* Tribune…
A key ratings agency said the decision by the Illinois Teachers’ Retirement System to lower its expected rate of return was “a positive,” even though it means the cash-strapped state will have to find hundreds of millions of dollars more to pay into the pension program for teachers who live outside of Chicago.
The decision by the system’s board to alter the rate of return on investments from 7.5 percent to 7 percent was made despite opposition from Gov. Bruce Rauner, who characterized it as a rushed decision that puts taxpayers on the hook. It was an odd position for the Republican governor, who has long criticized state and city government for kicking the can down the road on financial issues.
But Moody’s Investors Service said the change was “a positive” despite increasing financial pressure on the state in the near term, saying the move would “lower exposure to volatile investment performance.” Moody’s estimated that if the new, lower rate had been in effect for the budget year that began July 1, the state’s required employer contribution would have been $4.3 billion, roughly $421 million more than if the assumed rate of return stayed at 7.5 percent.
* But it’s not all good news. From Moody’s Investors Service’s David Jacobson…
However, even under the lower 7% discount rate, Moody’s estimates Illinois’ contributions would remain roughly $1.5 billion below our “tread water” indicator. Our “tread water” indicator equals the sum of employer service cost (called the “normal cost” for actuarial funding) plus interest on the unfunded liability, using reported assumptions. In the most recent TRS valuation report, actuaries projected that reported unfunded liabilities will continue growing until 2030 under the statutory funding formula.
Oy.
…Adding… Related…
* Amend the state constitution to cut public pensions?: Higher taxes may be needed along with other changes, Baise said. But what’s really needed is to change a clause in the state constitution that the Illinois Supreme Court repeatedly has said fully protects pension benefits some say the state no longer can afford. “In what world do we live in where a $100 billion-plus pension obligation can be explained away by saying ‘It’s in the constitution’?” Baise asked. “A constitutional provision that was drafted in 1970 cannot and must not bankrupt this great state.” In a later interview, Baise conceded that the courts might balk at such an amendment. And getting it by voters would be no snap. But change nonetheless is needed, he said. “Democrats and Republicans have both got to say, ‘We need to get this problem under control,’ ” he said. “Nothing is so sacrosanct it can’t change.”
- Honeybear - Wednesday, Aug 31, 16 @ 9:34 am:
1.5 billion below “tread water”. Dear God.
- Ron - Wednesday, Aug 31, 16 @ 9:38 am:
Good time to pass the teacher pension obligations on to the school districts that created the obligations. And of course allow municipal bankruptcy.
- Ole' Nelson - Wednesday, Aug 31, 16 @ 9:43 am:
If I were Ron’s neighbor, I wouldn’t loan him anything of value. His sense of fairness and value of promises kept seems to be askew.
- Anonymous - Wednesday, Aug 31, 16 @ 9:46 am:
Ron, you know not of what you speak. You’ve been drinking the KoolAid and believing that all retirees are of the Rauner caliber in wealth.
I can tell you as a retired teacher, I earn less in pension that you will. Guaranteed.
It’s as ludicrous to believe that retirees earn the likes of Rauner or Bill Gates all on the public dime,whom they’ve delivered services to.
Wise up. And pay up!
- Ron - Wednesday, Aug 31, 16 @ 9:47 am:
Illinois will never be able to pay the pensions. What was actual return last year. Hint it was a lot less than 7%.
- Ole' Nelson - Wednesday, Aug 31, 16 @ 9:57 am:
Ron
TRS has three sources for the money it uses to pay pensions. Employee contributions, state contributions, and earnings on investments. While investment returns may very well trend downward in the near future, that is not the biggest cause of the pension fund shortfall.
Properly funded defined-benefit plans can ride out market fluctuations. The problem in Illinois is that our plans have not been properly funded historically.
- Robert the 1st - Wednesday, Aug 31, 16 @ 10:03 am:
=The problem in Illinois is that our plans have not been properly funded historically.=
The state’s failed here. So try Ron’s plan and give control to school districts. Maybe every teacher in the state wouldn’t be getting 6% raises each of their last 3 years because there’d actually be some accountability.
- Big Muddy - Wednesday, Aug 31, 16 @ 10:10 am:
“roughly $1.5 billion below our “tread water” indicator”
Wonder what this tax increase would(will?) look like? What do you want to fund with that tax increase Dem’s? Social services or pensions? Whatever you do don’t think about compromising at all with anyone. Hold the line… its been working great so far. Ugh.
- JS Mill - Wednesday, Aug 31, 16 @ 10:12 am:
When did welching become a GOP virtue?
I know that is how corporate America works (hint- guys like trump and rauner), but it is now virtuous to do it?
Now GOP slogan- “We are not good for our word and you know it”
- G'Kar - Wednesday, Aug 31, 16 @ 10:12 am:
To the related comment by Baise: One of the main reasons the Articles of Confederation failed and a constitutional convention was organizes was the efforts of some states, especially Rhode Island, to simply welch on their debts. The Contract Clause of the Federal Constitution is aimed in part at States to make sure they honor their debts.
- Out Here In The Middle - Wednesday, Aug 31, 16 @ 10:12 am:
Dear Ron -
Would you loan me the money to buy a house? I’d like to live in it for 20 years while making minimal payments (because I need the money to buy new cars and a boat). After 20 years I’ll decide it’s only worth half what you loaned me and tell you to take it or leave it.
- Retired SURS Employee - Wednesday, Aug 31, 16 @ 10:13 am:
Greg Baise should know better. Any amendment to the state constitution concerning Article 13, Section 5 can only be prospective. On the other hand, he seems to be unaware that Tier II will accomplish his objectives without the need for an amendment; assuming, of course, that Tier II is viable in the long run.
- Ole' Nelson - Wednesday, Aug 31, 16 @ 10:14 am:
I agree that the districts need to have some “skin in the game”.
Ron loses me at bankruptcy.
- sideline watcher - Wednesday, Aug 31, 16 @ 10:18 am:
Retired SURS Employee +1
Baise said nothing new except that he’s offended that we have to pay back what we stole from the pension systems to pay for programs because we are offended by taxes. Oh wait…nothing new there.
Oh and hat”s off to the commenter that pointed out that his nostalgia for the good old days of manufacturing was before globalization and when most of their work force was unionized forcing them to give the benefits and pay that actually created middle class lifestyles. When they aren’t forced and there was a financial incentive to leave…..we have manufacturing today.
But I’m sure Baise’s salary and benefits package makes up for his selective memory. Heh.
- illinois manufacturer - Wednesday, Aug 31, 16 @ 10:19 am:
Retired Surs yiu are right. All this seems to be more about feeding one or another crazy GOP ideologies not about pensions or manufacturing. The only manufacturing issue he mentioned was workmans comp and pyshing this extreme stuff wont help compromise there. That us why I wont join that outfit
- Anonymous - Wednesday, Aug 31, 16 @ 10:21 am:
==pensions have not been funded properly historically==
They have been 100% funded by the employees.
- Ole' Nelson - Wednesday, Aug 31, 16 @ 10:23 am:
Anonymous thank you for adding that extremely important point!
- Ron - Wednesday, Aug 31, 16 @ 10:25 am:
JS Mill, I am not a Republican. I am Democrat and am rational.
- Gruntled University Employee - Wednesday, Aug 31, 16 @ 10:36 am:
==Ron loses me at bankruptcy. ==
Ron loses me as soon as he starts typing.
- Maximus - Wednesday, Aug 31, 16 @ 10:38 am:
I think it’s odd how bankruptcy is somehow a crazy concept that cannot be considered. If the entity in question goes insolvent, you’ll wish bankruptcy had been on the table. Bankruptcy = reduced pension payout. Insolvency = no pension payouts. This exact scenario is what played out with Detroit and they went through a managed bankruptcy. Illinois will end up having to do the same thing.
- Ron - Wednesday, Aug 31, 16 @ 10:40 am:
How about those non existent investment returns last year anonymous? Taxpayers are on the hook for that too.
- Ole' Nelson - Wednesday, Aug 31, 16 @ 10:42 am:
Maximus
Who gets to determine if a taxing body is “insolvent” versus ideologically opposed to public employee pensions?
- Ron - Wednesday, Aug 31, 16 @ 10:43 am:
Maximus, municipal bankruptcy is the solution. Illinois credit rating would improve immensely if what I have laid out was instituted .
- Anonymous - Wednesday, Aug 31, 16 @ 10:44 am:
Ron, you seem to forget that public employees not only paid 100% of their responsibility to their own pension funds, but they paid their state taxes as well. Only their state taxes intended to pay into their pension funds apparently went to………? Anyone but them! You better believe we’re angry that those who got our money don’t want us to have any of it back.
- Ron - Wednesday, Aug 31, 16 @ 10:45 am:
Insolvency is determined by math.
- Ron - Wednesday, Aug 31, 16 @ 10:47 am:
Anonymous, you seem to forget that public employees have outrageous protections that don’t exist for the vast majority of Illinois citizens. No one gets guaranteed investment returns for their retirement.
- Ron - Wednesday, Aug 31, 16 @ 10:49 am:
I would be happy to allow all public employees get what they have earned to date if we ended any additional accruals and switched to 401ks immediately. The insanity must end. No one gets guaranteed increases in retirement benefits.
- Ole' Nelson - Wednesday, Aug 31, 16 @ 10:49 am:
Here is some fun math. Illinois pension funded ratio was almost identical to current ratio during 1970 convention. The pensioners who have received their pensions over that last 4 decades are glad it wasn’t declared insolvent then!
- Pepper Brooks - Wednesday, Aug 31, 16 @ 10:54 am:
Insolvency is when you simply can’t pay obligations and expenses on your tax revenues, and no one will lend you money.
The notion that there won’t be a variety of Illinois municipalities that become insolvent is extremely short-sighted. Look at southern Cook. Look at Harvey, Kankakee, etc.
- Ron - Wednesday, Aug 31, 16 @ 10:56 am:
Pepper Brooks is correct. Math is simple. The sooner municipal bankruptcy is allowed, the sooner we get out of this message.
- blue dog dem - Wednesday, Aug 31, 16 @ 11:06 am:
Is this the same Moodys that gave the thumbs up on Detroit munis about 18 most before it hit the fan?
- Gruntled University Employee - Wednesday, Aug 31, 16 @ 11:26 am:
==Who gets to determine if a taxing body is “insolvent” versus ideologically opposed to public employee pensions? ==
And ideologically opposed to tax increases.
- Union Dues - Wednesday, Aug 31, 16 @ 11:27 am:
Ron you forget the state can raise revenue whenever it wants. Which is one of the reasons the state cannot declare bankruptcy.
- Maximus - Wednesday, Aug 31, 16 @ 11:32 am:
Union Dues -
The state cannot raise revenue but it can raise taxes. At a certain point, you cannot tax your way out of the debt. Just look at Puerto rico, they would love to just raise their taxes to solve their pension/economic problems but they’ve already raised them too high and everyone is fleeing the territory. Raising taxes does not make the system sustainable.
- blue dog dem - Wednesday, Aug 31, 16 @ 11:35 am:
RNUG. ARE YOU OUT THERE? Havenot heard from you in a while and am a bit concerned.
- Robert the 1st - Wednesday, Aug 31, 16 @ 11:37 am:
=the state can raise revenue whenever it wants=
Couldn’t you have said the same for the city of Detroit? How about Stockton, CA?
- Original Rambller - Wednesday, Aug 31, 16 @ 11:39 am:
Wonder if Ron is OK with transferring pension liabilities to local school districts without the BK option.
It’s good to see Baise put everything on the table so we can fix the state’s current fiscal condition. “Nothing is so sacrosanct it can’t change.” I assume that includes the corporate subsidies many of his members receive.
- Union Dues - Wednesday, Aug 31, 16 @ 11:41 am:
The State of Illinois is not the City of Detroit. There is money to be had. The extra two percent seemed to be doing the trick over time. This is not complicated.
By the courts rulings, raising taxes and paying our pension debt is the most likely scenario to play out.
- blue dog dem - Wednesday, Aug 31, 16 @ 11:49 am:
Never mind RNUG.
- Anonymous - Wednesday, Aug 31, 16 @ 11:51 am:
Ron, are you as worried/bitter about those who earn multi-millions and pay a fraction, if any in taxes or just the average $42k pensioner (with no social security)? You think rather small.
- RNUG - Wednesday, Aug 31, 16 @ 11:52 am:
== RNUG. ARE YOU OUT THERE? ==
I’m still here. Just been really, really busy with more important stuff than politics and haven’t had a lot of time to check in. Thanks for being concerned.
Besides, some of the people here have been doing a pretty good job with their comments rebutting the whole insolvency / bankruptcy issue. I didn’t see a need to just echo what has already been said.
Let’s face it, certain groups just don’t get it. You can change whatever laws you want to, but the pension debt can’t be wished away or paid for with magic beans.
RE someone’s question about the tax rate to cover $1.5B for TRS, if I remember correctly that is about 0.4% on the state income tax, or the equivalent of taxing all retirement income with no threshold.
- TrumpsSmallHands - Wednesday, Aug 31, 16 @ 11:56 am:
I guess Greg Baise has never read the US Constitution, specially Article I, section 10, clause 1.
It states:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
So any modification of the IL Constitution to remove the pension protection clause would only apply on a go-forward basis and have no impact on the current liability.
- Shemp - Wednesday, Aug 31, 16 @ 12:00 pm:
What good does it do to push pension costs back on the schools when the State isn’t funding the school districts at the legal levels?
- Ron - Wednesday, Aug 31, 16 @ 12:01 pm:
Elminate public employee protection going forward. It is outrageous that the taxpayers are forced to provide benefits that can’t be changed.
- Ron - Wednesday, Aug 31, 16 @ 12:02 pm:
Shemp, allowing municipal bankruptcy fixes that problem. Illinois hasn’t had a balanced budget in 30+ years, time to acknowledge simple truths.
- Pepper Brooks - Wednesday, Aug 31, 16 @ 12:02 pm:
Union Dues–
The unfunded liability continued increasing during those tax hike years. And I’ll remind you that the current income tax rate is 25% higher than it was in 2010. And the unfunded liability continues to increase.
The unfunded liability always increases because Illinois cannot afford to pay the interest on the debt, let alone ever getting around to paying the principal.
A $112 bil debt (which is being very generous to the state) with an assumed average investment return of say 7.25% per year means that Illinois needs to pay $8.12 bil per year just to cover the interest on the debt. Forget about paying down principal. Forget about paying the normal cost.
The local pensions are far worse. Chicago isn’t anywhere near covering even the cost of servicing its pension debt, which is why the UL keeps going up in Chicago.
- RNUG - Wednesday, Aug 31, 16 @ 12:07 pm:
== What good does it do to push pension costs back on the schools when the State isn’t funding the school districts at the legal levels? ==
Even if you pushed it out to the school districts, you can only do it for the current and future costs. The State is still on the hook for the existing debt ($111B for all 5 systems).
The problem is not making current employee contributions, the problem is the debt. The sooner the State actually re-addresses the issue of paying off the debt (aka changing the Edgar ramp), the sooner a real fiscal solution (which WILL have to include more revenue via either taxation or total elimination of corporate tax breaks) can be reached.
- HangingOn - Wednesday, Aug 31, 16 @ 12:11 pm:
==It is outrageous that the taxpayers are forced to provide benefits that can’t be changed.==
The state has a lot of people retiring, and a lot of trouble getting people to even apply for the positions. I guess next year we can listen to people complain how outrageous it is that there are no longer services for the taxpayers who expect things like clean water to drink, someone to stop abuse of elderly in nursing homes, somebody responding when they try to report the 4 year old next door is covered in bruises…and heaven forbid Zika make it to Illinois and nobody from public health was there to help.
- NoGifts - Wednesday, Aug 31, 16 @ 12:24 pm:
How many times do we have to say “can’t afford” is not the same as “don’t want to afford.”
- Name Withheld - Wednesday, Aug 31, 16 @ 12:32 pm:
Moving to a 401K plan from a defined benefit plan (pension) is a horrible idea, and not just for the employee.
Studies have shown that it ends up costing states as much if not more money down the road due to the fees associated with 401Ks and the volatility.
Here’s one study that covers this:
http://www.rsa-al.gov/uploads/files/Case_Studies_State_Pension_Plans_that_switched_to_DC_Plans.pdf
From the closing paragraph of this report:
“As states and municipalities have considered switching from the DB pension to a DC plan, those that have conducted a cost analysis have found that the move would save little to no money in the long term, and could actually substantially increase retirement plan costs in the near term. Not surprisingly, virtually no state that has conducted such a study has made the switch. Only one state (Oklahoma) ultimately opted in favor of moving to DC, but it did so as part of an overhaul of the total compensation package, without conducting a separate cost study for the switch.”
RNUG - you have far more knowledge of this area than I do. Can you confirm or clarify any of this?
- City Zen - Wednesday, Aug 31, 16 @ 12:41 pm:
In a universe of infinite possibilities, I’m always amused by the folks who think the one and only thing that could have changed all these decades was for the state to pay its fair share and fund the pensions properly. Not one person would have a received smaller raises all those years. Or had a smaller pension due to those lower salaries. Or not have received unfunded pension enhancements.Or paid more for health care. Or not have been hired to begin with. All things that would have happened in some shape or form if that money went to pensions. Endless combinations of possibilities yet some folks only see only one answer: Nothing changes for me, everyone else is impacted by change.
I, and the universe, respectfully disagree.
- Mama Retired - Wednesday, Aug 31, 16 @ 12:45 pm:
Rauner is financially running the state into no return while waiting for the Feds to pass a law allowing States to declare bankruptcy. I think it will happen if Trump gets elected, but what do I know?
- Mama Retired - Wednesday, Aug 31, 16 @ 12:48 pm:
My question is: In the event that it becomes legal for the state to declare bankruptcy, will the pension funds still have to be honored?
- NoGifts - Wednesday, Aug 31, 16 @ 12:55 pm:
City Zen - the past is behind us and cannot be changed.
- HangingOn - Wednesday, Aug 31, 16 @ 1:02 pm:
@CityZen
There have been years the Union agreed to no across the board % raises. The employee part of insurance went up right before I was hired on, agreed to by the employees. No, not double, but some. I know many people who work outside office hours and don’t turn it in for overtime, and some agencies don’t even have an overtime. They get comp time in return to take. And many don’t use it and lose it when they don’t use it in a year. And the comment about “not have been hired to begin with”? I don’t even understand that comment. A lot of people have been approved for hire and turned the state down because they could get a better deal elsewhere. So the ones who didn’t take the better deal are bad for it?
- Anonymous - Wednesday, Aug 31, 16 @ 1:06 pm:
- Name Withheld -
401K’s have not been that good of a deal for a lot of employees. But we don’t even need to take about 401K’s.
The Tier 2 system, out in place in 2011 for new hires, is designed and projected to cost the State ZERO. The reduced Tier 2 benefits are to be totally funded by just employee contributions and earnings.
So why would anyone want to talk about shifting from a Defined Benefits plan like Tier 2 with ZERO, repeat, ZERO cost to a Defined Contributions plan that will, for most State employees (not most SERS and some SURS) require a new employer contribution to Social Security of 7.65% AND some level of match (4% is typical) for the 401K?
With the various IL SC rulings, it is a given the current $111B pension debt MUST be paid. You can’t change that for Tier 1 employees. Moving new employees to a 401K does not eliminate that debt.
So the question to everyone pushing a 401K for teachers is: Why would you want to pay 11.65% for pensions instead of ZERO?
The question for everyone pushing a 401K for other (coordinated with SS) State employees is: Why would you want to pay 4% when you are currently paying ZERO?
- City Zen - Wednesday, Aug 31, 16 @ 1:08 pm:
@NoGifts
We may be through with the past, but the past ain’t through with us.
- RNUG - Wednesday, Aug 31, 16 @ 1:08 pm:
1:06 was I. Forgot the phone isn’t auto-filling the name.
- Robert the 1st - Wednesday, Aug 31, 16 @ 1:13 pm:
RNUG- how about a 401k for the benefit of the teacher or employee?
I have a CPA cousin who works for the state and he feels trapped there due to the pension. Which is tier II for him and I’ve tried explaining he’d be better off with a standard employer match 401k in the private sector. And he’s the accountant.
- Fav Human - Wednesday, Aug 31, 16 @ 1:21 pm:
Studies have shown that it ends up costing states as much if not more money down the road due to the fees associated with 401Ks and the volatility.
Here’s one study that covers this:
Well, kind of sort of.
The key things they mention are that the DB (defined benefits) plans have demographic problems once people move to a DC plan (contribution).
That just reflects that DC plans have the same flaw Social Security does: It depends on an ever growing population.
They do not mention anything about the investments used for the 401Ks, so it’s impossible to say if they just chose high cost and bad choices for the people or not.
When a study doesn’t show those details, it has no place in public policy.
- Name Withheld - Wednesday, Aug 31, 16 @ 1:28 pm:
Fav Human - I would expect that information to be in the sources cited on page 4 of the paper, specifically…
West Virginia Consolidated Public Retirement Board. Comprehensive Annual Financial Report, Fiscal Years Ending June 30, 2013, and June 30, 2012.
West Virginia Consolidated Public Retirement Board. Audited Financial Statements, Years Ended June 30, 2005 and 2004.
West Virginia Consolidated Public Retirement Board. Audited Financial Statements, Years Ended June 30, 2004 and 2003.
- Name Withheld - Wednesday, Aug 31, 16 @ 1:29 pm:
At least with respect to the West Virginia analysis.
- Name Withheld - Wednesday, Aug 31, 16 @ 1:32 pm:
From that same report:
“TRS, a traditional DB plan, was historically underfunded, due to lack of contributions from the state. While teachers had always made their contributions (6% of their pay out of every paycheck), the state and many county school boards failed to make their full contributions for many years. In fact, for some years from 1979 onward, the state and many school boards failed to match even employee contributions to the fund.”
Exactly like Illinois - if the State doesn’t put in what it’s supposed to, it’s going to have a shortfall. That falls under the heading of ‘duh’
- RNUG - Wednesday, Aug 31, 16 @ 1:45 pm:
-Robert the 1st-
You can’t automatically assume that; you have to look at the whole package. Depending on which system they are, your relative might gave a self-directed plan that is similar to a 401K. And even Tier 2 has a few perks, like survivor’s, and a, admittedly reduced, AAI. And, like all of us, he would has access to his own funded 457 (Deferred Compensation) plan; don’t overlook the advantages a 457 has over a 401.
- NoGifts - Wednesday, Aug 31, 16 @ 1:57 pm:
FAv Human
“same flaw Social Security does: It depends on an ever growing population.”
Or better - ever growing wages? How about that?
- Robert the 1st - Wednesday, Aug 31, 16 @ 2:01 pm:
We’ve discussed his situation at length, he did not opt for the self-directed. He’s planning on retiring at 67.
- Robert the 1st - Wednesday, Aug 31, 16 @ 2:03 pm:
=Or better - ever growing wages?=
About the only chance of that is rapid inflation. Which, actually would help alleviate the pension problems.
- NoGifts - Wednesday, Aug 31, 16 @ 2:06 pm:
Or paying social security tax on all of the income, not just 118 k. Again, don’t want to afford it vs. can’t afford it.
- City Zen - Wednesday, Aug 31, 16 @ 2:24 pm:
==Or paying social security tax on all of the income, not just 118 k. Again, don’t want to afford it vs. can’t afford it.==
Then are you lifting the cap on social security benefits as well?
- RNUG - Wednesday, Aug 31, 16 @ 2:27 pm:
== We’ve discussed his situation at length, he did not opt for the self-directed. ==
I used to be amazed that people would not take the time to learn about something as important as their retirement options before making a choice. Not any more …
- Delimma - Wednesday, Aug 31, 16 @ 2:27 pm:
The only constitutional amendment that needs to be done to fix this mess (message?) is eliminating the prohibition on graduated income tax rates.
- Maximus - Wednesday, Aug 31, 16 @ 2:29 pm:
RNUG -
I think you have stated before how Tier 2 ends up becoming revenue neutral before but this isn’t something I have seen mentioned from any other sources. It almost sounds too good to be true but I’ll be looking into it. If this is true it totally changes the tone of conversation on what we need to do for solving this in the future.
- JS Mill - Wednesday, Aug 31, 16 @ 2:44 pm:
=JS Mill, I am not a Republican. I am Democrat and am rational.=
The rational part is debatable based on your shrieking for bankruptcy.
Learn to read, I didn’t call you a Republican or even make reference to you (ego much?). I simply refer to the bankruptcy doctrine embraced by the GOP aka, the party of personal responsibility.
The protections exist specifically because of the lack of responsibility or accountability of politicians and their historical penchant for taking the easy way out. They failed to fund the pensions by diverting moneys that should have gone to the pensions to pay for other programs instead of finding a new revenue stream. They now have a debt to account for.
Taxpayers like me, and hundreds of thousands of others, that have paid into the pensions expect our reasonable benefits to be paid as per contract. We are providing the work product we agree to provide.
In addition, I and others like me, supplement social security from our federal taxes. I also put in a significant amount from my career prior to education and will never get it back. That money goes to SSI recipients and their outlandish (snark) benefits.
So get over it fella. A debt owed needs to be paid. If not, then no contract is enforceable including those that you enter into.
- Robert the 1st - Wednesday, Aug 31, 16 @ 2:59 pm:
RNUG- I honestly don’t believe he gave it more than a few seconds thought until his discussion with me. His wife just got a job with SURS and I think she’s going to opt for their self-directed plan. Seems to be a much better deal in her case. Plus the possibility of retiring 7.5 years earlier.
- RNUG - Wednesday, Aug 31, 16 @ 3:02 pm:
- Maximus -
Tier 2 is the solution; the problem is the 25 - 30years required to right the ship. And Tier 2 doesn’t pay / eliminate the $111B existing debt.
Paying the debt is what the “pension reformers” want to avoid.
- Anon - Wednesday, Aug 31, 16 @ 3:02 pm:
I was in college with Greg Baise. Big fraternity guy as I remember. Not a very deep thinker– but he did marry well!
- Echo The Bunnyman - Wednesday, Aug 31, 16 @ 3:28 pm:
I have said many times. As a member in TRS I have known for almost my 16 years in the system it’s a shell game. I pay 10% and started a403b the month I began teaching. Many of my colleagues want to talk about what we are “owed” … They are right. We are. But guess what? If the scales tip to the point that we will never get caught up then what? A state can’t go bankrupt. But, would the US Supreme court intervene if suits filed? I think there are many people in an echo chamber if you don’t think there would be a very strong support from people to amend the Constitution. We will not ever pay this obligation. Anyone under 45 plan accordingly. Oh, trust the Government, ask the Indians how that ended up…
- Anonymous - Wednesday, Aug 31, 16 @ 3:36 pm:
Tribune had an article about a week or so about how 401ks are not working out well for private workers. In fact, it was quite negative in assessment of 401ks. However, those in the private sector not only have their 401s, but social security and hopefully, if smart, a personal IRA. Many in the public sector have a state pension, no social security and many never earned enough to have much of a private IRA, if at all. Yet some foam at the mouth at taking away the only retirement income those people have. THese are the people who think small. They can’t see those who live lavishly and avoid income taxes as a resource to tap into to relieve our state’s burdens. Hey, why ask those with millions+ to pay a few percentage points more (or rein in some of their deductions) when you can whack someone living on 30, 40k per year? Makes total sense, doesn’t it? /s
- Ron - Wednesday, Aug 31, 16 @ 3:42 pm:
No way we allow progressive income tax without eliminating the outrageous protections our public workforce receives.
- Ron - Wednesday, Aug 31, 16 @ 3:43 pm:
Bankruptcy is the only logical solution in a state bleeding population, terrible job growth and high unemployment.
- Ron - Wednesday, Aug 31, 16 @ 3:44 pm:
Sorry, forgot a state that currently has the 5th highest state and local tax burden.
- HangingOn - Wednesday, Aug 31, 16 @ 3:52 pm:
==outrageous protections==
==Bankruptcy is the only logical solution==
== a state that currently has the 5th highest state and local tax burden.==
Rich, when did you get a parrot? Or a politician. I really can’t tell the difference anymore…
- City Zen - Wednesday, Aug 31, 16 @ 3:52 pm:
==However, those in the private sector not only have their 401s, but social security and hopefully, if smart, a personal IRA.==
3 retirement accounts?! With what money? 6.2% of my salary already goes into the social security pit from whence it may never return. Most folks I know also put in 8-10% into their 401k. And even if I had money left over for an IRA (again, from where?) isn’t my personal IRA going to mirror what my 401k would provide, thus subject to the same risk?
Since public workers don’t pay into social security, why haven’t they invested that 6.2% into their own IRAs? That would yield a much better return than social security ever would. And the money is all yours.
I truly do not understand the obsession with social security. For many professionals, it is a bad deal. For young professionals, it may turn out to be the worst deal they ever made.
- JS Mill - Wednesday, Aug 31, 16 @ 3:57 pm:
only one person I know that loves to use “outrageous” as much as ol’ Ron.
Welcome to the blog governor!~
- Kim - Wednesday, Aug 31, 16 @ 4:53 pm:
In their zeal to bash public workers and blame them for Illinois’ economic and budgetary ills, many commenters seem to ignore a simple fact: most state pension systems are in lieu of Social Security. In fact, workers so covered are typically prohibited from also contributing to Social Security.
The point? How badly do we hate teachers and such? Unlike their corporate counterparts in the private sector, there is no Social Security safety net if the pensions are somehow reduced or decimated. Is this really the kind of state we live in?
The Rons of Illinois flourish in a garden of anonymity, such as this column– where uninformed statements and non workable “solutions” are minimally tolerated.
- Anonymous - Wednesday, Aug 31, 16 @ 5:15 pm:
The obsession with Social Security is the flip side of the coin of the private workers obsession with pensions! Social Security is YOUR defined benefit plan (the plans that are so horrible/s). Private workers claim they have no guaranteed income as public workers do. Has anyone ever had their social security checks lowered? Missed? If folks want to hammer public pensions, public workers can hammer Social Security. Many public employees contribute to Social Security through other (usually) supplementary employment but will never see a penny. Taxpayers actually receive services and pay for the pensions of public workers–they actually get something for it! Services!
- Sue - Wednesday, Aug 31, 16 @ 5:25 pm:
Folks- States have no access to bankruptcy. The lack of understanding of late is drepresding
- Sue - Wednesday, Aug 31, 16 @ 5:26 pm:
PS- for all legal purposes all 5 state retirement systems are recognized as the State of Ilinois. They cannot seek BK protection. Period
- Ron - Wednesday, Aug 31, 16 @ 5:34 pm:
Retirement age for Social security can be changed and has been. Annual increase in 2016 was 0%.
- Ron - Wednesday, Aug 31, 16 @ 5:36 pm:
Teachers pensions should be moved to municipal control. Municipalities can go BK.
- Sue - Wednesday, Aug 31, 16 @ 5:42 pm:
Ron- I am sorry to say you just seem to be uninformed. There is no silver bullet. Elect some Rs to the Supreme Court and maybe they will reach a different conclusion on the pension clause. Absent that the State is toast
- Sue - Wednesday, Aug 31, 16 @ 5:48 pm:
Ron- municipal govt units also can’t file BK in Illinois. The legislature would have to allow it first. Not so in most other States but this is Illinois where Mike Madigan runs the show
- Ron - Wednesday, Aug 31, 16 @ 6:11 pm:
I guess you’re right Sue. Madigan will never allow municipal bankruptcy.
- RNUG - Wednesday, Aug 31, 16 @ 9:21 pm:
- Robert the 1st -,
One of my friends under SURS had the self-directed plan and did very well. Of course, past performance may not reflect future results.
- Ron - Wednesday, Aug 31, 16 @ 11:03 pm:
Anonymous, social security retirement ages can and will be changed. Do you know what the increase was for social security recipients this year?
- Ron - Wednesday, Aug 31, 16 @ 11:05 pm:
Most taxpayers get very little from the unionized state public workforce.