The pension dodge, Springfield style

Opinion: Columns

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Jack Crowe

It's election season in Oak Park with a primary election of state senators and representatives around the corner. Something else is around the corner too. Gov. Pat Quinn and Senate Majority leader John Cullerton are floating their proposal to cure the chronic underfunding of the state pension fund.

Remember the state pension fund — the one underfunded by over $80 billion, the most underfunded pension fund in the nation with only about 43 cents put away for every dollar that should be there? The one that our Illinois legislators and governors (when they weren't headed to jail) failed to fund over the last two decades? The huge state liability that is in large part responsible for the state's deteriorating credit rating?

But now there's a solution forming in Springfield — a solution so elegant and simple, only an Illinois politician could have thought of it.

The solution, dear friends, is you.

That's right, Oak Park and River Forest real estate taxpayers, you will be left with the tab for the state's failure to keep its promise to pay its share of the enormous teacher pension fund gap.

Here is the reasoning: In Chicago, the teacher pension obligations are funded by two sources: the teachers themselves and city taxpayers through the Chicago Public Schools. Long ago, some long-gone legislators, whom no one can name, came up with a different deal for suburban and downstate teachers.

As a result, suburban and downstate teacher pension obligations are funded by teacher contributions, a tiny bit by school districts (i.e. local taxpayers), but a big chunk is paid by the state. This, our legislative leaders now say, gave the local school districts carte blanch to negotiate high pension payments to teachers which the school districts did not have to pay because the obligation was passed on to the state.

But the state has had its own passive-aggressive response to school-district pension shenanigans: It has failed to make anything approaching its full contribution for decades, so now we have today's multibillion-dollar shortfall.

Here is where it gets interesting: The Governor and Senate leader Cullerton are saying it's unfair that suburban school districts took advantage of state laws and dumped the funding obligation on the legislature. Remember, Chicago has long been liable for its own teacher obligations.

The solution? Wipe the pension-funding obligation off the state's books and dump decades of obligations back on the local school districts. Got it? The pension obligations that the state should have been making will be the obligation of our local school districts.

But wait: Our school districts don't have that kind of money sitting around. So the obligation will fall on? Who else? You and me, the local real estate taxpayers. And that's the way we do things in Illinois politics these days.

So my question to our local state senators and representatives who are running for election in the upcoming primary? Where do you stand on this issue and do you deserve our votes?

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Reader Comments

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Unfortunately  

Posted: March 2nd, 2012 9:57 PM

Wouldn't it be nice, hint, hint, if the WJ contacted Don Harmon and asked him to respond to the issues raised here? Our founding fathers knew what they were doing when they recognized the importance of free speech and the press. They knew how much it meant to them. I've been SCREAMING that we've got Harmon down the street, y'know, Mr. "Good Govt" - and, yet, all I hear from him is crickets? Yes, I'm calling him out - via this source. C'mon, Dan, I know that you might be reading this. What's up?

OP from Oak Park  

Posted: March 2nd, 2012 6:57 PM

A few years ago at one of the OP elementary schools 4 teachers all decided to retire. Since then not 1 has...Hhmmm

TellingItLikeItIs from Oak Park  

Posted: March 2nd, 2012 6:39 PM

Not just Susan Bridge but every Oak Park teacher that retired up til last year took part in the teachers union's practice of massive pension-bloating preretirement salary "bumps". Constitutionally protected institutionalized fraud. How covenient.

OPRF Guy  

Posted: March 2nd, 2012 6:38 PM

@ Our Leader. Your point is not irrelevant. The private sector stopped giving pensions out for this very reason. People where retiring then finding plum work and took both a salary and pension. So there was an incentive to retire young and take your pension and get a job. Meaning instead of 12 yrs of payouts, there was 22 yrs. Not a workable formula. Our politicians have given us an unworkable system by the numbers and tells us too bad?

OPRF Guy  

Posted: March 2nd, 2012 6:27 PM

@ Mary Ellen. Pensions are not what they are. Citizens can force change. Two years ago there was a referendum for a Constitutional Convention in Illinois that lost. Part of that idea was to open up pensions and change them. Guess who fought that idea and won? I guess politicians fear democracy. Most calculations have the school's portion or your Property tax doubling. Chicago and Rahm have already done that study and he campaigned on stopping that. He has support.

Mary Ellen Eads from Oak Park  

Posted: March 2nd, 2012 6:02 PM

This is irrelevant. Her pension is protected by the state constitution. The question is, what will happen with future pension obligations and how much will it cost us if the state shifts future pension responsibility to the districts. Along the way, somebody must remember why the state started picking up these costs in the first place. Perhaps an effort to shift all education costs to the state? Perhaps the WSJ can help us here, as well as with estimating the additional property tax costs.

Our Leader: Susan Bridges  

Posted: March 2nd, 2012 5:48 PM

Former D200 Supt./Principal Susan Bridge is the poster child for scamming the teaching pension system, when she received a huge salary increase (to $290,000) prior to retirement, so she could receive a huge pension increase. She now has the 23rd highest pension of the entire state ($190,492 per year). Though collecting this state pension, she remains employed at Concordia University and is an associate of the educational search firm Hazard, Young, Attea, and Associates, Ltd.

Mary Ellen Eads from Oak Park  

Posted: March 2nd, 2012 5:22 PM

I'm glad somebody is finally paying attention to this proposal to shift responsibility for teacher pension costs to the districts. We need to keep our focus on the main issues though. How much higher will our property taxes go up if a bill is passed. What is the position of our state legislators. Everything else is irrelevant. The pensions are what they are. But after the election, our legislators will have far less interest in our opinions.

Unfortunately  

Posted: March 2nd, 2012 3:41 PM

@OPRF Guy. I've observed that if any one in OP (and many other places) represents center-right POV's (and I'd say that I'm closer to right-center) then OP libs, media, neighbors, immediately zero in on one aspect of their beliefs and seek to demonize. And so we have tremendous group think in OP (somewhat addressed in this forum) and a lot of "go along to get along" people and decisions. There isn't much corruption here (Harmon included/excluded), but only seeing issues from 1 angle is very bad.

OPRF Guy  

Posted: March 2nd, 2012 3:23 PM

@ Laughing. No...Teachers pensions are not social issues. They are compensation issues that currently have them receiving 3 times has much retirement pay then a person with similar wages in the private sector. Also, is it fair that teachers pay absolutely nothing to support older people on SS. Nothing by them or their employer! I pay into SS that benefits my Mom and Dad. A teacher does not help pay to support their Mom and Dad. So a I pay teacher's retirements and their parents. Fair?

Laughing  

Posted: March 2nd, 2012 3:15 PM

Are teachers life pensions social issues?

OPRF Guy  

Posted: March 2nd, 2012 2:55 PM

@Unfortunately...excellent Post! You are correct in your bipartisan rant. I however would like to see a few more people from the center/right elected so that the Dems have something to think about. Has long has the right cares about social issues so much...it will never happen. Would it not be nice to have a political party that was pro-choice, pro-green, pro-limited taxes and pro-small government? You would think OPRF would be the perfect place for that? I can dream!

Unfortunately  

Posted: March 2nd, 2012 1:39 PM

@OPRF Guy. Alright, I'll attempt to answer: yes, every American should be part of SS! Further, don't overlook the fact that, shock, politicians also receive generous pensions and benefits!!! This is a group of individuals, say Harmon/Madigan/Ryan (see, I'm bi-partisan in my criticisms!) that believe that they can do whatever they want - whenever they want. Us? We're just sheep to be sheared. OP, as usual, will vote overwhelmingly for the status quo. Oak Parkers - so smart, but yet so stupid.

OPRF Guy  

Posted: March 2nd, 2012 12:34 PM

@Eric, we have choices to make and they should not be seen as good or bad. I would like you and others to answer this simple questions...why do State employees not have to participate in SS? Should not every American be a part of SS? Why should we support a system of benefits promised by politicians with no real means to pay for them? If someone steals from you (Politicians) should they not be punished? So when you vote maybe you should vote against those who put you in this situation.

Unfortunately  

Posted: March 2nd, 2012 10:11 AM

I apologize for not finding any links, but I've read several times that the state HAS paid a ton in to the system (more than teachers) - it is just that the rapid and large increases in teacher salaries AND the ridiculous spiking...made the "plan" explode. It doesn't help that current union leaders become subs for one day and then also get on the gravy train! First, stop the COLA's. Next, amend the constitution - or simply declare BK. Madigan/Harmon vs Walker? If only we had that choice!

Luke ScottWalker from Oak Park  

Posted: March 2nd, 2012 9:37 AM

Speaker Mike Madigan needs to be indicted, prosecuted, and thrown into prison. He is ground zero for the insipid corruption in this state. Nothing good will happen in Illinois until he and everyone in his political army (his daughter included) is removed from state government. Instead of OPer's worrying about what's going on in Wisconsin, we should focus our anger & energy on the SW side of Chicago. How about we do some good for a change?

Want to stay in Oak Park  

Posted: March 2nd, 2012 8:14 AM

epic lulz, exactly... there are no good options. The state didn't meet its commitment in the past, and unfortunately doesn't have the money to fund the pensions now. Ultimately we will be paying more income taxes, property taxes and other taxes. As I said, the only good that can result is school districts may take a more sober approach when negotiating upcoming contracts.

realitysux  

Posted: March 1st, 2012 10:32 PM

all state and local union members can certainly afford to pay more since they don't pay any FICA taxes. Also, there needs to be caps placed on pension payouts just like socioal security. The MAX SS payout now is about $28k per year regardless of income, while pension payouts go up dollar for dollar and based on just the last 4 yrs average salary. Don't forget that pensions are the largest investors in hedge funds and private equity yet supporters mock privatizing social security. Go figure

Unfortunately  

Posted: March 1st, 2012 8:57 PM

On the flip side, Madigan HAS been key in bringing some significant reform for NEW union employees, but any one hired before, hmm, I think 1/1/11, and still breathing when it is time for them to "retire" in 20-35 years.....gets the gravy train pension - which means that IL will either be BK or heavily reformed long before then. But, hey, I notice that Don Harmon, who is unopposed, is spending big money and time with yard signs for the primary!! He has HIS priorities straight!! And it's not us!!

State of ILL Taxpayer  

Posted: March 1st, 2012 8:27 PM

Paging Mike Madigan...Paging Mike Madigan

State of ILL Taxpayer  

Posted: March 1st, 2012 8:25 PM

I heard that the income tax hike last year that I thought was passed to pay pass due bills was actually a ploy to fund the pensions for the unions that are in the Democrats pockets. We still are broke and owe big time. Only now is the state having a pension reform discussion. Unbelievable!

Unfortunately  

Posted: March 1st, 2012 8:11 PM

To begin, this "problem" is nothing new. The unions knew all about, but didn't worry - because "the pensions are protected by the IL constitution!" Therefore, the money that could have gone toward the pensions instead went for salaries - and the underfunding grew! Next, the state should have a max annual pension. The spikes, etc. done at the end of the cycle, before retiring at age 56, led to a lot of $100K & more pensions. How about a cap of $75K? Unions? Sub for a day? Harmon? Silence.

epic lulz  

Posted: March 1st, 2012 7:59 PM

We have two choices here. Either we the taxpayers come up with the money to meet our obligations, or we screw over the teachers. No one wants to pay more income tax. No one wants to pay more property tax. So be honest. What is it exactly you want to do?

Jim Coughlin  

Posted: March 1st, 2012 3:56 PM

Thanks for the references, OPRF Guy. I agree with you about Mike Madigan. He's wasted our tax dollars, fattened his wallet and fed a huge patronage army with no-bid contracts and no-show jobs. Any attempt to establish honest and open government in Illinos is blocked by Madigan and his cohorts. The dirty work that Don Harmon engaged in to weaken reforms of the Freedom of Information Act is evidence that Illinois will never dig itself out of this mess until we toss them all out.

OPRF Guy  

Posted: March 1st, 2012 2:24 PM

@Jim - Specifically on pension information I would direct you to the Tribune/WGN study last month, the Sun-Times series in November and the Illinois Policy Institute that have produce a tremendous amount of hard fact studies outlining the abuse problem. However it really isn't abuse. The system is rigged and the math does not work. Our Illinois "One Party" rule has deepened the problem. Madigan has been speaker for 30 years and has kept power by giving out pensions like these.

Jim Coughlin  

Posted: March 1st, 2012 12:00 AM

I'm not sure special deals between public employee unions and our elected officials are solely responsible for the State's pension woes. Has an independent study been released that examines the problem? The burden placed upon us is by those corrupt politicians who have been misspending our tax dollars for decades. Graft, waste and cronyism have rob the state of the funds needed to fix roads, build schools and countless projects that would benefit the citizens of Illinois. Efforts to reform government are blocked by the very people we elect to serve. It's no term limits. No to transparency. No to reform of the freedom of information act. No to good government.

OPRF Guy  

Posted: February 29th, 2012 9:39 PM

Pensions are also a joke in how they are handled. Beavers can put $68K of money in his pension today and increase his monthly take by $3.5K having a two year payback. Mayor Daley will get all of his contributions ($400K) back in 26 months?? The math does not work. Jack and others make it sound like there is a funding issue. Their is a over-promising issue with politicians who can not say no.

OPRF Guy  

Posted: February 29th, 2012 9:35 PM

Jack you make it sound like Chicago is ok, it is not. In 2015 the RE taxes of Chicago will need to double to cover this shortfall. The mayor knows this and that is why he is pushing the State for reform. They too did not fund correctly. How did this happen? Easy, Unions say I will get you elected if you give me something even though the math does not work. The taxpayer will always pay since we are Noble and they have to...

Want to stay in Oak Park  

Posted: February 29th, 2012 8:50 AM

This is painful for OP and RF taxpayers. The state should have been funding the pensions. They didn't. Illinois residents will pay higher income taxes, property taxes, and/or other taxes. Our representatives need to determine the options that are fair to all residents. Districts that negotiated higher salaries and pension payments created more of the obligation and must pay more. The only good that can result is school districts may take a more sober approach when negotiating upcoming contr

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