Mike Tryon: “What I Hear Everywhere Is, ‘We Want More Money.’ There Is No More Money.”
That comment by State Rep. Mike Tryon (R-Crystal Lake) pretty much summed up the District 300 Legislative Committee meeting at Jacobs High School Tuesday night.
State Reps. Mike Tryon and Keith Farnham, plus State Senator Karen McConnaughay await questions at the District 300 Legislative Committee meeting.
Tryon succinctly summarized the state’s financial situation at the end of the meeting in answer to a compound question, part of which was whethe3r the two local legislators present–Tryon and State Senator Karen McConnaughay–favored prorating State Aid to Education payments.
Elaine Neckritz
Traveling from her North Shore district to discuss pension reform, Democrat State Rep. Elaine Nekritz explained that State Aid to Education has been prorated at 85% of what the formula dictated.
Tryon pointed out that with a 1.2% increase in the state economy, State Aid payments could not keep up with teacher salary increases of 2-2.5%.
“It won’t work,” he said.
Several times the trade-off on pension responsibility from state taxpayers to local property taxpayers was advanced by low taxed Chicago politicians was discussed.
To put the disparity of real estate tax burdens in perspective, Tryon told of House Speaker Mike Madigan’s tax bill of $4,900 on his $341,000 home in Chicago.
A tax bill in Crystal Lake on a $341,000 home would be $12,000, Tryon pointed out.
“We can’t afford anymore money on our property tax.”
There was a pretty good crowd of students, teachers, staff and residents at the Legislative Committee meeting.
Tryon did say he was amenable to talking about a trade-off, if the money saved was put into the State Aid Formula for the districts where the shift occurred, if I understood what he said.
Before he left for another engagement, commenting on the state’s fiscal condition, State Rep. Keith Farnham (D-Elgin) said, “I really don’t believe we can totally cut our way out of this.”
Freshman State Senator McConnaughay added, “There are more needs than there are available dollars.”
She added, “If the state can’t pay its bills, there’s no way to avoid…difficult choices without shared pain on the part of all.”
Shared pain for all except teachers unions. Yup!
1Where is the talk about illegal aliens?
Illegal aliens get FREE school lunches.
The USDA does not permit the validation of applications.
The federal government STOPPED the state from verifying incomes AND legal residency for Medicaid!
Meanwhile the State is granting driver licenses to illegal aliens while Cook County will NOT hold for ICE any illegal aliens arrested!
We have become a nation of laws with selective enforcement.
Those elected to office are practicing crony capitalism!
Before you vote for anyone, check to see where their campaign funding comes from. http://www.elections.state.il.us/CampaignDisclosure/CandidateSearch.aspx
BTW Keep your eye on SB0043: “Amends the Property Tax Extension Limitation Law in the Property Tax Code. Provides that language providing that a new rate may not exceed the statutory ceiling above which the tax is not authorized to be increased applies only for levy years 2005 through 2012.”
2@Another watcher, quit whining!
Undocumented immigrants are here and are here to stay, as long as they don’t commit any real crimes while they are here.
Like it or not, like gay marriage, a pathway to citizenship for the undocumented who have clean records will be the law of the land, soon, and polling says Americans support it, like they now support gay marriage.
Selective enforcement?
That happens all the time (think of the person going 1 mile over the speed limit, police rarely stop them, but go after the jerk going 10 over instead).
Get used to it.
3@Another watcher- that’s right; underpriviledged children get free meals.
And I suppose the underprivileged children whose parents came to the country illegally should surrender to INS.
You are every bit as ignorant as the individual I was speaking to yesterday, that felt our president was not fit to serve because his parents fed him foods Americans do not eat.
Somehow, this disturbed individual thought that an 8 year old Barack Obama had some kind of autonomy over his meal choices.
To me, your moral compass is either guided by a mental defect, or else your parents and teachers failed you completely.
Seek professional help.
4Stay tuned. I am seeking professional help.
5The problem with teacher pensions is benefit increases passed by State legislators and Governors after the pension protection clause was added to the Illinois State Constitution at the 1970 Constitutional Convention.
COGFA claims otherwise.
Hogwash.
Even as the State was not making its full pension contribution, pension benefits were increased.
That is completely insane.
That’s like saying I can’t afford payments on a $300,000 house, so let’s buy a $500,000 house.
Wake up.
Don’t believe me.
Look up the information yourself.
Do your own research.
Because the press and legislators and Governors and COGFA and eveyone else can not talk about it, but the numbers are all there if you do the research.
And for all the rhetoric about teachers and administrators and legislators and Governors and lobbyists and unions not being trusted and appreciated, it was trust and appreciation that allowed this mess to evolve.
And they all are to blame.
A complete fiscal meltdown and political disaster.
It’s amazing it was all illegal.
The legal ineptness is worse than the illegal corruption.
Campaign Contributions and votes in exchange for favorable legislation.
6I meant to say it’s amazing it wasn’t illegal.
7To understand why benefit increases are the problem, you have to understand how teacher/administrator pensions are calculated, and identify the benefit increases.
First of all, the rules exchanged for teachers/admin beginning employment prior to Jan 1, 2011, and that includes substitute teaching one day.
There are exceptions and I’ll oversimplify for clarification, but in general, here’s the teacher/admin pension formula.
Years worked x accrual rate = factor.
Factor x final salary = pension.
Let’s look at each input.
Years worked is actually years of service.
Years of service is typically more than years worked.
Because teachers/admin can exchange accumulated sick leave for years of service.
In 1970, teachers/admin could accumulate 90 days sick leave.
In 2011, teachers/admin can accumulate 360 days sick leave.
A teacher works 180 days a year.
Collective Bargaining agreements typically allow 12-15 sick days a year.
So many teachers work 33 years, exchange 2 years sick leave, resulting in 35 years of service, which results in full retirement benefits.
Do you get full social security benefits after 33 years worked?
I’ll continue at another time.
8In 1970 the benefit rules were 45 years worked for full benefits.
In 2011 the benefit rules are 33 years worked for full benefits if you exchange 2 years accumulated sick leave.
In 2011 the benefit rules are 35 years worked for full benefits if you don’t exchange any accumulated sick leave, assuming there is no other way to obtain years of service credit.
Well, there are other ways to obtain years of service credit.
It’s called Early Retirement Option (ERO).
Another benefit added after 1970.
ERO allows the employee and employer to jointly “buy” years of service credit.
Can your employer “buy” social security credits?
Can you “buy” social security credits?
It’s unbelievable.
9Actually the 2012 rules are the same as 2011 rules for teachers/admin beginning their employment prior to 2011.
Now this example just looked at years worked.
See how it works?
Just change the pension rules to increase pensions.
In other words, change the pension benefit rules to increase pensions.
In other words, State Representatives and State Senators passed legislation to increase pensions, which Governors signed into law.
It’s magic.
Want a bigger pension.
Just change the pension rules.
Government for special interests.
Campaign contributions and votes in exchange for favorable legislation.
10Now let’s look at accrual rate.
11Remember, Years of Service x Accrual Rate = Factor.
Factor x Final Pay = Pension.
In 1970 accrual rate was 1.5%.
In 2012, accrual rate is 2.2%.
The longer you work, the bigger the effect of changing the accrual rate.
And changing the accrual rate, allows you to more quickly reach the maximum factor.
Let’s say the teacher worked 33 years, exchanged 2 years accumulated sick leave for 2 years of service credits, retires with 35 Years of Service.
35 x .015 = .525
35 x .022 = .770
The maximum factor is .75.
So 1970, Factor after 35 Years of Service is .525.
In 2011 or 2012, Factor after 35 Years of Service is .75.
That dramatically increases your pension.
Because Factor x Final Salary = Starting Pension.
Now let’s look at Final Salary.
12Typically Final Salary is actually average of last 4 years Salary x .75.
Let’s say Last 4 Years Salary were:
$090,000
$095,400
$101,124
$107,191
$393,715 Total / 4 = $98,429 Average Last 4 Years Salary.
$98,429 x .75 Factor = $73,822 starting pension.
The salary increases were 6% which has been the norm for retiring suburban school teachers although that’s being phased out or abruptly changed in many school districts.
What if Factor was .525 as it was if the benefit rules in place in 1970 were used?
$98,429 x .525 = $51,675.
Now how can you not talk about benefit level increases?
Benefit level increases just increased that pension from $51,675 to $73,822.
$73,822 – $51,675 = $22,147.
And the teacher retired after 33 or 35 years worked instead of 45 years worked.
Which means the pension contributions had less time to accumulate investment returns.
And also means the recipient will receive a pension for a longer period of time.
Now let’s look at Cost of Living Adjustment (COLA).
COLA for teachers/admin in 1970 was 1.5% not compounded.
COLA for teachers/admin retiring in 2011 or 2012 is 3% compounded.
Not compounded, the yearly dollar COLA increase remains constant.
Compounded, the year dollar COLA increase, increases each year.
Let’s look at an example.
1970 rules using 1.5% accrual rate, not compounded
$51,675 x .015 = $775.
Each year teacher/admin will receive a $775 COLA increase.
2011/12 rules using 2.2% accrual rate with 75% max Factor, COLA 3% compounded.
$73,822 Starting Pension.
$73,822 x .03 = $2,214 Year 1 COLA increase.
$73,822 + $2,214 = $76,036 Year 2 pension.
$76,036 x .03 = $2,281 Year 2 COLA increase.
$76,036 + $2,281 = $78,317 Year 3 pension.
$78,317 x .03 = $2,349 Year 3 COLA increase.
See how that works.
1.5% Accrual Rate with COLA 1.5% not compounded results in $775 annual COLA increase.
2.2% Accrual Rate with 75% max Factor with COLA 3% compounded results in $2,214 Year 1 COLA increase,
$2,281 Year 2 COLA increase, and $2,349 Year 2 COLA increase.
Thanks to benefit level increases to the Accrual Rate and COLA.
Thanks to your State Legislators and Governors.
Campaign contributions and votes in exchange for favorable legislation.
Government for Special Interests.
13Why can’t we just revert to 1970 benefit levels, since 2011/2012 benefit levels are unaffordable?
Because the pension protection clause added to the IL State Constitution at the 1970 Constitutional Convention states pensions can’t be “diminished or impaired.”
Benefit levels can be increased.
Which they were.
But they can’t be decreased once they are earned if they are unaffordable.
Can you imagine a private company being held hostage to the IL State Constitution?
But it’s all legal for State pensions thanks to the 1970 Constitutional Convention.
Michael Madigan was a delegate at the 1970 Constitutional Convention and first elected as State Rep in 1970, assuming office in 1971.
14Let’s go back to the Illinois public school teacher/administrator pension formula.
Years of Service x Accrual Rate = Factor.
Factor x Final Pay = Starting Pension.
What benefits increases from 1971 – 2011 affected each input?
Years of Service: Increase max sick days from 90 to 360.
Accrual Rate: Increased from 1.5% to 2.2%.
Factor: Max factor increased from 70% to 75%.
Final Pay: 25% annual increases over final 3 yrs then 6% annual increases over final 4 years allowed with no penalty.
Final Pay: Minimum age to retire with full benefits reduced from age 66 to age 55.
Final Pay: Minimum years worked to retire with full benefits reduced from 45 years to 33 years with exchanging 2 years accumulated sick leave or using ERO, or 35 years without exchanging sick leave or using ERO.
Pension: COLA increased from 1.5% not compounded to 3% compounded.
As you can see, all inputs to calculate a teacher/admin pension were made more lucrative through legislation.
Campaign contributions and votes in exchange for favorable legislation.
15We need to find some way to increase the pensions of teachers. They help build our future.
LOL
16Think for a moment.
Boomer chunk of population retired or about to retire.
The largest segment of the US population.
Smaller population coming behind them.
Boomers’ kids owe for their college loans and can’t get jobs, or have jobs worth $10 per hour or less.
They’ll never be able to get mortgages for $10 per hour or less.
Who is it you-all teachers think are going to be paying for you?
McDonald’s burger flippers?
The economy’s gone to he\\ and things aren’t going to recover soon, if ever.
The USA doesn’t have the recovery power it used to have.
We’re sinking and the tide’s going out.
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