Media Ignores Madigan “What me worry?” Culpability in Pension Debacle

Read what I have enlarged on the front page of the Chicago Sun-Times today:

Mike Madigan could have stopped most of the pension sweeteners that have driven the Teachers Retirement Fund and the other four plans into desperate straights.  He did not.

Mike Madigan could have stopped most of the pension sweeteners that have driven the Teachers Retirement Fund and the other four plans into desperate straights. He did not.

The emphasized part of the front page says,

“Madigan rips ‘lack of leadership'”

But the media has steadfastly ignored the role that House Speaker Mike Madigan has played in putting the pension systems into a sinkhole so large it is now obvious to even Madigan, one of its chief diggers, that taxpayers cannot pour enough money to satisfy legislative obligations, while allowing Democrats to continue spending a billion or more each year.

I’ve packed a lot into that sentence, too much, I am sure.

But consider that Mike Madigan has been head of the Illinois House 38 out of the last 40 years.

Anyone want to guess when the pension busting legislation was enacted?

And, who might have decided to allow pension enhancement bills to be voted upon?

It certainly was not Senate President John Cullerton.  At most, he was at Madigan’s leadership table giving “input.”

There is another garment of culpability that Madigan must wear.

When I was closely examining budgets, I noticed that each governor had an education section.  It had three parts:

  • kindergarten through 12th grade
  • higher education
  • pensions

Unions have loudly carped that the Illinois General Assembly did not pay what its members should have for their pension system over the years.

They have a point there.

But it is a misleading one.

It was the union leaders who were urging Madigan and other legislators to put more money into State Aid to Education.

Want to guess where that “more money” came from?

Hey, you could be a legislator.

That’s right.

It came from the money governors requested for pension obligations.

From the unions point of view, it was a double win:

  • There was more money for next year’s teachers’ salaries.
  • Because the salaries were higher, pension benefits would be increased.
For almost forty years, Mike Madigan has been leading the "What me worry?" generation of legislators.

For almost forty years, Mike Madigan has been leading the “What me worry?” generation of legislators.

And yesterday Madigan blames former underling Cullerton for not mustering enough votes to pass “cover my rear end” pension legislation.

= = = = =

Most readers will probably know that I am a former State Representative.

I received a generous pension for which I regularly thank people.  (Thanks!)

During my sixteen years in Springfield, I can count on very few fingers the number of pension bills I voted for.  State Rep. Joe Ebbeson  of DeKalb was the pension “scold” in the 1970’s.  I can’t remember who took on that role in the 1990’s.

In any event, my viewpoint was that I might serve long enough to have to figure out how to pay for benefits being promised and concluded that a “No” vote was the appropriate on.

“When in doubt, vote ‘No'” is still pretty good advice for a legislator.

It won’t make you popular at the time, but in time too many “Yes” votes turn out to have been bad judgment.


Media Ignores Madigan “What me worry?” Culpability in Pension Debacle — 12 Comments

  1. What are the reps from McHenry county doing to solve the pension crisis?

    Yes Madigan was part of this situation as was Daley and Gov Thompson a republican.

    At least Madigan is being a man now and standing up for the people.

    Are our representatives?

    I will look how everyone from this county voted and if they run unopposed maybe it is time for citizens to run against them.

  2. Everyone should read Illinois Pension Scam by Bill Zettler.

    Including those who are or will receive a state pension.

    You’ll realize how much you are ripping off the taxpayer not receiving such a pension.

    Both the House and Senate are proposing and have proposed all along a funding guarantee, which only makes an awful problem worse.

    Anyone who understands the issue realizes these pensions need a complete overhaul and neither the House nor the Senate is proposing completing overhaul.

    What they have done with pensions in this state defies common sense and all logic.

    It’s pure greed and the only reason it’s legal is they make the laws.

    Those pensions should be illegal.

  3. If there’s one pension I don’t mind paying it’s the Cal Skinner pension.

    He’s the only former or current legislator that even comes within a county mile of exposing the shenanigans.

    Senate Bill 1 (SB 1 – Madigan / Cross / Nekritz / Senger plan), Senate Bill 2404 (SB 2404 – Cullerton / We

    Are One union endorsed plan), and Senate Bill 1687 (SB 1687 – pension cost shift for universities and community colleges) in the 98th General Assembly are all duds.

    It’s time for taxpayers to stop paying for benefits they themselves don’t receive.

    Social Security and Medicaid are underfunded, is there talk of creating a funding guarantee and shall not
    diminish or impair guarantee for Social Security?


    So why do Illinois taxpayers just accept this bullying by legislators and public sector unions?

  4. Republican / Democrat ,makes no difference.

    Illinois the land of corruption has a do nothing general assembly, especially if it is to benefit the taxpayers.

    When you think of Illinois you think of high taxes and corruption in government.

  5. The pension mess can also be summed up like this.

    40 years of benefit increases are unaffordable.

    That’s 4 DECADES.

    Why don’t public sector unions talk about the benefit increases?

    They completely ignore increases to their pensions.

    Unions omit pension ncreases from the conversation.

    They only talk about how awful and unfair decreases are to hard working public servants.

    Unions never mention exchanging campaign contributions and votes with politicians for favorable legislation in return.

    Unions never compare their pension contributions to their actual pensions in their advertisements.

    That’s policemen, fireman, teachers, university professors, state workers, they are all misleading the hard working men and women of Illinois, all so they can hide the true facts about their pensions.

    That’s what’s really happening.

    They want your money and they are manipulating you to get it.

    It’s really time to stop being diplomatic with these people who are basically lying to financially benefit themselves
    at your expense.

  6. Here’s one way the IEA teacher union misleads the hard working taxpayers.

    The IEA advertises, the actual pension is x and teachers don’t receive Social Security.

    The IEA omits the amount that teachers contributed to the pension fund to receive that pension.

    The IEA omits that teachers don’t contribute to Social Security.

    The IEA omits the number of years that teachers worked to receive that pension.

    Even if the IEA did tell you that, they would probably still be misleading you.

    Because in the majority of school districts in Illinois, the employer (school district) through collective bargaining “picks up” all or some of the teachers contribution to the pension fund in a practice known as “board paid TRS.”

    So when you hear that teachers contribute 9.4% of their paycheck to the pension fund, in the majority of school districts that’s false.

    Yet another way that teacher unions manipulate and deceive the public.

    Does the Federal Government allow employers to “pick up” all or some of your contribution to Social Security?


    But teacher unions convinced lawmakers to create that law.

    Now let’s say the teacher union did advertise the number of years teachers worked to receive that average pension.

    You would have to ask the teacher union, are you referring to Years of Service, or Actual Years Worked?

    Because Years of Service are different than actual Years Worked.

    State law allows teachers to accumulate up to 2 years (360 days, or maybe it’s 340 days) of unused sick leave.

    At retirement that can be exchanged for years of service credits.

    Now the Federal Government does allow some Federal government workers to accumulate sick leave.

    I’m not sure if it can be exchanged for years of service credits at retirement.

    And the practice is almost unheard of outside the government sector.

    It’s a completely foreign concept to most workers in industry.

    Most employers in industry don’t even allow you to accumulate unused personal, vacation, or sick days from one year to

    In teacher world, through collective bargaining, most teachers receive 12 – 15 sick days per year.

    Plus many collective bargaining agreements for teachers also include a few personal days per year.

    Well there’s just a few examples of how public servants are misleading the public to financially benefit themselves at
    your expense.

    How can the public evaluate if pension reform is fair?

    The public doesn’t even know what they are paying for in the first place.

    The public doesn’t even know about all the benefit increases over the years.

    Because the public servants won’t tell you.

    You have to figure it out for yourself.

    Unions don’t tell the whole story.

    Only the part of the story that benefits them at your expense.

  7. Now unions would call what I wrote above an attack.

    Another deception.

    In Illinois public servants call revealing the truth an attack.

    If you tell the whole truth, you are attacking them.

    If you tell the part of the truth that benefits them, well that’s not an attack.

    How manipulative is that.

  8. Do you know that unions are lobbying for another type of tax increase?

    The 67% state income tax hike from 3% to 5% that became effective January 1, 2011 is not enough.

    More sources of revenue are need to pay for pension benefit increases.

    Unions are lobbying to replace the 5% state income flat tax with a progressive tax.

    The unions will argue the Illinois income tax is too low compared to many other states.

    Of course the unions will not talk about all taxes.

    How about gasoline taxes?

    Illinois taxes more for gasoline than just about any state, when you compare all the taxes.

    There’s a smorgasbord of gasoline taxes allowed in Illinois State law.

    State gasoline tax, local gasoline tax, this gasoline tax, that gasoline tax.

    That’s the real reason gas prices are so high in Illinois.


    What other taxes won’t the unions talk about, when lobbying to replace the flat income tax with a progressive income tax?

    Property Taxes.

    Sales Taxes.

    Corporate Income Taxes.

    Various taxes on businesses that get passed along to consumers.

    So pension reform is the tip of the iceberg.

    Whatever pension reform is done, it will not be enough.

    It took 40 years of new state laws to increase pension benefits to get us where we are today.

    It will take at least 40 years of reform and tax increases to address all those increases.

    I bet that the House and Senate will come back in session this summer.

    Or if not, they will revive a bill in the fall.

    Want to know why?

    Early Retirement Option (ERO) for teachers and administrators in public schools expired.

    See the regular retirement benefit, which got to where it is today through benefit increase legislation, is not good
    enough for teachers and administrators.

    Retiring with full benefits at age 55 is not good enough.

    Working for 35 years to receive full benefits is not good enough.

    They need an even better deal.

    That deal is called Early Retirement Option (ERO).

    ERO is set to expire July 1, 2013.

    ERO has been set to expire many different times in its lifetime, and its always been extended.

    See once teachers and administrators receive a benefit increase, they hate to give it up.

    They can’t stand the thought of a teacher or administrator retiring a few years earlier than them receiving a perk they
    themselves don’t receive.

    They completely ignore the taxpayers that don’t receive such a benefit yet have to fund it.

    That doesn’t even enter into their thought process.

    ERO Extension is HB 2900 in the 98the General Assembly.

    It’s currently parked in the House Rules Committee.

    TRS (teacher / administrator pension plan) does a good job of tracking the various major proposals that affect them.

    So as you see pension reform is endless.

    Average Joe in this case is the citizen who does not receive a public sector pension.

    Average Joe doesn’t have the time to track all the various ways that public sector unions are attempting to extract
    their tax dollars.

    That’s one of the big problems with public sector unions.

    There is no Average Joe special interest group.

    There is no lobbyist for Average Joe.

    Average Joe is on his own.

    A little bit of tax revenue from each Average Joe equals nice benefits for the far fewer people who receive or will
    receive a Public Sector Pension.

    It’s a many to few relationship.

    Many Average Joe’s, fewer people who receive or will receive a Public Sector Pension.

    So if Average Joe spends a lot of time analyzing a government unit, Average Joe only saves a few tax dollars.

    On the other hand, public sector lobbyists get paid to extract Average Joe tax dollars.

    Depending on state law, the relationship can get out of hand.

    The relationship of the state taxpayer to government unit and public sector union; is much different than the
    relationship of the investor to the private or public company, and private sector union.

    One big difference is the government unit is a monopoly.

    Bottom line, every taxpayer in Illinois who doesn’t receive a public sector pension is on the short end of the stick.

    Best thing such citizens can do is educator themselves, expose what’s happening, and try to organize somehow.

    Average Joe is under attack from public sector unions, public servants, and politicians and has been for 40 years.

    Average Joe has been nickle and dimed to death through state laws.

    No one is looking out for Average Joe.

    Not the press, not the politicians, not the public servants, not the public sector unions.

    It was easy to determine if the tax on tea increased.

    Far more difficult to determine if or how any given state law increases Average Joe’s taxes.

  9. Skinner, Calvin $79,831/year; start date 1/1/2001

    No, Cal- no one who works for 16 years at a very large organization- and whose tenure at the firm ended decades ago- could ever earn an annual pension like that- except, perhaps, at a money laundering/private equity firm.

    Unlike the private sector, your former employer can force its customers to provide more money to the organization via the threat of fines and prison.

    I can’t understand how you can live with yourself and say the things you do, without drinking yourself into unconsciousness every night.

    You are as much an ‘Exhibit A’ for pension reform in Illinois as any school administrator or State Police employee.

  10. Actually, the number of years included in the pension calculation is 24. That includes four as McHenry County Treasurer and four in the Department of Central Management Services.

    You can blame other legislators for the benefits. I voted for my last General Assembly Retirement System bill in 1973 and was not in office in the early 1980’s when the 3% annual so and inaccurately called “cost-of-living” legislation was enacted.

    I probably voted for less than a handful of pension bills in my sixteen years in the Illinois House. Usually less than a handful voted, “No.” And approaching 99% of the time, I’d guess, mine was one of them.

    And I don’t have to drink to go to sleep.

  11. I’m not sure what percentage of private equity firms offer pensions to its employees, but just about every large public sector pension fund invests in private equity.

    Here are two specific examples of Illinois state pension funds that invest in private equity.

    Teacher Retirement System of Illinois (TRS), Private Equity Asset Allocation as of March 31, 2013, $4.3 Billion (11%).

    State University Retirement System (SURS), Private Equity Asset Allocation Target is 6%.

    The Defined Benefit plan in SURS had $1.1 Billion or 8% Asset Allocation as of June 30, 2012.

    Here is some more general data on private equity investments by state public pension funds.

    Exhibit 14: Wilshire’s 2012 Capital Market Assumptions

    Private Equity: 8.2% Asset Allocation.

    Thus on average 8% of a state public pension funds assets are invested in private equity.

    Exhibit 12: Average Asset Allocation for State Pension Plans

    Private Equity has the highest expected rate of return: 10.25%.

    Private Equity has the highest risk at 27.5%.

    High risk, high reward.

    Source: Wilshire Consulting 2012 Report on State Retirement Systems: Funding Levels and Asset Allocation, March 2, 2012.

    Guess who bears that risk?

    The retiree receiving a state pension? No.

    The employee contributing to the pension? No.

    The taxpayers. Yes.

    No because it’s a defined benefit type of pension, no because the Illinois State Constitution was modified to say public pensions shall not be diminished or impaired (but they can be and were increased), yes

    Illinois taxpayers are on the hook for any funding shortfall.

    So guess what, every single taxpayer in Illinois, left wing, right wing, or no wing, invests in Private Equity because taxpayer dollars are used for Private Equity investments in public pension funds!

    So all those liberal state employees who bash private equity personally benefit from private equity!

    Cal Skinner has done more to expose Illinois state and local government and state pension abuses than any other and possibly every other current and former state politician combined.

    He drives the political establishment nuts.

    Back to the main topic, for any given employee, compare the employee pay in contribution (excluding fair share on behalf pension pickup contributions by the employer) to that employee’s pay out pension.

    Look at the at ratio.

    Well for most employees you would have to FOIA the information from the pension fund.

    Zettler has information for selected employees in his book.

    That information alone justifies the cost of the book.

    That ratio is off the charts compared to what taxpayers receive from their Social Security, 401k’s, and
    in most cases even private pensions.

    Salaries are publicly available.

    Pensions are publicly available.

    Collective bargaining agreements are publicly available.

    No one has created a database of lifetime public employee pension contributions, per pension fund.

    So you could look up an employee’s specific lifetime pension contributions per pension fund (some
    employees have contributed to more than one pension fund).

    No one has created a database of employee pensions by year; only the most current year is available.

    Once someone does that, then the taxpayer will better understand why Bill Zettler calls Illinois public pensions a scam.

    They really are a scam.

    You might think it unbelievable that the State of Illinois could be involved in a scam.

    One example is the SEC charged the State of Illinois with misleading bond investors about the funding of
    Illinois state pension funds.

    That was a scam perpetuated by the state about the very pension funds we are discussing here.

    There’s a greedy scam culture in Illinois government regarding state pension funds.

    If Pat Quinn really wanted to be a do gooder working on behalf of the hard working Illinois families, he would expose the Illinois Pension Scam.

    The taxpayer is shouldering the burden of funding public sector pensions when they themselves don’t receive anywhere near that type of investment return, especially comparing the ratio of employee pay in to pension pay out.

    One big reason the pensions are unsustainable is the pensions are based on a calculation of final pay, and final pay in many or most cases was increased substantially by end of career salary increases.

    But there are many reasons the pensions are unsustainable.

    The Illinois pension story is one of incredible greed and deceit.

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