Northwest Herald backs Illinois Policy Institute’s Pension theft Plan B. TRS’ Ingram calls it out.

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The Northwest Herald’s editors have decided that the stink tankers from the Illinois Policy Institute – which was funded by Governor Bruce Rauner – is right about moving state employees to a 401(k).

The state’s pension systems are underfunded by at least $111 billion. That number grows by the millions daily, and doesn’t count the $56 billion of unfunded debt for retirees’ health benefits.

Current pension benefits are, frankly, unaffordable. Each year, more and more tax money the state collects goes to pay nonworking retirees as opposed to services. The only way the current system can be sustained is through significant – and by significant, we mean huge – tax increases. Any tax increase would only drive more jobs out of Illinois and break the backs of hardworking Illinoisans, many more of whom also would flee the state.

Maintaining the status quo has one – and only one – eventual outcome: State retirees and employees will lose all of their retirement benefits, creating an economic crisis so big that 2008-2009 would seem like boon years in comparison.

The biggest obstacle to meaningful pension reform is language in the state constitution that says public employee benefits “shall not be diminished.”

So what’s Plan B?

During his campaign for governor, Rauner discussed a defined contribution option, a 401(k)-type retirement plan similar to what most employers in the private sector offer. This is the way to go.

An optional defined contribution plan could be offered to all state employees almost immediately, without legal challenge, as more meaningful, longer-term pension reform is adopted. One of the state’s public pension systems, the State University Retirement System, already offers it on an optional basis, and more than 18,000 university employees have opted in. Why wouldn’t they when the pension systems are in danger of crashing?

The Illinois Policy Institute, a conservative policy think tank, also has recommended adopting legislation that would move all state workers into a defined contribution plan moving forward.

 “The pensions earned to date would be protected and treated as though they retired today,” wrote Diana Rickert, vice president of communications for the Institute. “All new retirement benefits would be earned under the defined contribution plan, so when the current workers ultimately retire, they will have both a pension and a 401(k). All new workers would be on a 401(k).”

The institute says its plan would pay down the unfunded liability by 2045, and reduce the state’s annual pension payment to $4.1 billion. This fiscal year, the state is paying more than $6 billion on pensions only, none of which addresses the unfunded liability.

Because already accrued benefits would not be “diminished,” the institute’s plan passes constitutional muster.

Rauner should open up an optional 401(k)-style plan to all state employees as soon as possible, and work with lawmakers to pass legislation similar to what the Illinois Policy Institute proposes.

They are the best options we’ve seen to save Illinois from insolvency.

Illinois Teacher Retirement System’s Executive Director calls them out on the facts.

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Governor Wall Street moves to seize control of the Teacher Retirement System board of trustees.

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Millionaire Governor Bruce Rauner made much of his private fortune by investing public employee pension funds.

Inaugurated just a few days ago, he is now moving to seize control of the Illinois Teacher Retirement System’s board of trustees.

The following email is from Bob Lyons who is elected by current retirees as their representative on the TRS Board.

Monday we had two open seats on our board and the outgoing governor appointed one of his people to the TRS Board that morning, though he should have known that the appointment was made too late.  Today that person and also two Quinn appointees, Marcia Campbell and Mark Harris, that were appointed, but never confirmed by the senate were told that they are no longer TRS trustees.  Campbell of course is a state officer of the IFT and has served with distinction for some years.  That means that now we have four openings for gubernatorial appointees that Rauner can make. Two Quinn appointees still have two years on their term.  Recall that there are a total of thirteen seats on the board with the State Superintendent of Education as our president.  Chris Koch was appointed superintendent under a Democratic administration and Rauner will have new appointments to state school board as well.  Six seats on the TRS are held by active and retired teachers.

Bob Lyons

TRS’s missing pension checks.

I received word yesterday that there might be as many as 5,000 retired members of the Teacher Retirement System who did not receive their March 1st check.

On Friday all TRS members were notified that because March 1st fell on a Saturday, our checks would not be posted to our accounts until the 3rd if we used automatic electronic deposit.

Of the over 100,000 retirees, roughly 5,000 still receive their checks by mail.

As of yesterday they had not received them.

What happened to them? Nobody seems to know.

Richard Ingram, TRS Executive Director, sent this out:

Our staff, especially Sally Sherman and Tom Gray, have continued to follow up through various channels on whether or not there is a problem with the delivery of the March 1 benefit checks.  The Comptroller’s office insists they were delivered to the Postal Service.  The Postal Service is trying to confirm delivery of these approximately 5000 checks.  If they cannot locate them by tomorrow, the Comptroller’s office has indicated they will reissue them immediately. We have been taking calls and members generally seem to understand that it is not a TRS created circumstance. We will update the website and Facebook as we learn more.

The problem is that those 5% of TRS members who receive checks by mail are more than likely those who can least afford the delay.

Another hit, although unplanned, on retirees.

 

Scott Reeder is up to no good when it comes to TRS.

Scott Reeder has made a career out of bashing teacher unions. So, it was no surprise to find this piece of pseudo-journalism in something called Cornerstone Media – Lincoln Trails Publishing.

Of course, Reeder is no journalist. He is a horse shit salesman for the right-wing stink tank, the Illinois Policy Institute.

Reeder has several arguments going in this article.

One is that there is somehow something wrong with taxpayers, in the form of the state, paying into the retirement systems of those who work for the state.

Illinois taxpayers contributed three times as much money to the Teachers’ Retirement System, or TRS, last year than did participating teachers, even as the makeup of the board tasked with overseeing the state’s largest pension fund tilted more heavily in favor of teacher union representation.

Scott. Here’s news that will shock you: When I was a teacher, taxpayers through the school district contributed 100% of what I earned. Not even most. All of it. 

That’s because I worked for them.

Then Reeder wants you to be suspect that teachers would sit on the board of trustees that run the pension system. And that some of those teachers are also members of the largest teachers union in the state.

If it weren’t for the right of teachers and retirees to elect members to the TRS board of trustees, it would be run by political appointments like Blago’s Rezko, Cellini and Rosenberg.

Reeder cites criticisms by former TRS Executive Director Jon Bauman.

So I asked Bauman, “Reeder makes you sound pretty anti-union. Was that your intent?”

Absolutely not. I was reluctant to talk to him because it sounded like he already had his mind made up about the story, but he had spoken well of me in the past so I felt like I owed him one.

His premise was that unions, especially IEA, hold too much power in TRS. I don’t think this article made that case.

The comments of mine in quotes appear to be correct.

I don’t know where he came up with this stuff about AFSCME and the law firm – we did hire one, but only for the purpose of making sure that management did not violate any labor laws as AFSCME pursued representation.

Reeder also omitted that I was terminated by legislation. People have speculated that Ken Swanson may have asked Quinn to make this happen. I have no way of knowing to this day. Swanson and I were not close, though I enjoyed good relationships with Anne Davis and Cinda. I also don’t see what he was getting at with the bit about “fact-checking.” We did that for Cinda and other trustees routinely – seems to me it’s both a good idea and part of staff’s job.

In my 31 years in State Government, across three agencies, I worked with almost all the unions representing State employees, including all the trades, Teamsters, and AFSCME. I never had a grievance filed against me personally and we had good labor relations in all my areas. I am not anti-union.

It’s no secret that some of us have have concerns about IEA President Cinda Klickna wearing two hats as IEA President and member of the TRS board of trustees. The responsibilities and interests of those two jobs often diverge in ways that are different than for the other teacher reps.

But Reeder is doing a hack piece here.

He misrepresents both the nature of the retirement system and the role of those who make sure TRS is run honestly and gets a good return on investments for its members.

Which it is and does.

Reeder on the other hand is just up to no good.

Jon Bauman. More on the suit.

Fred,

I need to think about this some more (already past my bedtime) and talk to a “real lawyer” but I’m wondering aloud if the correct TRS defendant, if there needs to be any for the suit to be complete, is the Executive Director (no offense intended Director Ingram) instead of the Board of Trustees. Article 16 states that the ED, not the BOT, is responsible for the “detailed administration of the system.”

The TRS Board will have to possibly promulgate rules with JCAR implementing some aspects of the law, but that is a staff-driven process carried out in collaboration with major stakeholder groups. The buck stopped with the ED’s recommendations to the BOT.
Although the relationships are apples to fruit salad, IRTA’s suit also names IRTA member, friend of retirees, my friend, and TRS Trustee Bob Lyons as a Defendant, unfortunately. Not right.

Good work from Glen.

– Jon Bauman

Jon Bauman is the former Executive Director of the Teacher Retirement System.

IRTA pension suit names TRS board as a defendant which includes Cinda Klickna. What’s up with that? Glen Brown explains.

From my friend Glen Brown’s blog:
“The lawsuit names Quinn, Illinois Comptroller Judy Baar Topinka and the Illinois Teachers’ Retirement System’s (TRS) board of trustees as defendants and seeks preliminary and permanent injunctive relief. It was filed as a class action, representing retired and active members of TRS, who are not currently members of any teachers’ labor union” (Reuters).
It’s the way the law works: IRTA is suing TRS Board. Why? The Board will become administrators of the law.
Is the fact that Klickna is both president of IEA and a TRS trustee a conflicting and disadvantageous set of circumstances for herself, as well as for members of both the IEA and TRS?
Read the entire post here.

The in box. Richard Ingram. If you know an Illinois teacher retiree affected by yesterday’s storms.

Just received from Teacher Retirement Director Richard Ingram:

Sally Sherman, TRS Director of Member Services has confirmed with the US Postal Service that all the areas affected by yesterday’s tornados have operational postal facilities.  If individual members  have issues with receiving mail, they should be able to contact their local post office to determine if their mail has been held, which it likely would have been.  We are determining how many receive their benefit via a paper check and whether or not we can anticipate disruption in their mail service continuing when checks are delivered on December 1.  We will attempt to come up with alternative measures if it seems as though members will have their mail affected by the storms.

A TRS member tries to get answers about his pension.

Ask TRS Communications Director Dave Urbanek about a report in the Sun-Times that Cabrera Capital and Martin Cabrera made $2 million in commissions from TRS and you get a boiler-plate email response and a hostile challenge on the phone.

Cabrera recently resigned from UNO, a major charter operator in Chicago. UNO has been the center of financial scandals.

“Where are you going with this,” Urbanek demanded to know?

The reference to Cabrera and TRS in the Sun-Times was almost a throw away line. Was staff reporter Dan Mihalopoulos suggesting something was wrong? His story didn’t make that specific claim.

But I wanted to know. I’m a TRS member. My retirement pension is TRS.

“I know who you are. You’re a blogger,” said Urbanek. You could almost hear him spit the word into the phone.

“No. I’m a TRS member,” I responded to the TRS Communications Director who is an employee of TRS.

Urbanek says he also is a member of TRS.

When I asked several TRS board members about the Cabrera connection, one told me after making an inquiry that they were told, “we have not contracted with Cabrera as one of our brokers.”

Read the Jon Bauman letter to me. Bauman is the former Director of TRS.

Is it technically true that Cabrera was not contracted directly by TRS? Yes. He was hired by the managers who were hired by TRS.

The answer that “we have not contracted with Cabrera as one of our brokers,” is a deceptive parsing of words given, I presume, by a TRS employee to one of our elected TRS board members.

“Cabrera started doing work with TRS money managers on my watch so I’ll answer your question directly. He walked in the front door, set up meetings to get acquainted with TRS and did all the heavy lifting with the managers to get the brokerage business,” wrote Jon Bauman.

Urbanek could have said that.

Instead he chose to circle the wagons as if there was something to hide.

A Communications Director who is not interested in communications.

It’s the kind of thing that makes retirees very concerned about their pension.

And makes others suspicious of what’s going on.

Jon Bauman answers my TRS question. That wasn’t so hard. Was it?

Jon Bauman is the former Executive Director of the Illiniois Teacher Retirement System.

Fred,

Cabrera started doing work with TRS money managers on my watch so I’ll answer your question directly. He walked in the front door, set up meetings to get acquainted with TRS and did all the heavy lifting with the managers to get the brokerage business. No Eddie Burke calls ever. He is an incredibly hard working guy who got whatever he got at TRS fair and square. TRS had no affiliation with that Valor Realty thing and all I know about it is what I’ve read in the media.

It’s probably worth noting that Cabrera and the 4 other minority-owned brokers on TRS’s Top 20 list had to meet the same fiduciary requirements as Goldman and Citigroup in order to work for TRS’s money managers. Let me know if you have more questions and I’ll do my best to answer them.

Jon

Bruce Rauner also made some big bucks managing my pension funds. But don’t ask questions.

Isn’t it amazing that a guy like Bruce Rauner, Rahm’s best buddy and the guy who attacks teachers unions and teacher pensions as if it is a blood sport, has made lots of bucks off of teacher pensions?

Reported Crain’s last April:

Mr. Rauner, a millionaire who retired as GTCR chairman last year in anticipation of a run for the state’s top office, led a firm with more than $10 billion under management largely from public pensions nationwide, including the biggest in Illinois. After earning millions of dollars from this work, Mr. Rauner says he wants to use his insights to overhaul the state’s pension system, the worst in the country in terms of meeting its obligations, with an estimated $100 billion shortfall.

Crain’s goes on:

GTCR has managed money for years for the Illinois Teachers’ Retirement System and the Illinois State Board of Investment, the largest and third-largest, respectively, in Illinois, as well as state and municipal pension plans from the San Francisco City and County Employees’ Retirement System to the Massachusetts Pension Reserves Investment Management Board. Its funds have delivered above-average returns for Illinois, according to Preqin Ltd., a London-based investment data provider.

For its work, GTCR takes a slice of returns it reaps from business sales, typically about 20 percent, and charges management fees, up to 1.5 percent. The Illinois State Board of Investment, for instance, reports it paid $280,000 in fees last year on $85 million it has in two GTCR funds.

Combined, TRS and the ISBI have committed $252 million with GTCR since 1993.

I think I’ll skip asking TRS Communications Director Dave Urbanek any questions about this. He clearly resents TRS members like me asking questions about the money we paid into the system for our retirement.

I mean, whose money is it, anyway?

Oh. Wait. It’s ours.

He’d probably ask me, “Where are you going with this?”