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Old 10-29-2013, 07:12 PM   #41
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Originally Posted by ERD50 View Post
According to the city of Chicago's own web site, it's true:

City of Chicago :: Just The Facts



And of course, CPS (Chicago Public Schools) is funded by taxpayer dollars. I guess you need to recalculate your figures?

-ERD50
I don't get how can you claim that teachers pay 9% of their salary (a reasonable sum but less than I contributed to my 401K) when the reality is they pay only 2% and the CPS contributes 7%. Geez

So if I recalculate my figures you need to add 17% to teachers salaries when comparing to the public sector workers.
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Old 10-29-2013, 07:15 PM   #42
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Teachers are no different from other people. Heck, I know (slightly) a retired math teacher who is over $500k in debt.

Go figure.
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Old 10-29-2013, 08:55 PM   #43
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... I work with a guy...his wife is a retired teacher from Chicago. Her pension is 98,500/year.
That made my eyes open wide. Wow.
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Yep. If anyone knows a representative sample of IL retired teachers, it doesn't take a genius to figure out where the money is going.
Right, you can look them up here - though it helps to know if they were teachers, admin, etc..

Champion Pensions

I looked up a few of the retired teachers I know (outside of Chicago), the first three were $81K-$84K (34-38 years), and this has a 3% COLA factor. Found a few more in the mid $60K's, had to get down to ones that retired with 27/28 years to get to mid $50K range.

I looked up salary history on one elementary school teacher, $84K pension, salary was $85K in 2001, and (miraculously?) jumped to $107K in 2003 (retirement year)! A 26% increase in a bad economy! Of course, this factored heavily into the pension calculation, but the contributions were based on a lower salary history.

And most of these are taken before age 65. For comparison, my private pension (non-COLA) would be cut in half if taken at 55.



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I think that it is a mistake to make a judgement on whether someone else "deserves" their pension. It is pretty hard to know how hard someone else's job was or how hard they worked.
I agree with this, but as far as I could see, no one made any such statement before your post. So why bring it up?

In case it is misunderstood, my comments are not directed towards 'deserve' or 'fair', they are just the factual numbers we must deal with here in Illinois. An $80K 3% COLA pension is a bill to pay, whether it was 'deserved' or not. Facts.

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The fact is that an agreement was made, the work was delivered as promised over many years and there is an expectation that the agreement will be honored.
No one wants to see promises broken. But the question is - what can be done if the money is not there? We can take a cue from the private sector - if my company went BK, my pension would fall under the rules of the PBGC, and my pension could be capped. I see the current cap, w/o COLA, is ~ $37K for someone retiring at 60 YO (pretty typical of the pensions I quoted). Add maybe $20K SS that a private sector might get, and I think you have a reasonable basis for comparison of what could reasonably be done - and that $37K would not be COLA'd.

Should the expectations of those in the public sector be higher than those in the private sector? It is tough to determine 'fair', but how about 'equal'?

A bit OT, but was 'the work delivered as promised over many years'? Seems the Union fights tooth and nail against any attempt to measure teacher performance, so how can we know this?


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The fact that the pension was not adequately funded falls on the governing body that refused to fund it properly and the voters who allowed them to get away with it.
This gets complicated. The unions supported the campaigns of the politicians. Then they negotiate with them. The taxpayers really didn't have a seat at that table. The mailings my daughter gets from the Teacher's Union reads like a campaign ad for one party here in IL.


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OK, people will probably find this article informative.

Set the record straight on teachers pension fund problems | catalyst-chicago.org
Interesting that an article that claims to 'set the record straight' gets the facts wrong on the Chicago teacher's salary contributions. They are 2%, not the 9% claimed as I linked to earlier - big difference. It seems intentionally misleading, as the 9% number is out there (but 7% paid by their employer), so it is easy to misinterpret. Cuts the credibility of that article by a lot.

So to get back to the point of what to do in IL - I just don't think you can take some sort of PBGC type pension limits/caps off the table. Raising IL taxes further might just create more of a downward spiral in revenue, and that could make it even tougher to meet pension responsibilities in the future.

-ERD50
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Old 10-30-2013, 12:15 AM   #44
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I am curious. Was the Ill-in-noise pension system ever reformed at all?

I ask because in my home state we have moved from a very generous older plan (closed to new members since the 70's) to a less generous DB plan, and now to a hybrid 50/50 DB/DC plan. Many if not most new people choose the hybrid plan because it has less restrictive retirement rules and give one the opportunity to put more money aside and choose where that money goes. IMHO, it's a win for both the state (less future obligations) and the employee (a chance to invest more and earn more while still having a guaranteed minimum pension).

Really, reforming the public pension system while not easy is not that difficult. Many states have done it.
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Old 10-30-2013, 08:27 AM   #45
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I am curious. Was the Ill-in-noise pension system ever reformed at all? ...
New IL state employees, hired in 2011 I think, are under a much more conservative plan. This will help 25-30 years from now, and helps very modestly now as less is needed to be contributed fund those future expenses.

The State Constitution says something to the effect that benefits cannot be reduced. It is debated whether this applies only to earned benefits, or also to future benefits not yet earned for current employees. Some argued it even applied to people not yet hired (they lost)!

Private employees have definitely experienced changes to future benefits. Despite a lot of wailing (The Retirement Heist), changes to earned benefits are rare, with the exception of BK companies and high earners hitting the PBGC caps. Pilots were hit hard by this because of the forced early retirement rules.

-ERD50
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Old 10-30-2013, 09:24 AM   #46
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Every time we get into a "who owes what to whom?" I think about my share of the debt, and go to the charts that break down the debt. I was a little surprised to see that my share of the Illinois debt is about $12,000 while those who live in Michigan owe less than $7500 to their state. New Yorkers owe more than $17,000 per citizen, and those who live in Wyoming, $4,000

State of Michigan Debt Clock

A few billion here, a few billion there, and ya know... ?

My share of the National debt is about $54,000. If it would help, and everyone else did it, I'd be happy to pay my share!
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Old 10-30-2013, 10:08 AM   #47
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My share of the National debt is about $54,000. If it would help, and everyone else did it, I'd be happy to pay my share!
I paid $57,500 in federal tax last year, so I have done my part!
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Old 10-30-2013, 10:08 AM   #48
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I am an Illinois resident who is vested in one of the State's pension plans, although not the one for CPS. Currently I work in the private sector for a large company headquartered in Illinois so I try to see both sides of the pension funding issues here. As a point of reference, since roughly 2003, new employees at my megacorp only have a 401k option for their retirement savings plan. The company match is 6% (there are some rules around that) and of course employees also contribute 6.2% to Social Security. So, employees who want the maximum match will contribute at least 12.2% of their gross pay towards their retirement each year and the company will contribute the same amount. Using 59.5 for the 401k and 62 for Soc Sec, a private sector employee who doesn't have FIRE goals can expect to work 37 to 40 years before they can access their retirement savings.
When I look at the information about the pension plan for CPS that has been posted in this thread, I can see a number of things on the employee side of the equation that just don't seem to be sustainable. First, a 2% contribution rate is simply not enough. We can debate the relative pay of teachers, but who on this forum would expect to FIRE by only saving 2% of their salary? Next, the 3% fixed COLA is also another place where I think the rules could be tweaked such as using CPI-U instead. Lastly, the rules that determine at what age a participant can retire and receive a full pension need to be balanced with the longer life expectancies that are common today. The changes can be phased in, but to have any useful impact, they will have to affect some of the current participants.
Regarding the State skipping contributions in the go go 90's when the funding levels were 100%, I remember when our V.P. commented about how the pension plan portfolio for our megacorp was doing so well that the company did not need to make any contributions. I also recall co-workers quitting to become day traders. That was in 1998. In 2003 the company froze the plan to new participants and in 2011 they kicked out anyone who wasn't yet 40 and all benefits will be frozen on 12/31/2019. I made the cut both times so I am hopeful that they are done making reductions, but you never know. I know many long time employees who have been affected by these changes. I suspect this is because, when they hired in 30+ years ago, the promise of a future company pension as well as full medical benefits, caused them to spend most of their take home pay.
On the State's side of the equation, I am not sure what can be done. It's one thing to ask the State to meet its pension funding obligations, but to do so without modifying the rules for benefits seems likely to drive the State's budget over a cliff. I do wish there were more constructive ideas presented by both sides. As to how all of this happened, I remember a conversation I had with the director of the facility that I worked at for the State, and he said that the legislature found it easier to pass benefits increases than pay increases because they didn't have to pay for them right away. I guess that day has arrived.
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Old 10-30-2013, 10:50 AM   #49
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It doesn't help the budget when retirees take their pensions and move to Florida or Texas to spend them.
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Old 10-30-2013, 11:35 AM   #50
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Next, the 3% fixed COLA is also another place where I think the rules could be tweaked such as using CPI-U instead.
Do you mean that a pensioner under this system gets 3% more every year regardless of the inflation rate?
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Old 10-30-2013, 11:42 AM   #51
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New IL state employees, hired in 2011 I think, are under a much more conservative plan. This will help 25-30 years from now, and helps very modestly now as less is needed to be contributed fund those future expenses.
Well, as my old grand pappy used to say, "The best time to plant a tree was 30 years ago, the next best time is today".

Interestingly, in my home state the pension plan with the biggest problem is the old one closed over 30 years ago. All those baby boomers in that system are now retiring. Still, I am certain the citizens of Illinois would trade their pension problems for ours in a New York minute.
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Old 10-30-2013, 01:02 PM   #52
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I know all teachers don't get such a deal, but I do have a hard time hearing about how teachers have it so tough. Please don't throw stones, I DID say that I know not all teachers get such a great deal. But a lot of them do.
The big pensions for teachers are in states/cities run by the public employee unions. Salaries are large and pensions wonderful. The only problem with this is the prospect of the next Detroit. Chicago is definitely having its issues.

I have a daughter that is a teacher in Texas. For working 9 months she is making about $50k. I have a sister with a teaching certificate in Washington State where teachers can bring in $80k+. The only problem is that there are so many want-to-be teachers that my sister can't get a teaching job. She's been a low paid teachers aide for many years.
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Old 10-30-2013, 01:40 PM   #53
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Do you mean that a pensioner under this system gets 3% more every year regardless of the inflation rate?
Yup Hawaii has the same rule for its public pensions. Historically inflation has been in the 2% range other than 70s and early 80s when it was closer to 5%.
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Old 10-30-2013, 09:38 PM   #54
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While I can't speak with certainty for the CPS pension system, the plan that I am a member of in Illinois has a 3% annual COLA. As far as I know that is for the life of the retiree.
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Old 10-31-2013, 10:53 AM   #55
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While I can't speak with certainty for the CPS pension system, the plan that I am a member of in Illinois has a 3% annual COLA. As far as I know that is for the life of the retiree.
I looked up my wife's plan (IMRF - Illinois Municipal Retirement Fund), she will get a small pension, and I was a little surprised to see that the 3% is non-compounding. The IMRF actually has decent funding (mid 80% IIRC).

-ERD50
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Old 10-31-2013, 11:12 AM   #56
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I have a sister with a teaching certificate in Washington State where teachers can bring in $80k+. The only problem is that there are so many want-to-be teachers that my sister can't get a teaching job. She's been a low paid teachers aide for many years.
Yet the union tell us that they just cannot get "qualified "teachers for less. Yeah, right.

Ha
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Old 10-31-2013, 11:46 AM   #57
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Yet the union tell us that they just cannot get "qualified "teachers for less. Yeah, right.

Ha
And we are ranked 17th worldwide in education while spending way more than everyone else. Maybe we need an entity to ensure we are getting our money's worth like the insurance companies do for medicine. We would pay the third party and the teacher would get paid when Johnny is proficient with the fundamental theorem of calculus. The idea that someone gets paid regardless of whether they produce or not is just pure garbage. IMHO, of course.
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Old 10-31-2013, 12:00 PM   #58
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DW has been in education for thirty years. As far as the pension goes, even some teachers, DW included, think that like an annuity, there could and should be a lifetime payment amount, but states and unions made tremendous promises of full funding, COLA, etc. which will probably all fail to be met. Also, I have to note, starting salary for teachers is abominable. You could do better waiting tables and not need a masters or sixth year.
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Old 10-31-2013, 12:01 PM   #59
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I looked up my wife's plan (IMRF - Illinois Municipal Retirement Fund), she will get a small pension, and I was a little surprised to see that the 3% is non-compounding. The IMRF actually has decent funding (mid 80% IIRC).

-ERD50
From the SURS (State University Retirement System) FAQ -

Will I receive a cost of living increase on my retirement?
If you first began participation prior to January 1, 2011:
Each January 1st, your retirement annuity will automatically receive a 3% compounded increase. The first increase will begin on the January 1st following the month in which you retire and will be prorated for the number of months you were retired.

Here I believe "participation" means contributing to the system and not the date that you began receiving benefits. At least I hope so! Mind you, I would not object to a change to something more realistic such as CPI-U because I think that would make the system more viable over the long term.

What is a non-compounded COLA? I can't quite wrap my head around what that means.
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Old 10-31-2013, 12:54 PM   #60
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Many folks on this thread are quoting numbers from the CPS system and then generalizing to the total Illinois pension problem. For example, while the Chicago BOE seems to have contributed 7% of the 9% employee contribution for the employee, this is NOT the case in the rest of the state. Typically, the employee contributes the entire 9%.

To reduce confusion, when throwing out CPS numbers, don't generalize those numbers to the rest of the state.
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