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.”
http://www.illinoiscourts.gov/Opinions/SupremeCourt/2015/118585.pdf
Look at it again. We average one percent less under TRS than Social Security increases.
Fred Klonsky 
Danny Boy, the Sun-Times resident bottom feeding “investigative” reporter is jealous because he’s stuck with a 401K. Alas, he’s turning into the Kristen McQueary of CS-T.
Fred, there you go again, confusing the issue with irrefutable facts. The people who pull the levers of government have always counted on pitting the great unwashed against itself and look where it’s gotten them… (and the referential pronoun is ambiguous by design)
Think of it this way Fred-the people that you are asking to pay the 3% per year raise in perpetuity are not themselves getting a 3% raise, therefore they may get pissed off after a while. Logical?
Nothing, I repeat nothing can go straight up for ever, even your pension. Why is there a so called cost of living when your own Federal Reserve Bank can’t find any inflation? It’s not a cost of living, it’s a raise for sitting on your arse.
Should we believe the stats on pensions when we are well aware of the $300+K man ifrom the broke school district in the South burbs?
As long as the state doesn’t address the debt, the people of the state will be throwing money at the banks. Logical? I’m not pissed. The Court says our pension is a contract and constitutionally protected.
Don’t let the facts confuse you.
“Sitting on my arse?” What? Are you writing from England. I believe I am sitting on my bum.
I can confirm from a list I saw that all the downstate big pensions are administrators whose names the media spread to sow hatred and division. There is one thing Trump does I like …he puts them in a pen in the middle of his crowds. Based on our experience with these media types they are pathological liars .
The A.A.I. for teachers was earned and paid for by teachers. A separate contribution is collected for this benefit. The actuaries for the state (in the case of T.R.S.) calculated the cost and imposed the charge. The problem is that teachers paid but the state never did.
This is all earned and owed compensation that belongs to teachers. The teachers did everything asked of them. The city and the state that ignored the effects of not paying their debt when it was owed. They spend already owed money to get re-elected.
Einstein described compound interest as the most powerful force in the universe. The city and the state ignored that fact. If they had paid what was owed on time, there would be no problem. They are now crying poor. They don’t want to pay what they owe.
Our leaders in government ignored the effect of time on debt. Now the court says the debt has to be paid no matter what else has to suffer. So who should we blame?
Politicians want the anger of taxpayers to fall on public employees instead of themselves. Hence the C.O.L.A. and “undeserved” increase arguments.
I would like to see some articles about not paying the banks and bond holders because it is more than they “deserve” . Why are they more deserving than those who actually did the work? No one ever even asks that question.
Hugh,
You are absolutely right. And it needs to be said again and again. My point is that Sun-Times investigative reporter Dan Mihalopoulos wrote a column that is fundamentally wrong on the facts. COLAs are not the driver of the funding crisis. The unpaid debt and the interest that goes to the bankers drives the crisis. If an investigative journalist cannot even get his facts right, what else is there?
You Fred Citizen jouralism it’s all we have the rest is billionaire propaganda.you are a teacher and artist forced to practice journalism.
A thousand Ralph Martires, a thousand Fred Klonskys, a thousand Glen Browns, and thousands of others who may understand completely Illinois’ revenue crisis will never convince some ideologically drunken fool from the IPI or a Mihalopoulos of the realities. For Mihalopoulos and his ilk, facts are irrelevant. Their immediate goal is to put their vampire pay masters in complete charge and to tie their personal fortunes or fates to them. They’ll wallow in their own manure of denial, lies, and corruption to reach that goal. Does Mihalopoulos really believe what he wrote or is he merely kissing his boss’ posterior and those of Chicago’s blood-sucking millionaires and billionaires? One thing’s for sure, Mihalopoulos has earned a grade of F for research, originality, and content. All he’s done is resurrect the same BS that we resisted, rebutted, fought and defeated in the Illinois Supreme Court. It’s nothing new. Dismiss Mihalopoulos to your heart’s content; he deserves it; but stay vigilant!
Yessir! Laughing. I’m not trying to convince Mihalopoulos. But it is just bad journalism to have the only source be Lawrence Msall and cherry pick your examples. Luckily he pretends to be a journalist for that morning rag instead of having gone to law school and maybe ending up the the ISC.
Fred,
Bad journalism comes either from complete fools or shameless media whores. Mihalopoulos is a great example of the latter. A safe guess is that he’s quite aware that cutting pension benefits of Illinois’ retirees won’t make much of a dent into the “unfunded liability.” All he had to do was to hear Nekritz’ own projections on Dick Kay’s “Back on the Beat” podcast dated February 14, 2014 that SB 1, had it passed constitutional muster, would only have produced $20 billion over a stretch of years. That still leaves more than $90 billion of the “unfunded liability” that would have to have been repaid with interest by the State of Illinois to TRS and the other four pension systems. From where would the revenue to pay off the remaining $90 billion of State debt to pensions come?
I’m convinced that Mihalopoulos knows this, but he’s nothing but a media whore who’s kissing the butts of Chicago’s billionaire class. If by chance he doesn’t know anything about the real source of the “unfunded liability” or the half-assed attempt to slash pension benefits with the unconstitutional SB 1, he’s a plain ignoramus. Either way, Mihalopoulos has proved himself to be worthless as a source of reliable information and unworthy of the title “journalist.”
And definitely, the Sun-Times, the Trib, the Herald, our major papers, are nothing but rags. As I’ve written recently in another post, the three papers on which many Chicagoans rely for “news,” remind me of the old Soviet propaganda rag, Pravda, or better, the old East German communist rag, “Neues Deutschland,” of which East Germans said mockingly was good for three things: for use as wrapping fish bought at the market, starting a fire in a coal-burning stove, or as toilet paper in an outhouse. Guys like Mihalopoulos have turned our papers into Chicago’s versions of “Neues Deutschland.” At least the East Germans understood the real “value” of their paper; what about the readers of the Sun-Times, the Trib, or the Herald?
You are sooooo good!
Sent from my iPhone
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As Martire has said in the past, perhaps all of the concerned taxpayers should have said “thank you” to all of the teachers for the ability to pay for goods and services without raising taxes, because the state was using $$$ that should have gone for our pensions. Now the loan is due.
My $3100 a month pension money goes right back into the local economy. I intentionally do business with small local businesses. I wouldn’t even have been able to retire if I didn’t live in a trailer park. It’s surprising how many people from Chicago are moving out here to the park. I tell people I’ve met who complain about my pension they could have applied at the IDOC in the early 80s like I did. I hated that job from day one but I stuck it out for the benefits.