To Roberta Rebb:
- 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)
- Market returns lower than projected – The pension funds have, and are, performing at rates lower than projected in their models.
- 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.
- 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.
- 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.
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 The money was just withdrawn from my paycheck each pay period once again to cover the indebtedness of the State of Illinois.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