillinois.edu/content/how-will-limiting-cost-living-adjustments-affect-value-state-pensions (2016-02-17)
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