State must tackle pension woes
Financial problems surrounding public pensions in Illinois are a ticking time bomb that threatens to blow state government sky high.
Gov. Pat Quinn made a big deal last week about signing new legislation designed to put an end to a series of outrageous abuses of public pension plans.
In one horrific case, a politically connected Chicagoan who had earned $15,000 annually while employed by the city was allowed to base his pension on the $300,000 annual salary he received as the leader of a labor union, a private organization. Another outrage allowed two union lobbyists to be eligible for $100,000-plus public pensions from the Teachers Retirement System based on one day's work as substitute teachers.
"The pension abuses unearthed were flagrant. They needed to be stopped immediately and prevented from ever happening in the future. I'm pleased the Legislature voted overwhelmingly to address this issue. We look forward to working together in 2012 to tackle the remaining pension challenges that face Illinois," Quinn said.
But Quinn is speaking strictly for himself. He may feel the urgency to craft legislation addressing the public pension problems in Illinois. But state legislators have been studiously ignoring the problem, lest it interfere with their precious re-election plans.
In past months, there have been repeated efforts by some to draft a legislative response to the financial problems surrounding public pensions, but there has yet to be a formal vote.
Here are two basic problems facing the state's public pension systems:
— Because the state has chronically failed to meet its payment obligations over the years, public pensions are sorely underfunded and the problem is getting worse.
Unfunded obligations for state pension systems, like those for retired teachers and university employees, increased by $7 billion in 2011 — to $82.9 billion — while the funded ratio dropped from 45 percent to 43 percent. As if that is not enough, the lagging economy has undermined the ability of the pension funds to earn strong returns on their invested assets.
— Because the state is trying to get control of the underfunding problem, more money is being appropriated to reduce the pension shortfall at the expense of fundamental state obligations.
In a recent report, the Illinois Policy Institute outlined one grievous example of this reality.
"Many applaud increases to state education funding. However, over the past five years, 71 cents out of every new dollar set aside by state government for PK-12 education instead went to cover the costs of teacher retirement. The crowding out effect will only get worse as state contributions to (the Teachers Retirement System) quickly begin to ramp up," the Institute reports.
A Quinn spokeswoman recently disclosed that the governor intends to put together a group of interested parties to address the pension issue. Any effective plan will necessarily affect thousands of public employees.
Legislators already have changed the rules for state employees hired after Jan. 1, 2011. In 2010, they passed legislation raising the retirement age to 67 and limiting the maximum allowable pension new employees can earn to roughly $100,000 a year.
Officials say the changes affecting post-Jan. 1, 2011, employees reduce the actuarially accrued liability by more than $200 billion by 2045.
The policy challenge is huge for longer-term employees. But it's small change compared to the political priorities of incumbent legislators seeking re-election. Any change in the status quo will not only upset public employees but bring down the wrath of the unions who represent them. That daunting reality is all members of the House and Senate need to cling to the pension status quo.
Legislators won't say that, of course. Their preferred explanation for inactivity is that the Illinois Constitution forbids changes in an employee's pension plan once he is enrolled. But the real legal question is not whether the state can reduce the benefits an employee already has earned but whether it can change the rules regarding pension benefits yet to be earned.
That's an issue for the courts to resolve, not one for timid legislators to embrace as a shield against facing a tough issue.
Skyrocketing public pensions and Medicaid costs threaten Illinois state government because they are consuming larger and larger amounts of the tax revenue that traditionally has funded social services, education, mental health and law enforcement.
If that broad array of services is to be maintained in a credible way, the General Assembly must act. Gov. Quinn has wisely indicated he wants to lead the way to a solution, but our legislators must follow.
Let's recap this. The employer, the State of Illinois, did not pay it's portion of the pension plan for years. The Legislators spent the money on the taxpayers wants. The employees paid their portion every paycheck. Their money was automatically deducted. Now, the bill for the I.O.U.s is too much. The only alternative is to STEAL the employees pensions. Yeah, I understand it..... Ameren, Sears, CME, and others get tax breaks. People complain about the recent tax increase. The Legislators get payoffs in "campaign donations". Nothing is done about ILLEGAL IMMIGRATION. In fact, the pension money that was to be paid into the pension systems was used for services to illegal immigrants; and YOU, the taxpayer. Since the owed money is too much now, and services are "needed"; the only solution is to STEAL the state employees money. This is all being pushed by the good Republican media (NG included) with the consent of the Legislators, Governor, Chicago Civic Federation, and corporations. Illinois credit rating was ranked yesterday the lowest in the nation for states. The court case up to the U.S. Supreme Court will be expensive, and will stop any further borrowing by the Land of Thieves due to no credit rating. It is Theft anyway you cut it.
For a recap: According to the Wall Street Journal," the Teachers Retirement System shows that the average teacher who retires today after 30 - 34 years of service has final earnings of $84,466 and collects a pensions of $60,756 a years, plus anual cost of living adjustments, providing an income higher than 95% of retirees in Illinois. That's a lifetime value of almost $1.6 million if collected at age 62 and more if the employee retires in his 50s." This for 9 months of work per year plus generous holidays and health insurance.
If I made $84,466 per year (for the entire year) I would collect Social Security of around $17,750. The most my employer pays into my 401k is a 4% match. Public employees receive far more into their retirement funds and sometimes pay nothing into it. I was promised Social Security at age 65. Now I have to wait until age 67. I don't want to hear employees complain about what they were promised. I'm not getting what I was promised. Why should they? Public employees have scammed the system long enough with pay far in excess of the private sector plus the same for vacation, sick time, holiday pay and health care. Now my taxes have gone up, my employer's taxes have gone up and all of the increase has gone to public employee retirement funds. Stop paying public employee's pensions and then they might settle for something reasonable.
Another "taxpayer" spouting inaccuracies. The pensions addressed are State Employee pensions; not Teachers pensions. State employees paid their contributions into their pension systems. The State of Illinois, their employer, did not pay the employer's portion as mandated. If the State of Illinois were a corporation, it would have been in court long before now. State employees earn .0167% per year of their highest paid four year average. They must work for a minimum of 8 years before they are eligible for a pension. They must be 55 years of age before they can retire. If an employee started work at age 22, and worked until age 55; they would receive 55% of their highest four year average of pay. If that amount was $48,000, they would receive $26,400 per year. They do pay separately into the Social Security program as REQUIRED by their employer, the State of Illinois. University employees do not pay into Social Security. Their plan is the old plan that state employees used. It is .022% per year of the employee's highest four year average. The State of Illinois required state employees to pay into Social Security back in the late '60's to lessen the amount the State paid, or was supposed to pay into the retirement systems. They made grandiose promises. They even put it into the State Constitution; "not to be diminished over time". They did that to promise state employees they would not be robbed even with the Legislature spending the pension payment money on expanded services to the citizens, and non-citizens. Your complaining about something you do not know. Your acting like it is YOUR money. It is NOT. The rest of your kind can line up, and howl all you want. I worked 40 plus years serving citizens. Some even like you. It is MY money. Theft is theft; and it is illegal.
If the State of Illinois were a corporation, it would have declared bankruptcy long ago and eliminated pension liability. It should do so now as public employees refuse to work toward any kind of solution.
All money paid to any public employee was and is from the taxpayers. As a taxpayer, it is my money. Public employees have already received enough of it.
The Illinois Constitution is a piece of paper. It won't pay for public pensions no mater what it says and it can be changed. Until public employees get a clue, nothing will change. But if there is no change, public employees won't receive a dime of pension money because the well is dry. They will be far better off with a workable solution such as the one worked out in Rhoad Island that to continue on the "entitlement", inflexable road.
The only theft here is from the taxpayers not the other way around.
State employees pay taxes also just like you. If the Illinois Constitution is only a piece of paper, then anything in it is not valid. Better read it before you shred it. The "well" is not dry. The state has assets such as state parks (land), buildings (real estate), and assorted facilities with equipment. That can be sold to solve some of the pension theft. No financial institution will ever loan money to a bunch of deadbeats who steal from employees, do not honor contracts or their own constitution. You pay your taxes maybe. After that it is NOT YOUR MONEY. Every cheap hustler wants someone else's life savings. By the way, states cannot declare bankruptcy. For retired state employees who contributed their money via paycheck deductions, a pension which they earned thru years of work is NOT an "entitlement". For forty plus years, I served people who were facing adversity. The vast majority were good, reasonable people. However, there always was a minority of "good Republican taxpayers" who accepted services; but complained about others getting the same service. Your comments bring back memories.
Comments
News-Gazette.com embraces discussion of both community and world issues. We welcome you to contribute your ideas, opinions and comments, but we ask that you avoid personal attacks, vulgarity and hate speech. We reserve the right to remove any comment at our discretion, and we will block repeat offenders' accounts. To post comments, you must first be a registered user, and your username will appear with any comment you post. Happy posting.