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


  1. Amen!!! Very well said. I have been promoting a progressive tax with all that I come in contact with regards to the pension issue.

  2. Dear Senator Syverson,
    I've read your form letter explaining how you see teacher pension "reform", and I am not impressed. My wife taught 7th grade math in northern Illinois for 37years. Every year the State renewed its contract with her explicitly stating the way her pension was to be calculated. As I began teaching the same year as she, I remember well the State's position on teacher pay and pension. The State made it clear that it could not compete with the private sector for the quality of people it wanted to teach its children, but that it would make up its inability to pay fully at the time of the work, by making up the shortfall with a pension, the calculation of which was made clear and in contract form. To read your form letter, one would get the impression that Illinois is destitute, when, in fact, it takes in and expends a great deal of money on a regular basis. It is true that unscrupulous legislators diverted money destined for the teachers' pension fund in order to spend the money in their districts for the purpose of impressing their constituents with the quality of their representation in State government. Every time money was diverted, a contract for its repayment to the pension system was made by the government. Now is not any special point in the failure to pay that debt. It is just another season of ducking the contractual obligation.
    The State needs to put money into the fund. Obviously, the money repaid to the fund cannot be spent elsewhere. If the State's government feels it needs more money, it must open new ways of gathering revenue. Perhaps closing some of the corporate tax loop holes, or tax breaks would be a good place to start.
    How would it be for you to have a previous employer contact you and explain that the business, or perhaps, State Assembly, was having, in some areas of its finances, a bad time, and that a substantial part of its failure to thrive was that you extracted too much money for your labor, and, furthermore, that it expected you to give back 10%, or 20% or, perhaps 50% of the money you'd earned? How would it be for you if this past employer had somehow successfully mangled the law and claimed that it had every right to take back any part of what you'd spent your life earning?
    Do you understand how very wrong it is to have the State, the source of the laws that organize our dealings with each other, so that people are not allowed to behave in dishonest, immoral, and unethical ways, to turn on its own citizens and cheat them of their earnings?
    Surely, you must.

    Very Sincerely,
    Ronald Anthony Koules