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.
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.
As the City Council is poised to pass on a cop contract, the protection of misconduct remains.
As the Chicago City Council is about to pass on a new contract with the Fraternal Order of Police, I am writing again to ask the Illinois legislature to remove as issues of bargaining all due process language that protects cops from prosecution.
They can do that. They should.
While the Mayor has gotten some reforms in the new deal (and good for her), no mayor should have to bargain how to deal with police misconduct in negotiations with those that commit brutality and murder on the citizens of this city.
Those rules should be statutory, not contract language.
The tentative agreement that will be voted on by council would prohibit the names of complainants from being disclosed to officers until immediately prior to their interview, which typically comes at the end of an investigation.
A new state law introduced by the legislative Black Caucus bans police unions’ collective bargaining agreements that require complainants to sign an affidavit when filing a complaint against a police officer.
The success of the Black Caucus in removing that language as an issue that can be bargained only proves the legislature can do more.
Meanwhile, the tentative agreement is being opposed by many who think the City hasn’t gone far enough.
The American Civil Liberties Union of Illinois, Business and Professional People for the Public Interest, the Chicago Council of Lawyers/Chicago Appleseed and the Chicago Lawyers’ Committee for Civil Rights said the tentative contract does not do enough to ensure that officers protect the civil rights of Chicagoans.
It is unlikely the council will reject the tentative deal with the fascist FOP.
But it shouldn’t be this way.
When will the legislature do what they need to do? The Black Caucus has shown the way. Where are the rest of them?
Giving child tax credits to the “right People.”
“Let’s make sure we’re getting it to the right people. There’s no work requirements whatsoever. There’s no education requirements.. Don’t you think if you want to help the children, the people should make some effort?” said Democratic Party West Virginia senator Joe Manchin yesterday.
And just who are the right people?
It doesn’t take a PhD to unpack the racism and contempt of poor people displayed by Democrat Manchin.
What work are the billionaires required to perform for their tax credits?
What education requirement?
Does Manchin have kids? I don’t know and I’m not Googling to find out.
That takes real effort particularly if you’re poor.
How much money are we talking about here?
Billions went to the wealthy in the first pandemic bailout.
The Biden administration wants to make a $300 tax credit permanent. The government claims that a $300 a month tax credit has lifted millions of children out of poverty.
Three hundred bucks.
That’s a Jeff Bezos tip for dinner out.
Currently, the child tax credit provides up to $300 a month for each child aged 5 or younger, or $3,600 annually.
$3600 a year.
That’s not even a month’s rent on a Lake front studio apartment.
For children between ages 6 and 17, families can receive up to $250 each month, or $3,000 each year.
The Democratic stimulus law in March, turned the credit into a one-year cash benefit issued in monthly checks to the vast majority of families. Individuals who earn $75,000 or less are eligible for full payments. Couples earning a combined $150,000 or less also qualify for the total amount.Studies a suggesting that the first month of payments kept three million children out of poverty and helped feed two million kids in July.
“We have real world evidence from the past two months that hunger among children has fallen, it’s a clear result of the credit being paid out on an advance basis to low-income families,” Seth Hanlon, a tax expert at the Center for American Progress.
Food insecurity, what we once called hunger, dropped among Manchin’ West Virginian families as well, per an analysis from the West Virginia Center on Budget and Policy.
By the way, West Virginia is the 4th poorest state in the country. Almost twenty percent of West Virginians live below the official poverty line. Only Mississippi, Louisiana and New Mexico have more poor people.
Hanlon also noted existing research that indicates programs like child tax credit improve long-term health, educational and financial outcomes. “There’s such overwhelming reason to not base the aid to children on their parents’ earnings,” he said.
Unless they’re poor.
Unless they’re not the right people.
Inflation is now being measured in quarters not months. Our COLA isn’t keeping up.
You don’t hear the name of Elaine Nekritz these days.
She was once a rising star in the Illinois legislature. Some pegged her to be the next Speaker of the House when Michael Madigan retired. Others thought she had her eyes set on a seat in Congress.
I remember sitting next to her at a luncheon of my chapter of the Illinois Retired Teachers Association when she told an elderly retired teacher, a woman in her 80s, sitting across the table that her 3% compounded cost of living increase was to blame for the state’s pension liability.
She was not a great lunch date. “How can you sleep at night?” I asked her.
I once had the pleasure of debating her at a pension forum at a high school in Aurora. Easy pickings, really.
At the time, Representative Nekritz and State Senator Dan Biss were leading the charge to cut COLA benefits from Illinois public pensions.
Nekritz continually made the argument that our annual COLA was the driver of the state’s huge pension debt.
That was always a lie.
What drove and drives the pension liability is the decades long failure of the state to make their full actuarial payment to TRS. I always compare it to paying the minimum on your credit card debt. The debt just gets worse and worse.
In those days the list of Democratic Party politicians that wanted to cut our COLA was long. It included Governor Pat Quinn, Speaker Mike Madigan, Senate president John Cullerton, Attorney General Lisa Madigan along with Nekritz and Biiss. In fact most of the Democrats in the Illinois General Assembly (and the tiny number of Republicans who are elected to the General Assembly).
But then the Illinois Supreme Court ruled that the constitutional prohibition against pension diminishment meant what it said.
And since then Quinn, Madigan, Madigan, Cullerton, Nekritz, Biss. All gone. Political road kill on the pension highway.
This year the COLA news for retired teachers hasn’t been so good either.
While the Illinois Supreme Court can prevent politicians from cutting our annual 3% cost of living pension increase, they can’t order it to keep up with inflation.
For twenty or so years that is exactly what our COLA did. Not this year.
It is likely that the Consumer Price Index will beat 5% this year.
President Biden’s economic advisors keep assuring us that inflation is temporary. It can be measured in months. Now it is being measured in quarters.
I remember kind of joking about the idea that retired workers were living on a fixed income. I would say that all workers are living on a fixed income.
And that’s true.
But when I was teaching we would bargain a new contract and a new salary every three or four years. Both the board and the union negotiators – and I was one for many contract negotiations – would keep a close watch on the CPI.
My old union, the Park Ridge Education Association is bargaining right now. They have started the teaching year without a contract, having rolled over the old one last year in deference to the pandemic challenges that the board and teachers were facing.
It is different for those of us on a teacher pension. We don’t get to bargain anything. Our cost of living increase is literally fixed, statutorily, by law. If inflation and the CPI continue to go up as it has been, for years not quarters, we are screwed.
Fixed like a dog.
And for those on Social Security it is even worse.
But that is for a different post.
Remembering 9/11. Standing guard against Hate.
Tomorrow is the 20th anniversary of the attack on the Towers and I continue to be worried about my Islamic sisters and brothers.
I remember the level of anti-Muslim hatred and the hate crimes that took place and continue to take place in the wake of the attack.
Twenty years later and I was thinking the other day about the phone call from my niece Amanda.
Amanda was organizing with the Jewish Council on Urban Affairs at the time. JCUA was in contact with with the Inner City Muslim Action Network to build an ecumenical defense of the Muslim community.
Violent attacks on Mosques had already occured around the country.
“We’re going to stand in front of the Muslim Community Center.
“Wanna come with me?”
Hell yes, I wanted to come.
I mean, who wouldn’t want to stand unarmed in front of a Mosque a few days after 9/11?
The MCC was a Mosque as well as a gathering place for Muslims on Chicago’s north west side. In the days after the attack on 9/11 there was constant and justifiable fear in the large Muslim community that lives around the Center.
So there we were on Elston Avenue, Amanda, me and a handful of other, non-Muslims standing guard and bearing witness.
We were just in time for evening prayers.
To tell the truth, although I’m not a believer, as I was standing there I was doing a little praying myself.
In the two decades since 9/11 hate crimes in America have increased.
Trumpists and Proud Boys.
The targets of white supremacists continue to be Muslims, but are not limited to Muslims.
We need to be standing guard more than ever.
TV and the newspapers are filled with stories about what America remembers about 9/11.
But this is what I am remembering.
The federal law protecting pensions – ERISA – doesn’t apply to ours.
When the report of the Office of the Inspector General came out listing the misconduct of TRS Chief Information Officer Jay Singh, it recommended nothing more than that he not be rehired by any agency of the state of Illinois.
I’ve had what are semantic debates over whether Singh and his benefactor Jana Bergschneider stole money from TRS.
The TRS board of trustees remain tightlipped about all of it other than a cover their ass email to TRS annuitants.
But when the CIO contracts his own company to do TRS work in violation of TRS’ own code of conduct I think it qualifies as theft. He lied about severing his ties to his company until the very moment he was being interrogated by the OEIG.
The only punishment Singh has suffered is that he can’t work for TRS or any other Illinois agency. But that doesn’t prevent him from getting a job with any other state or municipal pension system anywhere in the U.S. And Bergschneider was hired by the Illinois Comptroller two months after she was fired by TRS.
It is typical of the lack of federal protection of our pension systems.
The thing is that public pensions like ours are sitting ducks for crooked investment managers and those corrupt officials like Singh and Bergschneider.
We still don’t know what TRS executive director Richard Ingram was fired for.
Sure. Our benefit in Illinois is protected by the ruling of the Illinois Supreme Court preventing any diminishment of our monthly pension payment. But that doesn’t prevent those in charge of our fund’s investments from ripping us off.
There are no state or federal laws or regulations preventing that from happening.
Edward Siedle, writing for Forbes:
The Employee Retirement Income Security Act of 1974 (ERISA), the federal law that establishes minimum standards for pension plans in private industry, does not apply to public pensions.
ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by requiring the disclosure of financial and other information concerning the plan to beneficiaries; establishing standards of conduct for plan fiduciaries; and providing for appropriate remedies and access to the federal courts.
Since ERISA doesn’t apply, none of the above mentioned protections exist with respect to America’s state and local government pensions.