Is Rahm’s ambassadorship a gift for steering chicago teacher pension dollars to Rauner and his wall Street buddies?

Why is our former mayor even being considered for ambassador to Japan?

Maybe because Chicago teachers’ pension money flowed to financial companies connected to some of the mayor’s friends and top donors while he was in office. 

In a 2015 story in International Business Times reported: “When Mayor Emanuel took office, he said he was going to stop the culture of pay-to-play,” said Alderman Scott Waguespack, who is among a group of lawmakers asking the U.S. Securities and Exchange Commission to investigate whether the donations also violated that agency’s anti-corruption rule. “This is an example of his failure to follow through on those promises.”

Read the entire IBT story here.

The lack of transparency of teacher pension funds and their investors, fees, returns is not limited to Rahm’s relationship to the CTPF.

The Illinois Teacher Retirement System fired all five of its top executives. Only an investigation of CIO Jay Singh and financial officer Janna Bergscheider by the Governor’s Inspector General has been made public.

We still don’t know the details of TRS executive director Richard Ingrams departure over a year ago.

Chicago cAN ACT ON the idea of a guaranteed basic income.

“A drop in the bucket,” someone wrote me in response to Chicago’s Mayor Lightfoot budget proposal of a $31.5 million pool to provide $500 a month to 5,000 COVID-affected low-income families for one year.

“I agree. But this will be the biggest plan for a guaranteed direct cash payment to poor folks in the country,” I said.

And that’s really the point.

Mayor Lightfoot has signed on to the concept of a guaranteed income even if it’s baby steps.

The program would provide relief for Chicago’s poorest families.

A direct cash payment of $500 a month makes a real difference to people trying to make the rent and put food on the table.

The idea of a universal basic income is one whose time has come. Past due, really.

It should be a national program.

Some members of the Chicago city council have claimed the Mayor has “plagiarized” the idea or has “copied” it.

That is just typical Chicago politics and doesn’t matter much as long as the alders pass it as part of the budget.

Puerto rico public pensions. Appointed board violates workers’ rights.

By Nydia Velázquez who represents the 7th District of New York and is chairwoman of the Small Business Committee. Jesús “Chuy” García represents my 4th District of Illinois and a member of the House Financial Services Committee.

Imagine after years of devoted public service work, your hard-earned pension benefits are now on the brink of being slashed, even when your elected representatives are trying to protect them through law. That is exactly what’s at stake for Puerto Rico’s public sector pensioners.

Earlier this summer, the Puerto Rico Financial Oversight and Management Board, otherwise known as “the Board” sued members of the government of Puerto Rico. The lawsuit attempts to invalidate a new local law — the Dignified Retirement Act — designed to protect pension-holders and essential services in the debt restructuring deal being considered in court. The Board, in taking this action, is violating the spirit of the power-sharing arrangement we established through federal law.  

When Congress created the Board through the 2016 law known as PROMESA, it did not give it a carte blanche. Specifically, Congress recognized that provisions of the bankruptcy code incorporated into PROMESA cannot be used to infringe upon the exclusive powers of the local government to legislate. That’s why recent actions taken by the Board in an attempt to force pension cuts in spite of opposition from the elected government are so concerning. 

The Puerto Rican government is well within its rights under PROMESA to oppose a restructuring plan proposed by the Board, and to articulate how it believes its debt should be restructured — a decision that will impact Puerto Rico for generations. The government did just that through the unanimously passed Dignified Retirement Act.  

Under PROMESA, the legal framework necessary for implementing a restructuring plan must be in place before it can be confirmed by a judge. Therefore, the local government must pass the necessary legislation before the plan can be implemented. Congress specifically sought local input when designing this power-sharing arrangement and decided that the elected Puerto Rican government must maintain its exclusive power to legislate — including in the context of the debt restructuring process. 

The Dignified Retirement Act describes the conditions that must be met in order for the government of Puerto Rico to cooperate in the implementation of a debt restructuring plan, including providing for full payment of government pensions and protection of essential government services. The Board, on the other hand, continues to advocate for a debt restructuring plan that would impose an 8.5% cut on any pension payment exceeding $1,500 per month received by retired public servants.  

While the press has given much attention to the Dignified Retirement Act, the Board may very well face an insurmountable obstacle to getting its current debt restructuring plan confirmed and implemented. The Board needs the Puerto Rican government to enact legislation to implement the plan, and the government has made clear that it will not advance the implementation of a restructuring plan that would cut pensions and jeopardize essential services. 

We urge all parties to arrive at a fair resolution that protects the vulnerable retirees who are facing a cut to their benefits. The Board is not Puerto Rico’s appointed governor or legislature, and it must work with the local legislature to arrive at a mutually agreed resolution instead of putting retirees at risk.

our pension funds are being used to oppose unions.

Take a few minutes to read this article in The Intercepts which describes how our pension funds are being used by companies owned by private equity firms in order to fight unions.

Which begs the question as to what voice do we as members of pension funds like the Illinois Teacher Retirement System have in the management of the system’s investments?

To be clear, of the sources of pension fund revenue, teacher contributions and returns on investment have been the most reliable.

The state has been the least reliable.

They continue to short their pension responsibilities by billions of dollars every year.

I’ve been writing about the threats to our teacher pensions for years.

I have spent that time organizing to preserve them.

I was on the phone the other night with a friend who retired a year ago.

“Thank goodness for all those bus trips to Springfield,” he told me.

Many of my retired friends lost interest once the Illinois Supreme Court declared that our pensions could not be diminished or impaired – to use the language of the state constitution.

Once our monthly checks were secured by the Illinois Supreme Court many of us have moved on to other things.

An interesting side bar:

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that requires investors for private pensions to act in the interest of the individuals in these plans.

ERISA does not apply to public pension plans. When some members of public pensions like TRS brought suit to have ERISA cover our public pension plans, the US Supreme Court ruled that they had no standing.

They and we are in a defined benefit pension plan.

In other words, those who manage our retirement savings can do it in secret, can charge hidden fees, can hide actual earnings, but since our monthly pension check is guaranteed, we cannot claim that we are harmed.

In her dissent, Justice Sotomayor wrote, “After today’s decision, about 35 million people with defined-benefit plans will be vulnerable to fiduciary misconduct.”

If, like me, you believe that even though we are retired we are still part of a movement for workers’ rights and social justice, then the idea that our pension funds are being secretly invested in private equity companies to bust unions, is outrageous.

But much of that information is hidden from us by TRS trustees and investment managers.

A monthly guaranteed defined benefit can’t be enough to shut us up.

We have standing no matter what the courts say.

The inflationary pressures on retirees on a public pension.

In a blog post by my retired colleague John Dillon, written in 2019, John gave us some of the history of our teacher pension’s 3% compounded yearly benefit increase.

He began by quoting former TRS trustee Bob Lyons:

As past Illinois Teachers’ Retirement System Trustee Bob Lyons observed, “In the 21 years from 1969 through 1989 there was only one year that inflation was less than 3.3% and the average annual rate of inflation was just over 6.2%.  In making the decision in 1989 to change our annual increase from three percent simple to three percent compounded, the members of the General Assembly made what they felt was a reasonable assumption that inflation would continue and that it would grow at the rate that it had been for more than 20 years.  Since state pensions had not kept up with inflation they would provide a necessary increase, but they did not ask anyone to pay for it because they assumed it would not really be expensive.  The change would cost the state, but they assumed it would still run behind inflation. And growing inflation would mean the state would collect more tax revenue.”

Anticipating further elevated inflation rates, the General Assembly granted a change from 3% simple to 3% compounded COLA in 1989 to the retirees in TRS. 

Since 1990, (high of 4.1% in 2007 and low of .1 in 2008) the average inflation rate for the country has been overall 2.4%.   As Mr. Lyons writes, “The reality is that the change from 3% simple to 3% compounded did just what it was supposed to do and it has more than protected us from inflation.”

And he’s right.  On average, thus far, we are looking back nearly 30 years with a .6% positive break.  And in our current media environment of people turning on each other rather than to each other, this COLA correction seems unacceptable to those who criticize the Illinois “Pension Problem” as simply an issue of too many benefits. The finger pointing by the Tribune and other anti-union organizations ignore the truth: the cost of pension would not be so overwhelming if there were no debt payment as a result of decades of avoiding payments.  

Again, It is important to note that our TRS pension is fixed. It does not change from year to year regardless of any change in the Consumer Price Index or other measures of inflation.

This is not true of Social Security, which teachers do not receive and can vary based on changes in the CPI.

In 2022 it is expected that the Social Security benefit may go up by as much as 5%.

Our teacher pension monthly payment will go up by the same amount it has gone up for two decades. There will be no change.

There is a myth that retirees’ living costs go down. We no longer have to pay the cost of working and working has definite expenses.

The truth is that the government’s official CPI fails to keep seniors on a par with the inflation we actually experience. 

The cost of goods, including prescription drugs, housing, health insurance, food, and various taxes go up for the elderly.

Even for those receiving a Social Security benefit have lost 33% of their buying power since 2000.

Among the 10 fastest-growing costs cited in the a survey of retirees were prescription drugs, homeowners insurance and property taxes, several food items, and Medicare premiums.

It is true that some retired seniors own their own homes and are are protected from the rising cost of housing – to the extent that they have fixed-rate mortgages or own their homes outright – but are still are subject to rising costs of property taxes, insurance, and maintenance. 

Many retirees are exposed to the volatility of rental rates, which have been on a tear in recent years and show no signs of abating.

I have written extensively on the health care costs that Medicare does not cover such as dental, hearing and vision.

And yet our pension benefit adjustment remains unchanged from year to year.

TRS or Social security, inflation is hurting us.

I posted the other day how the actual cost of living is running ahead of our Teacher Retirement System public pension, which is fixed at 3% compounded. We won’t see a change in our monthly retirement benefit until next February.

Remember that career teachers in Illinois receive no Social Security benefit. Those of us who have paid into Social Security at other jobs have our benefit reduced by roughly two thirds. We receive no spousal death benefit from the Social Security system.

This is the result of WEP/GPO, federal laws that discriminate against teachers and other public employees in 15 states.

I pointed out that for the past twenty years our 3% yearly benefit increase more or less matched the actual increase in the Consumer Price Index which calculates the cost of goods and services.

This year the CPI is surging above 5%.

Workers in the private and public sector who are members of a union have the ability to bargain increases that keep up with inflation.

Retirees on a public pension or on Social Security have no such power. Our yearly pension increased is fixed by the state legislature or the federal government and is not up for discussion.

Retirees on Social Security like those of us on a public pension are also losing ground to inflation.

The Social Security payment typically is adjusted annually. 

Benefits go up if there is a measurable increase (at least 0.1 percent) in the price index from year to year.

For 2021, the cost-of-living increase is 1.3% boosting benefits by an average of $20 a month starting in January. The COLA was 1.6 percent in 2020, 2.8 percent in 2019 and 2 percent in 2018.

The CPI-W is a calculation used for urban wage earners and clerical workers.

For August, the CPI-W jumped 5.8% year-over-year. In July, it had jumped by 6.0%, in June by 6.1%. The summer readings are the highest since July 2008, and before then, since 1990.

The COLA to be applied to Social Security benefits starting in January 2022 is based on the average year-over-year percentage increase of CPI-W in July (6.0%), August (5.8%), and September (to be released a month from now).

If the September reading comes in at 5.6%, the COLA for 2022 would be 5.8% (the average of July’s 6.0%, August’s 5.8%, and September’s 5.6%). This 5.8% would match the COLA of 2009. Both would be the highest since 1982 (7.4%).

While the increase will provide some relief from the price increases that have been eating away at the incomes of those of us whose benefit increases are fixed, it will still be insufficient to compensate for the surging costs that individuals may face.

If the beneficiary is renting in the Chicago area where rents have been soaring in the double digits, a 5.8% COLA won’t go far. 

If a beneficiary drives a lot, the 43% jump in gasoline prices is going to hurt. Used vehicle prices are up 32% from a year ago, new vehicle prices 7.6%.

Take housing. The index for rent rose only 2.1% and the index for the costs of homeownership rose only 2.6%. The Chicago area home prices and rents are way beyond that.

The COLA for 2021 was only 1.3%, which was based on the average of CPI-W in July, August, and September 2020, when CPI readings happened to be very low. So, given the price surges in 2021, that lousy 1.3% COLA this year is leaving many people deeply in debt.

Whether we rely on our public pension or on Social Security, inflation is a looming threat.

Pension debt stabilization with Tier 2 is a pig in a poke.

From today’s Capitolfax.

The most news-worthy item to me was about the state’s pension debt. A slide was presented to the agencies showing that by next fiscal year the state will have more employees in the much less costly Tier 2 pension program than in Tier 1. “That’s why the trend is our friend,” Hynes said. “If we just continue to make the same payment, over time, the demographics are going to work in our favor.”

Hynes explained that the “same payment” didn’t mean the dollar amount would level off, but payments would remain at about 25 percent of the state’s budget into the future. While that’s a huge chunk of the budget, “75 percent of a growing revenue pie is still a lot of money to do the things we need to do and want to do,” Hynes said. And planning will be easier. Of course, that assumes no major revenue crashes and no successful legal action on Tier 2.

A few observations from this retired teacher.

When Hynes says “demographics are going to work in our favor,” he means retired teachers like me are dying.

When the state reports, a little too gleefully in my opinion, that in the next fiscal year there will be more teachers in Tier 2 than Tier 1, it may be that Covid has been working on the pension debt with way more effectiveness than the state legislature. We are dying at a faster pace.

Rich Miller takes from a report by Pew that IIlinois has been showing more pension payment discipline. But that in no way means that the legislature has been making their full actuarial payment to TRS.

Investment returns have been good. And Tier 2 teacher contributions have reduced the rate of the increase in debt and liability. But the legislature still shorts the system in every budget it passes.

Assuming no major revenue crashes and no legal action on Tier 2 is a pig in a poke.

When Tier 2 members of TRS reach retirement age their pension will be so pitiful that it will not meet federal requirements. It’s what is known as safe harbor.

Lawsuits will be filed.

It is likely they will be successful.

It will blow state and local budget stability to smithereens.

Alderman gardiner should resign from the city council.

45th Ward constituents to Alderman Gardiner. “Show some spine and resign.” Picture from a WTTW video.

Full disclosure.

Joanna Klonsky is my niece. Anne Emerson is my friend. Alderman Tom Tunney makes the best cinnamon roles, which I devour while waiting for Ulysses at our dog’s vet which is next to one of Tunney’s Anne Sather’s restaurant outlets.

But none of that matters.

Now under investigation by the feds for pay to play deals, Gardiner got outed by a local community organization and on Twitter for social media messaging calling my friends bitches and cunts and for threats and intimidation of ward opponents.

To me this should be enough to throw the guy out office.

One alderman called for censure.

But they have the power to expel him.

And they should.

On the other hand, indicted Alderman Eddie Burke still has a desk after more than a year, so I’m not expecting much.

Yesterday Gardiner apologized to the council.

As the mayor pointed out, that was not the group he should be apologizing to.

He is hiding from the press and his constituents.

Using bitch and cunt to describe anyone is bad enough, but Gardiner is accused of gangsterism intimidation of constituents who disagreed with him.

He blocked the construction of affordable housing for seniors and veterans in his north west side ward for over a year.

Another disclosure. I was a supporter of former alderman John Arena who Gardiner defeated. John was one of the council’s best and it is the city’s loss that he no longer there even if he wasn’t replaced by one of the council’s worst.