A Response to TRS Executive Director Dick Ingram’s call for more “sacrifice” from Illinois teachers

The following is Dick Ingram’s Letter to the Chicago Tribune on December 9, 2012 (reprinted in the Hartford Courant):

Last October, during one of the many public meetings I have spoken at on behalf of Teachers’ Retirement System throughout Illinois, I was confronted by an angry teacher. During the meeting, I had described in blunt terms the serious financial challenges facing TRS and the difficult time state officials were having in finding a solution that would secure the system’s future for all educators; those who are retired and those still teaching. This man was angry. He deserved to be. He felt cheated by a system that had promised him security when he retired. And quite frankly he has been cheated.

I found myself face to face with him after the meeting. By this time his anger had ebbed, and he was reflective. “This isn’t really about me, is it?” he said. “It’s about my daughter.” It turned out his daughter is in college and wants to follow in her father’s footsteps and teach in Illinois. But right now TRS cannot promise her a pension in 30 or 40 years when she finishes her career.

“Can we fix it?” he asked. Yes, I explained, we can. But any solution will be painful and involve sacrifice. He thought a moment more and posed a question I have not been able to get out of my head — a question we all have to answer. “Why wouldn’t we do that?”

Over the past 20 months, I have written to and spoken to thousands of Illinoisans about the problems TRS faces in keeping the pension promises made to our members. Describing the potential insolvency of TRS, and not being able to keep our members’ retirement promises, has generated many difficult — and even angry — conversations. The truth is often hard to accept. But everyone in Illinois deserves to hear the truth, however inconvenient. The challenges TRS faces are steep. But they are not beyond solution.

Say what you will about Gov. Pat Quinn’s latest effort to spark the proper attitude toward pension reform. Beyond his “Squeezy the Pension Python” video campaign, there is an important kernel of truth in the central message. All of these difficult conversations about pensions are far more about securing the future than balancing the present or understanding the past.

For the past eight months, TRS has emphasized that state leaders must act now to prevent insolvency in the future. TRS has the same fiduciary obligation to the 25-year-old teacher as to the 85-year-old retiree. Fixing the problem for the young teacher fixes it for everyone. Why wouldn’t we do that?

Those five words capture the attitude we need to solve the pension problem in Illinois. We are at our best when we think of the future instead of the present, especially when the present is challenging and difficult. When we sacrifice for the next generation, we do great things for today. Who among us would not strive, in lean times and good times, to make the future better for our children and grandchildren?

That is how we have to approach the pension challenge in Illinois. That is how we must think about the choices before us to put TRS and the other Illinois public pension systems on sound footing. It is not about us, it is about those who come after us. They might not even know or appreciate the sacrifice made for them, but what does that matter? Right now we have the opportunity to fix an old problem that has lingered in Illinois for decades — if we focus on the future. Why wouldn’t we do that?

Dick Ingram, executive director of Teachers' Retirement System of Illinois

Irony of the Week:

“TRS will not take a position on House Bill 6258. It is the legislature’s job to dictate the laws and rules that govern TRS and other public pension systems. The job of TRS is to administer those laws and work to secure the System’s finances so that the promises made to generations of teachers by the General Assembly can be kept” (Dick Ingram, December 6, 2012)

Dear Dick Ingram:

I didn’t know that your job description as the TRS executive director also includes occasional supplications. It is easy to construct victims with a dubious call for “sacrifice.” Of course, by “sacrifice,” you, Civic Committee members, and many Illinois legislators mean only public employees. Rose Ann DeMoro, the leader of National Nurses United, said the wealthy have “created an economy on to themselves without people.” Surely, you can see that to victimize teachers again and again because of the TRS unfunded liability is reprehensible. 

We are told that to fix the Teachers’ Retirement System teachers must pay for the system’s liabilities they did not create; that teachers need to compromise through “consideration” and make additional sacrifices. We know you are aware that the “sacrifice” you call for entails changing the public employees’ constitutionally-guaranteed pension by way of a bill that mitigates earned benefits and deprives legally-guaranteed rights. 

Nevertheless, you say, “It is not about us. It is about those who come after us. They might not even know or appreciate the sacrifice made for them, but what does that matter?” 



Mr. Ingram, is it a “Shared Sacrifice” when a governor rolls back the billionaire’s and millionaire’s taxes and then lacerates the state’s school budget while also attempting to diminish a public employee’s pension? Is it a “Shared Sacrifice” when, for most teachers, their pension plan is their only retirement subsidy because they cannot receive Social Security benefits? Is it a “Shared Sacrifice” when legislators and their lawyers want to change an existing contract, one that is not made compulsory on them, to one that forces teachers to accept an “impairment and diminishment” of their constitutionally-guaranteed pension and retirement rights?

You say, “What does it matter? …We are at our best when we think of the future instead of the present, especially when the present is challenging and difficult. When we sacrifice for the next generation, we do great things for today.” 

That’s quite a declaration by someone who hasn’t taught in public schools for 35 years. As a part of the past generation that has now arrived in this “challenging and difficult present” machinated by flagrant incompetence and fraudulence, I thought about the “future” a lot during my teaching career: the “future” of my students, my colleagues, my family, public education and its inequitable reforms. 

You asked, “Why wouldn’t we do that?” There’s an irony in repeating “Why wouldn’t we do that?” ad nauseam. Your repeated question (for poor effect?) makes a false presumption that demands a simple answer to a complex problem. Perhaps your tautology is your adaptation of Governor’s Quinn’s puerile “Squeezy the pension python,” and your attempt at diverting everyone’s focus from real solutions for the state’s revenue and debt problems is just another ploy modeled after the Civic Committee’s skewed Illinois Is Broke operation. 

When you asked, “Why wouldn’t we do that?” It’s the “We” that slams into dramatic irony. “We” means that only teachers bear the burden. It’s obvious that you, many members of the Illinois General Assembly, and members of the Civic Committee of the Commercial Club of Chicago do not know the meaning of the word, “sacrifice.”

Sacrificing teachers (and other public employees) doesn’t address the revenue and pension debt problems in Illinois. “We” offer you and the Illinois General Assembly 10 legal and moral solutions instead of "pension reform" or breaking a contract:

·         The current “Pension Ramp” does not work for the five public pension systems. The “Ramp” entails larger payments today as a result of the 1995 funding law – Public Act 88-0593 – to pay the pensions systems what the state owes. The pension debt needs to be amortized for a longer frame of time (a flat payment) “just like a home loan that is amortized.” Though the initial payment will be greater in the beginning, over the long term it will become  a reduced cost and a smaller percentage of the overall Illinois budget as it is paid off throughout the years;

·         Raise revenue to pay the state’s debts. With a constitutional amendment, “given an appropriately designed graduated-rate structure, Illinois could cut the overall state income tax burden for 94 percent of all taxpayers—on average providing a tax cut to every taxpayer with less than $150,000 in base income annually, raise at least $2.4 billion more in revenue, and keep the effective individual income tax rate for millionaires well below five percent…  Illinois taxpayers with the bottom 94 percent of base income collectively would receive an annual tax cut of $1.06 billion… [T]he combined effect of this policy would be a stimulus to the economy from tax cuts and additional state spending (assuming that the additional revenue is used to fund current public services that would otherwise not be funded) that would create at least 36,000 private sector jobs in communities across Illinois…” (Executive Director Ralph Martire, Center for Tax and Budget Accountability, CTBA);

·          “The State shall provide for an efficient system of high quality public educational institutions and services… The State has the primary responsibility for financing the system of public education (Article X, Section 1 Constitution of the State of Illinois). There needs to be a required annual payment from the state to the pension systems;

·         Tax services. Broaden the sales tax base to include selected consumer services. Illinois is one of five states with sales taxes on fewer than 20 services (The Center on Budget and Policy Priorities);

·         Eliminate the tax loophole for “Tax Increment Financing Districts”;

·         Eliminate “Edge Tax Credits” and other tax loopholes for large corporations in Illinois;

·         Increase taxation on the wealthy: Illinois is in the top 10 of regressive state tax systems where the wealthiest taxpayers do not pay as much of their incomes in taxes as the poorest and middle-income wage earners (The Institute on Taxation and Economic Policy);

·         Implement a more timely system of payments (cash management practices are greatly affected by budgetary practices in relation to deferred liabilities which place additional pressures particularly in the first and second quarters of the year to pay those expenses; timing of tax payments also affects the state's cash flow and should be adjusted accordingly);

·         Shifting the state’s“normal costs” for the public pension systems to school districts will have negative consequences. “Property tax bases would not be sufficient to absorb any shift in the employer normal cost for teacher pensions… School districts are demographically and financially varied, and it would be difficult to impose a uniform normal cost shift on them… Illinois ranks last in terms of state spending on K-12 education, and school districts are already relying heavily on local property taxes… While shifting the state’s normal cost obligations onto school districts may provide some relief to the state’s budget, it will not mitigate these financial obligations and will instead push them onto school districts that, on average, already derive the majority of their revenue from local sources” (CTBA). The state should continue to pay the normal costs for the five "public pensions."

·         Examine and improve the efficiency of the state’s government. This includes establishing term limits for Illinois legislators.

Sincerely,
glen brown