Capitol Fax.com - Your Illinois News Radar » The bill is due… again
SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
The bill is due… again

Monday, Jul 17, 2017

* From the Illinois Policy Institute’s news service

The entirety of the $5 billion in tax increases the legislature imposed on Illinoisans will be eaten up by this year’s pension payment, and that’s still not enough to address the growing liability.

Lawmakers overrode Gov. Bruce Rauner’s veto of a $36 billion budget July 6, enacting it into law. Under the newly enacted budget, the state will spend around $7 billion for public sector pension funds. […]

State Rep. Jeanne Ives, R-Wheaton, said the same thing happened with the 2011 temporary income tax hike, where the increase went to pay off growing pension obligations.

That’s true.

Illinois got itself into a big hole over the years by failing to make its pension payments, keeping state taxes relatively low while still expanding programs. You simply can’t do that forever. Eventually, you gotta pay the tab.

- Posted by Rich Miller        

89 Comments
  1. - Michelle Flaherty - Monday, Jul 17, 17 @ 10:04 am:

    Keep in mind Rauner has been spending at $39 billion without a budget and dumping it all on the stack of IOUs.


  2. - Anony - Monday, Jul 17, 17 @ 10:09 am:

    And the General Assembly (aka Madigan) owns the budget.


  3. - Ahoy! - Monday, Jul 17, 17 @ 10:11 am:

    –Keep in mind Rauner has been spending at $39 billion without a budget and dumping it all on the stack of IOUs.–

    I’m not sure I would say Rauner has been spending money when it was court ordered. I think Rauner has plenty of things that we can blame him for that are actually his doing, I’m not sure this is one of them.


  4. - Oswego Willy - Monday, Jul 17, 17 @ 10:11 am:

    ===And the General Assembly (aka Madigan) owns the budget.===

    Too bad Rauner, for three fiscal years was so grossly inept, he couldn’t do a thing.

    Some might call that failed leadership, like Candidate Rauner did…


  5. - Christopher - Monday, Jul 17, 17 @ 10:12 am:

    Anony, would you rather we still had NO budget, since Rauner didn’t propose a balanced budget himself?


  6. - Anonymous - Monday, Jul 17, 17 @ 10:15 am:

    Hence the need for reforms. Oh heck, let’s just raise the state income tax to 9.95%, that will fix everything.


  7. - Streator Curmudgeon - Monday, Jul 17, 17 @ 10:16 am:

    –Illinois got itself into a big hole over the years by failing to make its pension payments, keeping state taxes relatively low while still expanding programs. You simply can’t do that forever. Eventually, you gotta pay the tab.–

    I don’t want this to seem like a “Because…Madigan” rant, but it was on his watch that much of this happened, but other than Rauner, you don’t hear too many people blaming him.

    It seems to be kicking the can down the road or just poor fiscal management, neither of which is boastworthy.

    Maybe I’m being naive, but can Mike Madigan honestly say, “Boy, I’ve done a great job for the state of Illinois the past 30 years?”


  8. - JPC - Monday, Jul 17, 17 @ 10:16 am:

    That bill was always going to be due.


  9. - LTSW - Monday, Jul 17, 17 @ 10:16 am:

    Until the right folks realize this is a debt problem and not a pension benefits problem we won’t get a solution.


  10. - Christopher - Monday, Jul 17, 17 @ 10:17 am:

    Well, without Madigan, I think Rauner would have steamrolled over everyone with his “Turnaround Agenda.”


  11. - Earnest - Monday, Jul 17, 17 @ 10:19 am:

    >I’m not sure I would say Rauner has been spending money when it was court ordered. I think Rauner has plenty of things that we can blame him for that are actually his doing, I’m not sure this is one of them.

    If this is true, then how did the Legislative Branch craft a budget that spent less money?


  12. - Oswego Willy - Monday, Jul 17, 17 @ 10:19 am:

    ===Well, without Madigan, I think Rauner would have steamrolled over everyone with his “Turnaround Agenda.”===

    I’m guessing this is snark, given the Labor aspects, for one example, wasn’t what Rauner ran on the first time….


  13. - cdog - Monday, Jul 17, 17 @ 10:19 am:

    Exactly.

    Rauner has to pay his tab, and quit the deficit spending. There is nothing prudent or conservative about his past words and actions.

    Rauner needs a six year plan, that’s radically candor-ish and not a bunch of his typical phoniness. The new plan must include serious pension funding, surplus budgeting, and non-existent overdue payables.

    If Rauner and his new team want a “buy-in” from the people who voted for him the first time, he needs to get his math right this time.

    (Using his own team’s new “radical candor” Cartesian Plane, he’s been operating in the 4th quadrant — “obnoxious aggression.”

    This has to stop in order to accomplish big-time pension funding, surplus budgeting, and zero old payables–all while running the State of Illinois.

    #doyourjob


  14. - northsider (the original) - Monday, Jul 17, 17 @ 10:20 am:

    Isn’t it good to pay down obligations? How else can you get out from under them without violating the constitution?


  15. - Norseman - Monday, Jul 17, 17 @ 10:22 am:

    Somehow, I suspect that IPI propaganda service is not into explaining the background. It’s public employee bad. Make public employee suffer.


  16. - Sue - Monday, Jul 17, 17 @ 10:22 am:

    Let key it or not but absent a favorable court ruling some day by the Suprdme Court- Illinois cannot tax its way out of the pension liabilities. Pensions are choking off all other govt services and it’s going to get dramatically worse. If the Rrpublicans had any brains they would start the decades necessary battle to capture the Court because without a decision allowing a reduction in payments Illinois will continue to die a slow death. I don’t think this is an overstatement of hyperbole it’s just the reality


  17. - Rich Miller - Monday, Jul 17, 17 @ 10:25 am:

    ===Until the right folks realize this is a debt problem===

    And we cannot constitutionally discharge that particular existing debt. So, get over it. The bill has to be paid.


  18. - titan - Monday, Jul 17, 17 @ 10:35 am:

    According to the IPI https://www.illinoispolicy.org/interest-on-illinois-pension-debt-is-9-1b-per-year/

    “For example, in fiscal year 2018, Illinois will make an $8.9 billion pension payment, which will cover the $2.1 billion employer normal cost and $6.8 billion of annual interest cost. However, the annual interest cost is actually $9.1 billion, meaning that after the employer’s portion of the normal cost, Illinois will come up $2.3 billion short on the interest payment. The unpaid portion of the interest cost is added to the debt, just as if a person didn’t cover the full interest payment on a home loan or credit card. In Illinois’ case, that $2.3 billion shortfall will be added to the pension debt….”

    So, even the IP acknowledges that the main problem is the money already borrowed from the pension systems in the past.


  19. - Chicago Cynic - Monday, Jul 17, 17 @ 10:38 am:

    It’s positively batty that these geniuses at IPI act as if it’s the governor (Quinn) or the ILGA’s fault that the tax increase is going to pay the pension debt. Would they rather we just not pay it and add to the debt?


  20. - Can - Monday, Jul 17, 17 @ 10:44 am:

    ==The entirety of the $5 billion in tax increases the legislature imposed on Illinoisans will be eaten up by this year’s pension payment==

    So, the tax increase will enable the state to make the pension payment, and it can use the rest of the state’s revenues to pay for other priorities. It’s a good thing they imposed that tax increase on us then. Otherwise, we’d be in even worse shape.


  21. - anon - Monday, Jul 17, 17 @ 10:48 am:

    Sue I don’t believe you can target one political group over another regarding the pension. Both parties are to blame for borrowing against the pension fund and kicking the can down the road.
    Additionally, the republicans for years signed off on pension enhancements without regard to how they would be funded. If you don’t believe that go back and look at the Alternative funding formula for highway maintainers signed into law by George Ryan.
    We need to stop blaming and get to funding.


  22. - Phil King - Monday, Jul 17, 17 @ 10:51 am:

    Illinois got itself into trouble by creating a ponzy scheme for a pension system; it never would have been able to fund itself.

    They promised too much.


  23. - A Jack - Monday, Jul 17, 17 @ 10:51 am:

    If you want to slow down the growing liability, entice workers to stay longer.

    For example, I could retire at 60, although that is young by today’s standards. Many state employees have in the past expressed an interest in working past that age.

    If I continue to work to age 70, the state would save its share of pension payments to me for between the ages of 60 and 70.

    But with the current poisonous environment, what is the incentive to stay any longer than necessary.


  24. - A Jack - Monday, Jul 17, 17 @ 11:00 am:

    Phil, New York State has a defined benefit system as large as Illinois’. It is fully funded.


  25. - Sue - Monday, Jul 17, 17 @ 11:12 am:

    Anon- there is not a politically saleable tax rate to resolve the pension obligation. The 5 percent won’t suffice and unfortunately every other state funded program is suffering- s me for the municipals. See what Cook County is now confronting. What really is unfortunate is that the three percent wasn’t excluded from the pension clause when it was added by Statute. The State’s future is truly being jeopardized in his Eder to pay the pensions


  26. - Anonymous - Monday, Jul 17, 17 @ 11:14 am:

    A Jack - Once someone becomes fully vested in their pension, there is little incentive to remain working. The only folks I see typically working well beyond full vesting are high-level who aren’t quite ready to give up their high-level salaries.

    I do agree it is cheaper to have you work at 70 then to pay out your pension, your retiree health benefits, and the salary and benefits of your replacement.


  27. - Anonymous - Monday, Jul 17, 17 @ 11:19 am:

    Phil, IMRF is over 90% funded because legally no one could steal from the required contribution.

    I guess that’s a Ponzi Scheme too.

    Funny, how DB pension plans work so well and cheaply when no one welches on their end of the payment.


  28. - Anonymous - Monday, Jul 17, 17 @ 11:22 am:

    Staying longer at work?

    In the teaching field, teachers have been encourage to leave to “save” money on the higher salaries that experienced teachers earn.

    Which is it that’s saving money? Higher salary for older teachers, or paying their pension?


  29. - City Zen - Monday, Jul 17, 17 @ 11:27 am:

    ==What really is unfortunate is that the three percent wasn’t excluded from the pension clause when it was added by Statute.==

    Sue, when the pension clause was enacted, AAI was only 1.5% simple interest.


  30. - City Zen - Monday, Jul 17, 17 @ 11:33 am:

    ==In the teaching field, teachers have been encourage to leave to “save” money on the higher salaries that experienced teachers earn.==

    That’s an old wives tale. Only the local school district saves money when older teachers retire. Pension withdrawals start earlier, meaning compounding COLA starts earlier, then add retiree health care on top of that. But you have to replace that teacher, so you end up having to pay a new salary (albeit lower) but just as expensive health care (and probably more expensive as the new guy might have family coverage whereas the retiring teacher is probably an empty nester).


  31. - Anyone Remember - Monday, Jul 17, 17 @ 11:38 am:

    “The entirety of the $5 billion in tax increases the legislature imposed on Illinoisans will be eaten up by this year’s pension payment …”

    This is not new - see this 2012 quote from then-Treasurer Dan Rutherford. “He says the problem is so bad that the recent 66 percent income tax increase only covers the money needed for pensions and does nothing for the state’s backlog of unpaid bills.”
    http://chicago.cbslocal.com/2012/04/23/rutherford-tough-road-ahead-for-quinns-pension-plan/


  32. - Sue - Monday, Jul 17, 17 @ 11:48 am:

    Pension clause 1970/ COLA 1990. The retireds for the past 15 years have enjoyed the 3 percent pops while inflation has lagged. Most actives haven’t done as well in terms of raises. I know what the Supremes ruled but they could just as easily ruled the COLA wasn’t contemplated by the 1970 pension clause. Under the current Supreme Court there is no reform which will withstand a challenge.


  33. - LTSW - Monday, Jul 17, 17 @ 11:54 am:

    What I meant in my earlier post that nibbling around the edges with benefit changes doesn’t change the existing debt. Re amortization or a dedicated revenue stream from the income tax is needed.


  34. - City Zen - Monday, Jul 17, 17 @ 12:05 pm:

    ==New York State has a defined benefit system as large as Illinois’. It is fully funded.==

    New York State’s pension system has 6 tiers.


  35. - The_Equalizer - Monday, Jul 17, 17 @ 12:08 pm:

    The IPI now literally work for Rauner. Can we quit calling them a “news service”? They may call themselves that, but it’s not true. They can call themselves Martians and it’s equally untrue.


  36. - Sue - Monday, Jul 17, 17 @ 12:14 pm:

    The NY Funds may be better funded but they certainly are not fully funded


  37. - Lucky Pierre - Monday, Jul 17, 17 @ 12:22 pm:

    You could reduce the future benefits for current workers either through the consideration model or constitutional amendment

    The Supreme Court has never said reductions for benefits not yet earned is unconstitutional. The Fullerton consideration model has not been tested in the courts.

    When President Obama hired Time magazine Washington Bureau chief Jay Carney to be his press secretary did you call for Time Magazine to be stripped of it’s credentials as a news service?

    Journalists were hired by the Obama administration at least 24 times by 2013.

    https://www.theatlantic.com/politics/archive/2013/09/rick-stengel-least-24-journalist-go-work-obama-administration/310928/


  38. - RNUG - Monday, Jul 17, 17 @ 12:27 pm:

    == I’m not sure I would say Rauner has been spending money when it was court ordered. I think Rauner has plenty of things that we can blame him for that are actually his doing, I’m not sure this is one of them. ==

    Actually, Rauner committed the State to a couple of billion ERP software project that is, at best, questionable and at worst, actually worse to use than the previous hodge-podge. In a time of massive debt and short revenues, it really was fiscal mismanagement to fo “nice to have” things like that.


  39. - RNUG - Monday, Jul 17, 17 @ 12:30 pm:

    == The entirety of the $5 billion in tax increases the legislature imposed on Illinoisans will be eaten up by this year’s pension payment ==

    Conversely, with the tax increase, Illinois has $5B to spend on programs because, without the tax increase, Illinois still had to pay $5B to the pension funds.


  40. - DuPage Saint - Monday, Jul 17, 17 @ 12:32 pm:

    If one would read the Illinois Supreme Court opinion one would see that they specifically ruled the 3% increase is not a COLA but a bargained for annual increase . They also showed that the social security COLA over he time period in question was higher than the 3% bargained benefit. They also suggested in a footnote that the pension beneficiaries should sue the state to force the state to make pension payment. I am astounded that this has not happened. Read he decision it is a fun read


  41. - RNUG - Monday, Jul 17, 17 @ 12:32 pm:

    Rich, it’s your blog & article but … I would have titled it “The bill is still due …”


  42. - Captain Ed Smith - Monday, Jul 17, 17 @ 12:32 pm:

    Missed pension problems are an issue, a couple recessions, an unrealistic 90% funding level, and retirees that are living much longer than originally anticipated.


  43. - City Zen - Monday, Jul 17, 17 @ 12:37 pm:

    == they specifically ruled the 3% increase is not a COLA but a bargained for annual increase.==

    Interesting definition of the word “bargain.” What exactly was given up by the unions in exchange for the COLA increase from 2% to 3% or from simple to compounded interest?


  44. - A Jack - Monday, Jul 17, 17 @ 12:39 pm:

    Sue, New York State is 98% funded and it’s a defined benefit plan. So the argument that a defined benefit plan is not affordable is bs.

    One big difference between Illinois and New York is the progressive tax that New Yorkers pay. So they can afford their defined benefit plan. Yes, they have six tiers and we have two.


  45. - titan - Monday, Jul 17, 17 @ 12:39 pm:

    +++ - Lucky Pierre - Monday, Jul 17, 17 @ 12:22 pm: You could reduce the future benefits for current workers either through the consideration model or constitutional amendment +++

    Not likely to work. Consideration route would require offering something the participants would choose to take (i.e. something “better” for at least a large number of them to want). Constitutional amendment is likely not to work either, except going forward, and going forward isn’t the problem Tier II fixed that). The Supreme Court hasn’t ruled on the issue yet because it hasn’t been tried, but a reading what they have ruled on in the past makes it a dubious option.


  46. - Oswego Willy - Monday, Jul 17, 17 @ 12:41 pm:

    ===Interesting definition of the word “bargain.” What exactly was given up by the unions in exchange for the COLA increase from 2% to 3% or from simple to compounded interest?===

    Huh?

    If it was asked for and agreed to, why does any “bargain” have to have a “must in return”?

    Complete packages speak from themselves, as a whole.


  47. - RNUG - Monday, Jul 17, 17 @ 12:48 pm:

    Early retirement is a double edged sword.

    If people retire early, in theory you save the difference on GRF paid salaries between the high paid old timer and the lower paid rookie. However, you are still paying for two health insurance packages.

    But (there is always a but), you had a somewhat different effect on the pension fund(s). Yes, the benefit accumulation has stopped (in terms of years of service and, maybe, FAC) but you now, most likely, will have to pay out for more years and the 3% AAI kicks in (it always was for Tier 1, but I mention it to be inclusive). Yes, the new hire is on Tier 2, so they shouldn’t be racking up increased pension funding debt. But the State still has to keep paying in for past Tier 1 debt, which comes out of GRF (again, has to paid regardless of working or not).

    You have to look at the big picture, not just the effect of GRF or on the pension fund. The net effect on to the State is, most likely, a little savings on a cash flow basis and, maybe, actual increase in total long term debt.

    So any time someone tells you they are going to save money on the pensions, ask if it is truly short term savings that can be booked in a fiscal year budget or if it is long term savings that should be properly booked over 20 or 30 or 40 years.


  48. - City Zen - Monday, Jul 17, 17 @ 12:50 pm:

    ==So the argument that a defined benefit plan is not affordable is bs.==

    Once again…NYSLRS has 6 tiers. They were on their 5th tier before we got on our 2nd.


  49. - RNUG - Monday, Jul 17, 17 @ 12:52 pm:

    == Maybe I’m being naive, but can Mike Madigan honestly say, “Boy, I’ve done a great job for the state of Illinois the past 30 years?” ==

    Maybe not, but he can honestly say he kept the income tax rate low for that period and he managed to keep the cash flow solvent enough that we survived for those years.

    Note: I’m not a MJM fan per se, but I do admire his ability to accomplish what is “doable”. Illinois has never really been willing to step up to the pension debt … and that pre-dated MJM by about 60 - 70 years.


  50. - RNUG - Monday, Jul 17, 17 @ 12:57 pm:

    == hey also suggested in a footnote that the pension beneficiaries should sue the state to force the state to make pension payment. ==

    Would be interesting to see how these 7 would rule. In the 1975 IFT case, those 7 refused to order specific payments into the pension funds; they just ruled the pensions had to be paid when due.

    Even today, I think the IL SC would be wading into a sticky separation of powers issue.


  51. - Ghost - Monday, Jul 17, 17 @ 1:02 pm:

    4 Billion of that is from the ramp. change the ramp payment and you could cut that payment 2-3 billion.


  52. - A Jack - Monday, Jul 17, 17 @ 1:11 pm:

    RNUG, yes, When I took a government accounting class in the 90’s, the year mentioned for when Illinois started underfunding the pension system was 1918. So we are coming up on the centennial of pension underfunding.


  53. - A Jack - Monday, Jul 17, 17 @ 1:16 pm:

    If you change the ramp, you end up owing more in the long run because you lose out on the earned interest.

    A change in ramp would not have been necessary pre-Rauner, but now you have that large bill backlog. So if they want to rename it the Rauner backlog ramp…..


  54. - RNUG - Monday, Jul 17, 17 @ 1:55 pm:

    == they would start the decades necessary battle to capture the Court because without a decision allowing a reduction in payments ==

    -Sue-,

    I don’t think even a change in political idealogy will make a difference. Because of the phrasing of the 1970 Pension Clause making pensions a contract, it’s a simple Contract Law question. The only ways out are (1) a ruling it is not a valid contract, which is hard to imagine, or (2) taking not allowed bankruptcy, and even in the that case, it is high odds most (if not all) of the pension obligations would be upheld by the courts.

    Better to put effort into figuring out how to pay it.


  55. - Sue - Monday, Jul 17, 17 @ 2:15 pm:

    RNUG - the Court could easily have bought into the emergency exception- whatever the Supreme Ct ruled would be the final answer and the Court could revisit the decision at some point in the future should the opportunity avail itsslf


  56. - RNUG - Monday, Jul 17, 17 @ 2:24 pm:

    == the Court could easily have bought into the emergency exception ==

    The court was never going to buy into using police powers for a self created crisis … especially since there were multiple alternative solutions, including taxation.

    And even IF the IL SC did, it wouldn’t be the end of litigation. It would have gone to SCOTUS as a Contract Law question (not bankruptcy law), where the odds are high that the State would lose.
    SCOTUS, IMO, is highly unlikely to rule against a valid contract with the strength of the IL pensions. It would open too many cans of worms about valid contracts; the court would be undermining our entire basis for commerce.


  57. - Anonymous - Monday, Jul 17, 17 @ 2:52 pm:

    Self created crisis says it all.

    It all just sounds so…………childish..the way our state has functioned. Don’t parents raise you to make good on your word? Follow the rules? Honor your committments?


  58. - Anonymous - Monday, Jul 17, 17 @ 3:02 pm:

    Just accept the corruption and pay,pay and pay.


  59. - Sue - Monday, Jul 17, 17 @ 3:13 pm:

    RNUG- no automatic appeal to the S Ct. who knows if they would grant Cert. your wrong on police powers- could have gone either way. The State can’t tax its way to solvency. Something down the line will have to occur


  60. - Mama - Monday, Jul 17, 17 @ 3:18 pm:

    The legislature passed the tax increase Rauner wanted - not the tax increase that is necessary. Rauner supposedly asked for the lower rate knowing it would not be enough to pay IL’s bills.


  61. - FriedWalleye - Monday, Jul 17, 17 @ 4:18 pm:

    I view State’s pension system similar to Social Security. Workers are required to pay into it, State calls all the shots on how it is invested and what your payout will be, Workers are provided yearly statements outlining what you made, what you paid into the system, and all options on when you can retire from full retirement to early retirement with a reduced pension. Workers plan their career and retirement around those. If Social Security suddenly said….sorry, we haven’t been funding it properly, how dare you expect us to provide you with a benefit as promised….you would see riots in the streets. Illinois has not been a good steward….of any public monies. We have watched it happen and did nothing.


  62. - Sue - Monday, Jul 17, 17 @ 4:23 pm:

    Mama- I didn’t hear Madigan asking for more did you. By the way feel free to send in more if you like


  63. - Sue - Monday, Jul 17, 17 @ 4:27 pm:

    Wally eye- SS does not pay you the 75 percent plus 3 percent every year compounded which teachers and other State folks get at full retirement. BTW- at least for teachers- they contribute Zero. Ever hear of the employer pick-up? Virtuously ever TRS employer pays the employee and employer portion but other then that good analogy


  64. - Davos Seaworth - Monday, Jul 17, 17 @ 4:28 pm:

    =your wrong on police powers- could have gone either way”

    It was this close to being a 6-1 decision, Burke flipped at the last minute.


  65. - Hieronymus - Monday, Jul 17, 17 @ 4:31 pm:

    Sue, are you also in favor of defaulting (”reforming”) on the debt owed to bondholders and vendors, or just the debt owed to the pension plans?


  66. - Davos Seaworth - Monday, Jul 17, 17 @ 4:32 pm:

    =BTW- at least for teachers- they contribute Zero. Ever hear of the employer pick-up?=

    It was bargained for in lieu of other forms of compensation/benefits. Teachers in these districts made concessions to receive this benefit.


  67. - Sue - Monday, Jul 17, 17 @ 4:34 pm:

    Hieronius- eliminate the three percent and call it a day. But I don’t have a vote


  68. - RNUG - Monday, Jul 17, 17 @ 4:34 pm:

    == no automatic appeal to the S Ct. who knows if they would grant Cert. ==

    Yes, it’s not an automatic appeal. But I would expect the unions and retirees to appeal. Cert is always a question, but being a fundamental contract issue that would affect at least 3 states (NY, IL, AZ), my guess is they would take it. Maybe we’ll live to see it happen in my remaining lifetime.


  69. - City Zen - Monday, Jul 17, 17 @ 4:34 pm:

    ==If Social Security suddenly said….sorry, we haven’t been funding it properly, how dare you expect us to provide you with a benefit as promised==

    Social Security rules have been changed numerous times to my detriment since I started paying into it. Some self-employed folks saw their contribution rates double over their careers with no benefit enhancement. That’s not exactly providing a benefit as promised.

    In other words, social security is in no way similar to the State’s pension system.


  70. - City Zen - Monday, Jul 17, 17 @ 4:36 pm:

    ==eliminate the three percent and call it a day.==

    Pensioners pay 0.5% for AAI. You simply cannot eliminate it without refunding those deposits with interest. And you can’t eliminate it anyway.


  71. - FriedWalleye - Monday, Jul 17, 17 @ 4:39 pm:

    Sue, don’t know where you get 75% of salary. 75% is max in my system. A State worker would need to work 46 years to hit 75%. I will give you a link to the calculator to run some scenarios.

    Also, I have had 6.5% of each check taken by the State for my “pension”, along with Social Security, for the last 31 years and invested however they see fit. It isn’t any worker’s fault that the State failed to fund it.


  72. - Anonymous - Monday, Jul 17, 17 @ 4:39 pm:

    Sue, sorry State workers would need to work 45 years…not 46. fat fingers


  73. - City Zen - Monday, Jul 17, 17 @ 4:44 pm:

    ==Ever hear of the employer pick-up? It was bargained for in lieu of other forms of compensation/benefits. Teachers in these districts made concessions to receive this benefit.==

    That’s a highly dubious claim. The “in lieu of” only happens once, then raises are given out normally as if the pick-up didn’t exist. The only way the pick-up saves money is if raises are extremely small going forward. We’re talking below inflation. Otherwise, the district ends up spending more over the long-term.

    Pick-ups should only be a one-time deal, yet once given, they’re almost never pulled back. I would like to see how raises in a pick-up district compare to a comparable non pick-up district. I doubt you’d see much, if any, difference.


  74. - Hieronymus - Monday, Jul 17, 17 @ 4:45 pm:

    @4:34pm. Disingenuous. Any business owner who ever ran a payroll, and I did for ten years, knows that it is smoke and mirrors to say that the business owner pays half of the SS contribution. From the employer’s perspective, it is how much does it cost to put a body at a desk or workstation. As a self-employed person, you were only really paying half of what a W2 person was paying for equivalent benefits, and you are smart enough to know that.


  75. - Hieronymus - Monday, Jul 17, 17 @ 4:48 pm:

    @Sue 4:34pm. Try answering the question that I actually asked. BTW, I believe the 3%AAI was paid for by an additional.5% worker contribution. RNUG?


  76. - Anonymous - Monday, Jul 17, 17 @ 4:50 pm:

    CityZen, it is very true that SS contribution rates have increased as the system needed funding since the system is funded by contributions thru the salaries of workers. The State pension system is funded thru IL revenue sources….so it makes sense that if that pension system needs $$ (due to lack of proper funding in the past) it must be made up from those same revenue sources.
    Sorry you are self-employed, those individuals truly get the short end of the stick having to make up both parts. For anyone looking at self-employment, it is a risk that should be weighed.


  77. - City Zen - Monday, Jul 17, 17 @ 5:06 pm:

    ==so it makes sense that if that pension system needs $$ (due to lack of proper funding in the past) it must be made up from those same revenue sources.==

    Yes, but one of those revenue sources includes employee contributions. No one’s saying Tier 1 participants have to contribute 12% now “as the system needed funding”.

    Safe not to compare the 2 systems and leave it at that.


  78. - CrispyCritter - Monday, Jul 17, 17 @ 5:32 pm:

    I would like to see the figures on an average state employee paying 4% of their salary into the system for 30 years plus the state’s 4% and assuming pay increases over that same 30 years; using the rates of return the pension systems received for the past 30 years, what would the future value of those payments have grown into. Then based on the value of those payments over 30 years, would there be enough from the current rates of return to pay the employee their pension from those investments.


  79. - union thug - Monday, Jul 17, 17 @ 6:27 pm:

    CrispyCritter: I would like to see the figures on an average state employee paying 4% of their salary FOUR PERCENT???? ONLY FOUR PERCENT


  80. - RNUG - Monday, Jul 17, 17 @ 7:57 pm:

    == BTW, I believe the 3%AAI was paid for by an additional.5% worker contribution. RNUG? ==

    Varied by system. Some paid, some didn’t. I’ll have to check my benefits spreadsheet for the specific details when I get home … if I’m too tired then.


  81. - RNUG - Monday, Jul 17, 17 @ 8:07 pm:

    == That’s a highly dubious claim. The “in lieu of” only happens once, then raises are given out normally as if the pick-up didn’t exist. ==

    Actually, the forgone pay raise (and subsequent lack of compounding on it) permanently lowers the FAC, which results in smaller pension. Schnorf understood that; he engineered such a deal for SERS employees … that Blago later reneged on, and unions then clawed back the forgone raise.


  82. - RNUG - Monday, Jul 17, 17 @ 8:16 pm:

    == I would like to see the figures on An average state employee paying 4% of their salary FOUR PERCENT???? ONLY FOUR PERCENT ==

    Folks, you have to talk about a specific system when you talk about contributions. It ranges anywhere from 4% (to the State) for a SERS coordinated to over 12% (to the State) for uncoordinated (no Social Security).

    And the maximum pension, and the time to earn it, also varies by both system and even job title. You have to talk specifics, and it’s not easy to compare them.


  83. - RNUG - Monday, Jul 17, 17 @ 8:24 pm:

    == I would like to see the figures ==

    Adding … all the systems’ annual reports are online for quite a few years. They have most the data you need to run such an analysis. Look in the “statistical” section.


  84. - City Zen - Monday, Jul 17, 17 @ 10:23 pm:

    ==Actually, the forgone pay raise (and subsequent lack of compounding on it) permanently lowers the FAC, which results in smaller pension.==

    Maybe, but the cost of the pension pick-up combined with the salary is typically greater than the cost of just giving normal raises each year. If the amount of the pick-up is greater than the typical raises (like CPS’s 7% pick-up), then it costs more over the long term. Throw the numbers into a spreadsheet and you’ll see what I mean. There is zero cost savings to the school districts in the pension pick-up UNLESS every subsequent raise is very small compared to its peers.

    Let’s stick w/ CPS as I don’t know the history of other school districts w/ pick-ups. Every contract, CPS started negotiations with an already built in 7% bonus (the pick-up) before any COLA or step raises were negotiated. The original deal was a 7% pick-up for no raise. Why then, in subsequent contracts, offer X% raises on top of a 7% pick-up? That wasn’t the original purpose of the pick-up. If you’re gonna give raises going forward, the pick-up should be reduced or eliminated.


  85. - Hieronymus - Monday, Jul 17, 17 @ 10:52 pm:

    @10:23 pm. Humph. The purpose of the pickups was to then not pay into the pension funds. Otherwise why not just pay the COLA/raise in the first place?


  86. - City Zen - Tuesday, Jul 18, 17 @ 8:23 am:

    Hieronymus - I’m not aware of school districts that do not deposit their pick-ups into the pension fund. The employer portion is another story.

    Otherwise, I agree…why bother with the pick-up and just pay the raise? Because I think the district intends to only offer it once but it never turns out that way. If you back it out quickly, you can save money. If not, you spend more.


  87. - Hieronymus - Tuesday, Jul 18, 17 @ 8:57 am:

    I believe you are mistaken regarding the pickup. If it is more than than the “normal” cost of the average COLA/step, then I would agree, but I don’t know the specific history of that plan.

    But generally, if there is a pickup in lieu of an increase to nominal compensation, then in following years, subsequent real increases are still based on the smaller starting point.

    And that other poster is correct, too — the Final Average Compensation is effectively reduced by the percentage of the pickup, so long as it remains in effect.

    But my point, which you seemed to agree with, is that I suspect that (at least for SERS), the bigger reason for the pickup was to assume the employee portion of the pension contribution, which is then spent on something else. Again I’ll have to ask RNUG if that was, in fact, so.


  88. - City Zen - Tuesday, Jul 18, 17 @ 9:04 am:

    ==But generally, if there is a pickup in lieu of an increase to nominal compensation, then in following years, subsequent real increases are still based on the smaller starting point.==

    Right, but the cost of that smaller increase plus the cost of the pick-up typically exceeds the cost of the raise on what would’ve been a higher salary and no pick-up. Once again, that’s assuming raises going forward are not smaller because of the pick-up.

    Hard to explain here. Throw those numbers in a spreadsheet to see what I mean. And I’m sick of typing “pick-up”.


  89. - Hieronymus - Tuesday, Jul 18, 17 @ 10:42 am:

    It sounds to me as if you are arguing that subsequent raise percentages are higher than they would otherwise be for a COLA as if the previous pick-up had no bearing on the situation, and they we’re trying my to “catch up”.

    When I run the numbers matching a hypothetical COLA to a pick-up, there is no difference in the total amount. Now in SERS, several years ago, we unwound the pick-up in two increments. We got two 2% increases, that were then immediately taken away as we resumed deducting the employee portion. We then got a small COLA on the sixth-month interval to serve as a “real” increase.


TrackBack URI

Sorry, comments for this post are now closed.


* Reader comments closed for the weekend
* Rauner vetoes DHFS managed care performance audit bill as part of another big Friday dump
* Rauner vetoes Geolocation Privacy Protection Act
* Rauner plans three bond sales
* Caption contest!
* *** UPDATED x1 *** SUBSCRIBERS ONLY - HB40 update
* SUBSCRIBERS ONLY - More candidate announcements
* Logrolling?
* Ricketts' Wrigleyville rooftops benefit from "mom and pop" tax break
* It would've been a very tough campaign for Lisa Madigan
* Question of the day
* Legislative move shines light on antiquated law
* Chicago FOP wants halt to new use of force policy
* GOP turkey shoot event image with Madigan's visage pulled down
* Drury could benefit from contribution cap loophole
* *** UPDATED x1 - ILGOP responds *** Report: Madigan pushing back against pop tax
* Poshard backs Pritzker
* Yesterday's stories

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............
<


Loading


* Editorial: Illinois cannot afford to wait for e.....
* Clayborne law firm out in East St. Louis, forme.....
* Daniel Biss explains misstep with first running.....
* Illinois lawmakers quitting before voters get t.....
* Bernard Schoenburg: Sen. McCann takes on Cellin.....
* Statehouse Insider: Illinois finances not the w.....
* Abortion bill is hot potato for Gov. Rauner..
* Abortion bill is hot potato for Gov. Rauner - T.....


* Gary shooting leaves 1 dead, 2 hurt, car falling 23 feet
* Authorities: Skeletal remains belong to missing boy, 13
* Evidence of invasive grass carp signals threat to Lake Erie
* Deputy shot; stopped vehicle sought after 2 police chases
* Deputy shot; stopped vehicle sought after 2 police chases
* Bat found near Kankakee church tests positive for rabies
* Dick Butkus, YouTube co-founder among Lincoln Award honorees
* War hero, WIU 'Leathernecks' legend, honored with statue
* Cook County court for unwed parents quietly disappears
* EXCHANGE: Principal emphasizes communication, community

* Abortion bill is hot potato for Gov. Rauner
* New Illinois law will let adults earn high school diplomas
* Raoul enters AG race, apologizes for 'Miss America' comment
* AG candidate Raoul apologizes for 'bad characterization' of opponent
* Report: Payments for treatment of addictions, mental illness often denied
* Republican McClure will run against McCann in 50th Senate district
* Republican McClure will run against McCann in the 50th Senate district
* Rep. Drury leaves governor's race to run for attorney general
* Rauner signs revamp of EDGE business tax-credit
* Rauner to lawmakers: Help me balance the budget

* How Tock aims to get bigger piece of the restaurant reservations market
* Guess where manufacturing jobs are back?
* Downtown becoming one big candy shop
* Time for Preckwinkle & Co. to answer questions on soda tax
* Three reasons why Amazon is turning Emanuel and Rauner into BFFs


* Why Kyle Hendricks could be poised for bigger role in playoff rotation
* Cubs voice Pat Hughes on an ‘exhilarated’ ride he hopes won’t end soon
* Kenneka Jenkins’ funeral tentatively set for next weekend
* Burglary call leads to SWAT team response in Austin
* 31-year-old man shot multiple times in Calumet Heights
* Davis, Cubs stunned by Brewers in another extra-inning thriller
* U.S. Bank branch robbed in Plainfield
* Connor Murphy excited to finally play some high-stakes hockey
* New earthquake, magnitude 6.1, shakes jittery Mexico
* String of cellphone robberies reported on Near North Side


* Jose Abreu makes history in White Sox's 8-2 loss to Royals
* Wheaton College at first stood by players accused of hazing, letter shows
* Bucktown BBQ eatery owner accused of killing younger brother
* An all-access look at ESPN's 'College GameDay' New York City premiere
* North Korea foreign minister says Trump's insults make rocket attack on U.S. 'inevitable'
* Lake Central's Gelen Robinson produces three tackles for loss in Purdue setback
* White Sox 'still trying to gather information' on Carlos Rodon's shoulder injury
* In Trump's bully pulpit, it's us vs. them, with race often used as a device to polarize
* Trump's comments about NFL anthem protests, NBA's Curry inflame sports stars
* Kyle Hendricks' consistency could loom large as Cubs move toward playoff berth


» State Week: IL Attorney General Candidates, The Soda Tax, and Courting Amazon
» State Week: IL Attorney General Candidates, The Soda Tax and Courting Amazon
» Governor Running Out Of Time On Location Tracking Regulation
» In Cook County, 3 Prosecutors Are Handling Hundreds Of Wrongful Conviction Claims
» An Accounting For Meteorological Violence Among Insurers
» Illinois Supreme Court Upholds Murder Conviction Of Drew Peterson
» State Sen Raoul To Run For Illinois Attorney General In 2018
» Suit: Pregnant Illinois Officer Forced To Take Unpaid Leave
» Palestinian Activist To Be Deported To Jordan From Chicago
» Looking For Analog: Old Button-Mashing Arcades Come Back For A New Generation


* Angie Muhs: New content coming to Sunday SJ-R
* Our View: Path to health care reform is bipartisan compromise
* Statehouse Insider: Illinois finances not the worst? Believe it or not.
* State employees, retirees have opportunity for giving
* Citizens weigh in on the community
* Abortion bill is hot potato for Gov. Rauner
* Bernard Schoenburg: Sen. McCann takes on Cellini in tiff with Bruner
* Guest Column: Let’s help Illinois get back on track with 'College Changes Everything' month
* Guest Column: Let’s help Illinois get Bback on track with 'College Changes Everything' month
* New Illinois law will let adults earn high school diplomas


* High school football scoreboard: Sept. 21-23, 2017
* Would-be solar plant operators search for new funding
* Pitmasters credit Pat Burke for mentoring their competitive barbecue teams
* Durbin, Duckworth ask President Trump to convene a federal cabinet-level task force to address the crisis facing Cairo
* Apple 'n Pork Fest celebrates harvest, history (copy)
* Apple 'n Pork Fest celebrates harvest, history
* Find your funny bone
* After 32 years of HUD oversight, problems persist in East St. Louis public housing, residents say
* Lake Egypt Water District issues boil order
* 78 volunteer in 11th Annual Great Mississippi River Clean Up


* South Elgin stops West Aurora, takes control of Upstate Eight Valley race
* Hazing law sponsor says Wheaton case shows need for tougher rules
* Girls volleyball: Antioch wins Harvard's invitational
* Boys soccer: Lake County roundup
* Frk, Nielsen score 2 each as Red Wings beat Bruins 5-1

* Hultgren pushes for CHIP funding ahead of ...
* Indivisible billboard targets Hultgren, Ro...
* Montgomery mayor hosts health care forum a...
* Good government - The Daily Progress
* Hultgren pleads for continued funding of f...
* What suburban members of Congress say abou...
* Hultgren helps haul in $88 million pledge ...
* Rep. Randy Hultgren announces 2017 Congres...
* Congressman Randy Hultgren Visits Raue Cen...
* Hultgren Comments on CAT Closure, Hurrican...

* Durbin, Duckworth ask President Trump to c......
* Pass the dogma please - Community Common...

* Durbin, Duckworth ask President Trump to c......
* Illinois Receives $110-Million in Emergenc......
* Democratic senator: Trump 'not fit to be c......
* Illinois Receives $110M in Emergency Prepa......

* Why Self-Esteem Is Self-Defeating
* Trump-supporting mayor's home vandalized with swastikas and resignation demands
* Higher cigarette taxes are fueling the illicit trade in non-brand cigarettes—and possibly terrorism
* Illinois Left panics over Graham-Cassidy; ignores state's shrinking insurer numbers
* Higher minimum wages means less sanitary restaurants
* Cook County grocers say they're losing sales up to 47 percent over soda tax
* President Trump asks the United Nations: "Are we still patriots?"
* Gutierrez arrested in front of New York City Trump Towers
* Before Closing the Waukegan Coal Plant, Lawmakers Should Consider California’s Failures
* Are federal restrictions making rehabilitation harder?


* Illinois Awarded Funds to Offer Advanced Training on Detecting Impaired Driving
* Illinois EPA Announces Upcoming Household Hazardous Waste Collection Events
* IEMA Highlights Emergency Preparedness for People with Access and Functional Needs in May - Ready Illinois website offers preparedness tips for people, caregivers
* First Lady Launches Illinois Family Connects
* Governor and Lt. Governor Unveil 2016 Journal of Local Government Shared Service Best Practices

  
* Pioneer Working to Resolve iOS 11 Compatibility Issue With Select Receivers
* How to Force Restart or Hard Reset the iPhone 8 and iPhone 8 Plus
* Chronicles of a Windows user gone iPhone (part 3)
* Folding Galaxy X (SM-G888) seen at Korean regulator
* Apple iPhone 8 and iPhone 8 Plus have arrived! (Video)
* Qualcomm loses two battles in patent war with Apple
* iPhone 8 Plus rated best camera, HTC U11 Plus rumors & more – Pocketnow Daily

* Abreu joins exclusive club with 100th RBI
* White Sox fans excited about future seasons
* Rodon seeks answers for left shoulder issue
* Covery looks to impress Sox in clash with KC
* Covey looks to impress Sox in clash with KC
* Sporcle Saturday: Double your pleasure
* Sox Century: Sept. 22, 1917


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005

Syndication

RSS Feed 2.0
Comments RSS 2.0
WordPress




Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller