Teacher Tenure/Unions/Government/Pensions

[Arch]

"When I left the Senate, I left the Senate to retire,'" said Collins, who so far has collected more than $700,000 in pension checks. "Later, I decided to run for that [County Board] seat. Why should I give up my pension? You think I don't have a right to my own money? Every politician is not out here ripping off. Tell the truth about the whole story . . . that it's legal. Change the law so you can't do that."

======

Wow, where have we heard this sh!t before?

Though it may be 'legal' it certainly is unethical.

[macrockett]

Pension bonanza for government workers, survivors

September 11, 2009

Want to retire with a fat pension? Get a government job in Illinois. Nearly 4,000 retired government workers have pensions that pay them at least $100,000. More than half have collected more than $1 million each since they retired. It costs more than $800 million a month of governments to cover their pension burden, according to a first-of-its-kind Sun-Times analysis. See who's getting what. Data is divided in two parts. The first includes annual pensions for people paid from the 17 largest retirement plans for government workers in Chicago, Cook County and state of Illinois. The second covers the survivors of retirees. In all, 374,041 people are in the two databases. Want to retire with a fat pension? Get a government job in Illinois. Nearly 4,000 retired government workers have pensions that pay them at least $100,000. More than half have collected more than $1 million each since they retired. It costs more than $800 million a month of governments to cover their pension burden, according to a first-of-its-kind Sun-Times analysis. See who's getting what. Data is divided in two parts. The first includes annual pensions for people paid from the 17 largest retirement plans for government workers in Chicago, Cook County and state of Illinois. The second covers the survivors of retirees. In all, 374,041 people are in the two databases. Want to retire with a fat pension? Get a government job in Illinois. Nearly 4,000 retired government workers have pensions that pay them at least $100,000. More than half have collected more than $1 million each since they retired. It costs more than $800 million a month of governments to cover their pension burden, according to a first-of-its-kind Sun-Times analysis. See who's getting what. Data is divided in two parts. The first includes annual pensions for people paid from the 17 largest retirement plans for government workers in Chicago, Cook County and state of Illinois. The second covers the survivors of retirees. In all, 374,041 people are in the two databases.

[macrockett]

What they get . . .
Comments

September 11, 2009

. . . that most people don't. Here are six ways government workers in Illinois get sweeter retirement deals than most taxpayers:
1. Guaranteed pension payments until death

* All government workers -- from teachers to garbage collectors -- get a "defined-benefit" pension. That means they'll get monthly checks until they die -- most don't get Social Security, though.

* Most employers have abolished pension plans, leaving people to save on their own and rely on Social Security, whose payments aren't guaranteed.

2. Pensions that start at age 50

* City of Chicago and Cook County workers can retire at 50 and begin collecting monthly pension checks.

* Private companies don't offer that benefit. And you have to wait until you're at least 65 to collect Social Security, though if you're willing to take less money, you can start getting Social Security at 62.

3. A pension that nearly equals your salary

* Government workers can get pension checks equal to at least 75 percent of their final average salary -- or, in the case of state legislators, as much as 85 percent of their last day's pay.

* For most of us to get that much money in retirement, we'd need to save and invest well. Most Americans have watched their retirement savings plummet during the recession. And Social Security will give you much less than half of your salary.

4. Use multiple jobs to build a bigger pension

* Under Illinois pension laws, government employees get bigger pensions by combining years of service earned among 17 different retirement plans that cover virtually all governmental agencies. Some government retirees have combined years of service in four separate pension plans -- such as Chicago teachers, Cook County, City Hall and the State of Illinois -- to get one bigger pension that's then split among the four pension plans. This system includes most state and local governmental pension plans in Illinois. Notable exceptions: those of the CTA and the Metropolitan Pier and Exposition Authority.

5. A 3 percent raise each year

* All Illinois government pensions automatically go up by 3 percent each year -- a cost-of-living increase, though those increases typically don't start until age 60. These automatic raises ensure that government retirees eventually will have pensions that are greater than their final salaries.

* It's rare for private pension plans to provide automatic raises. Social Security payments began automatically going up each year in 1975, but that's based on the actual cost of living, which has usually been less than 3 percent. And those automatic increases now face the possibility of being suspended for two years.

6. Death benefits for a spouse

* These government pensions provide widows and widowers with death benefits ranging from 50 percent to 85 percent of the pension provided to the deceased retiree.

* If you're covered by one of the few remaining private pension plans, your spouse can expect a similar benefit. Otherwise, your widow or widower will get just a fraction of your Social Security payment.

[macrockett]

Widow gets $260K -- a year
DUPAGE | Dying school chief set up his bride -- a retired teacher -- with 2 death benefits
Comments

September 14, 2009

BY TIM NOVAK Staff Reporter/[e-mail]

As Robert Lopatka was dying of colon cancer, the retired DuPage County school superintendent took steps to ensure his new bride would be financially set for life.

Lopatka opted to give his wife not one but two death benefits from the Illinois Teachers' Retirement System -- a rare perk, used by fewer than 1 percent of retired teachers.

Now, six years after the west suburban school administrator's death, his wife gets the richest death benefits of any widow in any Illinois government pension plan -- in part because her late husband got end-of-career raises meant to inflate his state pension.

Beverly Lopatka's two death benefits total $260,000 a year -- about $95,000 more than her husband's pension paid, and $100,000 more than any other widow in Illinois gets from a government pension.

She also gets her own state pension, which pays her $79,954 a year as a retired home economics teacher in her late husband's school district.

In all, Beverly Lopatka, 66, gets $340,857 a year from the Teachers' Retirement System -- more than anyone else in the system, which is the state's largest government pension plan. And her benefits automatically rise 3 percent every year.

"I'm really not comfortable talking about that,'' Lopatka said in a brief phone interview from her home in Battle Ground, Wash. "It was my husband's pension. He and his advisers set that up. I'm just the recipient. It was obviously always a risk, like any other investment."

At a time when most private employers no longer offer pensions and people's 401(k) retirement savings have been battered by the recession, Lopatka said she knows how her rich pension checks look: "This is something that sticks out like a big sore thumb to some people.''

As superintendent of DuPage District 88, Robert Lopatka was in charge of two high schools -- Addison Trail and Willowbrook. During his final four years there, the school board began raising his salary to inflate his state pension, a common practice among suburban Chicago school districts that helps them attract administrators while spreading the cost of their resulting big pensions to taxpayers statewide.

A few months before he retired, Lopatka married the former Beverly Harvison, one of his recently retired teachers, in January 2001. He then made sure she'd end up with a rich pension after his death, partly by setting up what's called a "reversionary annuity" -- a rarely used benefit, usually taken by someone who's dying because, for them, it can provide their survivors with twice as much money.

"TRS did know that Mr. Lopatka was dying when he elected to take a reversionary annuity," said Eva Goltermann, a spokeswoman for the teacher pension plan. "TRS does not have the authority under state law to deny members a reversionary annuity, even if they're dying.''

Only 188 of the 325,000 members of the Teachers' Retirement System have signed up for the perk.

To fund the reversionary annuity for his wife, Lopatka agreed to reduce his state pension by about 12 percent.

Two years after he retired, Lopatka died from colon cancer on March 6, 2003. He was 57.

His widow gets half of his pension -- which has now grown to $99,104 a year, thanks to annual 3 percent cost-of-living increases -- plus the annuity, which pays $161,799.

Since her husband died, she has been paid more than $1.6 million in death benefits -- triple the $536,249 Lopatka contributed to his pension and the annuity.

Between her own pension and her husband's death benefits, Lopatka has been paid more than $2.2 million by the Teachers' Retirement System.

[macrockett]

Top widows' pensions
Comments

September 14, 2009

Illinois government pension funds provide lucrative benefits for widows, whose death benefits in some cases exceed the salaries of their late spouses. Two of the most generous are the Illinois Teachers' Retirement System, which allows members to set up two separate death-benefit plans for their spouses, and the Metropolitan Water Reclamation District of Chicago, which provides widows with as much as 85 percent of their late spouses' pensions.

Below are the highest death benefits paid under 16 of the state's top government pension plans. (The CTA pension plan refused to provide records on pensions paid to widows.)

1. Beverly Lopatka $260,903

Husband Robert Lopatka was superintendent of DuPage High School District 88.

2. Sandra J. Stevens $160,273

Husband Robert Stevens was superintendent of Glenbard Township High School District 87.

3. Ann M. McMillan $159,234

Husband Hugh McMillan was general superintendent of the Metropolitan Water Reclamation District of Chicago.

4. Debra Brinkworth $143,649

Husband John Brinkworth was gymnastics coach at Evanston Township High School.

5. Marjorie A. Dalton $142,173

Husband Frank Dalton was general superintendent for the Metropolitan Water Reclamation District.

6. Patricia C. Neubauer $127,210

Husband Ronald Neubauer was chief engineer for the Metropolitan Water Reclamation District.

7. Emma Wegner $124,901

Husband Robert Wegner was a math teacher at Highland Park High School.

8. Heather Bilandic Black $119,467

Husband Michael Bilandic was Chicago's mayor and later an Illinois Supreme Court chief judge.

9. Sandra Woolard $115,834

Husband Lee Schmoekel was a dean for Thornton Fractional High School District 215.

10. Jacquelyn R. Lies $114,493

Husband John Lies was a physical education instructor at Naperville's Steeple Run Elementary School.

[macrockett]

Daley willing to entertain ideas to solve pension problem
Comments

September 15, 2009

BY FRAN SPIELMAN City Hall Reporter

Mayor Daley today cracked the door open to raising the retirement age and implementing a two-tiered pension system for new and old city employees to solve a crisis that's choking local taxpayers.

Responding to the Chicago Sun-Times' "Pension Bonanza" series, Daley said he would entertain myriad solutions to get the pension monkey off taxpayers' backs.

"It's a very serious problem. You have to have some form of pension reform that's fair for everyone -- both fair for the pensioneer and for the taxpayer," he said.

"There has to be a whole review of these pensions because it's gonna fall on the backs of another generation of young people, and that's unfair."

Raising the retirement age from the current minimum of 50 "could be one avenue" toward reform," the mayor said.

"People are retiring at earlier ages and people are getting jobs all over in the private sector. You see people retiring earlier and earlier. That is a state problem," he said.

Daley said he was also open to the controversial idea of shifting newly-hired employees to the 401(k) plans favored by private industry -- instead of the "defined benefits" enjoyed by their older co-workers.

But, it's easier said than done. Union leaders oppose the idea on grounds that it would create a caste system among rank-and-file members.

"That is something you're trying to work out. But that requires unions to agree with it. You know that in your establishment as well at the Chicago Sun-Times," the mayor said.

In January, 2008, Daley created a 32-member commission drawn from labor, business and banking to confront the problem of underfunded city pensions.

They were given an 18-month window to recommend potential solutions to the vexing problem that gobbles up the city's annual property tax levy.

Three months past the deadline, the commission chaired by Daley's former chief financial officer Dana Levenson has yet to issue a final report.

In the meantime, Stock Market losses and the housing crisis have compounded unfunded liabilities of the city's four pension funds from the $10 billion debt to employees and retirees when the commission started its work.

If the pensions funds run out of money, Chicago taxpayers get stuck with the tab.

Today, Daley appeared to close the door to only one potential solution: ending "double-dipping." That's a practice that allows city employees to retire and collect a pension check from one city job, then land on the government payroll in another capacity.

"We have a number of people that we looked at -- a very small percentage in regards to hiring [retired] people who are very well-qualified. I needed them in different positions," the mayor said.

[southsidesignmaker]

"It is difficult to get a man to understand something,
if his salary depends on him not understanding."

-- Upton Sinclair

[doctorwho]

Sept 19, 2009 19:59:02 GMT -6 Arch said:

Crime really does pay.

In Illinois - it's a career path

[macrockett]

Perhaps I should re-title this thread "HOGS AT THE TROUGH"

[macrockett]

Can state find a fix for pension crisis?
Suggestions: Give new hires less, end automatic 3% boost, raise retirement age
Comments

September 15, 2009

BY CHRIS FUSCO, DAVE McKINNEY AND TIM NOVAK Staff Reporters

For years, pensions have been the multibillion-dollar problem that Illinois lawmakers just can't fix.

Legislators thought they'd solved it in 1995. But they failed to follow through on their own 50-year plan to fund state pension systems long-term, skipping pension payments and concocting pension borrowing schemes that only worsened the state's financial condition.

At the same time, pension plans for government workers continued to provide lucrative benefits -- from the ability to retire at 50 to yearly pension increases of 3 percent for most retirees 60 and older.

In a first-of-its-kind analysis, the Chicago Sun-Times reported in the four-part series that wraps up today that 3,958 government retirees in the 17 largest pension systems in Illinois now get pensions that pay them $100,000 a year or more. In all, the systems pay 374,041 retirees a total of $800 million every month.

The reports have drawn the attention of top lawmakers, including Gov. Quinn and his expected challengers in next year's election.

"I don't want to leave the impression I don't believe teachers and public servants shouldn't get a reasonable pension, but some of these provisions end up with the abuses you've outlined in the paper the last three days, and we have to do something about it," said Quinn, who is awaiting a report from a state pension-reform task force that's due by Nov. 1. "We have to have fundamental reform."

Getting that won't be easy. Union members -- a key voting bloc for the Democratic governor -- say that government pension plans provide reasonable benefits to retirees. They also note that the nearly 4,000 people getting six-figure, taxpayer-subsidized pensions represent only a fraction of government workers in Illinois.

"Those individuals represent just 1 percent of all public pension earners," said Anders Lindall, a spokesman for the American Federation of State, County and Municipal Employees. "It paints an utterly false picture of the modest retirement security earned by the real working people in the public service."

Lindall's argument that lucrative benefits granted by legislators in the past aren't to blame for the pension crisis today is open to debate. An analysis by the Civic Federation, for example, found that early-retirement programs have contributed to the mountain of government pension debt in Illinois.

But key players in the debate over public pensions generally agree that pension debt -- worsened by the recession's toll on pension investments -- is taking a toll on taxpayers. Consider: The state of Illinois plans to borrow $3.4 billion this year to cover contributions to five pension plans, covering university employees, state workers, judges, legislators and suburban and downstate teachers. And Mayor Daley has given Chicago school officials permission to raise property taxes -- in part to fund the pension plan for Chicago teachers.

So what needs to be done to fix the public pension mess? We asked an array of lawmakers and civic leaders. Here are six ideas:

Create a two-tier pension system. Quinn and others have advocated creating a less-generous pension system for new state hires. That idea was shot down in the spring, under fire from unions. Others have advocated offering only 401(k) retirement plans for new hires.

"The only way to bring credibility back to the system is an earned-retirement-benefit 401(k)," said Sen. Bill Brady (R-Bloomington), a gubernatorial candidate.

A two-tier system would save the state money eventually but wouldn't address the current pension debt.

Still, you have to start somewhere, said Sen. Matt Murphy (R-Palatine), another Republican hopeful for governor. And, in his opinion, reforms need to be more along the lines of Social Security. "The further you get away from Social Security as a model, the more likely you are to have a system that has no credibility with the people of this state," Murphy said.

End the current guaranteed 3 percent annual increases. Most government retirees 60 and older get automatic yearly boosts in their pensions, ostensibly to cover rises in the cost-of-living.

Quinn has proposed that retirees instead get increases of half of the Consumer Price Index -- the annual federal benchmark for inflation -- or 3 percent, whichever is less. In 2005, a pension task force impaneled by then-Gov. Rod Blagojevich estimated that lowering the 3 percent cost-of-living allowance could save the state nearly $4.7 billion by 2045.

Raise minimum retirement ages. City of Chicago and Cook County workers can start collecting pension checks at 50. State workers can retire at 55 with full benefits if they have at least 30 years of service.

"Pension benefits originally were created to provide economic security where people were no longer able to perform their jobs," said Laurence Msall, president of the Civic Federation.

But now middle-aged people -- who might well live decades longer -- are cashing in. "From a financial standpoint, it's enormously costly," Msall said.

End double-dipping. It's perfectly legal to begin collecting a government pension and then go work in another government job.

That's something that needs to end, said state Sen. Kirk Dillard (R-Hinsdale), another gubernatorial hopeful. "We would not let that happen when I was Gov. Edgar's chief of staff. That was self-imposed," said Dillard, who described himself as being "aghast when I saw some of the payouts and loopholes" reported by the Sun-Times.

Tax pension earnings. Unlike the federal government, Illinois doesn't tax retirement income. The Civic Federation has estimated that taxing all retirement income -- including Social Security -- at 3 percent would bring the state $1.3 billion a year.

But doing that would certainly draw the ire of senior citizens and unions.

Quinn ruled out targeting Social Security payments. But he left open the possibility of taxing government retirees who have scored six-figure pensions.

"I'm not ready to sign onto it yet, but I think it deserves to be studied," said Quinn, who added that it would be "important to maybe have a certain amount of money exempted" from any taxation.

End the current union-perk loophole. State pension laws now contain several provisions that allow former government employees who've moved on to work for unions and other nongovernmental agencies to get a taxpayer-subsidized pension based not on their government pay, but instead on their higher-paying private jobs.

Quinn said he was unaware, until seeing Monday's Sun-Times, that Chicago Federation of Labor boss Dennis J. Gannon now gets a $153,649 yearly pension -- not based on his pay as a city steamroller operator but instead on his higher-paying post heading one of Illinois' most powerful labor groups. The governor said he favors eliminating that perk in state pension laws.

"That one is one that's front-and-center," Quinn said. "It should only be based on your public service, actually where you're serving the taxpayers in a public position."

[macrockett]

Solving Illinois' public pension mess
(http://www.southtownstar.com/news/1771093,091509pension.article)

September 15, 2009

BY CHRIS FUSCO, DAVE MCKINNEY AND TIM NOVAK, Sun-Times News Group

For years, pensions have been the multibillion-dollar problem that Illinois lawmakers just can't fix.

Legislators thought they'd solved it in 1995. But they failed to follow through on their 50-year plan to fund state pension systems long-term, skipping pension payments and concocting pension borrowing schemes that only worsened the state's financial condition.

At the same time, pension plans for government workers continued to provide lucrative benefits - from the ability to retire at 50 to yearly pension increases of 3 percent for most retirees 60 and older.

In a first-of-its-kind analysis, the Chicago Sun-Times reported in a four-part series that wraps up today that 3,958 government retirees in the 17 largest pension systems in Illinois now get pensions that pay them $100,000 a year or more. In all, the systems pay 374,041 retirees a total of roughly $800 million every month.

The series has drawn the attention of top lawmakers, including Gov. Pat Quinn and his expected challengers in next year's election.

"I don't want to leave the impression that I don't believe teachers and public servants shouldn't get a reasonable pension, but some of these provisions end up with the abuses you've outlined in the paper the last three days, and we have to do something about it," said Quinn, who is awaiting a report from a state pension-reform task force that's due by Nov. 1. "We have to have fundamental reform."

Getting that won't be easy. Union members - a key voting bloc for the Democratic governor - believe government pension plans provide reasonable benefits to retirees. They also note that the nearly 4,000 people getting six-figure public represent only a fraction of government workers in Illinois.

"Those individuals represent just 1 percent of all public pension earners," said Anders Lindall, a spokesman for the American Federation of State, County and Municipal Employees. "It paints an utterly false picture of the modest retirement security earned by the real working people in the public service."

But key players in the debate over public pensions generally agree that pension debt - worsened by the recession's toll on pension investments - is taking a toll on taxpayers. Consider: The state of Illinois plans to borrow $3.4 billion this year to cover contributions to five pension plans - covering university employees, state workers, judges, legislators and suburban and downstate teachers. And Mayor Richard Daley has given Chicago school officials permission to raise the property tax - in part to fund the pension plan for Chicago teachers.

[macrockett]

Battle brewing over Illinois pensions
FINANCE | Stock market crash leaves state's plans critical just as baby boomers set to retire
Comments

January 24, 2009
BY TERRY SAVAGE [e-mail]

The State of Illinois has the most underfunded public pension plans in the nation, with a funding gap that is now approaching $50 billion. The low balances in the state's pension accounts have been made worse by the stock market crash, which has also hit Chicago's and Cook County's employee pension plans.

Here's a look at the dire situation for the retirement plans of state workers ranging from police to judges to university professors to members of the Illinois General Assembly. All are counting on generous state pensions, but may soon wake up to a brutal reality.
------------------------------------
RELATED STORIES
Tricky accounting helped state avoid necessary contributions The Savage Truth: Terry's blog More Terry Savage columns

FUNDING LEVELS FOR STATE'S TROUBLED PLANS

* State Universities Retirement System (SURS): 58.5 PERCENT

* Teachers Retirement System (TRS): 56 PERCENT

* State Employees' Retirement System (SERS): 46.1 PERCENT

* Judges Retirement System (JRS): 42 PERCENT

* General Assembly Retirement System (GARS): 32 PERCENT
-------------------------------------------------------------------------------

A financial war is brewing -- and it's likely to pit these public employees against Illinois taxpayers who are responsible for paying those generous pension promises. There simply isn't enough money in all these retirement plans (see box) to send out the promised checks. If you think Bernie Madoff had a Ponzi scheme going, wait until the wave of boomer retirement hits the reality of pension underfunding.

The state pension plans have been underfunded for a long time. But the problem is going critical because of the stock market crash. Unless you're willing to bet on a major bull market appearing in the next few years, there are only three solutions: raise taxes, increase employee contributions, or cut pension benefits.
Situation critical

The Illinois state-funded pension system is the most underfunded in the nation. By midsummer 2008, the five state retirement plans showed a $44 billion unfunded liability. The plans, on average, were at only about 50 percent of the required funding level. And that was before the stock market crash, which likely decimated the stock portion of the investment by another third.

You'd think the Illinois General Assembly, which is responsible for appropriations to fund these plans, would have paid attention to the fact that their plan is the most underfunded of all.

In March 2007, Gov. Blagojevich proposed new strategies to add money to the state's pension funds -- all involving questionable financial tactics: leasing out the state lottery to raise $10 billion; a new $6 billion state tax on business gross revenues, and a $16 billion bond sale of "pension obligation bonds" to raise cash.

Going into debt to fund the pensions is a strategy the governor has tried before. In 2003 ,the government sold $10 billion in bonds to make a required $2 billion pension contribution. The remaining $8 billion was "invested" in the stock market to earn more than the 5 percent interest being paid to bond buyers. At the time I questioned the logic behind this, wondering if the state could earn more than the interest it was paying.

Now the state has even more limited options. Borrowing money through the sale of municipal bonds will be more difficult and expensive because the state's entire financial picture is murky.

Illinois has been chronically late paying its bills. And the state has already reneged on some financial promises. For example, a bonus that was to be paid to purchasers of state bonds who used the proceeds for college tuition has not been paid for the last two years. The state found loopholes in the language, enabling it to simply stop paying the bonus.

What will happen when other future promises, including prepaid tuition and nursing home reimbursements, collide with fiscal reality?
Most states in trouble

To be sure, Illinois is not alone. The Center for Retirement Research at Boston College estimates that state pension plans have losses greater than $865 billion, a loss of nearly 40 percent in just the last year.

The National Bureau of Economic Research says the value of pension promises already made by U.S. state governments will grow to approximately $7.9 trillion in just 15 years. And the report predicts that as much as $1.75 trillion of those benefits cannot be paid.

Put in current dollars, to bring those pension funds up to appropriate levels would cost "almost $2 trillion today."

The Web site www.pension tsunami.com has been tracking these issues as they arise around the country.

Could the state simply default on its pension obligations when the time comes?

James Spiotto, an attorney with Chapman and Cutler in Chicago, is an expert in municipal bankruptcies and says the law can be murky.

"There are varying levels of protection, ranging from strict constitutional rights to general statutory provisions, that might allow for some renegotiation of benefit levels in light of adverse conditions affecting the pension fund," Spiotto said.

In other words, if the state tries to cut back on the promised benefits, there will be a huge court battle.

When companies go bankrupt, the Pension Benefit Guarantee Corp steps in to cover most defined-benefit pension promises. But the PBGC does NOT cover municipal or state retirement plans.

If city, state and local pension promise are to be kept, it will be up to taxpayers to come up with the money -- either through higher tax levies or lower service levels.

And that's The Savage Truth.

ONE GOOD PLAN

Is it inevitable that public pension plans are underfunded? Not at all. In fact, in the midst of all the dismal news about underfunded public pension plans, there is one bright spot: The Illinois Municipal Retirement Fund. Last year it was 100 percent, fully funded!

This plan covers the employees of 2,900 local governments - cities, villages, counties, parks, libraries, and other local districts, outside Chicago. The plan covers 177,000 active members, and has 85,000 current retirees.

Based on asset size, with $24.2 billion in assets at the start of 2008, the IMRF is the second-largest public pension in Illinois.

In 2005-07, the IMRF reached 100 percent funding level, an unprecedented accomplishment for an Illinois pension fund. Certainly, it took a hit in the market crash of 2008, but IMRF fund executive director Louis Kosiba says: "When all the numbers come in, we anticipate that IMRF will be better funded than most pension systems nationwide and statewide."

How have they managed so well since they got started in 1941? "What is unique about IMRF is that our board of trustees was given authority to set employer contribution rates, and that we have enforcement authority to COLLECT those contributions. We've used conservative actuarial principles . . . and we've been disciplined over the years about collecting the required monies."

In other words, they didn't fool around or play games with the pension plans of thousands of communities around the state. Those municipal employees covered by this plan can breathe a lot easier than their counterparts who work for the City of Chicago or the State of Illinois.

There was no accounting magic involved. The Illinois Municipal Retirement Fund simply did the right thing!

[Arch]

Declare them insolvent and dissolve them with a stroke of a pen.

Happened to just about everyone else in Corporate America and they had to deal with it.

[macrockett]

Tricky accounting helped state avoid necessary contributions

January 24, 2009

You might be wondering how the State of Illinois got away with avoiding making the needed pension contributions for so many years. The answer is simple: accounting magic.

I's not so surprising to find tricks in the numbers. That's how Enron got away with all those "off balance sheet" subsidiaries. That's how Wall Street firms never had to properly value all those credit default swaps. And, similarly, that's how the state got away with promising pension payments, but never funding them.
RELATED STORIES
Stock market crash leads to battle over Ill. pensions The Savage Truth: Terry's blog More Terry Savage columns
Expected rate of return

You and I know what we hope our 401(k) investments will earn. But we can't retire on our hopes -- or historic average returns.

The state, however, can make assumptions about future investment returns in order to calculate its pension contributions.

Not only did the state plans exaggerate the expected returns, they had some help from the rules. The riskier the assets in the pension plan (stocks are considered riskier than bonds), the higher the "expected return" the plan's actuaries can use to make the plan balances look good. That encouraged more investments in stocks.

But as we're all now well aware, the stock market has not been a place for positive outcomes in the last year.
The future is now!

The fiscal pain is now upon us, though no one wants to acknowledge it. State pension plans have become even more underfunded. And soon, all those state employees, and professors, and even the state Legislature will start questioning whether they'll be getting those promised benefits.

When we've finished trying to sell our state assets -- from the lottery to the toll roads -- they'll turn to massive tax hikes, or tuition hikes, or increased user fees. It's either that or make cuts in state services -- from prison guards to State Police, from road-building to education.

The City of Chicago will face the same problem. We've already sold the Skyway; Midway Airport; the parking garages at Millennium and Grant parks, and our parking meters. While those transactions may generate a pot of money for current needs, the sales diminish future revenue sources. How will those pension promises be paid? Where will they turn?

And just like the current banking crisis, they'll blame it on the accountants.

Terry Savage

[macrockett]

Cut huge pensions that bleed taxpayers
Comments

September 15, 2009

Allow us first to review some of the lame excuses, rationalizations and whining, if only so we can ridicule it all.

That will make us feel good.

Then we'll move on to what can be done about this mess -- the travesty of overly generous public pensions that are bleeding Illinois taxpayers. That's not as much fun as ridicule, but it could save us a few bucks.

Over the last four days, in a Chicago Sun-Times investigation called "Pension Bonanza," reporters Tim Novak, Chris Fusco and Art Golab have documented the whole sorry saga of Cadillac state pensions.

Dr. Alon Winnie, who draws the richest state pension, defended his $447,233 a year by telling our reporters, "If you were with a good company, you'd have a helluva lot better benefits."

Got that? Dr. Winnie's defense is that he could have earned a lot more money in the private sector, so basically he did us a favor.

Let us remember that -- Thank you, Dr. Winnie -- the next time we get hit up for higher taxes.

Cook County Commissioner Earlean Collins, who collects a $75,921 annual state pension while being paid $85,000 by the county, said to our reporters: "Tell the truth about the whole story . . . that it's legal."

Got that? It's legal. So who cares that it's also a scam.

Reginald L. Weaver, an elementary school teacher who enjoys a yearly state pension of $226,485 because he also once headed the National Education Association, complained that it is "unfortunate" for the Sun-Times to "focus" on his stunning pension when so many kids today are still going to bad schools.

Got that? Pay no attention to that man behind the curtain!

We can't help but wonder how many more school textbooks those kids might have if the state were not burning money on obscenely high pensions for the likes of Weaver.

Of all the Cadillac pensioners featured in the Sun-Times series, only one -- former state comptroller Dawn Clark Netsch -- offered a defense we could fully respect:

"I know I get a big pension. What am I supposed to do? Refuse it? There's no question there has to be changes."

Absolutely. Big changes.

And here's how:

Raise the minimum age at which City of Chicago and Cook County workers can receive a pension from 50 to at least 60. Private companies don't pay pensions that early; neither does Social Security.

End "double-dipping," the practice by which a worker collects a pension from one government job while on the payroll for another government job.

End the practice of increasing state pensions 3 percent a year. Automatic raises are rare for private pensions, and Social Security payments are increased only by the cost of living, which is usually less than 3 percent a year.

Tax pensions. Illinois is one of the few states that does not. As Sun-Times columnist Mark Brown suggested Sunday, this could be a progressive tax, exempting the first $50,000 to $75,000.

Revoke an absurd state law that allows dozens of lucky people to collect public pensions based not just on their government jobs, but also on private-sector jobs for labor unions, lobbying groups and other nongovernmental organizations. That law allowed a former city road worker, Dennis J. Gannon, to collect a yearly city pension of $153,649 --largely on the basis of his big salary later as head of the Chicago Federation of Labor.

And finally, as we have urged before, it's time to impose a two-tier pension for state employees, with new hires getting less than current employees.

The vast majority of public pension recipients, of course, don't get the golden deals of the Gannons, the Winnies, the Weavers and the Netsches. We know that.

But a two-tiered system could save the state billions of dollars in the long run, simply by bringing state pensions more in line with those in the private sector.
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I will add one more recommendation. Everyone....everyone should personally call your elected representatives and demand each of them sign a pledge to implement these changes pursuant to a vote on the house and senate floors.

This is nothing short of a transfer of wealth from our children to a group of extremely selfish individuals.