<p>“The group’s Labor Day report found more than 100,000 retired Illinois educators had been paid back what they invested into the system just 20 months after leaving work, a financial burden linked to union collective bargaining, which can cost taxpayers $2 million or more per teacher over the course of retirement.”</p>
<p>It could very well lead to bankrupting the state. People are fleeing Illinois in huge numbers, and more than 50% have indicated they want to leave the state. Taxes are one big reason. Our real estate taxes are simply outrageous compared to the rest of the country. If the state puts the burden of these ridiculous pensions on local governments, it’s all over. Pension hiking is a game here. It has to stop.</p>
<p>Actually, it is more like a “former” teacher problem. The teachers are acting rationally by retiring at 59 and getting other jobs, but the system is broken. </p>
<p>BTW is the state pronounced “illa noy” or “illa noise” and who decides?</p>
<p>My father was a state of Illinois retiree. He worked at an extremely stressful job at low pay for many years. But here’s the kicker…his pension was 75% of his last annual salary. At some level it makes sense…even though my dad had a master’s degree (which the position required) the pay was so low that my parents could barely save anything, didn’t have the down payment to buy a house until us kids were grown, etc. So it would have been very difficult to have saved for retirement. But right now, although my widowed mother’s pension check (as Dad’s beneficiary) is modest, it is about the same as if I had to live off the investments of my 401K (to which I have contributed the max since I was eligible to contribute to it.)</p>
<p>I admit I do look at the state (and college) solvency of the college my kid applies to. In many cases the intern/job hunt will be local to the college, so it matters.</p>
<p>I say IlliNOY. But I have an accent, so I’m probably wrong.</p>
<p>According to the Chicago Tribune, the average teacher pension in Illinois is $65,000 per year. The state has not been putting aside it’s expected contribution for years and now the pension fund is low. The state wants to push the costs onto the local districts, which have given raises assuming that the state would take care of the associated pension costs. </p>
<p>The basic problem is that the state spent the money it should have set aside for pensions on other things. Now people whose Social Security will not be nearly as generous as the teacher pensions will be asked to pay more in property taxes to support higher retirement incomes than theirs. </p>
<p>Yes, I have heard several people say it with “noise” at the end. It’s strange and I figured it might be residents of IL miss pronouncing the name of the own state. </p>
<p>A lot of people in Missouri can’t pronounce the name of their own state correctly. A lot of them think it ends with an “ah” sound even though it actually ends with an “e” sound. Pretty crazy.</p>
<p>Out of curiosity, do Illinois teachers or local/state civil service employees contribute and are allowed to collect from social security based on those collections or are they in the same situation as some public employee friends who have a separate pension plan to which they contribute which precludes social security contributions/future collecting on basis of salary as public employee?</p>
<p>Ha! Why am I NOT surprised NJ was #1 in the worst states for property taxes? </p>
<p>Then again, it’s interesting to note many of the states considered best states for property taxes also have some of the worst public K-12 systems by state. </p>
<p>Well, they certainly aren’t spending it on roads…</p>
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<p>I think that’s just kind of an old-timers’ way of pronouncing Missouri. There are countless examples of cities and states being pronounced in ways that don’t make sense to outsiders.</p>
<p>The essential problems, as noted and with my additions, are:</p>
<ol>
<li><p>Underfunding. Repeat three times, then repeat again. The legislature puts this off and off and off. (BTW, this is an example of the fallacy embedded in application of the idea that expected future tax increases affect current spending. People take an idea that’s important in a model which is not even expected to accurately reflect reality and extrapolate that to real life inappropriately.) Underfunding is not the fault of the recipients but it’s a warning about the nature of promises and the ability to keep them.</p></li>
<li><p>Average pensions are pretty low but the total value of pensions is driven up by a few factors, notably that higher pay people are rewarded with higher pensions (and the rules enable much gaming of the system by higher paid people to increase their pensions) and that people can retire relatively young. I have strong feelings about both of these. First, higher paid people have much more capacity to fund more of their retirement. They literally should not need to receive huge pensions and should be pushed down to average because this is supposed to supplement what they set aside for retirement not put them on easy street. Second, if you can retire young and work and get a pension there’s something wrong with the incentives in that. If you’re working, I believe there should be some offset based on an income scale. </p></li>
<li><p>The essential problem of defined benefit plans needs to be addressed. They were a good idea when people made $5k a year. The real value of today’s pay is similar but the nominal values are huge when aggregated and, to be blunt, nominal value matters when it’s a big number and has to be funded in today’s money. It would be different if pensions were funded all along so there would be no gap between today’s nominal value and funding but. Defined benefit plans also have the horrible effect of accentuating the way upper level pay has risen over time. </p></li>
<li><p>We have to remember that, as noted above, these pensions replace social security. And these pensions also are incentives to be a teacher and stay a teacher. If we want good teachers, they need incentives - not sticks and threats - so we can’t expect them to work for pensions that merely replace poverty level income. Teachers receive a pay package that includes lower current pay in exchange for higher long term pay. If we want to change that and keep or improve the quality of teachers, we’d have to increase up front, current pay. That would cost a lot too.</p></li>
</ol>