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Where the TRUTH starts. Public Pension Reform. Law Enforcement News. Officer Down News. Collective Bargaining. Corruption. - See more at: http://www.dukesblotter.com/#sthash.gzOejJCT.dpuf

Officer Down

Thursday, March 29, 2012

PENSION: (Illinois) Taxpayers Have Contributed 230% More Than Teachers Since 2001

--I think there is a couple of important questions missing from this evaluation.

1. Amount of taxpayer money actually used for pension funds from each year?

2. Amount that taxes went up in comparison to money owed by the state each year?

3. What did the legislators do with the billions of dollars that were collected from taxpayers and NOT used properly?


It is time to stop trying to turn the taxpayer against the public employees and for the state to face up to its wrong doing and then let's move forward to fix the problems.--
Duke

Story at Champion News

March 26, 2012
By Bill Zettler

An unending cascade of misinformation continues to come out of Springfield, union headquarters and the media so let me say it loud and clear:

We Taxpayers Have OVERPAID Into Pensions Not UNDERPAID.

Let’s keep it simple:

Is $20.1 billion greater than $8.7 billion?

If the answer is “Yes” then we taxpayers have paid $11.4 million more for teacher pensions from 2001-2011 than teachers have.

 That’s 230% MORE. 

The way I look at it the taxpayers are due a refund with interest.

Teachers vs. Taxpayers    
         
State Pension Contributions to TRS 2001 – 2010      



In millions of dollars    

YEAR   Taxpayer Contrib. (Employer)    Teacher Contrib. (Employee)    Taxpayer to Teacher %

2001                      821                                             643                                        128%
         
2002                      907                                             681                                        133%

2003                      1,021                                          732                                        139%

2004                      5,489                                          769                                        714%

2005                      1,055                                          762                                         138%
         
2006                      658                                             799                                         82%
         
2007                      854                                             826                                         103%

2008                     1,172                                           865                                         135%

2009                     1,604                                           876                                          183%

2010                     2,200                                           899                                           245%
         
2011                     2,300                                           910                                           253%

TOTAL>>            18,081                                         8,762                                        206%

Penion Bond Interest
            2,072
   
Total Paid In         20,153                                        8,762                                          230%


SOURCE: Teachers’ Retirement System of the State of Illinois    
June 30, 2010 – 2011    
         
Actuarial Valuation of Pension Benefits.          

SOURCE: Teacher Retirement System Actuarial Reports – June 30, 2001 & June 30, 2011


If the Teachers Retirement System loses $12 billion why do taxpayers have to pay for it?

The other dirty little secret we never talk about is how the taxpayer is responsible for every salary increase, every early retirement, every benefit increase and every dollar of investment loss. Which is exactly why we taxpayers (not the “state”) are contributing 400% more than employees this year.

Seven members of the 13 Member TRS Board of Trustees are current or former employees of the public school system.  So “teachers” are making the investment decisions for the TRS but the “taxpayer” (formerly known as the “state”) is required to make up all loses via higher contributions i.e. higher taxes. Taxpayers are also required to pay 100% of the interest on all Pension Obligation Bonds, an amount now approaching $1 billion/yr. Since they are in charge why aren’t teachers paying instead of taxpayers?

For more than a decade taxpayers have paid more than any reasonable system should require – 230% more in the case of TRS. Please note every single year taxpayers paid more than employees except in 2006.

Why are state pensions so expensive – the “Four Rules of Too”.

1. Retirement is “Too Early”:
State Police can retire at 50, teachers 54 and others at 55. Compare this with Social Security full retirement at 66. A person retiring at 50 will, on average, spend more time retired that he did working. That is very expensive proposition.

2. Pensions are “Too High”:
From a maximum of 75% of salary for teachers to 80% for State Police and University employees to 85% for legislators to 75% plus Social Security for state employees plus 3%/yr. COLA, pensions are very expensive to finance. When combined with early retirement, costs are off the charts.

3. Salaries are “Too High”:
Since pensions are percentages of salaries and are without any upper limit, high salaries lead to high pensions. State police earning $175,000, Phys Ed teachers $203,000 and school superintendents $368,000 have led to 5,400 state pensions in excess of $100,000/yr. growing at 25%/yr. This projects to 25,000 pensions over $100K by 2020.

4. Contributions are “Too low”:
About 99% of state employees pay less into their retirement system than we do into SS and 401K and they pay for fewer years since they retire earlier than we do. But they retire up to 16 years earlier (age 50 for troopers, age 66 for full Social Security) on much higher pensions so therefore they should be contributing much more than the private sector not less. Because they are not paying their fair share the extra cost must be picked up by the taxpayers of IL.

Illinois pension and retiree health care costs are creating an economic dead-end.

The Census Bureau just reported that Chicago now has its lowest population in the last 100 years. Mayor Daley says the new pension requirements for Chicago pensions will raise property taxes by 60% (Bloomberg Dec 21, 2010). Do you think raising property taxes by 60% will lead to more people moving to Chicago or moving from Chicago? Moving from Chicago of course.

Use the same logic for the state. Will potential new employers look at Illinois and see $1 trillion in pension and health care benefits owed to retired public employees over the next 35 years as a reason to relocate here or as a reason to relocate to Indiana, Wisconsin or Ohio? Anybody with common sense would choose someplace other than Illinois to relocate.

Do you think these numbers oriented businessmen will notice that this years $6.8 billion tax increase exactly matches this year’s pension cost ($6.2 billion) and retiree health care cost ($600 million)? Yes, I think they will notice.

Will the pension supporters’ whining that pensions are “owed” or “promised” have any effect on these decisions? Yes, it will have a negative effect.

If Illinois wants to avoid becoming a Michigan and Chicago a Detroit then comprehensive, meaningful pension reform needs to be completed soon. Decisions to come to Illinois or leave Illinois are being made every day.

Every day we avoid making tough pension cost decisions more taxpayers leave Illinois. Who is going to pay the pensions when all the taxpayers have left?

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