Mihalopoulos drinks the Kool-Aid.
The Sun-Times’ Dan Mihalopoulos must have run out of real things to write about this morning. So he decided to make stuff up about huge teacher pensions.
According to Mihalopoulos, the state’s current financial mess is driven by the cost of post retirement benefits to teachers and other public employee pensions, known as COLAs.
He quotes Lawarence Msall of the Civic Federation.
A third of the state’s unfunded pension liability of $110 billion is due to the 3 percent compounded increases in pensions, says Laurence Msall, president of the nonprofit Civic Federation.
“Nothing drives Illinois further away from everyone else than the 3 percent compounded,” he says.
Hmmm. A third? What about the other two thirds?
Because the state went all dead-beat for decades on their payments into the pension systems, it had to borrow the money. Now 60% of the cost of state pensions is payment on the debt.
A retired teacher on a $50,000 a year pension isn’t the bandit. Wall Street and the banks who are collecting the payment on the debt are the bandits. Less than a third are the normal costs to pension payments and the COLA. The rest is payment on the debt and interest to the banks.
Who is Mihalopoulos pinning this on? Half the state’s teachers collect less than $50,000 a year and collect no Social Security. Only 7% earn over $100K.
That means that if a 61 year old newly retired teacher collects her $50,000 pension the first year of her retirement, the following year she will get a $1500 increase and the year after that, when it is compounded, she will collect an additional $45.
That is the state’s financial crisis in a nutshell: $45 to a 62 year old retired school teacher.
Source: Illinois Teacher Retirement System.
It is clear that Mihalopoulos is intent on creating pension envy. Who gets a 3% compounded pension these days?
Here is what the Illinois Supreme Court said about that:
From PENSION REFORM LITIGATION (Doris Heaton et al., Appellees, v. Pat Quinn, Governor, State of Illinois, et al., Appellants):
“By way of comparison, data published by the Social Security Administration show that Social Security increases, which are tied to the cost of living, averaged 3.98%, nearly a percentage point more than under the Illinois formula, between 1975 and 2014. http://www.ssa.gov/OACT/ COLA/colaseries.html.”
Look at it again. We average one percent less under TRS than Social Security increases.