Governor Quinn (and Speaker Tom Cross): Illinoisans deserve pension reform of substance

January 7, 2012

Illinois faces a gloomy state budget prediction.  Projections show that government employee pension costs will rise about 43 percent over the next three years. 
 
As it stands, the Illinois TRS (Teachers Retirement System) is the worst funded pension system in the country with its $40 billion unfunded liability, representing only part of the total $77 billion that the TRS owes current retired teachers and all active teachers who have not yet retired.
Despite the astronomical amount of the TRS unfunded liabilities, why then is the Illinois Retirement Fund being invested in risky investments (betting on higher returns), despite similar risky investments which netted investment losses in fiscal years 2009 and 2010 (Reported in Crain’s Chicago Business on Dec. 19, 2011)? 

It would be prudent for Governor Pat Quinn to become familiar with the Illinois Policy Institute’s new three-part series to be released on Friday, December 6th, Pensions vs schools, as he prepares to sign into law what Quinn has referred to as a major crackdown on lucrative public pension abuses.   http://illinoispolicy.org/news/article.asp?ArticleSource=4597&utm_source=Illinois+Policy+Institute&utm_campaign=7d6454a527-Nov+22%2C+2011+E-letter&utm_medium=email

For all practical purposes, Quinn’s signing of the new pension reform law, reported in a Chicago Tribune article on Thursday, Jan. 5 (New law targets pension abuses), might stem the fragrant pension abuses uncovered in the past few months, but it represent only a tinkering around the edges of the reform demanded by Illinois’s  runaway pension system.  Real reform must apply to teachers already in the retirement system, not just new hires.

Highlights found in the Illinois Policy Institutes three-part report, Pensions vs. schools, shared as a preview with IPI members and friends on Thursday, January 5th by Ted Dabrowski, Vice President of Policy, include:

 

  • In higher education — In recent years 80 cents of every new state dollar were spent on retirements leaving less for the classroom, resulting in the need to cut programs, reduce class size, and reduce the teaching staff in school districts across the state.
  • In PK-12 — Unless the system gets reformed, by the year 2029, nearly 50 percent of state funding of schools will go toward retirements, despite ample spending by the state for education.

The IEA (Illinois Education Association) lacks credibility in suggesting that teacher pensions are typically quite modest. Illinois teachers often collect a starting pension of $60,756 a year.  Their initial pension then grows 3 percent annually.  With retirement possible as age 55, their initial pension grows at a 3 percent annually rate.

From an article published in the State Journal-Register on November 6, 2011:

“Normally, when a teacher retires, his or her pension is calculated based on this formula: The retiree receives 2.2 percent of his or her final average salary for each year of service, up to a maximum of 75 percent of the final average salary. Final average salary is calculated by the adding the four highest years of pay together in the last 10 years and dividing by four.”   http://www.sj-r.com/top-stories/x2128843634/TRS-report-raises-questions-about-timing-of-pension-vote

As a resident of Lake Bluff in northern Illinois, Lake Forest High School District #115 teachers rank first in Lake County with an average salary of $106,457 as reported in the 2011 Illinois Interactive Report Card.  These generous salaries do not even reflect additional compensations which could include special bonuses, compensation given for extra duties performed, or payments of both health insurance and TRF contributions.   

In an act that could only be called illogical, uncaring and shameless, in November of 2011 Lake Forest High School teachers were walking the picket line during ongoing contract negotiations, urged on by union representatives, demanding higher salaries with a message that they deserved more!    http://lakeforest.suntimes.com/opinions/letters/8669490-474/private-sector-would-relish-teachers-pay-at-lake-forest-high-school.html?print=true

Teachers in the Zion-Benton School District 126 have recently called a strike which is ongoing.  Granted, their salaries do not equal some of the wealthier school districts in Lake County.  The average teacher salary in District 126 is $65,000, which is not unreasonable considering the rather generous pensions they will receive upon retirement. 

It is also necessary to consider the tax base of  District 126, which is lacking ever since Exelon prematurely and unwisely closed the Dual Zion Nuclear Plant in 1998.  The average wage of those who live in the District is $44,000.  It is interesting that teachers with employment of less than five years in District 126 were not in favor of striking.

According John Tillman, CEO of the Illinois Policy Institute, pension reform is a must if there is any hope of turning Illinois around as it tethers on the brink of insolvency.  

All across the nation tax payers are footing the bill to pay for the generous salaries and pensions teachers are receiving through union negotiation that raise teacher salaries beyond those received by those in the private sector.

Is sacrifice no longer a politically correct word when applied to doing what must be done to ease the burden on taxpayers in a challenged economy?  Despite a law in Illinois that prohibits Illinois teachers from enrolling in Social Security, Illinois teachers still come out far ahead of their private sector counterparts.

Governor Quinn, we need real reform here in Illinois.  And to union officials, why should your members live “high off the hog” while private sector workers are being asked to tighten their belts? 

 

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