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Old 12-04-2013, 06:44 PM   #41
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Dunno Ha. It's really ERD50's number crunching technique. I was just suggesting that if he's going to compare pensions from his high tier school district vs state wide median household incomes, perhaps he should also compare pensions to median incomes within his own Fat Cat school district.

In any case, it's clear one can profess to always "be looking at the numbers" but pick the numbers and do the analysis in a manner which guarantees the desired results.
Interesting question. But really, should a teacher in Beverly Hills or Bel Air or Holmby Hills reasonably expect to be able to afford a home in Beverly Hills? Maybe she could rent, or drive a few miles south across I-10?

Ha
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Old 12-04-2013, 06:44 PM   #42
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Excellent work ERD50. Although it doesn't make much sense to compare the retirees from a plush school district like yours with the entire state. How does the median pension for your school district compare to the median household income for the residents of your school district. That would be more meaningful.
If you have a source for that state-wide, Ill try to take a look. The one I know of (through championnews.net) forces you to select a district. I'm certain our district is above the average in salary, but far from an outlier. But I think my point will still stand, a significant number of these pensions are above 'middle class'.

And as I've said before, I do think that any adjustments that are determined to be needed should try to protect pensions to PBGC levels, plus maybe some adjustment for what SS would have provided (but they never paid into SS, so maybe not?).

You're right, if the State can't declare bankruptcy there will always be an air of illegitimacy over any pensions adjustments. Without a third party looking into it, who can say where the pensions should have been in priority. And as you say, the politicians don't want any third party overseeing their deals, so we are right back to square one. It's ugly.

-ERD50
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Old 12-04-2013, 06:57 PM   #43
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PS. Think of the Fed like index investing. You'll get the average, and that eliminates the risk that you may get something a lot worse.
I think that's a good way to look at it. While I'm hardly an expert on ALL state governments, there are some where I like what they're doing and how they do it and the integrity with which they operate more, generally, than I like the feds. And there are states, like my own, where just the thought of the politicians in power makes me cringe. Some of them are in prison right now, but apparently not enough. Apparently the rewards to be gained by participating in corruption are great enough to justify the risk of getting caught and having to spend some time in a low security slammer.
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Old 12-04-2013, 07:00 PM   #44
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Interesting question. But really, should a teacher in Beverly Hills or Bel Air or Holmby Hills reasonably expect to be able to afford a home in Beverly Hills? Maybe she could rent, or drive a few miles south across I-10?

Ha
Dunno for sure. What do you think? I think they should be paid via the principals of supply and demand and should spend prudently on housing given their personal financial situation.
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Old 12-04-2013, 07:08 PM   #45
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Texas on the other hand, has no corporate income tax at all. So what does this tell us? Anything? What I'm saying is, it is more complicated than any single number. Big Picture.
Texas has no corporate income tax but it does have a franchise tax, which looks surprisingly similar. It's probably lower than Illinois' tax rate but it'd be a messy comparison and would be different depending on business type.

Yes,it is more complicated.
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Old 12-04-2013, 07:10 PM   #46
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I'm certain our district is above the average in salary, but far from an outlier.
I doubt that is the case. I think it is less than "far from an outlier." Do you have any data at all?
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But I think my point will still stand, a significant number of these pensions are above 'middle class'.
Well, as long as you are clear that the pensions to which you are referring are above average and come from a pool of retirees who worked for a high class suburban Chicago school district.

As far as the middle class thing...... Who knows what that means? It's ridiculous to even talk about. You and your neighbors negotiated salaries with your employees and willingly paid them evey pay period. Eventually, some of the employees retired and got pensions which you think are too big. Well, try starting over and actively engage your municipality, county and school district in a campaign to reduce public employees salaries and you'll achieve your goal. Lots of municipalites successfully execute the delivery of services and K - 12 education while paying much, much less than the typical pay rates in the Chicago suburbs. Why can't your town, county, school district do it too?
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Old 12-04-2013, 07:55 PM   #47
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Given the current state of the state and the lack of pension reform coming from the politicians, I don't see how Illinois can recover from this. I know of some state jobs where there are 2 retired people for 1 worker. Given roughly 80% pension, that means that Illinois could be paying at least 260% of a normal salary for each current worker. I have to convince DW to get out of here.
You also need to start reading the paper or listening to the news.......

The Illinois legislature passed a bill yesterday which reduces the already earned pension benefits of most (not themselves of course) state employees. In 2011, they established a new, less generous, retirement benefit package for new hires going forward. Our politicians have "promised" that these "reforms" will lead to a fully funded pension system by the year 2045. That is, they say given these changes they can pay benefits due until then and simultaneously bring the funds up to a fully funded level.

Look at post #4 in this thread where a link to an article giving a summary of the legislation is posted.

You should probably still try to convince your DW to get out of Illinois though. It sucks on a number of levels. But they have passed so-called "pension reform" for most state employees. City of Chicago employees, Illinois Supreme Court Justices and Illinois State Legislators are exempt, of course.
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Old 12-04-2013, 08:28 PM   #48
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Just for reference, the kinds of pensions that many of these public sector employees get in Illinois puts them more in the top 5% income area, not the middle class.

I know a couple of retired, married teachers - their household income from their pensions is ~ $130,000 - $150,000, and before this law that was all 3% COLA'd for life. That is not middle class, independent of any opinion of 'fair' or not.

A more useful figure would be what is the median pension for someone who worked a full career. I don't have that number, but I'd bet it is above the 'middle class' definition, especially when you take into consideration retirement age and COLA value.

What about the middle class who has to pay the taxes to fund those pensions? IL income tax is a flat tax, BTW. Recently raised from 3% to 5%.

Plus, a 'win for MegaCorps' can mean more middle-class jobs in IL. It isn't always an 'us-versus-them' game.

-ERD50
Hear is a megacorp trader who disagrees with you. Disregard the political tax portion. Pay attention that megacorp is not going to do squat for middle class.

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Old 12-04-2013, 08:57 PM   #49
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Reform is long overdue.

Look, I'm not against the public worker, as I'm a retired federal worker, but at some point Governments need to realign benefits to a more realistic and affordable level.
So you got your retirement and NOW there should be reform? OK then.
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Old 12-04-2013, 09:10 PM   #50
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Texas has no corporate income tax but it does have a franchise tax, which looks surprisingly similar. It's probably lower than Illinois' tax rate but it'd be a messy comparison and would be different depending on business type.

Yes,it is more complicated.

Yes, the franchise tax is a sneaky way of putting in a corporate income tax.... since they are prohibited by the constitution to have a corporate income tax, this is the best they could do....


So far, we still do not have an individual income tax.... but it has not stopped them from trying to get one every once in awhile...
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Old 12-04-2013, 09:27 PM   #51
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Hear is a megacorp trader who disagrees with you. Disregard the political tax portion. Pay attention that megacorp is not going to do squat for middle class.

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But he has facts and figures to prove his case.
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Old 12-04-2013, 09:28 PM   #52
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I doubt that is the case. I think it is less than "far from an outlier." Do you have any data at all?
Well, as long as you are clear that the pensions to which you are referring are above average and come from a pool of retirees who worked for a high class suburban Chicago school district.
OK, I searched and I could not find state-wide data in a usable form. No way to sort out and get pensions more representative of state workers with a full career. But I found a site that ranked IL household income by school district, so I picked the first I saw near the middle that had a sizable population, Round Lake SD 116.

Illinois Median Household Income School District Rank Based on ACS 2006-2010 data*

Rank Median HH Income School District / Population
422 $54,438 Round Lake Community Unit School District 116*/ 35,961

So near the reported $56,576 IL median HH Income I had from another source. So then I went to champion news, sorted their TRS pensions for years of service 25+ and the median pension was $66,211. Pretty close to the $70,975 of our 'high class suburban Chicago' District.

And that is a single number, there may be another earner/pension in the household, bring that number higher.


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As far as the middle class thing...... Who knows what that means?
Yes, as haha pointed out, do we expect pensions to compare to earnings of a household? But I was just trying to answer another poster who brought up the middle class.

As far as the rest of that comment (that I didn't quote above), I think my view would get too politically 'hot' for this forum or some posters. Maybe if things cool down and I can find a soft way to phrase it I'll try later.


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Old 12-04-2013, 09:33 PM   #53
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You also need to start reading the paper or listening to the news.......

The Illinois legislature passed a bill yesterday which reduces the already earned pension benefits of most (not themselves of course) state employees. In 2011, they established a new, less generous, retirement benefit package for new hires going forward. Our politicians have "promised" that these "reforms" will lead to a fully funded pension system by the year 2045. That is, they say given these changes they can pay benefits due until then and simultaneously bring the funds up to a fully funded level.

Look at post #4 in this thread where a link to an article giving a summary of the legislation is posted.

You should probably still try to convince your DW to get out of Illinois though. It sucks on a number of levels. But they have passed so-called "pension reform" for most state employees. City of Chicago employees, Illinois Supreme Court Justices and Illinois State Legislators are exempt, of course.
City of Chicago Employees are definitely on the chopping block but I am sure you can exclude the other two.
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Old 12-04-2013, 09:41 PM   #54
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Hear is a megacorp trader who disagrees with you. Disregard the political tax portion. Pay attention that megacorp is not going to do squat for middle class.

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I'm not sure which parts were not political, or which parts disagreed with what I wrote. I said "Plus, a 'win for MegaCorps' can mean more middle-class jobs in IL. It isn't always an 'us-versus-them' game."

OK, I'm not trying to paint MegaCorps as wonderful, altruistic benefactors (I think his point was that they are not?). But they do provide jobs. And if the IL State debt problems make IL a dim prospect for potential employers, that's not good for workers in the State.

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But he has facts and figures to prove his case.
So maybe I had trouble sifting through his political comments, and maybe I missed something - but what numbers/data did he present that disagrees with the comment I made?

-ERD50
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Old 12-04-2013, 09:56 PM   #55
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You also need to start reading the paper or listening to the news....... The Illinois legislature passed a bill yesterday which reduces the already earned pension benefits of most (not themselves of course) state employees. In 2011, they established a new, less generous, retirement benefit package for new hires going forward. Our politicians have "promised" that these "reforms" will lead to a fully funded pension system by the year 2045. That is, they say given these changes they can pay benefits due until then and simultaneously bring the funds up to a fully funded level. Look at post #4 in this thread where a link to an article giving a summary of the legislation is posted. You should probably still try to convince your DW to get out of Illinois though. It sucks on a number of levels. But they have passed so-called "pension reform" for most state employees. City of Chicago employees, Illinois Supreme Court Justices and Illinois State Legislators are exempt, of course.
I do not consider lessening employee contributions to pensions as "pension reform"
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Old 12-04-2013, 10:01 PM   #56
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I'm not sure which parts were not political, or which parts disagreed with what I wrote. I said "Plus, a 'win for MegaCorps' can mean more middle-class jobs in IL. It isn't always an 'us-versus-them' game."

OK, I'm not trying to paint MegaCorps as wonderful, altruistic benefactors (I think his point was that they are not?). But they do provide jobs. And if the IL State debt problems make IL a dim prospect for potential employers, that's not good for workers in the State.



So maybe I had trouble sifting through his political comments, and maybe I missed something - but what numbers/data did he present that disagrees with the comment I made?

-ERD50
Well for starters ADM wants to collect employees income tax withholding and join Sears, Navistar, and others from paying their fair share to stay in Illinois. I don't know the numbers but I know they are just facts.
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Old 12-04-2013, 10:11 PM   #57
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I do not consider lessening employee contributions to pensions as "pension reform"
That 1% reduction to contributions is peanuts. They are better off paying 3% more and keeping their COLA increase.
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Old 12-04-2013, 10:44 PM   #58
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Here's a little more perspective on the 'middle class' issue - Current IL pension liability is $83B, but that assumes an 8% return on investments. This source estimates it at $209B if you assume 4% returns going forward. Let's split the difference and say $146B. There are 4,773,002 households in IL, so that comes to $30,589 per IL household. How can a middle class household afford that bill? Now factor in the lower class that aren't going to be able to pay anything, and that goes up. Also, our credit rating is hurt by this, causing us to pay higher interest on bonds. There are many factors. I do think something has to give, and I think the way to help the 'middle class' may be to make some adjustments to above middle class level pensions. -ERD50
The fact is the $146 billion liability is not due in one year. It's the payments due to retires over their lifetime. Therefore, the $30,569 per household payment, if made over the next 30 years, is much more doable. In fact, IF THE STATE OF ILLINOIS MADE THEIR REQUIRED CONTRIBUTIONS OVER THE YEARS, THIS WOULD NOT EVEN BE AN ISSUE.

Put the shoe on the other foot! What if your employer wanted to pull the rug out from under YOUR retirement? Don't blame the workers!
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Old 12-04-2013, 10:50 PM   #59
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Just the beginning. Stockton, Detroit, Illinois, maybe some police and fire in Texas next. What is promised or fair or deserved is not really relevant. In the end it will be what is affordable. States cannot mint money. The comments on average household income compared to pensions are relevant because ultimately taxpayers fund this.

I was in the private sector and lost more than 50% of my pension due to a PBGC takeover during a bankruptcy. It was a predictable outcome for several years before it actually happened. If I was in a situation to receive a relatively generous public pension, I would be working on a plan B. Not that the pension will disappear, but that it may be less lucrative than currently "promised".
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Old 12-04-2013, 10:58 PM   #60
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Bravo!
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