Latest Post | Last 10 Posts | Archives
Previous Post: Federal judge says Illinoisans have no 2nd Amendment right to carry guns in public for self-protection
Next Post: *** LIVE COVERAGE *** Jacksonville Developmental Center closure hearing
Posted in:
* Senate President Cullerton wants an adjustment in the way public pensions are funded…
Depending on the other components of a pension bill, Cullerton said, the state could also consider revising its current goal of having the pension systems funded at 90 percent by 2045. That level was “artificially determined in 1995,” he said.
“I always thought 80 (percent) was the acceptable percentage,” Cullerton said. “A hundred percent would be if everybody retired on the same day, that’s how much money you’d have to have. Well, that doesn’t happen.”
As long as the state wasn’t also responsible for paying the interest every year on that remaining 20 percent unfunded liability, the idea would significantly lower the pension payments. I’m not sure how it will be received at the Statehouse, but this is a start.
* More Cullerton…
The idea is intended to be one component of an overall pension reform plan, which could also feature concessions by public employee unions in exchange for some sort of mechanism to make sure the state pays what it owes to the systems, said Cullerton, a Chicago Democrat. […]
One approach to the problem could be giving pension payments priority over other state obligations, similar to the status now enjoyed by bonds the state issues, Cullerton said.
This is not something that can be negotiated with the unions during collective bargaining. The state Constitution’s “contract” on pension benefits is with individuals, not collectively. And the mechanisms he’s referring to aren’t quite clear yet. Subscribers know a little bit more, but this isn’t going to be easy, either.
Thoughts?
posted by Rich Miller
Tuesday, Feb 7, 12 @ 10:08 am
Sorry, comments are closed at this time.
Previous Post: Federal judge says Illinoisans have no 2nd Amendment right to carry guns in public for self-protection
Next Post: *** LIVE COVERAGE *** Jacksonville Developmental Center closure hearing
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
I think Cullerton’s on the right track here. At least he’s putting out ideas that would pass constitutional muster. It’s a good starting point for discussions.
Comment by TwoFeetThick Tuesday, Feb 7, 12 @ 10:17 am
Nothing wrong with the proposal other then it masks the problem by lowering the annual contributions- This is just another kick the can down the road suggestion- why not legislate a maximum salary cap for pension credit of lets say 100K-this would satisfy everyone other then the highly paid suburban teachers and overpaid administrators-this suggestion would also pass constitutional scrutiny- anything similar to this would drastically drive down the unfunded liability immediately
Comment by Sue Tuesday, Feb 7, 12 @ 10:20 am
@Sue - but it doesn’t actually mask the problem, nor does it kick the can down the road. The real pension problem is the annual payments, which are especially high due to previous skipping of payments.
As for capping pensions… how would that pass constitutional muster, unless you grandfathered everyone in that is currently in the system.
Comment by dave Tuesday, Feb 7, 12 @ 10:24 am
Seems reasonable. Seventy percent seems reasonable, too.
Comment by wordslinger Tuesday, Feb 7, 12 @ 10:27 am
What is frightening about this is it’s deja vu all over again. The old law in place that required funding without legislative appropriation was changed by our legislators when budget times got tough. What’s to keep them from doing that again?
Comment by Soccertease Tuesday, Feb 7, 12 @ 10:30 am
I do not think the over 100Ker’s have the political juice to fight this in court. The state can say the current payments are not a priority and strech the proceedings forever.
Just my opinion. It beats the heck out of speed cameras as a political sell.
Comment by gg Tuesday, Feb 7, 12 @ 10:30 am
of course it masks the problem since funding at 80 percent solely lessens the state contribution and does deal with the real problem of future payment obligations- the pension clause doesn’t assure a guaranty that the state doesn’t impose a salary cap for future contributions- this wouldn’t result in a loss of any existing credited service- alternatively- the state could by statute impose a salary cap on all educational employees so that the pension contribution would be similarly limited- say 100K for teachers and 150k for administrators adjusted annually for inflation
Comment by Sue Tuesday, Feb 7, 12 @ 10:31 am
==this suggestion would also pass constitutional scrutiny==
No it wouldn’t for anyone hired before Jan. 1 of last year. This notion that the unions have the ability to negotiate violations of the Constitution is false. This zeal to punish public employees is all part of a well financed pr campaign fostered by special interests who don’t want to pay their fair share.
Comment by Bill Tuesday, Feb 7, 12 @ 10:33 am
==the pension clause doesn’t assure a guaranty that the state doesn’t impose a salary cap for future contributions==
Yes it does. There was no cap when the employee was hired so to impose one now would be impairment.
==the state could by statute impose a salary cap on all educational employees so that the pension contribution would be similarly limited- say 100K for teachers and 150k for administrators adjusted annually for inflation==
Where are we? Wisconsin? Indiana?
Comment by Bill Tuesday, Feb 7, 12 @ 10:38 am
**the pension clause doesn’t assure a guaranty that the state doesn’t impose a salary cap for future contributions**
So, like I said, you’d have to grandfather everyone in.
**of course it masks the problem since funding at 80 percent solely lessens the state contribution and does deal with the real problem of future payment obligations**
It just lowers what the target funding level is, which right now is absurdly high. Do you really think that 90% of state employees are going to retire at the same time?
Comment by dave Tuesday, Feb 7, 12 @ 10:40 am
Bill- what is fair about administrators in the TRS taking down 300K a year and retiring with pensions costing the state tens of millions of dollars- not many teachers would oppose salary caps for administrators nor even salary caps for teachers if reasonable and force the TRS to provide reasonable pensions and not multi- million dollar income streams
Comment by Sue Tuesday, Feb 7, 12 @ 10:40 am
This seems sensible. Especially if there can be legislation to require the state to never skip their annual payments again.
Any idea on how much this would reduce the state’s annual contribution amount?
Comment by Cassiopeia Tuesday, Feb 7, 12 @ 10:41 am
You could canacel all administator pensions and not make a dent in the debt. The problem is not the benefit it is the unpaid debt that the state has run up over the decades in order to keep taxes artificially low.
Comment by Bill Tuesday, Feb 7, 12 @ 10:49 am
I don’t understand why any state employee would agree to this pension deal. So the employee has to give up 3% of his/her salary to secure a promise (let’s ignore the fact that it’s a promise from a lawmakers) that the state will pay into the pension fund the money they are already entitled to? Seems pretty silly to me.
That’s ignoring the fact that the lawmakers & Governors have been hammered lately for being irresponsible with pension payments…..it’s something that I doubt the legislature/Governor would ever do again, regardless of this promise. I just think there is too much voter awareness of this now & they can’t get away with it any longer.
They’d have to sweeten the deal a helluva lot for me to willingly allow my constitutional right as a state employee to be diminished.
Comment by TCB Tuesday, Feb 7, 12 @ 10:50 am
This is a 1st step,on a long road to get this mess
straigtened out.A ton of other ajustments should
be moved on and quickly.The notion that we can wait till the next election is over is nonsence. Our legislators must get moving,afterall they are being paid quite hamdsomely to do their job.
Probaly the best jobs in the State, surly the best
partime job in the world.
Comment by mokenavince Tuesday, Feb 7, 12 @ 10:57 am
TCB,
the incentive is that without pension savings the cost of the annual payments will ensure there are fewer and fewer state workers. this year it’s the raises. Next year its closing facilities, they year after that … you can start to see how this is going to go unless something changes.
Comment by Michelle Flaherty Tuesday, Feb 7, 12 @ 10:59 am
If 90 percent was arbitrary, why go 80? Why not 50? Or 30? Or how about pay-as-you-go, funding it as folks actually retire?
Sheesh.
Comment by Anonymous Tuesday, Feb 7, 12 @ 11:09 am
This does nothing to solve the problem since future obligations are unchanged.
However, 80% seems like a chance in hell of reaching, while 90% seems more like no chance in hell.
Anyone know what % funded pensions are now? Are we at 50%, 60%, what?
Comment by Robert Tuesday, Feb 7, 12 @ 11:10 am
===Or how about pay-as-you-go, funding it as folks actually retire?===
That’s how Dept. of Defense pensions are paid.
Comment by Rich Miller Tuesday, Feb 7, 12 @ 11:11 am
Michelle,
I guess it comes down to how essential you believe you/your position/your facility/your agency is to state government.
It should be noted that the majority of state employees are pretty far along in their careers……which is also a factor. If I were an employee with a retirement date in the near future & someone said I could give up 3% of my salary for guaranteed free premiums, I’d imagine that I’d be all over that.
Comment by TCB Tuesday, Feb 7, 12 @ 11:13 am
Rich- pay as you go doesn’t work as more folks retire and their longevity increases- we are not many years off from when the Systems are paying more people pension benefits then we have employees working- you have to reduce the future payment stream one way or the other or the programs will go broke absent obscene tax increases
Comment by Sue Tuesday, Feb 7, 12 @ 11:23 am
==There was no cap when the employee was hired so to impose one now would be impairment.==
This is the single greatest myth in Illinois politics. It’s simple contract law. There’s no such thing as an impairment on benefits that haven’t actually been earned. The point of reference is the date the benefits were earned, not the hire date. So long as the previously earned benefits are grandfathered in, the state can do whatever the hell it wants.
Comment by Jimbo Tuesday, Feb 7, 12 @ 11:24 am
Sue, I wasn’t arguing for PayGo. I was simply pointing out a fact.
Comment by Rich Miller Tuesday, Feb 7, 12 @ 11:28 am
Yeah, Jimbo. That’s what the right-wingers in Arizona thought too.
Comment by Bill Tuesday, Feb 7, 12 @ 11:30 am
Always pains me a bit to say this, but Bill is absolutely correct on the impairment issue. Pension law is much more than simple contract law.
Comment by Arthur Andersen Tuesday, Feb 7, 12 @ 11:38 am
75-80% funding level should be fine. Not everyone retires at once. Capping the high end pensions and adjusting for inflation seems like a common sense step. Not sure if that can be done for current employees or just new hires. I completely agree that it is cullerton, Madigan, Quinn and the inept politicians on both sides that caused this problem not the teachers or state workers.
Comment by Fed up Tuesday, Feb 7, 12 @ 11:39 am
If you aren’t a fan of Illinois judges now, wait until you see the caliber of judge willing to sit for a capped $100k salary pension. On the plus side, they’ll never retire and take the pay cut.
Same probably for doctors at county hospitals.
Comment by Edison Parker Tuesday, Feb 7, 12 @ 11:46 am
==As long as the state wasn’t also responsible for paying the interest every year on that remaining 20 percent unfunded liability, the idea would significantly lower the pension payments.==
That’s the whole problem — the state IS responsible for “interest” on the underfunding, and there is no way around it. Cullerton’s characterization of the full funding amount as providing for “if everyone retired today” is wrong. Full funding is the amount that you would have to put into a bank account that pays interest equal to the investment return assumed by the actuaries so that the contributions plus all the future earnings put enough money in the account to pay the pensions as they come due. If the assumption were that they would all retire today, you would need more funding because you would have to start paying pensions to everyone today. The assumption is that some current participants will retire today and others 35 years from now, and that contributions made today for the 35-years-in-future retiree will earn compound interest for that time before any payout is needed. If we don’t fund that amount today, we will have to pay the interest the contribution should have earned, compounded, when we do get around to funding the plan or paying the pension. Anything less than full funding is kicking the can down the road. 10% or 20% underfunding might not hurt much, but the much larger underfunding over the past few decades are killing us now. Trying to catch up today is painful, waiting until 20 years from now will hurt worse.
Comment by anonymice Tuesday, Feb 7, 12 @ 11:46 am
Sounds like a lot of common sense to me - kind of refreshing for a change!
Comment by Kerfuffle Tuesday, Feb 7, 12 @ 11:56 am
Jimbo,
Illinois court cases say otherwise.
Go read the paper prepared by Cullerton’s Chief Legal Counsel. It pretty much spells out where things stand and lists all the applicable court cases.
http://www.niu.edu/statebudget/pension_reform/_pdf/Pension%20Clause%20Article%20Final.pdf
Comment by Retired Non-Union Guy Tuesday, Feb 7, 12 @ 12:10 pm
Robert,
Last figures I saw had the funding around 50%. It may be a bit higher now as the stock market slowly recovers …
Comment by Retired Non-Union Guy Tuesday, Feb 7, 12 @ 12:12 pm
What I see here is the beginning of a process in earnest to address the problem. When the leaders of the majority caucuses are talking about a problem, it is moving up the agenda rapidly.
Comment by steve schnorf Tuesday, Feb 7, 12 @ 12:28 pm
I hearby rescind my snarky comment yesterday about Cullerton not trying to pass a balanced judgement. This blog post makes it seem like he is going to make a good effort at some common sense reform this year, and that type of attitude by a member of the General Assembly (even this loser one) should be honored instead of made fun of.
Comment by Its Just Me Tuesday, Feb 7, 12 @ 12:37 pm
Anonymice, if you are right, then I would assume that if we could obtain Pension Obligation Bonds at a lower interest rate than the actuarially determined investment return rate, that we should consider that in terms of lowering the state’s pension interest expense.
Comment by PublicServant Tuesday, Feb 7, 12 @ 12:42 pm
Does anyone actually know how much the average pension is for a state employee with 25-30 years of service? I can tell you it is not the $27,000 that the unions often quote.
Comment by Don't Worry About the Government Tuesday, Feb 7, 12 @ 1:09 pm
Don’t Worry,
It depends on how you define State employee. Are we including teachers, administrators, superintendents, university employees, judges, legislative, or just the members of SERS?
For SERS, go read the annual report. You have to dig a bit on multiple pages (16,31) and do some math but it is all there:
For year ending June, 2010, average annual payment (all figures rounded to nearest dollar):
retiree (pension) - $27,100
survivor - $8,676
disability - $19,602
If you lump them together, the average is $23,532
If you bump the $27,100 average up by 3% compounded two years (2011, 2012) then the number is probably around $28,750 today. It could be a bit more or less depending on the mortality rate and the retirement rate the past year and a half … I don’t have access to those numbers.
If you want to know about the others, they have annual reports also …
Comment by Retired Non-Union Guy Tuesday, Feb 7, 12 @ 1:56 pm
Forgot the SERS FY10 report link
http://www.state.il.us/srs/PDFILES/oldAnnuals/SERS10.pdf
Comment by Retired Non-Union Guy Tuesday, Feb 7, 12 @ 2:00 pm
For a state employee on the standard formula, making $50k/yr with 30 years of service: 1.67% X 30 X $50,000 = $25,050/yr pension.
Comment by AC Tuesday, Feb 7, 12 @ 2:00 pm
Using the Google, the Illinois Retirement Security Initiative (which says it’s a project of the Center for Tax and Budget Accountability) says the typical SERS retiree is 69 years old and has served for 25-30 years. If they also receive Social Security (which it notes is most of them), they receive a monthly benefit of $1,798.12, which works out to $21,577.44/year. Obviously, they’re rolling in it.
Comment by TwoFeetThick Tuesday, Feb 7, 12 @ 2:01 pm
So, Don’t Worry About the Government, the answer to your question, from three different people, is a pension in the low-to-mid $20’s.
Comment by TwoFeetThick Tuesday, Feb 7, 12 @ 2:08 pm
Point proved. Capping contributions at 100K going forward would solve a number of problems … most important the perception of fraud and gaming by the politicians.
Comment by gg Tuesday, Feb 7, 12 @ 2:16 pm
Thanks non union guy. That was a great attachment. Thank you for the info.
Comment by anaonymouse Tuesday, Feb 7, 12 @ 2:34 pm
Interesting. Retired Non-Union Guy seems to have the numbers that I often hear. The problem is that these numbers do not account the pension recipients who are bringing down the average.
Two Feet Thick- I looked at the Illinois Retirement Security Initiative and it says that a “typical SERS retiree is 69 years old and has
served Illinois for 25 to 30 years” but this still doesn’t account for those who worked for 5, 10 and 15 years. My problem is that the report doesn’t define typical nor does it show how much a state employee who has dedicated their career to serving Illinois receives in annual pension payments.
I think this is a point worth noting considering if you only worked for the state for 10 years, then at some point you probably paid into Social Security and/or a 401k or another type of investment yet your $5k annual pension is still factored in when lumping all pension recipients together, leaving us with a lowball number.
Comment by Don't Worry About the Government Tuesday, Feb 7, 12 @ 2:39 pm
anaonymouse
You’re welcome.
Since the SERS reports are easy to find, I’m assuming you’re referring to the pension clause analysis paper. I stumbled on it a while back. Between the historical context and current analysis, it should be required reading …
Comment by Retired Non-Union Guy Tuesday, Feb 7, 12 @ 2:46 pm
The funding target should be 100%, not 80% or even the current 90%. Contemplating reducing it would lower current payments, but is very shortsighted. Investment returns account for 80% of the cost of benefits paid. If the systems don’t have the assets to invest, the state will have to make it up in contributions which is real money and must come from state revenue sources. For example, in 2045 the total state unfunded liability (according to CoGFA) will be $32.4 billion at the 90% funding level. The state will have to continue making contributions of almost $3 billion (at an average rate of 8.2%) in order to maintain the 90% funding level. If that level were to be changed to 80%, $6 billion would be required to maintain that funding level. The taxpayers would actually be paying to maintain this funding level. If the systems were funded at 100%, they would have the $32.5 billion and be earning interest on it.
Comment by Did the Math Tuesday, Feb 7, 12 @ 2:47 pm
Don’t worry - If you want to know what a state employee receives in pension after 30 years and leave out the impact of short-timers, use the formula. It’s about 50% of their final average compensation. A $100,000 a year upper manager would get $50,0000.
Comment by 332bill Tuesday, Feb 7, 12 @ 2:54 pm
Please revise my previous post due to a “rounding” error. Maintaining the 90% funding level would cost $2.66 billion and the cost of maintaining funding at the 80% level would be $5.32 billion.
Comment by Did the Math Tuesday, Feb 7, 12 @ 2:58 pm
Just to make sure everyone’s aware, Tier 2 includes a maximum pensionable salary. I think it’s 106K, which mirrors Social Security max for contributions.
Comment by Michelle Flaherty Tuesday, Feb 7, 12 @ 3:00 pm
but not many people get to the $100,000 salary under SERS, so that still misleading; an average Joe or Jane will get, in fact, between $25,000 and $30,000.
Comment by steve schnorf Tuesday, Feb 7, 12 @ 3:02 pm
Steve, I agree about the 100k. I was trying to show that even an upper manager does not exactly make out like a bandit after 30 years.
Comment by 332bill Tuesday, Feb 7, 12 @ 3:10 pm
Thanks for the insights folks. I think it would make an interesting study if someone were to create “years of service” tiered system that would show the average pension of those who worked 7-10, 10-15, 15-20, 25-30, 35-40 etc. for all five retirement systems. That way everyone can get a clearer idea of what the “average” pension recipient receives.
Comment by Don't Worry About the Government Tuesday, Feb 7, 12 @ 3:11 pm
Schnorf is correct. This is progress.
Does anyone know where the 90% target came from? Because I sure don’t.
I’ve heard many outside state budget experts suggest 80% is sufficient, including the fiscally conservative Pew Center.
Maybe the credit rating agencies have a different view. We SHOULD take that into account.
On the otherhand, the credit rating agencies don’t have kids in Illinois schools, so they don’t particularly care if public education is gutted to reduce our pension obligations.
Its our job to care about that though, and a whole lot more. The whole big picture Common Good stuff Clint Eastwood was talking about.
Speaking of which, lets stop Caricaturing Illinois public employees as narrowly self interested. Yes, they want the retirement they were promised and paid for. Yes, they want a system that is solvent. But they are also our neighbors, parents…people who share our values and common goals for Illinois. You’ll get much further in the discussion by remembering that.
And if you put forth a plan thats fair and puts Illinois on a sustainable path for a prosperous future, I think you’ll be surprised how quickly and how many get on board.
What’s fair? Well, I think it ought to include guarantees that their sacrifices will be used to protect the things they care about the most: not just the solvency of the pension fund, but the vitality of our public schools and other core state services we as a people value.
Secondly, the working class shouldn’t be asked to bear this burden alone. I’ve heard alot of business lobbyists and wealthy Illinoisans argue that we’re facing a crisis in Illinois. But I’ve heard precious few argue that we should close corporate tax loopholes, decouple the corporate income tax rate from the individual tax rate, or enact a progressive income tax.
Its kinda like yelling “Fire!” in a crowded theater and then arguing its someone else’s job to put it out while you eat all their popcorn.
BTW, that goes double for the newspaper industry, beneficiaries of some of the biggest tax breaks in Illinois.
Anyway, that’s my idea of a grand bargain.
Comment by Yellow Dog Democrat Tuesday, Feb 7, 12 @ 3:22 pm
Don’t Worry,
SS doesn’t really have anything to do with State pensions. If you paid into SS, you are entitled to it. Unless you are one of the few still under the original non-coordinated plan (or a teacher), then you are entitled to SS. In some cases, there are offset rules that apply.
Finally, unless the SERS rules have changed, you aren’t entitled to any benefits (except a refund of your contributions) with less than 8 years of credible service. And the ‘free’ health insurance doesn’t vest until the 20 year mark. These rules were intended to ensure long term commitment to State employment. Except for a smattering of people who used to get state work (for the health insurance when the rule was 8 years) after they retired from the private sector, most retirees were long term employees.
If you really want to know what State retirees get, there is a web site that lists all of us by name … but it doesn’t have our service time.
Comment by Retired Non-Union Guy Tuesday, Feb 7, 12 @ 3:23 pm
Don’t Worry,
Re your desire for charts, etc. I have two lines of advice for you:
The truth is out there.
Google is your friend.
Comment by Retired Non-Union Guy Tuesday, Feb 7, 12 @ 3:33 pm
Unfortunately, the service time is one of the most important numbers when breaking pension recipients into tiers.
My point with SS is that a state employee who only worked for 15 years for the state likely has other sources of retirement income. Chances are they worked somewhere else for the 25+ years that they could have been gainfully employed.
I’m sure the info has been FOIA’d.
Comment by Don't Worry About the Government Tuesday, Feb 7, 12 @ 3:39 pm
Just an intermission:
–Illinois was admitted to the union in 1818.
–It’s an ongoing concern.–
–It’s never blown off a pension or GO debt payment.–
–There have been some challenging times in Illinois since 1818.–
–Somehow, it gets done.–
–Some low-hanging fruit is crazy-low interest rates on short-term debt for a portion of the state backlog on bills.
–At some point, it’s all math.
Comment by wordslinger Tuesday, Feb 7, 12 @ 3:44 pm
Don’t Worry,
What does other retirement income have to do with it? Whether they worked 8 years, 15 years or 45 years, they earned what they were promised and are legally entitled to.
It would be the same as saying that because you worked for Ford and have a big pension coming, then you shouldn’t get SS also. Or because you spent 20 years in the military and have a government pension coming, you shouldn’t get a pension from Ford where you also worked 25 years.
Comment by Retired Non-Union Guy Tuesday, Feb 7, 12 @ 4:00 pm
Because “the average pension recipient only makes $27k” is misleading at best. It makes people think that people who depend solely on their pension are scraping by on $27k a year.
Forget about the other retirement income such as SS for a moment. If you tell the average taxpayer (and pension recipient) that a state employee who served for 25-30 years is drawing 38k as opposed to 27k, then it might open up the door, in terms of support, for some sort of pension reform.
Compromise has to be found somewhere and the best way to get there is to have all the information on the table, and we should make that information as detailed as possible.
Comment by Don't Worry About the Government Tuesday, Feb 7, 12 @ 4:15 pm
OK, so the current State Constitution guarantees the employees’ pensions, and they’re going to pay an extra 3% to actually … what? … double super secret guarantee … payment?
And if a waiver of health premiums is a benefit tothe employee, doesn’t that mean it would be an EXTRA cost to the state?
Comment by titan Tuesday, Feb 7, 12 @ 4:38 pm
A few thoughts:
Word is as always spot-on when he noted that this State has seen tough times before and never failed to meet the challenge.
If the discussion on pension funding devolves into a debate about the size of individuals’ pensions, the chances of finding a solution will decrease.
The 90% target is not a magic number-it was derived along with the 15 year ramp and 50 year plan back in 1994 based on affordability at the time. However, as other posters have noted, moving the target now means short-term savings at long-term cost, just like the ramp. .
There are other financial issues involving pensions that never seem to get aired, and they should at this juncture, including the substantial and persistent underperformance of the investments of one of the three entities responsible for investing State pension assets.
Comment by Arthur Andersen Tuesday, Feb 7, 12 @ 4:42 pm
@Don’t Worry -
Hey, I don’t know if you checked your email yet today, but our boss sent out a doozy.
It turns out that our company wanted to return higher dividends to the shareholders, so the board of directors and the CEO decided not to make their required payments to our 401k match that they promised us. For the past 15 years.
Obviously, this is a real fiscal crisis for the company. We don’t want the company’s stock to tank — even though the stockholders benefitted from all this malfeasance…and, afterall, they did vote to elect the board.
So the Big Boss has decided that the only thing to do is have the employees like us kick in 100% to make up for what they failed to pay. But hey, atleast its only 15 years!
Sarcastically,
Dilbert
Comment by Yellow Dog Democrat Tuesday, Feb 7, 12 @ 4:53 pm
Dear Yellow Dog Democrat,
This kind of thing doesn’t happen in the private sector without repercussions. Your business will be shut down, your upper management and board will be convicted of fraud and go to prison. You will lose your job.
Realistically Yours,
Wally
Comment by Don't Worry About the Government Tuesday, Feb 7, 12 @ 5:38 pm
Don’t Worry @ 4:15,
Actually, some people do have to scrape by on just their State pension. Because she was on the old non-coordinated system, my mom only gets her State pension. SS offset rules prevent her from drawing SS survivors benefits; the only thing all my dad’s FICA payments bought her was the right to purchase, repeat, purchase Medicare part A (which anyone who paid FICA gets for free).
Comment by Retired Non-Union Guy Tuesday, Feb 7, 12 @ 5:47 pm
Everyone assumes that pensions cannot be changed because the IL constitution cannot be changed. why? It was adopted in 1970, and allows for amendments. In fact I heard a discussion on wttw proposing an amendment to allow progressive state income tax. Why not amend to remove the line about “not diminishing” pensions? Yes, they deserve a pension that is at least as big as social security (maybe 2x social security). But
Teachers who retired after 30 or more years on the job (full career) between July 1, 2009 and June 30, 2010 averaged $65,109 per year as their starting pension.
According to teacherportal.com the average starting salary for a teacher in Illinois is $37,500 and average for all teachers is $58,686. Thus, the an average retired teacher who worked 30 years will recieve more in yearly pension than the average active teacher earns.
quickfacts.census.gov places the Median household income 2006-2010 for the state of Illinois at $55,735.
Pensions are simply too big. IL cannot afford everything that has been promised.
Comment by jans Wednesday, Feb 8, 12 @ 12:23 am
There is a model pension right her in Illinois which works. The pension benefits and employee contributions are similar to the SERS.
THe difference is that the Illinois Municipal Retirement Fund requires that downstate local governments actually make the actuarial required contribution because there is a collection mechanism if they don’t.
The result is that the IMRF is well funded and 60% of the cost of the pensions is covered from the return on investment of contributions. The employer cost is less than 30% 0f the benefit.
Why not try something that works?
Comment by TRUTHTELLER Wednesday, Feb 8, 12 @ 6:08 am
Jan, you need to read up on ex-post-facto “laws” and their legality. Secondly, Illinois could have, and still can, afford what was constitutionally promised. The problem has been identified. Its the state’s failure to pay the employer share over the course of the last 3-4 decades. Fix the problem. FYI…It’s not that the pensions are “bloated”. The state’s promise was reasonable. People worked for the state because of it. People made investment decisions because of it, and people continued to work for the state through years of no salary increases, and weathered furloughs because the pension made continuing employment worth it. The pension is deferred compensation. It’s a sunk cost, not a future benefit due to the prior actions that people have taken because the the law that existed during their lifetime of employment.
Taxpayers benefitted from the state’s non-payment, and they should be the ones with some “skin in the game” because of the prior benefit to them of, in effect, state employee funding of Illinois priorities as enacted by your representatives. Change my pension now, and I’ll see you in court, and I’ll win.
Comment by PublicServant Wednesday, Feb 8, 12 @ 7:04 am
jans @12:23
You can’t retroactively change a contract arbitrarily. Basic law; both US and IL says so. The pension clause specifically states it is a contract.
If you argue you are only changing it going forward, there are multiple Illinois (and New York, which the IL clause is based on) court decisions saying the rules in place on the day of hiring are what applies.
If you want citations, read the 75 page document I referenced @ 12:10.
Comment by Retired Non-Union Guy Wednesday, Feb 8, 12 @ 8:57 am
And to follow up on RNUG, the courts ruled that changes to the Constitution can’t be retroactive in effect either.
Although no one has told me what would happen if you amended out the prohibition on ex post facto laws.
Oh, except the entire collapse of our economy.
Its called “Keeping a promise.”
Comment by Yellow Dog Democrat Wednesday, Feb 8, 12 @ 10:55 pm
PublicServant you are absolutely correct. Why hasn’t anyone thought of changing how Illinois politicians laws work. They need to follow the same pension the rest of the public servants do. A percentage per year of their service to this State. Currently, all they have to serve is one year and they receive full pension benefits. How about we limit their terms and only give them what they have earned. This may solve all of our problems. Maybe there is a mathmatician out there who can see what the cost savings would be. Challenge accepted?
Comment by AnotherPublicServant Thursday, Feb 9, 12 @ 10:50 am