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* From the Illinois Policy Institute…
Public employee unions balked at pension reform when it was introduced this spring because they claim government workers already have “paid their fair share” by kicking in “8 percent, 9 percent or more from each paycheck” to their retirement funds.
But when it comes to public school teachers in Illinois, paying their own way to retirement isn’t the norm.
An analysis by the Illinois Policy Institute of data from the Teachers’ Retirement System, the Illinois State Board of Education and hundreds of teacher contracts found that in nearly two-thirds of districts across the state, teachers don’t contribute the full “employee share” toward their pensions. In fact, most of these districts don’t require their teachers to contribute anything toward their own retirement. Instead, the contributions are paid for or “picked up” by school districts – and by extension, local taxpayers. During the 2009-10 school year alone, this little-known perk cost taxpayers more than $430 million. This subsidy is on top of what the state – and by extension, state taxpayers – pay into the teachers’ retirement funds through district-paid employer contributions and state funding. To give a recent example, in 2010, the state paid more than $2.2 billion toward TRS to cover the “employer share” of the benefits.
What they don’t say is that taxpayers are gonna pay one way or another. These pension pickups were negotiated by teachers unions, usually in lieu of pay raises. So, the districts will either pay for raises or pick up pension payments. It’s a wash.
*** UPDATE *** Actually, it’s not a wash. This saves taxpayer money in the long run. As a commenter noted, by not taking a pay raise, the teachers are foregoing higher pensions. Their pensions are based on their salaries, not their salaries plus a pension pickup. No salary increase means their future pensions aren’t increased.
* Speaking of pensions, this is from Mayor Rahm Emanuel’s own budget proposal analysis…
CPS Reimbursement: $32.5 million in increased pension reimbursement from CPS
All government agencies need to stand on their own financial footing. The City should not be paying for pensions for employees of other agencies. CPS should be responsible for all of its own pension obligations. This is the smokes and mirrors way of budgeting of the past.
* Receive reimbursement of 50 percent of pension costs for CPS non-teacher pensions, and commitment for full reimbursement in future years.
So, the mayor moves that pension funding off his budget, but the schools will have to find a way to pay for it with more cuts.
Also, over 21 percent of Emanuel’s $238 million “Investments, Financing and Growth” section of his budget is from a one-time source - refinancing city debt. And then there’s this…
When Mayor Rahm Emanuel trotted out his city vehicle sticker fee hike, he billed it as a modest $15 increase aimed at those who drive SUVs and trucks that cause the most damage to city streets.
What the mayor didn’t highlight is a change he’s pushing in how those large passenger vehicles are defined. Instead of setting the bar at 4,500 pounds, as it is now, Emanuel wants it set at 4,000 pounds.
Such a change means 184,000 more Chicago vehicles would fall under a pricier sticker class. And their owners would pay $60 more for a sticker.
* Ford UAW contract vote totals so far…
On Thursday, the union said the running tally nationally was 3,256 in favor and 3,915 against.
Oy.
* The Tribune has a story about a suburb contemplating banning drivers from eating. It’s your basic he-said, she said, and not once is this finding mentioned from the National Highway Traffic Safety Administration…
Eating while driving is about as dangerous as manually dialing a cell phone, but less distracting as reading or changing CDs.
The top ten foods to avoid while driving…
1. Coffee. Even with a travel lid, hot coffee can find its way out of the opening when you hit a bump.
2. Hot soup. Many people drink it like coffee and run the same risks.
3. Tacos. Any food that can disassemble itself will leave your car looking like a salad bar.
4. Chili dogs. Huge potential for drips and slops down the front of clothing.
5. Hamburgers. From the grease to the toppings, it could end up on your hands and the steering wheel.
6. Ribs and wings. What’s more distracting than licking your fingers?
7. Fried chicken. More greasy hands. You’ve got to wipe them off while you’re driving.
8. Jelly donuts. It’s not possible to eat one without watching the center ooze out.
9. Soda. Carbonation. Fizz in the nose. Lids that leak. Disaster.
10. Chocolate. Try to clean melted chocolate off the steering wheel without swerving.
posted by Rich Miller
Friday, Oct 14, 11 @ 10:27 am
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…the districts will either pay for raises or pick up pension payments. It’s a wash.
I’m not certain the raises and pension payments will be equal… I’m not certain the pension payment will be picked up.
Maybe I’m missing something?
Comment by Bill Baar Friday, Oct 14, 11 @ 10:39 am
Didn’t Rachel Maddow just do a segment on elected officials working on problems that don’t exist?
Comment by Observer of the State Friday, Oct 14, 11 @ 10:41 am
Yeah, the lowering of the SUV weight was BS, and he’s getting called on it by Susan Mendoza, the city clerk, who doesn’t want to get blamed for presiding over a huge increase in the city sticker tax, err fee.
As for IPI, the release is SOP, and anyone with half a brain can see it as the BS that it is.
Comment by PublicServant Friday, Oct 14, 11 @ 10:52 am
Do you have any actual evidence that these were negotiated in lieu of a pay raise?
Comment by Anon Friday, Oct 14, 11 @ 10:52 am
Ribs and wings? Chili dogs? Who are these people?
The city sticker fees are going to be a big and unpleasant surprise for a lot of people and I expect we’ll see that get walked back pretty quickly.
Comment by 47th Ward Friday, Oct 14, 11 @ 10:52 am
Anon, the only way the districts could pick up the payments would be through contract negotiations. If they gave it away for nothing, then they’re pretty darned stupid. Most were negotiated in lieu of pay raises.
Comment by Rich Miller Friday, Oct 14, 11 @ 10:54 am
Deductive reasoning doesn’t register with many republicans, Rich.
Comment by PublicServant Friday, Oct 14, 11 @ 10:57 am
I am confused about the city picking up the CPS pension payments. The city does not make its own pension matches, but they made the CPS match? I would still like to know how Rahm saved $33M in grants spending (from his original $75M in savings) from the corporate budget when those expenditures don’t come out of the corporate budget.
Comment by Jim Friday, Oct 14, 11 @ 11:03 am
How about we just take the licenses away from the idiots who shouldn’t be driving in the first place and leave the rest of us alone?
Comment by Jaded Friday, Oct 14, 11 @ 11:10 am
11. Cheese popcorn. See 6 and 7 above.
Comment by Former Titan Friday, Oct 14, 11 @ 11:21 am
I was hit by a truck who’s driver was eating a Big Mac. The guy was at fault yet livid at me because his lunch was ruined. The sandwich was everywhere inside the cab of the truck. Fries were everywhere, as well as his soda. Guess it was a real sad day for him…
Comment by Lil Enchilada Friday, Oct 14, 11 @ 11:31 am
“What they don’t say is that taxpayers are gonna pay one way or another. These pension pickups were negotiated by teachers unions, usually in lieu of pay raises. So, the districts will either pay for raises or pick up pension payments. It’s a wash.” Are you sure about that Rich? Also, such maneuvers are intellectually dishonest and you are obviously on apologist for the teachers unions.
Comment by John Ruberry Friday, Oct 14, 11 @ 11:31 am
12. Plate of spagetti. Believe it or not, I have seen people eating this while driving
Comment by Crow04 Friday, Oct 14, 11 @ 11:31 am
It appears free-range arugula is safe…
Comment by Cincinnatus Friday, Oct 14, 11 @ 11:33 am
Food is nothing compared to a guy I saw with the Tribune spread out on his steering wheel during the morning rush on the inbound Kennedy.
Comment by PublicServant Friday, Oct 14, 11 @ 11:36 am
===Also, such maneuvers are intellectually dishonest and you are obviously on apologist for the teachers unions. ====
LOL
You should ask the CTU president about that goofy charge of yours.
Bite me.
Comment by Rich Miller Friday, Oct 14, 11 @ 11:38 am
**Also, such maneuvers are intellectually dishonest **
Huh? How is it intellectually dishonest to negotiate deferred compensation?
Comment by dave Friday, Oct 14, 11 @ 11:38 am
-”Bite me” … not while he’s driving through Oak Park…
Comment by PublicServant Friday, Oct 14, 11 @ 11:39 am
===Are you sure about that Rich?===
Yes.
Comment by Rich Miller Friday, Oct 14, 11 @ 11:39 am
Bite me? How mature of you, Rich. Make sure you thank me for all the links you get from my blog, including one today.
Oh, I’m not afraid of the CTU prez. She should fear the taxpayers
I’m sure you will delete this comment.
Comment by John Ruberry Friday, Oct 14, 11 @ 11:41 am
Rich, it wouldn’t surprise me at all that politicians “are pretty darned stupid” when it comes to negotiations, but I don’t get the sense that these benefits are “in lieu” of pay raises. I believe these benefits of the employee share of TRS contributions are combined with better than average pay raises. At least that’s my experience locally where Township District 211 has 404 (2010) people making more than $100K/year (teachers & admin.). Much higher than it was a decade ago (213 100K+ in 2000).
Let’s compare teachers increase in income to citizens in the whole of the state over past decade or two. Anyone have the data on teacher income over time, to either prove or disprove RM’s “in lieu” of pay raises claim?
Comment by bmcosti Friday, Oct 14, 11 @ 11:41 am
Ruberry, thank you. Without your links, I would be nothing.
Now, reread what I said about the CTU president. And take a breath.
Comment by Rich Miller Friday, Oct 14, 11 @ 11:44 am
bmcosti, the bottom line is, these things are all negotiated.
Comment by Rich Miller Friday, Oct 14, 11 @ 11:46 am
That’s just one union. Simply put, we need a Wisconsin Scott Walker law in place here. As I wrote yesterday on this same subject, “The good old days are over.” Ban teacher tenure as well or make teachers re-apply for it every five years, as Tim Pawlenty suggested last year.
Oh, you are welcome.
Comment by John Ruberry Friday, Oct 14, 11 @ 11:46 am
**Ruberry, thank you. Without your links, I would be nothing.**
LOL.
And I still really, really want to know what is intellectually dishonest about negotiating deferred compensation.
Comment by dave Friday, Oct 14, 11 @ 11:47 am
It’s a shell game, Dave.
Comment by John Ruberry Friday, Oct 14, 11 @ 11:49 am
By Dave above:
**Also, such maneuvers are intellectually dishonest **
Huh? How is it intellectually dishonest to negotiate deferred compensation?
Here’s how it is intellectually dishonest. Contracts get negotiated. The Teachers Unions want more. The local politicians can’t afford it now, and they know they can’t ask for higher taxes. So, in lieu of giving more money now, they offer more - later. Everyone wins - the Union gets more, the School Board’s don’t have to raise taxes, and they don’t have to endure the kids protesting with signs that say “I love my teacher”. Well, everybody wins except for the taxpayers 20 years later that have to pay for higher taxes because of deals made decades ago, which is where we are now. The local school boards KNOW that they are signing a blank check that won’t be able to be cashed later, but they “kick the can down the road”
That is what is intellectually dishonest about it.
Comment by Ghost of John Brown Friday, Oct 14, 11 @ 11:50 am
Ghost, maybe this will help.
I give you ten dollars and you have to give the pension fund a dollar out of that ten. You want me to give you eleven dollars. Instead, I give you ten dollars and then I give the pension fund a dollar.
Comment by Rich Miller Friday, Oct 14, 11 @ 11:56 am
Rich, Yes, I understand that “these things are all negotiated”. All union and non-union contracts are. But that doesn’t answer the question of if teachers are getting pension pickups in “lieu of pay raises” or on top of them. If that’s the case then it’s most definitely not “a wash” for taxpayers.
Comment by bmcosti Friday, Oct 14, 11 @ 11:58 am
I’d argue that reposting a list that condemns driving while drinking coffee while excluding other hot beverages shows that Rich is nothing more than a stooge for the Tea Party.
Comment by chicagoj Friday, Oct 14, 11 @ 11:58 am
Rich..the money isn’t there anymore. It’s time for the public-sector unions to “eat their peas,” in Obama’s words. There’s on average of one foreclosed home on every block of my town. Once gain, “The good old days are over.”
Comment by John Ruberry Friday, Oct 14, 11 @ 12:00 pm
Once again…
Comment by John Ruberry Friday, Oct 14, 11 @ 12:00 pm
===It’s time for the public-sector unions to “eat their peas,”===
That has absolutely nothing to do with the topic, which is where the money is coming from. You shouldn’t use a falsehood to perpetrate your ideological position.
Comment by Rich Miller Friday, Oct 14, 11 @ 12:02 pm
**That is what is intellectually dishonest about it.**
Nope… still not intellectually dishonest. Poor budgeting? Maybe. Poor negotiating? Maybe. But not intellectually dishonest.
Generally both sides have a total value of what they want to negotiate. Do they want to put that money towards base wages? Step increases? Paid time off? Pensions? That is up to both sides, and then negotiations. But it isn’t intellectually dishonest.
Comment by dave Friday, Oct 14, 11 @ 12:03 pm
bmcosti, even if it’s on top of the raises, and it rarely is, my point is that all the money is still coming from the very same pocket. Where do you think the teachers are getting the money to make their pension payment?
Comment by Rich Miller Friday, Oct 14, 11 @ 12:03 pm
**here’s on average of one foreclosed home on every block of my town.**
And the relevance to teacher pensions is… what, exactly?
Comment by dave Friday, Oct 14, 11 @ 12:04 pm
The school boards were duped. And taxpayers should be angry. And you don’t have an “ideolical agenda,” Rich?
Comment by John Ruberry Friday, Oct 14, 11 @ 12:07 pm
===The school boards were duped. ===
The school boards negotiated the language, man.
===And you don’t have an “ideolical agenda,” Rich? ===
No, I have a math agenda.
Comment by Rich Miller Friday, Oct 14, 11 @ 12:10 pm
Rich,
I understand. Politicians have made promises for many, many years. To use your analogy (by the way, if you DO want to give me $10, just let me know, I’ll send you my address) - We gave the politicians $10 for the pensions, they put the $10 in, but then the next day, withdrew $8 to pay for other things. It’s been bad for decades.
My point goes to what you said, Rich, that we would be paying either way. The point I was trying to make was instead of making difficult decisions 20 years ago, which might not have been “will either pay for raises or pick up pension payments”, they made promises of future pension payments that they couldn’t support. They might have instead said, “we can only pay you X, and we won’t add “Y” to your pension because in 20 years we won’t be able to afford it”. Too many politicians have taken the expedient route instead of being honest about what could and couldn’t be afforded.
Comment by Ghost of John Brown Friday, Oct 14, 11 @ 12:12 pm
The school boards were stupid, then.
Comment by John Ruberry Friday, Oct 14, 11 @ 12:13 pm
They weren’t stupid if the unions were asking for more than that in raises. That’s what happened when the state agreed to pick up the pension payments years ago under Edgar, I think.
But even if they were, it still stands that the money all comes out of the same pot. And you still can’t get that through your head.
Comment by Rich Miller Friday, Oct 14, 11 @ 12:15 pm
I’m so weary of people complaining about everything the government touches…
Comment by Lil Enchilada Friday, Oct 14, 11 @ 12:18 pm
I suspect the public will keep crying out until all legislators and public servants are transitioned to defined contribution plans. How long can people defend the in-defensible?
Comment by Allen Skillicorn Friday, Oct 14, 11 @ 12:20 pm
The more in salary and benefits school boards agree to pay into the public employee “pot” the taxpayers “pot” gets smaller. The corresponding tax increases on the local, state, and federal level hurts our economy and the ability for people to make ends meet. This isn’t something to be ignored.
Comment by bmcosti Friday, Oct 14, 11 @ 12:21 pm
I knew someone who had a driver for most of his adult life. When he had to “cut back” by driving on his own most of the time, his then-wife kept making him a full traditional bacon, sunnyside up eggs, and toast breakfast to take with him in the AM. At least he was smart enough to put pride aside and pull over to the side of the road once he left his property to eat it.
Comment by Anonymous Friday, Oct 14, 11 @ 12:22 pm
13. 3 pc kentucky fried chicken meal w mashed pots and cole slaw. we tried this once heading into thanksgiving eve traffic. the problems started in spfld and lasted to bloomington, hard feelings even longer, due to the mess. impossible. i used the handi-wipes to clean the steering wheel. we can laugh about it now.
Comment by langhorne Friday, Oct 14, 11 @ 12:23 pm
The School Board, more often than not are regular citizens who take the advice of the career bureaucrats that do the daily lifting. It is no wonder that the Boards do dumb things. (Including superintendent salaries)
In my community we had a relative of the union negotiator on the Board during negotiations, things can get rigged. …..
Comment by Plutocrat03 Friday, Oct 14, 11 @ 12:31 pm
Hey Rich…where did my comment about Romney go?
Comment by John Ruberry Friday, Oct 14, 11 @ 12:34 pm
I guess the Ford workers want more production sent overseas…..
Comment by Plutocrat03 Friday, Oct 14, 11 @ 12:34 pm
Re: pay raises vs. pension payments
First, this is not deferred compensation as far as the school district is concerned. For many years, some teachers have preferred to have the district pay their portion of TRS. The district has to pay the money immediately, not when the teacher retires.
Second, a school district has a certain amount of money in the ed fund that it is able to use to compensate its faculty. The money may be used for salary, health insurance, or TRS payments, but the pot is limited. During negotiations, the admin side will say, “we can afford this much,” and will quibble with the labor side about how much is available. Then, the two sides will negotiate the distribution. If labor wants more to go toward insurance premiums, there is less for salary; if they want more toward TRS, there is less for insurance; etc. Many contracts have language obligating the district to pay all of a teacher’s TRS payment; with the current prospect of employee TRS contributions rising, the language is being fixed as a dollar amount or percentage of a teachers pay. This is a fair indicator that paying the teachers’ portion of TRS was negotiated with a dollar amount in mind.
Third, this actually costs the teachers in the long run. If teachers were as greedy for a rich retirement as portrayed, they would ask for all of their compensation as salary and then pay their insurance premiums and TRS from that. Since TRS retirement pay is calculated based on salary (not total compensation) it would be to their benefit to have all compensation appear as salary.
Fourth, the sense in having some compensation deferred is in lower taxes and shifting some of the uncertainty in insurance and TRS premiums to the employer, but also in the criticism teachers often receive for requesting pay that they feel reflects their education and experience. Teachers (and school districts) have long been criticized for paying teachers “too much.” Some of that criticism can be deflected by diverting some of the pay into insurance premiums and TRS payments.
When a district compensates teachers by paying the employees portion of TRS, districts do not pay more or less, they just put the $$ in a different pocket, and the teachers’ benefits when they retire are lower. You can call it a shell game, but it exists because a school district needs to pay a fair wage to attract and retain good teachers, but voters/taxpayers do not seem to value teachers at the market rate.
Comment by Pot calling kettle Friday, Oct 14, 11 @ 12:35 pm
Put salads on that list - love to eat ‘em. On the road? Not unless you blend it and suck it up a straw.
Comment by dupage dan Friday, Oct 14, 11 @ 12:39 pm
===where did my comment about Romney go?===
It was deleted for a TOS violation.
Comment by Rich Miller Friday, Oct 14, 11 @ 12:40 pm
===When a district compensates teachers by paying the employees portion of TRS, districts do not pay more or less, they just put the $$ in a different pocket, and the teachers’ benefits when they retire are lower.===
Excellent points.
Comment by Rich Miller Friday, Oct 14, 11 @ 12:41 pm
BTW, those who are posting about “dumb school boards” have probably not been on one. If anything, schools boards are tight-fisted during negotiations. They know exactly what they are willing to spend to compensate employees, but they also know that if it makes the employees happy to put the money into insurance or TRS premiums, there is no budgetary reason not to do so.
Comment by Pot calling kettle Friday, Oct 14, 11 @ 12:42 pm
Within the total compensation package that a teacher gets, adding the pension payment to wages and letting them make their own payment, also increases the teacher’s pension amount. The pension % is taken times a 9% bigger number. This has worked out well for several of our local teachers.
Comment by Nilwood Northsider Friday, Oct 14, 11 @ 12:46 pm
“But even if they were, it still stands that the money all comes out of the same pot. And you still can’t get that through your head.”
I think what John and I are arguing is that if the pot were negotiated to have been smaller 20 years ago, we wouldn’t be in this problem. Today, even though I think most people realize that, they School Boards are still making the same mistakes.
By the way, you mentioned Edgar - yes, I would agree with you that Edgar screwed it up.
Comment by Ghost of John Brown Friday, Oct 14, 11 @ 12:49 pm
Pot - I haven’t been on a school board, was I was on a Village Board, and we had similar negotiations with the police union, Teamsters, etc. So yes, I know about those negotiations.
Comment by Ghost of John Brown Friday, Oct 14, 11 @ 12:51 pm
===…if the pot were negotiated to have been smaller 20 years ago, we wouldn’t be in this problem.===
Perhaps. Of course, we might also have had to endure 20 years of teacher strikes too, which we haven’t. Has there been a long, protracted teacher strike in Illinois in the past 20 years?
I’m sympathetic to those who finally figured out that public education costs the public a lot of money. But what is the alternative? Teachers aren’t demanding pay cuts in these negotiations. What are school boards supposed to do? Tell the teachers to take a hike?
Comment by 47th Ward Friday, Oct 14, 11 @ 12:55 pm
Rich, One of the the things overlooked is the pension is based on last 3 years of service. Because neither the school district nor the teachers were on the hook for previous years, many contracts were negotiated with end of career bumps. This was to the advantage of the school district, the union and its members for the state not so much.
I would let you fund my pension for a lower salary if I knew that I would be getting a boost in my last salary that would boost my pension.
Comment by jeff Friday, Oct 14, 11 @ 1:03 pm
@ Pot calling kettle “If anything, schools boards are tight-fisted during negotiations.”
This has not been my experience. Most school board members are generally cheerleaders for their school district. There are very, very few fiscal hawks on school boards. Most want the biggest and best of anything and everything. They blame the governor and the state for not increasing the foundation level to fund the 5% pay raises that they pass out every year.
Comment by Bobby Hill Friday, Oct 14, 11 @ 1:04 pm
47th Ward
YES!!!! Perhaps we wouldn’t be having the problem that we are in if some school boards had stood up a time or two.
My wife works in a school district. When I was in college, I dated several young ladies that had just graduated with their teaching degree. For many suburban districts, there are often times hundreds of applicants for every teacher’s position. We don’t have a problem of attracting good candidates as a reason to pay more.
In inner city school district - yes, we do have a problem. I will grant that.
Rich - I see your update. Here is the downside. What was the retirement age 40 years ago, and what is it today? We now have a situation where teachers can retire at 55. That wasn’t always the case, and that is part of what has been negotiated. So, instead of having teachers work for 40 years, retire at 65 and then take a pension for 20 years, they now work for 30 years, retire at 55 and then have a pension for 30 years.
THAT is part of the problem, and that is something that has been negotiated over the last 40 years.
Comment by Ghost of John Brown Friday, Oct 14, 11 @ 1:06 pm
I believe pensions are paid on creditable earnings. If so, TRS pickups give the teachers higher pensions:
http://trs.illinois.gov/subsections/employers/faq/calc.htm
Comment by Anon Friday, Oct 14, 11 @ 1:06 pm
With respect to overall teacher compensation, if you want cheaper teachers, you want less educated teachers. Since the state sets the educational requirements, why not remove them? A school could pay a lot less for a teacher if they could hire someone with an eighth grade or high school diploma. I mean, if it was good enough in 1870, shouldn’t that suffice today?
Comment by Pot calling kettle Friday, Oct 14, 11 @ 1:08 pm
===If so, TRS pickups give the teachers higher pensions:===
Yes, but they’d be getting that credit anyway, as you point out. Forgoing a raise means they’re getting less in retirement.
Comment by Rich Miller Friday, Oct 14, 11 @ 1:10 pm
===…if the pot were negotiated to have been smaller 20 years ago, we wouldn’t be in this problem.===
not sure what we can do about that absent a good DeLorean and Michael J Fox.
sorry to be so dense on these matters - I assume there’s no way to apply a significant extra tax to all public pensions over, say, $50,000, rather than taxing that income at just 5%?
Comment by Robert Friday, Oct 14, 11 @ 1:11 pm
I think the problem is that when school boards negotiate they look at what the contract is going to coast the District. They look at what affects them.
So the teachers come in with a demand of a 10% increase knowing they are not going to get it. The school board counters with their offer. This haggling goes on until both sides get close. then the “thinking out of the box” begins. School boards will say “Okay we will give you X% in raises and X amount in insurance premium reduction or individual pension payment reduction to equal your offer of X% increase plus a little. Sometimes days off are even thrown in to the equation.( If you have a good financial guy/gal they will figure the cost to the district of a substitute teacher for those days and that is shown as a cost to the district for the days off.)
Again, they are figuring the cost to the DISTRICT. Since the pensions are paid by the TRS the cost to the state of the pensions is not figured. Most boards do not go the extra mile to concern themselves with the total cost to the taxpayers. The boards do this since some of those items are pre tax so the teacher/administrator realizes a slightly higher increase than if they took it all in cash after taxes. An agreement is made and the board can tell the citizens of the district that they only gave 3% raise and some adjustments in the benefits. Sounds good. They are praised and re-elected. Most think they have done a good job for the taxpayer because they don’t look far enough to see what that pension is costing all the taxpayers of the state.
So what Rich said is true, it all comes out of the same pot of taxpayer money, some of which is in the school boards money and some of it in the State’s tax revenues.
One of the few good things that Blago did was to put the burden of pension costs incurred by any increase over 5%, I think that was the figure, to any individual in a one year period on the back of the district giving that increase. When he did that you saw a very sharp decline in the traditional last years bumps that had become the norm in most districts.
Comment by Irish Friday, Oct 14, 11 @ 1:12 pm
- “eat their peas” -
Do you feel the same way about the dozens of corporations enjoying tax loopholes that allow them to avoid any state income taxes? Perhaps they could use some vegetables as well.
Comment by Small Town Liberal Friday, Oct 14, 11 @ 1:18 pm
Ghost of John Brown said “We gave the politicians $10 for the pensions, they put the $10 in, but then the next day, withdrew $8 to pay for other things.”
Actually, that misstates the cause. The problem is they never put the $10 in at all; they might have put the $2 in. They never took money out of the pension fund, they just never put it in.
Comment by Retired Non-Union Guy Friday, Oct 14, 11 @ 1:21 pm
Actually, yes. Low taxes for EVERYONE. No loopholes. And low taxes in Illinois.
Comment by John Ruberry Friday, Oct 14, 11 @ 1:23 pm
Robert,
Retirement income in Illinois, including pensions, is not taxed at the State level (the Feds do tax most of it). Even if it was taxed, the State Constitution forbids a graduated income tax.
Comment by Retired Non-Union Guy Friday, Oct 14, 11 @ 1:23 pm
Pot
If there were only 4-5 teachers applying for each teaching position, I might agree with you. Since there are oftentimes dozens if not hundreds applying for those jobs, I don’t think we have a problem with quality.
Comment by Ghost of John Brown Friday, Oct 14, 11 @ 1:30 pm
Irish,
Good explanation.
I agree, the biggest mistake on them was Edgar agreeing to the State picking up the funding … that let the State play games on when they put in the funding, and we’re seeing how that has worked out in all the State pension funds.
The only way I see to show the true cost of the TRS pensions is to have each school district pay *all* the pension funding. But with that comes the hard question of how it is funded; is it with money from the State or is it with property taxes? Either way you cut it, there is probably a tax increase in the future .. the question is which tax. If you believe the State Constitution, most of the ed funding should be coming from the State. If you raise local property taxes, then you end up with “have” and “have not” school districts … not that we don’t now, but it would make the problem much worse.
Comment by Retired Non-Union Guy Friday, Oct 14, 11 @ 1:32 pm
==This saves taxpayer money in the long run. As a commenter noted, by not taking a pay raise, the teachers are foregoing higher pensions.==
Absolutely correct. And for other state employees, who participate in Social Security, the state would have to pay FICA tax to the feds on the direct pay raise, but not on employer pension contributions made in lieu of a pay raise, so “pick-up in lieu of pay raise” saves the state 7% off the top.
==sorry to be so dense on these matters - I assume there’s no way to apply a significant extra tax to all public pensions over, say, $50,000, rather than taxing that income at just 5%?==
Illinois doesn’t tax anyone’s pensions now, and taxing state retirees more than other retirees might be a bit of a problem under a number of constitutional provisions.
Comment by JustMe Friday, Oct 14, 11 @ 1:32 pm
I love how the name of this post is “Fun with Numbers” and the fact that Mr. Miller uses no numbers or research to defend his position that, “These pension pickups were negotiated by teachers unions, usually in lieu of pay raises.” I guess numbers are even more fun when you don’t have any.
Comment by bmcosti Friday, Oct 14, 11 @ 1:40 pm
bmcosti: Fair enough. In this case, the evidence is anecdotal, but it strongly supports what Rich wrote.
Comment by Pot calling kettle Friday, Oct 14, 11 @ 1:48 pm
bmcosti, perhaps unlike yourself, I have followed this issue over the years.
Comment by Rich Miller Friday, Oct 14, 11 @ 1:50 pm
Ghost of JB: There are fewer teaching positions due to school cut backs; however, that does not necessarily mean schools can cut pay.
Newly minted teachers and laid-off teachers will apply for, and probably accept, any position they can get. However, that does not remove them from the job market. Many (perhaps most) of these folks continue to apply for positions that are closer to their primary interest and/or pay more money. This keeps the number of applicants for a given position high, but also puts pressure on districts who want to retain the good teachers they have or attract them away from other districts.
Comment by Pot calling kettle Friday, Oct 14, 11 @ 2:01 pm
Pot, you correctly stated that salary drives the pension.
But it’s end of career salary that sets the mark. I’m willing to bet that the same contracts that include the district (employer) picking up the teacher (employee) pension contributions also kick in automatic raises in the final years of employment in order to maximize the pension annuity.
Comment by Michelle Flaherty Friday, Oct 14, 11 @ 2:50 pm
By the way, in my wife’s district, when it publishes teacher salaries it includes the district paid TRS contribution as salary, even though it isn’t in her paycheck (not even as gross pay).
Comment by titan Friday, Oct 14, 11 @ 2:54 pm
==I’m willing to bet that the same contracts that include the district (employer) picking up the teacher (employee) pension contributions also kick in automatic raises in the final years of employment in order to maximize the pension annuity.==
Maybe, but if the “kicker” is a percentage-of-wages raise each year for the last couple of years, the compensation in those years will be less if the school picked up the pension contributions in lieu of a raise.
Comment by JustMe Friday, Oct 14, 11 @ 3:17 pm
“So, the mayor moves that pension funding off his budget, but the schools will have to find a way to pay for it with more cuts.”
This is the same mayor who still insists he didn’t raise taxes (thereby keeping his campaign promise), the Board of Education did . . . .
Comment by The End Is Near Friday, Oct 14, 11 @ 3:23 pm
I don’t know what the teachers union did, but part of the reason the state pensions are in the mess they are is exactly that reason. About 20 years ago, I believe during the Edgar administration, the state negotiated an agreement with AFSCME to pick up 4% of the employees income as a pension payment in lieu of a pay raise. This arrangement continued for over 10 years. Around 2004 the new contract ended this arrangement. In the new collective bargaining agreement the state phased out these payments, giving the employees small raises each year, and reducing the pension contribution by an equal amount. Today the employee pension contribution is totally paid by the employees. The problem with the pension comes from the years the state was in violation of the collective bargaining agreement by not paying the agreed upon contribution. AFSCME is also at fault for failing to address adequetly the failure to fund these payments. Paying the pension payment in lieu of a pay raise reduces the state’s costs. In addition to reducing the future pensions of employees, other costs related to income are also reduced. These include life insurance, Social Security Tax, Medicare tax & unemployment insurance levies. These are cost savers and are not intellectually dishonest.
“What they don’t say is that taxpayers are gonna pay one way or another. These pension pickups were negotiated by teachers unions, usually in lieu of pay raises. So, the districts will either pay for raises or pick up pension payments. It’s a wash.” Are you sure about that Rich? Also, such maneuvers are intellectually dishonest and you are obviously on apologist for the teachers unions.”
Comment by Fed Up Friday, Oct 14, 11 @ 3:26 pm
@JustMe - “Maybe, but if the ‘kicker’ is a percentage-of-wages raise each year for the last couple of years, the compensation in those years will be less if the school picked up the pension contributions in lieu of a raise.”
TRS counts pension pickups as creditable earnings when calculating pension payments. http://trs.illinois.gov/subsections/employers/faq/calc.htm
Check out Chapter 3 Page 18 of this report to see how salaries are grossed up to cover the cost of the pension: http://trs.illinois.gov/subsections/employers/pubs/employerguide/2011EmployerGuide_print.pdf
Comment by MichaelQuotes Friday, Oct 14, 11 @ 3:27 pm
Fed Up
Actually, the State stuck religiously to the agreement. The State did pay the employees’ portion as required every year in lieu of the raise. The State *did not* pay the full (or even any some years) employer’s contribution.
The State gave the same deal to non-union staff. However, when the State ended the deal, the union people got a raise to make up for the dropped contribution; non-union people just got a pay cut from having to start paying the employee portion again.
The SERS system was routinely shorted by multiple administrations the last 30 some years. The only Gov to make all the required payments, which included part of the “ramp up” to fix previous shortages, was George Ryan.
Comment by Retired Non-Union Guy Friday, Oct 14, 11 @ 3:45 pm