Vocabulary "VESTED"

Nope.

What is “Vested?”

Simply put, vested means “secured in the possession of or assigned to a person.”

In public education, the term vested for a future retiree means a pension fully and unconditionally guaranteed as a legal right, benefit, or privilege – although any Tier 1 or Tier 2 educator in Illinois realizes that save for the Illinois Supreme Court, the General Assembly would have ignored any guarantees morally or legally implied.

In the private business world, the full benefit(s) of being vested may include different remunerations in lieu of a defined benefit or pension.  Those would include but not be limited to profit sharing, stock options, 401K matching contributions, etc.  

The benefit to any company or school district in providing an accumulating vesting schedule is to retain the talent and productivity of employee(s) at a firm or in a district over an extended period of time.  Workers who decide to leave a company may find themselves losing access to thousands of dollars or tens of thousands in investment instruments.

According to Investopedia.com, “This strategy (vesting employees) can backfire when it promotes the retention of disgruntled employees who may hurt morale and simply do the minimum required until it is possible to collect previously unvested benefits.”

You already know this person – you teach next to him/her.

Seriously, this may also explain just one reason why the concept of tenure – the right to due process in the dismissal of a public worker – seems so strange for the private world to comprehend.  It appears on the surface a too-good-to-be-true deal.

Keep the talent.

On the other hand, without social security or matching retirement savings plans, educators in Illinois are doubly dependent upon their defined benefit at the end of a career. 

Likewise, Illinois public pension schedules require a considerably longer vesting schedule than normally found for private sector benefits: Illinois pension participants do not qualify for retirement benefits until completing between eight and ten years of service, while those in the private sector are vested usually after seven years. 

Regardless, in both cases, public or private benefits for an employee become fully vested as prescribed by a schedule of accrual, often at a gradual pace over a period of time.  In the public sector (and often in the private), age rules also establish a minimum age at which a participant can begin drawing those retirement benefits. 

Retirement benefits may also be capped at maximum levels or at a percentage allowable as a final retirement benefit.

If you are a current active watching your older colleagues figuring out whether or not to retire, you’ll begin to understand why they all carry calculators.  A considerable number of items go into figuring out the numbers – and pity the poor English teachers, who have acquired an expergefacient  phobia for all things math. 

Complicating all of this was the addition of a Tier 2 in 2010, changing the retirement qualifications for those hired after January of 2011. 

Pension System	Pension Code Section	Age & Vesting Rules (Pre-2011 Hires)	Age & Vesting Rules (Post-2011 Hires)
Teachers’ Retirement System	40 ILCS 5/16-133	·      62 with 5 years of service ·      60 with 10 years of service ·      55 with 20 years of service ·      55 with 35 years of service (full annuity)	·      67 with 10 years of service ·      62 with 10 years of service for a reduced benefit

In Illinois, there are more than a fifteen different public sector pensions, each establishing separate and unique requirements for vesting, in establishing age requirements, and providing maximum annuity pay-outs. 

Accrual Rate

In every Illinois public pension plan – teachers’ retirement to judges – the Pension Code provides for a method to determine the benefits of a pension over the course of an individual’s career in public service.

In sum, the benefit accrual rules follow two paths: the percentage of pension benefit an employee accrues per unit (annual employment) of service and the average pay rules – calculating pension benefits based on average of final years of employee service.  This calculation provides the ultimate or highest amount (percentage) of an ending salary/average that can be earned as retirement benefit.

Pension System	Pension Code Section	Current Accrual Rate	Maximum Percent of Final Salary
Teachers’ Retirement System	40 ILCS 5/16-133	2.2%	75%
Judges Retirement System	40 ILCS 5/18-125	Years 1-10: 3.5% Years 10+: 5.0%	85%

Pension Codes in Illinois also regulate what contributions are made by various employees, what caps may be in place, what percentage of salary is required for contribution to retirement. 

It’s a mixed bag, and one that is complicated, but it is worth the time for a current teacher to know a little bit about before it closes in – especially for you English teachers.

More to come.

Pension Pickup Explained

"Pension Pickup" Explained.

The Illinois Policy Institute is angry once again with what their editorialist Diana Sroka Rickert considers another unnecessary handout to Chicago teachers:  the Pension Pickup. 

In her December Tribune editorial last week, Rickert urged Chicago’s besieged Mayor Emanuel and CPS CEO Forrest Claypool to end the current practice of providing pension pickups for the Chicago Teachers Union. 

“While (they) have busied themselves asking state taxpayers to send hundreds of millions of dollars Chicago’s way, they’re unwilling to use the $174 million that’s already available for them to use for teacher’s pensions.”

But they’re not the peculaters.  The real culprit?  Read on, please.

“Chicago teachers are supposed to pay 9 percent of their salaries toward their own retirement savings.  But instead, teachers pay just 2 percent; the rest of the “teachers’ contribution” is picked up by taxpayers, thanks to a clause negotiated into their contract6s in the early 1980s.”

As a retired educator from a suburban district I suppose I could feel a little miffed with having paid 9.4% of my salary each paycheck, instead of 9% like those in the CTU.  Adding to that, if CTU paid only 2% of the 9%; well, why didn’t I get such a deal?

And that’s exactly what Rickert and the IPI want all of us to do.  Let’s not think it out or look into it.  Let’s just be blind angry. 

The “deal” that Chicago teachers got in the early 1980s was actually a mandated law by the General Assembly in 1983.  And this statute (40  ILCS 5/17-130.1) provided the opportunity for retirement contributions to be considered part of the negotiating process in salary and benefit settlements during collective bargaining.  In fact, all districts in Illinois got the same deal.

“An Employer or the Board may make these contributions on behalf of its employees by a reduction in the cash salary of the employee or by an offset against a future salary increase or by a combination of a reduction in salary and offset against a future salary increase.” 

Teacher’s Union:  We’d like to ask for a 2% increase in our wage benefits across the board this next contract.

Board of Education:  We’d like to find a way to do that.  How about a ½% increase across the board, and we’ll pick up 1.5% of your contribution costs per person?

If` you’re still not sure how this works, it means that my union never debated with the Board over my 9.4% payment.  But just down the highway at another district near the airport, they did and paid only 4% of their 9.4% requirement. 

What Rickert is not telling us – and I believe on purpose – is that the statute in 1983 was not a prosperous honeyfuzzle by the unions.  The statute was a smartly designed legal mandate for flexibility for negotiators on both sides, one that might have prevented strikes.  Think of it as an offer to use pension contributions as one part of a package of benefits for working in a specific district – and in Chicago.

And if you were lucky enough to get “such a deal,” you were still on the hook for the required taxes and costs so associated.  The amount negotiated could never “exceed the employee contribution required by Section 17-130 for all employees…”  Likewise, such contributions by a Board or Employer were also to be treated “as employer contributions in determining tax treatment under the United States Internal Revenue Code.“

Now that I know a bit more, maybe the grass wasn’t so much greener over by the airport.  Or even for teachers in the city of Chicago. 

And Union leader Karen Lewis?  She knows that regardless of a Supreme Court unanimous decision acknowledging the thievery of the state and the city, they’ll still keep coming.  She knows that Claypool and Emanuel want to take the pickup away, even after it has been an integral part of contract negotiations for over 30 years.

She knows, like Rickert doesn’t want us all to know, that that 7% in contribution pickup has been traded over the three decades for give-ups in salary, benefits, and working conditions. 

And this is why the Chicago Teachers Union is taking a vote this week on whether they will strike. 

They know the Mayor, Claypool, the IPI, and they understand what a pension pickup is.

Now you do too.

End-Of-The Year Charitable Giving & the Loss of the Local Economy

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.  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 pets are just tied to the front door when we get there.  

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

The Middle Class is struggling to survive after the Great Recession. 

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. 

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. 

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.

Gregory Marcus

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.  

Brian Gallagher

And this corporate giving and getting is a two way street, you know.  The CEO of United Way is Brian Gallagher, whose 2010 reported annual salary is $375,000, “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.

Rep. Kenneth Dunkin: Self-Anointed Strike Breaker?

"But…I did it for you…"

Rep. Ken Dunkin and Self-Anointed Strike Breakers

It was in 1803 the first persons to cross over a picket line of strikers were called black-leggers, probably in reference to the shoe polish that was integral to the Wisconsin bootmakers’ strike.  Of course, sadly, in past as well as current America, some historians propose the term to be possibly racist in nature.

The term “scab” was first used in England, of all places.  Europeans then and now seldom employed strikebreakers (or scabs) to continue operations; that was and is  more likely an action on the part of American factory owners and magnates. 

In the early 1850’s, the term SCAB was likewise a reference to “blacklegs,” for the latter indicated a severe infectious disease among British cattle that rendered the poor animals with necrotic skin and abscesses and, of course, oozing scabs.  Not a term of endearment if it were part of your job description.

And this somehow brings me to this last week’s dramatic kerfuffle in Springfield.

To look over Representative Ken Dunkin’s (5^th District) explanation of his no-vote on SB570 – to overturn the Governor’s changes to the Child Care Assistance Program to his constituency is a script Capra-esque.

“That’s why I made a promise to fight Gov. Rauner’s child care cuts.  That’s why I spent countless hours on calls and meetings with the governor and his administration to demand these cuts be rolled back.  And that’s why I delivered for my constituents and reversed these cuts.”

http://www.sj-r.com/article/20151112/OPINION/151119867

Energetic and earnest young politician rolls up his sleeves, stomps by the smoke-filled rooms of the strategists and insiders, and flings open the doors of the hardheaded Governor to have an honest face-to-face quarrel in order to save the kids in his district and entire state.  Very Jimmy Stewart.

Here’s what happened.

Governor Bruce Rauner, using his administrative emergency powers to curtail or diminish human services to save money, had earlier cut the threshold for Child Care Assistance from 185% of the federal poverty level for families in Illinois to 50% of the federal poverty level.

Explanation:  Illinois’ median income for families is higher than most states in the nation; therefore, our historical threshold for various human services has always hovered well beyond the federal level. 

The Census Bureau on Median Income by Family Size shows Illinois families of three at nearly  $72,500.  (By the way, that’s between $5000 and $10,000 more than our neighboring states which are held as models for Illinois. )

http://www.justice.gov/ust/eo/bapcpa/20141101/bci_data/median_income_table.htm

The 2015 federal poverty level for a family of three is $20,090. 

So, it makes sense that Governors in the past and the Illinois General Assembly have provided an increase in the onset for assistance in the state. 

Prior to Governor Rauner’s lowering the threshold to 50% of the federal level, Illinois’ threshold for Child Care Assistance (family of 3 or more) was 185% of the federal poverty level…or…$37,166. 

A mother with two children making $36,000 would be eligible. 

Rauner’s earlier “emergency action” would have reduced that level to 50%.    In other words, that same mother and children would need make less than $10,056 to qualify for assistance.  Quite a devastating distinction.

Those many state resources devoted to caring for impoverished children and families were quick to react. 

“The unprecedented use of the Administration’s emergency rulemaking authority to restrict eligibility for child care assistance has resulted in the denial of 90 percent of applicants who would have otherwise been eligible for child care services through CCAP. That means approximately 20,000 children have been rejected from the program since the drastic restrictions took effect July 1.”

http://www.voices4kids.org/undoing-child-care-restrictions-good-for-illinois/

The Speaker and the Illinois Senate were likewise politically punctual, and SB570 was crafted to strike down the Governor’s draconian changes, reinstate the original thresholds, and prevent any current or future governor from making such alterations again without permission of the General Assembly.

 As you already know, the bill needed 71 votes in the House, but got only 70 as Representative Kenneth Dunkin once again avoided voting at all.

According to Rep. Dunkin, “Let me be very clear about what would have happened without a deal in place – what would have happened if the House or Senate passed SB570.  Childcare income eligibility would have stayed at 50 percent of the federal poverty level for at least another 60 days as we waited for the governor to veto the bill…The folks who wanted prolonged suffering to help their political agenda won’t be very happy with me.  But I don’t work for them.  I work for you.” (SJR)

Well, not all of you.  Rep. Dunkin’s sidebar with Rauner and his team resulted in a partial return to the original Child Care Assistance threshold of 185%.  Instead, it now will be 167%.  That will be nearly a $5000 drop in annual income in order to qualify. 

From $37,166 to $32,545.  In other words, a drop of nearly 5% in population numbers of families’ earnings.

http://illinoisepi.org/countrysidenonprofit/wp-content/uploads/2013/10/ILEPI-Economic-Commentary-Illinois-Income-Report.pdf

According to the latest figures on the Illinois Child Care report, nearly 163.500 children require funding from Child Care Assistance.  That constitutes a probable change of nearly 5% less in children provided Child Care Assistance. 

. 

Nearly 8000 children will be dropped from Child care Assistance after Rep. Durkin’s sidebar with Rauner. 

The collective group of Democrats in the General Assembly would have stripped Rauner of his ability to make such draconian cuts, rolled back the thresholds, and doubled down on the Republican attempt to use once again the marginalized as the scapegoats for the Democrats’ not coming to heel.

This and the likely blowback by senior members of his own Republican party gave the CEO Governor reason to change his original cuts to 50% of federal poverty level for assistance.

What to do?  Find a patsy?

In the Mohawk Valley Formula, a 1930's plan for strikebreaking and undermining collective bargaining usually credited to members of the Rand family, one important tenet is to find suitable puppets or "loyal" workers who can be co-opted to break solidarity.  Whatever it takes. 

But Rep. Dunkin argues he works for you. And he argues that without his timely intervention, all might have been lost.

A man of service, or a simply serviceable man?