Tuesday, February 12, 2013

Pension Ramps and Gorillas?

Missing the 200 Pound Gorilla in the Room (The ramp?...  What Ramp?... I don’t see any ramp…

Selective Attention: noun.  In psychology, a singular focus for information or answers at the expense of other alternatives which may be available.  In short, thinking only inside the box without other consideration; a particularly dangerous form of group-think.

In a famous study of the 1970’s, Ulrich Neisser, a professor of cognitive psychology at Harvard, tested the results of singular concentration on perception that has real implications for what we see in Springfield these days. 

First, he videotaped some students passing a basketball back and forth on an open court and differentiated them by using shirts of white or a darker color.  He asked those watching the video to count the number of passes between the players wearing white for a specified period of time.  During the video, he inserted images of a woman with an umbrella.  Later on, the vast majority of the subjects who watched the video never reported seeing any woman with an umbrella in the room. 

Lately, professors Christopher Chabris and Dan Simons decided to try it again, but this time adding a 200-pound gorilla that, in one case, remained on the court for nearly ten seconds before ambling off screen through the moving basketball passers.  Results?  Once again, half of the people watching the video never saw the gorilla.  
You can see the interview and video at BigThink (http://bigthink.com/ideas/20583 ).

The frightening implications of selective attention are everywhere –the kid texting while driving next to you or the Representative in Springfield looking at the latest bills for “pension reform.”  And, of course, you and I both know the gorilla in this case is the crazy, ascending ramp (PA 88-0593)designed to repay the money stolen from public sector pension funds over nearly a half century. 

Instead of addressing the problem of the 1995 Ramp, the legislature has decided to ignore the gorilla and construct an answer by cutting benefits. Governor Quinn is their best cheerleader. 

Proposed bill HB6258 (Rep. Nekritz, Sen. Biss) severely diminishes promised cost-of-living adjustments, increases retirement ages, escalates employee contributions to highest in the land, caps eventual pensionable salaries, and pushes new employees into a cash balance plan (instead of a pension).  Nothing about the Ramp.  Nothing about the nearly $100 billion owed.

Proposed fall-back SB1 (Sen Cullerton)  requires all active and retired members to make choices: Either accept a reduced cost of living adjustment and maintain access to the state’s health insurance program for retired teachers, or keep the current TRS COLA and lose access to state supported health insurance in retirement.  Nothing about the Ramp.  Nothing about the nearly $100 billion owed.

As Ralph Matire has been warning for years now, “Purportedly to rectify the problem, Public Act 88-0593 was passed in 1995. Known as the "Pension Ramp," it established a repayment schedule to get the pension systems 90 percent funded by 2045.
“Unfortunately the Pension Ramp was fundamentally flawed, because it continued the practice of borrowing against pension contributions to fund services for 15 more years, effectively tripling total pension debt, and was so backloaded that the installments of debt to be repaid in out years jumped at annual rates that were unrealistic and unaffordable.
“For instance last year in FY2012, the state's pension contribution was $4.1 billion, of which only $1.6 billion was the cost of funding benefits, while more than half, $2.5 billion, was repayment of debt. In FY2013 the contribution jumps by 23 percent to $5.1 billion — with all the increase being debt repayment under the goofy Pension Ramp”(http://www.dailyherald.com/article/20120703/discuss/707039979/) .
The problem is not pension benefits, no matter how many times Governor Quinn links the regular payment (which is minor) with what the state owes the pension funds.  That’s the gorilla.  That’s what they choose not to see.

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