The Dumpster Fire of Illinois Public Pensions is Still Smoldering

[MrLoco]

I will speak specifically about teacher's pension since my wife has been a public school teacher for 35 years and retiring very soon. When she started, she had NO choice but to contribute 9% of her pay towards her pension. You were part of the union....you paid in. Now 35 years later, she will receive a juicy pension with a juicy COLA .... and she deserves every penny. Her school system also had employees pay into SS....so she has that benefit to look forward to as well. Plus any teacher that dies (and their spouse) after just retiring...all those payments stop just as with SS. So many public employees certainly DO NOT collect far more than what they paid in. The dead pay for the living. At least with a 401k or IRA your heirs inherit the assets.


You know what is really sucking money into the abyss as far as tax money going toward schools? Special Ed. Probably a sore subject for some if they have a child who is special Ed...but facts are facts. It costs about 3x more to educate a special ed student as a "regular" student.


Is it worth it? I say No. Special buses to transport the child. Tell me .....you have a 16 year old in a motorized wheelchair in diapers who can only grunt every now and then in a class with the regular students. Plus the cost for an aide for EACH student. Money. Money. Money. Really? Does this make any sense? And when a special ed student "graduates" ( no diploma....certificate of completion), they move to a group home or remain at home.
Other than the more able ones getting a job at McDonalds wiping down tables...where is the return to society in terms of taxes paid into the system? But state laws are what they are with the "no child left behind rule" and integrating all students in a classroom.


Is this all fair to the non special ed students who are trying to learn?

The only way to go is to have a non special ed child take AP classes or pay for a private school so they may excel and achieve their potential.

 

[leftbucket]

prichard

I am not going to look to see if my memory is gone or still there...


I do remember reading about some city in Alabama or maybe Georgia (well, somewhere down south) where they took a big hit... not sure if it qualifies for mostly everything... but I can tell you that if I had a pension and I lost even 50% of it I would say I lost 'mostly everything'...

Prichard, AL...
https://www.nytimes.com/2010/12/23/business/23prichard.html

scary stuff...they lost it all. this is a very rare situation though...no new employees paying in anything (you would typically have some employees paying in something in a municipality) and no PBGC coverage (as you might have in an old private plan)

definitely a reminder to pay attention...

 

[jazz4cash]

Some here I calling for doomsday for public employee pensions. I believe from what we have seen so far in major cities like Detroit and Stockton there has been not much of a haircut for them. I believe Detroit employees took a 5% hit and no COLA. I think the police and fire took even less of a hit. It appears creditors mostly were hit hardest. Does anyone have any examples of where the public employees lost everything or mostly everything?

Ok here’s one from last year in Rhode Island. It seems the smaller municipalities are the ones affected first. The larger statewide systems are more capable of kicking the can down the road. This one cost the pensioners ~50%.
https://www.illinoispolicy.org/rhod...-municipalities-struggling-with-pension-debt/

 

[jazz4cash]

I guess I always figured eventually these obligations get papered over by revenue from some form of vice (gambling, cannabis, or something like that).

 

[kjpliny]

I will speak specifically about teacher's pension since my wife has been a public school teacher for 35 years and retiring very soon. When she started, she had NO choice but to contribute 9% of her pay towards her pension. You were part of the union....you paid in. Now 35 years later, she will receive a juicy pension with a juicy COLA .... and she deserves every penny. Her school system also had employees pay into SS....so she has that benefit to look forward to as well. Plus any teacher that dies (and their spouse) after just retiring...all those payments stop just as with SS. So many public employees certainly DO NOT collect far more than what they paid in. The dead pay for the living. At least with a 401k or IRA your heirs inherit the assets.


You know what is really sucking money into the abyss as far as tax money going toward schools? Special Ed. Probably a sore subject for some if they have a child who is special Ed...but facts are facts. It costs about 3x more to educate a special ed student as a "regular" student.


Is it worth it? I say No. Special buses to transport the child. Tell me .....you have a 16 year old in a motorized wheelchair in diapers who can only grunt every now and then in a class with the regular students. Plus the cost for an aide for EACH student. Money. Money. Money. Really? Does this make any sense? And when a special ed student "graduates" ( no diploma....certificate of completion), they move to a group home or remain at home.
Other than the more able ones getting a job at McDonalds wiping down tables...where is the return to society in terms of taxes paid into the system? But state laws are what they are with the "no child left behind rule" and integrating all students in a classroom.


Is this all fair to the non special ed students who are trying to learn?

The only way to go is to have a non special ed child take AP classes or pay for a private school so they may excel and achieve their potential.

Well, don't feel too bad about the special ed kids and their associated costs. My wife has been teaching special needs children for 27 years and it certainly is a lot of work, expense, and very challenging, but either way you look at it, civilized society pays one way or another for the less fortunate and less gifted among us. Is it fair? Probably not, but I bet you'd rather pay a bit extra rather than living the dream as a full-time parent of a special needs or severely disabled child. What is the moral thing to do?

If you want to talk about financial injustice, how about a child-free couple paying $15k per year in property taxes (70% of which is school taxes) over 30 years of home ownership? What is the return on that investment?

 

[ziggy29]

If you want to talk about financial injustice, how about a child-free couple paying $15k per year in property taxes (70% of which is school taxes) over 30 years of home ownership? What is the return on that investment?

As someone without children, I used to think it was a travesty that I had to pay as much in property taxes as someone with 6 children. But then at some point, besides not wanting to live in an undereducated society, I decided to look at school taxes as my repayment for the education I received rather than my subsidizing everyone else's kids. That has been good for my mental health.

 

[OldShooter]

... I believe from what we have seen so far in major cities like Detroit and Stockton there has been not much of a haircut for them. I believe Detroit employees took a 5% hit and no COLA. ...

"not much of a haircut" ?!!?! Do the math. The loss of a COLA is could easily be a 50% loss of purchasing power in the 20th year. That is huge for someone relying solely on the pension income.

IMO eliminating COLAs will be the centerpiece of many pension restructuring efforts simply because the public in general is not good at math and because it has a huge effect of future obligations.

 

[kjpliny]

As someone without children, I used to think it was a travesty that I had to pay as much in property taxes as someone with 6 children. But then at some point, besides not wanting to live in an undereducated society, I decided to look at school taxes as my repayment for the education I received rather than my subsidizing everyone else's kids. That has been good for my mental health.

That's probably a healthy way of looking at things. The problem is...the older I get, the more idiots there appear to be. Most of them driving and gawking at their iphones with their heads down, perpetually distracted by irrelevent nonsense.

 

[OldShooter]

...the older I get, the more idiots there appear to be. ...

Years ago a wise man told me: "Getting old isn't so bad. There are more pretty girls every year." I have found this to be true.

 

[Teacher Terry]

Severely disabled kids aren’t usually mainstreamed but are in their own classrooms and their parents need to work. Having a disabled child comes with lots of expenses so they need to work more than someone else. I don’t mind paying for things I don’t use. It’s part of being a civilized society and am grateful that I don’t need help.

 

[beowulf]

Years ago a wise man told me: "Getting old isn't so bad. There are more pretty girls every year." I have found this to be true.

Same results here. A lot like beer goggles when we were young .

 

[Sunset]

Years ago a wise man told me: "Getting old isn't so bad. There are more pretty girls every year." I have found this to be true.

I've also noticed, a lot of gray haired women are starting to give me a serious look over as I walk by.... I must be getting more rare and therefore more attractive or at least still breathing as an older male.

 

[beowulf]

I think the still breathing and not in a wheelchair are large factors.

 

[beowulf]

Severely disabled kids aren’t usually mainstreamed but are in their own classrooms and their parents need to work. Having a disabled child comes with lots of expenses so they need to work more than someone else. I don’t mind paying for things I don’t use. It’s part of being a civilized society and am grateful that I don’t need help.

Agree completely. Our son did well until high school and then was placed in a relatively small special needs high school with classes of no more than 12 students. He was able to flourish there and went on to college and graduate school. Without that extra attention he would have been lost. Thank you for your efforts as a teacher.

Yes, we are mostly a civilized society, but far too many people in the US still act like we live in the west of the 1880s where it was survival of the fittest.

 

[beowulf]

"If you want to talk about financial injustice, how about a child-free couple paying $15k per year in property taxes (70% of which is school taxes) over 30 years of home ownership? What is the return on that investment?

Did you and your spouse go to public schools? Did you and your spouse receive educations that allowed you to succeed in life? Are you forced to live in the taxing jurisdiction you are in now? That's not injustice. It's was your choice to live where you live knowing that the property taxes are high. You could always move to #50 on the education scale in the US - Mississippi - and pay very low property taxes. Or the Phoenix, AZ area, where a $500K home pays about $2,500 a year in property taxes. Nearly all of us have the freedom to choose where we live. Obviously, you chose poorly.

 

[Breedlove]

Our son is out of school we paid , but now why should I pay school taxes . I have a nephew and niece as teachers in Houston and he tells me about the wasted money . Look at our football stadiums . We pay taxes so our HS kids can play sports in a palace . HS football coaches make 200K a year and don't have to teach a class . I will say it loud money does not produce smarter students or better schools . It just produces more corruption . I pay 500.00 a year for school taxes , very little and I will put our students in our HS against any in the nation . Why ….because our parents participate . This is a quote from a teacher in our district . She used to be a teacher in San Francisco.

 

[kjpliny]

"If you want to talk about financial injustice, how about a child-free couple paying $15k per year in property taxes (70% of which is school taxes) over 30 years of home ownership? What is the return on that investment?

Did you and your spouse go to public schools? Did you and your spouse receive educations that allowed you to succeed in life? Are you forced to live in the taxing jurisdiction you are in now? That's not injustice. It's was your choice to live where you live knowing that the property taxes are high. You could always move to #50 on the education scale in the US - Mississippi - and pay very low property taxes. Or the Phoenix, AZ area, where a $500K home pays about $2,500 a year in property taxes. Nearly all of us have the freedom to choose where we live. Obviously, you chose poorly.

Not really...we love where we live and we certainly wouldn’t be able to have the jobs/income we enjoy if we were in Arizona or some other low cost of living area. We don’t need to like the high taxes though. Once we retire, we’ll have the option to move on.

 

[CardsFan]

As someone without children, I used to think it was a travesty that I had to pay as much in property taxes as someone with 6 children. But then at some point, besides not wanting to live in an undereducated society, I decided to look at school taxes as my repayment for the education I received rather than my subsidizing everyone else's kids. That has been good for my mental health.

Bingo! We have one child. We moved to a high tax school district because of the quality of education. We have since moved to a different area, but I have no problems paying to educate the young folks in our area.

Though, I do sometimes worry about WHAT they are being taught.

 

[beowulf]

Not really...we love where we live and we certainly wouldn’t be able to have the jobs/income we enjoy if we were in Arizona or some other low cost of living area. We don’t need to like the high taxes though. Once we retire, we’ll have the option to move on.

You always have the option to move on. You choose not to. You can like or not like high taxes, but complaining about them and not taking action to find a place with lower RE taxes is hot air. You can vote two ways - one at the ballot box, the other with your feet. One reason you probably won't move is you love what the area offers, which is derived from your local taxes. You can't have it both ways. BTW, you wouldn't need such a high income if you move to a LCOL location.

 

[kjpliny]

You always have the option to move on. You choose not to.

For most people that may be true, but it's not really a practical option for us. Wife is a tenured teacher with 5 more years to go until full pension. Since this is the single biggest asset in our retirement portfolio, we're not about to give that up for some lower taxes elsewhere. As I said before, we'll have relocation options once we retire.

 

[Chuckanut]

Here's one proposal to 'fix' the Illinois pension system:

https://reason.com/2019/08/11/illinois-is-the-canary-in-the-pension-coal-mine-says-adam-schuster/

One quote below, but you really need to read the entire article to get a good feel for what the author is talking about.

Q: What is the short version of your plan?
A: It would amend our constitution so that instead of protecting the future growth rate, it would only protect the pension benefit that somebody has earned to date. So if you retired today, your annuity would be protected, but it would give the legislature flexibility to change retirement ages for younger workers and to change that 3 percent cost of living adjustment, for example.

 

[beowulf]

Good article in Reason. Essentially what’s being proposed is what has already happened to federal employees. Depending on when you started federal employment, there are 3 different pension plans. And a fourth will be rolled out in the next few years. Lots of states and cities have done this. Why not Illinois? The answer is obvious. Not fear of the voters, fear of the unions.

 

[Mr._Graybeard]

Our son is out of school we paid , but now why should I pay school taxes . I have a nephew and niece as teachers in Houston and he tells me about the wasted money . Look at our football stadiums . We pay taxes so our HS kids can play sports in a palace . HS football coaches make 200K a year and don't have to teach a class . I will say it loud money does not produce smarter students or better schools . It just produces more corruption . I pay 500.00 a year for school taxes , very little and I will put our students in our HS against any in the nation . Why ….because our parents participate . This is a quote from a teacher in our district . She used to be a teacher in San Francisco.

Viewing from a distance, high school football in Texas seems pretty extravagant. But in our area, the football programs get a lot of financial support from booster groups that run fund drives to pay for uniforms, bleachers, etc. Is that not also the case in Texas?

I did a quick Google and found this handbook for the booster club in the Lake Travis school district. It suggests that it pays for the bulk of the school district's football program. I don't know if that's true, but it's the way it works up here.

 

[beowulf]

And what does this have to do with public pensions? Football is a religion in Texas.

 

[Mr._Graybeard]

And what does this have to do with public pensions?

Not a thing.