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Avoid This Ill.-Advised State of Monetary Madness

Written by Jeffrey Steele - 3 Comments

Avoid This Ill.-Advised State of Monetary Madness

What I’m about to reveal I don’t like to bandy about. In fact, I try to hide it when in polite company. So I’ve got to ask you to please not breathe a word of what I’m about to divulge.

As embarrassing as it is to admit, I’m from Illinois.

I’ve lived here almost all my life and, like many other state residents, have watched in horrified fascination as over the past couple of decades, the state has steadily built its now unshakable reputation as the fiscal laughingstock of the nation.

Here in the Prairie State, four of our last seven governors have followed their stint in the Governor’s Mansion with another behind bars. (Illinois is the only state in the union where ex-governors make the license plates.) The state routinely spends more than it takes in, has the lowest credit rating of all 50 states, and has badly under-funded state worker pension plans and public education.

Illinois, along with New Jersey, leads the nation in the numbers of residents fleeing the state for greener pastures. The departures of those exiting Illinoisans place an ever weightier burden for generating desperately needed tax revenues on the frail and slender shoulders of those of us who remain behind.

Spinning in his grave

No wonder there’s a well-visited website featuring a caricature of the Land of Lincoln’s most-famous product, Honest Abe himself, with empty pockets turned inside-out and a grimace on his face. Its address: www.illinoisisbroke.com.

Some point to poor decisions by many of the state’s current and past political leaders as the reason Illinois is in such bad economic shape. I dunno about that, but there does seem to be one Illinois politico who has presided over the state for every year of its slalom into the financial abyss. I won’t mention his name here, but will merely say that each time he’s re-elected, everyone gets mad again.

Even though Illinois’ finances are an absolute horror show, and so bad they seemingly defy a solution, the state does have one thing going for it.

If you look at the areas where state leaders have blundered most ignominiously, they neatly line up with places where Americans in general have mismanaged their own personal and family finances, in every task from retirement planning to funding their children’s education to ensuring they spend less than they take in.

That means that Illinois’ abysmal fiscal situation can be put to good use, providing a wonderful example of what NOT to do in guiding the state of your own personal finances.

Let’s examine some of the fiscal atrocities Illinois politicos have visited upon the state and its people, and explore how those monetary miscues can help point folks everywhere toward the 180-degree opposite course of action.

Underfunded pensions

Illinois’ biggest problem is likely its under-funded state pensions. Some experts report Illinois has more than $200 billion in retirement-related pension debt. As a result, the state is now in crisis mode, trying to figure out some way to pay pension obligations to state workers and teachers.

Lesson: If you see uncomfortable parallels between Illinois’ inability to adequately fund the retirement needs of its workers and your own underfunded 401k and IRAs, don’t feel so alone. Throughout America, many seem to use Illinois’ terrible example to guide their own retirement planning.

In fact, according to the Daily Ticker, 75 percent of Americans nearing retirement had less than $30,000 in their retirement accounts as of 2010.

But you don’t have to make Illinois and other Americans your role model. Instead, start saving this very week, socking away a little on a regular basis and watching it compound, so you’ll have more resources when you retire.

Underfunded schools

A February 14, 2013 article in the State Journal-Register, citing figures from the National Center for Education Statistics, reports Illinois comes in dead last in providing the resources needed to educate children to high standards. While the other 49 states average 43.5 percent, Illinois provides just 28.4 percent of public education cost from state resources.

Ranking 50th out of 50 states surely means Illinois is adding to its K-12 funding, right? Wrong-a-mundo. The state has cut school funding each of the last two years.

Lesson: Were Illinois’ example practiced at your home, you would be putting away less than two-thirds what the other 49 families in your corner of town average in saving for college. Who would do that!? Avoid the Illinois example and start funding a 529 Plan while your kids are knee high to a prairie dog.

Reduced bond ratings

Standard & Poors has joined other rating agencies in again dropping Illinois’ bond rating, an action the Daily Southtown’s Scott Reeder opines results from state politicians not adhering to basic personal finance axioms like “spend less than you make.” Last year, Reeder reports, Illinois spent $738 million more than it took in, leaving it, he wrote, “dripping in debt.”

Lesson: It’s impossible not to accumulate cash for the aforementioned retirement and college expenses if you sidestep the Illinois example and always spend less than you bring home in pay.

Illinois offers dozens more examples of avoidable fiscal fumbling, so for an education on what not to do, visit www.illinoisisbroke.com and click on “News.”

Come to think of it, there is one thing the state got right, and that’s its nickname, “the Prairie State.” Prairies are flat, and so is Illinois.

Flat broke.

Published on March 5th, 2013
Modified on March 18th, 2013 - 3 Comments
Filed under: Economy

About the author: is an independent writer in Chicago who has written over 2,000 articles appearing in publications such as Barron's, Boston Globe, Chicago Sun-Times, LA Times, and more.

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3 Responses to “Avoid This Ill.-Advised State of Monetary Madness”

  1. 1
    Kurt @ Money Counselor Says:

    I have a brother who’s worked as a professor in the Illinois state university system for many years. Through absolutely no fault of his own (unless you say he should have known better than to take a state job in Illinois), his pension is in jeopardy, which is appalling. I kinda think all the state politicians for the past 20 years should do a little jail time and be forced to cough up personal assets. They’re crooks!

  2. 2
    illinois citizen Says:

    Point of clarification: The statement that Illinois schools are underfunded is inaccurate; it is based solely on the contribution made by the Illinois state government.
    Illinois schools are funded by a combination of state, local and federal taxes, primarily local property taxes.
    For each Illinois pupil, the total expenditure from all taxes is around $11,000. Based on that, Illinois ranks about 25th in the US. California’s total expenditure is only about $8600. See http://datacenter.kidscount.or.....x?ind=5199
    The Springfield State Register-Star article dated 2/14/2013 upon which you relied was a guest column by Ralph Martire, a well-known proponent of increased taxes for education. It was not an article by an objective journalist. Not surprisingly, Martire only relies upon facts that support his position for higher taxes.

  3. 3
    Jo Says:

    I lived for 10 years in IL – 20 miles east of St. Louis, MO and down the “street” from Scott AFB. YES! People do live elsewhere in IL besides Chicago and its ‘burbs. ;-P Anyways, both of my kids attended a blue-ribbon HS, of which the state pumped a lot of money into it. During that time frame teachers rarely got laid off in the entire school district and their pensions were well-funded. My former husband also had no trouble finding PT teaching positions at the local community college. Classes were well-attended as well.

    During the latter part of those 10 years, a close friend who was a disabled vet was finally able to get (after almost 30 years of attempting to do this in his home state of PA) his 100% disability rating, thanks largely in part to Senator Dick Durbin’s office.

    Former Congressman Jerry Costello constantly fought to keep the nearby Air Force Base opened, as other constituents in Congress were always finding reasons to close it. Had this occurred, the area, to include St. Louis, would have become a ghost town.

    Because of the hard work of these two men and a few others, much of this demographic area where I lived was spared. Admittingly, we had two governors who were a total joke. No further comment needed….

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