Tribune Resurrects Pension Crisis

The Tribune Resurrects “Pension Crisis” Again…

In the latest Tribune editorial, “Even pension loopholes are protected?  Then amend the Illinois Constitution,” the readers are provided with egregious acts of double dealing and slippery allowances that provide for the very cagey to get away with getting more than they should have in retirement benefits. 

It makes a teacher with 34 consistent years of work and experience cringe.  At first it seems objectionable.  And…maybe it is?

(2018 IL 122793)

In short, public workers who took leave from their positions to work for the unions representing them sued to be given their pensions for time served in (what was arguably) a not-public, now private position.  Other seemingly malicious examples included an individual who served as a lobbyist but later subbed for one day to receive an eligibility in the Teachers Retirement System.  

The heart of the issue was whether a law written and signed by then-governor Pat Quinn preventing those who sought leaves of absence in lobbying or other union positions could continue operating as if employed by their original public union.  Prior to the law (Act 97-651) enacted in January of 2012, personnel who worked as public employees within a school, labor force, or service provider could request and receive a leave of absence from their position to work within the union leadership – and make continued payments to their retirement pension plan based upon the salary or earnings they were receiving from their employment while on leave.  

In example, Ms. Kendall departs her position of 10 years as a teacher and takes a position as an IEA contract-negotiations advisor in the northern half of the state. Before Act 97-651, she would elect to pay the portion of her earnings to the TRS to secure the promise of her retirement benefits at the end of her career.  This would include the possible return to her teaching position if she so chose.  Act 97-651 disallowed those payments, creating a severance from her union representation and the original promise made in the Pension Contract Clause of the Constitution.  ““Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” (Article XIII, Section 5)

In writing the Act 97-651, the Justices of the ILSC found that this particular attempt to find a means to blunt earnings without identifying the responsibility for the “questionable employer” created an ambiguity which undermined the constitutionality of the Act at the outset.

¶32 “We find that, regardless of the purpose of the benefit and the merits of the suggested utility of the benefit, it was a matter for the legislature to decide. And, as Kanervanoted, “[w]e may not rewrite the pension protection clause to include restrictions and limitations that the drafters did not express and the citizens of Illinois did not approve.” Id. Accordingly, we hold that the circuit court correctly determined that Public Act 97-651 was unconstitutional to the extent that it eliminated as a pension benefit for current participants the ability to earn union service credit previously bestowed by the legislature.”

And within the opinion’s conclusion by Justice Thomas:

 ¶65 “We find that the circuit court properly held that, with respect to participants who were already members on the effective date of Public Act 97-651, the denial of the future ability to earn service credit on leave of absence for labor organization employment violated the pension clause of the Illinois Constitution. We reverse the circuit court’s judgment dismissing the portions of plaintiffs’ complaint that alleged a violation of the pension clause of the Illinois Constitution related to Public Act 97-651’s change in the law to deny the use of a union salary under section 8-226(c) or 11-215(c)(3) to calculate the “highest average annual salary.” We also reverse the circuit court’s rulings on the parties’ cross-motions for summary judgment that resulted from the circuit court’s construction of section 8-226(c)(3) to include defined contribution plans within the definition of “any pension plan.” 

So, if Ms. Kendall had returned after 12 years of paying dutifully into her pension obligations for her IEA position and then performed another 12 years of work and pension payment, well, what’s wrong with that? Maybe she’d be part of the mass of retired public workers in Illinois earning approximately $10,000 less than the median earnings of workers in the United States ($62,175).

But, the Tribune and its confederate Illinois Policy Institute have begun another assault on the concept of any defined benefits in retirement owed to those who toil for the state of Illinois. 

“The solution to the state’s multifaceted pension crisis should be crystal clear to taxpayers.  The Illinois Supreme Court isn’t going budge.  The pension clause needs to be amended.”

EMPHASIS on pension crisis,labor bosses, and plenty of outlier examples that make a normal pensioner take an unsettled notice.  On the other hand, the Tribune editorial identifies 11 of the more than 200,000 retirees of public labor unions who worked long and industrious careers for the people of the state of Illinois.  Eleven…

And, therefore, the Tribune and IPI rail that we need an amendment, but remember my friend, neighbor and reader: Even with the amending of the pension protection clause, the UNFUNDED PENSION LIABILITY WILL REMAIN.  

In the editorial’s accompanying cartoon by Stantis, a pop-eyed taxpayer is held in a small cage with a behemoth Frankenstein entitled “Pensions.”  It is not really the outliers that bother the Tribune or the IPI: it’s the existence of pensions, collective bargaining, and any benefits at all.    

 "TRS benefits are not responsible for the majority of the unfunded liability at TRS. “TRS actuarial reports show that 66 percent of the unfunded liability over the last 15 years was caused by contributions from state government that failed to meet the “full funding” levels set by actuaries. For instance, between FY 2014 and FY 2017, the state’s total contributions were $7.2 billion short of the actuarial requirement.

“In addition, the chronic lack of proper funding from state government means TRS does not have that money to invest, and those “unrealized” investment returns over time account for 27 percent of the TRS unfunded liability, along with the cost of issuing pension bonds and other miscellaneous factors. Of the $578 million increase in the state’s annual contribution to TRS for fiscal year 2018, only 4.7 percent is attributable to benefit increases. According to the group “Illinois is Broke,” over the last 15 years 50 percent of the TRS unfunded liability is the result of underfunding by state government, 25 percent from pension bond costs and miscellaneous items, 21 percent from unrealized investment profits and only 4 percent from benefit increases.”

As long as the Tribune and the IPI deny the already huge deficit created by the shorting of pension payments from the state of Illinois over decades in order to divert Ms. Kendall’s payments and others to avoid the real costs of running a government, nothing will ever be corrected, not really.

Instead of facing the actual issues and finding a means to correct them, they scapegoat those who have already fully paid into their retirements.  

It’s not just the bizarre and hyperbolic examples that the Tribune and the IPI want to paint broadly across the minds of those willing to be beguiled.  It’s all of us, even those of us who forsook social security and earnings to work for the benefit of students, those in need of services, or in maintaining our state’s infrastructure.  Feel guilty?  That’s what the Tribune wants.  Feel like someone is scapegoating you?  They are.

Rep. Liz Cheney - Daddy Would Be Proud

Former VP Cheney and Rep. Liz Cheney

Another Cheney, Another Exploitation of Our Natural Resources.

It was Kenny Invergo who first opened my mind to the wonder of the annual migratory patterns of birds, especially raptors.  He and the group of us often slept in a mud-spattered and frost-whitened van on the cascades of the Mississippi River in Jo Daviess County, Illinois, and crawled out of our blankets at dawn to check mist nets for foraging owls and the morning skies for hawks traveling south in the beginning cold of fall. Raptors were just one species of the thousand species flying high over our blind, but Ken kept a copious record of times, weights, band numbers, types, and descriptions of the many hawks he captured through the fall.   For decades.  Kenny passed away some time ago on his land overlooking the long valley running into the Mississippi Valley, his favorite creatures still making their instinctive travels overhead each fall.

“July 3rd marked the 100th anniversary of the signing of the Migratory Bird Treaty Act. On that day in 1918, America’s most important bird protection law went into effect. Throughout 2018, we are celebrating this milestone as the Year of the Bird, yet at the same time, we (the Audubon Society) are defending the law in the face of unprecedented attacks, including by recently filing a lawsuit against the administration.

The Great White Egret 

Because of the Migratory Bird Act, it is not legal to take or possess or export/transport or sell or barter migratory avian species in America. Nor is it legal to have or hold their physical parts, nests, or eggs except with a valid Federal permit providing an allowance to do so.  Remember the Passenger pigeon?  Gone. Remember the clamor for White Egret plumes for fashionable hats just after the First World War?  Still around, because the same bird made it to 1918, and was saved under the Migratory Bird Treaty Act.  

“A few weeks ago, in conjunction with other conservation groups including the Natural Resources Defense Council, Defenders of Wildlife, National Wildlife Federation, and others, Audubon filed litigation to challenge the administration’s interpretation of the Migratory Bird Treaty Act that guts enforcement of the law. The policy reverses decades of precedent in the interpretation of the law by both Republican and Democratic administrations. The new interpretation allows all industrial activity to be exempted from the MBTA by only prohibiting deliberate acts, and letting off the hook bird deaths caused by hazards such as oil waste pits, oil spills, mining activity, power line electrocutions, and other threats. It drastically reduces the incentive for companies to adopt best practices that save birds from preventable harm, along with the ability to recover after events such as oil spills by applying fines under the law to habitat restoration.”

And, if you considered Scott Pruitt a danger to the environment?  Don't feel too relieved.  Enter stage Halliburton, Representative Liz Cheney – like father, like daughter.

According to Audubon:

Oil-Soaked Pelicans

“In reaction to a bird-killer amendment introduced today by Representative Liz Cheney (R-WY) and passed by the House Committee on Natural Resources, National Audubon Society President and CEO David Yarnold (@david_yarnold) said, “Rep. Cheney is giving oil and gas companies and other industries a free pass to kill birds with impunity. This amendment guts the most effective bird conservation law that has been on the books for a century, the Migratory Bird Treaty Act. Under Cheney’s amendment, companies would have no responsibility for bird deaths. We will engage our 1.2 plus million members to stop this and any other attack on the laws that save birds.”

Cheney introduced the measure as an amendment to H.R. 4239, a bill written to weaken environmental protections in order to facilitate oil and gas drilling. The amendment was approved in the committee mark-up, and the bill passed out of committee earlier today. 

“The MBTA is one of Audubon’s earliest victories. Congress passed the MBTA in 1918 in response to public outcry over the mass slaughter of birds, which threatened egrets and other species with extirpation. The law prohibits killing or harming America’s birds except under certain conditions, including managed hunting seasons for game species. The law protects more than 1,000 bird species in part because industries implement commonsense best management practices like covering tar pits and marking transmission lines.

“Facts and figures on industrial causes of bird mortality in the United States:

·      Power lines: Up to 175 million birds per year (Source: http://www.fs.fed.us/psw/publications/documents/psw_gtr191/Asilomar/pdfs/1051-1064.pdf)

·      Communication towers: Up to 50 million birds per year (Source: http://www.fs.fed.us/psw/publications/documents/psw_gtr191/Asilomar/pdfs/1051-1064.pdf)

·      Oil waste pits: 500,000 to 1 million birds per year (Source: http://www.ncbi.nlm.nih.gov/pubmed/16988870)

·      Gas flares: No reliable mortality estimates, but an infamous 2013 incident in Canada incinerated an estimated 7,500 birds (Source: http://www.cbc.ca/news/canada/new-brunswick/7-500-songbirds-killed-at-canaport-gas-plant-in-saint-john-1.1857615) 

“Audubon members can take action and urge their legislators to vote against any legislation that includes language weakening the Migratory Bird Treaty Act.

“The National Audubon Society protects birds and the places they need, today and tomorrow, throughout the Americas using science, advocacy, education and on-the-ground conservation. Audubon's state programs, nature centers, chapters and partners have an unparalleled wingspan that reaches millions of people each year to inform, inspire and unite diverse communities in conservation action. Since 1905, Audubon's vision has been a world in which people and wildlife thrive. Audubon is a nonprofit conservation organization. Learn more how to help at www.audubon.organd follow us on Twitter and Instagram at @audubonsociety.

“Contact: Nicolas Gonzalez, ngonzalez@audubon.org, (212) 979-3100.”

Giving to Local Causes

 The Myth of the Local Economy (or “Brother, can you spare a dime?”)

 Been begging lately?  I have.

When I seek donations and contributions for a small, local animal shelter, I don’t call it begging, but that’s what is it. 

Hard work, begging – especially in this cold and especially in this economy.  Hurricanes and storms have made a difference this year.  Some shelters are experiencing up to 400% increases in the amount of dogs and cats left abandoned in foreclosed homes or given up by owners who have lost their jobs. Sometimes their poor abandoned pets are just tied to the front door when we get there.  

But what really makes finding money for food and medical treatment for orphaned animals such an uphill climb is the changed nature of the economic landscape in which we all now live.

The Middle Class is still treading to survive eight years after the Great Recession.  The next great extraction called the Trump Tax Plan is on the menu.

And if you are non-white, it’s been even more difficult.  Hispanics have lost nearly 37% of purchasing power as contrasted to whites since 1980. 

And African-American families?  They’ve lost nearly 200% of purchasing power in wages (from the Center for Tax and Budget Accountability). 

There’s not much disposable income around – especially to help the voiceless & homeless. 

The business geography has changed too. 

“Too big to fail” an economic disaster also means many were too small to survive.  While Mom and Pop’s stores struggle to endure, Big Money gets promised to Big Corporations – like Amazon.

At the shelter, we used to be able to depend on the many local shops and businesses to provide a few dollars or an item suitable for a fund raising auction or raffle. 

Not so anymore.  Not so local anymore. 

What used to be trickle down from our local mom-and-pop shops is no more.  Instead, it has become decidedly trickle up.

“Hi, I’m from Peoples Animal Welfare Society in Tinley Park.  We’re trying to solicit assistance in any way from local businesses like yours to help us pay for the thousands of abandoned animals we vet, feed, care for, and adopt out each year. Would your business, here in our town, be willing to help?”

“Sorry, you’ll have to go through corporate for that.”

Corporate will be in Idaho, Minneapolis, California, or somewhere else usually far away.  Maybe even another country.

And corporate, even in a closer place like Chicago, usually has a program of giving on a national not local scale.  It’s part of the boardroom budgeting process; FY16 is already in the hopper.  And, honestly, the last Target (pun intended) for their obligatory corporate giving would be a small, local shelter. 

You see, giving on a national or international scale provides advertising, which is of value to corporations – it is revenue generating.  Even a thank you from a charity on a corporate level (like United Way) can assure a full page of company icons and solicitous appreciation in a newspaper like our Chicago Tribune.  In addition, in the lower corner it will read “With thanks to our media partner Chicago Tribune.”  See, more feel-good advertising.

Of course you won’t believe who makes this full page spread in the enormous “thank you” and collection of icons in pages of the Tribune.  Here’s a partial list of the 24 corporate Samaritans fro last holiday season, and I’ll just highlight the companies with membership in the Civic Committee of the Commercial Club of Chicago:  Northern Trust, Illinois Tool Works, AT&T, UPS, Deloitte, Exelon, Bank of America, Ernst & Young, Illinois Blue Cross and Blue Shield, KPMG, PWC, William Blair, Wells Fargo, GE, Nicor, Allstate, Kelloggs, Sargent and Lundy, HSBC, Harris Associates, Pepsico, Aon, Walgreens, and US Bank.  They all appreciate the spirit of giving on the mammoth scale to national and international charities because beyond the good citizen-type appearance…well, it pays back.  Helping people is profitable (except when they desire to bargain collectively).  Go to a movie this holiday season, and you'll see CEO Gregory Marcus pushing United Way as well as popcorn.  

And this corporate giving and getting is a two way street, you know.  The CEO of United Way is Brian Gallagher, whose 2016 reported annual salary is $1,166,355, “plus so many numerous expense benefits it’s hard to keep track as to what it is all worth, including a fully paid lifetime membership to 2 golf courses (1 in Canada and 1 in the USA), 2 luxury vehicles, a yacht club membership, 3 major company gold credit cards for his personal expenses…and so on.  This equates to about $0.51 per dollar of income [going] to charity causes” 

(http://www.snopes.com/politics/business/charities.asp).

In the case of corporations, the amount of bang for the buck isn’t nearly as important as the public fawning and media attention that comes with it. 

And let’s not forget the connections or the possibility of playing golf this summer; let’s say in Canada? “Hello, Brian, maybe I can fly up on your company plane?”

Abandoned animals?  How about abandoned local communities?   

Hey, have a great holiday season.  Gotta go untie some dogs.

Illinois Tax Education Credits - A Trojan Pony?

Illinois Education Tax Credits – A Trojan Pony?

In September this year, I called my Illinois Representative Justin Slaughter to discuss why he had voted yea for SB1947 after he had initially voted nay a short time before.  You might recall that SB1947 was the Educational Funding Bill, which had been vetoed by Governor Rauner for setting aside too much money for assistance to CPS.

The bill, which allowed Chicago to receive significant additional money for CPS as well as provide for increases in property taxes, failed on its first vote as a result of an amendatory addition of a Republican inclusion of a tax-credit program for private schooling – a tax-deductible voucher package.   

The first vote was, as stated before, a failure.  The second ballot, an attempt to override the Governor’s veto was also unsuccessful.  The third vote, a compromise that many Democratic Representatives described as “difficult” passed 73-34.  The Governor was quick to sign it.

Although many pols described the final vote as a compromise, which left everyone with a sense of some regret, they all agreed that the result was the best they could achieve for the most people.  Representative Justin Slaughter explained to me that the vote was extremely difficult for him.  He told me that he had to weigh the positives over the negatives: the increased funding formula for all schools, the freeing up of a budget that had curtailed the state’s operations for the last few years, and the needs of students and citizens across our state.  As "difficult as it was, I voted finally to accept it for the positives it brought, even though the educational tax credits were the reason I said no to begin with."

A close friend of mine who has worked politically in Springfield for decades called the entire dance of voting nay and then yea a politically inspired Madigan charade.  Just enough twists and turns of soulful and hand-wringing compromise to provide Representatives like those who changed their votes some cover for the next election.  That’s not necessarily cynicism; it is experience.

Meanwhile, the Illinois Policy Institute, the right-wing organization from which Rauner recruits and then fires his new, administrative team, declares the Governor victorious in getting a “voucher system” sanctioned as a part of the state code.

So, what exactly do we have in Illinois with Education Tax Credits or “Scholarship Tax Credits” as known in the other 18 states that use them?

In 2018, the State of Illinois will allow anyone (corporation or individual) with a payable state tax to apply that amount to a specific school or subset of schools (think parochial system kindergarten – high school) at a 75% rate of owed tax.  For example, my very wealthy friend Ernesto will owe $5000 in state taxes.  If he decides to provide all of that payment for his favorite private Academy, $3750 will go to his chosen school.   And, he will pay the state of Illinois the lesser amount of $1250 in tax responsibility.

When my pal Ernesto stopped by the other day, he was ecstatic.  He plans instead to pay the total $5000 to his favorite Academy and an additional  $1250 out of pocket to the same Academy.  “Is that legal?” I asked.  “Why not try it,” he replied, smiling.  “Besides. He offered, “I can get a federal deduction on the $1250.”  I reminded Ernesto that much of this is still in the air, and a non-political scholarship granting organization is charged with making heads or tails of this new system.  He gave me that “What, me worry?” smile.     

The Illinois Policy Institute declares Illinois as one of eight other states that have provided for tax credit scholarships, although there are now 18.  And in each case, the successes (political and otherwise) have led to more states following suit.   In Illinois, Republicans wanted a dollar-for-dollar exchange for those who would pay their state income tax to specific schools or programs (but not individuals).  That is the state tax credit program in Florida.  In the end, Illinois Democrats stood strongly against this and Republicans finally compromised for the 75%.

Hang on, here’s the math:

An individual (like Bruce Rauner) or corporation can give up to $1 million from state taxes each year. 

The total amount the State of Illinois can take from this arrangement for the whole state stops at $75 million.  The bill will be reviewed in 5 years, as that is its sunset moment.

Because that $75 million represents ¾ of the tax liability, the private schools can receive $100 million in “vouchers” specific to their schools/students.  This is money that will not reach the state coffers for services like public education, health care and safety.  Because it does not come "directly" from the public coffers, and it instead diverts money on its way to the general revenue, tax credits do not fall into the federal Blaine Amendment rule preventing public funds for private schooling.  

Recipients of such scholarships awards can come from households which earn 300% of the federal poverty level ($24,600) OR $73,800.   Once a student enters the program, the threshold is raised to 400% - or, $98,000.  This is not the “lower class families in Illinois. 

If we are considering a “voucher system” to assist the lowest income students to enroll in a suitable educational system, we are looking at a price of (on average) $13,000 per voucher.  This includes the price of tuition, books, fees, transportation, etc.  This will cover less than 6000 students.

How are the EdChoice and other Voucher Proponents Reacting?

Lukewarm but hopeful.  EDChoice leader Jason Bedrick felt that this sudden change in the hearts and political position of Democrats represented the great strength of Governor Rauner in drawing the line in the sand to refuse cooperation with their budget demands over the last few years. The Illinois Policy Institute agreed.  Bedrick also described the most any student might receive at $13,000; but, he also suggested strongly that students would probably number somewhere between 5000 to 20,000 students.  That range is between  $15,000 and $3750. 

Because no state in their memory has every reduced or dropped such programs, Bedrick looks forward to a probable increase in the program in the State of Illinois. In five years, he foresees $75 Million becoming $150M, $250M, and onward.  

On the other hand…Strings Attached

Part of the bargain struck between Democrats and Republicans in the arrangement for a “tax-credit voucher system,” was to force those private schools who accept such funding to administer annual state tests to those students who are participating in their credit programs.  In the past, this contingency has caused nearly 50% of private schools to retreat from accepting such students on the national level. 

As Ernesto has always made clear to me.  “Our private schools are not like yours at all.  We are better to begin with and demand more, so why should we submit to your measurements?”

Some accountability?

When arguing against any accountability, leaders in the “voucher/choice” present slippery opposition.  EdChoice leader Bedrick contends, “Why should we have to follow requirements. If parents want something different, it doesn’t’ make sense to use the same type of test as public schools…”  In fact, according to Pew Reports, when a state asks for a standardized test requirement on the state level, private schools opt out at nearly 50%.  Most of them, like leader Jeff Murray of School Choice Ohio state: ‘There’s better ways to track accountability,” another common position from Private School leaders.  

Pew and ALCU express positions that most money in tax-credit programs goes instead to those who are already well off.  ALCU describes most who access these scholarships" as financing extra fees and activities costs.  There's also the more duplicitous argument by such proponents as well: like the discomfort expressed by Principal Tom Otten of Elder High School in Cincinnati, Ohio.  “Students (who come to us) from academically deficient schools will struggle worse than ordinary students.”    

The state of Illinois has also thrown another “poison pill” at those who would have us hit-and-run public educational schools.  The amounts of money given to those seeking vouchers in Illinois will also be determined by how low the family resides on the poverty level.  If your family is at 185% of the federal poverty level ($45,110), you can receive the full STC amount ($13,000).

From there, the available scholarship money reduces to 75% for those with income up to $61,500.  And $51% for any family over that $61,500.

Another serious string attached is the requirement that the State of Illinois, in conjunction with these private schools that plan to agree to the terms of the law, will keep records and data of how students perform on state tests, what money has been spent on those who have participated, and expenses for each student. 

If past is prologue, this will give many private schools, academies and parochial systems serious pause.

And in five years, Representative Justin Slaughter will have another chance to look at this bill and whether or not to suspend the continued undermining of public education or play the charade once again.

I plan on being around, Representative.  

Sources:

https://www.illinoispolicy.org/illinois-house-passes-school-funding-plan-tax-credit-scholarships/

http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2012/07/26/choices-often-limited-in-school-choice-programs

http://www.chicagotribune.com/news/ct-private-school-tax-credits-met-20170901-story.html

https://www.edchoice.org/blog/illinoiss-new-tax-credit-scholarship-happen-can-improve/

https://www.aclu.org/other/myths-and-facts-about-education-tax-credits