-- Connecting the dots between our economy, government and business --
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
SIGN UP HERE FOR OUR FREE WIREPOINTS DAILY NEWSLETTER
Lots of the kids in CPS are too stupid to learn anything useful. CPS should teach sharecropping.
Since the public schools don’t teach reading, writing, and ‘rithmatic well, but teach much evil garbage, they should be shut down. If Illinois could be re-industrialized, the unemployed teachers could find work in factories.
when these kids can read and write and not be a pervasive truant ,you then get your full pension.
You no maka da rules!
To paraphrase Elvis, “We’re caught in property tax trap” to pay for CPS.
Sorry. No tears shed here. If they weren’t smart enough to figure out what’s going on then its on them. Much like the student failures
CPS makes/made the majority of the pension contributions for teachers hired before 2017–they pay 7% and the employee pays 2%. A 7% match on a 2% contribution is very high (and highly unusual). Most ERISA plans have 5 year vesting; the ten-year vesting is another way the local governments cut their costs for the pension (in addition to not being subject to either PBGC premiums or minimum funding standards). If terms need “fixing” don’t cherry pick–fix the entire problem and not just small potato issues that can’t be fixed without increasing the unfunded liability.
But the salary of a CPS teacher hired after 2017 is 7% higher. CPS didn’t do away with the pension pick-up, they embedded it into gross wages. Smoke and mirrors by Rahm to make it look like he won a fight he actually lost.
When a pre-2017 teacher requests a refund on their pension contributions, do they get 2% or 9% back? The mechanics of how pension pick-ups work can be confusing, which is why they’re a bad idea tbw.
There is a documentary Sweden: Lessons for America. I originally saw it on Netflix, but it looks like it is available on Youtube. They mention in there the retirees benefits are tied to the country’s economy.
They should do something similar in Chicago (if not the State). Instead of a fixed COLA percent, tie it to the private sector median income. Same with the union contracts; align the pubic workers salaries to the private sector. This would give pause to the unions backing every destructive tax increase.
These teachers knew the “benefits” when they signed up. It is hard to find sympathy for someone leaving earlier than 10 years that wants more in payouts. They could have invested their pay in a self directed ira with pre- or after-tax dollars, which is the way it should have been long ago and is more like the rest of the working world. The university pension system is long overdue for changes as well, and serves as a poor comparison, since it contributes to the unaffordable tuition for families.
I believe you are ineligible to give pre-tax IRA contributions if you or spouse have a pension.
Trying to avoid getting in the weeds, but CPS offers 403b plans (defined contribution) in addition to the pension (defined benefit) and their participation in the defined benefit plan does not preclude their investment in other vehicles. Not my specialty but do know there are plans available for teachers to utilize to start roths, etc. Just suggesting there is nothing to preclude them from using money to open additional investment vehicles on their own. They just would have to learn to save a little like the rest of us. Some references are below if interested. Enrollment CPS Teacher Retirement Success… Read more »
Illinois residents have known the high taxes charged in the state for quite some time. It’s hard to find sympathy for property owners that knew property taxes were high when they bought their home. They could have moved to another state and bought a home elsewhere. Everyone owns their situation. No need for any sympathy.
Actually some of them don’t or at least don’t care to. I am constantly amazed at people that buy houses believing the figures put out by the realtor’s that are based upon the seller’s current tax bill. As an example a house next to one of my rentals was advertised with an estimated monthly payment based upon the seller’s real estate taxes that included the senior and disabled exemptions as well as the senior assessment freeze. My past experiences are that most of the “how much down and how much a month folks” won’t look any farther than that choosing… Read more »
You are correct about most people just looking at the monthly payment. The higher the property taxes the lower the overall price when you sell. A recent analysis shows that if Desantis and Florida get rid of property taxes, the average property owner will see a 7-9 percent increase in pricing. We can lower property taxes and that will help out current property owners but those in the market to purchase will never see that savings. Buyers will either pay the current model of a lower home price and high property taxes or a higher purchase price with lower taxes.
ALL public unions should be ILLEGAL, problem solved.
I’ve long been writing how unfair the 10-year vesting requirement is for Tier 2 Illinois teachers. In the Tier 2 reforms, Tier 1 fat cats at the top with seniority ripped off younger Tier 2 teachers.
Unfair is what is happening to the taxpayers. Taxes keep going higher and higher, services keep going down.
P.S. Think Teamsters bailout where federal government supplemented underfunded multi employer trusts.
It has long been a widespread Dem assumption that federal government would “federalize” the pension problem. For example, I know that Rahm Emanuel said just that in private some years ago. If they regain full power in DC again, they would likely try.
Remember that the government, in this case the school district, becomes directly liable for pensions if the pension doesn’t have enough money to pay. For that reason, teachers probably wouldn’t care. That’s a fundamental problem that runs through the system — pension members figure they don’t really have any skin in the game on adequate funding or virtue signaling investments. It’s ultimately taxpayers’ problem, they figure. Potentially, trustees could be sued for breach of fiduciary duty if they strayed too far from what they are authorized to invest in, but that probably makes little difference.
All local routes seem to lead to the Illinois Supreme Court unless, somehow, issues can be raised in the federal system. Of course, the U.S. Supreme Court may not tilt to the right forever! We seem to be in a somewhat law-less period where selective enforcement and prosecutorial discretion make compliance with even statutory law optional. If taxpayers revolt or courts can’t enforce their orders, the composition of other government branches comes into play. In Illinois, the bailout bucket brigade will likely continue to shower money on the “friends” who fund and elect them. It appears to me that fiscal… Read more »
Yes, for sure, though I would say this line of yours is understatement: “We seem to be in a somewhat law-less period where selective enforcement and prosecutorial discretion make compliance with even statutory law optional.” It has reached crisis levels and the rule of law is largely shattered. The left has been by far the worst offenders. Those far left federal judges appointed by Biden and Obama aren’t just biased. They are utterly incompetent and should not be on the bench. They decide the political outcome they want and draft an opinion accordingly. The DOJ under Biden and Obama broke… Read more »
You are giving the impression “my judges” that Trump appoints are averse to acting to acting likewise morally? Apparently he thinks they are in his pocket or he’d refer to them with less enthusiasm and probably derision much of the time. People of all persuasions always have self preservation as a primary motivation, don’t they?
Of course, self preservation is the primary instinct.
But not all self-preservation is the same. Some self-preservation is a function of how much you can fleece others.
Self I preservation is different from self enrichment … For life! Name some other groups that have comparable job protection and no-risk health insurance and COLA protected pensions … largely at public expense. If there are any, I’d bet they “work” for a government. Not only in America, of course. This sort of corruption is found everywhere (notably in places formerly funded by USAid and World Bank).
Taxpayers become directly liable for any pension losses. It is a heads they win, tails taxpayers lose. Taxpayers are almost always the loser.
Oh, thanks for enlightening me. Where did you learn that?
Surely you knew that! Ultimately public employee retiree pensions are an obligation of the state itself rather than any subordinate management entity it creates.
A failed attempt at satire and ridicule, it was. And don’t call me Surely.
I wonder if you’ve ever met her two sisters, Goodness and Mercy.
23 & me?
Tier 1 fat cat are just doing what all public sector workers do; they eat their young.