Teacher Tenure/Unions/Government/Pensions

[casey]

Sent to me by a friend. Ironically, I happened to catch 60 Minutes on Sunday. I couldn't help but cheer when Governor Christi spoke out.
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Public union pensioneers are set up nicely at present to receive $3-5 Million in pensions in many cases. That is 3-5 times more than oil companies pay to similarly compensated workers. And we still have politicians who say people want to pay more taxes. Not sure what study showed that, but with these kinds of revelations, we bet few tapayers want to give the government another dime to burn. In fact, any politician saying such things is disconnected from reality according to some folks. Perhaps they just want to make sure their own pension gets funded, so they can vacation in Cabo every year.

A public union employee was telling Governor Christi of NJ, that the governor was taking away compensation for her education, years of service, etc. His answer: "If you are not happy [with the proposed compensation changes], then go get a job somewhere else" [that compensates better].

Illinois is now the worst debtor state in the union. Legislator's staff are being thrown out of offices for not paying rent. Highway Patrol is being turned away from gas stations as are other dead beats. This was all on 60 minutes this past Sunday - how embarrassing for our fair state. But hey, they do not even care about that - and assume it will too pass....so business as usual in Illinois.

Link to editorial in SUN (reprinted below)
napervillesun.suntimes.com/opinions/2765597-474/government-pensions-tobin-public-administrators.html

Tobin right about pensions, but wrong about Edgar
Dec 14, 2010 02:37AM
Naperville Sun Editorial

The National Taxpayers United of Illinois — a self-proclaimed watchdog group that regularly blasts government expenditures — is right to unleash its latest salvo about government employee pensions.

As has been pointed out many times, the pensions of state and local government administrators, school district administrators, and even teachers are far outstripping not only the retirement money available in the private sector but also the ability of the taxpayers to continue to support such largesse.

This time, the organization’s target was public employee pensions in DuPage County.

NTUI pointed to pensions for government officials that were over $140,000 each at the high end and of school administrators in excess of $230,000.

James Tobin, the organization’s president, referred to many of these people as “pension millionaires,” and said a state trooper who retired at 50 years old with 25 years of service would collect $5 million in pension money if he lived to age 81.

A teacher with a salary of $100,000 — not unusual for teachers in DuPage — who retired at age 55 would collect $3 million if he lived to the same age.

Needless to say in the private sector, where pensions are almost unheard of these days and Social Security provides a small fraction of what public pensions pay out, the kind of largesse that government gives its workers is increasingly hard to justify.

NTUI’s call for government workers to pay into Social Security like private sector employees and to use 401(k) accounts to bolster that is well taken.

There was once a time when government workers were poorly paid and a good pension was offered to offset that. Now, with long-tenured teachers and government administrators easily making $100,000 a year and above, that time is long past.

As the recent flap over the city of Naperville’s police contract showed, unionized public workers not only command substantial salaries but can get relatively large wage increases (in this case 3 percent a year for three years) when in the private sector employees’ wages are frozen, or their salaries cut, or their jobs eliminated.

For the most part, we agree with what NTUI and Tobin have to say.

However, we part company when Tobin takes a gratuitous shot at former Gov. Jim Edgar, telling a group at a recent press conference that “This man never had an honest job in is life.”

Even though our state’s recent experience with past governors has been, shall we say, less than satisfactory, Edgar stands out as an honest, ethical, hard-working exception to the others.

It is also hypocritical of Tobin, who has sought state office, albeit unsuccessfully, himself to say that public service is not an honest job.

If so, why did Tobin seek it?

Government service can and should be an honest and even admirable calling, and Edgar is a good example of the sort of public servant we need more of in Illinois.

[EagleDad]

Illinois is entirely asleep at the wheel when it comes to public pensions - they are waiting to be pulled out of the ditch and given a sobriety test.

Thanks our current, newly-re-electected governor, who, when he isn't busy putting his head in the sand, will surface to hold a razor blade under the ripe beating pulse of educations neck to get his coveted tax increase.

Illinois is swirling down the crapper at an ever increasing pace and we have no one at the helm to even realize it to steer course.

[macrockett]

One thing I like about NJ Gov Christie is he tells it like it is. At the end of this interview with Kudlow, he takes a swipe at our Gov Quinn and his quid pro quo relationship with the public employee unions: www.cnbc.com/id/15840232?video=1767940143&play=1

Here is another video on Christie re NJ: www.cnbc.com/id/15840232?video=1767948132&play=1

[doctorwho]

Jan 26, 2011 23:24:23 GMT -6 macrockett said:

One thing I like about NJ Gov Christie is he tells it like it is. At the end of this interview with Kudlow, he takes a swipe at our Gov Quinn and his quid pro quo relationship with the public employee unions: www.cnbc.com/id/15840232?video=1767940143&play=1

Here is another video on Christie re NJ: www.cnbc.com/id/15840232?video=1767948132&play=1

just more Quinn-cidences - just like the lame ducks that voted in the tax hike all landing jobs they are 'qualified' for..
I hope Christie schools his behind in luring companies away as well

Springfield is full of idiots

[macrockett]

One of the battlegrounds to chip away at the power of unions is the right-to-work laws:

FEBRUARY 2, 2011 Wall Street Journal

Giving Workers a Union Choice
More states consider right-to-work laws.

One of the under-appreciated fault lines in the U.S. economy is between the 22 "right-to-work" states and the rest of the country. The former have tended to do much better economically. Now some non-right-to-work states such as Indiana, Wisconsin and Michigan are thinking about joining this club that allows workers to opt-out of union membership.

Contrary to much union rhetoric, right-to-work laws don't ban or bust unions. They simply grant individual workers the right to join or not to join, even once a workplace is organized by a union. Workers who decline to join the union can't be forced to have dues taken out of their paycheck and thus used to finance union political campaigns. Most right-to-work states are in the South and West, and only Oklahoma has adopted this freedom to choose in the last 20 years.

Right-to-work states outperform forced-union states in almost every measurable category of worker well-being. A new study in the Cato Journal by economist Richard Vedder finds that from 2000 to 2008 some 4.7 million Americans moved from forced-union to right-to-work states.

The study also found that from 1977 through 2007 there was "a very strong and highly statistically significant relationship between right-to-work laws and economic growth." Right-to-work states experienced a 23% faster rise in per capita income over that period. The two regions that have lost the most jobs in recent years, the once-industrial Northeast and Midwest, are mostly forced-union states.

Indiana is a case study in the negative effects of forced unionism. Governor Mitch Daniels recently explained why his state lost a bid for a new Colgate factory that would have employed hundreds: "We did absolutely everything we could do. . . . We made an offer we believe was competitive in every other respect, but they [Colgate] want to be in a right-to-work state."

Mr. Daniels adds that the lack of a right-to-work law "does hold us back economically. There is no doubt about it." He estimates that when competing with Southern states for businesses, "a very large number—perhaps as many as a quarter—of the deals we don't get a shot at are for just this reason."

This damage has motivated Indiana Republicans, who now control both legislature chambers, to announce that they want to pass a right-to-work law. Unions immediately went to Defcon 1, Democrats are up in arms, and Republicans could yet buckle under this union pressure. Even Mr. Daniels, who has stood up to union opposition in the past, seems hesitant. He told the Indianapolis Star that right to work "may be worth a look," but he added it "is not on my agenda." He's worried that the issue so antagonizes unions that it could derail the rest of his legislative agenda.

We hope Republicans don't flinch. Right-to-work laws make states more economically competitive, but the bigger issue is about individual rights. Workers should have the right to join a union but also the right not to. Indiana and other states with new Republican majorities have a rare opportunity to pass a major reform that will reduce union power, help to attract new jobs, and liberate workers from union coercion.

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit

www.djreprints.com

Current Federal petition re right to work:

righttoworkcommittee.org/rprtwah_petition.aspx?pid=rph2a

[macrockett]

How has one of the best endowment funds of late, ND, performed in the last decade? 8.5% per annum? 10%? More? You be the judge, watch the video then compare it to Illinois. Focus on the 10 year returns on the graph at minute 1:21. And lest you get your hopes up on the performance in the last year, remember this: the Federal Reserve is pumping money into the economy at an unprecedented rate (over $2 trillion and counting). Just in the past week it was disclosed that the Fed now is the largest holder of treasuries, exceeding even China and Japan. Much of that cash sloshing around has gone into equities and other asset classes:

www.cnbc.com/id/15840232/?video=1756572252&play=1

The Bond Buyer
Illinois Shifts Reporting Standards
Tuesday, February 01, 2011

In a move prompted by the Securities and Exchange Commission's heightened scrutiny of pension-disclosure practices, Illinois unveiled overhauled reporting standards in its latest bond offering statement that also announced a rise in unfunded pension liabilities to $75.7 billion and revealed a pending SEC inquiry.

The state intends to sell $3.7 billion of eight-year taxable general obligation bonds in mid-February to fund much of the fiscal 2011 payments owed to its five public pension funds.

The sale was part of a fiscal bailout lawmakers approved earlier this month, which includes a temporary increase in state income taxes. The legislative action prompted Standard & Poor's to remove the state's A-plus GO rating from negative watch Tuesday.

In a preliminary offering statement (POS) published this week, the state divulges that it was contacted in September by the SEC about communications relating to the "financial effects" of pension reforms. Illinois last year established a two-tier system with reduced benefits for employees hired beginning this year. The SEC sought communications "relating to the potential savings or reductions in contributions" to the pension funds.

When Gov. Pat Quinn signed the legislation in April, he estimated the reforms would shave $100 billion of contributions needed to bring the state's pension system to at least a 90% funded ratio by a deadline of 2045, under a 1995 funding plan.

The POS said the SEC informed Illinois that its inquiry should not be "interpreted as an indication by the SEC or its staff that any violations of federal securities laws has occurred." The state reports it is cooperating and providing requested information.

The state anticipates that its statutory payments will begin to decrease in 2012 and continue to fall through 2045. At that time they will total $19 billion, instead of $25 billion had the reforms not been adopted, according to the offering statement.

The state reports in the offering statement that it decided to revamp its pension disclosure and reporting practices in August, after the SEC filed a lawsuit that month charging New Jersey with securities fraud. The commission charged the state with failing to disclose to bond investors that it was underfunding its two largest pension plans.

New Jersey agreed to settle the case without admitting or denying the SEC's findings and said it would cease and desist from committing any further violations.

Illinois hired Chapman and Cutler LLP to assist in reviewing the enforcement action and to update its own disclosure policies and procedures using the New Jersey enforcement as a template. New Jersey's disclosure woes were partly caused by a lack of communication between the state officials who handled its debt and those responsible for its pensions.

"After reviewing the New Jersey action, the state decided to be proactive and sought the advice of Chapman and Cutler and the attorney general's office," said state budget spokeswoman Kelly Kraft. "Not only do we feel we meet a higher standard set in the New Jersey case, but we believe we exceed it."

Illinois has established a committee to oversee its pension disclosure process that is chaired by state debt manager John Sinsheimer. Disclosure items are submitted to the state comptroller, treasurer, and pension funds for review and comment.

More than 20 pages are devoted to pension fund reporting in the $3.7 billion offering statement, more than double the section in past offering statements, including the one for the state's $3.5 billion sale of GOs to fund its fiscal 2010 pension payments early last year.

The section underscores just how troubled the Illinois pension system remains. The unfunded liability rose to $75.7 billion in fiscal 2010 from $62.4 billion in fiscal 2009. That lowered the state pension system's funded ratio to 45.4% from a 51% funded ratio that is among the worst in the nation. Enjoy the shell game Taxpayers, it's your bill. And it just went up $13.3 billion in one year....YIKES. Do you really think Illinois has a handle on anything? I sure don't.
Illinois shifted to a five-year smoothing model in fiscal 2009 that limits the impact of near-term investment losses and gains. The unfunded liability would stand at $85.6, for a funded ratio of just 38.3%, based on the fair market valuation that recognizes gains and losses annually.

The unfunded actuarially accrued liability "increased between fiscal 2009 and the end of fiscal 2010 primarily as a result of insufficient state contributions as compared to the actuarially required contribution," or ARC, the state wrote in the offering statement.

Illinois contributed $2.9 billion in 2009 while the ARC payment needed to put the state on track to fully fund its pension was $4.1 billion. The $4.1 billion 2010 payment fell short of the $4.8 billion ARC payment needed. The state has long failed to make payments that reach the ARC level.

The impact of the state's $10 billion pension bond sale in 2003 has also fallen far short of expectation in raising the funded status of the pensions. The state pumped $7.3 billion of the bond proceeds into the funds to bring down the unfunded liability, using the remainder to cover near-term payments owed to the system.

Illinois in turn lowered its statutory contributions by the amount needed to cover debt service on the 2003 bonds. The state assumed investment returns would exceed debt service, driving down the unfunded actuarial accrued liability, or UAAL.

"In actuality, the significant investment losses experienced by the retirement systems in fiscal years 2008 and 2009, when combined with the reduction in the required annual statutory contribution by debt-service payments on the 2003 bonds, created an even greater increase in the UAAL in those years," the offering statement reads.

Debt service on the 2003 bonds ramps up from $543 million in 2010 to $1.2 billion in 2033. Throughout the pension disclosure section, the state says it provides "no assurance" that future legislative action, investment trends, or other variables won't negatively impact the pension funds status.

The funds used an investment return rate that ranged from 8 to 8.5%, but two have lowered that rate to 7 and 7.75%. Illinois operates five funds that collectively serve 737,000 beneficiaries. They include one fund each for teachers, state employees, judges, the General Assembly, and university employees.

Some issuers were moved to update pension disclosure after the SEC took legal action in 2006 against San Diego for failing to disclose major problems with its pension and retiree health care obligations. John McNally, president of the National Association of Bond Lawyers, said the combination of the New Jersey case and the SEC's establishment of a muni and public pension enforcement unit has prompted "renewed attention" on the subject among issuers.

Sinsheimer and members of the deal's finance team are meeting with investors overseas and in several U.S. cities ahead of the taxable sale. Goldman, Sachs & Co., Loop Capital Markets LLC, and Morgan Stanley are co-book-running senior managers. Peralta Garcia Solutions is adviser and Kutak Rock LLP is bond counsel. The state is selling eight-year GO bonds with no principal payments in the first two years.

"The state is sharing with investors the tremendous progress it's made towards enhancing its fiscal position," one member of the finance team said. A temporary income tax increase approved earlier this year is expected to raise between $6 billion and $7 billion annually, but analysts believe it solves only the state's near-term fiscal crisis.

On Tuesday, Standard & Poor's affirmed the state's A-plus GO rating and removed it from negative CreditWatch, where it had been since March. The outlook is negative. The action "reflects our view of the state's recently enacted legislation that provides for structural budget solutions," said analyst Robin Prunty.

The state's credit remains challenged by its weak pension funds, high debt burden, and the possibility of up to $8.75 billion of additional borrowing to pay down bills. Quinn is pushing the borrowing, but it requires bipartisan legislative support.

Moody's Investors Service affirmed Illinois' A1 rating on $31 billion of GO debt and negative outlook, but its analysts remain concerned about the state's long-term challenges. Fitch Ratings affirmed the state's A rating and revised its outlook to stable from negative.

[macrockett]

www.foxbusiness.com/personal-finance/2011/04/28/californias-giant-pension-problem/ <----video on this page

A story in today's Los Angeles Times has me seeing red, and one public official seeing dollar signs. The official is the soon-to-be retired president and CEO of a public hospital in Salinas, California - a city of about 150,000.

Two years ago this CEO, Samuel Downing, was given a $3 million retirement payment—again this is a public hospital so he is a public employee, and his salary is paid by taxpayers.

But turns out - Downing wasn't quite ready to retire. So he kept working and keeping the retirement payment, on top of earning $668,000 a year for the next two years— nearly $1.5 million in salary.

Now he is getting ready again to step down, and this week he is getting another retirement payment of nearly $900,000.
So all in all, his compensation for the last two years is more than $5 million.

Oh yea, one more thing… all that is on top of his yearly pension of $150,000.

This enormous sum of money was handed out by the hospital as it was laying off 600 workers. Not all California hospitals play this game. Antelope Valley Hospital in Los Angeles has 150 more beds than Salinas and a thousand more employees, but they offer no supplemental pension plan.

In San Diego, the CEO of a public hospital gets $80,000 a year upon retirement - but no other compensation.

And this is great—when asked about his whopping retirement package, Downing responded, "I think I've earned it".

Well Mr. Downing, the majority of Californians don't think so. An LA Times poll shows 70% support capping pensions for public workers, because, as a state watchdog recently put it, "California retirement plans are dangerously underfunded, the result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently."

As a result - the Golden State has had to make record cuts. A budget signed by the governor just last month slashed billions from everything including health care. Nearly $6 billion has been cut from social services, including a nearly $2 billion cut from health-care for the elderly and low-income.

Education is another victim, as $1billion has been taken out of the state university system. Not to mention slashing the budget of public safety programs.

I know the cuts are in the billions, and Downing's compensation is in the millions, but every little bit helps right?

I'm sure he was a spectacular and well-respected CEO, but there are limits to how much public officials can take from the public. And I'm not just talking about California—are you listening Illinois?

And on a side note, on his way out the door, Downing is acknowledging concerns over public pensions and switching his employees to a 401 (k)-type plan - not a traditional pension.

How thoughtful of him to think of that as he cashing in on his millions.

Read more: www.foxbusiness.com/personal-finance/2011/04/28/californias-giant-pension-problem/#ixzz1L9dNGpnP

Here is the LAT story:

www.latimes.com/news/opinion/opinionla/la-ed-pensions-20110430,0,525529.story

[macrockett]

www.chicagotribune.com/news/opinion/editorials/ct-edit-pension-20110504,0,3766846,print.story

Tame the pension beast
Thursday, May 05, 2011

"We're all familiar with the inadequate funding of the state pension systems. Again, tough decision-making, telling people, 'You're not going to get everything you thought you were going to get,' telling people, 'You may have to pay in more.' Not easy stuff. So we all better get ready for it."
—Speaker Michael Madigan to the Illinois House, Feb. 8, 2011.

With those few words three months ago, the man who runs official Springfield telegraphed that long and lazy years of denial would end during the current legislative session. Finally, Illinois lawmakers would tame the public pension beast that now devours billions of dollars more sensibly devoted to education, public safety and other priorities. That reform, in turn, would help state government avoid the "financial implosion" presciently predicted in 2006 in a devastating analysis by the Civic Committee of the Commercial Club of Chicago.

Now, though, the General Assembly is within four weeks of its scheduled May 31 adjournment. And the pension beast lounges comfortably, its languid gaze and prodigious hunger fixed on hard-pressed Illinois taxpayers. The beast is relieved: Yet another session is passing uneventfully in the state with the nation's certifiably worst-funded pension system.

This, then, is the moment when legislative leaders need to … lead.

The best rescue plan we've seen in bill form comes from House Republican Leader Tom Cross. Madigan hasn't publicly endorsed the proposal, but we hope he sees it — or a pension scheme even more economical — as a gotta-do. His spokesman assured us Wednesday that, yes, Madigan, Cross and a working group of legislators do hope to see a bill passed this session.

The key player is Madigan. Without him and the votes of his Democratic caucus, no pension reform clears the House. That explains why the leaders of public employees unions are demanding that Democratic legislators reject whatever bill Madigan, Cross & Co. produce. Never mind that, as academic studies and mathematical imperatives suggest, public workers could see Illinois funds paying out their last pension dollars before this decade ends.

Every time we reiterate that point, we wonder anew why union leaders aren't caterwauling for pension reform. Instead, they're busy bad-mouthing Madigan for even suggesting that Illinois has no prospect of fulfilling its recklessly underfunded obligations. As is, those labor leaders risk having to hem and haw in a few years when thousands of retired workers ask in fury: "Why didn't you protect the pension benefits I earned?"

The beauty of Cross' plan is that it does just that: Current workers would, at retirement, receive whatever benefit payouts they've already earned. Going forward, though, they would choose from three options. In essence: Employees could continue toward their currently projected benefit level, but their required contributions would increase. Or they could select a second defined benefit formula, keep current contribution levels intact, and work more years for a less open-ended package. Or they could choose a 401(k)-style defined contribution plan, with the state offering a 6 percent matching contribution — an uncommonly generous match by private-sector standards.

We hope Madigan adds his sponsorship to that plan and passes it. Senate President John Cullerton, also a Democrat, says he thinks the Illinois Constitution guarantees that the benefit scheme in place during a young employee's first hour on the public payroll cannot be reduced for the remainder of his or her lifetime. Beg to differ. But we like to think Cullerton will do as he hinted on Feb. 9: Allow a vote on a reform bill and let the courts rule on its constitutionality. Nudges from a pal and ally, Chicago Mayor-electRahm Emanuel, should help Cullerton accept the necessity of dramatic pension reform.

That said, legislators need to pass reform with veto-proof majorities. Two of Gov. Pat Quinn's top aides, Budget Director David Vaught and Chief of Staff Jack Lavin, told us Feb. 16 that, in Vaught's words, "We have to accelerate the (pension) reform" — possibly including a cut in current workers' future benefits. Vaught said the governor's legal advisers think a properly framed reduction would have a "two-thirds" chance of court approval. But Quinn, another Democrat, is Jell-O in the hands of organized labor. Veto-proof numbers in both legislative houses would render Quinn, and his tendency to change his mind, irrelevant.

Everything, though, rests on Madigan's willingness to finish the mission he articulated early in this session. His openness to curbing current employees' future pension earnings set a tone that has earned him scorn from the unions — but encouragement from those of us who see Illinois racing ever closer to that "financial implosion."

Mr. Madigan, we're glad you risked this discussion. Let May be the month when you and your members begin to salvage Illinois.

[macrockett]

I have missed hundreds of articles lately as I simply cannot keep up with the news flow in this thread. One article that did catch my eye was this one. What does it say when a Democratic state house, in this case Mass., cuts union collective bargaining rights?

To me, as the article clearly states, it means that market forces have finally caught up with unsustainable agreements. I have said it before in this thread, market forces are more powerful than any union.

Only dictatorships have been able to withstand market forces, and even they don't have a very good track record as they have collapsed one after another because of the economic distortions they create. It is only a matter of time.

APRIL 29, 2011

Union Busting, Massachusetts Style
The Bay State's heavily Democratic House strips municipal employee unions of their power to bargain most health benefits.

By KIMBERLEY A. STRASSEL

Columnist's name

Pop quiz: What political party, in what state, this week passed a bill in the dead of night stripping public-sector unions of their collective- bargaining powers? Republicans in Wisconsin? The GOP in Ohio or Indiana?

Try Democrats in Massachusetts. Maybe the debate over public-sector benefits isn't all that ideological after all.

That would be the view of Massachusetts Democratic Speaker Robert A. DeLeo, who late Tuesday led an overwhelming majority of his House in passing a bill divesting policemen, firefighters, teachers and other municipal employees of the power to collectively bargain most health-care benefits. The 111-42 vote took place at 11:30 at night, so as to avoid a mass of protesting union workers set to descend on the State House the next day. The cheek.

Then again, Mr. DeLeo (like so many Republicans) seems to understand that there is no longer a choice. The Bay State—precisely because it is the land of union power—is being crushed by its rich public-worker pay and benefits. Its several hundred thousand municipal employees have long had the power to collectively bargain key aspects of their health care—co-pays, deductibles, premiums.

Municipal health costs have as a result averaged near 11% growth annually—for a decade. The average premium is today 37% higher than in the private sector, and one-third higher than premiums for federal plans. The numbers have so exploded that personnel costs—salaries and benefits—are now eating up an astonishing 75% of local Massachusetts budgets.

That's a tipping point that threatens widespread layoffs and the end of basic services. "The huge growth in municipal health-care costs is cannibalizing everything else," Michael Widmer, president of the Massachusetts Taxpayer Foundation, tells me. Mr. DeLeo and "other members of the legislature understand that what is at stake is their local schools and hometowns." The unions, in short, have walked Massachusetts so far into a hole that even Democrats can no longer ignore the problem.

The DeLeo bill is a big political event (a "wow" moment, says Mr. Widmer), and it will save cities and towns an estimated $100 million in the upcoming budget year alone. Public employees would have 30 days to discuss health-plan changes with local officials, but at the end of that period officials can set co-pays and deductibles. In a concession, the bill allows local unions to retain bargaining power over their share of premiums, which is more power than what is currently allowed state employees.

Not that this has mollified labor. Robert J. Haynes, president of the Massachusetts AFL-CIO, was so irked he forgot to stick to the union script about "rights" and a "war" on the "middle class." He skipped to the real outrage—that the 81 Democrats who voted for the bill were failing to play by the political rules. "These are the same Democrats that all these labor unions elected. The same Democrats who we contributed to in their campaigns," he complained. The unions would fight this to the "bitter end," he vowed. "Massachusetts is not the place that takes collective bargaining away from public employees."

Or maybe it is. Even as the press has obsessed about Wisconsin, Massachusetts—hitting a fiscal wall—has moved quietly on the union front. As early as 2009, Democratic Gov. Deval Patrick signed a transportation bill that stripped bargaining power from public workers for the Massachusetts Bay Transportation Authority (MBTA) by moving them into the state health-insurance system.

The MBTA had been dishing out crazy benefits to its 12,000 workers and retirees, paying an astounding two-thirds more in health-care costs per employee than those paid for state workers. (Only last week, Superior Court Judge Linda Giles tossed out the union lawsuit protesting the switch.) Facing an unfunded pension liability of some $20 billion, Gov. Patrick has also been pushing modest state pension reform. It's a measure of the dire mess in other blue states that Democratic governors in New York (Andrew Cuomo) and California (Jerry Brown) have also dared murmur "pension reform."

Mr. DeLeo isn't backing down. Supported by an array of business and education groups, he applauded those who voted to allow cities and towns "to retain jobs and allot more funding to necessary services." Still, the bill is no sure thing. It now moves to the Senate, where Democratic President Therese Murray has shown no similar backbone. And while Gov. Patrick applauded the House for taking an "important vote," he won't say whether he'd sign it. He's more focused on running from Gov. Scott Walker. "This is not Wisconsin," he insisted. "That's not what the House did."

Wrong. Wisconsin moved to rein in collective bargaining powers that are crushing the state. Massachusetts moved to rein in collective bargaining powers that are crushing the state. The only difference is that Democrats have chosen to portray Mr. Walker's legislation as "union-busting" while presenting their own as necessary reform.

The public, and the press, should take them at their word that it's the latter. The DeLeo bill is a game-changer. It's big, concrete proof that public-employee benefit reform isn't a political game. It's a modern, fiscal necessity, the only thing standing between a state and budget ruin. Just ask Massachusetts Democrats.

Write to [e-mail]

[macrockett]

Get ready for the Political action committees (PACs) of the NEA, IFT, AFSCME to name a few to make an assault on Springfield and the taxpayer of Illinois who has no PAC representation.

See the PFDs at the IEA website: www.ieanea.org/

There is also this website: www.weareoneillinois.org/ that WVHS Parent pointed out to us. Who is behind that site?
We Are One Illinois coalition members include the Illinois AFL-CIO, Illinois Education Association, Illinois Federation of Teachers, Associated Fire Fighters of Illinois, AFSCME Council 31, Illinois Police Benevolent and Protective Association, Fraternal Order of Police, Service Employees International Union, Laborers International Union of North America Midwest Region and the Illinois Public Pension Fund Association.

Three states, Colorado, South Dakota and Minnesota are already in court battles with Employee Unions over altering benefits. You can read more about that here (the plantiff's perspective): www.educationsector.org/publications/representing-retirees-interview-stephen-pincus

[macrockett]

illinoispolicy.org/blog/blog.asp?ArticleSource=4098

Illinois's $100,000 Plus Workforce: Strong and Growing
Share |

5/16/2011

by Mark Cavers

Illinois will have $8.3 billion in unpaid bills by the end of the fiscal year, a projected deficit of $1.7 billion for fiscal year 2012 and $86 billion in unpaid pension liabilities. A contributing factor to our deficits, and a major reason behind calls for higher taxes is government employee’s pay and benefits. Rather than reining in the explosive growth in personnel costs by taking steps similar to those in states across the country like hiring stops and salary freezes, our Governor has decided to double down on the failed policies of the past: expanding government, raising taxes, and borrowing to bailout a broken system. Last year, the Governor gave out pay increases to 46,000 state workers and this year he wants to hire an additional 945 employees. Already, one out of every four dollars from the State’s general fund is spent on labor costs. Tellingly, the number of high paid government employees in Illinois has increased dramatically over the past three years.

In 2008, the State employed 3,504 workers who received annual salaries of over $100,000 (inflation adjusted), by 2010 that number had risen to 4,252, an increase of 748 people and 21%.


From 2008 to 2010 the amount of money going to employees making over $100,000 increased by $93,761,096 (inflation adjusted) or 21% from $457,195,553.33 to $550,956,849. This increase in funding, set aside to pay employees making over $100,000, is the equivalent of paying the salaries of over 1,500 new first year teachers at the Chicago Public Schools. The $93,761,096 in higher pay is more than the taxes paid by 20,000 Illinois workers making $70,000. Its also enough to pay off the entire backlog of unpaid bills to the Departments of Public Health, and Children and Family Services. At a time when human service providers are waiting on payments from the state, the funds being diverted to compensate the highest tier of government employees are soaring.


Increasing the salary and size of Illinois’s workforce ensures that families and other government service providers will continue to feel the pinch either through higher taxes or cuts to services that will be necessary to shift money to pay for bloated payrolls and higher salaries.

Tax hikes hurt real people. This year, the average family will have to get by with $1,400 less than they did last year, that’s clothes for two years, or feeding a family of four for 10 weeks. Asking families to cut their own budgets to prop up unsustainable government salaries is especially difficult to justify.

The second place money for these higher salaries will come from is by diverting funds away from other areas of government. A government’s resources are finite; every time politicians set aside funds for unsustainable salaries and benefits they pass up the opportunity to spend the funds elsewhere or return the money to citizens in the form of tax credits. By the end of the year, our government will owe $8.3 billion to nonprofits, small businesses, and other vendors for services already rendered. Instead of making the hard choices necessary to bring down spending and then allocating excess revenues towards paying back the people we owe, legislators seem intent on spending every last dollar to expand the size of government. By showing an unwillingness to reign in salaries at the expense of taxpayers, service providers who are owed money, and core government services, politicians are signaling their priorities to citizens.

The numbers cited above are only salaries. They exclude the pension, health, and other benefits which are huge drivers of the overall higher compensation packages of public employees. Further, higher salaries fuel our largest looming crisis: A pension system that is over $86 billion in the red. Higher salaries drive up individual pensions and more employees expand our pension liabilities. Rather than halting hiring and freezing pay until we can get our pension and budget crises under control, our Governor continues to dump fuel on the fire. Public employee salaries already eat up one out of every four dollars in the state’s budget. Illinois’s poor and disadvantaged cannot afford to see 25% of government spending going towards salaries. The Governor should work to freeze hiring and renegotiate union contracts to lower pay increases.

[macrockett]

illinoispolicy.org/blog/blog.asp?ArticleSource=4110

Teacher Retirement Costs Exceed General State Aid to Schools: Charting Illinois's Pension Crisis
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5/18/2011

Download a pdf of this report and chart here.

The funding of Illinois’s Teachers’ Retirement System (TRS) has become a major obstacle for future increases in state education spending. Years of overly generous pensions and delayed funding by the Illinois legislature have left the TRS approximately $47 billion short of its obligations.

Historically, the largest item in the state K-12 education budget has been General State Aid (GSA), the program that provides cash assistance to school districts to cover operational costs.

The state will spend $4.6 billion on GSA in 2011. More than any other state education program, GSA targets resources to areas with low property values and high student poverty. The GSA is unlikely to grow, however, as obligations to fund the state’s pension plans dominate Illinois’s general funds.

There are three annual costs associated with TRS:

The annual “normal cost” of new benefits earned by employees during the current year;
The interest on the pension system’s unfunded liabilities from past years; and
The repayments of bonds used in past years to generate cash for the pension systems.

State government makes its required, non-negotiable payments to bondholders. It often does not set aside enough money to cover annual normal costs and interest on unfunded debts – but that doesn’t mean the tab for three items won’t come due. Costs incurred in 2011 will have to be paid at some point.

This year alone, the interest costs on TRS’s unfunded pension liabilities exceed $4 billion. A further $800 million must go toward repaying TRS’s share of the state’s pension obligation bonds. Add that to the “normal cost” needed to cover the cost of new benefits earned by workers during 2011, and the year’s pension costs exceed $5.75 billion. The result? Total Teachers’ Retirement System pension costs have exceeded the amount spent on General State Aid.


Consistent with the failures of the past decades, Illinois will not fully fund this year’s total pension costs. Under the most recent plan the state government will only contribute about $2.2 billion. The remaining $2.8 billion will be left for the future. This is done to free up short term cash to pay for items like GSA, but doesn’t change the fact that the 2011 costs of TRS will come due. And when the state can no longer short the pension fund of its actual costs, it will have to divert money from other sources.

By 2020, total TRS costs will climb to $6.4 billion. As Illinois struggles to meet these and other pension obligations (the other four state pension funds face similar shortfalls and problems), funding for operating funds in education will undoubtedly suffer, unless a reform of the state’s pension funding system is implemented.

See all of the Illinois Policy Institute's recent research on public employee pensions.

[macrockett]

If you haven't been watching the pension debate in Springfield, this is the Bill to watch:

www.ilga.gov/legislation/billstatus.asp?DocNum=512&GAID=11&GA=97&DocTypeID=SB&LegID=55337&SessionID=84

[doctorwho]

May 25, 2011 20:38:04 GMT -6 macrockett said:

If you haven't been watching the pension debate in Springfield, this is the Bill to watch:

www.ilga.gov/legislation/billstatus.asp?DocNum=512&GAID=11&GA=97&DocTypeID=SB&LegID=55337&SessionID=84

I encourage everyone to bookmark this for reference...

[macrockett]

You heard or read the story that the Illinois Legislature came up short on pension reform, right?

www.chicagotribune.com/news/opinion/editorials/ct-edit-legis-20110530,0,570500,print.story
newsblogs.chicagotribune.com/clout_st/2011/05/push-to-cut-government-worker-pensions-fizzles-at-capitol.html

I mean who would what to kill the goose that laid the golden egg, especially when you stand to gain?

Sad thing is all the kids out there, those who have no vote or representation, will get the bill that has been kicked down the road for a long time.

www.suntimes.com/news/5076845-417/100000-pensions-for-27-retired-state-pols.html?print=true

$100,000+ pensions for 27 retired state pols

BYTHE BETTER GOVERNMENT ASSOCIATION
Last Modified: May 30, 2011 12:37AM

Some of the state’s best-known politicians, including former governors and lawmakers, are reaping hefty and guaranteed annual pension payouts backed by Illinois taxpayers.

A Better Government Association investigation found that 27 of the 286 retired office holders — nine percent — are enjoying annual pensions of more than $100,000. In some cases, retirees draw their pensions while also working in other government-related posts or lucrative private-sector jobs. Thirty retirees, or 10.5 percent, have drawn more than $1 million each so far.

The annual $100,000-plus pension club is a virtual “Who’s Who” of famous Illinois politicians, including former Govs. Jim Edgar and James Thompson; former Senate President Emil Jones; former Comptroller Dawn Clark Netsch; and former Attorney General Roland Burris.

Moreover, Illinois taxpayers will keep on paying for their politicians’ retirements well into the foreseeable future unless there’s a radical change in state pension law. The public-pension reform law that passed last year won’t cut into payments for the current crop of state public office retirees or those of aging incumbents, who in the next few years could leave the state payroll to draw their own pensions.

That group of elders could include Gov. Quinn, 62, who also served as state treasurer and lieutenant governor, and 69-year-old Michael Madigan, who was elected to the Illinois House of Representatives in 1970 and has been speaker for most of the past 30 years.

“No one really knew in the past how much we’re paying for these pensions,” says suburban Chicago pension consultant William Zettler, who favors an overhaul of the current state-employee retirement system. “Nobody dreamt they are as high.”

At the end of fiscal 2010, the General Assembly Retirement System was only 26 percent funded with $66.2 million in assets and $251.8 million in liabilities.

Zettler obtained the pension data under the Freedom of Information Act, and provided it to the BGA, which confirmed the data.

GARS plan participants contribute up to 11.5% of their pay annually and their retirement payouts depend on the total number of years served. For example, those with 20 years of service can collect up to 85% of their final salary for their remaining lifetime. Moreover, if a participant retires at age 60 or older, that person gets a 3 percent pension increase every year.

Leading the GARS list of annual pensions is former state Sen. Arthur Berman, who collects $203,428 annually, according to the data, which is as of March 7.

The Chicago Democrat retired from the General Assembly in 2000 with a salary of $59,657. But he later took a higher-paid position with Chicago Public Schools and his pension was determined based on the higher salary under a reciprocal state-pension system agreement that ended in 1994.

“Everything I did was legal,” Berman, 75, asserts. “I served in the Illinois Legislature for 31 years and survived 22 elections. People ask me how I did it and I tell them all I did was campaign 365 days a year.”

Edgar, who was governor from 1991 to 1999, collects $134,853 a year, Thompson, governor from 1977 to 1991, gets $127,215 annually.

Edgar notes that he was a CEO running the government of a big state, but didn’t earn the type of multi-million benefits awarded to top executives at publicly-traded companies.

“I didn’t get the stock options and bonuses,” he says.

Edgar defends pensions for state officials and says curtailing benefits “is going to affect who you draw in” to serve public office.

The 64-year-old Edgar is a distinguished fellow with the Institute of Government and Public Affairs at the University of Illinois, a position he’s held since 1999. Edgar teaches and lectures for the U. of I. system and is contributing to a pension program for state university employees. He is paid $177,000.

Edgar is also paid to serve on two corporate boards: nut marketer and distributor John B. Sanfilippo & Son, which paid him $100,760 in fees and stocks last year, and personal-grooming products giant Alberto-Culver Co., which paid him $162,136 in fees and stock last year, Securities and Exchange Commission filings show.

Meanwhile, Thompson, 74, has been a partner with the law firm Winston & Strawn since 1991. While there’s no breakout of Thompson’s compensation, Winston & Strawn reported profit per equity partner of $1.39 million last year, according to trade publication American Lawyer’s web site.

Thompson didn’t respond to requests for comment.

Former Gov. George Ryan forfeited his pension after his convictions on felony corruption charges. And whether former Gov. Rod Blagojevich — facing trial on corruption charges —will get his pension has yet to be determined.

One of Blagojevich’s most controversial decisions was naming Burris to fill the U.S. Senate seat vacated in 2008 by President Obama.

Burris, who is also a former state comptroller, draws a $129,162 annual pension.

“It’s legal and the law allows it and that’s all I’ve got to say,” says Burris, who recently retired from the U.S. Senate and is not eligible for a federal pension.

Netsch, who logged 22 years of state service as a lawmaker and comptroller, gets an annual pension of $121,720. She is a professor of law emerita at Northwestern University.

“This is a continuing subject of debate and a good target for people who want to make all public officials look like thieves and crooks,” says Netsch.

While big names of statewide office holders draw the most attention, the bulk of the General Assembly’s retiree roster consists of rank-and-file lawmakers from the House and Senate.

Among the state’s Top 10 retirees are former lawmakers Edward Petka of Will County, who ranks second-highest with $161,280; Judith Erwin of Chicago, who is third-highest with $141,476 and John Friedland of Kane County who is fourth-highest with $140,649.

Erwin, 61, is now a managing director at ASGK Public Strategies, a position she’s held since February.

“For nearly 30 years, I made employee contributions as required,” she says. “I have been fortunate to work in state government but I never did anything to impact my pension. I followed the rules.”

Petka is a 30-year legislator who retired as a 12th Circuit Court judge last year. Petka, 68, drew a salary of more than $174,000 as a judge but under a reciprocal agreement no longer permitted in Illinois, drew a much higher General Assembly pension.

Friedland served 25 years in the House and Senate. He retired from the General Assembly in 1992 but draws a big pension based on a salary he earned working for the Fox River Water Reclamation District until early 1993.

“I just followed the rules and regulations when I was in,” he says.

After 20 years in the Legislature, Erwin went on to become executive director of the Illinois Board of Higher Education, a job she held from 2005 until August of last year. She resigned for mixing politics and state business. She resigned from her $191,000 a year agency job, paid a $4,000 fine and agreed never to seek or accept state employment again.

For incumbents, becoming eligible for a GARs pension is a fairly easy bar to reach in terms of time of the job and age. A member is eligible to start drawing from a pension at age 62 after working at least four years in the system. Members with eight years of work can collect pensions at age 55.

Berman counters that a public pension and health care insurance is a well-earned benefit necessary to draw capable people to serve in office.

Among those enjoying that guarantee is the current flock of incumbent state lawmakers and constitutional office holders including the current governor and speaker of the house.

Asked about the possibility of Madigan drawing a large pension some day, his spokesman Steve Brown defends his boss, saying that the speaker ran a “multi-million dollar operation” for decades. Madigan performed a job comparable to a private-sector business, Brown says.

Gov. Quinn’s budget spokeswoman Kelly Kraft wouldn’t comment on her boss eventually drawing a sizable state pension. “Governor Quinn is currently working and not collecting a pension,” she says.

But Kraft says Quinn is interested in discussing greater restrictions on state pensions. The governor “feels large state pensions that are already being collected need further review and is open to further discussions on this matter,” she says.

Some changes are already in place, sparked by a pension-reform bill signed into law last year.

Under the new law, legislators and state officials who begin their jobs after Jan. 1, 2011 are subject to new eligibility rules.

Now, new hires--including brand new lawmakers and office holders--will have to wait until they are 67 years old, with 8 years of service, to qualify for benefits. A General Assembly member with 8 years of service can retire at 62 but will receive decreased benefits under the revamped pension rules.

Retirement benefits will be figured on a maximum salary of $106,800 while cost of living increases will rise at the rate of inflation or no more than 3 percent (whichever is lower).

Backers of the pension law say these reforms will save the state $200 billion over the next 35 years.

Copyright © 2011 — Sun-Times Media, LLC