Bad News For Illinois Teachers: Illinois is Broke and You Might Not Get Your Pension!

The unions and the Democrats are lying to you, teachers.

In Illinois we have a $140 billion retirement pension deficit for teachers, folks. Don't let the unions lie to you all the way until you decide to retire only to find out you lost everything.

And you police, firemen, and other state employees… don't think you are better off than the teachers. You aren't.


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  • Question for you - do you think it's fair that someone who contributed 10+% of their annual income to a state-backed pension plan to not receive their benefits upon retirement? (especially since they will be completely ineligible for Social Security since the state-backed pension plan was in place of FICA)

    Teachers, firefighters, police officers, and other public workers made their contribution per their contract with the state, most times in lieu of current wages. Don't you think the state will be legally obligated to pay the benefits that they contracted for? If the state can't, won't the Federal government have to step in and rescue the fund like they did for UAL when the company filed for bankruptcy?

    I don't understand the resentment toward employees who sacrificed market wages for deferred retirement wages and contributed to the fund as per their negotiated contract...

  • In reply to Brent Cohrs:

    Nice try. I have nothing against the employees. It is the unions and the politicians that are the problem.

  • In reply to publiusforum:

    Both the unions (elected by their members) and the politicians (elected by the taxpayers) negotiated contracts that are binding. It wasn't the individual employees that failed to make their contractual contributions. We can agree on this, right?

    Is there a precedent for who takes the hit when the pension contract is breached with a government-administered plan like this? The PBGC protects pensioners with private plans - who protects pensioners in Illinois' plan?

    If there is no guarantee and there is no precedent, what do you feel is fair for the employees who made contributions and can't receive SS benefits?

  • In reply to Brent Cohrs:

    Yeah, you have your constitutional rights. Too bad that there won't be any taxpayers in the private sector to pay you, though.

    If you want more details, I discussed this in "Get Employed." As usual, someone fed you the union line.

  • In reply to jack:

    No one "fed me the union line". I'm a taxpayer, just like you and I'm concerned about who is going to pay to fix the underfunded pension plan.

    Private sector employees who still participate in a pension plan are insured by the PBGC so that the employer can't walk away with the contributions they made or benefits they negotiated for. Who is going to protect the state employees who made their contributions per their contract? They aren't eligible to collect Social Security, so is it fair that they lose negotiated benefits because the state mismanaged the plan?

    Whether you support unions or not is irrelevant. All of these contracts were negotiated in good faith in the past (just like any pension program offered in the private sector). If we (the taxpayers) want to discontinue pensions and opt for 401k's (or whatever they're called for public employees) in the future, that has nothing to do with the obligations the state has to those who contributed to the plan in the past.

  • In reply to Brent Cohrs:

    All of these contracts were negotiated in good faith in the past (just like any pension program offered in the private sector). If we (the taxpayers) want to discontinue pensions and opt for 401k's (or whatever they're called for public employees) in the future, that has nothing to do with the obligations the state has to those who contributed to the plan in the past.

    That much is true. But no one that I know of has said anything about forfeiting contributions.

    What Cullerton is saying is that, under his interpretation of the Illinois Constitution, any element of the existing pension plan can't be changed for existing workers, and hence, the state can't say that the current plan stops and forward all state employees are on 401ks. In the meantime, that is what most private employers say, or have put former employees on independent contractor status, and all they have are their SEP IRAs going forward.

    For that matter, you had a choice whether to become a public employee, and if you didn't use clout to get that job, at least the people to the left and right of you did. If it were such a bad deal, go into the private sector, who you assume will pick up this tab.

    The point made in this post is simply the one that (as Hulk Hogan would say) "what ya gonna do when the money runs out?" Especially when Quinn is doing his best to run private employers out of the state, or, when they threaten to go, give in to "incentive" tax extortion?

    Unlike the feds, Illinois can't print money.

  • In reply to jack:

    I'm not a public employee, btw. I've worked for small companies my entire career. I've watched friends in both sectors experience highs and lows with compensation and retirement benefits. Each of us had a rough idea what the risk / reward equation was for our choices - at the time we started.

    As for employers threatening to leave, I say we call their bluffs rather than give in to their demands. Can a company like Sears really afford to relocate its best employees to North Carolina? If they're not willing, can they find experienced professionals in that state to replace them with? Will they be able to fly around the country as easily or cheaply from a NC HQ? There are hundreds of factors that affect that financial decision.

    I would rather see the state stick to its guns and enforce a fair tax for all companies than constantly cave to "incentive tax extortion". Maybe we should do a study about the true effects relocating to a state like Texas actually had on a firm's overall profitability.

    Quinn needs to sell Illinois to these corporations and justify the value they receive for being here. Our educated workforce, our infrastructure, our hospitals, our society and cultural assets. There is a value to doing business in Illinois. We can't sell out our children and grand children's futures every time some backwater state is having a fire sale.

  • In reply to Brent Cohrs:

    You obviously have not been watching the business news. Companies ARE leaving the state, we are ranked as the third worse business climate in the country (beat by New York and California if I remember), the city of Chicago is the only big city in the nation that lost population in the last ten years, and we have some of the worst unemployment in the nation.

  • In reply to Brent Cohrs:

    In fact, it is your anti-business, anti-capitalist attitude that has taken us to the worst of the worst status!

  • In reply to publiusforum:

    Since I'm not an elected official, I don't see how I contributed to any of this. I live out in the 'burbs (like you) and even if I vote Dem, it never matters at the state level.

    I work in business and I'm very much pro-capitalism. I am anti-corporatism - there's a big difference between the two. Capitalism encourages competition, provides choice, and rewards innovation. Corporatism seeks monopolistic control, limits choice, and stymies innovation.

    It would be interesting to graph businesses leaving the state during Repub and Dem administrations with another axis for industry type. I'm not a believer in Supply Side Economics and don't believe very many business decisions are based solely on tax consequences. No business forgoes revenue opportunities over marginal tax rates. If there's no market, on the other hand...

    If we're worried about losing companies to Indiana, are we supposed to sell off all the state's resources and infrastructure to finance tax breaks like they did? We see how well privatized parking meters are working out for Chicago residents and taxpayers...

    When your only value in the marketplace is being the lowest price provider, what happens when someone else comes along and undercuts you? Ironically, if anyone should understand this, it's Sears. In the 80's, Kmart was #1 and Sears was #2. Now, combined, the two are #3 behind Walmart and Target. Moving to Indiana isn't going to ever make them #1 again...

  • In reply to Brent Cohrs:

    I find interesting your seeming insistence that all of this is the fault of greedy business. Why is none of your attention focused on cutting government back down to size? Why are cuts not a part of your discussion? Me, I think both the business sector and the govt have their problems, but most of the blame for our current mess goes on the head of govt, not business. Notice that all the states that are growing are not punitive against all its jobs providers as you seem to want to be?

  • In reply to Brent Cohrs:

    Businesses look out for their bottom line. Downsizing, outsourcing, contracting, importing, hiring overseas - whatever it takes to increase that ROI for shareholders. Profit drives capitalism. Greed drives corporatism.

    Businesses benefit from infrastructure and employees educated in public schools. Without either, they wouldn't exist. The social structure that makes it possible for them to exist deserves as much a percentage of the profits as management and the shareholders (I also purposely left out labor, who should also get its share).

    I won't argue with you that Illinois has been mismanaged for decades. It needs to be overhauled.

    However, there is nothing punitive about charging full value for our infrastructure. The other states that are poaching our businesses are doing so with taxpayer subsidies. They hope to get a return later with money they borrow (from somewhere) now.

    Can the taxpayers of Illinois afford to subsidize corporations? How well did that work with Sears? I watched my little 'burb make direct infrastructure improvements and defer sales tax dozens of times and every single time the business failed before it had to pay the same fair share as every other business in town! Corporations like Walmart intentionally move stores outside the city limits as soon as their rebates expire.

    It's a two-way street. I don't believe any government should give upfront subsidies against a promise to create jobs in the future. Why can't we just give them a rebate AFTER they've created a job?

    Think how much different our economy would look today if we gave all those "job creators" their tax cuts AFTER they created jobs. Since they created no net jobs in 10 years, we would be money ahead and they would have had less money to create jobs overseas...

  • In reply to Brent Cohrs:

    If you are not a public employee, I find it hard to see why you would want to mimic their legalistic arguments, since it apparently wasn't you who made the contributions and claim to have a contract in return. Maybe you can explain your interest in those assertions.

    In fact, the people who should be complaining are providers of services to the state, who are about two years behind in getting paid. If that isn't a breach of contract, I don't know what is. Apparently, though, they provide mental health services, health care services to state employees, and the like, with only the prospect of eventually being paid. I'm sure that the state employees and pensioners would scream if they only got scrip payable in 9 months.

    I agree on the points about corporate extortion and a fair tax, but Quinn is certainly not the person who can make any credible representation to businesses thinking of moving to this state, instead of, say, Indiana, not to mention Texas. And the trained workforce will follow those employers, leaving those dependent on the state here. Hence, it is unlikely that any study will change perceptions.

    I can think of no better way to assure the fiscal bankruptcy of the state than what it is doing, and crying about all the public employees' constitutional and contract rights.

  • In reply to jack:

    My interest in the state employees is from a perspective of fairness. If they agreed to serve the needs of the taxpayer based on compensation that included paid wages, benefits, and deferred compensation and benefits AND contributed to the fund in lieu of paying into FICA, I think it would be very unfair to break that contract now. That's not to say that they can't be reasonable and accept a compromise if it's a matter of receiving all and bankrupting the state or receiving nothing and paying the state's other vendors.

    That said, who takes responsibility for encouraging the state to take pension holidays when the market was doing well? That's a big part of the shortfall. The employees certainly couldn't take a break from making their contributions. (just looking for an opinion here). Too often, there are no repercussions for the truly bad players in these crises.

    I appreciate the civil discussion, btw!

  • In reply to Brent Cohrs:

    Unfortunately, "fairness" seems to be something that cannot be the sole goal of a solution at this late a date.

    I agree that it is very unfair if govt employees suddenly find that all the things promised them aren't going to happen. Were I one of those employees, I'd be pretty mad, maybe even righteously so.

    However, that does not detract from the fact that there are too many of them (many should be fired outright), that their unions illicitly negotiated political deals that were not good for taxpayers (gov't unions should all be eliminated), and that all along they knew darn well that what they were doing was unsustainable but they didn't care because future people would have to deal with it (and that would be us!).

    But, I really don't feel too bad for these people. They sat back, became rich off the backs of the voters, and did nothing while their union reps and pliant politicians gave in to their every demand while the state goes broke and the taxpayers get made the poorer for it all.

    It's about time these fatcats made rich at our expense feel the pain like the rest of us.

    Now, I would like to see a solution that keeps the promises for the current retirees (if possible) but the unearned riches HAVE to end for future retirees.

  • In reply to Brent Cohrs:

    I suppose that the providers of mental health services, social services, and the like are entitled to fairness, too, but they aren't getting paid in anything like a timely manner.

    I'll let publius speak to what is fair or not, but note that bankruptcy, in adjusting debts, affects contract rights. For instance, all the GM and Chrysler dealers thought that they had iron-clad franchise agreements, often bolstered by state law, until the bankruptcy court invalidated them. Of course, one could suppose that anything that happens to a car dealer is fair.

    There is some debate whether bankruptcy law applies to states (as opposed to municipalities, such as Harrisburg, Pa., which filed yesterday) but the state's liabilities will be adjusted, one way or another, some time but eventually.

  • In reply to Brent Cohrs:

    I agree that the abuses are infuriating. I lived in U-46 and watched the school board renegotiate the superintendent's contract before it expired. She then took medical leave for the remainder of her term, forcing the district to pay someone per diem to do her job while still paying her, then she retired at a higher cost to the citizens!

    I'm divided on unions, especially when they provide a competency / professionalism standard in addition to collective bargaining. My U-46 example is one extreme of an incompetent elected body renegotiating a contract, it could just as easily go the other direction with a new mayor replacing the police chief with his unemployable brother-in-law. Unions serve a purpose in ensuring the taxpayers that we're getting competent people who desire to do the work we expect of them while ensuring those dedicated employees they won't lose their jobs when a new administration is elected.

    I don't believe that it is a very big percentage of public workers that are ripping off the taxpayers. I think waste runs rampant throughout the system from the Wall Street firms that manage the pension fund to the contractors who rebuild our roads. We need campaign finance reform to prevent certain entities from having undue influence on our elected officials.

    After all, it is OUR government and our elected officials are supposed to look out for OUR best interests. We need ordinary citizens to step up and serve and not career politicians who become wealthy upon retiring from office or in the case of some (Governor Perry) while they're in office.

  • In reply to Brent Cohrs:

    Brent you said, "After all, it is OUR government and our elected officials are supposed to look out for OUR best interests."

    Ah, but there is the rub. When there are government unions involved this is impossible. You see, govt unions don't care about you, they don't care about public safety or public good. All they care about is "getting stuff" for members. In fact, that is understandable. That is a union's purpose after all.

    They are negotiating in bad faith from the beginning. We expect our govt to be responsive to us, but govt unions can't have that as it affects their members.

    So, they cut out voters and coerce govt and the courts to their side. They do this by plying govt officials with millions of dollars in campaign contributions.

    This is why govt unions are antithetical to good govt and wholly undemocratic. It is why they should be eliminated.

  • In reply to Brent Cohrs:

    "...All of these contracts were negotiated in good faith ..."

    That sure is a matter of opinion!

    Regardless, though, the money is simply NOT there. What do you do then? All your suing, all your carping won't squeeze money from nothing.

  • Great discussion thread - very civil, too.

    Mr. Publius, I don't share your convictions about the power of unions and the proportion of their role in our state's financial woes. I see just as much, if not more abuse, with legislation written to give preference to specific industries or corporations (or contracts to campaign donors).

    We do both agree on the campaign contribution problem. Campaign finance reform would go a long way toward curtailing this problem and allowing elected officials to negotiate in good faith with public workers.

    Jack, it would be very interesting to see what would happen if a state would (could or should?) go bankrupt. Everything from bonds to pensions to mandates to contracts to wages to vendor payments would all be subject to some form of arbitration / judgment.

    At some point this state does need to look at how it compares to other states in total taxation and expenditures. There is a level of service that needs to be provided and a cost associated with it. Some states have high property tax, high income tax, local income tax, high sales tax, higher fees, etc. while some have lower. Maybe our blend is off.

    Personally, I just can't understand why Wisconsin has better roads, a lower fuel tax, and no toll roads...

  • In reply to Brent Cohrs:

    I wouldn't say "as much if not more" but I absolutely agree that govt should not be subsidizing business. There we are in 100% agreement.

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