McHenry County Blog

I went to the Illinois Policy Institute’s Pension.  Got there a little late and was pleasantly surprised to discover that it was over an hour after it started.

Representing the Illinois Education Association was Crystal Lake High School teacher Mike Sayre.

I waited in vain for him to accept the responsibility his union and the Illinois Federation of Teachers had in helping create the teacher pension mess.

As I thought about it, I conclude he was too young to know what IEA and IFT lobbyists had done over the years to shortchange the Teachers Retirement System.

Although I have written about this before, let me repeat the scenario that went on year after year after year after year.

The Governor’s budget would have “X” hundreds of millions of dollars for education.

Included would be recommendations for K-12, universities and pensions.

As the session went on teacher union lobbyists would ask for more money for State Aid to Education.  In other words, for current salaries.

Where would that money come from?

The pension portion of the education budget.

Concurrently, those same lobbyists would be trying to improve teacher pensions.  Think  early retirement.  (I was astounded that one of my high school classmates who went into teaching was able to retire at age 52.)

The effect?

Higher teacher salaries, which, in turn, led to higher teacher pensions…while the pension fund was being shorted.

So, when Mike Sayre blames the legislators for not paying what they should have over the years, he is partly right.

The part he doesn’t know about is that his union urged those legislators to do what he complained about Tuesday night.

He said the IEA wants a guarantee that the General Assembly will put money into the Teachers Retirement Fund.

It is virtually impossible for one General Assembly to bind a future General Assembly.

It would be like telling future IEA lobbyists not to try to improve benefits for current dues paying members, that is active teachers.

Just trying to parcel out the responsibility for the mess all parties got us taxpayers in.

= = = = =
On the IEA handout for the event was the following assertion: “The pension crisis was caused by politicians who diverted the pension system payments to other programs.”

What other programs?

State Aid to Education so current salaries could be raised with the assumption that pension payments would take care of themselves. After all the Illinois Constitution says pensions can’t be impaired.

Even I told teachers that for years when they expressed concerns.

A press release from the Illinois Policy Institute:

Illinois Policy Institute to host debate on teacher pension reform

Debate 7 p.m. Tuesday, Aug. 14 at McHenry County College in northwest suburban Crystal Lake

CHICAGO (Aug. 13, 2012) – On Tuesday, Aug. 14, the Illinois Policy Institute will host a debate aimed at exploring who should pay the employers’ share of teacher pension costs: local school districts or the state.

Tuesday’s debate will be held in the auditorium at McHenry County College, 8900 Route 14, Crystal Lake. The debate starts at 7 p.m., and is free and open to the public.

The Crystal Lake debate will be moderated by state Rep. Tom Morrison and Kevin Lyons, news editor at the Northwest Herald newspaper in McHenry County. Panelists will include:

• Mike Sayre on behalf of the Illinois Education Association;
• District 47 school board president Jeff Mason; and
• the Illinois Policy Institute’s Diana Sroka Rickert, an award-winning journalist on the topic of pensions.

In June, the question of who should pay the “employer” portion of teachers’ pensions prompted legislative talks over pension reform to come to a standstill. The results of a new poll commissioned by the Illinois Policy Institute finds that public opinion on this issue is mixed, not only across the state but across the political spectrum.

The poll found that nearly half of likely Illinois voters oppose asking school districts to pay the employer share of teachers’ pension costs, while the other half of likely voters are split between indecision and favoring this proposal.

“The Institute’s poll indicates that the public needs more information on how local pension accountability would affect schools and taxpayers, and that they’re confused about who owns this policy in the statehouse,” said Kristina Rasmussen, executive vice president of the Illinois Policy Institute.

“To improve understanding of this issue, the Institute is launching this statewide tour to engage stakeholders and move toward consensus on much-needed pension relief.”

In addition to Monday’s stop in Crystal Lake, the Illinois Policy Institute is planning debate stops in Rockford, Skokie and Kane County. Debates already have been held in Quincy, Carbondale, Lemont Springfield and Decatur.

= = = = =

The Illinois Policy Institute sponsored a candidates’ night at MCC in October, 2010.  Democrats ducked the Congressional part.  The Institute call the appearance a “Turnaround Tour.”

A group calling itself “Patriotic Veterans” just called to tell me that there is an attempt to place the unfunded liability of teacher pensions on real estate taxpayers’ backs.

It said the politicians should retire at 65.  (That would have been find with me, but I was forced into retirement when I lost the 2000 GOP primary election.)

More to the point the call ended with

“Press one to reach Mike Tryon.”

So, I did.

There were two rings, then nothing.

Guess the call didn’t fully accomplish its purpose.

A press release from State Senator Dan Duffy:

On the last night of legislative session in Springfield, when the clock was ticking towards midnight, President Cullerton called his “pension reform” bill for a vote.

President Cullerton’s pension reform bill didn’t address the teacher’s pension problems or other key pension liabilities which are bankrupting the state.

Although Sen. Duffy fully supports pension reforms, he debated the flaws of President Cullerton’s bill on the senate floor.

This brief three minute audio clip illustrates the contentious relationship between President Cullerton and Senator Duffy.

They both have differing opinions regarding how to address the states crippling debt.

Duffy wants to deal with the pension problem now, while Cullerton would like to keep kicking the can down the road.

Below is what Duffy said on the Senate Floor that last night of the session:

Duffy: “Mr. President I haven’t been here as long as some of my esteemed members of the Senate but I’ve been here for four years and I know that things move pretty quickly on the last day of session.

“Is this the only reform, pension reform bill, that we’re going to receive tonight?”

Chair: “President Cullerton.”

Cullerton: “Yes. This is the one I believe, that we have a consensus hopefully of a majority of the Senators.

“The other two systems there still are some very contentious issues that we don’t have an agreement on, so but these two, the General Assembly and the state employees I believe we have an agreement. Hopefully a majority of the Senators would agree.”

Chair: “Senator Duffy.”

Duffy: “To the bill Mr. President.

DanDuffy

“You know, after all the years of people discussing this pension problem.”After all the research, the think tanks, the analysis.

“After all the time and energy that went into pension reforms, and this is it?

“You know, this is like trying to put out a forest fire with a spray bottle. Earlier a member mentioned that he didn’t think someone in the chamber got the memo.

“I don’t think the leadership of the Democratic Party got the memo.

“We’re in debt.

“We have 83 billion dollars in unfunded pension liabilities, and this is all that we get.

“We are never going to get out of debt and we are never going to put our place in the state of Illinois and bring jobs and bring people back to the state of Illinois unless we truly try to take a look at our problems in this state.

“Now you’ve tried with Medicaid, and we’ve taken a step forward.

“Now we’re going to take two steps back with this farce of a bill that we call pension reform.

“We need to implement some fair and constitutionally accurate pension reforms.

“We need to cap pensions.

“We need to reduce COLA’s.

“We need to end the double dipping.

“Why is it that we can’t take a look at these low hanging fruit situations like that and cut those out immediately?

“Why is it that we let people in Illinois on pension systems receive multiple pensions from the state of Illinois?

“How hard is it to say pick one pension and go with it?

“So, you know if we’re not going to take a look at the easiest items and reform those then we’re not serious about pension reform.

“I understand this is a political year, I understand that there is an election coming up, but the people of Illinois are very smart.

“They can’t be fooled.

“To try to take this bill, put this out there, and say that now you’ve tackled pension reform, is a complete joke, and the people understand that it’s a farce.

“This is not going near far enough.

“This isn’t even the tip of the iceberg.

“We’re 85 billion dollars in debt and that’s going to continue to compound every day our bond rating is going to continue to drop and people and companies are going to continue to leave the state of Illinois until the leadership on that side of the aisle grabs a ball grabs a mitt, and decides to get in the game.

“You have the leadership.

“You’re in charge.

“You can pass any bill, anytime you want without one vote from this side of the aisle.

“Well now here’s your chance to do something.

“Here’s your chance to lead and put Illinois back on top.

“And you are failing.

“You are passing up that opportunity and you are kicking that can down the road once again.”

An email from State Rep. Mike Tryon:

The final week of the May legislative session in Springfield ended with many good bills headed to the Governor, but with no meaningful pension reform in place to stabilize our state’s pension systems.

Today, pension costs are one of the biggest pieces of our State budget, and those costs are going up significantly every year and crowding out other essential service areas of the budget.

I really thought that late last week we were going to approve reforms that would have stabilized the systems so we could continue to offer fair retirement benefits, while also freeing up funding for other essential services.

While an early version of the bill included a $21 billion property tax increase for suburban and downstate homeowners that would have resulted from shifting a significant portion of the pension costs to the local level, the version of the bill brought forward by Republicans had that component removed.

We felt the shift would have placed an undue burden on local homeowners and we stood with the taxpayers on the issue until the provision was removed from the bill.

With the changed language, Speaker Madigan withdrew his support, and that point it became clear the bill would not pass.

In the end, Speaker Madigan was not willing to vote in favor of pension reform that did not include the pension cost shift.

The Governor said he will call the legislators back to Springfield over the summer to continue our work on the pension issue.

I am determined to find the common ground necessary to pass meaningful and fair pension reform in Illinois, so we can provide some much-needed certainty for the budget, for local schools and universities, and for the participants in the pension systems. The ultimate bill must be constitutional, and able to withstand an almost certain legal challenge.

I will continue to keep you informed about the pension issue as we work toward a solution over the summer.

Sincerely,

Michael W. Tryon
State Representative, District 64

A press release from State Senator Pam Althoff:

Althoff: Shifting pension risk onto local schools wrong approach

SPRINGFIELD, IL. – State Sen. Pamela Althoff (R-McHenry) says a pension proposal being advanced in Springfield that shifts costs onto suburban and Downstate school districts could result in higher property taxes without initiating true reforms.

Althoff says she will oppose the measure, Senate Bill 1673, should it come to the Senate for a vote in its current form. Under the legislation, Illinois state government would shift future pension liability risk onto local governments including school districts, universities and community colleges.

Such a move could put those entities at risk of market fluctuations and actuarial assumptions leading to declining investment returns, forcing them to impose higher property taxes to compensate for the shortfall.

“I am absolutely against any pension reform plan that shifts this financial risk without addressing the core root of the problem, which is the skyrocketing costs associated with the current system,” Althoff said.

“Even worse, if this plan took effect, suburban and Downstate school districts could be in enormous financial jeopardy should investments not come back as expected, which could lead to higher property taxes to pay for the losses.

“This bill is bad for taxpayers, bad for the economy and bad for state employees who deserve a solution that truly protects the long-term solvency of the pension system.”

The McHenry senator warned that constituents she’s talked to are demanding lawmakers enact true and real pension reform that reins in costs today, rather than pushing the problem onto others.

“This is exactly the type of fiscal sleight-of-hand that’s gotten Illinois pension system to the precarious point it’s at today,” Althoff warned.

“Local school districts aren’t the ones who’ve shortchanged the pension system to the point where it needs massive restructuring – that happened on the state level. It’s only right that Springfield step up and come up with a solution that doesn’t unduly punish local school districts and colleges.”

I have to say I am disappointed that Crystal Lake District 47 has no idea of how much it might cost to shift the financing of teacher pensions from state taxpayers to local taxpayers.

In a Freedom of Information Request, I asked for the ““estimated increase in local taxes in total and by home if teacher pensions have to be paid by property taxes, as being considered by the General Assembly.”

The reply:

“District 47 does not possess records containing the information you are requesting.”

Wouldn’t you think the administration and school board might be interested in that number, even if the plan is no longer under active consideration?

The year the State of Illinois decided to improved the pension system of state employees, Missouri took action on its employee pension system, too.

The pension was quite poor compared to other states.

Governor Jim Edgar’s administration and the AFSMCE union agreed on a trade-off.

No raises for a year in return for a better pension.

Because I held the pretty meaningless (all GOP budgeting power was held tightly by Lee Daniels) title of Committee Spokesman on one of the too many House Appropriations Committees, I was invited to a meeting of those with similar titles in a small meeting room in the Governor’s part of the State Capitol.

When the proposal was announced, I brought up what Missouri had just done.

I was familiar with it because the Sunday St. Louis Post-Dispatch had run a story about it in its legislative round-up of what happened in the Missouri legislative session which had just ended.

And, what had Missouri politicians done?

They had gone from a defined benefit program to one in which half of retirement benefits were defined benefits (read pension) and half were to be derived from defined contributions (think 401(k) plans).

Not yet realizing the lack of a role I had in the meeting, I suggested it might be better to follow Missouri’s example.

That’s when I learned the deal had been cut and we were being told of it ahead of other legislators because of the alleged role we had in the budgetary process.

When I read one of the front page stories in Springfield’s State Journal-Register on Sunday before going to the Old Capitol Art Fair for a second time, one headline read,

Hybrid plan urged for pensions

It was a proposal by two University of Illinois professors, Jeffrey Brown and Robert Rich.

One of them said the idea had been presented.

The State Employee Retirement System was funded at 34.94% at the end of last June, so I guess Jim Edgar’s contract didn’t work out too well for taxpayers.

Signs like the one you see above are all over Springfield this past weekend.

Illegally posted, but why should those opposing budget cuts follow the law anymore than political candidates do.

Bill Zettler, who has done oodles of research on Illinois public employee pensions has written a book on the subject.

Published on May 12th, the book’s blurb follows:

“Illinois’ state pension systems are in the worst financial condition of any state system in the country.

“According to Pew Research, Illinois ranks dead last with only 51% of its pension obligations funded.

“In this well-documented and provocative book, Bill Zettler debunks the common myths surrounding the reasons why Illinois is last in pension funding.

“According to Zettler, collusion between public sector unions and the politicians they have funded with member dues has resulted in more than 130 benefit increases since 1970 most of them passed by the Illinois legislature with large majorities and with little or no publicity.

“Those benefit enhancements and their costs have been underplayed by both the public employees and the politicians to the point where there are currently over 6,700 pensions in excess of $100,000.

“These $100,000 pensions are growing at a rate of more than 20% per year thus projecting to more than 25,000 by 2020.

“Zettler uses public information concerning salaries and pensions to develop a powerful argument for immediate restrictions on Illinois public salaries and pensions in order to bring them into line with the private sector and to prevent the state from bankrupting Illinois’ children’s future.

“Bill Zettler is Director of Research for the Family Taxpayers Foundation and has researched and written over 150 articles on Illinois public salaries and pensions since 2005. For 30 years prior to that Zettler was owner or principal of three different software companies.”

Look for the book on Amazon.