On its face, the challenge seemed Herculean. Solve the Illinois pension crisis in six weeks.
Without a doubt, the more than 60 DePaul University students who volunteered for the Public Pension Crisis Student Case Competition had no illusions they could actually find a solution for Illinois to address its $110 billion in unfunded pension debts, an issue state leaders have been grappling with for years, resulting in a recent budget stalemate.
Photo by Kathy Hillegonds."I don't think any of us actually had any idea about anything until we started really researching the problem," says Robert Cunliffe, a junior studying finance and management information systems, who participated in the competition.
"The more we learned, the more research we did, the more we realized how scary it really was. But this is such an important issue, so we decided to do the competition."
Cunliffe was one of 15 finalists on five teams who presented solutions at the one-day final round of the competition operated by the Department of Finance at the Driehaus College of Business April 19.
The case competition was part of a series of events this spring that celebrated the 10th anniversary of the college's opening of the Arditti Center for Risk Management and the Center for Financial Services. Both centers help DePaul business students gain a real-world finance education and engage with the outside financial world. The two centers bring prominent finance industry professionals into DePaul classrooms and provide opportunities for students to connect and work with financial institutions in Chicago.
Facing the Impossible with Theory and Practice
DePaul students who participated in the case competition and the faculty and staff who managed the event all say the challenge was an excellent example of what makes a DePaul business school education distinctive — real-world learning.
"You're not going to find the solution to the Illinois pension crisis in your finance book," says Michael Babicz, a finance junior. "That's why I love the DePaul education because it incorporates what you learn in the classroom with what's going on in the outside world.
"Every class I've had here has some element of real-world learning, from building a real stock portfolio, to trading with a live investment account and now this case competition," says Babicz. "It's theory and practice and that makes a perfect balance."
Celebrating Real-World Learning
Sponsored by WIPFLI CPAs and Consultants, in partnership with the nonprofit watchdog group Truth in Accounting, the case competition offered $7,000 in cash prizes to the top three teams. Winners were selected by a panel of judges who are finance professionals, including actuaries and accountants.
The solutions ranged from shifting new pensioners to a 401K-like fund to consolidating all the pensions into one management fund to save $2.6 billion in management fees.
"I thought [the competition] was fabulous," says William Burgman, director of research at Truth in Accounting. "The young people did a great job to try to grapple with some of the most difficult problems in public finance and they actually did a good job helping to think of solutions."
Finance Case Competition winners left to right: Jay Choi, Darshan Kadmar, Sebastian Vermaas, Nealkanth Patel, Connor Francesca, Kaitlyn O'Shea, Doug Palzer, Luke Hamilton, Lauren McDermott, Paul Kuligowski and Michael Sherman (not pictured). Photo by Kathy Hillegonds.
In the end, the winning team suggested readjusting the assumptions for pension investment returns, consolidating all pensions into one large state fund and reallocation of the state budget to shore up gaps in the pension contributions.
- Winners Lauren McDermott, Paul Kuligowski, and Jay Choi shared the $4,000 top prize.
- The second prize of $2,000 went to Luke Hamilton, Michael Sherman, Doug Palze and Sebastian Vermaas.
- The third prize of $1,000 will be shared by Kaitlyn O'Shea, Connor Francesca, Darshan Kadmar and Naelkanth Patel.
A Gift for the Future
In addition to the case competition, the Federal Home Loan Bank of Chicago hosted an expert panel discussion on monetary policy featuring Chicago finance leaders William C. Hunter, former director of research at the Federal Reserve Bank of Chicago; Michael H. Moskow, vice chair at The Chicago Council on Global Affairs; Diane Swonk, former managing director at Mesirow Financial; Carl Tannenbaum, chief economist at Northern Trust Bank; and Charles Wheelan, policy fellow at Dartmouth College.
The Department of Finance's celebration week finished with an dinner honoring Norman R. Bobins, non-executive chairman of The Private Bank and Trust Company and a renowned finance professional in Chicago. More than 270 people attended the dinner.
At the dinner, Bobins and his wife, Virginia, presented the university with $50,000 for the The Robert Thomas Bobins Endowed Scholarship. Named after Bobins' son, the scholarship will help provide recognition and financial assistance to the students enrolled in the Driehaus College of Business.
Overall, the anniversary celebration was a great success, says Elijah Brewer, chairman of the finance department.
"The level of support from the wide-range of financial services institutions for our events and for our students and DePaul was beyond our expectations," Brewer says. "You really don't know how much support you have within the community until you do something like this. It shows that DePaul is well-respected throughout the financial community in Chicago and, as always, the true beneficiaries were our students."
As for Babicz, although his team didn't win the case competition, he says he's richer for the entire experience.
"I want to leverage my finance degree ultimately to enact good, social change," says Babicz. "I'm not in it for the profits or the yearly bonus. This competition was about something that's affecting us all — it's real life and ultimately that's what motivated us to continue to find solutions."
Find out more about DePaul's MBA finance concentration and MS in Finance.