Print Friendly, PDF & Email

By: Mark Glennon*

AFSCME’s Roberta Lynch

Roberta Lynch is executive director of AFSCME Council 31, a union representing 100,000 active and retired public workers in Illinois.

In a Crain’s opinion piece this week she makes her case why the solution to our pension crisis is just a “funding problem needing a funding solution.” The answer, in other words, is just more money from taxpayers.

Her article is brazenly dishonest. She says:

“Illinois public pensions are modest: just $34,084 for the average state employee retiring on the standard formula, according to the retirement system’s latest annual report, and $34,413 for retirees in the Chicago municipal fund who aren’t eligible for Social Security.”

That’s hogwash constantly repeated by public unions. Annual pension benefits are typically over twice that.

First, the averages Lynch used are meaningless because they include part-time workers and, most importantly, those who worked far less than a full career to earn their pension. Pension benefits vest for state employees who leave after as little as five years of service. They also will get whatever retirement benefits are offered in the other jobs they hold over the course of their lives. Lynch ignores those other benefits

You have to look at full career benefits. We will be generous here and call “full career” just 30 years or more of service. Here are the true average, annual pensions for workers recently retiring since 1/1/14 with 30 or more years of service for the largest state-sponsored pensions:

You can find similar averages confirmed in the annual actuarial and financial reports for each pension fund (see note below for more information).

Lynch cites Chicago’s municipal pension, MEABF, as another example. Average pensions there are $34,413 per year, she says. Dishonest, again for the same reasons. MEABF workers retiring now with 30 or more years of service get $63,420 per year, according to its actuarial report.

As you can see, the real average pensions are about twice what Lynch claims.

Second, Lynch is very misleading about Social Security in that quote above. It’s true that MEABF and most other state and local pensioners in Illinois don’t get Social Security. However, over 96% of SERS pensioners do, which is why their average pension is lower. Most pensioners in IMRF, which is for municipal employees, also get Social Security.

Another whopper in Lynch’s article is why she says we couldn’t amend the state constitution to permit real pension reform. That would be “illegal,” she says, because it would violate the U.S. Constitution’s prohibition on impairment of contracts. Note that she says that without qualification, as other public union representatives often do. No ifs, ands or buts about it, she’d have you believe.

That’s bunk, as we’ve long told you. Just this month, a Rhode Island court, applying federal law on that exact issue, said pensions can be cut. Even if a court concludes that a contract was substantially impaired, “the court then must inquire whether the impairment, nonetheless, is reasonable and necessary to fulfill an important public purpose.” That was already well-established in federal law. Previous rulings by Illinois courts applying Illinois law won’t matter. Cutting cost-of-living benefits met that test in Rhode Island’s case.

Many Illinois municipalities are far past meeting that test. If the state itself isn’t there yet, it sure will be by the time this ever gets to the courts.

As for other answers to Lynch’s claim that the pension crisis is only about more taxpayer money, I won’t try to summarize the many dozens of articles we’ve written about the need for reform. Our pension system is fundamentally broken, corrupt and unsustainable. Illinoisans will never be able to afford what it will cost to honor them in full.

The impossibly deep hole deepens every day thanks, in part, to dishonesty about pensions spread by public unions.

*Mark Glennon is founder of Wirepoints.

Read more about Illinois’ pension crisis:

Note: Wirepoints’ data averages all pension who retired within the last four years and have 30 years or more of service. The pension funds’ actuarial reports show annual pension benefit data based on the members who retired each year, grouped by years of service.

25
Leave a Reply

10 Comment threads
15 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
19 Comment authors
  Subscribe  
newest oldest most voted
Notify of
whocares

BS

s and p 500

Unions continue to repeat the lies that (1) pensions are unbreakable promises and (2) unfunded pensions are “pay as you go” and it’s not really debt. Pension promises have been broken in several municipalities and will continue to be broken. There’s a federal rule GASB 68 that says that unfunded pensions are debt that has to be reported on balance sheets, and that rule has been around since 2014.

james f. cohan

this is a lie ,I worked for Corrections for 30 years and my retirement is $32,000.00 a year . I don’t no where you get the $53,000.00 I wish that was true don’t spread lies like this we worked hard for what we got and payed for are retirement. It was not a tax on the people .

world with end

If pensions, health care benefits, etc. are reduced, am I right in thinking that there wouldn’t be a corresponding reduction in taxes and user fees? My contention is that this tax and user fee revenue would still be needed, except it would be shifted to pay for state services previously neglected, like infrastructure improvements and elderly care. That’s why it will take many years for the IL resident to dig out of this hole and why I think it may not be wise to stick it out instead of relocating out of state. There have been way too many years… Read more »

Your not mentioning the debt incurred by the State Government over pensions. The State owes the pensioners billions of dollars they took from the pension fund. Please give the stats. Peace

Andrew Szakmary

I am not at all sure that previous Illinois court rulings are immaterial if the state constitution is amended to delete the pension protection clause. In its ruling striking down SB1 the Illinois Supreme Court strongly signaled that it would likely have done so even in the absence of the pension protection clause based on general contract principles alone. Yes, the court in Rhode Island did not strike down pension cuts for a small city with very limited taxing power, but it would be the ISC, not Rhode Island courts, that would rule on any future Illinois legislation, and it… Read more »

Dan

Courts can’t defy math Andrew, and as a result, your pension is going to get cut. It is a 100% certainty once they collapse, and they will during the next recession. This problem will be handled at the federal level once they collapse.

Rick

My Zen has switched, I used to get riled up about govt sector employees, unions and their ideals and tactics. I don’t blame rank and file people for taking every bit of what they and their unions managed to coerce out of the politicians anymore, it’s wasted anger. Yeah it stinks but now it’s time shift focus. Being so deep in the debt hole, reducing the govt sector take will have no effect anymore, those promises can’t be broken. Focus and anger needs to go to what continues the debt and grows the debt. Namely the bond markets and rating… Read more »

Downstate_downtrodden

Every time I drive past a house with one of those stupid “I support state workers” signs In the yard I just shake my head and think of the bosses like Ms. Lynch here.

nixit

Relentless, isn’t it?

I like that Lynch admitted skipping pension contributions was “effectively borrowing employees’ retirement income to finance a public body’s operations.” Refreshing to see the union head admit all those union members’ raises were paid with pension dollars. Too bad she didn’t mention that decade when the state was picking up their employee pension contributions.

That’s what we need to hammer more. When pensions go unfunded, it’s not like taxpayers’ money simply disappears. Instead, it goes to fund bigger worker salaries, more government hires and more programs – all of which push up future pension obligations. That’s why the unions were silent or supportive of pension holidays. Those holidays simultaneously pushed up current compensation (salaries) and future compensation (pensions). It was brilliant. They knew they’d fight later and use the pension protection clause to try and get it all funded. If the money had simply gone to pay for pensions (the correct action), we’d be in… Read more »

Dan

Hi Ted, It is obvious that these pensions will collapse and be cut – one way or another. Don’t you agree? Once they go insolvent there is no way they will be able to pay for the pensions out of the general fund for very long. Greedy state workers are even saying now that even if they run out of funds, they will just pay out of the general fund, but that simply isn’t realistic at all. Obviously taxes cannot go up much more, and services can only be cut so much. Also, an entire state can’t just fail. The… Read more »

riverbender

Those pensions are a first mortgage on your owned or financed real estate. They will be paid for with the proceeds from your property sales.

Dan

At some point bankruptcy will be forced because property taxes cannot go up forever. Math and reality always win, and so you are wrong and the pensions will lose. I will be leaving Illinois if things get much worse anyway.

Freddy

Ted- As I mentioned before the taxpayers did not underfund the pensions. Every time I pay my property and other taxes within those payments are monies dedicated to pensions either directly or indirectly as is within a contract. I looked into the Rockford school district teachers contract as best as I could and we have total pension pickup by the district (taxpayers) so after I paid did the money really go to pensions?? Probably went into the state abyss system but only on paper. Even if people walked away from their homes in a PTELL county(taxes are not lost) that… Read more »

s and p 500

The University of Calif. took a long pension holiday of something like 20 years. The professors didn’t complain because they were getting raises and tuition wasn’t going up. But now UC can’t ignore its huge unfunded pension liability so tuition is around $13,000 a year. At least the kids are becoming aware of the issue of pensions. They are furious about former chancellor Mark Yudof’s pension of around $300K a year.

NB-Chicago

Fantastic,, wish crains would publish!!!!!, or submit as letter to editor