Tuesday, April 12, 2011

A Dialogue Between Teacher & Senator

Dear Senator Ronald Sandack:
Do your parents or grandparents live with the assurance of a pension?  I believe that you would not steal that promise from them if they did.  I also believe that you understand the importance of trust among individuals and the pension systems into which they have elected to participate.   However, there are some ugly facts I fail to understand.
I do not understand why the state of Illinois has underfunded its contributions to The Teachers’ Retirement System for decades and has used this money as if it were its own private savings account.  I do not understand why our elected officials have not competently and responsibly managed the retirement systems to which they were entrusted but fund other special-interest and on-going programs and services instead.  I do not understand how our past-and-present state officials have failed to generate enough revenue to meet the state’s fiscal obligations; nor do I understand how “pension borrowing” and “pension holidays” are fair to retiring teachers who believed they would have a promised and sound financial future.  Is it not true that “the level of [teacher] benefits is modest, comparable to national averages of public employee retirement systems…? The cost of benefits is not only in line with other states, it’s less than the private sector” (Anders Lindall, American Federation of State, County and Municipal Employees Council 31). 
Furthermore, I do not understand how public officials running for Illinois office can make promises that they will not keep once elected.  I do not understand how many of our public officials in both the House and Senate, and who have never taught in a school, can pass a bill for a Two-Tier Pension System without the input of Illinois educational leaders and discussion of the absurd, inevitable, and adverse effects it will have on Illinois students and teachers alike.  “The $80 billion of debt the state owes for pension benefits already earned remains unchanged by this bill” (Steve Preckwinkle, The State Journal-Register, April 4, 2010).  Lastly, I do not understand why the teachers’ pension is being blamed for years of state fiscal irresponsibility, incompetence, and corruption. 
I taught in public schools for 35 years.  My pension is all I have to live on now.  Like other teachers, I never missed a contribution to my state retirement plan.  I never received any bonuses either, and my school district never matched my contributions to my 403b.  Like other teachers, my Social Security benefits are next to nothing.  Incidentally, “Illinois taxpayers save more than $700 million per year by not paying Social Security payroll taxes for 78 percent of all active employees in the five state-managed plans, including all public school teachers” (Preckwinkle).
I believe that teacher retirees and the state of Illinois have “an enforceable contractual relationship” (Article XIII, Section 5, The Constitution of the State of Illinois);  I believe that any state cannot pass a law “impairing the obligations of contracts” such as ours (Article I, Section 10, The Constitution of the United States of America). 
I want to believe in a just system, in the rule of law and in promises to keep. I want to believe that there will be no attempt to pass a “law impairing the obligations of contracts” (Article I, Section 16, The Constitution of the State of Illinois); I want to believe that the state of Illinois will make an ethical decision to create the needed revenue and meet its obligations without jeopardizing the futures of thousands of teachers, and that belief is contingent upon whether the elected officials of Illinois will be competent, responsible, honorable, intrepid, and just.
Sincerely,
Glen Brown 


Dear Senator Ronald Sandack:
You are too young to remember this song by Simon & Garfunkel; nevertheless, the first few lines are: "Why don't you write me/ I'm out in the jungle/ I'm hungry to hear you..."

Do you think there should be Taxation of Retirement Income and changes in other pension benefits even though there are many Appellate and some Supreme Court cases that have ruled that “pension benefit rights [for public employees] cannot be diminished or impaired by the legislature”?  Explain.


Sincerely,
Glen Brown


Dear Glen:

There needs to be reasonable changes to our public pensions as they are now totally unsustainable and insolvent by any definition of the term. Go-forward benefit changes, reasonable ones, for new days worked does not impair nor diminish past earned benefits. Benefits already earned for past services certainly should not, and cannot, be lessened.

Presently, I do not favor taxing retirement benefits but that may become necessary if reasonable changes are not implemented to our public pension systems. Constantly taxing our residents is not a reasonable solution-- plan changes, again reasonable ones, must occur. Thanks for writing.

Ron

Dear Ronald Sandack,
But what are you basing your beliefs on?  Isn’t media evidence incomplete, biased, and fallacious?  Do they include the recent recoveries in equities, for example?  Isn’t there significant data contrary to the belief that public pension plans are in a crisis?  Despite the State’s underfunding of the pensions, TRS, for instance, is doing all right because of contributions from its members and its investment strategy of long-term diversification.  We know that its unfunded liabilities have also fluctuated throughout its history.

Rauh’s report has been proven wrong.  What do the Government Finance Officers Association, the Governmental Accounting Standards Board, and the National Association of State Retirement Administrators say about his findings? Most of the misinformation out there about “the public pension crisis” is slanted and out of context.  Shouldn’t the research come from actuarial science and public finance journals where the information is properly scrutinized by experts and not by charlatans?  Isn’t one of the assumptions about this crisis that governments will fund only earned benefits?  Is it realistic that state and local governments will contribute nothing to amortize past pension liabilities? 

Are some people assuming that the costs of defined-contribution savings plans will be lower than defined-benefit plans? Wouldn’t the transition costs be exorbitant? What about the “Pension Clause” and all the antedated court cases that upheld it? Wouldn’t this litigation be useless as well?  Do you really believe that the current public pensions are more expensive than the private sector?  Explain.

Why go after public employees anyway?  Doesn’t that seem unjust to you? Do you believe that the current benefit structure is the primary contributor to the current pension crisis, or is the main culprit the State’s inability to fund its pension systems according to actuarial principals?  What should be done about this without threatening teachers and other public employees?  Consider this: aren’t retirement systems a small portion of State and local government budgets?  And doesn’t the money paid to retirees come out of pension trust fund assets and not out of the general operating revenues?  Aren’t the public employees an important source of economic stimulus to communities across the State because of these benefit distributions?  Teachers do not and cannot receive Social Security.  Consider Social Security and its costs for Illinois taxpayers: is a State-Funded pension more expensive for Illinois taxpayers to afford than Social Security?

Indeed, we have a State budget deficit because of an antiquated revenue system; because of wasteful spending, tax breaks to special interest groups, deregulation and the encouragement of State debt. We also have a budget deficit because of a previous Market downturn and loss of revenue due to the recession, unemployment, property devaluation, foreclosures, and bankruptcies.  We know why TRS and other State pensions are unfunded: past General Assemblies and governors have not honored the 1970 constitutional obligation to fully pay the money owed to the TRS pension but use that money instead as a “private savings account” and that the real problem is not benefit levels, which are found to be average nationally, but the debt accrued and lack of state revenue. 

Nevertheless, we also know that unfunded liabilities would be a serious problem if all State and local employees retired simultaneously, but that is not going to happen.  What is going to happen is that State employees will continue to contribute to their pensions and there will be a growth in assets because of long-term investments, even though legislators will probably continue to default on their promise to fully fund these pensions and continue their attacks on public employees' and retirees' benefits and rights.

Teachers and other public employees are tired of being scapegoats for the financial mess created by the private sector and past legislators.

Sincerely,
Glen Brown


Glen:

Yours is a voluminous treatise-like response which I am happy to reply to face-to-face. I have spent considerable time and effort to think through all aspects of the public pension situation in Illinois. I am happy to share my thoughts...and hear yours. Call my legislative assistant Barb Finn (number below) and we'll talk at my Dist. Office when I am not in Springfield about good policy development in the public pension arena. Regards.

Ron   

3 comments:

  1. Hey Glen. If you schedule that meeting with Sandeck I'd love to go in with you with the information I learned as part of the Pension Modernization Task Force. I love how they throw around the word "unsustainable" when they have no idea about the actual cost. Say it enough and you believe it even though it's not true!
    Ed

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  2. This letter was written and posted on April 22, 2011:

    Thank you, Senator Sandack, for taking the time to meet and talk with me regarding the teachers’ pensions, even though I do not live in your district. It was a pleasure to make your acquaintance. As you are well aware through my e-mails to you, public pensions and the State’s budget deficit are extremely important issues to me and to thousands of teachers across Illinois.

    Please allow me to reiterate and to partly revise what I had stated in a previous letter to you and to other legislators: I believe that both active and retired teachers and the state of Illinois have “an enforceable contractual relationship” (Article XIII, Section 5, The Constitution of the State of Illinois) that originates when teachers first begin contributing to the pension system (The decision of the Illinois Supreme Court case, Felt v. Board of Trustees…1985); I believe that any state cannot pass a law “impairing the obligations of contracts” such as ours (Article I, Section 10, The Constitution of the United States of America).

    I want to believe in a just system, in the rule of law and in promises to keep. I want to believe that these attacks on teachers’ pensions are not some ugly political games played by legislators who know that they have everything to gain by ignoring the antedated court cases regarding the Pension Clause so they can inevitably say to their voters “that they at least have tried to challenge its constitutionality by sending it through the court systems.” I want to believe that there is no “Shell” bill or a late amendment to an existing bill that will blind-side all of us the way SB 1946 did when it passed the House and Senate on March 24, 2010 in less than 24 hours. In other words, I want to believe that there will be no attempt to pass a “law impairing the obligations of contracts” (Article I, Section 16, The Constitution of the State of Illinois) and that the legislators of Illinois will make an ethical decision to create the needed revenue to meet the State’s constitutional obligations without jeopardizing the futures of thousands of teachers and their families, though that belief is contingent upon whether the elected officials of Illinois will be responsible, moral, intrepid, and just and uphold both the Constitution of the State of Illinois and the Constitution of the United States of America.

    Let me close with these personal questions for you: do you want to become one of the senators who helped save the teachers’ pension from a flagrant injustice, or one of the senators who destroyed every teacher’s promised future? Do you want to become a “former senator” who abandoned and ruined the lives of our children’s greatest resources, their teachers, or a senator who is credited with safeguarding public education in Illinois by protecting and honoring a most important commitment that was made to one of our children’s most important influences? I am looking forward to hearing from you again, and I hope I may also, as you said to me in our meeting, “address a committee of legislators” in Springfield on May 4th.

    Sincerely,


    Glen Brown


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  3. Over the years, I have come to the realization that it takes extreme courage and strength of character to fight for the public employees of Illinois. Sadly, no one in Springfield has these qualities.

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