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By Nancy Thorner – 

Illinois taxpayers are beginning to paying attention to how their tax dollars are being spent, and Tea Partiers in Northern Illinois were especially interested last week in getting more information on one of the state’s biggest expenditures – state employee retirement benefits.

The Northern Illinois Patriots met at Austin’s in Libertyville, IL, Wednesday, April 9, although the usual meeting night of the organization is every 2nd Tuesday of the month from 6:30 – 9:00 p.m.  Greg Clements is president of the organization. The core beliefs of the Northern Illinois Patriots are Limited Government; Free Market Economy; Pro-family; Choice of Education; and National Defense.

Bill Zettler, Director of Research at the Family Taxpayers Foundation, was on hand as featured guest to speak about the “Illinois Pension Scandal,” also the title of Zettler’s outstanding book.

Prior to introducing Bill Zettler, Clements commented:

1.  Our bond rating is worst in this nation.  The first watch dog group to blow the whistle on Illinois’s pension problem was in 1945.  A promise of promising more than can be paid has been ignored for over 60 years.

2.  Impact on business:  They will not expand.  Small businesses are relocating to bordering states, resulting in the loss of tax revenue.

3.  Personal impact:  It compounds the problems for those who stay through increased and additional taxes levied.  Every 9 minutes someone leaves Illinois.  Illinois ranks third in the number of people moving out of the state.  Only New Jersey and New York win over Illinois in the number of people exiting our state.

Greg Clements was questioned about IRISA, the Employee Retirement Income Security Act passed in 1974 that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.  “Just why doesn’t government have to be subject to the same rules as business where at least 80% of their retirement fund must be funded?”  The catch:  In general, ERISA does not cover retirement plans established or maintained by governmental entities.  As government uses the cash method, it can promise payment, but the amount owed doesn’t become a liability until it is paid.

Clements called the 1970 Illinois Constitution a “recipe for disaster” and that “no one deserves a constitutionally deserved retirement.”   Although government pensions in Illinois might be funded at the 57% level, if even at that, commitments already made are outstripping the money being put in.  Three words in the Constitution, “diminished or impaired,” cap a clause that is designed to force Illinois to meet obligations to its retired public sector workers.

On Thursday, April 10, current information about Mayor Rahm Emanuel’s partial city pension overhaul that passed two days before in the General Assembly (Tuesday, April 8) was shared by State Representative Jeanne Ives (R-Wheaton).  Representative Ives’ wrote:

Mayor Rahm Emanuel’s partial city pension overhaul passed in the General Assembly on Tuesday. The bill that passed merely scratches at the surface of the problem. In October 2013, Barron’s shed some light on the severity of Chicago’s pension problem in an article that ranked the 20 most populous cities in the US based on their debt as a percentage of government revenue.  Detroit, currently bankrupt, ranked 12th at 372 percent.  Chicago, ranked 20th– last place, at 683 percent. The article exposes that it would require ALL of Chicago’s government revenue for the next seven years to finally pay off the city’s debt and unfunded liabilities for worker pensions and healthcare. 

It is going to get worse.  Politicians eventually must deal with the larger Chicago funds that are in worse shape – police, fire, and teachers.  Rolling out these reforms piecemeal hides the depth of reform needed by masking the entire cost to taxpayers. Hidden during debate is the $600 million in additional pension payments state law requires the city to make to its police and firefighter funds next year and the $600 million in pension payments needed for Chicago teachers at the same time.

Greg Clements introduced Bill Zettler to the assembled patriots.  Zettler’s remarks added immensely to the current pension issue, especially in relationship to the TRS (Teachers’ Retirement System), given his knowledge of the issue as presented in his book: “Illinois Pension Scam.”  Zettler was encouraged to write “Illinois Pension Scam” by Jack Roeser of Champion News in his role as Director of Research at theFamily Taxpayers Foundation

According to Bill Zettler, although the amount of unfunded pension is often given at $100 billion, this is just a guess.  When adding up all future pensions that must be paid by the state’s five retirement funds, it’s more like $170 billion.

Zettler immediately zeroed in on the TRS, as it’s the state’s biggest public pension fund.  According to an article published at “Huff Post Chicago” on October 25, 2013 by Reuters:  TRS said it has never received a full contribution from Illinois since it was created in 1939.  TRS, the 39th largest pension system in the United States, serves 389,900 teachers, administrators and other school personnel and had assets of $40.97 billion as of Sept. 30, 2013.

Madigan was in the House back in 1970 when the “Constitution” was passed guaranteeing pensions, but not funding.

How is it that despite a 13% return on investments in fiscal year 2013, the TRS funding gap rose to $55.73 billion as of June 30, up from $52.08 billion at the end of fiscal 2012, increasing the unfunded liability of the TRS by 7%. With only $40.97 billion of assets, and a funding gap of $55.73 billion, real pension reform is urgently needed in Springfield, not a make-believe fix.

Bill Zettler explained how the ROI (Rate of Investment) has much to do with the way pension debt is mounting.  Using a large mounted tablet Zettler wrote the following simplified example to illustrate why pension debt is increasing:

  • Suppose that $8.00 a year pension is owed and there is $100.00 in the bank.
  • With $100 in the bank, the $8.00 a year pension can be met when receiving an 8% interest rate on a CD.  With this rate the pension can be paid forever.
  • Now let’s suppose in rolling over the CD that the best rate available is 4% for the following year.
  • Now in order to meet the $8 pension there would have to be $200.00 in the bank, as only 50% of the pension would be funded.

The proof is indeed in the pudding!  It matters not how much the amount of debt is.  When interest rates are cut in half, liability doubles.  

Zettler illustrated the nature of the “Defined Benefit Fund” with a pie-chart.   Depicted was how a small amount of money is paid into the fund by the employers and a slightly higher amount by the employees, meaning that the rest of the pie, which is over 3/4 of the whole, must somehow be paid for.  With the amount derived from investments cut in half from 8% to 4%, taxpayers are now liable for half of the amount that investments are no longer covering.

A $5.3 billion contribution would be needed to keep the unfunded liability of the TRS from rising further. As the TRS gave preliminary approval to only a $3.412 billion contribution for fiscal 2014, a further rise in unfunded TRS liability is assured.

High salaries for teachers equals high pensions.  Teachers in Illinois can retire at 55 or 30 years, with an assured 3% cost of living every year until the end of their lives.

Through FOIA requests, Zettler has determined that in Illinois there are 10,000 teachers and 16,000, if you include administrators, whose salaries are greater than $100,000.  In contrast, Wisconsin has one $100K teacher; Indiana (21); Iowa (8); Missouri (11); and Kentucky (0).

A handout by Zettler listed the 50 top pensions as of 2013, ranging in amounts from $439,672 down to $231,110.  Illinois now has its first $500,000 pensioner, anesthesiologist Dr. Alon Winnie, a retiree from the State’s University Retirement System.  His pension during 2013 was $512,964 or $42,747 a month.  His COLA payment of January 1, 2014 amounted to $15,389, raising Winnie’s pension to $528,353 or $44.029 a month.  Dr. Winnie has already collected close to $6 million to date. If he lives a normal life expectancy (80 years per IRS), he will end up collecting over $12 million.

It should be obvious that the defined pension benefit plan where the benefit formula is defined and known in advance and is predetermined by a formula based on the employee’s earnings history, tenure of service and age, as with TRS, is bound to collapse, especially for young teachers coming into the system.  Mandated is the need to shift to a 401K-style retirement system.  Might salaries be frozen for three years, and what about the yearly fixed 3% COLAS?

In closing Mark Miller announced a new endeavor for the Northern Illinois Patriots.  Its leadership team will help members by partnering and then working with them to educate people in their local communities on how to stand up, using facts, to shed light on the situation at hand.

Recommended as a coming event was the 6th annual Chicago/Illinois Tax Day Tea Party rally on April 15, 2015 at 4:00 p.m. at the Arcada Theater in St. Charles, IL.


Sunday, September 29, 2013

Dt.common.streams.StreamServer.clsBy Nancy Thorner and Carl Lambrecht – 

In any school district superintendents come and go.  Some stay longer in a position than do others; however, the position often offers a very generous salary plus a sizable compensation package.

Consider Superintendent Dr. Harry Griffith (at right) who retired on June 30, 2012, as superintendent of Lake Forest Districts 67 and 115.  Hired by Lake Forest District 67 in 1994 from a school district in Texas to become superintendent, Griffith’s shared service superintendency arrangement began in 2004.  A year before retirement Dr. Griffith was already the highest paid superintendent in Illinois with a total compensation package amounting to $430,000, more than that of the Chicago and Milwaukee school chiefs and the governor of Illinois.

Upon retirement Griffith’s basic salary mushroomed to $363,000. Now in retirement Dr. Griffith was listed as number 58 in the top 100 state pensions covering the entire state of Illinois in 2013, with an annual pension of $231,109.  Not to be overlooked is that Griffith will receive an automatic guaranteed increase of 3% per year until his death from the Teacher Retirement System (pension fund) in Illinois.

To replace Dr. Griffith as superintendent of Lake Forest Districts 67 and 115, a search was conducted outside both school districts.  Michael Simeck was chosen and assumed his position on July 1, 2012.  Prior to his hiring Simeck was superintendent at Bloomfield Hills Schools in Michigan.  Simeck’s basic salary during the 2009 – 2010 school year in Michigan (the last school year available) was $165,000. (FOIA request, Feb. 38, 2012).  Lake Forest’s contract awarded  Michael Simeck a starting salary of $230,000, with an extra $30,000 thrown in for good measure because Simeck was managing two districts.  But in Michigan’s Bloomfield Hills Schools Simeck had likewise been superintendent over two school districts.  Simeck’s very generous contract also included a $500 a month car allowance, a $30,000 annual contribution to the Teachers’ Retirement System, a $750,000 life insurance policy, plus an agreement to share moving expenses of $15,000.

The price to hire superintendents to manage Lake Forest’s two micro (small) school districts did not come on the cheap, even for an upscale community like Lake Forest in Lake County, considering that Simeck will oversee approximately 4,000 students with the aid of assistant superintendents and other directors.  On the other hand, the NYC Chancellor of Schools oversees 1.1 million students and earns less than $130,000.  To be fair, many superintendent salaries are quite generous in northern Cook County and in its collar counties of DuPage, Kane, Lake, McHenry, and Will.

It was Highland Park resident, Carl Lambrecht, who informed me that only after a short time David L. Behlow, Ph.D. is retiring as superintendent of North Shore School District #112.  Lambrecht regularly monitors the school districts that serve his community.  District 113 includes Highland Park and Deerfield High Schools, while District 112 has 12 schools located in Highland Park and Highwood serving 4,609 students in grades PK through 8th. Both school districts are located just south of Lake Forest.

Mr. Lambrecht suggested that it would be prudent for the District 112 school board to evaluate its personnel to select one among them who could assume the role of superintendent.  In Lambrecht’s opinion, it is not likely that an administrator chosen outside the school system would do any better than one chosen within the ranks of the district.  Among the hundreds of teachers in District 112, there are a number of principals and assistant superintendents, and even teachers, who would be qualified to take on the superintendency position.

Continuing with his thoughts Carl Lambrecht opined:  Why not open the position of superintendent to all staff members in Districts 112 and 113?  After all it is a given that those hired to work in Districts 112 and 113 have fine credentials in keeping with the fine quality of teachers and administration located by the search firm employed to fill positions.  And let’s not forget the many fine executives in Highland Park who could competently step into the administrative job.  Even a member of the school board might fill the position?

Although North Shore School District 112, like Township High School District 113, is doing an excellent job for some of its students, for others it is failing.  According to the school report card of North Shore School District 112 two of its schools are failing. (Read pages 17 and 18).

Regarding School District #113, Highland Park High School has received a failing grade for about nine years.  Its report card can be read on pages 11,12, and 13. Although Deerfield High School does fail from time to time, it is not at this time.

Might teachers and students who are doing well be having success in spite of the administration and the Illinois School Code, and, if so, why might this be so?

In the past twenty years there has been an increase in the cost to operate school systems in this nation, yet the quality of education has not improved.  Consider how Ron Clark came to New York City as a new, young teacher, taking a position at one of the worst schools in the city.  Being the new teacher that he was, Mr. Clark was given the worst class in his school, only to be recognized as having one of the best classes by the end of the school year.

As a new teacher in a bad New York City school, Ron Clark made a real change in the performance of his students.  In so doing Ron Clark proved that credentials, salary and tenure do not automatically make for a fine teacher or superintendent.  If you want more details about how Ron Clark outperformed teachers with tenure and many years of experience, there is a DVD and books in the Highland Park Public Library to check out.  If the material isn’t available in your library, request that it be purchased or read the amazing success story of Ron Clark at  “The Inspired Teacher.”

In no way is Carl Lambrecht implying that a superintendent shouldn’t receive a decent compensation; however, there are many superintendents with salaries of less than $100,000. The Regional Superintendent of Lake County Schools, Roycealee Wood, makes a salary of $120,000.  Governor Quinn’s salary is $170,000, and he is one of the highest paid governors in this nation!

Why is it that despite the decrease in school populations, the number of administrators continue to increase relative to the number of students and teachers?  At a time when computers have reduced administrative work in the private sector, it makes sense for schools to follow suit.  After all, the key person in a school is the teacher.  In a medical office it is the doctor, not the administrator.

Two questions are in order:  1. Why should a supeintendent for District 112, or any school district in Illinois, earn more than the governor of Illinois?  2. Why does a micro district such as District 112, as compared to a mega school district as found in Chicago and New York City, need so many high paid administrative positions?

Wouldn’t it makes sense to fill the open position of superintendent in District 112, and within other school districts, from within the ranks of its administrators and staff, rather than bringing in an outsider with a compensation package far grander than is called for and which must be funded by taxpayers?

Sunday, September 29, 2013 at 06:30 AM | Permalink

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