The “new reality” for public employees is about rediscovering that funding is not guaranteed to the pension systems, even though public employees are guaranteed a pension “benefit” that cannot exist without guaranteed “funding.”
The “new reality” reveals an unlikely-guaranteed funding because some legislators (mainly democrats) want to shift the state’s financial responsibility (its normal costs of pensions) to school districts, universities and property taxpayers, regardless of promises or consequences.
The “new reality” is about distorting fundamental issues and blaming the state’s budget deficit on teachers, firemen, policemen, and other state workers. It is about the notion that public pension systems are not affordable and, therefore, unsustainable. It is perpetuated through skewed broadcasting that omits the obvious fact that pension costs are increasing because of a defective 1995 “ramp-up” payment to the pension systems and the accrued pension debt caused by irresponsible, incompetent and corrupt politicians; reckless union leaders; and three illogical court rulings (People ex. Rel. Illinois Federation of Teachers v. Lindberg, 1975; McNamee v. State, 1996; People ex. Rel. Sklodowski v. State, 1998).
The “new reality” is about HB 1447 and SB 1673, two bills fouled by duress (unlawful pressure) and undue influence (the exploitation of a relationship of influence to obtain an advantage). It is about reneging on responsibilities; thus, there is pension reform such as capping salaries for final pension calculations, increasing the retirement age for receiving a cost-of-living adjustment, and coercing public employees and retirees to make an illicit choice or lose the state’s precarious health insurance subsidy and creditable earnings in retirement or compounded COLA.
The “new reality” is about creating disposable public employees, privatizing services for profit, and ignoring the decline of the middle class. It is about disregarding an active and retired teacher’s dignity; about betrayal and indifference and discounting the legal and moral commitment to proceed ethically by reforming the state’s pension debt and revenue structure, because what really matters for most Illinois politicians is not the state’s perpetuated unfunded liability and inequitable and unbalanced revenue system, but the diminishment of public employees' rights and benefits and elimination of the state’s pension payments despite the severe effects it will have on thousands of peoples’ lives.
-Glen Brown
“A Long Time Ago [Two Years ago] in a [TRS] Galaxy Far, Far Away…”
To the Editor [of the State Journal-Register]:
August 6, 2010
R. Eden Martin's article in the August 4 State Journal-Register concerning ways to fix state government's budget crisis unfortunately contained some misinformation about state pensions, especially teachers' pensions. It's unfortunate because Mr. Martin's misinformation only scares teachers and state workers into thinking that their retirement plans are built on sand. In reality, teachers and other government workers will continue to receive their pensions for years to come.
In his article, Mr. Martin incorrectly states that if a state pension plan goes broke, the employee's claim "is against the pension fund - not the state," implying that employees have no legal recourse to their money and would get stiffed. His conclusion is based on an incomplete reading of state law.
Teachers comprise the largest single segment of public pensioners in Illinois. The state law that empowers the Teachers' Retirement System (40 ILCS 5/l6-158(c)) is very specific: "Payment of the required State contributions and of all pensions, retirement annuities, death benefits, refunds, and all other benefits granted or assumed by this System, and all expenses in connections with the administration and operation thereof, are obligations of the State." In other words, state government does guarantee teachers' pensions.
Mr. Martin also claims that state government's "sovereign immunity" against lawsuits would prevent teachers from successfully suing to claim their pensions. In reality, the state has waived its sovereign immunity in regard to teacher pensions because TRS is a qualified pension plan under the tax deferral provisions of the Internal Revenue Service Code. Federal law would protect all claims.
Finally, Mr. Martin's premise that state retirement systems could "go broke" is, in itself, faulty. It assumes that at some point in the future, all outstanding pension obligations come due on a specific day because all school districts, as well as state and local governments, just stop functioning.
Sincerely,
Dave Urbanek
Public
Information Officer
Teachers'
Retirement System of the State of Illinois
“A Long Time Ago [21 months ago] in a [TRS] Galaxy Far, Far Away…”
To the Editor [of the State Journal-Register]:
November 3, 2010
In his recent letter to the editor, Gerald Naughton unfortunately repeats an erroneous prediction from Northwestern University professor Joshua Rauh that the State of Illinois' public pension systems will "run dry" in 2018. The reality is Mr. Rauh's doomsday scenario has been routinely discredited by financial experts.
The state's largest public pension fund, the Teachers' Retirement System, currently invests more than $33 billion in assets for its 365,000 members and will pay out more than $4 billion in pensions and benefits this year. Retired teachers in Central Illinois should not worry about the stability of their pensions.
Rauh's prediction will only come true at TRS if – over the next eight years – TRS does not earn another dime in investment income or does not receive any contributions from active teachers, school districts and state government. That scenario is simply next to impossible.
First, because state law says teachers and school districts must contribute to TRS, the only way those contributions dry up is if all public school districts in Illinois stop operating. Further, Rauh greatly underestimates the investment income TRS and other pension systems will generate in the future. His prediction is based on an unrealistic investment return of about 2 percent per year. In fiscal year 2010, the actual rate of return on TRS investments was 13.5 percent. Over the last 25 years it averages out to 8.6 percent.
Repeating Rauh's prediction as if it were a cold hard fact only serves to unnecessarily scare teachers into thinking their pensions will soon collapse. Nothing could be further from the truth.
Sincerely,
Dave Urbanek
Public Information Officer
Teachers' Retirement System of the State of Illinois
“A Long Time Ago [13 months ago] in a [TRS] Galaxy Far, Far Away…”
To the Editor [Voice of the People, Chicago Tribune]:
July 7, 2011
The Tribune's July 5 editorial, "Rescuing public pensions," is centered on the false premise that Illinois' current pension plans for its public employees are "doomed" and unsustainable. The truth is that the state's pension plans are sustainable. When public pensions are not properly funded on a timely basis – as we have seen for decades in Illinois – state costs increase as the government plays catch-up. Two-thirds of the state's $6.4 billion pension contribution for fiscal year 2012 is the cost of "kicking the can down the road."
While it is true that taxpayers – including teachers and public employees – foot the entire bill, in reality the amount of tax dollars needed to help fund the state's current pension obligation is $1.6 billion. The remainder is debt service and paying off an unfunded liability. This is an important distinction. It is often falsely claimed that public employees receive "lavish" pensions. Adding the cost of paying down debt to the actual cost of benefits lends credence to this misconception.
In recent months, the central question raised by the Tribune in the court of public opinion is whether tax dollars should be spent on pensions or other state programs— and not whether the state has the money to pay its pension obligations. This is, correctly, a conversation about spending priorities, not pension sustainability. Teachers' Retirement System, the state's largest public pension plan with 372,000 members, is committed to being a trusted partner in the on-going discussion over public pensions. But as this conversation continues, it is vital to keep in mind that correct facts, the Illinois Constitution, state laws and prior judicial rulings do matter, however inconvenient they may seem in the court of public opinion.
Sincerely,
Dick Ingram
Executive Director
Teachers' Retirement System of the State of Illinois
That Was Then; This Is Now:
A Chicago Tribune Commentary, April 10, 2012
In recent days, news reports have circulated throughout Illinois claiming that I am calling for changes in the benefits currently received by retired teachers. I understand completely the confusion and frustration these reports have created. To be clear: Neither I nor Teachers’ Retirement System is proposing any changes in member benefits, especially a reduction in the current annual cost-of-living adjustment. All of us at TRS are working to educate our members and the general public about a “new reality” in state government that throws long-term financial viability of the system into serious doubt. It is not our role at TRS to suggest a solution to this problem.
In February, I informed the system’s board of trustees that TRS can no longer be confident that the General Assembly will appropriate all of the money to TRS that is required by law. The State of Illinois’ growing budget deficit and the system’s $43 billion unfunded liability is together causing this new reality at TRS. If the General Assembly does not continue to provide all of the funding called for in state law, calculations done by TRS actuaries show that the system could become insolvent as soon as 2030.
Last year, TRS reported that the system’s financial status was good. For the last several years, the state has been able to make its legally-required annual contribution to TRS. As long as the state makes that payment, TRS can “tread water” indefinitely and be viable well into the future. The system has carried an unfunded liability since 1953 and has never missed a check.
I told the board that preventing insolvency may include significant changes for TRS: New revenues must be generated, and if they are not, benefits may have to be reduced. Any of these significant changes can only be made by the General Assembly. I have outlined for the media the possible areas where lawmakers may look for a solution. There are only a few options available and none is very pleasant to discuss – changes in the cost-of-living adjustment, in member contributions, in retirement age and in the benefit formula, as well as increased revenues through taxes.
Dick Ingram
Executive Director
Teachers’ Retirement System of the State of Illinois, Springfield
Letters to the Editor can be found at http://trs.illinois.gov/subsections/press/TRS_Speaks.htm
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.