“Without pension reform, within two years, Illinois will be spending more on public pensions than on education”
S.E.C. Accuses Illinois of Securities Fraud - NYTimes.com: "For the second time in history, federal regulators accused an American state of securities fraud on Monday, ordering Illinois to stop misleading investors about the condition of its public pension system. In announcing a settlement with the state, the Securities and Exchange Commission said Illinois had passed a law in 1994 allowing itself to put less than the required amount into its pension system each year. . . From 2005 to 2009, Illinois issued $2.2 billion worth of municipal bonds, which the S.E.C. said were marketed under false pretenses. There was a growing hole in the pension system, putting increasing pressure on the state’s finances every year. That raised the risk that at some point retirees and bond buyers would be competing for the same limited money. The risk grew greater every year, the S.E.C. said, but investors could not see it by looking at Illinois’ disclosures. . . . Because the states are legally sovereign, federal securities regulators have limited jurisdiction over their activities and can take action only when there has been a fraud. The first state to be accused of securities fraud by the S.E.C. was New Jersey, in 2010. The commission found that New Jersey had also deceived the municipal bond market about the risks posed by its shaky pension system. . . . In his budget address on Friday, Gov. Pat Quinn of Illinois, issued a clear warning that the pension system had to be fixed. “Without pension reform, within two years, Illinois will be spending more on public pensions than on education,” said Mr. Quinn, a Democrat. “As I said to you a year ago, our state cannot continue on this path.”
OK, fraud complaint settled; when will pension reform begin?
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