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Teachers unions call Tribune “a tool of terror”

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Illinois

* The rhetoric is heating up in the war over pensions. Dennis Byrne’s most recent Tribune column used a legal opinion provided by R. Eden Martin, president of the Civic Committee of the Commercial Club of Chicago, to argue that pension benefits aren’t actually guaranteed by the state Constitution. His conclusion…

But, if we’re to climb out of this nightmare, everyone will have to sacrifice. That includes public employees who, Martin notes, should get on board to work out some solutions. They might have to put up with some small sacrifices, but it’s better than waiting until the well runs dry.

The Illinois Federation of Teachers and the Illinois Education Association issued a joint response…

How much longer will the Chicago Tribune allow itself to be used as a tool of terror by millionaire Eden Martin in his quest to deprive hundreds of thousands of Illinoisans of the reasonable retirement they, in large part, have paid for?

The August 10 opinion piece, ostensibly written by public relations specialist Dennis Byrne, is a blatant attempt to frighten and intimidate innocent people who simply expect the State of Illinois to keep its promises.

Byrne/Martin’s claim that the state pension shortfall was caused by overly-generous pension benefits paid to state employees and teachers is provably false. And they know it.

They also know that suggesting that police officers, fire fighters, teachers, and state workers could be denied the reasonable retirements promised them is an unconscionable use of a newspaper to force a surrender by those who continue to work hard and well for the people of Illinois.

Enough.

We, and the 236,000 Illinoisans we represent, believe the facts matter. Even on the opinion page:

FACT - The state’s pension debt was caused by politicians who habitually refused, over decades, to pay the state’s modest share of pension costs, using the money instead to stave off needed tax increases. The legislature’s bipartisan Commission on Government Forecasting and Accountability found that from FY 1996 through FY 2008, the state’s pension debt grew by $35.6 billion. Of this, $30.3 billion (85%) is the result of factors not attributable to employees (53% the state’s failure to pay its share, 24% early retirement incentives, 8% poor stock performance).

FACT - Four of five state pension system annuitants rely solely on their pensions for survival. By Illinois law, contributors to the Teachers’ Retirement System (TRS) and the State University Retirement System (SURS) are barred from receiving full social security benefits, even when they have been earned from non-education employment.

FACT - Public employees contribute significantly to the cost of their pensions. Teachers pay 9.4% of their salary directly into TRS. State employees on the alternative formula contribute 8.5% of their pay into SERS. And state employees on the standard formula in effect contribute 7% of their checks-4% deducted, and an additional 3% in the form of a pay raise given up in 1998, with the understanding this amount would go directly into the pension fund.

FACT - The typical retired state employee on the standard formula-those who do receive Social Security, including the caregiver for the disabled, the child protection worker, the state park employee-earns a pension of about $22,000 a year.

FACT - Illinois law clearly states that pension payments payment are, “obligations of the State.” (40 ILCS 5/16-158(c)) It’s clear that Byrne and Martin’s scare tactics are nothing more than that. Respected judges and other legal analysts have also said cutting pension benefits for current public employees is unconstitutional. The law firm which once employed Eden Martin as a partner (from which he retired with a handsome retirement package that a teacher could never even dream of enjoying), has failed to produce a signed opinion that refutes this basic fact.

Eden Martin, Dennis Byrne and the Tribune want the public to forget that the pension shortfall is the result of bad financial management by the State and that the present and future annuitants have always paid their share.

We won’t let that happen.

The truth should not be ignored or distorted. Even on the opinion page.

Thoughts?

posted by Rich Miller
Tuesday, Aug 17, 10 @ 11:15 am

Comments

I’ve seen the Civic Committee report a few weeks ago, I’m not entirely convinced and it’s basically irrelevant with the current make up of the court… they simply will rule that it is an obligation and be done with it.

However, this rhetoric by the teachers unions goes far over the top. Every time I speak about pensions, I’m basically on the same page they are (the fault is politicians promising what they aren’t paying for). However, every time I get out of a conversation about pensions from the unions or their members, I leave with such a sense of contempt that I think all their pensions should be confiscated whole and entire. (Note, that’s a sentiment, not a policy position).

This rhetoric only excerbates this problem. And let’s face it, the unions have had a seat at the budgeting table for decades, more so than anyone else. Their union leaders are COMPLICIT in the pension short-changing, they’ve ALLOWED it to happen. I believe, in part, so they will have the trump card to cash in to take a bigger say in the budgeting process.

Comment by John Bambenek Tuesday, Aug 17, 10 @ 11:22 am
On pensions, and specifically public pensions, I understand they are expensive for taxpayers. What bothers me is that I see an attempt by Byrne, Martin and many others to try to pit the middle class against itself.

Private pensions have been dumped across the country over the past 20-30 years. We now are lucky to get a 401K plan or other supplement to Social Security, if we’re lucky to have a job with benefits. Because today few private sector employees have a pension, it is easy to stir resentment against those who do.

Yet these same people attack Social Security too. Wages have been stagnant for a generation, guaranteed retirement plans are a distant memory. Who benefits from this? It isn’t like jobs are returning from overseas now that union membership is in decline.

We should be advocating for decent retirement plans for everybody, not trying to tear down the protection that a few of us in the middle class are lucky to have. The debate is upside down.

For today’s Republicans, the slogan is “Every man for himself.” And so far, they are winning the rhetorical war. Most people do resent public employees and pensions are a great hook for this class warfare tactic. They have split the middle class on this and that is very troubling to me.

Interesting factoid: Can you name the largest public employee pension plan that also has the earliest retirement age? The United States Armed Forces plan. It also doesn’t have anything invested. It’s cash in, cash out annually from the Pentagon’s budget.

Where is Dennis Byrne’s outrage there?

Comment by 47th Ward Tuesday, Aug 17, 10 @ 11:31 am
The Teacher organizations are correct to point out the state has failed miserably to fund the annual payment into the pension plans for the past 30 years- having said that, the formula permitting the three percent annual inflation raises is a significant problem allowing for the automatic increases notwithstanding inflation has not come close to three percent for the lat 10 years- secondly, the state can and should immediately increase the contributions retirees pay for their health coverages- unlike the pension obligation, there is no argument that the health coverage is “guaranteed” and the nominal amounts retirees pay for health coverage is substantially less then what non-governmrnt employees pay and even less then what medicare recipients pay- a meaningful start to reigning in state expenditures should start with an announcement by the Governor that all state retirees will be charged 50 percent of the cost of their health coverages

Comment by Sue Tuesday, Aug 17, 10 @ 11:32 am
47th Ward

–
Re: We’re now lucky to have a 401k plan…

http://www.bls.gov/ncs/ebs/sp/ebnr0016.pdf

74% of private sector workers have an employer funded plan of some sort.

re: wages have been stagnant for a generation

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CIU2010000000000A

In the last decade there has been positive compensation growth every year.

—

Let’s try fact-based commentary now.

Comment by John Bambenek Tuesday, Aug 17, 10 @ 11:38 am
Maybe Dennis Byrne should be shipped off to Texas with the rest of ‘em.

Shared sacrifice and all.

Comment by George Tuesday, Aug 17, 10 @ 11:43 am
A tool for terror

That is pitiful. Terror?

They should be ashamed of themselves for claiming that their stand on this issue is a stand against terror. They are clueless and insensitive.

Comment by VanillaMan Tuesday, Aug 17, 10 @ 11:43 am
I guess when the times get tough the teachers are an easy mark…afterall, they only work 9 months per year, right? Wrong. If we fail to treat our teachers fairly, our public school system will only be poorer for it. You can’t deny that the state has not adequately funded not only their pension coffers, but the educational system itself. This is an abomination for a society that needs a skilled, educated workforce…

Comment by Loop Lady Tuesday, Aug 17, 10 @ 11:44 am
I don’t blame the teachers or the cops or the fireman, I blame the Gov, the mayor and the state Legislature. They are the ones who time and time again skipped pension payments to fund other projects. I agree reform is needed and some has happened but the politicans are to blame the money was their they just used it for other things and sent the pension system an IOU that they dont want to pay now.

Comment by Anonymous Tuesday, Aug 17, 10 @ 11:45 am
Considering that the major teachers unions in LA are calling for a boycott of the LA Times because the Times is writing an expose on poor teacher performance, this doesn’t surprise me.

Comment by Team Sleep Tuesday, Aug 17, 10 @ 11:45 am
Thanks John,

I was ranting. I appreciate your facts.

I know a young man who recently graduated college. He’s looking for work and thinks if he can land a job that pays $30K and has benefits, it would be great. I graduated college 25 years ago. I also wanted a minimum salary of $30K.

College today costs about 4x what I spent. House prices have gone up more. Cars are still fairly cheap, and they practically give food away. But based only on my experience, I think wages have been relatively flat for a long time in this country.

Don’t worry. I’ll spend some time looking for data on this, but somehow I don’t think you’ll be persuaded.

Comment by 47th Ward Tuesday, Aug 17, 10 @ 11:45 am
Actually, the time to start looking at state retiree health care would be in 2014 when the new federal health laws kick in. Early retirees will be able to buy insurance on the private market and will not have to fear being rejected because of pre-existing conditions. Those who are eligible for subsidies would get them under the federal law. I see no reason why we taxpayers would have to provide (currently premium-free)
health insurance for early retirees at that point.

Comment by cassandra Tuesday, Aug 17, 10 @ 11:46 am
Sue - as stated the average State worker pension isn’t that great and many retired under the assumption that health care was part of the package - 20 years of servive is a long time today. To require a 250 to 500 a month insurance premium on a 22,000 pension would be pretty unfair.

Comment by Mr. Ethics Tuesday, Aug 17, 10 @ 11:52 am
Serious question: how are you going to pay for all the pensions/healthcare for gov’t employees. Can anyone come up with any plan to fund these things? I am not worried about it, because my hubby lost his job and we will be leaving the state soon. So what are you folks going to do? How are you going to come up with the dollars without chasing businesses(like my hubby’s) out of state?

Comment by Mary, Sterling Tuesday, Aug 17, 10 @ 11:54 am
47th Ward-

College grads aren’t a majority of the work-force… and of course, you’re talking about a very slim demographic, recent college grads. As someone who has hired in the past, I can tell you, recent college grads tend to be pretty worthless and have only gotten more so. In a tough economy, they wouldn’t be my first pick. So yeah, I’m sure the rough economy is hitting them pretty hard.

Comment by John Bambenek Tuesday, Aug 17, 10 @ 11:55 am
The Tribune and other newspapers in this state cherry pick these superintendents and other administrators who have abused the systems and then extrapolates how these pensions provide overly generous benefits. This generalization ignores the fact that the rank and file teacher does not get Social Security and their pension is in the mid $40’s. The lack of Social Security coverage in this state for nearly 80% of public workers has SAVED -yes SAVED- state and local government BILLIONS -yes BILLIONS- of dollars.

In addtion all members of theses systems will not be receiveing these abusive pesnions because of the law that was passed last year. While that law will have policy implications like 67 year old kindergarten teachers and inhibit the ability of higher education institutions to recruit highly sough after professors it will significantly reduce the pension payment in upcoming years.

Comment by Obama's Puppy Tuesday, Aug 17, 10 @ 11:59 am
So, OP@11:59, how’re you all gonna pay for this current mess? I don’t have a dog in the fight. Just curious how folks plan to keep the scheme going. Hard numbers. Is there ANY plan out there that will fully fund these pensions?? An income tax hike isn’t going to do it, is it? Maybe a big hit on farmers and their land? Would that do it? Who’s going to pay?

Comment by Mary, Sterling Tuesday, Aug 17, 10 @ 12:12 pm
Eden Martin retired from Sidley Austin with a golden parachute and a golden pension. He serves on two boards for over $300K in compensation.Talk about double dipping! The millionaires on the Civic Committee are committed to screwing people who have had to work for a living their whole lives out of their pensions which average about $17 K for state employees and about 34K for teachers who don’t get social security benefits.
If we have to pick sides I know what side I am on.

Comment by Bill Tuesday, Aug 17, 10 @ 12:13 pm
Legal opinions like all opinions are worthless unless they belong to the person making the decision and the Illinois Supreme Court has a history here the pensions are safe for current employees, future employees have already seen pensions cut I wonder how the Avg teacher pension stands up to the Golden parachutes that the Tribune was lavishing on its departed executives.

Comment by fed up Tuesday, Aug 17, 10 @ 12:14 pm
The state employees shouldn’t be punished because we have legislators that can’t do their jobs. You’re not talking about reducing the use of state tax dollars the state hasn’t paid fully in years; you are talking about stealing what would be many of the employee’s social security payments.

Comment by Justwrong Tuesday, Aug 17, 10 @ 12:14 pm
Dennis Byrne is just flacking for clients. The Trib gives him a nice soapbox.

Comment by wordslinger Tuesday, Aug 17, 10 @ 12:15 pm
I hate the arguments - but facts are facts - 24 furlough days, no raises for 10 years (another 6 under Edgar) - pay 8% to the pension fund, also pay the social security - how much do some of us have to share

Comment by swede Tuesday, Aug 17, 10 @ 12:19 pm
There are some state employees on the alternative retirement formula who contribute 12.5% of their salary each paycheck to the retirement system!!

Comment by Anon Tuesday, Aug 17, 10 @ 12:27 pm
As a state employee only a few years away from retirement I was very troubled by Byrne’s comments. Altho the pension system is outmoded in many respects it is important that those who provide for such a program make sure to fund it in a responsible manner to the extent reasonably possible. No one can say that about those in charge (the gov’t) in this case. The employees pay is automatically deducted in the amount agreed upon in the union contract. The state fails miserably to pony up the required matching amounts and are thus in default. We all know it is the tax paying citizens who have to make up the shortfall. Since many here say the taxpayer/voters have repeatedly installed failures and cheats with their votes does that mean we can place the blame on their (our?) door step? I wonder if the same logic Byrne posited could be applied to Social Security? How would that go over with the national electorate?

What a mess. Homeric in scope and nature (no, I’m not comparing Illinois to Greece).

Comment by dupage dan Tuesday, Aug 17, 10 @ 12:31 pm
We don’t pay social security to SSI we pay it too the state and can’t receive SSI. The state is suppose to pay SSI payment and won’t and now wants to cut our pensions. So we are out our pensions and Social Security.

Comment by Justwrong Tuesday, Aug 17, 10 @ 12:31 pm
Move the teachers and state workers to a cash-balance pension plan so they get the fair market value of their pensions as they currently stand. They won’t lose their benefit they have accrued to date. Moving forward, put everyone in a defined contribution plan and within 5-10 years, the problem of the legacy costs to the state will be gone.

The real “terror” is in the groups like the IFT and IEA working against a workable solution for the 11 million people who work and live in the state for the benefit of their 236k members. If given the chance, how many of these teachers would leave the union?

Comment by Logical Thinker Tuesday, Aug 17, 10 @ 12:32 pm
Thanks, Logic. I think you’re the only poster to actually put forward an idea!

Just, I am esp interested in how you envision paying for these pensions and benefits.

Any ideas? Any plan? How’re you going to deal with this? Money-wise, real action.

Comment by Mary, Sterling Tuesday, Aug 17, 10 @ 12:38 pm
After working for myself for nearly 2 decades, I know nothing of pensions, private or public. However I do have a peronsal opinion that it is likely not the amount of money a public pensioner receives but it is the lenght of time for which they are eligible for said pension Anecdotally a fairly egregious example of extravagant public pensions is found in our State Police retirees. Several of our local retired SP’s retired at age 52 with an 80% pension eligibility. With an expected life span into their late 70’s probably longer, they will have spent far more time in retirement than working. The SP’s are not at fault for taking the offer, but the system and sytem gamers are at fault for allowing it. You cannot build a sustainable system this way.

Comment by The Southern Tuesday, Aug 17, 10 @ 12:43 pm
Sorry for all the typos.

Comment by The Southern Tuesday, Aug 17, 10 @ 12:44 pm
Logical Thinker,

That plan has been floated here, ane elsewhere, for quite some time. You suggest nothing earth shattering or new. Trouble is, it takes the combined efforts of our elected officials to bring about such a plan. Combine that with an unwillingness on the part of unions to consider such a plan and the elected officials (this is a blue state, remember) to get some backbone and you have the reason this hasn’t happened. It could be done on a national scale, as well, but that effort was shot down during the 1st Bush administration. There are so many powerful blocs that seek to maintain the status quo that the reforms you simply put are not put simply….

Comment by dupage dan Tuesday, Aug 17, 10 @ 12:59 pm
DD,

I realize that and agree with your comments. But as long as the fearmongering of the Teachers Union continues in a fashion similar to the release above, we are all screwed. I, for one, applaud the efforts of the Chicago Tribune and hope that they go after ALL the districts now and don’t back down from these thugs.

Yes, thugs. Any rational individual will conclude that the release from the IFT and IEA was an attempt at intimidation. Thugs intimidate.

Comment by Logical Thinker Tuesday, Aug 17, 10 @ 1:09 pm
Well, sounds like its all gonna crash and burn. There are no other options that will fund the thing.

Maybe the feds will come in and give state employees a modest(I am hearing 21000 per year?) pension.

Comment by Mary, Sterling Tuesday, Aug 17, 10 @ 1:09 pm
==Move the teachers and state workers to a cash-balance pension plan so they get the fair market value of their pensions as they currently stand. ==

That basically means “fully fund the pensions now,” because full funding is the amount that would need to be in the fund today that will, taking into account earnings on investments, be enough to pay the expected pension entitlements. If the State could do that, we wouldn’t be having this discussion.

All Byrne said was that there might be a loophole through which the State could wiggle out of its pension obligations. While you could interpret this as a call for the State to walk away, the more reasonable reading is that he’s encouraging the State to tell the unions, “We cannot pay it all, and don’t have to pay anything more than we already have, so let’s talk about how much we will pay.”

That is a perfectly reasonable position on its face. It doesn’t place blame, it just says this is the reality, what do we do now? The unions’ reaction to it is outrageous.

Unfortuneately, the less emotional response of the unions is, “You are obligated to pay, and the State constitution and the federal constitution’s “impairment of contracts” clause prohibit you from reneging. Why should we concede anything?” And to anyone who thinks the State can reneg on pensions (INCLUDING promised health care benefits, which are nothing more than part of the obligation), I would point out that the law looks very clear to me, the Sidley opinon Byrne describes requires a lot of weaseling, and the judges who will ultimately decide any dispute will also have a financial stake in reading the law as protecting pensions and health care benefits.

Comment by Pat Robertson Tuesday, Aug 17, 10 @ 1:51 pm
Mr Martin and Mr. Byrne are rightly called terrorists by the IFT and IEA. What was written was a call to class war by one of the major leaders of the bussiness community in metro Chicago. Basically he is telling public employees to agree to pension reductions before they get nothing at all or at least greatly reduced benefits.

I can fully understand the response and do not think it was over the top in the least. Is it possible that the pensions will default, oh yes. But can you imagine how the 75 year old retired police officer still armed to the teeth is likely to react to that? Now that will really be ugly.

Comment by Rod Tuesday, Aug 17, 10 @ 1:52 pm
@Mary Sterling:

Who are you and what are you even talking about? You pipe in here with all these little questions like an annoying 2 year old, and now your latest comment about the feds? I think you got some bad kool-aid somewhere.

Who is going to pay for it? Ultimately, it is the taxpayers of Illinois that will have to pay - at least for some of it. I am not a teacher but am in the public sector. I did not, nor do I, control how the pension systems are set up. This same argument has been made by this group in Chicago before - that pension benefits are not guaranteed. Problem for them is the courts have said otherwise. Their opinion matters. I am not advocating anything here, but just as a thought, you know that courts can force things to happen. Just ask Kansas when, a few years ago, their Supreme Court ORDERED them to come up with a specific amount of money for Education and the state had to find a revenue source to deal with it. You want to know where the money is going to come from? Like I said - it may come from you.

Comment by Demoralized Tuesday, Aug 17, 10 @ 1:53 pm
Let’s look at just a few examples of the Trib’s feeding at the public trough:

Crain’s article some years ago:
Sen Braun helped the Tribune Co get a minority-preference tax waiver when the company and minority investors acquired two television stations. The Chicago Tribune and its rival, the Chicago Sun-Times, provided little coverage of the controversial decision.
2006 Decision
Then the Trib tried to avoid a huge tax liability but the U.S. Tax Court added $1.3 billion to the Tribune Company’s 1999 taxable income by ruling that the sale of Matthew Bender by its Times-Mirror subsidiary did not qualify as a tax-free reorganization.
How about the purchase of the Tribune by Zell
While Zell invested $315m of personal equity, with substantial risk mitigated by tax breaks, debt was piled on to the company in the acquisition process. By the time of its completion, Zell’s deal had saddled the Tribune Company with $11.2 billion in debt.
Regardless of how the plan acquires stock, company contributions to the trust are tax-deductible, within certain limits. So in this case, the company is able to use the ESOP to borrow money and repay it in pretax dollars, deducting both principal and interest. This is one of the key tax benefits that the many articles on this transaction are referencing.”

Benton Foundation Review of Tribune Deal
Benton Foundation stated on the restructuring: Lost tax revenue: The sale represents a complex corporate restructuring that would allow Tribune to eliminate most of its corporate taxes.

Trib Sale of Newsday Long Island Newspaper
If the transaction is considered an outright sale of assets at the time of the ‘S’ election, Tribune will be hit with the tax consequences. Indeed, a tax, assessed at a 35 percent rate will be imposed on the portion (likely to be close to 100 percent) of the gain from the sale which was “economically accrued” at the time the ‘S’ election became effective. Accordingly, Tribune appears to be employing an approach that will enable it to raise substantially all of the cash it would have raised had an outright sale been attempted, but in a manner which will delay the occurrence of the “sale,” for tax purposes, until after the 10 year recognition period has expired. Gains recognized by Tribune more than 10 years after the date on which the ‘S’ election became effective will be exempted from the built-in gains tax.

Sale of the Cubs Tax Free? From the TaxProf Blog
Here’s how a leveraged partnership works (somewhat simplified): Tribune drops the Cubs business into a limited-liability company, or LLC, which taxed as a partnership, and Buyer drops in some cash. The LLC borrows a large amount of additional cash (essentially, the purchase price) and distributes that cash to Tribune. As a result, Buyer has a 95% interest in the LLC, and Tribune has a 5% interest and a lot of cash. But wait, you may be saying. Yes, it’s true that assets can be contributed tax-free to an LLC that’s taxed as a partnership, and it’s true that distributions from such an LLC are tax-free to the extent of basis. But surely the claim cannot be that Tribune did not sell the assets, but simply made a tax-free contribution to an LLC of assets worth $844 million and then received a tax-free distribution from the LLC of roughly that amount of cash. (How so?) Tribune guarantees the debt. Then all of the debt is allocable to Tribune, and the whole deal falls under this tax exception. And the guarantee means that Tribune’s basis in the LLC is increased by the amount of the debt, which gives Tribune plenty of basis to receive the cash distribution tax-free.

Comment by Artie Anderson Tuesday, Aug 17, 10 @ 1:54 pm
===The Chicago Tribune and its rival, the Chicago Sun-Times, provided little coverage of the controversial decision.===

The Trib put that on the front page.

…Adding… Along with a big photo of CMB. The Trib’s political columnist was so upset about the apparent quid pro quo that he wrote a scathing column about Braun the very next day.

Comment by Rich Miller Tuesday, Aug 17, 10 @ 1:57 pm
I have seen the SUV driving football dad say they love thier teacher/coach and then complain about taxes. Same thing with PTA mom, a 75K renovation on the house is OK, taxes are not. People, if the people you vote for negotiate a contract then you must pay. Do without the SUV or the new kitchen, take care of the teacher!! Enough is enough.

Comment by Mr. Chips Tuesday, Aug 17, 10 @ 2:04 pm
Logic,
The Tribune is clearly trying to intimidate teachers, cops and every other public employee. The unions are clearly trying to defend their members and the benefits that they’ve earned. The Tribune and Eden Martin have been doing an excellent job of intimidating the legislature and the public with these scare tactics that you applaud. Thugs try to take something away from someone which is exactly what the Trib and Martin are trying to do with pensions.
As to a 401K style plan, it would seem “logical” to know what the total cost to the state of IL. would be if the switch were made. If you would do a little research, you’d see that putting teachers in Social Security and a 401K will cost the state more, yes more, than the current system. You never hear Eden talk about that.

Comment by DC Tuesday, Aug 17, 10 @ 2:07 pm
One of the bigger problems with pensions is that the final payout amount is calculated by using some average of the last years of service. Perhaps a simple change that could save significants amount of money would be to calculate the payout based on some formula that takes into account both starting and ending pay, without overtime.

Let’s say in the first year the employee makes $20k, second year $25k etc. Instead of calculating based on the employee’s final pay of $100k, calculate one year as final pay $20k, next $25. The formula would be complex because the retirement age would be in the calculations too, based on actuarial tables of life expectancy after retirement, so some jiggering is necessary. Now you average the final retirement package expected pay over the actuarial time of life and you get the benefit paid each year to the retiree. Get it?

Comment by Cincinnatus Tuesday, Aug 17, 10 @ 2:17 pm
The private sector dropped benefit plans lik the State n favor of 401(k’s). WHen they did the number of retirees who fell below the poverty line and become dependent on oial security increased. The 401(k) was intended to supplement benefit plans, not replace them. the over reliance on this type of risky funding for retirmenets is still hitting the tax payers, the burden is now going to be to fund social security to make cover for not providing decent retirment plans now

Comment by Ghost Tuesday, Aug 17, 10 @ 2:20 pm
Demoralized…thanks for the kind words! I am a simple person, for sure!

I really am just asking you for a plan to pay for these gov’t employee pensions, benefits. What’s is your plan? In real dollars.

How high will we have to raise taxes to fund these pensions?

I hear about how bad it all is, but I don’t hear any CONCRETE solutions with numbers backing them up.

I am here to learn. So educate me, Demo!

Comment by Mary Tuesday, Aug 17, 10 @ 2:38 pm
A legal opinion is just that, an opinion supported by a train of legal reasoning that some clever attorney has been paid to produce. It may or may not stand up to judicial scrutiny. If the IFT constituency is sufficiently concerned about this particular legal opinion, they should simply hire their own even more clever attorney to review and rebut Martin’s opinion. But to call the Chicago Tribune ‘a tool of terror’ is hysterical hyperbole that only makes the IFT and its minions look bad. Get a grip!

Comment by SURS Retiree in MT Tuesday, Aug 17, 10 @ 2:39 pm
Mary Sterling, It sounds as though you do indeed have a dog in the fight. I sense from your comments that the business that employed your husband is leaving or has left and you are quite upset about that. Very understandable and I am sorry that this has befallen your family.

However, the bottomline, the absolute, gosh awful, undeniable, truth about the pension situation is this. The taxpayers have already paid for funding the pension system. The FACT that the GA and past administrations TOOK that money and used it somewhere else where it was not originally intended to go is why we are in the situation we are in.
This is the same as if you made your house payment and the bank decided to apply those payments to renovations of the CEO’s office instead of applying them to your loan and is now telling you that you have to make up the payments.

On top of that they, the GA and the past administrations also TOOK the money that the pension participants paid out of their salary and used it somewhere else. This is basic THEFT disguised as executive privilege.

So putting your self in our place. Would you not be upset if someone stole your savings and retirement and spent it on something they wanted?

All the rhetoric, gnashing of teeth, and wringing of hands by all the politicians and their supporters, does not change the fact that the pension money was TAKEN and used for programs is was not supposed to fund. END of story

Comment by Irish Tuesday, Aug 17, 10 @ 2:41 pm
Mr. Chips:

Two problems. Those who we elect to negotiate the contracts are often depending on those same unions for campaign support and contributions (see the big bucks flowing into Quinn’s coffer from the public employee unions). Plus, the collective bargaining rules in this state put employers at a significant disadvantage to the public employee unions in the negotiation process.

No one is saying teachers and other employees should not get a fair deal. But your argument that working stiffs should forego the fruits of their labor to support bloated pension benefits and perk laden contracts is indicitive of the problem.

Comment by Bluefish Tuesday, Aug 17, 10 @ 2:44 pm
A little closer look at Mr. Bambenek’s numbers:

Businessweek, Feb 2010:

The income story in America is deeply troubling. Inflation-adjusted average hourly earnings for production and nonsupervisory workers (a category that encompasses 80% of the workforce and leaves out higher-paid managers and supervisors) rose by an anemic 0.1% a year from 1979 to 2007, according to the EPI.”

Why?

Income inequality continues staggering 25-year growth trend:

http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20080618/

How about this one (WSJ):

Wage and Benefit Growth Hits Historic Low

http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748704343104575033250546866096.html

“Adjusted for inflation, wages and benefits fell 1.3%, after rising 2.8% in 2008, the first year of the recession. The inflation-adjusted cost of wages and benefits at the end of 2009 stood just 1.1% higher than at the end of the previous recession in 2001, the Labor Department said.”

I bet if I didn’t have to get some work done this afternoon (!) I could clarify the misleading stuff about retirement plans for 74% of us, too. 7 years to full vestment, insane buried fees, the risk of significant losses at retirement age….

Comment by Lefty Lefty Tuesday, Aug 17, 10 @ 2:49 pm
Irish, no worries. We are a simple household, living beneath our means and we will do fine.

I know what happened with the pols and the unions. That’s water under the bridge. That story might be at an end, but….

How high will we need to raise taxes to fully fund these pensions/benefits?

Comment by Mary Tuesday, Aug 17, 10 @ 2:51 pm
Whoops..Irish: I meant to add that I said I don’t have a dog in the fight, because we are leaving the state, following our employer. So we won’t be paying the bill. Nor will our employer.

Comment by Mary Tuesday, Aug 17, 10 @ 2:53 pm
As a public educator Mr Bambenek…I too feel contempt concerning my TRS pension…the same contempt I feel for the people who are being mislead into STEALING my retirement which my own contributions have funded.

Should we be shocked that another of the fine ideas of “privatization” from the GOP and business is now seething its stenchy way into our public sector pension system. Boy I wish I could screw up a company, pay off a high ranking official, or commit a white collar crime and walk away with a bushel load of money…maybe then sir, you and all of your cronies won’t have to pay my pension because you can just buy me out.

When you make lifetime plans based on one set of rules and the rule makers decide to change them in the middle of the game it should come as no shock that people get enraged. My pension did not create this mess…the public demanding services for nothing and legislative leaders without the chutzpah to lead and require all of us to pay for it are why we have this problem. I am open to shared sacrifice, but eliminating my nest egg, that has taken my life to create, in order to continue to foot the bill is a moral outrage. In fact, it is down right CONTEMPTABLE.

Comment by Double D Tuesday, Aug 17, 10 @ 3:54 pm
To Anon , you are right, before I retired 2 years ago I as a sworn State Police officer I paid 12.5 % of my salary to go towards my pension since about 2001 , before that I paid 9.5 %. It all started with Edgar, he didn’t put in the 4% and just got worst from there.

Comment by ispretired Tuesday, Aug 17, 10 @ 4:10 pm
I can understand your rage, DD.

Now, what are we to do about it? What’s your plan? How high are we going to need to raise taxes to fund these pensions/benefits?

How much do you think IL families need to give up (out of their future plans and dreams)?

How much? Do you have any idea? What seems fair to you?

Comment by Mary, Sterling Tuesday, Aug 17, 10 @ 4:43 pm
I am a retired teacher in Omaha, Nebraska. I receive a decent pension for teaching physics for 36 years and I receive Social Security. My pension plan is somewhat underfunded, but not terribly so. My pension plan can and is investing its way out of this small hole with the help of slightly larger contributions from both employees and employers and because modest additional funding has come from the employer. This modest additional funding as actuarially required has always been made.

Therein is the only real difference between my pension plans funded status and the typical Illinois public pension plans funding status. In my case, my employers always paid up the extra modest amounts. In your case, the state rarely paid up the small actuarially required amounts and over the years these small amounts compounded into very large amounts.

What did Illinois do with the money it should have paid into the pension plan? It helped pay for everything else in the budget and as a result it helped keep taxes down. But Illinois still owes the pension plans that money plus interest!

That money paid for roads, corporate tax loopholes, snow removal, flood control, police stations, fire trucks and much more. Artie Anderson, in an earlier post, listed many of the loopholes in which the Tribune took advantage. Were those loopholes paid for with money that should have gone into the pension plans?

Now, Illinois needs a plan to pay it all back with interest. And Eden Martin, Dennis Byrne and the Tribune don’t want to pay it back. So Eden, Dennis and the Trib are trying to come up with ways to justify reneging on the legal contract between the state and it’s public employees.

I am sure the Tribune has a contract with a supplier of newsprint and I am sure the Tribune knows what would happen if it refused to the contracted amount for the newsprint it uses. No more newsprint.

But here is what I really do not understand. Public employees are the only ones who have upheld their end of the bargain. No one else has. Certainly the citizens of Illinois understand this and empathize with these hardworking public employees. Don’t they? Certainly the citizens of Illinois will side with Illinois kindergarten teachers over Eden Martin and Dennis Byrne and the super-rich. Won’t they?

Oh. I almost forgot. There is another difference between my benefits and the benefits of teachers in Illinois. I get Social Security. They don’t.

Comment by John Jensen Tuesday, Aug 17, 10 @ 5:01 pm
Certainly the citizens of Illinois understand this and empathize with these hardworking public employees. Don’t they?”"”

Well, I don’t know. Private citizens are fighting their own economic battles in this state.

In better times, I am sure the citizenry would be more understanding. Now, not so much. This is why we haven’t had a tax increase thus far. And if the pols think tax increases will be anymore palatable after the elections, they’re sadly mistaken.

When it comes down to it, right to the nub, is private citizen A(who is likely struggling financially) willing to cut back on heat, food, clothing to fund gov’t worker B’s pension? Not likely. Human nature, I am afraid.

You all are setting up some pretty nasty class-warfare(of a fiscal nature), here. Granny’s home health aid vs. teacher’s pension? No contest.

Doesn’t matter the law. As we’ve been shown, they can be changed, or rearranged or negated. Sorry, folks. Get used to the new reality. Maybe the Pension Guaranty Corp will come in and give you $20000/year(I was too optimistic, earlier).

I guess that is the cost of living in a corrupt state. You gotta deal with corruption that sometimes touches you directly.

There it is.

Comment by Mary, Sterling Tuesday, Aug 17, 10 @ 5:21 pm
Mary, Sterling commented “Granny’s home health aid vs. teacher’s pension? No contest.” That is not nor should not be the contest. It should be “Granny’s home health aid vs. Eden Martin and his Civic Committee of the Commercial Club of Chicago”. They do not give a wit about you or Granny. Do not make it Middle Class vs. Middle Class. The Tribune is telling everyone to circle the wagons, point to the center and shoot. Do not fall for it.

Comment by John Jensen Tuesday, Aug 17, 10 @ 5:44 pm
The IMRF is an Illinois poster child for the intended functioning of a public pension. Why? Because local governments are forced to fund their portion on an annual basis…almost no exceptions.

The problem with SERS, SURS, TRS and the like is simple. The GA chose to flout its own pension design; they diverted pension funds to other purposes.

As with any debtor, the State must honor its obligations and that funding will come from higher taxes and/or the disposal of capital assets.

Comment by Anon Tuesday, Aug 17, 10 @ 5:47 pm
Sorry. I don’t want to beat up on only poor old Eden Martin. There are others on his committee at the Commercial Club of Chicago—such as:

Chairman, CEO, Managing Partner, Presidents, etc of Abbott, Ernst & Young , American Airlines, Inc., Sara Lee Corporation, LaSalle Bank Corporation, Chicago Board Options Exchange, Motorola, JPMorgan Chase & Co., Deloitte LLP, Federal Reserve Bank of Chicago, Hewitt Associates LLC, UBS Investment Bank, PricewaterhouseCoopers LLP, Sears Holdings Corporation, AT&T Illinois, The Allstate Corporation, Tribune Company, Bank of America, McDonald’s Corporation, The Boeing Company, Northern Trust Corporation, KPMG LLP, - Hyatt Hotels Corporation, Kraft Foods Inc., Crate & Barrel, UAL Corporation, Walgreen Co., The Allstate Corporation and Wm. Wrigley Jr. Company.

And that is just a partial list.

Don’t you just know how much they relate to the middle class?
Especially that JP Morgan guy. Hey! Didn’t JP Morgan get a Government bailout? Bank of America too?

Comment by John Jensen Tuesday, Aug 17, 10 @ 6:28 pm
Mary,

As I stated…I am willing to share some sacrifice…first maybe we should seize all assets, pension monies, and campaign funds of every state legislator who contributed to this mess.

Of course I realize that is not possible…so realistically I am open to an income tax increase after all state programs and agencies are examined to eliminate wastes, such as campaign workers and friends who are given patronage jobs. They give hard working state employees the shaft, (unless they work for Pat Quinn…then they get a raise!)

Finally, I am also open to imposing some state income tax on my pension upon retirement, as I will still use state services. However Mary, Grandma has been getting a free lunch…I mean a free CTA ride for too long…along with everyone else who uses services in this state. It is time to be honest and realize that some form of a tax increase is in order to pay for the party we have been pushing off.

Now before you lament about how many businesses will leave…understand they will leave because of the budget uncertainty of our state. If we get the state budget in order and on its way to recovery then businesses will not relocate.

Mary…there is my list for some spread sacrifice.

Comment by Double D Tuesday, Aug 17, 10 @ 8:18 pm
If someone does not start woring on a solution, the teachers will wind up like the union pilots who had grand pensions until their sponsor went beyy up. Now they get a pension based on the rules of the PBGC. A much smaller amount.

Comment by Anonymous Tuesday, Aug 17, 10 @ 9:55 pm