Interactive clinic with POCDE members from 3-5 p.m.
Clinic registration online at www.pocde.org
Free preview performance from 5-6 p.m.  You need not participate in the clinic to attend the preview performance.

Interactive clinic with POCDE members from 3-5 p.m.

Clinic registration online at www.pocde.org

Free preview performance from 5-6 p.m.  You need not participate in the clinic to attend the preview performance.

URGENT-TAKE ACTION NOW BY FILING A WITNESS SLIP
TAKE ACTION NOW - HERE’S ONE MORE THING YOU CAN DO TO OFFICIALLY REGISTER YOUR OPPOSITION TO SB1.  The pension hearing is scheduled for 8:30 a.m. today.

One thing that teachers and employees can do is officially register their opposition to SB1 with the pension committee that will be meeting in the Illinois Senate today at 8:30 a.m.
 
Step 1 - Click on this link:
 http://my.ilga.gov/Hearing/HearingDetail/11356?SCommittees12%2F9%2F2013-page=1&SCommittees12%2F9%2F2013-orderBy&SCommittees12%2F9%2F2013-filter&committeeid=0&chamber=S&nodays=7&_=1386028717982 
 
Step 2 - Click on “Create Witness Slip.”
 
Step 3 - Fill in the blanks and indicate “Opponent” by checking in those boxes.
 
Step 4 - Mark Record of Appearance Only (since you will not be at the committee hearing).
 
Step 5 - You will have to fill in the number at the bottom of the form & mark “agree to the terms.” 
 
Step 6 - Click “Create Slip.”
 
Step 7 - Ask your friends to do the same thing

 
 
I had a hell of a time with the “authentication” field at the end of the form.  Just keep trying and you will finally get a series of letters you may be able to read.  Clearly they don’t want anyone to use this form.
CALL TO ACTION BY IRTA

Call To Action

The Illinois House and Senate will be returning on December 3, 2013 to vote to reduce your pension.  They want to reduce your cost of living adjustment (COLA) to a simple 3% on $1,000 for each year you worked.  For example, if you worked 25 years you would receive a COLA on $25,000 ($1,000 x 25 years of service) which would be $750.  This simple interest amount would be added to your current pension amount.  You would no longer receive the 3% compounded COLA.
Some proposals have a reduced escalator on the $1,000 so that each year your COLA would go up by a few dollars and some proposals have no escalator at all.  With either proposal, your pension will not keep up with increases in costs.  The bill also does many things to negatively affect active teachers as well.
IRTA is strongly opposed to this constitutional and moral dereliction and we ask you to stand with us in letting law makers know how we feel.  Please click on the blue link below and contact your legislators now!!
 

Click the link below to log in and send your message:
https://www.votervoice.net/link/target/irta/JEi8qQq9i.aspx 

University Presidents and Chancellors oppose pension bill

FAT CATS, PENSION REFORM, DIVISION AMONG POLITICIANS

Caterpillar CEO Doug Oberhelman announces support for the proposed pension cutting legislation the Illinois General Assembly will consider on Tuesday, Dec. 3.  I guess he doesn’t mind giving the shaft to state retirees.  After all, he is getting his $16.9 million pension lump sum payment.  I guess things aren’t as tough at CAT as we have been led to believe.  (Source:  SEC proxy)

———————-
GOP gubernatorial candidate Dan Rutherford says he opposed the new state pension bill.  He has constitutional concerns.
"…fundamental to our rule of law is our Constitution.  Our government’s obligation can be changed through a process involving adequate consideration to the employees.  In my opinion, the legislation before us fails to address this relationship and offer adequate consideration in exchange for altering the pension benefits."
http://www.suntimes.com/24127208-761/gops-rutherford-says-he-opposes-state-pension-bill.html
————-
Lt. Gov. Sheila Simon breaks with Gov. Quinn, opposes pension deal.  ”…the proposed legislation puts too much of the burden on lower income workers and retirees, ” Simon said.  ”I appreciate the requirement that the state pay its share, but the legislation should be made more fair for those who have worked and earned their pensions.”
http://voices.suntimes.com/early-and-often/politics/lt-gov-simon-breaks-with-gov-quinn-opposes-pension-deal/
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And just watch, Decatur based ADM is in line for a $24 million tax break immediately following cuts to pensions.  Yes, it’s on the docket.  If pensions fall the ADM get’s it tax break to move its “corporate headquarters” to Chicago.  Remember, 1/3rd of Chicago is in a Tax Increment Finance district (TIF) which siphons off $500 million annually from public services like schools, fire, police, libraries, museums, parks, etc.  The fat cats are still at it, looking for for themselves at the expense of the rest of us.
At what point will the people of Illinois unite and say “enough is enough.”
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MY PENSION DOESN’T NEED TO BE REFORMED, IT NEEDS TO BE HONORED.
VOTE NO ON PENSION BILL - CONTACT LEGISLATORS NOW

We find ourselves in a peculiar situation.  Every year, every teacher has paid their required contribution to their pension.  For 60 years Illinois has failed to pay its share into the teacher retirement system.  Consequently, legislators and governors have shortchanged our pensions billions of dollars.

Now we find ourselves faced with the untenable prospect of today’s legislators and governor cutting the very retirement benefits for which every teacher has dutifully worked and paid for.  By our very nature, as teachers, we have a great sense of fairness, loyalty, respect for authority and an innate sense of caring, a drive to protect others from harm.  We became teachers fore altruistic reasons.  These beliefs are central to how we structure our lives, our classrooms, our schools, and the commitment we have to our students and communities.  

We do not seek conflict.  Rather, we seek solutions.  We strive to be well informed and expect that rational thinking and compassion for others are important elements in finding solutions to problems.  We also expect fair play and abiding by the law to be essential.

Legislators and the governor would have us believe that state pensions are the primary reason our state budget is in such dire straights.  We all know this is untrue.  To suggest this is the case is insulting to any informed citizen.  

Of the state’s contribution to the Teacher Retirement System this year, only 18% is for the “normal cost” of retirement benefits for current teachers.  In other words, 82% of the state’s pension payment today is to pay off the debt owed the system.  Since 1939, TRS has never received a full actuarial contribution from the General Assembly.  (Source:  Teacher Retirement System)

The real problem is that legislators over the years have not lived within their means, and even in the most recent dire economic times, have continued to spend, spend, spend.  They have used the pension systems as a credit card to fund other things.  They have placed a culture of corruption and collusion and political cronies above the welfare of the citizens of the state.

With the largest tax increase in the state’s history, we still have billions in unpaid bills and vendors waiting months for payment of services.  At the same time, the legislature continues to appropriate for new programs and give multi-million dollar tax breaks to corporations under the guise of “job creation.”  The last time I looked, jobs are still down and we continue to squander resources through corporate welfare.  A perfect example is the proposed $24 million tax break for ADM that is rumored to be approved hot on the heals of pension cuts to retirees.   The top seven executives compensation at ADM last year was $31,655,517.  Do legislators expect me to take a cut as a retiree and feel good about it when those CEO salaries are so high?  Really?  Not likely.  The General Assembly and One-Term Quinn awarded a $100 million tax break to Motorola Solutions when the CEO’s compensation was $40 million.  Legislators might like to know that Caterpillar CEO Douglas Oberhelman’s compensation last year was $17,738,076 plus, amazingly, a lump sum pension payment of $16,943,243.  Lump sum pension payments due the CEOs of Caterpillar, Boeing, Abbot-Laboratories and Crown Holdings were $129,939,430.  (Source:  SEC proxy)

The General Assembly just appropriated $70 million to purchase land for a Peotone airport.  Hardly a critical need given the fact that not one airline has yet voiced support for it.  I guess the Rockford airport must be a full capacity.  Unlikely.  Of course there is the $900,000 buyout cost for METRA CEO because he wouldn’t bend to Speaker Madigan’s wishes, or the $600,000 for doors at the Capitol.

And the list goes on, and on, and on.

There will be a tipping point.  Perhaps this is it.  As for myself, I have voted in every election for the past 44 years.  I’m a lifelong Illinois resident whose family has been in Illinois for 150 years.  I’ve been an educator in Illinois for 42 years.  My father taught school in Illinois for 53 years.  We have been invested in Illionis, and I expect Illinois to invest in my retirement as well.

Can legislators and the governor just disregard the very people that have served their communities and not expect some type of repercussion?  Are we to learn that fairness, loyalty, and respect for the law are to be discarded?  If that is the case we will find ourselves in a place we do not want to be.

I urge you to vote NO on the proposed pension cuts.

MY PENSION DOES NOT NEED TO BE REFORMED, IT NEEDS TO BE HONORED.

PENSION REFORM ANALYSIS
An important read for every retiree, teacher, university employee, and state employee
FROM CAPITOL FAX - AN ANALYSIS PENSION REFORM AS BEST CAN BE DONE UNTIL THE REAL LEGISLATION IS MADE PUBLIC
www.capitolfax.com
A quick analysis of the pension reform proposal

Friday, Nov 29, 2013

* I asked our resident pension expert commenter “RNUG” to take a quick look at the pension reform dot points distributed by the four leaders today. His thoughts are indented…

Funding schedule and method for certifying contributions: Establishes an actuarially sound funding schedule to achieve 100% funding no later than the end of FY 2044. Contributions will be certified using the entry age normal actuarial cost method (EAN), which averages costs evenly over the pensioner’s employment and results in level contributions.

    This is a good move but do we really need to be 100% funded? I understand that 100% sounds good to both the public and the bond rating agencies but I think it is over kill. Somewhere around 80% - 90% would be more than adequate.

Supplemental contributions: The State will contribute (i) $364 million in FY 2019, (ii) $1 billion annually thereafter through 2045 or until the system reaches 100% funding, and (iii) 10% of the annual savings resulting from pension reform beginning in FY 2016 until the system reaches 100% funding. These contributions will be “pure add on,” which means State contributions in any year will not be reduced by these amounts.

Without seeing more details, I’m going to assume the add-on amounts in (i) & (ii) are the funds freed up by the expiration of the current pension bonds. Since that money is currently being paid out, this is “free” money as far as the GA is concerned. As to (iii), I have a problem with only 10% of the savings going into the pension funds. That tells me there are plans for the other 90% of the savings, either avoiding the need to keep the income tax at the 5% level or to cover expansion of other state program expenses or for new spending. Sorry to be a bit vague on where the 90% might go.

Funding guarantee: If the State fails to make a pension payment or a supplemental contribution, a retirement system may file an action in the Illinois Supreme Court to compel the State to make the required pension payment and/or supplemental contribution set by law each year.

As I commented in one of the other posts, if this is the same as previous proposals, and it sounds like it is without being able to read the actual bill language, all this does is provide the retirement system with the right to sue and, maybe, giving retirees the right to sue the retirement system (not the State) if the retirement system fails to act. I don’t see it as consideration; at a stretch it might be considered a group right. It is not an individual right any retiree can exercise against the State itself, so I don’t think it meets the contract law definition of individual consideration. Brighter minds than myself may well disagree. And then there is the whole issue of it being a one sided and non-voluntary (coerced) choice.

Employee contribution: Employees will contribute 1% less of their salary toward their pension.

    That could be a valid consideration for changing the AAI for current employees, especially when you look at the GARS, TRS and SURS systems where they pay either 0.5% or 1% for their AAI (COLA).

Annual annuity adjustment (COLAs): Future COLAs will be based on a retiree’s years of service and the full CPI. The annual increase will be equal to 3% of years of service multiplied by $1,000 ($800 for those coordinated with social security). The $1000/$800 will be adjusted each year by the CPI for everyone (retirees and current employees). Those with an annuity that is less than their years of service multiplied by $1000/$800, or whatever the amount is at the time of retirement, will receive a COLA equal to 3% compounded each year until their annuity reaches that amount.

      This is where almost all the “savings” come from. For GARS, JRS, TRS, some SURS & some SERS, the $1,000 per year figure will apply. For most SERS and some SURS, the $800 figure will apply. Those figures are quite interesting. Assuming any average of 30 years for a teacher, their AAI will be based on $30,000. Assuming 35 years for an average state employee (SERS), their AAI will be based on a pension of $28,000. In other words, those numbers were picked by using some of the retirement system averages.

While every situation will be different and there are lots of variations, we can calculate a couple of examples. Assuming a average 1.5 CPI to adjust the $800 amount, a SERS retiree with 35 years of service currently receiving $30,000 as an annual pension will receive about $47,000 less in total over the next 20 years when compared to the 3% AAI.

If you double the current pension to $60,000, the diminishment really kicks in; that retiree would receive about $330,000 less over 20 years.

As I noted, this is intended to kind of keep the average retiree somewhat whole while playing on the public envy of the well off state retiree. A very carefully crafted piece of work. Don’t think it is constitutional based on previously rulings, but I have to admire the thought that went into it.

One possible problem with the $1000 / $800 per year of service formula. Since we haven’t seen the actual language, it really needs to be based on the same number of years of service the pension is based on regardless of the actual years worked. In other words, any purchased service time should be included as part of the COLA calculation.

Additionally, current employees will miss annual adjustments depending on age: employees 50 or over miss 1 adjustment (year 2); 49-47 miss 3 adjustments (years 2, 4, and 6); 46-44 miss 4 adjustments (years 2, 4, 6, and 8); 43 and under miss 5 adjustments (years 2, 4, 6, 8, 10).

    I see the logic of gradually applying it to the younger employees in order to create the illusion of fairness, but it is a apparently unconstitutional change to existing employees.

Pensionable salary cap: Applies the Tier II salary cap ($109,971 for 2013), which is annually adjusted by the lesser of 3% or ½ of the annual CPI-U. Salaries that currently exceed the cap or that will exceed the cap based on raises in a collective bargaining agreement would be grandfathered in.

    I’m going to assume the bill language will be similar to what we have seen earlier this year. They are applying the SS salary cap. But then they limit the pensionable salary growth with a 1/2 CPI or 3% cap, so it will gradually fall below the SS cap. The grandfathering of salaries exceeding the cap is probably not as clear as the bullet point states. In the previous proposals, that exemption only applied until the end of the current contract.

Retirement age: For those 45 years of age or under, the retirement age will be increased on a graduated scale. For each year a member is under 46, the retirement age will be increased by 4 months (up to 5 years).

    It’s a reasonable approach to changing the retirement age but it rules counter to previous ISC rulings for existing employees.

Effective rate of interest (ERI): For all purposes, the ERI for SURS and the rate of regular interest for TRS will be the interest rate paid by 30-year U.S. Treasury bonds plus 75 basis points.

    Insufficient knowledge of that specific program to give an informed opinion. I do know someone who might be able to answer it, but I probably can’t get an answer quickly.

GARS Tier 2 fix: Brings GARS Tier 2 salary cap and annual adjustment in line with other Tier 2 benefits.

    Insufficient knowledge of that specific program to give an informed opinion quickly.

Pension abuses: Prohibits future members of non-governmental organizations from participating in IMRF, SURS, and TRS. Prohibits new hires from using sick or vacation time toward pensionable salary or years of service (applies to SERS, SURS, TRS, IMRF, Cook County, and Chicago Teachers).

    Good move closing a loophole that has been abused in the past. Changing it for new hires also passes the constitutionality test. It will result in the new hires, if career employees, receiving about 1/2 year less in service time than under the current rules.

Defined contribution plan: Beginning July 1, 2015, up to 5% of Tier 1 active members have the option of joining a defined contribution plan. The plan must be revenue neutral and employee contributions will be equal to those for the defined benefit plan. If a member chooses to opt into the defined contribution plan, benefits previously accrued in the defined benefit plan will be frozen.

    Basically offering a 401K style plan (assume it will actually be a 403b variation) to existing employees. It’s been discussed at length on this blog, but such a plan is probably a bad choice for most employees, and especially so for those near retirement. The only people it would benefit are non-career employees who only work at the state for a few years. In other words, this could be a sweet deal for political appointees that won’t be around long enough to earn a Defined Benefit pension.

Collective bargaining: All pension matters, except pension pickups, are removed from collective bargaining.

    Can look at this two different ways. On the one hand, it pretty much acknowledges that the union can not negotiate for the retirees. On the other hand, it prevents the unions from throwing the retirees under the bus in exchange for additional employee considerations.

Healthcare payments: Prohibits the State pension systems from using pension funds to pay healthcare costs.

    Not really anything new; just explicitly states it. Health insurance has always been paid out of either the State’s General Revenue Fund as an annual expense (SERS, GARS, JRS, some SURS) or partially subsidized by the separate TRIPS program (TRS, some SURS). but I think this is intended to slam the door on health insurance being considered a pension benefit ala Judge Nardulli’s ruling in the consolidated ‘Maag’ case. Mostly closing the barn door in case the ISC rules in favor of the retirees.

* And here’s his summary…

It is apparent a LOT of thought went into this proposal. Not only is it crafted to solve the pension “funding” problem but it is also crafted to provide the illusion of fairness to employees near retirement age and the retirees. As such, it is a fairly masterful piece of public relations. Not enough so to prevent employee / retiree outrage, but enough to delude the uninformed public (dare I say low information voter?) into believing the GA proposal is more than reasonable and fair.

Some of the items proposed, especially those affecting only new hires or offering a voluntary choice, will easily pass contract and constitutional muster.

A lot of what is proposed does not seem to meet contract law or constitutional muster based on the clear language of the pension clause and the various rulings by the ISC, both before and after the 1970 constitution. I’m having a problem reconciling any changes to either retirees or current employees with the previous rulings that, in effect, state the rules in place at hiring plus enhancements granted by the General Assembly at what is protected by the pension clause.

So the real question is what is Madigan’s real end game? Is it to railroad this through and twist the arms of the ISC to buy a “police powers” arguments? Is it to try to get the ISC the change their “rules are time of hiring …” logic to “only benefits already earned are protected” like in a number of other states? Or is it an intentionally unconstitutional bill in an attempt to get ISC coverage for a tax increase? Only time will tell.

- Posted by Rich Miller   Comments Off       

PENSION CUTS - NEW DETAILS REVEALED

FRIDAY, Nov. 29, 2013

REFORM SUMMARY RELEASED

FIRST DETAILS ISSUED   Check the blog later for possibly more, but the Senate Democrats have just sent the following memo to their members about the leaders’ agreement on pension reform:

* Funding schedule and method for certifying contributions: Establishes an actuarially sound funding schedule to achieve 100% funding no later than 2044. Contributions will be certified using the entry age normal actuarial cost method (EAN), which averages costs evenly over the pensioner’s employment and results in more level contributions.

* Supplemental contributions: The State will contribute (i) $364 million in FY19, (ii) $1 billion annually thereafter through 2045 or until the system reaches 100% funding, and (iii) 10% of the annual savings resulting from pension reform beginning in FY16 until the system reaches 100% funding. These contributions will be a “pure add on,” which means State contributions in any year will not be reduced by these amounts.

* Funding guarantee: If the State fails to make a pension payment or a supplemental contribution, a retirement system may file an action to compel the State to make the required pension payment and/or supplemental contribution.

* Employee contribution: Employees will contribute 1% less toward their pension.

* Annual annuity adjustment (COLAs): Future COLAs will be based on a retiree’s years of service and the CPI. The annual increase is equal to 3% of years of service multiplied by $1,000 ($800 for those coordinated with social security). The $1000/$800 will be adjusted each year by the CPI for everyone (retirees and current employees). Those with an annuity that is less than their years of service times $1000/$800 (or whatever the amount is at the time of retirement) will receive a COLA equal to 3% compounded each year until their annuity reaches that amount.

* Staggered skips for annual adjustments: Current employees will miss annual adjustments depending on age: employees 50 or over miss 1 adjustment (year 2); 49-47 miss 3 adjustments (years 2, 4, and 6); 46-44 miss 4 adjustments (years 2, 4, 6, and 8); 43 and under miss 5 adjustments (years 2, 4, 6, 8, 10).

* Pensionable salary cap: Applies the Tier II salary cap ($109,971 for 2013), which is annually adjusted by the lesser of 3% or ? of the annual CPI-U. Salaries that currently exceed the cap or that will exceed the cap based on raises in a collective bargaining agreement would be grandfathered in.

* Retirement age: For those 45 years of age or under, the retirement age will be increased on a graduated scale. For each year a member is under 46, the retirement age will be increased by 4 months (up to 5 years).

* Effective rate of interest (ERI): The ERI for SURS and the rate of regular interest for TRS would be set to a value equivalent to 75 basis points above the interest paid by 30-year U.S. Treasury Bonds for all purposes.

* GARS Tier 2 fix: Changes the GARS Tier 2 salary cap and annual adjustment to bring it in line with all other Tier 2 benefits.

* Pension abuses: Prohibits future members of non-governmental organizations from participating in the systems and new hires from using sick or vacation time toward pensionable salary or years of service.

* Defined contribution plan: Up to 5% of Tier 1 active members have the option of joining a defined contribution plan. If a member chooses to opt into the defined contribution plan, benefits previously accrued in the defined benefit plan will be frozen.

* Collective bargaining: All pension matters, except pension pickups, are removed from collective bargaining.

* Healthcare payments: Prohibits the State pension systems from using pension funds to pay healthcare costs.

© 2013 BY AHEAD OF OUR TIME PUBLISHING, INC. 

 

ILLINOIS SENATE SCHEDULED TO CONVENE TUESDAY, DEC. 3 AT 11 A.M.

SENATE PRESIDENT CULLERTON HAS CALLED MEMBERS BACK TO SPRINGFIELD TO ACT ON PENSION CUTS.

HOUSE IS NOT YET SCHEDULED ON THE OFFICIAL LEGISLATIVE WEB SITE

WWW.ILGA.GOV

MY PENSION DOESN’T NEED TO BE REFORMED.  IT NEEDS TO BE HONORED,.

MY PENSION DOESN’T NEED TO BE REFORMED.  IT NEEDS TO BE HONORED,.

LEGISLATIVE LEADERS STRIKE DEAL ON PENSION REFORM

RALLY AT LEGISLATIVE OFFICES NEXT MONDAY

PENSION CUTS NEXT WEEK - TAKE ACTION NOW

You’ve Earned A Say

After years of paying into your pension you deserve a voice in your retirement future.  You deserve a voice that is heard and listened to.

Illinois politicians are on the verge of breaking the law and breaking their promise to every state employee, every teacher, every administrator, everyone who has faithfully contributed their fair share into their retirement system.  The state legislature is scheduled to convene DECEMBER 3 to CUT YOUR PENSION BENEFITS.

You can make a difference by sending a clear message to Illinois politicians today, tomorrow, and every day.  Email, call, fax, and visit you legislators now.  Rallies are planned for Monday, Dec. 2 at various legislator’s offices.  Everyone that was at a health insurance regional meeting needs to attend at least one of these rallies.  You can find a preliminary list of “pension action” locations on Fred Klonsky’s blog at http://preaprez.wordpress.com. and on Glen Brown’s blog at 

http://teacherpoetmusicianglenbrown.blogspot.com/2013/11/we-are-one-illinois-coalition-is.html.

THIS IS THE REAL DEAL AND THEY ARE ABOUT TO STEAL FROM YOU.  NEXT WEEK IS THE WEEK THE THIEVES ARE GOING AFTER YOUR RETIREMENT.

Share facts, be forceful, be vigilant, and most of all, BE ANGRY AND TAKE ACTION!

MY PENSION DOESN’T NEED TO BE REFORMED, IT NEEDS TO BE HONORED.

THEY WORK FOR YOU AND THEY ARE ABOUT TO:

Cut your cost of living increase that is protected by the Illinois Pension Code.  This cut will cost YOU hundreds of thousands of dollars over your retirement.  One likely scenario, yet to be publicly presented in proposed legislation but on the table, would be to cap TRS COLAs at a simple 3% of $1,000 for each year you worked.  For example, if you taught 25 years, your COLA would be $750.  So, if your retirement annuity is $50,000, once you become eligible for your COLA, it would be $750 annually.  For someone that retired in 2012 with an annual pension of $50,000, this reduced COLA would cost the retiree over $400,000 in lost retirement income over 25 years.  Yes, that’s right, the cumulative difference in retirement income is HUGE!  You might think that you could “help” the state a little and not get quite as much of a COLA.  To put it in perspective, if you live my neighborhood in a modest older home, in those 25 years you would pay around $150,000 in real estate taxes if there are no tax increases.  At current insurance premium rates and the historical rate of premium increase of 5%, under the current state retiree health plan, you would pay $294,000 in insurance premiums for single coverage over those 25 years, plus whatever medical expenses you might incur.  It’s reasonable to expect that you could incur $40,000 in medical/prescription drug out-of-pocket costs in those 25 years.  It didn’t take long to eat up that COLA benefit, and then some, that you currently have.  Just those two items alone, property taxes and medical expenses, represent $484,000.  Now for sure you would be  getting your pension, but at a drastically reduced amount.  You might like to eat, pay the electric bill, occasionally go out for a senior luncheon, and perhaps even buy a tank of gas now and then, or even help out your community through charitable giving, or even help out your grandchildren.  As for myself, I’ve chosen to actively support not-for-profit youth groups.  One of the unintended consequences of COLA cuts unquestionably will be a  dramatic reduction in the amount of financial support that retirees can provide for their communities, whether through charitable giving or through a reduction in purchasing of every-day goods and services.  

Remember, the pension you protect now is what you will live on for the rest of your life.  And, it is a significant part of the state’s economy.  Teacher pensions alone have a positive economic impact on the state, contributing $2.5 billion to the state’s gross domestic product and support over 30,000 Illinois jobs.

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Is the retiree COLA an unreasonable benefit?  

NO is a complete sentence.  But, to substantiate this position, consider the following.  Remember, you must consider cost-of-living changes over long periods of time, not just recent history.  Hopefully, many retirees will be living 25+ years after they retire, even though our politicians lament that we are living longer.  I don’t plan to die off prematurely just to please our politicians.

Based upon datas from the Federal Bureau of Labor Statistics we know the following.

• The average change in the Consumer Price Index (CPI) has been:

3.6% from 1980-2012

2.5% from 1990-2012

3% from 1926 to 2012

Remember, when you fall behind in any one year, you stay behind the CPI increase unless future COLA increases significantly outdistance the CPI.  It is a cumulative effect.  There is always the threat that inflation can take off and leave you behind.  Some of us remember when inflation was over 13%.

Medical care CPI has outdistanced the average CPI every year since 1981.

CPI medical care average change over time has been:

6.2% from 1980-2008

5.2% from 1990-2008

4.7% from 2000-2008 (latest data available from BLS)

Every year from 1981-2008 medical care costs have outpaced the overall rate of inflation and have exceeded the TRS COLA (except for 1997 when the medical care CPI was 2.9%)

Remember, the CPI is compounded in that it is based upon the prior year’s data.  It is not calculated on a “simple interest” formula.  Once you get behind it is very difficult to catch up.

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Politicians, including 1TQ (One-Term Quinn) want us to believe that pensions are “squeezing” out essential state services.  That is a bold faced lie.

The cost of corruption in state government has been pegged at $500 million annually.  We all know the huge corporate giveaways that have taken millions from Illinois taxpayers.  State politicians are on the verge of giving a $24 million tax break to Arthur Daniels Midland so they can move their corporate headquarters to Chicago.  One-third of Chicago is in a Tax Increment Financing (TIFG) district, siphoning off $500 million dollars annually to be spent on politicians pet projects rather than on the fundamental services needed for the city’s citizens.  Two-thirds of corporations in Illinois pay NO corporate income tax.  Priorities for spending in Illinois are so out of line with citizen’s wishes that they defy explanation.  Right now $70 million of new expenditures have been appropriated for purchasing land for a new airport in the Peotone area, an airport that no airline has expressed support for.  A recent $900,000 buyout for Metra’s CEO came about because he butted heads with Speaker Michael Madigan.  And the list goes on and on.  To suggest that the state does not have the resources to support fundamental public services because of pension costs is ludicrous and insulting to any intelligent and informed citizen.

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Read IEA’s response to the “bipartisan” agreement on pension reform at www.ieanea.org.

——————

CONTRIBUTE AGAIN TO THE IRTA LEGAL DEFENSE FUND 

http://www.irtaonline.org/News.aspx