A communication from State Rep. Barb Wheeler to her constituents:
Barbara Wheeler
Thank you for your continued support of our efforts for a fair education funding proposal. Today, I am pleased to announce that the Speaker of the House has taken action to form a House Education Funding Task Force.
In January, I filed House Resolution 9 (HR9) to call on House Speaker Michael Madigan (D-Chicago) to enact a special committee in the House to examine the existing school funding formula.
Those efforts have borne fruit as the Speaker just created a special task force, to which I have been assigned along with other local lawmakers Rep. Mike Tryon (R-Crystal Lake) and Rep. Steven Andersson (R-Geneva), to do just that.
Steve Andersson
Mike Tryon
The efforts to form this task force came from the out-cry over last year’s Senate Bill 16 (SB16), reintroduced as Senate Bill 1 (SB1) this year.
After numerous calls from my colleagues and I, I’m pleased to see that the Speaker has heard our voices to have the House thoroughly examine the education funding formula change that the Senate tried to force through last year, and is attempting to do again this year.
The House was never given a chance to review our state’s current funding breakdown, which led to a very bad bill.
I’m looking forward to this opportunity to bring my experience as an educator to the table and make recommendations that will provide a beneficial restructuring to our school funding formula that improves education for all Illinois children.
I have been calling for a special House committee since last year and finally the Speaker has realized the value on the House’s involvement in such a major restructuring.
Last fall, SB16 attempted to substantially re-write the school funding formula in the state.
SB16 would have stripped millions of dollars in funding from McHenry and Lake County Schools.
While the bill was ultimately killed last fall due to the efforts of numerous concerned parents and educators, the bill was refiled this year as SB1.
The newly minted House Education Task Force will conduct a thorough review of the existing school funding formula and make recommendations for reforms that would create a funding system that would be adequate, equitable and which prepares students for achievement and success after high school.
These recommendations will be used in conjunction with the previous study conducted by the Senate to ensure that a fair and equitable education funding formula is created to benefit all of the students attending Illinois’ public schools.
Providing for our children’s future is the most important thing to every parent, and it made no sense that the House was excluded from this process last year.
It would be incredibly unfair to not only the children of Illinois, but our state’s parents and educators to drastically overhaul our education funding formula without a complete understanding of its impacts, and without the input and review of both our legislative bodies.
As not only a parent, but also a former educator, it is very important to me to ensure that we take as much time as necessary to do this properly and offer every child in Illinois the best opportunity to achieve scholastic success.
If the Senate has already done a study are we being redundant in order to appear useful?
Were we unhappy with the proposal of the Senate?
We need fresh eyes looking at this
As a member of both a high school board and elementary school board for many years, I traveled to Springfield on countless occasions to lobby for changes to the school aid formulae.
That was 30+ years ago.
While the suburban districts can cite all sorts of reasons for the failure of Springfield to meet their obligations, the competition between big city school districts and downstate districts was too much to overcome.
In the 30+ years since my travels there has been continuous conversation about school aid.
I expect that conversation to continue for 30+ more years.
But, my bet is that there will be NO action.
Whenever Michael Madigan reaches out and shakes your hand, he is hiding a dagger in the other hand.
He only does this when he wants to DESTROY a politician or a good idea.
The notion that he has “seen the light” and only now understands the plight of the suburban taxpayer is laughable.
Michael Madigan is a despicable human being. He has ruined the lives of millions – many of whom are his blind supporters.
Barbara Wheeler, you praise Madigan ?
If you think for one minute that Madigan followed your advice, I question your being a State rep. and your judgement on this one.
Listen to Skeptic.
There will be no deal just a laugh from Madigan.
He could care less about what you want.
Smoke and mirrors
There have been massive education funding increases over the last 45 years in Illinois.
Part of education funding, is funding educator pensions.
Here’s the local and state funding for TRS pension contributions over the last 45 years.
These are employee, employer, and State (on behalf of employer) contributions to the Teacher Retirement System pension fund over the last 45 years.
It includes Pension Obligations Bonds (principal only) issued by Governors Rod Blagojevich and Pat Quinn.
And pensions are still about 60% underfunded!
1970 — $0,130,382,816
1971 — $0,141,147,302
1972 — $0,151,721,766
1973 — $0,189,317,217
1974 — $0,204,651,068
1975 — $0,247,357,116
1976 — $0,264,091,014
1977 — $0,286,176,102
1978 — $0,312,643,578
1979 — $0,336,469,458
1980 — $0,371,763,623
1981 — $0,413,262,674
1982 — $0,348,572,837
1983 — $0,350,780,987
1984 — $0,401,620,000
1985 — $0,444,429,000
1986 — $0,480,112,000
1987 — $0,517,383,000
1988 — $0,494,712,000
1989 — $0,529,180,000
1990 — $0,576,804,000
1991 — $0,604,554,000
1992 — $0,623,285,000
1993 — $0,669,308,000
1994 — $0,896,860,000
1995 — $1,028,930,000
1996 — $0,788,449,846
1997 — $0,837,918,557
1998 — $90,25,210,809
1999 — $1,502,971,799
2000 — $1,350,220,079
2001 — $1,465,188,709
2002 — $1,588,509,682
2003 — $1,753,282,676
2004 — $6,258,086,538
2005 — $1,817,352,355
2006 — $1,456,882,200
2007 — $1,679,834,675
2008 — $2,037,188,622
2009 — $2,480,102,691
2010 — $3,151,550,632
2011 — $3,235,605,731
2012 — $3,478,920,430
2013 — $3,781,914,113
2014 — $4,525,463,343
Total – $55,130,168,045
How much of that $55 Billion dollars in pension funding was due to legislative pension benefit hikes?
There are a few key points to the scheme which will be repeated.
Money that could have gone to fully funding pensions, went to hiking current pay, which hikes the pensions.
Before hiking current pay, first fully fund the pensions!
Hiking pension benefits, at a time when pension benefits are unfunded, should be illegal.
Before hiking pension benefits, first fully fund the pensions!
Educators as a whole are very cognizant that pensions are part of overall compensation.
Educators knew fully well the game that was being played, and were complicit in playing the game, that being, lobbying to hike pension benefits at a time when pensions were underfunded, and shorting pension contributions to hike current pay.
Public education in Illinois is a monopoly service with monopoly teacher union labor whose #1 goal is hiking educator pay and benefits.
Due to one sentence in the Illinois State Constitution, taxpayers are forced to fund unlimited pension and retiree healthcare benefit hikes, even though politicians were not required to fund the pensions on an annual basis.
If pensions were required to be 100% funded, none or few of the benefit hikes over the last 45 years would have occurred, because there would not have been funding for the hikes.
Unfunded pension and retiree benefit hikes have created a funding shortfall which cannot be filled.
Article XIII – General Provisions
Section 5. Pension and Retirement Rights
“Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
December 15, 1970 that sentence was approved by voters, but not individually, rather along with many other changes to a new, rewritten, Illinois State Constitution.
Prior to that, the changes were approved by the elected delegates to the Constitutional Convention on September 3, 1970.
Two elected delegates to the 1970 Constitutional Convention?
Two attorneys, Michale M Madigan and Richard M Daley.
Michael Madigan has been a State Representative since 1971.
Richard M Daley was a State Senator from 1972 – 1980, Cook County States Attorney from 1981 – 1989, and Mayor of Chicago from 1989 – 2011.
Attorney John Cullerton was a State Representative from 1979 – 1991, then appointed as a State Senator in 1991.
These people have been instrumental, along with Governors, House leaders, Senate leaders, Mayors of Chicago, and union lobbyists, in passing massive unfunded pension benefit hiking legislation, and even worse, in a time when pensions were already underfunded.
It made no economic sense.
It made no sense for the financial viability of the State and municipalities.
It only made political sense.
Campaign contributions, votes, and electioneering assistance from unions and other special interests largely via lobbyists, in exchange for favorable pension and retiree healthcare hiking legislation, and diverting pension funding to hike current pay.
Underfunding pensions is a sick, twisted scheme for many reasons.
In the name of educating children, underfunding pensions creates a pension debt which those children will have to repay, assuming they stay in Illinois and the debt still exists when they graduate.
Thus, when a pension is underfunding, assuming a real plan is put in place to make up the funding shortfall, two pension payments are made.
1. Current pension contribution.
2. Pension contribution to pay down the unfunded liability.
So if funding didn’t exist previously to fund the pensions, how likely is it that funding will exist in the future to fund the pensions?
Don’t let politicians separate educator pension funding from education funding.
It’s a ruse.
It’s a way to artificially inflate funding for education today while kicking the can on pensions into the future.
They are both part of overall education funding.
If you care about funding for education, also pay attention to funding for pensions, and creating a sustainable system for both.
Also pay attention to retiree healthcare funding.
Also pay attention to bond debt payments at the state and local level for education.
Also pay attention to Federal funding for education.
Also pay attention to local funding for education.
It’s a complex interwoven web, and the well is running dry as the system exists today.
Are legislators and Governors legally required to look out for the good of the state a whole?
That’s not what their oath of office says.
Look at the very same section of the Illinois State Constitution which contains the sentence about retirement systems.
Illinois State Constitution
Article XIII General Provisions
Section 3. Oath or Affirmation of Office
“I do solemnly swear (affirm) that I will support the Constitution of the United States, and the constitution of the State of Illinois, and that I will faithfully discharge the duties of the office of …. to the best of my ability.”
So where in the Illinois State Constitution is it written that elected State Representatives, Senators, and Governors officials are looking out for the good of the State as a whole?
The Preamble to the Illinois State Constitution?
“We, the People of the State of Illinois – grateful to Almighty God for the civil, political and religious liberty which He has permitted us to enjoy and seeking His blessing upon our endeavors – in order to provide for the health, safety and welfare of the people; maintain a representative and orderly government; eliminate poverty and inequality; assure legal, social and economic justice; provide opportunity for the fullest development of the individual; insure domestic tranquility; provide for the common defense; and secure the blessings of freedom and liberty to ourselves and our posterity – do ordain and establish this Constitution for the State of Illinois.”
That’s something to contemplate.
What our State government has done over the last 45 years, is, after one sentence was added to the Illinois State Constitution, obligate us via taxes to enrich special interests via sneaky schemes to hike pension and retiree healthcare benefits, shorting the funding of those systems while simultaneously hiking current pay and benefits, doing this at a time when pensions were already underfunded, and hiking current pay hiked the underfunded pension contribution.
And furthermore various schemes were used to deliberately underfunded the pensions, such as the legislature creating artificial “full” pensions contributions which were not actuarial contributions.
And we could go on and on and on.
How was this even legal?
Certainly was not ethical or moral.
Here’s the $55,130,168,045 breaks down to Member (teacher / administrator), State (on behalf of employer) and Employer (school district) contributions.
Plus the investment income from the pension fund.
Member Contribution (teacher administrator: $19,561,792,544
State Contribution (on behalf of the employer): $32,513,397,876
Employer Contribution (school district): $3,054,977,625
Investment Income: $52,184,927,010
Compare Investment Income to Total Contributions.
Investment Income: $52,184,927,010.
Total Contributions: $55,130,168,045.
Remember TRS (teacher administrator) pensions are only about 40% funded.
Can you imagine the investment income if pensions had been 100% funded?
That illustrates the devastating effect of underfunding pensions.
Underfunding pensions has resulted in tens of billions of lost investment income that has to be made up by the State Contribution.
Of course the teachers / administrators just blame the state for not making it’s full contributions.
That’s ripping a few pages out of the story, not telling the whole story.
Hiking benefits to an underfunded pension should be illegal.
Hiking salaries to an underfunded pension should be illegal.
Get the pension 100% funded, then make any salary and benefit hikes.
Campaign contributions, votes, and electioneering assistance by unions and special interest groups, in exchange for favorable pension hiking legislation and salary hiking collective bargaining agreements and administrator contracts.
There’s the rest of the story in a nutshell.
Of course, we are so far in the hole now there are no good solutions.
The legislators and unions and lobbyists and those participating in the scheme have created a situation for which there are no good answers.
Remember last year when legislators tried to shift the state pension contribution from state to local.
And then tried to re-allocate the percentage of existing education funding which each school district receives (which is what the Wheeler article is all about).
The bottom line is the State does not have adequate funding to maintain the status quo and is trying to reduce their funding to local education, especially amongst those more property tax rich districts.
A big reason is the hiked pension contributions.
Let’s look at the State Pension Contribution to TRS (teacher and administrator pension fund) over the last 45 years to get an idea why the State may have a funding shortfall in other areas.
The State Pension Contribution includes Pension Obligation Bonds issued by Rod Blagojevich and Pat Quinn.
1970 — $00,057,783,000
1971 — $00,060,117,000
1972 — $00,058,575,375
1973 — $00,091,979,900
1974 — $00,100,018,071
1975 — $00,130,723,094
1976 — $00,138,551,600
1977 — $00,156,976,400
1978 — $00,175,069,000
1979 — $00,188,641,596
1980 — $00,212,697,717
1981 — $00,231,871,230
1982 — $00,154,969,147
1983 — $00,144,437,110
1984 — $00,188,905,000
1985 — $00,214,356,000
1986 — $00,237,981,000
1987 — $00,257,304,000
1988 — $00,216,849,000
1989 — $00,232,438,000
1990 — $00,263,507,000
1991 — $00,262,504,000
1992 — $00,238,175,000
1993 — $00,269,896,000
1994 — $00,266,077,000
1995 — $00,267,146,000
1996 — $00,330,073,976
1997 — $00,385,129,987
1998 — $00,466,948,418
1999 — $00,572,950,673
2000 — $00,639,298,949
2001 — $00,724,007,792
2002 — $00,814,739,766
2003 — $00,929,709,762
2004 — $05,361,851,773
2005 — $00,906,749,310
2006 — $00,534,305,256
2007 — $00,737,670,628
2008 — $01,041,114,825
2009 — $01,451,591,716
2010 — $02,080,729,055
2011 — $02,170,918,489
2012 — $02,406,364,156
2013 — $02,703,312,213
2014 — $03,438,382,892
Total – $32,513,397,876
Pension Obligation Bonds
The State of Illinois issued Pension Obligation Bonds under Governor Rod Blagojevich in 2003 for $10 Billion, Pat Quinn in 2010 for $3.5 Billion, and Pat Quinn in 2011 for $3.7 Billion.
Public Act 93-0002 (PA 93-0002) amended the General Obligation Bond Act to increase bond authorization by $10 billion. The State used a portion of the bond proceeds to pay part of the FY 2003 State contribution and all of the FY 2004 State contributions to the retirement systems. Bonds were issued 6/12/03. With the help of the Democratic-led Legislature, about $2 billion of the bond money was diverted to help cover the day-to-day operations of the state and investment fees on the bonds.
Public Act 96-0043 (PA 93-0043) mandates the issuance of new pension bonds totaling $3.466 billion.
The Act establishes the FY 2010 State pension contributions as follows:
TRS — $2,089,268,000
SERS – $0,723,703,100
SURS – $0,702,514,000
JRS — $0,078,832,000
GARS – $0,010,454,000
The FY 2010 total inflows into each of the 5 systems from all sources will be equal to the GRF portion of the certified amounts for each system.
Public Act 96-1497 mandated the issuance of new pension bonds totaling $4.096 billion.
The bond sale proceeds, net of expenses, were used as a portion of the FY 2011 State contributions to the five State systems.
The actual bond sale proceeds, net of expenses, were $3.7 billion.
Illinois Policy Institute
Lessons from Illinois: Pension obligation bonds only delay the day of reckoning
February 26, 2015
by Benjamin VanMetre
http://www.illinoispolicy.org/lessons-from-illinois-pension-obligation-bonds-only-delay-the-day-of-reckoning
Only a portion of the proceeds went to TRS; some went to other pension funds; some went to pay bond interest and whatever else (see Bloomberg article below).
Here is some information about the 2003 bond issue from Buck Consultants.
Buck Consultants
Teachers’ Retirement System of the State of Illinois
June 30, 2012 (as of) Actuarial Valuation of Pension Benefits
Report issued December 31, 2012 to TRS
“Determination of Maximum State and Federal Funds Contribution under Public Act 94-0004.
Under Section 7.2(d) of the General Obligation Bond Act (GOBA), TRS received $4.33 billion on July 2, 2003.
Commencing with the fiscal year 2005, the maximum State contribution under the Act equals the State contribution that would have been required if this $4.33 billion contribution had not been made, reduced, but not below zero, by the State’s debt service on the TRS portion of the full $10 billion of Pension Obligation Bonds issued under Section 7.2 of the GOBA.”
http://trs.illinois.gov/pubs/actuarial/2012ValuationRept.pdf
Here’s a 2012 Bloomberg article about Illinois pensions and budgets.
Bloomberg
Illinois Is Pension Basket Case You Forgot About
April 9, 2012
http://www.bloomberg.com/news/articles/2012-04-09/illinois-is-pension-basket-case-you-forgot-about
Mark why don’t you just put down the sources you are talking about instead of typing and copying what they say?
Doesn’t “Little Wheeler” get it Y E T?
The rest of the state must subsidize wasteful, failed educational deserts like Chicago, Eligin, Joliet, E. St. Louis, etc.