Teacher Tenure/Unions/Government/Pensions

[macrockett]

Digging a pension hole
Springfield politics wreaked havoc on retirement code
www.chicagotribune.com/news/watch....0,7785082.story (Posted by SSSM below as well in "News")


Here is an email I sent Senger, Cross and Johnson, my reps in Springfield and the minority leader on August 19:



Dear Minority Leader Cross, Senator Johnson and Representative Senger

As members of the Republican party I am sure you are aware of the dire financial situation in Illinois. I am also sure you are aware that there is no issue that threatens Illinois more than the unfunded pension liabilities. I personally believe that without drastic action soon, our State will experience a serious financial “event” similar to that of our country at the end of 2008. We need to take action now.

Sincerely,

Michael Crockett



As the most recent evidence of this, I present the following:

#1 $100, 000.00 plus pensions are growing exponentially while, at the same time, our State and Local governments are reducing headcount that would otherwise be paying in to this system. This will further exacerbate this situation.
illinoisreview.typepad.com/illinoisreview/2011/07/total-illinois-government-retirees-receiving-100000-a-year-soars-to-22.html


#2 The unfunded liabilities are growing exponentially as well....
Take a look at the graph in the attached pdf (FinConIL...) on page 24 of the document (unfunded liability).

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

Then compare it to either:
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”)



#3 These unfunded liabilities are growing rapidly at every level of government:

Over the last decade government, at all levels, has taken on tremendous debt and unfunded liabilities.

Our Federal Government has increased the debt from about $2 trillion to over $14 trillion in the last 30 years; from approximately $6 trillion to over $14 trillion in the last 11 years; and from $11 trillion to over $14 trillion in just the last 2 ½ years. Unfunded liabilities at the Federal level are projected to be over $60 trillion currently. This later amount is primarily attributable to Medicare, Medicaid and Social Security.

In Illinois, the long term debt has grown from approximately $12 billion in 2000 to over $45 billion presently. The unfunded liabilities are now projected at over $85 billion, principally government employees pension liability, growing from approximately $15 billion in 2000. OPEBs are approximately another $10 billion.

In Will County, the long term debt has grown from approximately $143 million in 2004 to $413 million as of the end of FY 2010. Unfunded liabilities for pension have grown from $0 in 2004 to over $143 million today. Also, OPEBs (other post employment benefits (mainly health care costs)) have grown from $0 in 2004 to almost $10 million currently.

In Naperville, long term debt is $183 million as of the end of FY 2010. In addition, unfunded pensions liabilities in Naperville have grown from $1.16 million in 2003 to a staggering $127 million currently according to the City.

This accumulated debt and the unfunded liabilities will present a significant, if not insurmountable, burden on our children and future generations.


#4 The actuarial assumptions of achievable investment returns are, in a word, ridiculous. In addition, in my opinion, assumptions that investment returns which were achievable in the 80s and 90s are reasonable in perpetuity are, at best, suspect:


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 rest of this article can be seen above, posted above on August 18th).

[macrockett]

Call this the next nightmare:

www.bloomberg.com/news/2012-03-15/unions-send-doctor-bills-to-taxpayers-steven-greenhut.html

Unions Send Doctor Bills to Taxpayers: Steven Greenhut
By Steven Greenhut - Mar 15, 2012

The U.S. public pension mess, with its $2 trillion to $3 trillion in unfunded liabilities, is such a volcano of gloom that it takes a potentially bigger problem to turn our eyes away from it.

Turn your attention instead to the size of the taxpayer- backed health-care obligations for public employees.

“Frankly, if you want to look at a truly scary set of unfunded liabilities, health care for retirees is a better choice than pensions,” said California Treasurer Bill Lockyer in an October speech meant to play down the pension crisis.

Not that Lockyer or his Democratic and union allies want to reduce any benefits that are at the heart of the problem. In their view, the real scourge is “pension envy” or perhaps “health-care envy” -- the failure of the private sector to keep up with government-benefit levels.

States and localities make their own decisions on how to finance these health-care policies. Far more government employees than private workers receive health and dental care -- and those plans cost more, require lower employee contributions and provide more comprehensive coverage.

Such generosity comes at a cost to taxpayers and municipal budgets, especially given the “promise now, pay later” approach of officials. As a recent Bloomberg News article noted, while most public pension plans are 75 percent funded, the figure for health-care plans is only 4 percent nationwide. So unlike pensions, governments are setting aside little money in advance to pay for their future obligations.
Courts Back Unions

Public-sector unions and their allies have foiled even modest efforts to scale back pensions, and the courts have done the rest. Now the unions are gearing up to fight changes in health-care plans, as well -- an issue that has reared its head after Stockton, California, announced that it was possibly headed toward a Chapter 9 bankruptcy driven by $417 million in liabilities caused by an absurdly generous lifetime medical plan.

The unions’ job is considerably easier thanks to a California Supreme Court decision in November that will make it as hard to change health-care benefits as it is to deal with pensions.

It’s not that leaders in California, which is in the deepest public-employee-related fiscal hole, don’t understand the scope of the problem. Controller John Chiang released a report in February that acknowledges a $62.1 billion unfunded health-care liability.

“California should pay $4.7 billion in 2011-12 to pay for present and future retiree health benefits,” according to Chiang’s office. “In the 2011-12 budget act, the state provided $1.71 billion to only cover current retirees’ health and dental benefits.”

With pensions, government employers and employees contribute a percentage of income into retirement funds. The liabilities depend on how well the funds perform, with higher estimated rates of return leading to a lower predicted debt and vice versa. But as Bloomberg News reported, “States haven’t financed almost 96 percent of the $627.4 billion they were projected to owe for future retiree benefits in 2010.” They try to pay these health-care costs as they go.

Few governments have the excess cash available to prepay these already promised benefits. But often there are straightforward ways to solve the problem. In 2006, Orange County cut its $1.4 billion health-care liability, in a model effort touted not just by the Republican board of supervisors but by the union representing county workers. The union said the deal demonstrated its willingness to help fix the system.
Reforms Overturned

Retirees had been placed in the same medical pool as current workers. Because retirees are older, their health-care costs are higher, so the county was subsidizing the rates for retirees. The county separated the pool, raised the monthly contributions paid by retirees and reduced the unfunded liability by $815 million. But the retirees’ group sued the county and took the case to the state Supreme Court, which ruled in a way that has made it far easier to challenge cutbacks of these benefits.

Pensions are vested, contractual rights. As such, the California courts have consistently quashed efforts to change benefits for existing workers, as is frequently done in the private sector where employers have frozen pension benefits.

Health care typically is different. It has been viewed as a non-vested benefit that can be changed at the discretion of the employer. Until now, in California.

“Under California law, a vested right to health benefits for retired county employees can be implied under certain circumstances from a county ordinance or resolution,” according to the state Supreme Court ruling.

The Orange County Register editorial board opined that “much in the way that federal courts have found penumbras in the Constitution -- i.e., meanings between the lines, or in the shading or the shadows -- the state Supreme Court found that certain benefits are the result of ’implied’ contracts.” Localities now face a high hurdle to change these benefits.

Treasurer Lockyer warned about a health-care “time bomb,” but threw the problem back to the taxpayer.

“Nothing is more important in providing for retirement security than preserving the defined-benefit pension for those who have it,” he said in the October speech. Any changes would need to be “on our terms,” he added, to preserve “the power of workers and their unions to be a balancing force to business and the unregulated marketplace in American life.”
Protected Class

To Lockyer and other representatives of the public sector, the real retirement problem is not billions of dollars in unfunded liabilities that are leading to slashed services and higher taxes, but a stingy private sector that isn’t generous enough to its workers. Instead of proposing reforms that bring government benefits down to manageable levels, the state’s Democratic leaders are proposing a bizarre new mini Social Security system that provides a few crumbs to private-sector workers. But their goal is clear.

“In general,” Voltaire wrote, “the art of government consists in taking as much money as possible from one party of the citizens to give to the other.”

In California, this art form has been perfected. It’s anybody’s guess how the government class continues to get away with it.

(Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. He is based in Sacramento, California. The opinions expressed are his own.)

Read more opinion online from Bloomberg View.

To contact the writer of this article: Steven Greenhut in Sacramento at [e-mail]

To contact the editor responsible for this article: Katy Roberts at [e-mail]

[macrockett]

In the coming years, those of you in the private sector (me included) will be at war with the public employee unions over salaries and benefits. That war has already started with at least 9 States, that I am aware of, curtailing the benefits packages of public employees. One of the current beachheads appears to be CA. Specifically San Diego and San Jose. Google them along with pensions if you want to know more.

Better yet, start following this site on at least a weekly basis: www.pensiontsunami.com/

With respect to the story above in Bloomberg on OPEBs (look that up as well as you will become more and more familiar with the ramifications of it as time goes by) lets take a look our exposure, right now, today.

Where do we start? The best thing that everyone reading this post can do is become intimately familiar with every government entity that you are exposed to, right down to your township.

But lets start with District 204. Who knows, without looking, what our exposure, right now, is to OPEB's? Anyone? Like pensions, OPEBs are future liabilities. They do not appear on any Balance Sheet, they appear only as footnotes "Notes" to the financial statements.

Lets see if anyone can give me the figure for OPEBs quoted in the most recent audited financials, FY2011. Please post it below.

The Civic Federation www.civicfed.org/ is already on top of this issue, making it a priority in its 2012 Legislative Priorities: www.civicfed.org/sites/default/files/Civic%20Federation%202012%20Legislative%20Agenda.pdf

See the last item discussed in the report.

[doctorwho]

Mar 16, 2012 9:27:55 GMT -6 macrockett said:

Call this the next nightmare:

www.bloomberg.com/news/2012-03-15/unions-send-doctor-bills-to-taxpayers-steven-greenhut.html

Unions Send Doctor Bills to Taxpayers: Steven Greenhut
By Steven Greenhut - Mar 15, 2012

The U.S. public pension mess, with its $2 trillion to $3 trillion in unfunded liabilities, is such a volcano of gloom that it takes a potentially bigger problem to turn our eyes away from it.

Turn your attention instead to the size of the taxpayer- backed health-care obligations for public employees.

“Frankly, if you want to look at a truly scary set of unfunded liabilities, health care for retirees is a better choice than pensions,” said California Treasurer Bill Lockyer in an October speech meant to play down the pension crisis.

Not that Lockyer or his Democratic and union allies want to reduce any benefits that are at the heart of the problem. In their view, the real scourge is “pension envy” or perhaps “health-care envy” -- the failure of the private sector to keep up with government-benefit levels.

States and localities make their own decisions on how to finance these health-care policies. Far more government employees than private workers receive health and dental care -- and those plans cost more, require lower employee contributions and provide more comprehensive coverage.

Such generosity comes at a cost to taxpayers and municipal budgets, especially given the “promise now, pay later” approach of officials. As a recent Bloomberg News article noted, while most public pension plans are 75 percent funded, the figure for health-care plans is only 4 percent nationwide. So unlike pensions, governments are setting aside little money in advance to pay for their future obligations.
Courts Back Unions

Public-sector unions and their allies have foiled even modest efforts to scale back pensions, and the courts have done the rest. Now the unions are gearing up to fight changes in health-care plans, as well -- an issue that has reared its head after Stockton, California, announced that it was possibly headed toward a Chapter 9 bankruptcy driven by $417 million in liabilities caused by an absurdly generous lifetime medical plan.

The unions’ job is considerably easier thanks to a California Supreme Court decision in November that will make it as hard to change health-care benefits as it is to deal with pensions.

It’s not that leaders in California, which is in the deepest public-employee-related fiscal hole, don’t understand the scope of the problem. Controller John Chiang released a report in February that acknowledges a $62.1 billion unfunded health-care liability.

“California should pay $4.7 billion in 2011-12 to pay for present and future retiree health benefits,” according to Chiang’s office. “In the 2011-12 budget act, the state provided $1.71 billion to only cover current retirees’ health and dental benefits.”

With pensions, government employers and employees contribute a percentage of income into retirement funds. The liabilities depend on how well the funds perform, with higher estimated rates of return leading to a lower predicted debt and vice versa. But as Bloomberg News reported, “States haven’t financed almost 96 percent of the $627.4 billion they were projected to owe for future retiree benefits in 2010.” They try to pay these health-care costs as they go.

Few governments have the excess cash available to prepay these already promised benefits. But often there are straightforward ways to solve the problem. In 2006, Orange County cut its $1.4 billion health-care liability, in a model effort touted not just by the Republican board of supervisors but by the union representing county workers. The union said the deal demonstrated its willingness to help fix the system.
Reforms Overturned

Retirees had been placed in the same medical pool as current workers. Because retirees are older, their health-care costs are higher, so the county was subsidizing the rates for retirees. The county separated the pool, raised the monthly contributions paid by retirees and reduced the unfunded liability by $815 million. But the retirees’ group sued the county and took the case to the state Supreme Court, which ruled in a way that has made it far easier to challenge cutbacks of these benefits.

Pensions are vested, contractual rights. As such, the California courts have consistently quashed efforts to change benefits for existing workers, as is frequently done in the private sector where employers have frozen pension benefits.

Health care typically is different. It has been viewed as a non-vested benefit that can be changed at the discretion of the employer. Until now, in California.

“Under California law, a vested right to health benefits for retired county employees can be implied under certain circumstances from a county ordinance or resolution,” according to the state Supreme Court ruling.

The Orange County Register editorial board opined that “much in the way that federal courts have found penumbras in the Constitution -- i.e., meanings between the lines, or in the shading or the shadows -- the state Supreme Court found that certain benefits are the result of ’implied’ contracts.” Localities now face a high hurdle to change these benefits.

Treasurer Lockyer warned about a health-care “time bomb,” but threw the problem back to the taxpayer.

“Nothing is more important in providing for retirement security than preserving the defined-benefit pension for those who have it,” he said in the October speech. Any changes would need to be “on our terms,” he added, to preserve “the power of workers and their unions to be a balancing force to business and the unregulated marketplace in American life.”
Protected Class

To Lockyer and other representatives of the public sector, the real retirement problem is not billions of dollars in unfunded liabilities that are leading to slashed services and higher taxes, but a stingy private sector that isn’t generous enough to its workers. Instead of proposing reforms that bring government benefits down to manageable levels, the state’s Democratic leaders are proposing a bizarre new mini Social Security system that provides a few crumbs to private-sector workers. But their goal is clear.

“In general,” Voltaire wrote, “the art of government consists in taking as much money as possible from one party of the citizens to give to the other.”

In California, this art form has been perfected. It’s anybody’s guess how the government class continues to get away with it.

(Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. He is based in Sacramento, California. The opinions expressed are his own.)

Read more opinion online from Bloomberg View.

To contact the writer of this article: Steven Greenhut in Sacramento at [e-mail]

To contact the editor responsible for this article: Katy Roberts at [e-mail]

We are so screwed !

yet funny how the fed's looked the other way when major corporations pulled their pension plans in the late 1990's and retiree benefits - reducing them to 0 wherever they could...and no one cried for us Argentina.

[macrockett]

www.nytimes.com/2012/03/17/business/untouchable-pensions-in-california-may-be-put-to-the-test.html?_r=1

March 16, 2012
Untouchable Pensions May Be Tested in California
By MARY WILLIAMS WALSH

When the city manager of troubled Stockton, Calif., had to tell city council members why it was on track to become the biggest American city yet to go bankrupt, it took hours to get through the list.

There was the free health care for retirees, the unpaid parking tickets, the revenue bonds without enough revenue to pay them. On it went, a grim drumbeat of practically every fiscal malady imaginable, except an obvious one: municipal pensions. Stockton is spending some $30 million a year to pay for them, but it has less than 70 cents set aside for every dollar of benefits its workers expect.

Some public pension experts think they know why pensions were not on the city manager’s list. They see the hidden hand of California’s giant state pension system, known as Calpers, which administers hundreds of billions of dollars in retirement obligations for municipalities across the state.

Calpers does not want cities like Stockton going back on their promises, and it argues that the state Constitution bars any reduction in pensions — and not just for people who have already retired. State law also forbids cuts in the pensions that today’s public workers expect to earn in the future, Calpers says, even in cases of severe fiscal distress. Workers at companies have no comparable protection.

Stockton is in the midst of a mediation process with its creditors that will determine by the end of June whether it will file for Chapter 9 bankruptcy, which would allow the city to negotiate reductions in its debt in court.

For Calpers, the prospect of a California city in Federal Bankruptcy Court portends a potential test of the constitutional mandate that federal law trumps state laws — in particular, the state laws that protect public workers’ pensions in California. Such a challenge could blow a hole in what experts consider the most airtight pension protections anywhere.

“Obviously, what Calpers wants is that it doesn’t come up in the process, which I think is ridiculous,” said David A. Skeel Jr., a law professor at the University of Pennsylvania who writes frequently on bankruptcy. “My view is that even the California Constitution is subsidiary to federal bankruptcy law.”

As the United States population ages and more and more public workers qualify for retirement, the cost of their pensions is growing fast, turning into a major drag on many local governments’ finances. The pension contributions that cities must make every year are rising, but their revenue, which often depends on property taxes, is not keeping up. Taxed-out residents, many of whom have lost their own pensions in the private sector, are unwilling to pay more. In tax-averse California in particular, where every tax increase must be put to a vote, officials are running out of options and some are considering bankruptcy.

Bankruptcy in America is a collective process, where creditors of a distressed company or municipality come together under court oversight and negotiate a plan to share the losses equitably, for the sake of the greater good. Some creditors may stand more toward the front of the line and others at the back, but there isn’t generally one big creditor that gets paid in full without having to get in line at all.

Yet that’s what Calpers appears to be doing.

“They will probably say it’s a statutory right and it can’t be changed by a bankruptcy court,” said James E. Spiotto, a Chapter 9 specialist with the firm of Chapman & Cutler. “I think it’s still subject to some question.”

A spokeswoman for Stockton’s city manager, Connie Cochran, said she could not discuss the city’s dealings with Calpers, citing the confidential mediation process.

When a company with a pension plan goes bankrupt in Chapter 11, it typically stops making most of its required pension contributions, just as it can stop paying many other bills. Some companies, like Northwest Airlines, even declare bankruptcy the day before a pension contribution is due, to save the cash.

Chapter 11 also permits companies to shed their pension obligations completely, if they can convince the bankruptcy judge that’s the only way they can restructure. The federal government, which insures traditional company pensions, then takes over the defunct plan and pays retirees their benefits, up to statutory limits.

There is no such backstop for state or municipal pensions. But cities, until recently, have managed to avoid bankruptcy, so there is almost no precedent for how public pensions will fare in Chapter 9.

Now that is starting to change.

Prichard, Ala., tried to file for Chapter 9 bankruptcy in 2009, after its pension fund ran out of money, but its case was thrown out by the judge, who cited a rule that Alabama cities must have bonds outstanding to qualify for Chapter 9. Prichard had no bonds at the time, just a big debt to its retirees. The city went for nearly two years without paying them their pensions, then reached an out-of-court settlement that gave them about one-third, on average, of what they had earned.

Central Falls, R.I., declared bankruptcy in 2011, after its pension fund for police officers and firefighters nearly ran out of money. The state withheld aid, and passed a law forbidding any effort to revive the pension plan by issuing bonds. Central Falls had little choice but to negotiate sharp cuts with the retirees.

In California, the only precedent is in the city of Vallejo, which declared bankruptcy in 2008. Unlike Prichard and Central Falls, which had their own pension plans, Vallejo is part of a state-run system. It kept making all of its contributions to Calpers throughout its three-year bankruptcy.

“We never shortchanged Calpers,” said Robert V. Stout, Vallejo’s finance director at the time.

Mr. Stout said he had expected to renegotiate the city’s retirement plans in bankruptcy, since everything else was on the table. At the time, Vallejo was in a fiscal tailspin with the mortgage debacle, which hit cities in California unusually hard.

But Calpers drew a line in the sand, warning Mr. Stout and his lawyers that in California, public pensions can be increased but never decreased, not just for retirees, but also for workers at midcareer.

What if the city is bankrupt and cannot afford it?

“They made it quite clear that they take that law very seriously,” Mr. Stout said. Calpers also warned that if the bankruptcy judge ruled that the state pension laws stopped at the federal courthouse door, Calpers would appeal, and make Vallejo pay its legal bills.

“We interpreted that as, ‘If we try, they’ll fight us through the courts forever,’ ” Mr. Stout said. He and Vallejo’s lawyers decided the city couldn’t afford it.

The city ended up cutting services sharply, gutting its retiree health plan, adding a 1 percent sales tax and cutting payments on its bonds. But its police officers and firefighters still qualify for full retirement at 50, and other city workers at 55.

Since Vallejo made no effort to cut pensions in bankruptcy, the legal issues remain untested, said Mr. Spiotto, the Chapter 9 lawyer.

“It’s something that’s in the process of being worked out, not only in California, but in every state,” he said. “It’s a global issue.”

A Calpers spokeswoman responded to questions by providing a 20-page position paper on the laws that protect public pensions in California. The report did not mention bankruptcy but acknowledged that some California cities were struggling.

“It will be vitally important for all interested parties to heed the legal rules protecting the vested rights of Calpers’s members,” the paper said. Challenges “may lead only to additional litigation and administrative costs.”

Critics in academic and legal circles say they believe Calpers wants to keep municipalities in its system because it needs to keep their contributions flowing in without interruption to cover the payouts it makes each month to retirees. Gov. Jerry Brown called that situation “a Ponzi scheme” last December, when he proposed a plan to lower public pension costs gradually, by offering smaller pensions to the workers that cities will hire in the future. The governor’s plan was strongly opposed by public employees’ unions, which have a strong voice in Calpers, and his fellow Democrats in the state Legislature have let it languish.

After Vallejo’s bankruptcy, Calpers’s board passed another rule that any municipality wanting to withdraw from its system would have to first pay off its shortfall, calculated in a way that makes the payment two to three times as big as in the past.

Stockton’s city manager, Robert Deis, is focusing on cutting retiree health benefits instead of pensions, because he said the retiree health plan was completely unfunded — as opposed to its pension being 70 percent funded — and the cost was growing at a faster rate.

Changing the pensions would also be complicated by the fact that some of Stockton’s retirees get both pensions and Social Security, and others get only their city pensions.

Still, the city’s annual contributions to Calpers for pensions, currently $30 million, are greater than its retiree health costs, $9 million this year. Even before the collapse of 2008, Stockton was struggling with its pension contributions. In 2007, it issued bonds to raise the cash it needed to send to Calpers. But then Calpers’s investments took a pounding in 2008, leaving Stockton with a new pension shortfall to cover — plus about $7 million of principal and interest to pay on the bonds every year.

Bankruptcy lawyers said that if such issues were not addressed in Stockton, they were likely to come up elsewhere soon.

“There are a bunch of cities in bad shape, and pensions are part of the problem,” said Mr. Skeel. “If you have a string of Chapter 9’s, I don’t think every one of them is going to say, ‘This enormous obligation can’t be touched.’ I think one of them is going to take the plunge.”

Jennifer Medina contributed reporting.

[macrockett]

Calpers 20 page position paper referred to above:

www.calpers.ca.gov/eip-docs/about/press/news/vested-rights.pdf

[macrockett]

We feel your pain Mr Ambrose

www.ocregister.com/opinion/most-345238-stockton-city.html

Published: March 19, 2012 Updated: 7:15 a.m.
Jay Ambrose: Half-measures won't fix pension mess

By JAY AMBROSE

City and state officials have been as accomplished as Washington squanderers in lavishing money they don't have and never considering that the days of sunshine and plentiful revenues might end. They thus set us up for a mighty fall. My prime example for this thesis is highly publicized Stockton, Calif., which is getting ready to treat us to what could be one of the nation's most memorable bankruptcies.

There was once nary a cloud in the Stockton sky. Press reports tell us how the housing market was booming, property taxes were zooming and the City Council was building a minor-league baseball stadium over here, a convention center over there and an entertainment complex on its waterfront. It was also doling out unbelievable retirement benefits for city employees, not the least of the generosity being free health care.

Excuse me bondholders, excuse me city retirees, excuse me citizens without necessary services, but housing prices collapsed, meaning taxes produced pennies in a 300,000-population city with extravagant commitments. It is already so bad that officials are firing unaffordable cops as murders tragically go up.

Stockton is not alone in its misery. Most of the states and hundreds of cities have put themselves in similar trouble, and we know a primary source of their excessive obligations. It is government of, by and for politicians and public employees working in mutually advantageous collusion. The unions provide votes and campaign contributions and the politicians provide good pay, pensions to die for and health and other benefits that let employees live like kings.

The pension liberality has been the real killer. It might have done political damage to the office holders if they had then taxed enough to pay for what would be due, but many cheated through surreptitious underfunding. It did not help that the stock market took a dive in 2008, rendering many invested pension funds even more hopelessly incapable of fulfilling the promises made. The national gap, according to students of the subject, is a whopping $3 trillion.

A consequence could be a generation of hurt and an America unlike the one we have known, and here are some proposed answers that won't work.

Experts I trust have looked and said an improved stock market will not solve the problem. And if the federal government coughed up the money, you could well get a credit ratings drop and less eagerness by foreign countries to lend us money except at rates that would be ruinous.

Reform is the answer, and there are glimmers of hope, as found in a Heritage Foundation piece noting that some 41 states have restructured pension plans to make them more workable. In some cases, union members have shown themselves ready to contribute more to their benefits.

But some of the most valiant fighters for the most meaningful change have faced hooligan opposition. Wisconsin unions threatened a boycott of any business failing to support them in their fight against Republican Gov. Scott Walker's efforts to save the state and, of course, are trying to remove him from office.

My guess is that it is going to take the Stockton bankruptcy and still many other drastic occurrences for the public to see the truth and politicians to forge a real rescue. It would help if some in the news business would understand that collective bargaining with a sovereign government is not a "right," and it would be nice if Obamacare were rescinded to save states from crushing Medicaid costs it would impose on them.

It won't happen over night, but if our leaders take nothing but half measures, fearful of union retaliation, even the union members will be worse off, and the rest of us will be telling tales of what a great place America used to be before some of them helped ruin it.

[macrockett]

www.dailyherald.com/article/20120321/discuss/703219993/ (LTE)

Salaries, pensions strap universities

In a Fence Post letter of March 5, a University of Illinois-Chicago official, Mr. Mark Rosati, attempted to justify tuition increases at the College of Medicine. He stated that “this is a modest increase, especially considering that since fiscal year 2002 the College of Medicine funding from the state has been cut by $21.8 million.”

Once again, our education leadership is blaming the state and taxpayers for reduced funding for their institutions — the same story we hear from K-12 educators. Yet, as is the situation with K-12, our education leadership has no problem doling out generous salaries that result in bloated pensions that the state and taxpayers get stuck paying for.
Advertisement

And UIC has obviously taken advantage of the system to reward their faculty and administrators with absurd pensions. For instance, the highest paid SURS retiree is from UIC and receives a pension of a staggering $414,468. Further investigation shows that UIC has two retirees receiving $400,000+ pensions; five UIC retirees receiving pensions from $300,000 to $399,000; 50 UIC retirees receiving pensions from $200K-$299K; 242 UIC retirees receiving pensions of $100,000 to $199,000. And this is just one institution of 73 colleges, universities and agencies covered by SURS. Little wonder there is “reduced funding” for actual education.

Then there is the report that our universities approved state-paid pensions for vendors that are private businesses. Mr. Rosati also states that “ ... we are working to provide more funds for scholarships.” Yet, the scholarship system in this state is currently embroiled in scandal.

As with our K-12 education leadership our leadership of “higher learning” continues to be part of the problem instead of part of the solution.

Ken Hofrichter

Elk Grove Village

[doctorwho]

Mar 21, 2012 21:39:58 GMT -6 macrockett said:

www.dailyherald.com/article/20120321/discuss/703219993/ (LTE)

Salaries, pensions strap universities

In a Fence Post letter of March 5, a University of Illinois-Chicago official, Mr. Mark Rosati, attempted to justify tuition increases at the College of Medicine. He stated that “this is a modest increase, especially considering that since fiscal year 2002 the College of Medicine funding from the state has been cut by $21.8 million.”

Once again, our education leadership is blaming the state and taxpayers for reduced funding for their institutions — the same story we hear from K-12 educators. Yet, as is the situation with K-12, our education leadership has no problem doling out generous salaries that result in bloated pensions that the state and taxpayers get stuck paying for.
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And UIC has obviously taken advantage of the system to reward their faculty and administrators with absurd pensions. For instance, the highest paid SURS retiree is from UIC and receives a pension of a staggering $414,468. Further investigation shows that UIC has two retirees receiving $400,000+ pensions; five UIC retirees receiving pensions from $300,000 to $399,000; 50 UIC retirees receiving pensions from $200K-$299K; 242 UIC retirees receiving pensions of $100,000 to $199,000. And this is just one institution of 73 colleges, universities and agencies covered by SURS. Little wonder there is “reduced funding” for actual education.

Then there is the report that our universities approved state-paid pensions for vendors that are private businesses. Mr. Rosati also states that “ ... we are working to provide more funds for scholarships.” Yet, the scholarship system in this state is currently embroiled in scandal.

As with our K-12 education leadership our leadership of “higher learning” continues to be part of the problem instead of part of the solution.

Ken Hofrichter

Elk Grove Village

50 years of Mike Madigan running everything- this is what you get folks -

[casey]

Absolutely Mac! Look no further than today's Tribune and see that the Madigan Machine pushed through another - Rep. Derrick Smith. The guy was arrested last week and caught on tape by the FBI for taking $7000 in bribes. He's facing federal bribery charges but that doesn't bother Madigan. He will do everything to ensure that the Dems (and specifically himself) stay in power. Absolutely pathetic.

[macrockett]

There are many people that share in the largess that Madigan extracts from the disenfranchised citizens of Illinois. After all, it takes a village to keep it going.

[macrockett]

Lawmaker hits pension jackpot
Come on, stop this nonsense


State Rep. Roger Eddy is leaving to run a group that lobbies the state. His pension as a schools chief will soar to $141,000 a year in his new job. (E. Jason Wambsgans, Chicago Tribune / January 4, 2012)

March 23, 2012
When Republican state Rep. Roger Eddy announced his retirement from the House Thursday, you could hear the "ding, ding, ding" of a slot machine all the way from Springfield.

Eddy hit the pension jackpot.

He is retiring early from the House to run the Illinois Association of School Boards, which, among other activities, lobbies the Illinois Legislature. His start date is July 1 — although now that he's leaving the Statehouse before the end of the spring session, he said it's likely he'll work for the association before July.

Why the sudden defection? One likely reason: He'll be much richer in retirement, thanks in part to taxpayers.

In his new job, Eddy will not only stay in the Teachers' Retirement System, he can collect more in benefits from it. He has been working both as a state representative and superintendent for Hutsonville Community Unit School District 1. He has been part of TRS through his Hutsonville job, where he earned a salary of $107,400. His new salary is expected to be at least $200,000, and his pension will be based on that.

Illinois Statehouse News reported that Eddy's pension as school superintendent would have been about $70,500 a year. It will climb to at least $141,000 in his new job. His predecessor at the IASB, Mike Johnson, is earning an annual pension — get ready to swallow hard — of $193,273, according to TRS.

But that's not the end of Eddy's pension largesse. He'll be eligible in two years to begin collecting a pension of about $24,000 a year from his nine years of part-time work in the Legislature. Illinois Statehouse News projected his lawmaker pension carries a lifetime value of $584,273. Eddy is 53 years old.

TRS is supported by teacher contributions — and subsidized by the state. So Eddy is going to run an organization that pleads with the state for more of your tax dollars, and every day he does that, he'll earn more credit toward a tax-subsidized pension. Yes, you can be outraged now.

Eddy is transitioning to the new job more quickly than many people expected. It looks like he's in a race against his former colleagues. Lawmakers are considering legislation that would remove private organizations, including the Illinois Association of School Boards, from the state's five public pension systems.

And rightly so. People who work for private organizations — especially organizations that lobby the state — should not be eligible for taxpayer-supported pensions. This is just one more reason that Illinois faces a pension funding crisis. Too many people get a crack at this benefit. And the top-line benefits — $193,273 a year! — are too rich.

The Tribune's Jodi S. Cohen and Jason Grotto reported in December on several private groups whose employees are enrolled in public pensions. "The cost that the state is asking the employee and the employer to pay is far below what is required to fund the benefit," Mitchell Serota, an independent actuary, told them. "So ultimately, it falls to the taxpayer to make up the difference."

Eddy told us Thursday that administrators of the school board association should be eligible for TRS because the association aims to hire educators who understand its mission. Most educators are part of TRS. Allowing them to stay in the system attracts high-quality applicants. They've been part of the system since the 1940s.

We disagree. A job advertised as paying $200,000 a year, as in Eddy's case, should not have to come with a taxpayer-supported retirement account to attract decent applicants.

Eddy also insisted his retirement from the legislature, effective midnight Tuesday, was not connected to the possible threat of pension reform legislation removing his new employer from TRS. We find that a stretch.

Regardless, his trap-door exit ought to stand as a bright reminder to legislators that it's way past time for a pension overhaul that addresses the system's catastrophic underfunding and strips away retirement perks for private-sector workers.

Copyright © 2012, Chicago Tribune

[EagleDad]

Another ridiculous example of why this public employee pension system must be thrown out and re-written.

That said I will miss Eddy in the legislature. He was fun to watch as one of the leading second amendment proponents.

[macrockett]

www.chicagotribune.com/news/opinion/editorials/ct-edit-pension-20120404,0,4801514.story

www.chicagotribune.com/news/opinion/editorials/ct-edit-pension-20120404,0,4801514.story
chicagotribune.com
Teachers and pension cuts

In a reversal, Illinois' biggest pension fund says it may have to reduce benefits to today's retirees

April 4, 2012

"The Tribune's July 5 editorial 'Rescuing public pensions' is centered on the false premise that Illinois' current pension plans for public employees are 'doomed' and unsustainable. The truth is that the state's pension plans are sustainable."

— Dick Ingram, executive director of the Illinois Teachers' Retirement System, in a letter to the editor published July 14, 2011

The politicians who run Illinois, along with many pension fund officials and union leaders, have spent years denying that their failure to demand big pension reforms threatens the retirements of public employees. That denial — often an effort to dodge blame — now stands disgraced: With insolvency looming in as little as 17 years, the head of the state's largest pension fund is warning that pension benefits promised to teachers, starting with those already retired, may need to be cut.

In a statement on its website, the Teachers' Retirement System of Illinois warns: "Preventing insolvency may include significant changes for TRS — new revenues must be generated and if they are not, benefits may have to be reduced."

A situation so dire that it threatens benefits to retirees ought to alarm every citizen of Illinois and every public worker who receives or expects to receive a pension. And remember, the $43 billion in unfunded pension obligations that burdens TRS is just one facet of the severe underfunding that officials at state, county and city governments have created for Illinois taxpayers. TRS today is only 46 percent funded; 54 percent of its future financial obligations do not exist.

What's more, TRS assumes it will achieve annual investment returns that average 8.5 percent — even though its returns averaged only 3.7 percent from 2001 to 2010. If TRS doesn't average 8.5 percent, its challenges will grow steeper.

The Springfield State Journal-Register reported Saturday that, in a confidential memo dated Feb. 9, TRS Executive Director Dick Ingram had warned TRS board members that they may need to cut benefits. Given TRS' past assurances, that's a shock for more than a third of a million people: more than 100,000 retirees or their beneficiaries, about 162,000 educators now working, and 100,000 retirees not yet old enough to claim pension benefits. "(I)t is prudent to assume that we will not be funded at the levels provided in statute ..." Ingram wrote. "However constitutionally sound or logical these provisions may be, they cannot print money."

The revelation that TRS has reversed field and now sees state government as too deeply indebted to meet its future pension costs could disrupt the cozy relationships that created this debacle:

•Teachers and other unionized public workers need to ask labor leaders why they didn't object when legislators and governors repeatedly failed to make full payments into the pension system. Employees also need to demand to know why their unions have been fighting, rather than insisting upon, major pension reforms.

•Union officials probably will try to deflect that criticism on incumbent pols whom, in many cases, the unions themselves have supported with campaign labor and huge donations. That mutual back-scratching has helped the pols and the union bosses at the profound expense of rank-and-file workers.

•And, with a general election only seven months away, citizens need to hold the politicians accountable for promising far more in pension benefits than this state's taxpayers ever could afford.

Ingram is the first pension fund official to rebel against Illinois politicians, union bosses and his peers at other funds. His board has issued its own statement warning that, "The fiscal situation of the State has deteriorated to the point that the Board no longer has confidence that the State of Illinois will be able to meet its existing funding obligations to TRS." Buck Consultants, which performed three actuarial "stress tests" for TRS, calculates that depending on the level of future contributions from the state, TRS faces insolvency in 2029, 2037 or 2049. In this case insolvency means TRS will have exhausted its invested assets and will only be able to pay benefits from then-current income.

That information pushed Ingram and TRS to issue its warning.

TRS' website now includes an indictment of numerous deceits that TRS labels "Illinois Pension Math." In that Alice-in-Wonderland arithmetic long practiced by politicians here, "Future savings over several decades from reform measures are counted now before they are actually realized." That's a whack at politicians who have boasted about creating far-off savings pegged to the retirements of workers hired after Jan. 1, 2011. The problem, by contrast, is today.

Gov. Pat Quinn is pushing for much more ambitious action. He says he wants pension reforms, as well as Medicaid reforms, passed by legislators this spring. We don't know whether lawmakers finally will agree to bold moves, such as reducing the pension benefits earned going forward by current employees.

Maybe TRS' declaration that it may be unable to make payouts as planned will jolt the Legislature from its evident strategy of delaying any action until after the Nov. 6 election. The TRS board isn't suggesting any specific remedy to the lawmakers who write pension policy. It has though, strongly encouraged Illinois pols to calibrate future payments into the pension system according to its actuarial obligations, rather than according to what's politically useful in any given year. For too long, Ingram told us Tuesday, "Political science has trumped actuarial science." He's right.

With TRS now warning of benefits cuts for today's retirees, the deniers can no longer pretend that Illinois doesn't have a pension crisis. The game just changed.

Copyright © 2012, Chicago Tribune
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trs.illinois.gov/

A “New Reality” for TRS Funding – Acting Today to Prevent Future Insolvency

TRS is working to educate its members and the general public about a “new reality” in state government that throws the System’s long-term financial viability into serious doubt.

Teachers’ Retirement System is not proposing any changes in member benefits.

In February TRS Executive Director Dick Ingram informed the System’s Board of Trustees that TRS can no longer be confident that the General Assembly will appropriate all of the money to TRS that is required by law. The State of Illinois’ growing budget deficit and the System’s $43 billion unfunded liability is together causing this “new reality” at TRS.

If the General Assembly does not continue to provide all of the funding called for in state law, calculations done by TRS actuaries show that the System could become insolvent as soon as 2030. Preventing insolvency may include significant changes for TRS – new revenues must be generated and if they are not benefits may have to be reduced.

Significant changes in revenue for TRS pensions or a cut in the System’s benefits can only be made by the General Assembly. TRS has not suggested or proposed any plan to help solve this problem and specifically has not proposed any plan to change or reduce member benefits.

Please click here to read a copy of a resolution approved by the TRS Board of Trustees on March 30, 2012 regarding this financial “new reality."

Please click here for a more detailed explanation of this financial “new reality."

Please click here for a news story about this situation published on April 1 in the Springfield State Journal-Register.

[southsidesignmaker]

April Update
Illinois State Representative Darlene Senger

Dear Constituent,

It's been a surprisingly productive session in Springfield thus far this year. Progress is being made on multiple fronts, and as we have now passed the deadline on advancing House bills, there is a brief Spring break to get back to our home communities and an opportunity to reengage our constituencies on the issues.

Over the past several months, I have been participating in a four-member legislative working group tasked with developing a strategy for dealing with our state's severe pension deficit. Within this year's budget alone, we will in all likelihood be investing $5.1 billion towards our state's pension system. Next year that number will be closer to $7 billion.

To put this in perspective that will be roughly what we spend on primary and secondary education in a year. This picture just isn't right, and it needs to change. Our group has made tremendous progress towards our goal of finding an amicable solution that is fair to both taxpayers as well as government employees that most importantly ensures our pension systems are stable and solvent.

We have been meeting with the Governor's office daily, and have been working tirelessly on this issue.

Without reform, less and less money will go towards the rest of the state budget, and the systems very well could collapse under their own weight. This is without a doubt one of my top priorities, and I welcome any and all input that you may bring to the table.

Pension Oversight Bill

In addition to our pension working group, a new initiative I worked on aimed at keeping better records for the various Illinois pension systems passed the House this week with overwhelming support.

House Bill 5791 requires the Illinois Pension Systems to perform actuarial audits to measure funding, sustainability and salary rates on a three year basis. Currently these reports are done every five years.

Doing this regularly will help us track the current state of the pensions and allow us to have an accurate status of each pension system. The last report produced by the Commission on Government Forecasting and Accountability showed the pensions at 42.5 percent funded, and given the current market fluctuations, it is better to do the reports more often to allow us to have the most accurate numbers available.

Budget Update

The House recently agreed that the new revenue projection number for next year will be $33.7 billion, which is a clear signal that we will need to spend less than that to allow the state to pay down our backlog of bills.

This year, the priority must be fixed on cutting spending, reforming Medicaid, and bringing pension costs in check. With low revenue and increased spending on big-ticket items, critical funding for everything else is slowly being crowded out.

This is proof as to why pension reform is so critical.


Increased Internet Safety

I am proud of the continued collaboration between the Naperville Police Cybercrimes Unit Officer Rick Wistocki and myself. We've had quite a bit of success in producing legislation, and this week was no different.


Our newest endeavor, which successfully cleared the House, is aimed at protecting those who are victims of Internet high jacking and stalking.



The legislation amends the Harassing and Obscene Communications Act to include in the offense of harassment through electronic communications, a provision that includes making repeated, unwanted, and harassing communications to another person within the period of a week by transmitting any comment, request, suggestion, or proposal which is obscene.



The penalty for this type of harassment imposed by the courts can include a minimum of 14 days in jail or 240 hours of public or community service, if applicable in the jurisdiction.



Our laws must continue to reflect the advances and changes in technology. We were seen a lot of instances of online harassment where the law doesn't provide protection. This is just another measure aimed at doing just that.


In closing, I will be back in the district on Spring Break for the next two week and would love to hear from you regarding your thoughts and concerns about the happenings in Springfield. Please call or stop by my office anytime.
Sincerely,



Darlene Senger
Illinois State Representative, 96th District

****************************************************************************


Darlene "Surprisingly Productive" What a sad commentary when this pension bomb has been developing for decades. If state government operated in the real business world all those leaders (including yourself) would have been replaced for gross negligence.

When will those in power realize that the timid steps outlined are not going to suffice, get the chain saw out and dump defined pension plans for all participants. At the very least prepare participants to expect 50% or less of what $$$ they have been promised.

Then justify to the average taxpayer (both income and real estate), how we can expect to move forward without huge tax increases.