Teacher Tenure/Unions/Government/Pensions

[macrockett]

An article from April:

April 27, 2011
Illinois: A Laboratory of Insolvency
Hugh de Payns
GA_googleFillSlot("AT_300_250_bottom");
States have been referred to as a "laboratory in democracy", but Illinois must be seen as a laboratory in insolvency.

Illinois is a symptom of a larger problem that is facing our nation, and one that will grow in significance: insolvency. The inability to squarely face the financial facts and handle our affairs with basic prudence will not go away any time soon.

The top 100 pensions here in Illinois will cost taxpayers nearly 1 billion dollars in future benefits. Think about that: 100 people collectively will get 1 billion in payments during their retirements.

Clearly, the Illinois pension and retirement system is one of the worst in the nation. With a total liability of at least $130 Billion (and climbing) perhaps only about half is funded.

The best estimates of our public pension shortfall are at least $55 billion and maybe as high as $70 billion. Illinois is dead last in funding its pension obligations.

Here is the math: In a state of 14 million residents, this amounts to a minimum of $4000 for every man, woman and child. Yes, this debt is one to be paid out over a number of years, but that too is a problem: it has to be paid and it will continue to be paid and paid and paid, absorbing an increasing share of limited resources.

The combination of absolute debt and an anemic percentage of funding make the situation intolerable and difficult to correct.

There is plenty of blame to go around, but ultimately public unions need to understand that they cannot operate in a world where financial reality does not intrude into the picture. Union leadership seems to be an oxymoron. Officers of public unions should have been using their considerable influence in Springfield to work on salvaging the pension programs through a series of significant restructurings, funding programs, greater contributions, and making sure tax dollars were being used and allocated wisely. It was in their direct and best interest to make sure that the state was solvent and the pensions were properly funded. That was and remains their job- to look after their membership. Disregarding this basic accounting and financing of your own members retirement plan is clear evidence of their lack of seriousness and total ineptitude.

Next in line are public employees themselves. Did they really just think that things would go along without interruption? Are they really so naïve as to think that because the benefits are written into law that they will, no matter what, get paid? This is a shame as a great majority of these people are decent and hard working, but they have been paying into a grossly mismanaged system. Now what?

The politicians in Springfield are equally to blame here. Taking campaign contributions -- often times amounting to very substantial sums -- and then turning your back on the rest of the citizens of the state has consequences. At a minimum they decided to not pay attention, figuring that the problem was 20 or 30 years down the road. But reality has a way of showing up whether you want it to or not. Back in March 2010, over the strenuous objections of AFSCME, House Speaker Michael Madigan bulldozed a pension reform bill through Springfield that greatly restructured the pension rules for state employees. Well and good, but the horses were long ago out of that fiscal barn and into the next county already, Mike.

Well now what? For here it looks like the end of that road is right up ahead and here is where it ends: Bankruptcy. State insolvency in our day, and in our time.

The point of all of this is as follows: what is happening here in Illinois is already starting to make itself manifest on a national level as well. Just give it a few years to properly fester and metastasize.

Finally the citizens in many states need to wake up and pay attention to what is happening to the dollar, to our budgets, to our growing debt, and to entitlement spending. We are all to blame. By continually electing people who are beholden to corrupt institutions and corrupt and discredited political philosophies, we get what we deserve.

Unfortunately, in this case, many of us are getting now what others deserve.

Page Printed from: www.americanthinker.com/blog/2011/04/illinois_a_laboratory_of_insol.html at May 31, 2011 - 01:48:08 PM CDT

[doctorwho]

May 31, 2011 12:48:43 GMT -6 macrockett said:

An article from April:

April 27, 2011
Illinois: A Laboratory of Insolvency
Hugh de Payns
GA_googleFillSlot("AT_300_250_bottom");
States have been referred to as a "laboratory in democracy", but Illinois must be seen as a laboratory in insolvency.

Illinois is a symptom of a larger problem that is facing our nation, and one that will grow in significance: insolvency. The inability to squarely face the financial facts and handle our affairs with basic prudence will not go away any time soon.

The top 100 pensions here in Illinois will cost taxpayers nearly 1 billion dollars in future benefits. Think about that: 100 people collectively will get 1 billion in payments during their retirements.

Clearly, the Illinois pension and retirement system is one of the worst in the nation. With a total liability of at least $130 Billion (and climbing) perhaps only about half is funded.

The best estimates of our public pension shortfall are at least $55 billion and maybe as high as $70 billion. Illinois is dead last in funding its pension obligations.

Here is the math: In a state of 14 million residents, this amounts to a minimum of $4000 for every man, woman and child. Yes, this debt is one to be paid out over a number of years, but that too is a problem: it has to be paid and it will continue to be paid and paid and paid, absorbing an increasing share of limited resources.

The combination of absolute debt and an anemic percentage of funding make the situation intolerable and difficult to correct.

There is plenty of blame to go around, but ultimately public unions need to understand that they cannot operate in a world where financial reality does not intrude into the picture. Union leadership seems to be an oxymoron. Officers of public unions should have been using their considerable influence in Springfield to work on salvaging the pension programs through a series of significant restructurings, funding programs, greater contributions, and making sure tax dollars were being used and allocated wisely. It was in their direct and best interest to make sure that the state was solvent and the pensions were properly funded. That was and remains their job- to look after their membership. Disregarding this basic accounting and financing of your own members retirement plan is clear evidence of their lack of seriousness and total ineptitude.

Next in line are public employees themselves. Did they really just think that things would go along without interruption? Are they really so naïve as to think that because the benefits are written into law that they will, no matter what, get paid? This is a shame as a great majority of these people are decent and hard working, but they have been paying into a grossly mismanaged system. Now what?

The politicians in Springfield are equally to blame here. Taking campaign contributions -- often times amounting to very substantial sums -- and then turning your back on the rest of the citizens of the state has consequences. At a minimum they decided to not pay attention, figuring that the problem was 20 or 30 years down the road. But reality has a way of showing up whether you want it to or not. Back in March 2010, over the strenuous objections of AFSCME, House Speaker Michael Madigan bulldozed a pension reform bill through Springfield that greatly restructured the pension rules for state employees. Well and good, but the horses were long ago out of that fiscal barn and into the next county already, Mike.

Well now what? For here it looks like the end of that road is right up ahead and here is where it ends: Bankruptcy. State insolvency in our day, and in our time.

The point of all of this is as follows: what is happening here in Illinois is already starting to make itself manifest on a national level as well. Just give it a few years to properly fester and metastasize.

Finally the citizens in many states need to wake up and pay attention to what is happening to the dollar, to our budgets, to our growing debt, and to entitlement spending. We are all to blame. By continually electing people who are beholden to corrupt institutions and corrupt and discredited political philosophies, we get what we deserve.

Unfortunately, in this case, many of us are getting now what others deserve.

Page Printed from: www.americanthinker.com/blog/2011/04/illinois_a_laboratory_of_insol.html at May 31, 2011 - 01:48:08 PM CDT

I see Howie in the for $7.6M -- and since it is based on age 56 assumption- Kathy B will slide right in there is she decides to call it a day at the end of this contract

[macrockett]

There is also another article on the previous page I posted today.

[macrockett]

Round one in CO and MN went against the public pension holders.

I haven't read the opinions, but ultimately I believe that the issue will be resolved as the Chicago law firms have reasoned, that what has been earned to date is vested, going forward however, benefits can be changed for those currently employed.

www.nytimes.com/2011/07/01/business/01pension.html

June 30, 2011
Two Rulings Find Cuts in Public Pensions Permissible
By MARY WILLIAMS WALSH

Judges in Colorado and Minnesota have dismissed court challenges by retired public workers whose pensions had been cut — developments that may embolden other states and cities to use pension reductions as a tool to help balance their budgets.

The two lawsuits sought to reverse reductions in the cost-of-living adjustments that Colorado and Minnesota had previously promised to retired public workers. Generally speaking, once lawmakers have agreed to provide certain pension benefits to public workers, it is difficult, if not impossible, to roll them back because of protective language in state laws and constitutions and years of court interpretations.

Public pensions are considered so bulletproof that when the city of Vallejo, Calif., recently restructured its finances in bankruptcy, it cut other costs but left worker pensions intact.

The two court decisions, issued Wednesday, suggest that the legal tide may be changing for public pensioners. The political tide has already turned in some places — in addition to Colorado and Minnesota, South Dakota and New Jersey have also cut cost-of-living benefits for current retirees, and other states have been awaiting legal guidance before doing the same.

In their court filings, retirees in Colorado and Minnesota had argued that their benefits were contractual in nature, and therefore protected by state and federal constitutional language barring the impairment of contracts.

However, in his ruling dismissing the Minnesota case, Judge Gregg E. Johnson of the state’s Second Judicial District Court wrote that the retirees in that state “have not met their burden to show unconstitutionality beyond a reasonable doubt.”

Judge Robert S. Hyatt, a district judge in Denver, offered a different line of thinking, noting that the 2010 state law that cut the benefits did not actually allow the state to remove money from the pension fund and use it to balance the budget.

Rather, he wrote, the law required the state to send even more money to the pension fund at the same time that it required retirees to give up part of their benefit, “in order to create a larger pool of investable funds and thus provide for sustainable pension benefits in the future.”

He also drew a distinction between a base pension and a cost-of-living adjustment, often called a COLA. He suggested that the inflation adjustment could be reduced, but the base pension could not.

William T. Payne, a lawyer in Pittsburgh whose firm represented the retirees in both cases, said his clients were studying their options and might appeal.

Another lawyer at the firm, Stephen M. Pincus, said in a statement: “Under the courts’ reasoning, the legislatures could eliminate the entire COLA and the retirees would have no recourse.”

There has not yet been a decision in a third lawsuit challenging a cost-of-living adjustment cutback in South Dakota.

The three cases have been closely watched as bellwethers. Many states and cities have been trying to rein in the cost of their pension systems, but the easiest changes — like closing the pension plans to new members and making fixed contributions to 401(k) accounts instead — can take decades to produce any savings. Cuts in COLAs, by contrast, produce big savings immediately.

Mr. Pincus said it was not clear whether the two new rulings would affect the thinking of officials in other states. “Trial court decisions are not binding on courts in their own states, let alone other states,” he said. He added that appellate courts in other states, including California and West Virginia, had found that cost-of-living adjustments could not be reduced.

Cost-of-living adjustments are found primarily in the public sector, and in the past, states and cities have prided themselves on the practice of shielding their retirees from inflation. Very few companies offer pensions with cost-of-living adjustments. Social Security benefits are adjusted for inflation, but the adjustments can go both up and down.

Ever since the stock market crash of 2008 wiped out many people’s retirement savings, officials have had a hard time persuading taxpayers of the virtues of covering the cost of inflation-adjusted pensions, which typical taxpayers no longer get themselves.

[southsidesignmaker]

Big Mac,

An interesting article indeed. One can only wonder how long it will be until the court finds "FOR THE TAXPAYER" in the end of work history bumps of 20% plus that have sweetened the deal for many pensioneers.

I suspect that if these bumps were considered illegal maybe a rollback for those receiving current pensions may be in order.

[macrockett]

Jul 2, 2011 12:03:51 GMT -6 southsidesignmaker said:

Big Mac,

An interesting article indeed. One can only wonder how long it will be until the court finds "FOR THE TAXPAYER" in the end of work history bumps of 20% plus that have sweetened the deal for many pensioneers.

I suspect that if these bumps were considered illegal maybe a rollback for those receiving current pensions may be in order.

As you know, Illinois changed its law to prevent footing the bill for more than 6% raises which now fall on the local taxing body, but even that distorts the actuarial assumptions in that when you bump even 6 per year for say 3 years, the employee will never pay in sufficiently to offset the benefit derived during the retirement period, often 12 + years and, in many cases, significantly longer.

Right now I am more worried about what is already here in terms of unfunded liabilities for pensions and OPEBs. I believe Illinois is currently in a meltdown. Apply the following video re NJ to here.

video.cnbc.com/gallery/?video=3000030250

[macrockett]

Nice interactive map of states pension assumptions and funding based on various return levels.

www.pbs.org/newshour/rundown/2011/06/can-investment-assumptions-worsen-the-state-pension-fund-crisis-1.html

Most recently Rhode Island reviewed and changed their pension investment return (and other) assumption after SEC heat. It increased the unfunded liability by 27%:

www.plansponsor.com/New_Assumptions_Push_up_RI_Pension_Liability.aspx

www.plansponsor.com/SEC_Looking_into_RI_Bond_Transactions.aspx

New Assumptions Push up RI Pension Liability
April 14, 2011 (PLANSPONSOR.com) - Rhode Island's retirement board has approved a new set of assumptions that estimates the state's unfunded pension liability is 27% higher than previously thought.

The Associate Press reports that the board of the Employees' Retirement System of Rhode Island on Wednesday voted 9-6 to approve the recommendations laid out in a report compiled by actuaries to change several assumptions it makes about the state's pensions, including lowering the expected investment return from 8.25% to 7.5%, decreasing the rate of inflation from 3% to 2.75% and increasing the life expectancy of retirees. That bumped up the unfunded pension liability by $1.4 billion to $6.8 billion.

The changes come amid an SEC investigation into whether states are adequately disclosing pension liabilities. It began an investigation in January into Rhode Island's disclosure practices, looking at the state's bond transactions since 2007 (see SEC Looking into RI Bond Transactions).

General Treasurer Gina Raimondo, who began a review of the state's pension assumptions shortly before the SEC investigation was announced, the AP noted, said the new assumptions were more accurate and in the best interest of retirees who benefit from the system. "It's a vote to have our assumptions reflect reality, which I believe is the first step to bringing about a truly sustainable system with long-term financial integrity," Raimondo said.
Raimondo also conceded the new assumptions will create budgetary pressures. The news report said if no changes are made to the plan's provisions, such as the size of benefits or how much workers must contribute, taxpayers would have to put $156.5 million more into the system in 2013 _ about $100 million of which would come from the state and the rest from cities and towns.

Rebecca Moore
[e-mail]

[macrockett]

www.youtube.com/watch?v=NQZEv5ao514&feature=relmfu (Out of Sync video)

illinoispolicy.org/uploads/files/PublicEmployeeCompensationFINAL.pdf (out of sync pdf)

www.youtube.com/watch?v=f_lMz41dcEg (AFSCME's third raise in 2011)
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illinoispolicy.org/news/article.asp?ArticleSource=4295
7/20/2011

Illinois Policy Institute visiting scholar Wendell Cox was featured in a Southern Illinoisan story discussing "Out of Sync," the Institute's new report highlighting the disparity between state employee compensation and that of private sector Illinoisans.

According to the report, [c]ompensation per state government employee averaged $69,500 - 23 percent more than a private sector worker's average of $56,500. Compensation for a local government employee averaged $63,100, which is 12 percent more than a comparable private sector worker, according to the report. Cox said the report relies on the most recent data available, which is from 2008.

During a conference call Tuesday, Cox said a large portion of the difference in compensation is due to employer paid benefits, which were more than 1 1/2 times that of private employees.

Cox said with an estimated $80 t0 $200 billion underfunded pension system, the data likely understates the difference between government and private employee compensation.

The report states that government employee compensation has been increasing faster than in the private sector. Cox said between 1993 and 2008, full-time state employee compensation rose $11,700 relative to private employee compensation and local government employee compensation rose $4,800 compared to the private sector.

Cox said the report attempts to bring two needed changes to light: the need for parity in pay between the public and private sector and the need to recognize the cost of a defined- benefits pension package, which he said has mostly disappeared in the private sector.

Cox said the current system of compensation for public employees is not sustainable.

"We are facing a crisis of just incomprehensible proportions."

thesouthern.com/news/local/article_f70d13f6-b28e-11e0-8aee-001cc4c002e0.html#ixzz1SeTdpiQw (full article)

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illinoispolicy.org/news/article.asp?ArticleSource=4288 (Out of Sync article)

Out of Sync: Government and Private Employee Compensation in Illinois
Share |

7/19/2011

Download the full report here.
Download the one-page Policy Point summary here.

Below is the Executive Summary and Key Findings sections of the report. The full, 24-page report is available for download here.
Executive Summary

Since the January 2011 tax hike, Illinoisans have seen more of their household budgets go to shoulder the growing cost of government employee compensation packages – packages made up of overly generous pay and perks that many can only dream of. Righting this imbalance is one of the great social justice questions facing policymakers today.

In 2008, government employee wages and benefits accounted for one-third of Illinois state government spending and two-thirds of Illinois local government spending. This study details how much of this spending is disproportionate with comparable private sector spending and current financial realities.

As fiscal year 2012 begins, governments in Illinois continue to face serious budgetary challenges – perhaps the most serious since the Great Depression. This situation requires a thorough review of expenditures, particularly in the realm of government employee compensation.


At a time when one out of 11 Illinoisans are out of work, Illinois's state employees
are protesting the fact that they didn't get their third pay raise of the year. This short
video is an introduction to the report Out of Sync: Government and Private Employee
Compensation in Illinois.

Solving the state’s fiscal crisis and, by extension, the flight of people and businesses from Illinois, will require tackling government labor costs. The expectations of state workers should be balanced with those of others who rely on government spending, such as welfare beneficiaries, contractors, service providers and the state’s creditors, as well as the taxpayers who pay the bills.

Right-sizing public employee compensation will help balance the budget in a fair manner, maintain funding for core government services and protect overburdened taxpayers, thereby resulting in a stronger, more prosperous Illinois.
Key Findings

Average Employee Compensation in Illinois

Overall, the average compensation for an Illinois government worker is higher than the average compensation for a private sector worker in Illinois. It is estimated that in 2008:

Compensation per state government employee averaged $69,500, which is 23 percent more than the private sector worker average of $56,500. Much of the difference was in employer-paid benefits, which were more than 1.5 times that of private employees. State employees received 16 percent more in wages and salaries than private employees.

Compensation per local government employee averaged $63,100, which is 12 percent more than the private sector worker average of $56,500. Much of the difference was in employer-paid benefits, which were more than 1.5 times that of private employees. Local government employees received 4 percent more in wages and salaries than private employees.

Compensation Per Hour Worked: The gap between state and private employee compensation is greater per hour worked. The more generous state government paid time off policies raise the state government employee compensation advantage to 28.8 percent over private employees.

Likely Understatement of Government Employee Benefits: These data, it should be noted, appear to understate the difference between government and private employee compensation in Illinois.

The state has underpaid its annual pension and retiree health care obligations for some time. These deficits, which amounted to $2 billion in 2008 alone, will need to be paid. If the payments had been made on time, recorded levels of state employee compensation would be higher.

There also is evidence of underpayment of annual pension and retiree health care obligations in local governments, though the extent of underfunding is undetermined.

Further, the cost to taxpayers has been increased by the failure to make on-time payments, because of the obligation to pay interest on deficient balances (interest that would otherwise be earned by the funds). However, this is not a cost of employee compensation, but rather results from the state’s financial management difficulties.

At the same time, government employee compensation has been rising faster than that of private employees. Between 1993 and 2008, overall full-time equivalent state employee compensation rose $11,700 relative to private employee compensation. Local government employee compensation rose $4,800 relative to private employee compensation (all data is adjusted for inflation).

Comparing Private Sector and Government Jobs

There is no reason for government employee compensation to differ from private employee compensation for comparable jobs. However, differences between private and government employment make it difficult to compare employee compensation for equivalent positions. Studies have reported substantially different results, even using purportedly equivalent jobs.

The ultimate test is the value employees themselves place on the job. The value of a job is indicated by more than wages or even total compensation. A job can be more or less attractive based upon other characteristics, such as job security, paid time off, responsibilities and eventual retirement income. The value of a job and the attractiveness to the employee may be most effectively evaluated using relative turnover rates (voluntary separations) between comparable jobs in the government and private sectors. The employee turnover rate at the state level is comparatively low, at approximately one-quarter the private sector rate, which could indicate overall that employee compensation is higher than appropriate. Equity between the government and private sectors requires that comparable jobs be equally attractive (have the same market value), including both monetary and non-monetary factors.

Career Compensation: To circumvent the difficulties in categorizing jobs, this analysis uses a comparable job analysis, which assumes that three employees of equal education and skills begin working for the state, a local government and a private company on the same day in 1993, in jobs of the same responsibility at the same wage or salary level. Over the course of the three careers, wages, salaries and benefits are adjusted based upon trend differences between the sectors:

Over a 40-year career, the private sector worker would receive compensation of $2,246,000. The state employee would receive $2,890,000 – which is $644,000 more than the private employee. The local government employee would receive $2,580,000, which is $334,000 more than the private employee.

Over a 35-year career, the private employee would receive compensation of $1,973,000. The state employee would receive $2,457,000, which is $484,000 more than the private employee. The local government employee would receive $2,236,000, which is $263,000 more than the private employee.

Career Compensation Per Hour Worked: This analysis, however, understates the value of state government employment because state workers receive more paid time off than private sector workers. It is estimated that over a 40-year career, the average state worker would receive $210,000 more in compensation for time off than a private employee. Over a 35-year career, the state government employee advantage is estimated at $169,000. For example, state workers would receive approximately 440 more days of paid vacation days, personal days and holidays over a 35-year career. Over a 40-year career, the same state worker would receive approximately 510 additional paid days off when compared to the average employee in the private sector. The comparable private employee would have to work 6.8 days to earn the same compensation as the comparable state employee earns in five work days (one week), and would need to work 6.6 days to earn the same compensation as the average local government employee.

Additional Advantages of Government Employment: There are additional advantages of government employment relative to private sector employment. These include superior job security, superior sick time accrual, earlier retirement and higher retirement incomes. Further, in 2009, state and local government employees took approximately one-third more paid sick days than private sector employees at the national level (Illinois data was not available). Government employees have even more significant advantages in having their compensation generally established administratively. Additional advantages come through their political access to officials responsible for making compensation decisions, rather than through the competitive conditions.

Conclusion

It is important to note that employees of the state of Illinois, its units of local government and its private companies are overwhelmingly dedicated to their jobs and effective in their job performance. Nonetheless, there is strong evidence that government employees are better compensated than private employees in comparable jobs. The existing and expanding compensation gap between government and private employees is unlikely to be sustainable in the long run, especially with the economic and fiscal challenges facing Illinois.

There is a need to undertake reforms, such as moving from unsustainable defined-benefit pensions to defined-contribution retirement systems, to evolve toward parity between government and private employee compensation. These reforms should take into full consideration monetary and non-monetary factors. Because turnover rates may serve as the best indicator of job attractiveness, policymakers should seek to align compensation with the private sector. With that, Illinois’ public sector turnover rates should converge with those in the private sector.

In preparing this report, difficulties in state employee compensation reporting were evident, which make it exceedingly difficult to obtain comprehensive data. There appears to be no comprehensive state personnel report detailing employee wages, salaries, employer-paid benefits and the number of employees. For example, it was reported that there is no central source for sick day usage information. The lack of comprehensive and readily available data on state employment is a serious problem. A comprehensive state and local government employee compensation reporting system should be implemented without delay so that elected officials, administrators and taxpayers have access to accurate and reliable data. The State Comptroller could issue these reports.

This is the Executive Summary and Key Findings sections of the report. The full, 24-page report is available for download here and is viewable below.

[macrockett]

If the above post doesn't get your attention, reread the cliff notes of the executive summary:

illinoispolicy.org/uploads/files/publicemployeecompensationPP-FINAL.pdf

Now let me take you a little deeper:

www.ilga.gov/commission/cgfa2006/Upload/FinCondILStateRetirementSysMarch2011.pdf

Look at the graph on page number 24 of the pdf document: entitled State Retirement Systems Combined Unfunded Liability History (from 1997 through 2010). Let your eyes pan from the total 1997 liability to the 2010 liability.

Now review either of the two videos below and ask yourself if the similarity of the trajectory is a coincidence.


www.youtube.com/watch?v=F-QA2rkpBSY (graph at minute 3:39 of the video) or

www.chrismartenson.com/crashcourse/chapter-3-exponential-growth (from “The Crash Course”)


By the way, if you believe the following executive summary statement at the beginning of the pdf document, good luck!:

If the State continues funding according to current law, the accrued liabilities of the State retirement systems will increase from approximately $138.8 billion at the end of FY 2010 to an estimated $324.5 billion at the end of FY 2045. At the same time, assets are projected to increase from $53.2 billion to $292.0 billion. Consequently, the unfunded liabilities are projected to decrease from $85.6 billion at the end of FY 2010 to $32.4 billion at the end of FY 2045, and the funded ratio is expected to increase from 38.3% in FY 2010 to 90.0% by the end of FY 2045. All of the projected figures in this paragraph come from the various systems’ actuaries and are based upon asset market values.

[macrockett]

Where is the money from that 67% increase in our income taxes going? Well among other things:

www.chicagobusiness.com/article/20110716/ISSUE01/307169973/jesse-white-gives-raises-while-other-illinois-agencies-freeze-pay-crains-bga-probe (There is a table of raises here, that isn't printed out below)

Also listen to: illinoispolicy.org/news/article.asp?ArticleSource=4299 (11 minute interview with Illinois Policy Institure)


Jesse White gives raises while other Illinois agencies freeze pay: Crain's/BGA probe
By: Greg Hinz July 18, 2011

At a time when pay raises are a distant memory and unpaid leave a reality for many area government workers, Illinois Secretary of State Jesse White has handed out pay hikes exceeding 6% to his entire executive staff.

According to payroll data obtained under the Freedom of Information Act by the Better Government Assn., Mr. White in the 12-month period ended May 31 gave 4% and then 2% raises to roughly 250 non-union administrative personnel, almost all of them policymakers, supervisors or their clerical assistants.

The hikes collectively are costing taxpayers an extra $78,000 a month.

Mr. White declines to comment, but his spokesman says the raises were needed to keep executive salaries even with the wages of unionized workers after two years of pay freezes. The spokesman says Mr. White funded the raises by cutting other expenses, including out-of-town travel and BlackBerry cellphones.

The secretary himself is taking one day of unpaid leave a month voluntarily, the spokesman says.

But since the raises were given to even the highest-paid staffers, at least 40 department employees now are making at least $500 a month more than they were a year ago. The raises come as the state of Illinois has jacked up the individual income-tax rate by two-thirds, fallen months behind in paying even routine bills, and amassed tens of billions of dollars in unfunded pension liabilities.

One key lawmaker was “very surprised” to learn of the raises, calling them “inappropriate.”

“In normal times, it would make sense,” says State Rep. Jack Franks, D-Woodstock, who heads the House Committee on State Government Administration. But economic conditions today “are not normal,” he adds. “There has to be shared sacrifice.”

POLITICAL BACKERS

Many of those who received the raises have contributed to Mr. White's political campaign fund or to the 27th Ward Regular Democratic Organization he heads, though his spokesman says office staffers have not been allowed to give to the former since 2006. Those gifts have totaled just under $110,000 since 1997, with 25 of the 32 department officials who make more than $100,000 a year among the donors.

Others have substantial political or other connections to Mr. White or his political allies. Included: Jeannine Stroger, the wife of former Cook County Board President Todd Stroger; Glenna White-Jones, Mr. White's daughter; former Alderman Michael Wojcik (30th); Darneice Burnett, sister of Alderman Walter Burnett (27th); and Water Reclamation District Commissioner Cynthia Santos, who works part-time for Mr. White.

According to the office spokesman, money for the raises was available under the $396-million appropriation the office receives from the Legislature to issue driver's and vehicle licenses, register businesses and perform other services.

“These people work in programs where there have been great savings,” the spokesman says. “The feeling here is that this was something that was deserved.”

But BGA President Andy Shaw notes that state employee unions and Gov. Pat Quinn now are battling in court over the governor's move to block scheduled 4% raises for more than 30,000 workers. “Taxpayers have to ask how Secretary of State White can justify (that),” he says.

In comparison, 453 non-union staffers for Illinois Attorney General Lisa Madigan have not received a raise since 2006, except for those who have been promoted.

Non-union workers in agencies that report directly to Mr. Quinn have taken as many as 24 unpaid furlough days in recent years and have received no raises since Mr. Quinn succeeded Rod Blagojevich in early 2009, excepting promotions, according to his office.

The story is similar at City Hall: no raises since 2008 for non-union supervisors and up to 24 unpaid furlough days a year.

Mr. White's executive staff has taken no furlough days since taking three at the end of 2008.

Mr. White, a Democrat, was first elected secretary of state in 1998 after several terms in the Illinois House. He generally is credited with some reforms at the Secretary of State's Office after the tenure of George Ryan, who is in prison after being convicted of federal corruption charges.

But Mr. White also caught some flak for promoting his daughter and putting his biographer on the state payroll. Those issues surfaced in the 2006 campaign, when Mr. White defeated Republican Dan Rutherford, who now is the state treasurer.

© 2011 by Crain Communications Inc.

[macrockett]

This is a "duh" moment. I think I said this about two years ago in this thread.....the actuarial assumptions of 8+ % are flawed. They won't be achieved. What it means? The public sector employee contributions are insufficient to properly fund these programs and YOU the taxpayers are on the hook for any shortfall until your incompetent representatives challenge and change the law.

www.bloomberg.com/news/print/2011-07-26/states-miss-pension-targets-by-50-with-private-equity-proving-not-enough.html

States Miss Pension Targets by 50% Even With Private Equity
By Martin Z. Braun - Jul 26, 2011

In the last decade, as a wave of baby boomers began retiring, America’s biggest state pension systems earned less than half what they needed to keep up with promises made to millions of graying civil servants.

The state of Washington’s 3.92 percent return for the 10 years through June 30, 2010, after fees, was the best in a Bloomberg survey of state pensions with more than $20 billion in assets. That was nowhere close to the average yearly gains of as much as 8 percent that fund managers and public officials count on for meeting obligations to retirees.

“To assume that the median plan will reach 8 percent given this environment, that’s optimistic to say the least,” said Karl Mergenthaler, an executive director in JPMorgan Chase & Co. (JPM)’s securities services group in New York. “Public plans have an incentive to maintain their expected rate where it is. The risk is that they’ll overreach for returns.”

The last decade is forcing public pensions to re-evaluate the projected returns that determine how much money taxpayers and retirees need to pour into retirement funds. Some systems such as New York, Rhode Island and the California State Teachers Retirement System have reduced their assumptions. It’s a tough call because lowering projected gains can widen funding gaps, forcing lawmakers to put even more money into the programs.

Complicating the issue of what returns to expect are the extraordinary reverses of the last 10 years, including the Internet stock bubble, the financial crisis of 2008 and the worst recession since the Great Depression. Returns over 30 years still average more than 8 percent, according to the National Association of State Retirement Administrators. And in the 12 months after June 2010, markets and fund assets surged.
Largest Funds’ Gains

For the fiscal year ended June 30, the California Public Employees’ Retirement System -- the nation’s largest -- said it gained 20.7 percent, and the California teachers program, the second-largest pension plan, 23.1 percent. The third-largest, the New York State Common Retirement Fund, returned an estimated 14.6 percent in the fiscal year ended March 31, according to the state comptroller.

Even though state pension funds posted near-record preliminary returns for the last fiscal year, their 10-year gains are still less than 8 percent. Calpers’s 10-year return increased to 5.36 percent last year from 2.6 percent the previous year, and the California teachers’ fund, to 5.7 percent from 2.5 percent.

The median state pension fund will achieve an annual return of 6.5 percent in the next 15 years, according to a February 2011 study by Wilshire Associates, the Santa Monica, California, investment adviser.
Alternatives Beat Stocks

In outperforming other public funds over the last decade, Washington’s system benefited from investments in real estate and private-equity placements. Private-equity pools may invest borrowed funds, which can amplify returns and losses, and their holdings are often opaque. Calpers cited gains on private-equity investments for its 2011 gains.

“It’s an illiquid, high-risk strategy,” said Tim Friedman, head of communications at Preqin Ltd., a London-based private-equity research firm. “You can lose everything.”

Washington’s program, with $52.7 billion of assets as of June 30, 2010, is setting the pace as other systems are boosting private-equity investments, according to consultants. Pensions are also cutting their holdings of U.S. stocks and buying assets in developing countries such as China, India and South Africa.
Political Backlash

Three of the top five performing funds -- Washington, Oregon, and the Pennsylvania teachers fund -- had more than 30 percent of their assets in private equity and real estate, according to data compiled by the state retirement administrators’ group. Four of the five worst performers -- Maryland, Arizona, the California teachers and Georgia -- had more than 50 percent of assets in publicly traded equities.

State pension funds increased average allocations for private equity to 8.8 percent in 2010 from 3 percent in 2000, Wilshire found in its February study. Meanwhile, the average allocation to U.S. stocks by 126 state pensions declined 13.9 percentage points since 2000.

Retirement funding spurred a political backlash against public workers this year. The meager returns after years of deferred taxpayer contributions magnified funding shortages, forcing legislatures and city councils to divert more money to the pensions. This left less for public services.

Adding to the pressures facing pensions, government workers are accelerating retirements as state budget crises have led to salary cuts. Governors in Wisconsin, New Jersey, Ohio and Florida have attacked unions.
Funding Gap

A quarter of the 363 human resources managers for state and local governments reported a rise in such departures in a 2011 survey by the Center for State and Local Government Excellence. Members of the baby boom generation, born from 1946 to 1964, began turning 65 this year, but many programs allow early retirements for civil servants in their 50s.

Statewide U.S. retirement programs were short $694.2 billion, or 24 percent, of having enough assets to pay future pensions at the end of their 2010 fiscal years, based on data compiled by Bloomberg as of July 15. Hawaii and Wisconsin haven’t reported and weren’t included.

Already, 14 states raised retirement age and length-of- service requirements to help close pension funding gaps, including New Jersey, Florida and Maryland, according to the National Conference of State Legislatures. Fifteen states increased employee contribution requirements in 2011, the conference said.

State judges in Colorado and Minnesota have thrown out lawsuits by retired public employees challenging reductions to cost-of-living adjustments, ruling the increases not protected.
Performance Data Opaque

Following the money in public pensions is no easy task for retirees and taxpayers, based on the 10-year performance survey by Bloomberg. Audited results may be published online no sooner than six or nine months after a fiscal year. Returns aren’t reported consistently from fund to fund. Some disclosures may appear in annual reports, or in documents for bond sales that are unrelated to the pension funds themselves.

Bloomberg compiled data from the most recent annual reports of state pension funds with more than $20 billion in assets as of June 30, 2010. Bloomberg made follow-up calls to ensure the returns were after deduction of management fees and to request adjustments when they weren’t. The research also obtained 10- year net returns as of June 30, 2010, for funds that use a different fiscal year-end.

Two of the biggest funds whose fiscal years don’t close on June 30 -- New York’s Common Retirement Fund and Colorado’s Public Employee Retirement System -- said they couldn’t provide returns on that basis.
Median Return

For the 25 programs in the survey, the median 10-year return was 3.15 percent. The pensions did beat the Standard & Poor’s 500 Index, which had an annualized loss of 1.59 percent for the period, according to Wilshire.

Maryland’s fund, which stuck with conventional investments, ranked at the bottom of the survey with annual gains averaging 2.10 percent. The fund had assets totaling $31.9 billion as of June 30, 2010. It posted preliminary returns of 20.04 percent for fiscal 2011, boosting its 10-year return to 5.01 percent.
Top-Performing Washington

Gary Bruebaker was behind Washington’s decision to pour money into alternatives to stocks and bonds. He has been chief investment officer of the State Investment Board since 2001, leading a team of 30 investment professionals. The 56-year-old son of a single mother who worked 29 years for Oregon, Bruebaker says he takes his mission personally. He describes it as getting the best return for 400,000 public employees, retirees and beneficiaries at a “prudent” level of risk.

“Most of these people are people just like my mom,” he says. Before taking over management of the Washington fund, Bruebaker was a civil servant in Oregon for 23 1/2 years, eight of them as deputy treasurer.

At the end of fiscal 2010, the system was fourth-best funded at 92 percent, behind those of New York, North Carolina and South Dakota, according to Bloomberg data.

Alternative investments such as private-equity and hedge funds carry higher risks for retirees and taxpayers than conventional stocks and bonds. Some of the instruments are seldom traded, or not traded at all, so pensions face uncertainty about how much their investments are worth. Investing borrowed funds can amplify losses, which can be hard to limit because money placed with private-equity and hedge funds generally can’t be cashed out on demand.
Private Equity

Public retirement systems don’t disclose most details on their private-equity and hedge-fund portfolios, making it impossible for taxpayers to assess the risks. Pensions themselves may get limited information on holdings from money managers, who argue that disclosing the information could harm their strategy.

Washington was among the first public pension to invest in private equity, Bruebaker says. The state committed $13 million to a 1982 KKR & Co. buyout fund. In 2010, 26 percent of Washington’s assets were in private-equity, Bruebaker said.

They’ve picked some big winners. A placement of $25 million in Menlo Ventures VII, a 1997 Silicon Valley venture capital fund that invested in early Internet companies, was valued at $117.5 million as of Dec. 31, 2010, for a 135.6 percent return, according to fund records.
Investing Advantage

Washington’s 30-year history with private equity gives it an advantage, Bruebaker says. The state has relationships with some of the best-performing funds and takes advisory seats on big investments, allowing it to work closely with the general partner, including sharing investment ideas, he said. Serving on advisory boards enables Washington to closely monitor operations and investments, the investment chief said.

“Whenever they do something special, we want to be one of the first calls,” Bruebaker said.

Washington’s heavier weighting toward private equity gave it a boost from 2004 to 2007, as easy credit enabled buyout funds to borrow cheaply and distribute cash to investors. In 2006, Washington’s private-equity portfolio gained 39.5 percent, compared with 8.6 percent by the S&P 500. Over the decade through June 2010, the fund’s private-equity investments returned 6.6 percent, fund records show.
Index Funds

In asset classes such as U.S. stocks where it believes managers can’t beat the market consistently, Washington has moved to funds that track an index, Bruebaker says. All of Washington’s $10.4 billion of U.S. shares, as of March 31, are in a BlackRock Inc. (BLK) fund matching all American equities, he says. The state has $7 billion of its international developed- market stocks in index funds too, according to the fund’s March 31 quarterly statement.

Washington is also increasing its allocation to emerging markets, Bruebaker says. In April, the state agreed to invest $75 million in a $750 million fund being raised by Prosperitas Real Estate Partners to invest in Brazilian property.

“Growth is clearly not going to come from the U.S.,” Bruebaker said. “That’s not a slap against the United States. It’s the reality of the marketplace.”

Some pensions invested as much as 65 percent in stocks, helping to account for the decade’s low returns, according to Eileen Neill, a Wilshire managing director. The opening 10 years of this century was the first in 70 years in which the U.S. stock market had a negative return, she said.

“If you had a lot of equity-like investments in your portfolio, you certainly didn’t get anywhere near that 8 percent return,” Neill said.
Stocks Betray Maryland

Maryland had 67 percent of its assets in stocks in 2001, a figure that declined to 51 percent by the end of the decade, according to the fund’s reports.

The state’s pension assets at 2010 year-end were 37 percent short of covering pensions promised to 120,247 retirees and 144,343 active vested civil servants, 10th-worst among state systems, according to Bloomberg data.

During the decade, the state’s domestic stock portfolio performed worse than the market, trailing the S&P 500 or the Dow Wilshire 5000 five years out of 10, including four straight from 2005 through 2008, the fund’s financial reports show.
Legislative Critique

The state Department of Legislative Services, a nonpartisan agency that provides research and policy analysis to Maryland’s legislature, has “repeatedly expressed concern” about the performance of the state’s active U.S. equity managers, according to a draft November 2010 presentation to the Joint Committee on Pensions.

For five straight years through 2010, passively managed funds structured to match a stock market index did better than actively managed ones, which collect higher fees, the legislative services analysts found. The percentage of the state’s domestic stockholdings placed with passive funds declined to 45 percent from about 71 percent in fiscal 2008, according to the office.

The performance of active U.S. stock managers has improved this year, beating their benchmark by 0.59 percentage point, said Robert Burd, the deputy chief investment officer for Maryland’s pension system since March.

“We have confidence in our current manager lineup to add value over time,” said Burd, 42, who has been with the system since 2001.

The state’s decision in 2008 to allocate money to a program targeting so-called emerging managers led to the decline in the percentage of passive managers, Burd said. Emerging managers are small firms that may be ignored by large institutional investors and often are women or members of minorities.
Maryland’s New Plan

Manager performance “only slightly explains,” why the fund did worse than its peers, Burd said. “Asset allocation explains 90 percent,” he said.

“A lot of our peers were earlier into private equity,” Burd said. It took the fund’s trustees time to get comfortable with the illiquidity, use of leverage and lack of transparency that are characteristic of private-equity funds, Burd said.

Maryland now aims to put 10 percent of its portfolio in private equity and the same share each into bonds, real estate and “credit opportunities,” which include high-yield instruments and distressed debt, according to Burd. It is also allocating 15 percent to assets that will protect against inflation such as commodities, 7 percent to hedge funds and 2 percent to cash. The program is cutting the proportion for stocks to 36 percent from 51 percent, Burd said.

As Maryland diversifies its investments, it has improved expected returns while reducing portfolio risk, according to an analysis by the investment consulting group Hewitt EnnisKnupp Inc., cited in the Department of Legislative Services report.
Boom, Bust, Reaction

Maryland’s Sharpe Ratio, a measurement of the return that can be expected from each unit of risk, increased to 0.377 as of June 30, 2010, from 0.242 as of June 30, 2007, according to the report.

Although it may not appear achievable based on the last decade, public pensions should be able to return 8 percent a year on average over 30 to 40 years, said Wilshire’s Neill. Stocks have earned about 10 percent annually over the last 70 years, and will continue to produce “high single-digit” returns, she said. The debt weighing on the U.S. government, businesses and consumers will decline over the next 10 years, Neill said.

“There are regular booms and busts, and then there’s reactions,” Neill said. “Ultimately, there’s always recovery, and that’s what you have to keep in mind as you’re looking out over a 10-year period.”

To contact the reporter on this story: Martin Z. Braun in New York at [e-mail]

To contact the editor responsible for this story: Mark Tannenbaum at [e-mail]

[macrockett]

These kind of stories are all over the country now. When Massachusetts, in April, cut public unions collective bargaining rights wrt healthcare options, you know something is up. That something is the deep fiscal mess that so many States and local governments are in.

www.statebudgetsolutions.org/publications/detail/illinois-likely-site-of-next-fight-over-public-employee-benefits

IN THE NEWS : ILLINOIS
Illinois likely site of next fight over public employee benefits
StLToday.com | by Kevin McDermott | August 23, 2011

Unionized public employees are once again clashing with state leaders who want to roll back benefits and weaken collective bargaining to shore up a government budget.

And this time, the threat isn't coming in a Republican stronghold like Wisconsin, Indiana or Ohio, but rather in that "bluest" of states, Illinois.

Leaders in both parties in Springfield appear ready to push a major pension reform bill this fall that would remove Illinois workers' current defined-benefit plan and replace it with less lucrative options, including a 401(k) plan.

Meanwhile, Democratic Gov. Pat Quinn - who just last year was accused by Republicans of coddling labor for votes - is now being accused by labor of trying to renege on salary and benefit guarantees for union workers.

"This dispute isn't just about money. It's about the integrity of the collective bargaining process," Tim Drea, secretary-treasurer for the Illinois State AFL-CIO, said last week.

It's the kind of language that labor leaders have been using in recent "red" state showdowns between public sector unions and Republican leaders. Here, as there, labor leaders say the implications reach beyond the public sector and into the very concept of union rights.



Full article:

www.stltoday.com/news/local/illinois/article_4329eb52-4886-52c0-9287-b63d1d3286e1.html#ixzz1VrT4Gdm0

Illinois likely site of next fight over public employee benefits
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BY KEVIN McDERMOTT [e-mail] > 217-782-4912 | Posted: Monday, August 22, 2011 12:15 am | (152) Comments

SPRINGFIELD, Ill. • Unionized public employees are once again clashing with state leaders who want to roll back benefits and weaken collective bargaining to shore up a government budget.

And this time, the threat isn't coming in a Republican stronghold like Wisconsin, Indiana or Ohio, but rather in that "bluest" of states, Illinois.

Leaders in both parties in Springfield appear ready to push a major pension reform bill this fall that would remove Illinois workers' current defined-benefit plan and replace it with less lucrative options, including a 401(k) plan.

Meanwhile, Democratic Gov. Pat Quinn — who just last year was accused by Republicans of coddling labor for votes — is now being accused by labor of trying to renege on salary and benefit guarantees for union workers.

"This dispute isn't just about money. It's about the integrity of the collective bargaining process," Tim Drea, secretary-treasurer for the Illinois State AFL-CIO, said last week.

It's the kind of language that labor leaders have been using in recent "red" state showdowns between public sector unions and Republican leaders. Here, as there, labor leaders say the implications reach beyond the public sector and into the very concept of union rights.

"What the governor has done is a flat-out assault on the collective bargaining process itself," Drea said.

Quinn and others say they're acting for the long-term fiscal stability of the state, as well as the short-term necessity of paying its bills. Even with a new personal income tax hike to address what was a $12 billion budget deficit, the state still faces about $7 billion in unpaid bills. The state's worst-in-the-nation unfunded pension liability is at least $80 billion, and some claim it's actually much higher.

On July 1, Quinn announced he wouldn't honor pay raises that had been scheduled by contract for 30,000 union workers across 14 state agencies because the Legislature hadn't appropriated money for them. An arbitrator subsequently ruled against the administration. Quinn is trying to get a court to overturn that ruling.

"We will not be able to get through the fiscal year if these 30,000 employees are given raises," Quinn said last week.

While he partly blamed the Legislature, he also couched it as a stubborn issue of financial reality: "You can't give money that isn't there."

Since that argument is coming from a traditional union ally in a labor-friendly state, it may not be as easy for labor leaders here to dismiss as it is in Madison, Wis.

"When you're dealing with Democrats, it's harder (for the unions) to portray it as a needless ideological fight," said Brian Gaines, political scientist at the Institute for Government and Public Affairs at the University of Illinois at Urbana-Champaign.

Complicating matters, Gaines said, is that Quinn is "a governor who owes his election (last year) in large part to the unions.''

Quinn last week scoffed at suggestions that the issue threatens to drive a wedge between him and one of his most important political constituencies. "Working people are behind me," he said. "I do very well with working people."

But the issue clearly has forced Quinn into a difficult balancing act between his long history as a pro-labor progressive and his current post at the helm of one of the most fiscally unstable states in America.

The unions point out that they have already conceded plenty to the state's fiscal crises. In the past two years, they've seen postponed pay raises, furloughs and a new pension system that's less generous to new hires. A recent education overhaul, which essentially ends traditional teacher tenure, was approved with the agreement of the state's two main teachers unions.

Union supporters also stress that the pension crisis isn't the result of overly generous benefits, but rather of the state's failure over decades to make its full regularly scheduled payments to retirement funds.

"Just like in other states, Wisconsin or Ohio, they're putting the blame on state workers," said Dwayne Hall, a Joliet-based child services investigator for the state, as he and other workers picketed the Illinois State Fair on Wednesday.

That was "Governor's Day" at the fair, when the sitting governor, his party and their supporters traditionally gather for a show of unity amid the corn dogs and lemonade. As Quinn was inside the fairground giving speeches, union workers were waving signs that implored, "Gov. Quinn Keep Your Word."

That's a very different relationship with labor than the one Quinn enjoyed just a few months ago, when he stood firmly with unions in Illinois, and nationally, during the public employee showdown in Wisconsin.

During that conflict, a group of Democratic Wisconsin state senators fled into Illinois in an effort to thwart what they saw as Republican Gov. Scott Walker's attempt to break the public employee unions there. Quinn, thrust into a national story, reveled in his role as leader of a safe-haven state for organized labor.

"We welcome them. They can stay as long as they want," Quinn said of the Wisconsin senators in a February interview on MSNBC's "Hardball with Chris Matthews." Quinn in the interview lambasted anti-union sentiment in general, and his fellow governor Walker personally, accusing him of waging "a war on workers."

"The people who teach our kids, who plow the snow off our interstates, those are working men and women and they deserve a decent pay and decent retirement," Quinn said. "What Gov. Scott Walker's doing in Wisconsin is just plain wrong."

Some in the Illinois labor movement now view that interview with irony and bitterness — even to the point of comparing Quinn, unfavorably, with Walker.

"Whatever you think of what Scott Walker did … at least he changed the law (to do it). Pat Quinn is just ignoring the law, to flout collective bargaining rights," said Anders Lindall, spokesman for the American Federation of State, County and Municipal Employees (AFSCME) of Illinois.

While Republican leaders and union workers in other states have accused each other of ulterior motives, Gaines, the political scientist, believes both sides in the Illinois dispute are saying exactly what they mean.

"It's not that (Quinn) is trying to pick a fight … I think if he could find the money somewhere else, he would," said Gaines. As for the union workers, he said, "I think they're genuinely upset. They feel like they put him in office, and he owes them."

Copyright 2011 STLtoday.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Read more: www.stltoday.com/news/local/illinois/article_4329eb52-4886-52c0-9287-b63d1d3286e1.html#ixzz1VuJ9C0CT

[macrockett]

Let's call this "Hogs at the trough." Every teacher and administrator should be outraged by this. These union officials are siphoning off your contributions and your future benefits without paying in anywhere close to what you have. Worse yet, these are YOUR (teacher's) representatives at the NEA, IFT, IEA and so on.

us1.campaign-archive1.com/?u=a68ef2524fe09d37b09403928&id=acfb7cb6b6&e=9f345e8e91 (the background)

www.wicd15.com/newsroom/top_stories/videos/vid_4600.shtml (the video)


For the Good of Illinois


“The top union bosses in the country and Illinois are…
Occupying our teachers’ retirement system.”
source: openthebooks.com

Unions are not government. The “boss” work is not in the classroom or on behalf of taxpayers.

The top union bosses and most powerful Illinois Democratic Party officials at the National Education Association (NEA), Illinois AFL-CIO, Illinois Federation of Teachers (IFT) and Illinois Education Association (IEA) are occupying and draining millions from rank-and-file teacher pensions. They literally muscled their way in.

SB2499 would end the pension abuse loopholes.

One of these bosses is Ed Geppert. Who is he? Ex-President of Illinois Federation of Teachers (IFT) and still leads the organization on the IFT Board. At life expectancy, Geppert will drain $4 million from TRS. As a teacher, Geppert earned $84,000 total. He left the classroom and spent 24 years at the union with final salary of $260,000. Annual teachers pension…$185,000!

Another boss is Ann Davis. As a teacher, Davis’ pension would have been about $48,000/ year. After six years as President of IFT, her annual pension spiked to nearly $150,000. At life expectancy, she’ll drain an extra $2 million from regular teachers.

The retirements of some union bosses are already exceeding their final salaries.

In 2007, Margaret Blackshere rose to become President of the Illinois AFL-CIO and one of the most powerful labor activists and Democratic Party leaders. Annual teacher pension: $108,000. Highest working salary: $110,600.

And it goes all the way to Washington, DC. Reg Weaver was head of the national teachers union (NEA) in Washington, DC. In 2008, he retired on an Illinois state teacher pension of $20,200/month!

Since September 6th, we’ve been writing about special, sweetheart union and other private organizations with insider access into our state level pension systems. Thirty-four union bosses are draining $4 million annually from our state teacher retirement system.

Who are they? Visit www.openthebooks.com or click here to see the screen shots.

Listen to my debate with an Illinois State University professor on SB2499 and pension corruption.


Sincerely,


Adam Andrzejewski
Founder | CEO
For the Good of Illinois


PS. Come to our Liberty Lunch at Hyatt Lodge- McDonalds in Oak Brook on Veteran’s Day. Lunch features National Policy Director of AFP, and author of Democracy Denied, Phil Kerpen. On Oct. 13th, Kerpen appeared on the Sean Hannity Show. Click here to reserve your lunch ticket. All in attendance will received a complementary signed book.

[macrockett]

To those who think the State will honor its funding commitment to School Districts I would suggest a "plan B."

www.chicagotribune.com/news/opinion/editorials/ct-edit-pension-20111113,0,4211687.story
chicagotribune.com

And on the 7th day, they rested.
Money for your child's school? For the disabled? For tax relief? Nah. Lawmakers would have to fix the pensions.

November 13, 2011
Advertisement

On Thursday, Illinois lawmakers fled Springfield for their homes after a do-little veto session spread over three autumn weeks. The legislators, who actually had convened for six days, couldn't claim exhaustion: As the headline atop Friday's Tribune reported, one legislator described the skimpy work product of the General Assembly as "slackluster."

We're relieved to report that, on the seventh day, lawmakers rested. Friday was Veterans Day. A government holiday. Whew.

Top on the list of crises that our solons failed to address: the potential collapse of a state pension system that's already the most underfunded in the nation. Legislators failed to pass the reform bill that would change the retirement benefits that current employees earn in the future, bringing them more in line with the benefits that private-sector workers receive.

That collapse of the pension system, when it comes, will have terrible consequences for today's public workers. But the financial pressures created by that system are already having terrible consequences for many other people in the state.

This year, Illinois must spend $5.8 billion — that's 17.4 percent of the state's operating budget, or more than $1 of every $6 — to meet its rising pension obligations, according to calculations by the Civic Federation of Chicago. That amount is most of what Gov. Pat Quinn, House Speaker Michael Madigan, Senate President John Cullerton and their fellow Democrats are collecting from the big income tax increase they enacted in January.

Worse, the Civic Federation estimates that the pension burden rises to $6.3 billion next year, to $7.7 billion in five years, to $8.2 billion in 10 years …

So if you'd like to see more state aid funneled to your child's school, forget it. The public pension system is devouring ever more of that money.

If you'd like to see the state spend more to care for developmentally disabled citizens in your family or your community, forget it. The public pensions get the money.

If you'd like deadbeat Illinois to pay its billions of dollars in overdue bills, including money that might keep social service agencies and suppliers and universities from having to fire workers, forget it. The public pensions get the money.

If you'd like more health care for the most disadvantaged families in our midst, forget it. The public pensions get the money.

If you'd like Illinois to offer tax relief to the working poor or to employers that might move your job to a lower-tax state, then you might have to forget that too. Lawmakers can't honestly pay for those tax breaks. The public pensions get the money.

And, no, there's no longer an easy way out, such as having state government — already approaching $200 billion in debts and unfunded obligations — go even deeper into hock by borrowing still more. Even most legislators seem to comprehend that, no matter how badly Gov. Quinn wants to pay down state debt by raising state debt, that's lunacy.

Legislators will return to Springfield for one more day, Nov. 29, to survey all they have failed to accomplish on multiple fronts.

Who knows, maybe the lawmakers are smart to avoid a tough vote. Maybe they'll get away with letting the pension system flail. Thus far, they always have.

But without this basic reform, Illinois -- with unemployment now at 10 percent -- will keep squeezing school children, will keep driving away jobs, will keep failing to pay the money it owes to people and businesses large and small across this state.

Because no matter how urgent the need for spending on other priorities, this is Illinois. The public pensions get the money.

Copyright © 2011, Chicago Tribune

[EagleDad]

There needs to be major overhaul of the public pension system in this state before it destroys everything good around it.

Actually, on second thought I would prefer the current leadership leave it alone for a while longer and take no action. Then we can have real change in the next election cycle like our Neighbors to the North.

Yeah, that's the ticket. Don't worry about it Madigan and Quinn, nothing needs to be done. I triple dare ya, go for it, make my day.