Wednesday, June 27, 2012

Not Quite a Sonnet on the Divisibility of Kinetics and Infinite Bisection (or a Theory on Yard Work)

I cannot help musing like the ancient
philosophers, such indolent meta-
physicians with nothing to do each day:
hulking Heraclitus with both feet sub-
merged in the same river, soaking bunions
in a flux to prove his Logos; drunken
Zeno, denying motion by proving
non-divisibility in goblets
of wine.  All this when there’s work to be done:
the grass needs mowing, the hydrangeas need
trimming.  No doubt about this collision
of leaf and blade.  I think I’ll leave the lawn
   half-cut, the boxwoods half-pruned, and ponder
   other dialectics in my backyard.

Not Quite a Sonnet...” was originally published in American Goat, 1993.

Tuesday, June 26, 2012

Pension Cost Shift: a superintendent’s (retired) perspective by Roger Sanders

Governor Quinn’s position is that “the taxpayers of Illinois should not be just there to subsidize the retirement costs of every single school district.” House Speaker Madigan says, “You have a situation where local school districts get a free lunch. They make spending decisions that they don’t have to pay for.” According to Quinn, “the new data showed that 478 out of 864 school districts across the state carried cash reserves as of June 30, 2011 that would fund at least 180 days of operating expenses - the equivalent of a full school year.”

Perhaps Governor Quinn should be looking at these school districts to learn how to effectively manage a budget instead of vilifying their superior management capabilities. One-term Quinn just has no idea of how to lead or how to solve complex problems, and he clearly has no idea of the important role of cash reserves. He’s more interested in pushing his problems off on to others rather than finding real solutions to problems created by 60 years of mismanagement by the Illinois General Assembly and state governors.

As a superintendent of a school district that maintained cash reserves that could carry the district through dramatic swings in funding, I think it would be helpful to consider the many variables outside the control of district management that can negatively impact operating funds. Local tax assessment, collection, and distribution practices can have a dramatic impact on district finances.

A number of years ago, the county in which my school district received its primary property taxes experienced a series of significant changes including delayed property assessment, delayed tax bills, and delayed distribution of taxes to the district. This resulted in over one-third of the district’s local revenues reaching the district 60 days past their normal date of receipt. This sequence of events occurred over three consecutive tax years. The district did ultimately receive all the tax revenues due eventually.

Nonetheless, this series of events created substantial cash-flow issues and resulted in great swings in the year-end balance sheet. My district had sufficient cash reserves to deal with the change in cash flow, but several districts needed to borrow money to pay bills, thus costing taxpayers more in interest that was paid on borrowed funds. In this case, the cash reserve saved taxpayers money.

State funds in recent years have proven to be extremely volatile with some grant funds coming as late as six months, with categorical funds dramatically reduced in districts not receiving funds as promised, and with general state aid delays or skipped payments. For districts that rely heavily upon state funds, this type of income volatility can result in districts borrowing money to meet payrolls and to pay bills.

Further, volatility in energy costs, particularly diesel fuel for buses, has resulted in dramatic increases in transportation costs at the same time the state is cutting transportation funds to schools. Diesel fuel costs have increased 54% since 2009. Moreover, there are those unanticipated emergencies or planned initiatives to consider.

The State of Illinois could take a lesson from districts that have established cash reserves. They know how to prioritize expenditures and focus their resources on planned initiatives; they know how to manage resources and set aside funds to carry them through difficult financial times brought on by external factors; they know how to restrain spending with an eye toward responsible management of resources, and they know how to work with their communities to raise funds and address local priorities.

Not once did I ever ask the state for extra help. In fact, over the years, I saw my district’s general state aid drop due to changes in the school aid formula, the shrinking of grant funds, payments of promised funds delayed, and the outlandish demands on professional practice that were intensified through No Child Left Behind and Race to the Top. We took care of business, set priorities, and did what was needed to be done to ensure an excellent educational experience for students, a high degree of professional practice, and prudent fiscal management.

Frankly, the Illinois General Assembly and the Governor could learn a lot from well-managed districts. If the state had exercised prudent fiscal management over the years, we would not find ourselves with the economic difficulties that have become characteristic of Illinois. Because of the state’s inability to set proper priorities, manage resources, and solve the culture of corruption and collusion, Illinois state government is seeking to push more costs onto local taxpayers. This is with no guarantee that the state will meet its obligations to existing pension liabilities that have amassed due to the legislatures’ and governors’ failures over decades to make the necessary pension payments… My suggestion is that the state seeks the counsel of the school administrators that have been successful at resource management and put them in charge of the state resources for a few years…


Monday, June 25, 2012

It’s about Keeping a Promise by Roger Sanders

The “automatic annual increase in annuity” prescribed by Illinois statute (see below) for retirees in the Teacher Retirement System is intended to ensure that the purchasing power of retirement benefits is not eroded by inflation. The federal government uses the Consumer Price Index for Urban Wage Earners (CPI-W) as the index for calculating Social Security Cost-of-Living Adjustments (COLA).

Illinois teachers do not earn Social Security credits while teaching and, thus, are not eligible for Social Security benefits from their teaching. Starting in 1969, the Illinois General Assembly established the TRS COLA at 1.5%. It increased to 2% in 1972 and was established at 3% in 1978. The TRS COLA has remained at 3% and is calculated upon the prior year’s retirement benefit, i.e. compounding. This is the same compounding process used by Social Security.

SB1673 proposed major changes for both active and retired TRS members. The legislature adjourned without acting upon SB1673; however, it continues to be a real threat to TRS member benefits.

• SB1673 applies to both active and retired members

• The bill requires active and retired members to choose between two options (1) accept a change in annual COLA that is capped at 3% or one-half of the CPI, whichever is less in order to retain “access” to state-supported health insurance through the Teacher Retirement Insurance Program (TRIP), and active teachers could then use future salary increases in calculating their retirement benefit, or (2) reject the COLA change, keeping it at 3% and lose “access” to TRIP. Active teachers would not be able to use future salary increases in calculating their retirement benefit.

• The bill also establishes a new COLA start date where TRS members agreeing to Option 1 would first see the new COLA on January 1 in the year after turning 67, or in the year after the fifth anniversary of the member’s retirement, whichever is earlier. If a retired Tier I member now eligible for the current COLA accepts Option 1, the current COLA would be suspended until eligibility for the new COLA (See

Illinois Pension Code: 40 ILCS 5/16-133.1) (from Ch. 108 1/2, par. 16-133.1) Sec. 16-133.1. Automatic annual increase in annuity.

Each member with creditable service and retiring on or after August 26, 1969 is entitled to the automatic annual increases in annuity provided under this Section while receiving a retirement annuity or disability retirement annuity from the system. An annuitant shall first be entitled to an initial increase under this Section on the January 1 next following the first anniversary of retirement, or January 1 of the year next following attainment of age 61, whichever is later. At such time, the system shall pay an initial increase determined as follows:

(1) 1.5% of the originally granted retirement annuity or disability retirement annuity multiplied by the number of years elapsed, if any, from the date of retirement until January 1, 1972, plus

(2) 2% of the originally granted annuity multiplied by the number of years elapsed, if any, from the date of retirement or January 1, 1972, whichever is later, until January 1, 1978, plus

(3) 3% of the originally granted annuity multiplied by the number of years elapsed from the date of retirement or January 1, 1978, whichever is later, until the effective date of the initial increase…

For more Information, read

Also read COLA: Is It Guaranteed in Illinois?

Friday, June 22, 2012

Senator Dave Syverson’s Form Letter Regarding “The Pension Problem” and Roberta Rebb’s Personal Response

To Roberta Rebb:

The pension problem should not come as a surprise to anyone. This has been a problem that began in the early 90’s, but became a real issue starting after the 2003 election.  In 1995, realizing there was a problem, I sponsored legislation that would mandate the state to fully fund its pensions every year. That mandate was in effect from 1995 until 2003. When Blagojevich and Madigan took over the legislature one of their first actions was to negate that law mandating fully funded pension payments. From that point on they were using budget gimmicks and skipping pension payments which just compounded a system that was already actuarially unsound.
The bottom line is that the system is not sustainable and is collapsing. As I have mentioned for years, the system was built on a lot of faulty and misleading data compounded by irresponsible leaders not funding the program. End result: Illinois’ pension system is in the worst shape in the nation with unfunded liabilities over $100 Billion and growing. The major reasons for the pension system’s instability and overall underfunding can be summed up in five areas:

  1. Underfunding of the State’s obligation – This translates to about one-third of the systems underfunded liability. By itself it is not the cause of the crisis. It just moved the crisis date up. (As a reminder, I voted against every budget that did not fully fund the obligation)
  2. Market returns lower than projected – The pension funds have, and are, performing at rates lower than projected in their models.
  3. Actuarial projections – The good news is people are living longer; the bad news is the funds did not update systems to account for increased actuarial life spans.
  4. Larger than expected end-of-career pay raises and overtime across systems – The system does not collect enough money or have to time-compound funds to recover from large end-of-career pay raises and overtime paid.
  5. Pension enhancements – There were 16 pension enhancements added to the system since 1970. The most costly being the 1990 COLA compounding, including survivors. The increased contributions for adding that benefit was not close to covering the actuarial liability it added to the system.
It angers me that knowing that, if the legislative and union leaders had heeded our warning and concerns ten years ago, we would not be sitting here having to face these painful decisions.

The bottom line – We can blame a lot of people for this problem; I have and we all should. However that does not change the fact that the system is now unsustainable.

So what is next? Great question and the answer are – no one knows. I am disappointed that the Speaker and the Governor have not kept ALL parties involved in negotiating a real solution. As you know there are still many unanswered questions and concerns with the different proposals currently on the table. I hope that before any final vote is taken on any reform legislation all parties affected have the time to review proposals and give their input.

At this point nothing will be done unless the Governor calls a special session. Without a special session the soonest action would be taken is after the November election, when we go back into our late fall session. As more details become available, we will post information on our website,

Warm regards,

SENATOR dave syverson

Dear Senator Syverson:

I want to thank you for your attempt to explain Illinois' pension difficulties. From what I am reading, however, it appears that you believe part of the problem was caused by teachers receiving cost-of-living increases and being paid too much before they retired. Actually, as I see it, had the state properly paid its share of pension payments over the last 50 years, we'd have no difficulties at all given the rate of market return that boomed in the 1990s.

In 1995, I was forced to incur an over $15,000 debt to pay more money into the pension system to cover the state's indebtedness, and that, I was told, was going to "fix" the system and enable me to collect my pension benefits. That was 2.2 percent more of my pay being taken away when I was only receiving a one percent pay increase from my school district. By working extra jobs and longer hours, I never failed to meet my responsibilities and make my payments into the system. It took me five years to completely pay this debt off. Additionally, I was assessed a payroll deduction to fund insurance for retired teachers in the Teachers’ Retirement Insurance Plan and was never asked whether I wanted to do that either. The money was just withdrawn from my paycheck each pay period once again to cover the indebtedness of the State of Illinois.

I'm certainly no fan of Mike Madigan or Rod Blagojevich but, if memory serves me, I believe it was Jim Thompson, a Republican governor who repeatedly took "pension holidays" and reallocated pension funds for other uses. George Ryan, another Republican governor, also provided a little over 60 percent of the payment to the fund. [Democratic Governor Rod Blagojevich’s funding to the TRS pension fund was as low as 35 percent].  What I see is a problem created by greedy legislators and incompetent governors—a good number of which occupy federal prisons today— rather than a problem caused by teachers. It's easy to point fingers and fix blame on others—a good way to cleanse the conscience of guilt—but it does nothing to solve the real problem.

That very real problem is obviously the ability of Illinois to generate revenue to meet its expenses. This problem results from giving huge tax breaks to CME stockbrokers who find it inconvenient to pay sales taxes like the rest of us, or to Sears, UAL, The Museum of Public Broadcasting, and others, particularly when Illinois taxpayers have received NOTHING of value in return for the benefits provided to these corporations. Since December, 2011, more than $160 million have been given out in tax breaks. When was the last time that teachers took trillions of dollars in taxpayer-funded bailouts, gave themselves billions of dollars in bonuses and then paid no taxes?

When millions of dollars are so freely-given away without thought to the current budget deficit Illinois faces, surely there must be some recognition for the consequences. There is a very real need to redefine and restructure the current income tax so that it is a PROGRESSIVE one that allows ALL citizens in Illinois to pay their appropriate share of taxes into the system, rather than allowing that burden to rest solely on the middle class. Yet, I see no mention or discussion either by the Governor, the legislature or you about
the need to generate revenue to cover expenditures.
That's a basic accounting principle.

It's always easy to tromp on the rights of those who cannot defend themselves, like the elderly, children, and the poor and take away the assistance a civilized society provides for those in need.  They don't make big political donations, so who cares. It's quite another thing to create a new genre of disadvantaged people by depriving those who've faithfully paid for their benefits and relied on the promise given by the State of Illinois to provide those benefits to them once they retire. I believe what we have here is the offer of benefits for the offer of payment which is a benefit for a detriment, and in any legal book that creates a contract. That's what the teachers have with the State: a contract and a constitutional guarantee that these benefits are sacrosanct.

I respectfully suggest, Senator, that you begin to fulfill your oath of office to defend the constitution and protect the citizens of Illinois, in this case the teachers, and create a REAL solution for the unfunded liability and the state's potential breach of contract—a real solution that goes beyond ridiculous party loyalties and egomaniacal maneuvering, and a real solution that provides for the restructuring of Illinois' income tax to be a progressive, revenue generating instrument instead of using pension money to subsidize the corporations and the wealthy. Thank you for your consideration.


Roberta L. Rebb

Thursday, June 21, 2012

Response to Fareed Zakaria’s “Why We Need Pension Reform,” (Time Magazine, June 25) by Richard Sasso

I write in defense of my pension and that of my fellow public employees. The late Senator Daniel Patrick Moynihan famously quipped that people were entitled to their own opinions, but not their own facts. In the recent debate surrounding public pensions, I have noticed that many people desperately want to have their own “facts,” especially those who want to “reform” public pensions. Here are the facts about how we got to where we are today in Illinois, with an emphasis on the Illinois Teachers’ Retirement System (TRS).

Because they work on the power of compounded interest, pension systems only work when all payments to them are made in full and on time. This is how small, regular payments create large amounts of wealth. While I cannot speak about other states and how their pensions got to be the way they are, virtually every honest observer notes that the Illinois General Assembly has not made its contributions to the Teachers’ Retirement System and to other public pensions.

The General Assembly has skipped close to $15 billion in payments over the last decades to TRS alone, $11.2 billion since 1990. By foregoing these payments, the General Assembly not only denied the value of the initial contribution to the fund, but forced the fund to forfeit the earnings that these contributions would have garnered over time had they been invested.

These gains would have been considerable: the Teachers’ Retirement System has averaged 9.83 percent annual returns since 1982. Arguments that pensions are set on unrealistic earnings is not accurate in Illinois’ case; actuarial studies show that the pension fund has made its projected earnings like clockwork. Therefore, the Illinois General Assembly did not skip payments based on over exaggerated rates of return. It did so simply because it was convenient and legal to do so.

In contrast, each teacher pays 9.4 percent of his or her income from each paycheck, supplemented by a .58 percent contribution from each school district. Both teachers and districts have made 100 percent of their contributions on time, every time. They have no choice, in fact.

This cannot be said for the Illinois General Assembly, however. It often balanced its budget by skipping pension payments, using the money for everything else – except the pensions for its public employees: roads, bridges, even building a now empty prison. In a bitter irony, some of the money even went to K-12 schools, forcing teachers to cannibalize their future pensions to secure the state’s commitment to school children.

We should note that taxpayers benefited from this diversion of funds – they got more government services than they paid for, since the money that should have gone into pension funds went to other expenditures. Essentially, public pension funds became an easily-used “credit card.” (It might also be noted that Illinois has among the lowest ratios of state employees to the general population; it has outsourced services for decades now, having been in the vanguard of privatization. One cannot argue that these expenditures simply went back to public employees in terms of salaries and benefits.)

Nor can one argue that the state simply could not afford to make its payments. If it were not for the pension debt, the State’s contribution would be about 6.3 percent to 8.6 percent. It is true that this is a bit more than the standard FICA/Social Security contribution employers make (6.2 percent), though it is less than the defined-contribution approach, which would involve the cost of FICA and maintaining thousands of individual 401(k) accounts and matching each individual employee’s contributions. In the private sector, this usually averages 4 percent of an employee's income. Hence, the average retirement costs for employers in the private sector are approximately 10-11 percent of employee salaries, much more than TRS.

Nor is the cost to taxpayers excessive: the “normal” cost (without the debt) of last year's contribution to TRS from the General Assembly would have only been $715 million, a mere $55 per Illinois resident each year – a cost similar to purchasing the Sunday newspaper each week. Even a teenager who spends $10 or $15 a week on bubble gum and video games will pay that much in sales taxes in year, as will a retiree who dines at a restaurant once a week.

The cost is not exorbitant for the taxpayer – that is simply a lie told by too many editorial writers, politicians and others who should know better. Hence, with the system running properly and with full contributions from both teachers and the State, the Illinois Teachers’ Retirement System would have had 16-18 percent of teachers’ salaries to invest at 9 percent at compound interest for 35 years – enough to pay the modest pensions promised to teachers. That is, if the Illinois General Assembly had done the right thing.

But instead of doing the right thing, the Illinois General Assembly skipped payments and enjoyed “pension holiday” after “pension holiday." ("Pension holiday" is the horrid euphemism used for skipping pension payments.) This created a gigantic debt of over $40 billion in unfunded liabilities for TRS, thus, driving up the cost of the state’s contribution to the retirement fund. Last year, the state's total contribution was $2.2 billion instead of $715 million, two-thirds of which is accumulated debt.

Granted, the recent economic crisis hurt TRS, as it did all investment funds across the world. Nevertheless, a recovery is underway. According to a recent press release from TRS, “the Teachers’ Retirement System Board of Trustees reported total assets of $37.3 billion at the end of March 2011, a 23 percent increase over the assets held by TRS in 2009 during the depths of the world financial crisis. During the first nine months of fiscal year 2011, the investment rate of return for TRS was 21.38 percent, besting the current target investment rate of 8.5 percent.”

Mr. Zakaria, you also seem uninformed about one simple reality as well: the Illinois General Assembly DID pass pension reform for all new public employees in March of 2010. This law applies to every new hire after January 2011 and is much less generous than the current system. Legislators wrote, passed and sent a bill to the Governor's desk in under twelve hours. (I'll leave it to you to decide how democratic such a process was.) The recent debate centers on benefits for current public employees, which have special status due to the "Pension Protection Clause" in the Illinois Constitution.  For this and other reasons, teachers believe that pension “reform” is an injustice.  Can you perhaps see why?

--Richard Sasso

"Why We Need Pension Reform" by Fareed Zakaria:,9171,2117244,00.html

Tuesday, June 19, 2012


 (August 19, 1895 – June 19, 1987)

I imagine her escaping Ukraine,
like a small bird 
breaking formation over unfamiliar terrain,
carrying her belongings in a wooden wagon
under a roof of vagrant stars
and sleeping beneath a shawl of leaves.

She bartered away her possessions in Proskuriv 
salvaged them from her hotel ransacked by Cossacks 
during the Bolshevik Revolution.
She gave up an old world to find a new one
more than five thousand miles away.

It was the prelude of a new life,
and the world lay before her like a matryoshka.
In America, she gave up her surname.
And though she spoke no English,
she learned the language of a new place
while keeping the old one alive.

I feel only sadness now, for her 
coming so far to everything
but having nothing,
bringing with her the voice
of an old country with quiet suffering.

The Great War had murdered her family
and her husband's family
with gas and guns, and for years
she remained silent as a sleepwalker.
Her husband died too before I was born.
She seldom mentioned his name,
and I did not know how to ask.

I still remember her voice,
the way my young son used to search 
in soft broken tones for the right word,
mispronouncing a vowel or consonant.
A long time ago, she would have 
called my son Doll Face.
He is the only one to carry forth our name.

“Bubbie” was originally published in Prairie Light Review, 1994.

(19 серпня 1895 - 19 червня 1987)

Я уявляю, як вона втекла з України,
як маленька пташка

розрив пласта на незнайомій місцевості,

перевозив свої речі в дерев'яному вагоні

під дахом бродячих зірок

і спить під хусткою листя.

Вона обмежила свої володіння в Проскурові,

врятував їх із звільненого козаками готелю

під час більшовицької революції.

Вона відмовилася від старого світу, щоб знайти новий

більше п'яти тисяч миль.

Це була прелюдія нового життя,

і світ лежав перед нею, як матрешка.

В Америці вона відмовилася від свого прізвища.

І хоча вона не розмовляла англійською,

вона вивчила мову нового місця

зберігаючи старий живим.

Зараз я відчуваю лише печаль

так далеко до всього

але нічого не маючи,

приносячи з собою голос

старої країни з тихими стражданнями.

Велика війна вбила її родину

та сім'ї її чоловіка

з газом і гарматами, і роками

вона мовчала, як сонник.

Її чоловік теж помер, перш ніж я народився.

Вона рідко згадувала його ім'я,

і я не знав, як просити.

Я все ще пам'ятаю її голос,

шлях мого маленького сина для пошуку

у м'яких ламаних тонах для правильного слова,

неправильне вимовлення голосного чи приголосного.

Давно, вона мала б

назвав мого сина Ляльковим обличчям.

Він єдиний, хто носить наше ім'я.