Teacher Tenure/Unions/Government/Pensions

[doctorwho]

Aug 29, 2010 19:22:21 GMT -6 southsidesignmaker said:

Thanks Mac, I did read a similar article and was stunned that a pension would sell of assets rather than "bite the bullet" and cut benefits. A farmer might consider this selling the seed corn for next year's harvest.

My concern is "how many harvests" will there be until the taxpayer is not asked, but told how much will be needed.

When will the public wake up and demand this situation change.... The sooner the better, start with cutting back all pensioners that received the "20% bump", and go back 10 years. Put all defined pension employees that are 30 or younger in self directed Keogh type plans.

one step left- get the media to actually carry the facts of the stories as presented by mac here, and others who have done that research. It's not as if the pols don't know what the issue is, but they do not want the general populace to know...nor do the unions . Once the blockade of this information is broken thru --the public will demand 'change' as one particular campaign promised..and not selective change

[asmodeus]

I think it's crazy to even discuss whether a fund should assume an 8.5% return or a 6.9% return. There should be NO defined benefit plans for public workers, period. It is unfair to the people who are footing the bill (the private sector taxpayers). How can anyone defend a system where a private worker who has a 401k that is subject to market risk should also shoulder the risk for the public union worker, who has no risk?

All this talk about rates of return is like re-arranging deck chairs on the Titanic. Unless the defined benefit plans are abolished, this inequity (as well as the systemic risk to the entire state and federal budget) will continue.

[macrockett]

I'm with you on that one. The taxpayer is providing a put to the public unions under the hypocrisy of the Democratic party disallowing private social security accounts due to the...risk! Second, while I advocate generous salaries for teachers the pensions are way over the top and do not remotely reflect retirement and other benefits in the private sector. Finally, public unions are the only legal monopolies in our country and for all intents and purposes reflect a quid pro quo with the Democratic party.

[macrockett]

Q: Who will pick up the tab for those unfunded pensions liabilities that came over from the old GM? Rather than having a much reduced obligation via the PBGC, we are on the tab for the full underfunded liability. Gotta love the union label!

Pension time bomb: The shadow hanging over GM's turnaround

Friday, August 27, 2010; A20

PRESIDENT OBAMA has a riposte for critics of his decision to rescue General Motors and Chrysler: You can't argue with success. And much good news has emanated from Detroit of late, especially from GM. Having wiped out almost all of its debt through an administration-orchestrated bankruptcy process, slashed excess plants and streamlined operations, GM is once again turning a profit: $2.2 billion so far in 2010. Sales are up; promising new models are coming to market. GM's aggressive new management is planning a public stock offering, which would let the Treasury Department start unloading the 61 percent stake it bought for nearly $50 billion. U.S. officials speak of escaping with modest losses -- a small price for averting industrial catastrophe.

All true -- up to a point. But the company's stock prospectus points to several reasons for caution, including such obvious ones as the sluggish U.S. economy and overcapacity in global auto manufacturing. And then there's a threat that the Obama-supervised bankruptcy did not address: the precarious condition of GM's immense pension plans.

With almost $100 billion in liabilities, GM's defined-benefit plans for U.S. employees (one covers a half-million United Auto Workers members, another, 200,000 white-collar personnel) are the largest of any company in America. Yet they were underfunded by $17.1 billion as of the end of 2009, and the underfunding had only slightly lessened, to $16.7 billion, as of June 30. (Chrysler has a similar problem, on a smaller scale.) Having been filled with borrowed money before Chrysler's bankruptcy, the funds can limp along for a couple of years. But, as GM's prospectus acknowledges, federal law will require it to start pumping in "significant" amounts by 2014 if not sooner. GM does not say exactly how much, but an April Government Accountability Office report suggested that a $5.9 billion injection might be required initially, with larger ones to follow. In other words, any investor who buys GM stock is buying stock in a firm whose revenue is already partially committed to retired workers.

When companies go bankrupt, their underfunded pensions often are taken over by the Pension Benefit Guaranty Corp. (PBGC), a government-run, industry-funded insurance agency, which then pays retirees a fraction of what they were owed. But that didn't happen in the GM-Chrysler bankruptcy. The UAW resisted what would have been a huge reduction in the generous benefits of its members, especially the many who retire before age 65. And the Obama administration chose not to push back.

The net effect is that the pension time bomb is still ticking. If GM earns robust profits, even more robust than it is making now, the bomb won't detonate. Otherwise -- well, in a worst-case scenario, GM winds up back in bankruptcy, with PBGC intervention both unavoidable and more expensive than it would have been last year. And that could necessitate a bailout from Congress, because of the PBGC's own deficits.

We're not offering investment advice -- just a dash of realism about a still-troubled industry, and a warning that its dependence on taxpayers may not be ended so easily.

[asmodeus]

PRESIDENT OBAMA has a riposte for critics of his decision to rescue General Motors and Chrysler: You can't argue with success. And much good news has emanated from Detroit of late, especially from GM. Having wiped out almost all of its debt through an administration-orchestrated bankruptcy process, slashed excess plants and streamlined operations, GM is once again turning a profit: $2.2 billion so far in 2010. Sales are up; promising new models are coming to market. GM's aggressive new management is planning a public stock offering, which would let the Treasury Department start unloading the 61 percent stake it bought for nearly $50 billion. U.S. officials speak of escaping with modest losses -- a small price for averting industrial catastrophe.

Yes, but it's the bondholders who took it in the moon.

This IPO is going to be interesting. Some people are saying that it should be open to everyone--not just the Wall Street insiders. But I've also heard people argue that if you let Joe Sixpack buy shares in the IPO, he may feel the urge to buy a GM car (in the hopes of boosting his stock), which would have the perverse effect of hurting companies like Ford, which didn't take government money. Talk about unintended consequences...

[Arch]

Aug 31, 2010 11:26:02 GMT -6 asmodeus said:

PRESIDENT OBAMA has a riposte for critics of his decision to rescue General Motors and Chrysler: You can't argue with success. And much good news has emanated from Detroit of late, especially from GM. Having wiped out almost all of its debt through an administration-orchestrated bankruptcy process, slashed excess plants and streamlined operations, GM is once again turning a profit: $2.2 billion so far in 2010. Sales are up; promising new models are coming to market. GM's aggressive new management is planning a public stock offering, which would let the Treasury Department start unloading the 61 percent stake it bought for nearly $50 billion. U.S. officials speak of escaping with modest losses -- a small price for averting industrial catastrophe.

Yes, but it's the bondholders who took it in the moon.

This IPO is going to be interesting. Some people are saying that it should be open to everyone--not just the Wall Street insiders. But I've also heard people argue that if you let Joe Sixpack buy shares in the IPO, he may feel the urge to buy a GM car (in the hopes of boosting his stock), which would have the perverse effect of hurting companies like Ford, which didn't take government money. Talk about unintended consequences...

Ford should just build better cars, undercut them, come up with better financing options and jam the knife in again by riding the marketing of having taken no bailout.

[macrockett]

AUGUST 27, 2010 Wall Street Journal Opinion

Public Pensions and Our Fiscal Future
Few Californians in the private sector have $1 million in savings, but that's effectively the retirement account they guarantee to many government employees.
By ARNOLD SCHWARZENEGGER

Recently some critics have accused me of bullying state employees. Headlines in California papers this month have been screaming "Gov assails state workers" and "Schwarzenegger threatens state workers."

I'm doing no such thing. State employees are hard-working and valuable contributors to our society. But here's the plain truth: California simply cannot solve its budgetary problems without addressing government-employee compensation and benefits.

As former Speaker of the State Assembly and San Francisco Mayor Willie Brown pointed out earlier this year in the San Francisco Chronicle, roughly 80 cents of every government dollar in California goes to employee compensation and benefits. Those costs have been rising fast. Spending on California's state employees over the past decade rose at nearly three times the rate our revenues grew, crowding out programs of great importance to our citizens. Neglected priorities include higher education, environmental protection, parks and recreation, and more.

Much bigger increases in employee costs are on the horizon. Thanks to huge unfunded pension and retirement health-care promises granted by past governments, and also to deceptive pension-fund accounting that understated liabilities and overstated future investment returns, California is now saddled with $550 billion of retirement debt.

The cost of servicing that debt has grown at a rate of more than 15% annually over the last decade. This year, retirement benefits—more than $6 billion—will exceed what the state is spending on higher education. Next year, retirement costs will rise another 15%. In fact, they are destined to grow so much faster than state revenues that they threaten to suck up the money for every other program in the state budget. (See the nearby chart.)

I've held a stricter line on government employment and salary increases than any governor in the modern era (overall year-to-year spending has increased just 1.4% on my watch). Nevertheless, employee costs will keep marching upwards because of pension promises, and they will never stop doing so until we get reform.

At the same time that government-employee costs have been climbing, the private-sector workers whose taxes pay for them have been hurting. Since 2007, one million private jobs have been lost in California. Median incomes of workers in the state's private sector have stagnated for more than a decade. To make matters worse, the retirement accounts of those workers in California have declined. The average 401(k) is down nationally nearly 20% since 2007. Meanwhile, the defined benefit retirement plans of government employees—for which private-sector workers are on the hook—have risen in value.

Few Californians in the private sector have $1 million in savings, but that's effectively the retirement account they guarantee to public employees who opt to retire at age 55 and are entitled to a monthly, inflation-protected check of $3,000 for the rest of their lives.

In 2003, just before I became governor, the state assembly even passed a law permitting government employees to purchase additional taxpayer-guaranteed, high-yielding retirement annuities at a discount—adding even more retirement debt. It's as if Sacramento legislators don't want a government of the people, by the people, and for the people, but a government of the employees, by the employees, and for the employees.

For years I've asked state legislators to stop adding to retirement debt. They have refused. Now the Democratic leadership of the assembly proposes to raise the tax and debt burdens on private employees in order to cover rising public-employee compensation.

But what will they do next year when those compensation costs grow 15% more? And the year after that when they've risen again? And 10 years from now, when retirement costs have reached nearly $30 billion per year? That's where government-employee retirement costs are headed even with the pension reforms I'm demanding. Imagine where they're headed without reform.

My view is different. We must not raise taxes or borrow money to cover up fundamental problems.

Much needs to be done. The Assembly needs to reverse the massive and retroactive increase in pension formulas it enacted 11 years ago. It also needs to prohibit "spiking"—giving someone a big raise in his last year of work so his pension is boosted. Government employees must be required to increase their contributions to pensions. Public pension funds must make truthful financial disclosures to the public as to the size of their liabilities, and they must use reasonable projected rates of returns on their investments. The legislature could pass those reforms in five minutes, the same amount of time it took them to pass that massive pension boost 11 years ago that adds additional costs every single day they refuse to act.

And after they've finished passing those reforms, they could take another five minutes to pass legislation terminating the annuity give-away they passed in 2003 and ending the immoral practice of pension fund board members accepting gifts or even campaign contributions from lobbyists, salesmen, unions and other special interests.

Reforming government employee compensation and benefits won't close this year's deficit. It will, however, protect the next generation of Californians from overwhelming burdens. The same is true with respect to the other reform I'm demanding—the establishment of a rainy-day fund so that legislators can't spend temporary revenue windfalls.

All of these reforms must be in place before I will sign a budget.

I am under no illusion about the difficulty of my task. Government-employee unions are the most powerful political forces in our state and largely control Democratic legislators. But for the future of our state, no task is more important.

Mr. Schwarzenegger is the governor of California.

accompanying chart: winsome.cnchost.com/MAC/pensiongraph.gif (On the second graph, showing the exponential increase in costs, you may want to revisit Professor Albert Bartlett's youtube series on exponential math)

[macrockett]

www.chicagotribune.com/news/opinion/editorials/ct-edit-pensions-20100904,0,5498288.story
chicagotribune.com
Free fall

2:49 AM CDT, September 4, 2010
Advertisement

Just when you thought the state of Illinois' fiscal trajectory couldn't get worse, Springfield has done it again. The major Illinois pension funds are selling off core assets to pay benefits. The biggest fund, Teachers' Retirement System, may have to cut $3 billion from its investment portfolio in the coming year, nearly 10 percent of its total.

This money is supposed to build over time to pay employees who've been promised retirement income at taxpayer expense. State lawmakers have catastrophically underfunded the too-generous pension system — and a forced liquidation of assets makes the outlook even worse: The pension funds are devouring their seed corn.

The effect is doubly insidious. Emergency sales of assets, by reducing the size of the nest egg, undermine investment returns in the short run. The compounding effect of that loss cripples long-term prospects as well.

Let's face it, given how Wall Street and the economy have been going, these funds weren't racking up nearly the investment returns they anticipated even before they started cracking open the piggy bank.

When they calculate their deficit projections, the state's three biggest funds assume an annual investment return of 8.5 percent. In what universe they expect to achieve that fat a return isn't specified.

True, Teachers' has posted a 9.2 percent annual return over the past 25 years — a period that included one of history's biggest bull markets. Hardly anyone in the world of finance expects a repeat of that performance anytime soon. Over the past decade, Teachers' managed a mere 3.7 percent return.

The unsurprising shortfall in its investment results contributes to the Big Lie about just how much the state owes. Bureaucrats with a vested political interest in low-balling hate to admit it, but the real amount of pension underfunding is huge — and rising, unless by some miracle these depleted investment portfolios suddenly grow to the moon. Writing in the Aug. 13 Tribune, public finance professors Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester warned that, "A true financial valuation of unfunded pension liabilities reveals a debt of more than $200 billion for (Illinois) state and local governments." They envision the state's funds empty as early as 2018.

Most public pension systems assume a somewhat less optimistic 8 percent return. And, last week, New York's system cut back to 7.5 percent. Yet even those rates perpetuate a convenient fiction: With 10-year Treasury notes yielding less than 3 percent, investments that could reasonably be expected to produce returns more than twice as lucrative inevitably involve higher risks. The potential downside from investments going sour will be borne, as ever, by the taxpayer — or by retired employees who don't get full benefits from dead pension funds.

Illinois politicians created this mess. Now they need to meet their obligations to the funds — and set realistic pension benefits for current employees. One sure road to further ruin: Gov. Pat Quinn's plan for still more billions in pension debt — borrowing on one credit card to pay down another. These funds have had enough irresponsible stewardship.

Copyright © 2010, Chicago Tribune

Example of compounding using Tribunes #s:
----- A----- B
1 1.037 1.085
2 1.075 $1.177
3 1.115 $1.277
4 1.156 $1.386
5 1.199 $1.504
6 1.244 $1.631
7 1.290 $1.770
8 1.337 $1.921
9 1.387 $2.084
10 1.438 $2.261


The above example assumes the compounding of one dollar at either 3.7 or 8.5% per year.

At the end of 10 years, under assumption of compounding of 3.7%, $1 dollar grows to $1.438. Alternatively, under assumption of compounding of 8.5%, $1 dollar grows to $2.261, (so in the last decade, actual return on investment grew about 36.39% less than projected.)

Bottom line, there are two parts to the under-funded liability that now exists. First, the failure of the State to make adequate contributions to the pensions each year. Second, the flawed actuarial assumption of 8.5% in perpetuity.

There is no question that a material portion of the unfunded liability is due to under-funding by the State of Illinois.

However, as the Tribune reported and the above compounding shows, when the actuarial assumptions do not reflect reality, and the actual return on investment slows dramatically, there is also a material impact on the unfunded liability.

The above example shows the magnitude of the later portion of the unfunded liability, the State and public unions failure to make larger contributions into the system to reflect the lower actual return on investment.

[Arch]

Dissolve it all, cut everyone a one-time check for their personal contributions into the system; let them roll it into a 401K or IRA or whatever they choose and be done with it. The sooner they realize that there is no money to pay it as it stands and do the needed course correction - the better off everyone will be. Oh but that means the politicians will miss out on their gravy train free ride on the back of the taxpayers for life... and they'll have no part of that, nope... they'll just further burden your kids and grandkids with their greedy ponzi scheme.

[macrockett]

While the TRS rebuts a number of assertions by various parties, correct me if I'm wrong, do they directly address the actuarial assumption of a projected 8.5% return on investment as being too high?


From TRS Illinois: trs.illinois.gov/subsections/press/TRSIssuesUpdate.htm

In recent months, while reporting on the financial problems faced by Illinois and other states, several news organizations, including the New York Times and Fox News, have focused attention on public pension systems throughout the country as one reason why states are facing multi-million-dollar revenue shortages.

The common thread in these stories is that public pensions are too generous, are mismanaged, make too many risky investments and force states like Illinois to spend billions of dollars every year on retirees instead of states services, and that increases the potential for budget deficits and higher taxes.

TRS has not been immune to these complaints, but in most cases the criticisms have been outright falsehoods. TRS can refute the inaccuracies that have been leveled in the media against the System in the following explanations.
Sale of TRS Assets

Claim: The Chicago Tribune, the Daily Herald in suburban Chicago and Pensions & Investments magazine are reporting that TRS could sell a much as $3 billion in assets in order to fulfill pension obligations. The story also has aired on WBBM-AM in Chicago, a main news-talk radio station.

Truth: TRS is selling assets in order to meet its obligations to retired teachers and benefit recipients. But the sale of assets is not an immediate concern for retired teachers and is not an indication that the System is going bankrupt. Retired teachers will continue to get their checks and the checks will be good.

TRS has $33 billion in assets, so selling $3 billion is about 10 percent of all TRS assets. And during fiscal year 2010 which ended in June, preliminary reports indicate that the TRS portfolio generated more than $4 billion in investment income. TRS expects to pay out $4.1 billion in pensions and benefits during fiscal year 2011, so there is enough money on hand to cover all obligations.

TRS is selling assets only because the state does not have the money on hand to make its annual, required contribution to TRS and five other state pension systems. The Comptroller’s Office is authorized to contribute $2.35 billion to TRS during fiscal year 2011, but because of the state’s budget problems, the Comptroller doesn’t have the money to make its normal monthly payment to the System.

For every month that we do not receive the state payment, TRS plans to sell approximately $250 million per month, for a potential total of $3 billion for the entire fiscal year. If the state borrows money to make the contribution, TRS will have no need to sell any more assets.

A bill authorizing the sale of bonds to make this year’s pension contribution is pending in the General Assembly. It was approved by the House this spring but is stalled in the Senate. The earliest action could be taken on the bill is in November after the general election.

In selling assets, TRS is repeating steps that were taken last year when the state initially did not have the money to pay TRS and the other retirement systems. Last year TRS sold $1.3 billion in assets until the state sold bonds to pay the pension systems.

TRS is not alone in selling assets. The State Universities Retirement System could sell $1.2 billion and the State Board of Investment could sell $960 million because the state has yet to make its contribution.
"Risky" Investments

Claim: A Northwestern University study from March, 2010 concludes TRS has the “fourth riskiest” pension system in the country, with 81.5 percent of investments classified as “risky.”

Truth: The “study” is misleading. It merely totals the assets that TRS and 24 other pension systems have that are not held in cash or invested in fixed income securities, and labels these investments as “risky.” No valuation is assigned to any of the thousands of individual investments held by TRS, so the study does not rank how risky the TRS portfolio is compared to any other system. TRS is required to maximize the resources available for retired teachers. All investments carry some element of risk. Without its investment portfolio, TRS could not keep pace with the resources needed for pension and benefit checks. Forty-nine percent of a TRS pension check comes from investment income. Check out the “study” at www.npr.org/templates/story/story.php?storyId=125059110.
“Mismanagement”

Claim: TRS is endangering teacher pensions by seeking to make a fast buck through “risky” trades in derivatives – attempting to recoup $4.4 billion in investments that were lost during fiscal year 2009.

Truth: TRS did lose $4.4 billion during 2008-2009, but almost every investor lost money. The losses stemmed from a worldwide economic downturn in stocks, bonds and real estate, not because of mismanagement or trading in derivatives. This year TRS has not made any substantial changes in its investment philosophy, and the overall $33.7 billion portfolio is on track for a positive rate of return that exceeds 19 percent. The target rate of return for TRS is 8.5 percent.
Derivatives

Claim: TRS is needlessly risking members’ assets in the last year on derivative investments in order to make a lot of money quickly. The media point a negative finger at TRS for trading in derivatives because many financial commentators blame derivative trading for sparking the 2008-2009 economic downturn.

Truth: TRS has been successfully trading in derivatives since 1986 without harming pensions. In the last year, TRS saw those derivative investments return $173 million. That is not a lot in a $33 billion portfolio and certainly not enough to cover the $4.4 billion losses of the previous year. In reality, for institutional investors like TRS, derivatives serve another purpose. They are never used to make quick profits, but to reduce risk in a large portfolio and to make some investments available at a lower cost. Despite the negative image, all large pension funds and institutional investors trade in derivatives. Derivatives comprise the largest investment market in the world, valued at $650 trillion. Derivatives are investment contracts whose value is based on the performance of a bundled group of financial assets, almost like a mutual fund. At TRS, a derivative investment is only made in conjunction with an investment in an asset that is included in the derivative package. The value of a particular investment, on its own, may vary over a period of time. But coupled with other investments, the average value of the package does not vary as wildly because the combined investments buffer each other – as one falls, another rises.
Underfunding

Claim: TRS, like many other pension systems throughout the United States, is “underfunded” over the long term and does not have sufficient resources to meet all its obligations to retired teachers in the future.

Truth: Unfortunately, TRS is underfunded in the long term. During the last fiscal year, the System’s unfunded liability, as measured under state law, stood at $35 billion, leaving a funded ratio of 52 percent. In other words, if all obligations were called due today, the System could not meet 48 percent of the outstanding pensions and benefits. That won’t happen because not all teachers will retire at once. This underfunding problem is several decades old, and has been caused primarily by state elected officials not contributing enough money to the System to meet its projected long-term needs. Evidence exists that an unfunded liability problem existed as far back as the 1950s.
Teacher Pensions are too “Generous”

Claim: The guaranteed benefits of retired teachers and other government workers are too high and are out of synch with retirement benefits found in the private sector. The rising costs of maintaining these pensions should be scaled back in order to avoid tax increases and cuts in other public services.

Truth: The average annual retirement benefit for an Illinois teacher is a little more than $43,000. When you consider that Illinois educators do not qualify for Social Security during their teaching years, this benefit cannot qualify as “too generous.” Not only are these benefits the sole monetary lifeline for retired teachers, but they stimulate the economy: The pensions and benefits paid annually to retired teachers living in Illinois create more than $4 billion in economic activity, including more than 30,000 full-time jobs that mean $2.3 billion in wages for non-teachers.
Reduce Pension Benefits for Current TRS Members

Claim: Because of Illinois’ financial trouble, benefits to existing teachers and government employees should not be guaranteed, but lowered to save the state billions of dollars every year. One argument is that pension credits for existing teachers should be left intact for service they have performed but reduced for future service they have not yet performed.

Truth: Pension benefits for existing teachers and government employees are guaranteed by Article XIII, Paragraph 5 of the Illinois Constitution and cannot be “diminished” in any way. Since 1972, at least seven court cases have affirmed the meaning of this clause. It is highly unlikely that the General Assembly will challenge this well-established legal precedent. There is no language in the Constitution that remotely comes close to allowing pension benefits to be changed prospectively for service that has not yet been performed.
Pension Guarantee

Claim: The Civic Committee of the Commercial Club of Chicago has said that pensions due to Illinois teachers and public employees are not guaranteed by the state; implying that if a state pension system goes broke, retirees have no recourse to collect the money owed them. It cites the Illinois Pension Code – 40 Illinois Compiled Statutes 5/22-403 – as saying that “any pension payable under any law herein before referred to shall not be construed to be a legal obligation or debt of the State…”

Truth: For TRS members, their pensions are guaranteed by the State of Illinois. The Civic Committee does not quote the entire law when referencing the Illinois Pension Code and leaves out an important phrase – “…unless otherwise specifically provided in the law creating such fund.” In other words, language in another state law creating a pension fund can override this section of the Illinois Pension Code.

For Illinois teachers, the section of the Pension Code cited by the Commercial Club is overridden by 40 ILCS 5/16-158(c), a part of the law that created TRS. This section specifically states, “Payment of the required State contributions and of all pensions, retirement annuities, death benefits, refunds, and other benefits granted under or assumed by this System, and all expenses in connection with the administration and operation thereof, are obligations of the State.”

In addition, Article XIII Section 5 of the Illinois Constitution says protects “membership” in any state pension system as an “enforceable contractual relationship.”

[macrockett]

When I get time, I want to address the below statement directly. It is BS to the extreme!

Claim: The guaranteed benefits of retired teachers and other government workers are too high and are out of synch with retirement benefits found in the private sector. The rising costs of maintaining these pensions should be scaled back in order to avoid tax increases and cuts in other public services.

Truth: The average annual retirement benefit for an Illinois teacher is a little more than $43,000. When you consider that Illinois educators do not qualify for Social Security during their teaching years, this benefit cannot qualify as “too generous.” Not only are these benefits the sole monetary lifeline for retired teachers, but they stimulate the economy: The pensions and benefits paid annually to retired teachers living in Illinois create more than $4 billion in economic activity, including more than 30,000 full-time jobs that mean $2.3 billion in wages for non-teachers.

[doctorwho]

Sept 5, 2010 11:58:34 GMT -6 Arch said:

Dissolve it all, cut everyone a one-time check for their personal contributions into the system; let them roll it into a 401K or IRA or whatever they choose and be done with it. The sooner they realize that there is no money to pay it as it stands and do the needed course correction - the better off everyone will be. Oh but that means the politicians will miss out on their gravy train free ride on the back of the taxpayers for life... and they'll have no part of that, nope... they'll just further burden your kids and grandkids with their greedy ponzi scheme.

for allintents and prupses exactly what my company did in 1999 with the cash plan-- as did many many major corporations in the 90's -- there was no outcry for any of us..in fact many politicians didn't want to get involved & high level judges sided with the corporations in cases that were brought. So there should be no problem now.

[asmodeus]

Truth: The average annual retirement benefit for an Illinois teacher is a little more than $43,000.

This is very misleading, as it includes teachers who spent little time in the system. It would be more useful to know the average retirement benefit for a teacher who has worked 25 or 30 years in the system. It is likely in the millions.

[macrockett]

I'm not exaggerating when I say there is not a day that goes by when there is anecdotal evidence on the street that the returns on the public pensions are way below the projected 8.5%.

The latest on CNBC around 55seconds into this video, listen to Peter Yastrow, a futures trader at the CME in Chicago: www.cnbc.com/id/15840232?video=1585469998&play=1

We are looking at a large train wreck and it will come very soon if nothing changes. Please take the time to contact your legislators and ask them what they are doing about this. Our children are going to pay dearly for this. It will come in the form of higher taxes, inferior education, fewer public services or all of the above. That's the best scenario imo.

[macrockett]

www.chicagotribune.com/news/local/ct-met-tribune-poll-mood-20100906,0,4860050.story
chicagotribune.com

Illinois voters don't trust government, poll shows
Most don't think state or federal government will make the right decisions for them

By Rick Pearson, Tribune reporter

7:31 PM CDT, September 6, 2010
Advertisement

A warning to Illinois politicians cranking up their post- Labor Day hype machines to woo voters: They're blasé at best about you, and they sure don't think the state or federal government is going to help them through uncertain times.

Yet they're also not ready to jump into the arms of tea party advocates, a new Tribune/WGN-TV poll found.

The traditional start of the fall campaign season finds Illinois voters in a mood that might be described as anti-politician rather than anti-incumbent, especially among those who don't identify with a particular political party. They're weathering a tough economy in a state with an unrelenting mess of a government, where federal corruption investigations brought down a Democratic governor and the Republican before him.

More than 6 in 10 lack confidence in Democratic-run Springfield, though the angst isn't limited to Illinois borders. Fully 55 percent of the voters say they don't have much or any confidence that the federal government will make the right decisions affecting them, according to the poll of 600 registered Illinois voters conducted Aug. 28-Wednesday. It has a margin of error of plus or minus 4 percentage points.

The results could mean trouble for Democrats in a blue state that is home to President Barack Obama and has high-ranking lawmakers in a Democratic-led Congress. Democrats control the statehouse and hold every top office in Illinois, which is awash in debt and unable to pay its bills on time.

"There is a lot of uncertainty, and I think that's what people are afraid of more than anything else," said Sue Larkin, 58, a poll respondent and political independent from the small central Illinois community of Carlock. The retired high school counselor said that when it comes to Illinois government, "I have little faith in anyone to run our state right now. No one is willing to put their job on the line to address problems."

But the concerns aren't reserved just for Illinois government or held only among independent voters, according to poll respondents.

"What happened to all the 'Mr. Smiths' that used to go to Washington?" asked Geri Dalke, 64, a retired insurance customer service employee from Niles, referring to the 1939 Frank Capra film featuring a Senate appointee who refuses to back down from opposing corruption.

"At this point, I am not really confident. I am scared for America," said Dalke, a Democrat whose elderly sister is facing the prospect of losing her job. "We seem to have lost what made us great."

The poll found only about 4 in 10 voters having some, or a lot, of faith in the federal government making the right decisions for them, while little more than 3 in 10 felt the same way about state government.

Although Democratic voters were generally supportive of their leadership in Congress and the statehouse, their leaders have reason to worry about the independent voters who are key to the Nov. 2 general election.

Six in 10 independent voters had little faith in the decisions of the federal government, and nearly 7 in 10 felt the same way about state government. Predictably, out-of-power Republicans were even more pessimistic about government decisions at the federal and state levels.

"Beyond the healthy skepticism that people have always had about government, they're seeing now that it's just not working, it's not getting them a job, it's not getting them hope in their lives," said David Yepsen, a national political reporter who now heads the Paul Simon Institute of Public Policy at Southern Illinois University in Carbondale.

"People have turned inward, and I think a lot of them are turning away from politics," Yepsen said. "It's particularly pronounced in Illinois. They're beyond laughing at their crooked politicians. It's beyond a laughing matter anymore. There's a huge ethical mess and a huge fiscal mess."

Though some disaffected, conservative voters have turned toward the tea party movement and its promotion of limited government and taxation, it appears to have gained only limited traction in the state.

The poll found 37 percent of voters said a tea party endorsement made no difference in deciding a candidate to support and 31 percent said an endorsement would make them more likely to vote against a candidate. Only 18 percent of voters said a tea party-backed candidate would be more likely to get their vote.

Even among Republicans, and those who called themselves conservatives, a plurality of voters said tea party support made no difference in their choice of a candidate.

While Illinois remains a Democratic state, the advantage Democrats have held over Republicans has fallen significantly from previous Tribune polls.

Currently, 37 percent of voters identify themselves as Democrats and 27 percent say they're Republicans — a 10-percentage-point differential that is about half the advantage Democrats had entering the 2008 election. Another 31 percent call themselves political independents.

Still, the Democratic dominance of the state revealed itself when voters were asked which party they would like to see win control of Congress.

Despite national polls forecasting a potential wave for Republicans that could let them recapture the House, 45 percent of Illinois voters said Democrats should maintain control of Congress, compared with 37 percent who back the GOP.

Independent voters, by a narrow 34 percent to 28 percent advantage, said they wanted to see a Republican takeover in Congress. But in a sign of dissatisfaction with the federal government, 1 in 5 independents said they'd like neither party to win control.

Yet voters appear more satisfied with their choices for statewide office this time than four years ago, when the race for governor against an already tarnished Gov. Rod Blagojevich and Republican rival Judy Baar Topinka divided the electorate.

This time, 52 percent of voters said they were at least somewhat satisfied with their choices for governor, while 40 percent said they weren't satisfied. In the contest for U.S. Senate featuring two candidates with credibility issues, more voters than not were at least somewhat satisfied, 49 percent to 41 percent.

But the poll indicated the recent conviction of Blagojevich on one count of lying to federal agents — one of 24 corruption counts he faced — will not play heavily on the minds of voters.

A total of 83 percent of the voters said Blagojevich's conviction will make no difference in whether they oppose or support Democratic candidates on the ballot.

Tribune reporters Cynthia Dizikes and Kristen Mack contributed to this report.

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