When a candidate to the Illinois legislature comes knocking on your door, ask about the 3% cap on teacher salaries.

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Reverse the cap.

I’m not a single-issue voter.

That’s not exactly true. There have been a few times.

Like after the Democrats in the state legislature voted to steal my pension. I promised I wouldn’t vote for anyone who voted for it and I opposed my union’s endorsement of any candidate in my region who vote for it. None of them got the endorsement, I’m happy to say. Which really pissed of Lou Lang who complained that we didn’t elect more Democrats.

Apparently the veto proof majority that the Democrats had at the time was not sufficient for Lou Lang.

This was before Lou was busted by the #MeToo Movement.

When the current legislature passed the last state budget they included a 3% cap on teacher raises.

The stated intension for sneaking in the 3% salary cap was to prevent pension spiking.

That explanation is total bullshit. Pension spiking is a myth. Several years ago the legislature limited final raises that could be calculated towards a teacher pension to 6%. That doesn’t nearly reach the level of spiking.

I remind folks that the state is carrying a pension liability of over one hundred billion dollars. A 6% increase (with no step increase) in the final year of work is not a spike. It is meaningless in the context of a one hundred billion dollar pension debt.

It is buying a mop because the damn burst.

Oh. About being a one issue voter.

Not this year.

But there is a bill that has been introduced that will reverse the 3% cap on teacher salaries.

It important to note that the 3% cap is not just on a raise in the final year of work. The law is remarkably non-specific about that. It allows for a local board to limit ALL increases to under 3% and punishes boards that exceed the cap if they are pensionable increases.

The Illinois legislature won’t be back in session until after the election.

The cap is not my only issue.

But if somebody comes knocking on my door asking for a vote, I will be asking them if they plan to co-sponsor and vote for a reversal of the cap.

So should you.

Kicking teachers in the teeth. More on the pension pick-up at CPS.

screwed

Fred,

Let me help some of our colleagues understand what really happened here. This is just another example of how no good deed goes unpunished. The benefit payment helped the school board, not the teachers.

Whether compensation was paid in dollars to the teachers or dollars to the pension fund didn’t seem to matter at the time. (We know better now.) Total money in paid compensation didn’t change at all. Other public employees should be thankful they never accepted a similar arrangement that their employers could later turn against them.

There was less than adequate money available to the school board from the state to fund schools. Instead of increasing funds to schools, the General Assembly changed a law so school boards could reduce tax withholding payments to the state and federal government by compensating employees with a non taxable benefit ( in this case a pension “pick up”) INSTEAD of higher pay. That money would then be available to spend on other things.

Teachers agreed to this arrangement to help the board. Now the board wants to use that agreement to lower teacher compensation. How nice! They only want to count what they supposedly “gave” teachers, not what teachers gave up. They really didn’t give teachers anything. Where compensation was paid was changed. Compensation was NOT increased.

Someone was running a scam when pension pickups began in the 1980’s. but it wasn’t teachers. It was the General Assembly and C.P.S. How total compensation is paid has a great effect upon how much tax withholding C.P.S. has to pay the state and federal government. The law you mentioned was passed to reduce that amount, allowing money to be spent elsewhere by school boards. It didn’t increase compensation given to teachers at all.

Now C.P.S. says that teachers compensation should be reduced by that amount? Nothing like using the willingness of teachers to try to help against them. I’d strike too. Nothing like kicking teachers in the teeth because they agreed to try to help solve a cash flow problem.

– Hugh

How the pension thieves blame retirees for what the legislature did.

House Speaker Michael Madigan, D-Chicago, talks with House Minority Leader Tom Cross, R-Oswego, as Madigan's Chief of Staff Tim Mapes listens in prior to the House convening at the Illinois Capitol on Monday, Aug. 6, 2007, in Springfield, Ill. (AP Photo/The State Journal-Register, Jonathan Kirshner)

Democratic House Speaker Michael Madigan and then-Republican leader of the House Tom Cross conspired to create a two-tier pension in 2010.

Mark Glennon is a vulture venture capitalist who spends his days ranting against public employee pensions.

Today he suddenly discovers that the two tier pension system for public school educators in the Teacher Retirement System is unfair.

Even one of Illinois’ most radical labor activists, Fred Klonsky, who is hell-bent on defending his Tier 1 pension, has noticed the unfairness in this. (Fred’s basically a Marxist as far as I can tell, and I usually like to annoy him, but he’s right about this one.)

On the rare occasion that I notice Mark Glennon he is way more amusing than annoying.

I noticed him today because my statistics page shows that one person came to my blog because of a Glennon post. I went over to his site to see what interested one person. I’m not depending on Glennon for traffic although I’m probably boosting his today.

Glennon tries to make two points.

There has been a huge increase in the number of public employees drawing more than $100,000 a year in pension payments. The other is that Tier II teachers are getting screwed.

First about Tier II teachers.

In 2010 the Illinois legislature, without giving any thought to the consequences, created a Tier II in which teachers hired after January 1, 2011 would need to work longer and receive less if and when they retired. Their payments while working would make up for some of the money that the state legislature had failed to contribute, which resulted in a 60% unfunded pension liability. It is the largest unfunded liability in the country.

Glennon describes it this way:

In 2010 Illinois created a second, junior level of pension beneficiaries for state and local pensions. Employees hired after 2010 became Tier 2 pension participants with far lower benefits.

Illinois didn’t create anything. The Illinois legislature, directed by Speaker Michael Madigan and Republican Leader Tom Cross created Tier II. And in a few years, just as we warned at the time, when the first Tier II teachers retire, they will receive a pension so small that it will violate Federal law. It will create another and even larger financial crisis for the state.

In the mind of Mark Glennon, warning that the legislature is doing something stupid makes me a Marxist, as far as (he) can tell.

Many of us said back in 2010 that creating a second tier was a really bad idea for both the teachers and the taxpayers of the  state.

But Glennon’s friends went ahead anyway.

As for the hundred thousand dollar pensions. Yep. A few older teachers who have been retired for a while are getting what they earned.

But don’t just listen to the vulture venture capitalist. Check the BGA list.

You can count the number of retired teachers on the list on a couple of hands and if you take off a shoe to count some toes.

I know for a fact that Dr. Leslie Heffez, who tops the list of state pension recipients, never saw the inside of any public school classroom. Except as a child. 

University administrators. Judges. A couple hundred retired superintendents.

Teachers?

Nah.

But as Karl Marx once said, “Haters going to hate.”

Judge Novak says SEIU 73’s Christine Boardman could not bargain away retiree benefits. Which is what I said last December.

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From December, 2014.

Yesterday Cook County Judge Rita Novak ruled that mayor Rahm and union misleaders like SEIU 73 President Christine Boardman could not bargain constitutionally protected pension rights.

Which is what I wrote last December:

When city unions filed suit against Rahm’s pension cuts, Rahm said the cuts were good because he bargained them with city unions.

Those unions included Bricklayers District Council, Carpenters Regional Council, IBEW 134, Iron Workers District Council, IUOE 150, IUOE 399, Laborers’ District Council, Pipefitters 597, Plumbers 130, Sprinkle Fitters 281 and Christine Boardman’s SEIU 73.

The unions suing Rahm because he has violated the pension clause of the Illinois Constitution are the Chicago Teachers Union, AFSCME Council 31, IFT-AFT, Teamsters Local 700 and the Illinois Nurses Association.

Boardman’s SEIU 73 is notorious for agreeing to concessions with the Mayor and is a donor to his re-election campaign.

The legal question is whether union leadership can bargain away constitutional pension guarantees.

Since no single union represents all of the members in the pension funds, the answer is no.

This is in some ways similar to what took place between the state-wide coalition of public employee unions, the We Are One Illinois, and Senate President John Cullerton.

We Are One, hoping that they could hold off a more draconian pension theft bill designed by Representative Elaine Nekritz and Speaker Madigan, bargained an alternative Senate Bill 2404.

SB 2404 did steal less of our pensions. But it conceded on the principal of the constitutional promise that public employee pensions can not be diminished or impaired.

Pension members not represented by the We Are One Illinois coalition balked at the deal. The Illinois Retired Teachers Association said that no matter what deals were cut between union leaders and politicians in Springfield, they would go to court to protect the pension protection clause.

The result was that SB2404 died. Senate Bill 1 passed. Judge Belz ruled it unconstitutional. And now we wait for an expedited ruling by the Illinois Supreme Court.

Union leaders like Christine Boardman of SEIU 73 cannot bargain away constitutional rights with the Mayor.

No matter how much money exchanges hands.

Keeping retirement weird. The court says union misleaders can’t bargain away my pension benefits.

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Glen Brown, IEA Region Chair Erin Breen and John Dillon fighting for pensions at the Illinois Capitol in 2012.

Mayor Rahm was not the only loser in yesterday’s ruling by Cook County Judge Rita Novak that Chicago’s theft of public employee pensions was unconstitutional.

On the central issue Judge Novak ruled that the Illinois Supreme Court was crystal clear – her words – about the pension protection clause of the Illinois constitution.

Promised benefits may not be diminished or impaired.

But what Judge Novak added spoke to an issue that the Supreme Court was not able to address because it did not come before them.

Rahm’s lawyers claimed that the theft of city pensions was legal because union leaders bargained it.

Unfortunately that was true.

Yet Judge Novak would hear none of that.

“The contention that labor unions, undisputedly acting outside the sphere of collective bargaining, may bind all members of the funds ignores the individual constitutional rights” of retirees, she wrote.

“There is no evidence that, in reaching an agreement with the city, the union officials followed union rules and bylaws in such a way as to bind their members as true agents. Nor is there evidence that the membership voted on the agreement … Additionally, there is no showing that the unions could have acted as agents of retired members while at the same time acting as representatives of active employees.”

This is a powerful statement in defense of the rights of retirees and all rank-and-file union members when it comes to defending our pension rights.

It says that our fundamental rights as citizens of Illinois are also protected from spineless union misleaders claiming they speak for us. These rights are not in the sphere of collective bargaining. Our pension rights can no more be bargained away by our leadership than can our voting rights.

This was precisely what we argued when the We Are One Coalition bargained SB 2404 with Senate President John Cullerton.

SB 2404 was the pension thieving little cousin of SB 1. SB1 ultimately passed the legislature and was signed by Governor Quinn.

SB1 became the law the courts ruled unconstitutional.

SB 2404 never made it out of the Senate.

But what if it had?

What if the bill that our union leadership bargained had been signed by the governor and ended up before the courts

The Illinois Retired Teachers Association promised it would file suit.

I have no doubt that the Supreme Court would have ruled as Judge Novak did.

When it comes to my pension rights, union misleaders can’t bargain them away.

Breaking. Chicago pension lawsuit.

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– This from the Municipal Employees Society of Chicago:

Info on today’s court hearing for an injunction to stop the pension cuts.

This was a hearing for a temporary restraining order to stop the pension reforms from going into effect while the actual trial on the reform continues.

Legal counsel on behalf of city workers did a good job arguing our side. They argued that an injunction was fair to all involved while the court case continued due to irreparable harm being inflicted on retirees in cuts to the cola, as well as an increase in current workers contributions.
They cited the State pension reform case, how an injunction was given, that it was basically identical. It was argued that if an injunction was given and the city ended up prevailing with the pension reforms in court they then could easily institute the cuts.

The cities legal counsel argued that they had police power to institute the cuts while the pension reform case continued. He argued the city case was completely different than state numerous times.
“Retirees were living quite comfortably last month and this month, they are still getting a raise Jan 1st, be it a smaller raise, but a raise none the less and will live even more comfortably.” (Exact words, I’m not kidding)

They argued current workers are getting a 2% raise Jan 1 and with their .05% increase in contributions they are still coming out ahead.

The cities attorney argued that “the city was in worse financial harm than the state and if an injunction was granted the city could never recover.” (Exact words yet again)
He argued that he respectably disagreed with Judge Belz but her decision was flawed and wrong, that’s why Judge Novak should not grant an injunction.

There was some debate on both sides about whether or not police powers could be used as a reason for denying an injunction.

Judge Novak had a few questions about both sides arguments, she mentioned the State case a few times as well.

Ultimately no injunction decision was made today, she set court dates of
Jan 28
Jan 30
Feb 6
Feb 11
So that both sides could provide more information on whether police powers can be used and have more hearings on the info.

As it stands now
Retired
Pensions over $22,000 get a .85% raise
Pensions less than $22,000 get 1%

Active
Members contributions go up .50% to 9.25%

The next court date on the actual pension reform bill is in April.

Jeff Johnson
Municipal Employees Society-President

And from Reuters:

Dec 29 (Reuters) – Litigation seeking to derail changes to Chicago public worker pensions on constitutional grounds ensnared a second city retirement system on Monday.

Attorney Clint Krislov said he filed a lawsuit in Cook County Circuit Court on behalf of members of the city’s pension fund for laborers. That lawsuit followed one filed Dec. 16 by a coalition of labor unions against Chicago’s municipal pension fund.

An Illinois law enacted earlier this year for the two funds requires higher worker contributions and limits cost-of-living increases for retirees. The lawsuits contend the law violates a prohibition in the Illinois Constitution against reducing public worker retirement benefits.

Cook County Associate Judge Rita Novak on Monday set a hearing on the unions’ motion for a temporary restraining order in the municipal fund case for Jan. 28 and 30.

To the guys on Wall Street: They’re called public pensions.

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Who knew back in the 80s when I was sitting in a methods class in the teacher preparation program at UIC, that I should have been taking a class in the economics department on pension law and investment strategies?

Who knew that as an art student and education major, that when I was sitting in a life drawing class, trying to capture the look of the naked body of a male model, I should have focused more on the possibility of naked corruption by Wall Street investors of public pensions?

For the past dozen years as a local teacher union president and since I was approaching retirement myself, I began to pay closer attention to pensions. What I saw was attempt after attempt by the Illinois legislature to steal from our public pension fund. It was a fund that I paid into every paycheck and which the legislature failed to meet their obligations to fully fund since 1917.

A year ago the crap hit the fan when the legislature passed and the governor signed SB1, gutting much of our pensions.

I don’t need to go into it all here. You read this blog, right?

But a few weeks ago, Judge John Belz ruled that our public pensions are a promise the state must keep and cannot be diminished, impaired or seized by state police power. The case next goes to the Illinois Supreme Court where most assume it will be settled along the same lines as Judge Belz ruled.

Now, slowly I learn that there is another threat to our promised public pension.

The threat comes from Wall Street, which according to articles and conversations I have had with the investigative reporter, David Sirota, may be playing high risk games with our money.

And keeping it secret.

Illinois officials denied an open records request for information identifying which financial firms are managing that state’s pension money. Like their Kentucky counterparts, Illinois officials asserted that the firms’ identities “constitute trade secrets.” Illinois’ Freedom of Information Act includes special exemptions for information about private equity firms.

The denial from Illinois pension officials followed a decision earlier this year by Rhode Island General Treasurer Gina Raimondo, a Democrat, to reject a newspaper’s open-records request for information about state pension investments. The treasurer’s office argued that financial firms have the right to “minimize attention” around their compensation. Last week Raimondo, who is now Rhode Island’s governor-elect, held a closed-door meeting of the state investment commission to review the state’s $61 million investment in a controversial hedge fund. 

In a recent essay, Steve Judge, president of the Private Equity Growth Capital Council, wrote that secrecy is necessary and appropriate to protect the financial industry’s commercial interests.

“The argument that [agreements] should be accessible to the public is akin to demanding that Coca-Cola publish its famous and secret soda recipe,” he wrote. “Like Coke’s secret recipe, [agreements] contain proprietary and commercially sensitive trade secret information that, if disclosed, could undermine a private equity fund’s ability to invest and generate high returns for its limited partners.” 

Former Illinois TRS Executive Director Jon Bauman wrote me, objecting to the secrecy characterizations of Sirota.

The FOIA contains an exemption specific to private equity funds which allows the funds to withhold data on portfolio companies. This exemption is not just about “Wall Street.” I was around when this was added to the law and it was done at the behest of Illinois-based venture capital firms. Rest assured that this information is provided to the fund staff and trustees in more than enough detail for them to fulfill their fiduciary duties.

An exemption to the FOIA laws for public pension investors? At the behest of venture capital firms?

Jon thinks I should rest assured that TRS staff and trustees have “more than enough detail.”

I am not assured.

It is our retirement interests I am concerned about.

It is handing over to private equity firms the right to hide facts about the investment of public money by those same private companies that concerns me.