State Senator Dan Duffy Passes Pension Bill Sponsored by Jack Franks in the House

A press release from State Senator Dan Duffy:

Dan Duffy

Dan Duffy

Duffy Passes Bi-Partisan Pension Reform Measure

SPRINGFIELD – On Wednesday, May 15, the Illinois Senate unanimously passed House Bill 140, a bi-partisan measure sponsored by State Senator Dan Duffy (R-Lake Barrington).

Duffy worked with State Rep. Jack Franks (D-Marengo) to pass the legislation, which would eliminate benefits packages currently afforded to part-time members of state-funded transit boards.

“Illinois is notorious for its large number of wasteful boards and commissions,” said Duffy.

“While we’re financing these boards, paying their members often exorbitant salaries as well as benefits, we’re not making payments on pensions for teachers, firefighters, and policemen.

“Benefits for these boards and commissions are low hanging fruit, and are a good place to start in making up for the $100 billion unfunded pension liability in Illinois.”

House Bill 140 stipulates that members of the Regional Transportation Authority Board, Suburban Bus Board, Commuter Rail Board, and Chicago Transit Authority Board are not eligible for pension or insurance benefits if they become a member of these boards on or after the effective date of the legislation.

“For members being reappointed to these boards, previously accrued benefits will remain unchanged, but all benefits will be eliminated for any future terms of service.

Bi-partisan effort is largely to thank for the passage of this legislation.

“I have enjoyed working on this truly bi-partisan piece of legislation with my house colleague Democratic Rep. Jack Franks,” said Duffy.

“Rep. Franks and I agreed fully on this issue and by coming together we were able to pass this legislation unanimously in both houses of the General Assembly.

“Now it’s up to Governor Quinn to sign this bill into law and help us cut some waste out of our overburdened pension system.”


Comments

State Senator Dan Duffy Passes Pension Bill Sponsored by Jack Franks in the House — 4 Comments

  1. Well the above bill is higher on the priority list than HB 2991 Lion Meat, which was discussed in the House yesterday afternoon.

    But the biggest pension fund is PreK – 12 Teachers and Administrators so that should be the focus.

    The TRS website contains a good summary of TRS pension legislation.

    Click the link below to read about the status of the legislation, then contact the appropriate legislator (House, Senate, both) to voice your opinion, because legislators hear from far more teachers and administrators than citizens who are not teachers or administrators.

    http://trs.illinois.gov/subsections/legislative/majorlegislationandproposals.htm

    Early Retirement Option Extension – Senate Bill 1366 – Vote No!

    Teachers and administrators already retire earlier than most people.

    And the old argument retiring early saves the district money because a less expensive replacement can be hired is smoke and mirrors.

    Taxpayers as a whole would then be paying for the less expensive employee plus the retiree.

    Second, the State contribution to the pension fund “on behalf of the school district” could well be shifted back to the school district (Edgar is the one who shifted it from school district to state according to Jack Roeser).

    These next two bills are the Big Whoppers.
    Big tax dollars.
    If you do nothing else pay attention to these two bills.

    Pension Reform – Senate Bill 2404.

    This is the Madigan plan.

    Vote No!

    This bill has a funding guarantee.

    Vote no for any bill with a funding guarantee.

    Here’s the key sentence.

    “The obligations created under this Section are contractual obligations protected and enforceable under Article I, Section 16 and Article XIII, Section 5 of the Illinois Constitution.”

    Why should teacher and administrator pensions have a funding guarantee?

    There’s no funding guarantee for Social Security.

    There’s no funding guarantee for 401k.

    Madigan filed a 277 House Amendment on April 30th and Madigan called it to vote May 2nd.
    The 277 pages includes a description at the beginning of the miserable condition of State of Illinois finances.

    Interspersed amongst the proposed legislation is a lot of pension history including police and fire.
    Underlined items are additions, i.e. what’s being proposed in the bill.

    Public Pension Reform – Senate Bill 1.

    This is the Cullerton plan.

    Vote no!

    Vote no for any bill with a funding guarantee.

    See above.

    Pension Reform Proposal – House Bill 1165.

    Vote yes.

    Could be better, definitely an improvement.

    Converts COLA to 3% simple and caps pensionable income for COLA calculations at $25K, in which case COLA would be $750 annually for the duration of one’s life and their beneficiary.

    Cap on Salaries Used to Determine Final Average Salary – House Bill 1154

    Vote yes.

    Caps pensionable income at max social security wage base thus converting Tier I to a cap similar to Tier II.

    Increasing the Retirement Age – House Bill 1166.

    Vote yes.

    Teachers and administrators should work as long as the social security workers funding their pensions.

    Early Retirement Option Renewal – House Bill 2900.

    Vote no!

    Can you believe that teachers and administrators, who already retire earlier than most taxpayers, have a plan to retire even earlier?

    It should be called Early Early Retirement Option (EERO).

    Anyways this legislation increases school district contribution to ERO because the actuaries and COGFA determined the contributions were not covering the costs.

    ERO needs to go.

    How about teachers and administrators fund an early retirement option for Social Security workers?

    Enough is enough.

  2. One of he main taxpayer problems with the TRS funding guarantee in SB 1 and SB 2404 is it places TRS funding ahead of every single government expenditure except Bond repayments.

    That’s ahead of the sick, disabled, elderly, poor, natural disasters, or any other expenditures.

    The TRS funding guarantee would include repayment of the over $100 Billion unfunded liability (IOU).

    The $100 Billion is the amount actuaries state that TRS should have right now, but does not, to achieve it’s 8% projected return on investment.

  3. Well HB 140 passed the House on April 12, 2013 and the Senate on May 15, 2013.

    It would eliminate pensions and group insurance for anyone who FIRST become members of the Regional Transportation Authority Board, Suburban Bus Board, Commuter Rail Board, or Chicago Transit Authority Board on or after the effective date of the amendatory Act.

    Meaning after the Governor signs Bill into Law as a public act and the law becomes effective).

    Apparently the new members would still be entitled to salary compensation, a change from when the bill was first introduced.

    The bill was sent to the Governor on Jun 13, 2013.

    What happened between May 15, 2013 and June 13, 2013?

    There is no explanation on the Illinois General Assembly website.
    http://www.ilga.gov/legislation/billstatus.asp?DocNum=140&GAID=12&GA=98&DocTypeID=HB&LegID=69118&SessionID=85

    But how much savings are we really talking about.

    There are 48 appointed members total on those 4 boards.

    Regional Transportation Authority Board: 17 appointed members.
    http://www.rtachicago.com/about-the-rta/board-of-directors.html

    PACE Suburban Bus Board of Directors: 13 appointed directors.
    http://www.pacebus.com/sub/about/board_of_directors.asp

    Metra Commuter Rail Board: 11 appointed members.
    http://www.metrarail.com/metra/en/home/about_metra/leadership.html

    Chicago Transit Authority Board: 7 appointed members
    http://www.transitchicago.com/about/overview.aspx
    http://appointments.illinois.gov/appointmentsDetail.cfm?id=35

    That’s drawfed by the number of teachers and administrators each year that retire under Teachers Retirement System of Illinois (TRS) pension plan’s Early Retirement Option (ERO).

    Teachers and Administrators can retire with full TRS benefits after 35 years of service (can be 33 working years by exchanging 2 years accumulated sick leave) at age 55.

    But that’s not good enough, so the Legislators and Governors created a new law, ERO.

    ERO is targeted to teachers and administrators that don’t yet have 35 years of service.

    ERO applies to those between the ages of 55 and 60 and have at least 20 years of service but less than 35 years of service.

    ERO was set to expire on June 30, 2013.

    But ERO was renewed by the General Assembly and Governor.

    SB 1366 (98th General Assembly) passed the Senate on March 13, 2013, the House on May 30, 2013; and the Senate again on May 31, 2013 in a Concur in House Amendment vote.

    SB 1366 was signed by Governor Quinn June 28, 2013 as Public Act 98-0042.

    So high salaried administrators and teachers can retire will full pension benefits after 20 years of service at age 55 with ERO.

    Thanks to Illinois taxpayers who pay for benefits they themselves don’t receive.

    That should be illegal not legal.

    COGFA claims the costs cover the plan.

    That’s true because the nice taxpayer shoulders the burden, the teacher and administrator contributions are far less than taxpayer (school district and State of Illinois) contributions.

    Say someone works 20 years and retires at 55 with starting pension of $100,000.
    Life expectancy past 80, but let’s use 80.

    That’s 20 years paying into TRS, 25 years in retirement receiving a TRS pension

    Without COLA, that’s $100,000 x 25 yrs = $2.5 million dollars.

    Let’s say the administrator paid 9.4% of $100,000 their entire career as a TRS pension contribution.

    That’s implausible because they starting salary would be less than $100,000, they typically get salary increases every year, the pension is typically less than ending salary (there are exceptions to that believe it or not), and most school districts “pick up” the pension contribution so the administrator pays zero not 9.4%.

    $100,000 x 9.4% = $9,400.
    20 x $9,400 = $188,000.

    Let’s say the employer match (school district plus State of Illinois on behalf of school district) was 100%.

    That’s another $188,000.

    $188,000 + $188,000 = $376,000.

    No chance $376,000 covers $2,500,000.

    Now skeptics would say that wouldn’t be common.

    I would say it’s legal…make ERO illegal.

    Skeptics would say no teachers earn $100,000 after 20 years.

    I can find you some.

    You would be shocked what some teachers are getting paid.

    Once again, make ERO illegal.

    Run your own numbers.

    21 years working, 22 years, 23 years, 24 years, etc.

    TRS and ERO are taxpayer ripoffs.

    I could go on and on.

    Skeptics would say it saves the school district money.

    Yes but to the taxpayers that fund the State of Illinois contribution to TRS, it costs them money.

    It’s a redistribution of taxpayer dollars.

    And you can’t count that a retiring teacher or administrator is replaced by someone with a starting salary.

    Many times that’s not true.

    There’s an endless supply of well paid teachers and administrators waiting to retire early, it never ends.

    Here’s some of the fine print on the ERO legislation recently signed by Pat Quinn.

    • For TRS members, the one-time contribution to participate in ERO is 14.4 percent of salary for every year the member is under age 60 or for every year the member’s creditable service is less than 35 years, whichever is less. The member contribution rate under the old ERO program was 11.5 percent.

    • For school districts, the one-time contribution to have an employee participate in ERO is 29.3 percent of the member’s salary for every year the member is under age 60. The employer’s contribution rate under the old ERO program was 23.5 percent.
    Teachers/Administrators 14.4%, school districts 28.8%?

    That’s right.

    Taxpayers pay double the amount of salary per year under ERO.

    Teachers and administrators pay 14.4%.

    School Districts and thus taxpayers pay 28.8%.

    Another form of “hidden” compensation for teachers and administrators.

    Once again, I could go on and on.

    Duffy had a no vote on SB 1366 on March 13, 2013.

    Duffy had a yes vote on SB 1366 on Mary 31, 2013.
    http://www.ilga.gov/legislation/votehistory/98/senate/09800SB1366_03132013_011000T.pdf
    http://www.ilga.gov/legislation/votehistory/98/senate/09800SB1366_05312013_016000C.pdf
    http://www.ilga.gov/legislation/votehistory.asp?GA=98&DocNum=1366&DocTypeID=SB&GAId=12&LegID=71900&SessionID=85

    In fact, looking at the House Roll Call May 30 and Senate Roll Call May 31, every single McHenry County Rep and Senator voted yes for SB 1366 ERO renewal.

    Once again, legislators and Governors believe the priority is for teachers and administrators to retire with between 20 – 35 years of service between the ages of 55 – 60, rather than spending the money on education students.

    By the way, a few teachers and administrators who retired at age 54 with big pensions are listed in Bill Zettler’s book.

    And as for the average teacher, their TRS pension plan is a gold plated pension plan, better than just about any pension plan in the private sector and most public sectors in most states.

    When the IEA quotes the average teacher pension, they don’t tell you how the following:

    Average total contribution by the teacher to TRS.

    Average total contribution by the school district to TRS (including pension pick-up whereas the school districts picks up the employees contribution to TRS).

    Average total contribution by the State to TRS.

    Average number of years worked.

    Average retirement age.

    Average number of unused accumulated sick days exchanged.

    IEA and IFT teacher unions don’t tell you this information because they know most people would be shocked.

    By the way here is what a typical teacher year looks like.

    Classroom 36 weeks per year.

    10 weeks summer break.

    2 weeks holidays.

    4 weeks split between Thanksgiving, Christmas, Spring Break, and other breaks.

    The minimum number of hours per day the teacher is required to be in school is stipulated in the collective bargaining agreement and is less than 8 hours per day including prep time.

    Some work more hours in the building or at home, many don’t.

    Teachers receive stipend pay for just about any duty other than teaching.

    Many teachers don’t pay for the college classes that are required for them to get pay raises called Lane

    Movements on the salary schedule.

    In many districts, taxpayers pay for the teachers college classes.

    That’s also listed in the collective bargaining agreement which is required by law to be on the school
    district’s website.

    So there are some easy reforms included above Mr. Duffy.

    Can he or anyone else enact reforms?

    Where are the politician who care about the average taxpayer?

    Why are they not explaining this to the average taxpayer?

    Or do they only care about pacifying teacher unions so they can get campaign contributions and votes and get re-elected.

  4. Above I broke down a typical teacher year as follows.

    “By the way here is what a typical teacher year looks like.

    Classroom 36 weeks per year.

    10 weeks summer break.

    2 weeks holidays.

    4 weeks split between Thanksgiving, Christmas, Spring Break, and other breaks.”

    That 2 weeks of holidays, holidays was not the best choice of words.

    Here’s an example of what might be included in those two weeks.
    Labor Day, Columbus Day, Martin Luther King Day, President’s Day, Memorial Day, and maybe 5 total days allocated between Institute Day, Teacher Work Day, and No Student Attendance Day.

    And that doesn’t even include Late Starts and Early Dismissals so so teachers can meet.

    Look at the “Bell Schedule” to see what Late Starts and Early Dismissal days might be in your students calendar.

    Think about what that means.

    Instead of the teacher coming early or staying late, the student comes late or leaves early.

    Once again, teachers and administrators first, taxpayers and students second.

    You see, teachers would have to be compensated if they were required to meet outside of work hours listed in the collective bargaining agreement.

    But students, you can take instructional minutes away from them and the students or taxpayers don’t get compensated directly.

    The indirect compensation is hopefully better instruction.

    Nothing in Illinois education collective bargaining laws states that students needs should be considered.

    Or if there is, apparently it’s not a strong enough protection so the students educational needs are also considered when cutting their instructional minutes, as we see in the above scenario.

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