Kristen “Hurricane” McQueary of the Trib gets so much wrong on pensions.

kristen-mcqueary

When the Trib operations moved out of the Tribune Tower on north Michigan Avenue the other day they missed an opportunity to leave one of their editorial board members behind.

That would be Kristen McQueary.

You remember Kristen. Her most famous editorial was the one where she wished for a Hurricane Katrina to destroy Chicago public schools.

“I find myself wishing for a storm in Chicago — an unpredictable, haughty, devastating swirl of fury,” wrote McQueary in her column; “a dramatic levee break. Geysers bursting through manhole covers. A sleeping city, forced onto the rooftops.”

Even by the Chicago Tribune’s usual anti-union, anti-labor, anti-pension standards, McQueary was a bit harsh.

You might say, ghoulish.

But it appears McQueary has a long-term lease with the Trib.

Monday she wrote an op-ed column on the budget settlement in Springfield. It was a scolding for failing to address the pension issue.

Of course, the Illinois legislature did address the pension issue. They passed an unconstitutional buyout option. It is unconstitutional because it is offers a diminishment of benefits which the courts have already ruled out of order.

Also. Any teacher who would take such a buyout is crazy. We are not crazy. So it will not save the state what they are claiming.

They also passed a 3% cap on pensionable earnings. The cap is an intrusion by the state on the collective bargaining rights of school boards and unions who are bargaining salary, as well as making a target of retiring career teachers.

I’ll have more to say about the 3% pension cap some other time.

Back to McQueary’s Monday column.

The legislature could have immediately sent a “consideration” model, perhaps trading one benefit for a lesser one, back to the court. Some constitutional experts say it might have been upheld. Lawmakers also could have created a third pension tier with less costly benefits for incoming workers. Or they could have transitioned new workers to 401(k)-style plans.

…….

Rauner and legislative leaders could have launched a campaign to change the strict pension clause in the Illinois Constitution, as Arizona did. That state’s constitution contained similar language to Illinois’ that pensions could not be “diminished or impaired.” Arizona’s high court also had struck down attempts to curb pension costs by altering benefits.

I don’t know who the “some constitutional experts” are that McQueary is talking about. Maybe those at the right-wing Illinois Policy Institute. But the consideration model that McQueary mentions is a term dealing with contract language. “Consideration” is a bargained exchanged where the value of the exchange must be of equal or greater value and agreed to by both parties.

Enforcing a lesser benefit on employees is not consideration and the courts would agree.

McQueary must have been sleeping during an editorial board meeting when the news came in that the legislature already passed a Tier III to the Teacher Retirement System this year with a 401(k) option.

And lastly, about that constitutional change to the pension protection clause of the Illinois Constitution.

Current members of the Teacher Retirement System have a contractual and constitutional right to the pensions they earned.

They can change the rules going forward. They already have several times. But the bill of $130 billion and counting – if nothing is done to pay it –  is not going away.

Not even by a hurricane.

 

11 Replies to “Kristen “Hurricane” McQueary of the Trib gets so much wrong on pensions.”

  1. Fred,
    the method to the madness in springpatch may be to let the slow spiral into “bankruptcy” continue until there is nothing left, literally. What will happen?
    No cash to pay bills or pensions, pension plan literally runs out of $ for lack of any contribution. BANKRUPT.
    What does the court do then? Make the state pay?
    Now comes the supreme court cases. Issues are can a state go bankrupt?
    Who gets priority payment?
    What happens when more people leave.

    In simple termd Fred, it ain’t so simple, it’s a fucking mess./

    1. Of course it’s a fucking mess. But bankruptcy is not an option for two reasons. First, it is politically untenable. Secondly, the courts will rule that the state cannot go bankrupt as long as it has the option to tax. So, yes. The courts will make the state pay. Who pays? That is also a political question. I believe it should be those that can most afford to pay it and who are not leaving the state. The recent demographic studies show an explosion of wealthy residence in Chicago. While 300,000 African Americans and those earning less than $75 thousand a year have been forced our for lack of jobs and schools over the past decade or two, the same number of white and wealthy have moved into Chicago, because that’s where the money is. Tax ’em.

    2. The Center on Budget and Policy Priorities affirms that “it would be unwise to encourage states to abrogate their responsibilities by enacting a bankruptcy statute. States have adequate tools and means to meet their obligations… Confusion between short-term cyclical deficits and debt, pensions and retiree insurance – and the overstatement of the magnitude of the latter set of problems – draw attention away from the need to modernize state and local budget and revenue systems and address structural problems that have built up over time in these systems.

      “States suffer from ‘structural deficits’ or the failure of revenues to grow as quickly as the cost of services… Structural deficits stem largely from out-of-date tax systems, coupled with costs that rise faster than the economy in areas such as health care. Fixing these structural problems would help states and localities balance their operating budgets without resorting to [desperate measures]… It is far more constructive to focus on fixing these basics of state and local finance than to proclaim a crisis based on exaggerations of imminent threats.”

      In Illinois, the State Constitution (Article XIII, Section 5) is quite explicit about public employees’ guaranteed pensions. Furthermore, “pensions will not run out of money… [That] assumes that at a future date, state pensions will just cease and all outstanding financial obligations will come due… Unlike a corporation, a state government cannot go out of business… [Accordingly,] state law empowers TRS (40 ILCS 5/16-158c)… Payment of the required state contributions and of all pensions, retirement annuities, death benefits…, all other benefits…, and all expenses are obligations of the state… The state has waved its sovereign immunity in regard to the teachers’ pension because TRS is a qualified pension plan under the tax-deferred provisions of the IRS code. Federal law would protect all claims… Pensions [are not] the problem [or] why Illinois has been unable to pay its bills. The reason is the dramatic fall-off in state revenues over the years, costing the state billions” (Dave Urbanek, Public Information Officer at TRS).

    3. “[Furthermore], The [Pension Protection] Clause [Article XIII, Section 5 of the Illinois Constitution] stands as a constitutional guarantee that pension recipients will receive their pension payments when due even if a pension fund [such as the Teachers’ Retirement System of Illinois] defaults or is on the verge of default.

      “Any state pension participant placed in such a position would have a cause of action in circuit court to enforce this guarantee and obtain payment directly from the State’s General Fund. A participant need not pursue payment before the Illinois Court of Claims and depend upon the largesse of the General Assembly…

      “Obligations of State: the payment of the required department contributions, all allowances, annuities, benefits granted under this Article, and all expenses of administration of the system are obligations of the State of Illinois to the extent specified in this Article’ (40 ILCS 5/14-132). The Clause makes the State a Guarantor based on its plain meaning, convention history, Illinois court decisions, and common law understanding of pension payments as creating a debtor relationship…

      “The Pension Code sufficiently manifests intent to make pension payments the obligations of the State when due… [T]he Illinois Pension Code Article of each of the five state-funded pension systems contains a provision with sufficient language binding the State to pay pensions even if a system defaults.

      “Each provision states in pertinent part that ‘[t]he payment of the required department contributions, all allowances, annuities, benefits granted under this Article, and all expenses of administration of the system are obligations of the State of Illinois to the extent specified…’ (40 ILCS 5/2-125; 40 ILCS 5/14-170; 40 ILCS 5/15-156; 40 ILCS 5/16-158; 40 ILCS 18-132).

  2. Once again we are faced with commentary by another individual who knows little or cares little about our profession. Some of her ex-teachers need to write her a letter. Also, with a face like that she should have been in radio!

  3. Ad hominem (Latin for “to the man” or “to the person”), short for argumentum ad hominem, is a fallacious argumentative strategy whereby genuine discussion of the topic at hand is avoided by instead attacking the character, motive, or other attribute of the person making the argument, or persons associated with the argument, rather than attacking the substance of the argument itself. The terms ad mulierem and ad feminam have been used when the person receiving the criticism is a woman.

    Well, Tom, Yo’ Mama Wears Army Boots. Your surname makes me think of IrishCreme in a pousse glass. Your comment is worthy of Donald Trump quoting Saul Alinsky.

    Fred, you should be monitoring more carefully.

    1. I have posted my rules for comments under full disclosure. The comment about McQueary was not something I would say but did not cross the line in my judgment. I respect your criticism of my decision.

  4. I wonder how Ms. McQueary thinks the state is going to deal with the growing teacher shortage in Illinois. Constant, unwarranted attacks on unions and on the earned pensions of public employees contributes to the teacher shortage. The “Tier 2” pensions are so bad that it is not a benefit but a financial detriment that is worse then social security. Speaking of which, teachers and many other public employees get no social security from their public employment, and any social security benefits earned by other employment is drastically cut if they get any type of public pension. Good luck on finding and keeping new teachers in Illinois. Maybe she is doing them a service. Young people just out of college usually are not thinking much about retirement or pensions. By bringing up pensions, she causes some of these fine young teachers to look at what they are signed up for (Tier 2 and an unsound financial future). Many of them flee for teaching positions in other states, or leave teaching altogether.

    Here is a news item of a good law that was passed for the wrong reason. It helps teachers licensed in other states get licensed to teach in Illinois. The wrong part is that it is luring in new teachers who are being taken advantage of. The young teacher shown in the news clip is probably not realizing the significance of the Illinois Tier 2 pension that she would be working under.

    http://www.kcrg.com/content/news/New-bill-makes-it-easier-for-out-of-state-teachers-to-teach-in-Illinois-479207623.html

    1. I would submit that the powers that be have a stunning plan to address the iLLINOIS teacher shortage – TURN TEACHING INTO A HIGH STRESS/HIGH TURNOVER JOB, RATHER THAN AN ESTEEMED PROFESSION!
      As far as the McQuearys of the world are concerned, teachers are a dime a dozen. If the now nearly universal draconian testing/evaluation measures are allowed to continue, fewer and fewer teachers will stay in the system long enough to draw what they believe are bloated pensions. The lion’s share of newly hired teachers will contribute their money, and then quit (at numbers even higher than the ~50% who leave withon 5 years. The unfunded pension shortfall will rapidly diminish.
      That said, I do have a question for the class (specifically, you Fred – and also the resident pension expert, Mr. Brown):
      Does the 3% cap enacted by this legislation extend to the Chicago Teachers, (and by extension, the Chicago Teachers Pension Fund)?

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