Community Corner

Letter to the Editor: Illinois Public Pension Rhetoric

Palatine resident Mark Evenson discusses what he calls rhetoric regarding Illinois' public pension problems.

To counter the rhetoric that Illinois’ public pension problems are the result of it taking so called “pension holidays” or “skipping payments” I will show a different perspective, using actual data from TRS (the largest of the five Illinois pensions.)

But first we need to understand the pension’s “Normal Cost”, defined as the actuarially computed cost of the benefits expressed as a percentage of payroll. The IEA places a figure of 9.13% for Normal Cost, compared to the employees’ own pension contribution of 9.4%. The Normal Cost is what Mike Madigan wants to push from the State’s responsibility to the local school districts.

So, using TRS data, comparing the cumulative contributions for each the taxpayer and employee beginning in 1981, how many times has the taxpayer level dipped below the employee level? Not a single time! All through the 1980’s and 1990’s the taxpayers contributed more than the employees!

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Now, if you were to Google “pension holiday” you will learn it refers to 2005 legislation allowing the State to contribute less over the next five years. Conveniently omitted from the rhetoric was the fact that over $4.3 billion of bonds were issued and turned over to TRS in 2004, so during the 2000’s the taxpayers actually contributed over twice that of the employees! Overall, since 1981 the taxpayers contributed nearly 1.7 times the employees.

What these “skipped payments” really refer to are the amounts above and beyond the Normal Cost that the State gets stuck owing. Since the Normal Costs are actuarially computed could this mean that the actual benefits paid are really much greater than the Normal Cost? Well, TRS conveniently admits as much in its “Retirement Guide” publication.

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For those who wish to see the supporting material behind my letter I have placed it here:

https://drive.google.com/folderview?id=0B-NGxr9I3-DDeE5vekNPTlNJRTA&usp=sharing

Please carefully examine the contributions made by the taxpayers and employees. Look for any indication of those “pension holidays” or “skipped payments” … anywhere. Then ask yourself why a 100% matching retirement benefit over twenty years isn’t enough of a benefit. Heck, even a 200% matching retirement benefit over the next ten plus years wasn’t enough as we actually went in the opposite direction, from being 68% funded in the year 2000 down to only 42% in 2012.  At some point we have to ask if we can continue to afford offering these benefits without someone other than the taxpayer making up 100% of the never ending shortfalls.

Mark Evenson

Palatine

Editor's note: Letters to the Editor are presented as they are originally submitted by our readers. Palatine Patch neither agrees nor disagrees with the opinions presented. 

You can submit a Letter to the Editor by emailing melanie.santostefano@patch.com. 


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