<p>Be carful when checking out teacher salary lists like the one in @eyemamom’s post. They often include health and retirement benefits in the amount displayed.</p>
<p>They include income from coaching, overseeing clubs etc. Neither of which count in the pension calculation before anyone attempts to talk about pension spiking.</p>
<p>By the way I am very familiar with Middletown and $108,000 while a very nice salary does not go a long way in the decent sections of Middletown.</p>
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<p>I said no such thing at all. </p>
<p><a href=“http://www.city-data.com/township/Middletown-Monmouth-NJ.html”>http://www.city-data.com/township/Middletown-Monmouth-NJ.html</a></p>
<p>Median “household” income is 94k in that town. High for sure. But a two teacher family could easily be double the mean. I don’t think anyone is crying too hard over a 9 month employee making over 100k/yr and I don’t begrudge the salaries in the slightest. But don’t be shocked over real estate taxes to support that. </p>
<p>Here is a link you may find interesting
<a href=“Interactive Map: What NJ Public School Teachers Earn | NJ Spotlight News”>http://www.njspotlight.com/stories/12/0904/1541/</a></p>
<p>eyemamom what do you think a middle class income is in NJ?</p>
<p>@tom1944 - I have no clue. I don’t live in NJ. I’d assume a teacher would be middle class. I live in a state with a higher median income than NJ. As I look around my county that is ranked in the top 10 year after year in the country and it is middle class/upper middle class with lots and lot of government contractors and employees, and not the uber wealthy it took me a while to figure it out. At least in my area, it’s not that so many people are so wealthy, it’s that we’re so rural we don’t have a large homeless or illegal population. </p>
<p>Yes, taxes are high in some states. At least in my state people are leaving along with businesses. As to why people don’t leave if they want to - sometimes it’s too complex to just pack up and leave. But believe me part of our retirement plan is getting out of our overly taxed state. When I’m being taxed for flushing my toilet and the rain falling out of the sky I get to complain about overreach and corruption. When the gps gets put in my car for a vehicle mileage tax you’ll see me incorporate in a new state.</p>
<p>In Illinois, the issue is fairly simple to describe. Until the great recession hit, the state had a fixed rate income tax of 3%. Being a blue leaning state, its prioritized programs didn’t fit the revenue produced by that tax-rate. Over the decades, and yes, I do mean decades, the state “borrowed” their part of the contribution required to keep the funds financially sound. While this allowed the state to “balance” its budget, the debt accrued began to build. The employees, seeing this, got an amendment added to the state constitution in 1970 that basically said that membership in the state pension system is an enforceable contract, the benefits of which shall not be diminished, or impared. The employees tried to sue to get the state to fund their portion of the pension, but the supreme court stated that the method of payment, although financially prudent for the state to make annually, was not required by the constitution, only the benefit was ultimately payable, even if it had to be funded from current revenues.</p>
<p>That’s when the state, given the green light to continue “borrowing” with various and sundry “pension holidays” as they were called, came up with an ill-advised law called the pension-ramp. Which in the short run allowed the state to make little to no payments for years, doubling the pension debt even before the recession hit. The ramp was exponential, however, and now Illinois is at the top of the ramp up, with pensions accounting for nearly 20% of the state budget. That 20% represents a 15.5% debt repayment, and about a 4% payment for current pension costs (ie what would be due had the borrowing not occurred. The employees, depending on the pension plan they are in pay anywhere from 7.5% to over 10% of their paychecks into the funds.</p>
<p>The state decided to change the pension plans for new hires starting in 2011, so new employees get a much less generous pension, so much less, that the feds are telling the state that if the pension benefits don’t grow at the rate of social security, then the state will have to begin paying into the SS Trust fund.</p>
<p>That 2011 change didn’t garner the state the savings that it wanted up front, so they wen’t after current employee pensions, in effect, telling state employees and, wait for it, retirees on a fixed income, that they would have to give up their annual increases, basically saving the state 150 billion over the next 30 or so years, but rapidly eroding the buying power of a retiree’s pension until they had to rely on welfare to get by. And this without social security or medicare. While several here have pointed out stories of people gaming the system, the average retiree of the systems today has a pension of about 28K. Over the last 30 years, social security payments have risen to allow it to keep pace with inflation. Imagine what that 28K will buy in 10 years, given the paltry existence it allows today.</p>
<p>So, in essence the same employees that had their state pension payment diverted to pay for roads, police, fire etc over these last decades are now being told that they’ll pay back that state borrowing over the next 30 years. This law flies in the face of the 1970 constitutional change enacted by the people of Illinois, and the battle is currently being fought in court, but a recent ruling on health insurance (premiums were a benefit conferred at retirement if enough years on the job were had) has essentially been thrown out as unconstitutional, and ultimately as violative of contract law on the federal level under Article 10 (states shall pass no law that impairs a contract). The bill needs to be paid, in other words, and not by the people who had the money taken from them without permission.</p>
<p>It best summed up as follows, if you borrow to much from the bank, the bank doesn’t need reform, your borrowing habits do. Please note that states exist in perpetuity, and cannot declare bankruptcy. The politicians have been taxing like a red state for decades while at the same time funding state priorities with pension funds. The borrowing is what was unsustainable, it was never the pensions themselves.</p>
<p>That is almost word for word what went on in NJ. In NJ the 2011 pension changes included a funding requirement which our governor has now ignored. He likes to throw the term bankruptcy and Detroit around but as mentioned above bankruptcy does not apply. The required pension contribution for every teacher and State worker comes out to 2% of the state budget. Miss that 2% for 20 plus years and you have a problem.</p>
<p>Balthezar, thank you for the terrific explanation. My 80 year old widowed mother, who as I mentioned before, is living on my dad’s state of IL pension, worries almost full time about the state pension situation. In the past year, her health insurance benefits have already become less generous.</p>
<p>The above description of the problem didn’t mention that the local districts don’t pay much towards the teacher’s pension. They do set and pay the salaries, but are only on the hook for a small percentage of the pension costs. So they saddled the state with costs the local districts didn’t have to pay.</p>
<p>Balthazar, that’s right. It’s a political problem rather than an education problem. (Illinois has education problems, but that’s another thread.)</p>
<p>That said, yes, moving to another state is easier said than done, and some families really are stuck, but when people are motivated to move, a lot of them go. So it’s particularly striking that more people don’t leave NJ when it’s such a small state. It’s not the same thing as leaving California. Unless you’re from Cape May, practically every spot in the state is under 60 miles from Pennsylvania – and often from Delaware and NY as well. Most of the population is under 30 miles from a border. In the aggregate, the reason people stay has to be that the benefits of the state are worth the costs for a whole lot of people.</p>
<p>Chicago has suburbs that are over the Indiana line, including some nice ones with more reasonable commutes than equivalent towns in Illinois. But they aren’t nearly as popular as the low taxes would make you guess.</p>
<p>If you raise taxes enough to pay for unpayable promises, you can bet the ranch that people will leave. (And it won’t be the ones you would like to leave…its the others. Hello adverse selection.)</p>
<p>I looked up NY state’s teacher funding and was surprised to see that it appears to be essentially fully funded. Hard to believe. </p>
<p>Tom, I really don’t care what teachers are paid. People choose that profession willing and I can only assume that they go into the field with their eyes wide open. They are foolish if they do not. </p>
<p>That said, I think a huge cost saving could be found by 1. reducing the number of school support staff 2. combining some school districts and municipalities (I agree that we have way too many school superintendents and chief of police/fire). </p>
<p>Disclamer: My kids did not attend any public school. I have no issue with teachers. I just didnot want to send my chidlren to a government school. </p>
<p>dadx-I do not believe the NJ pension was “unpayable promises” it had existed and flourished for years until someone promised 30% tax cuts without any cuts to services and used Wall Street magic via the pension system to make that happen. It was down hill from there as the next several governors skipped pension payments to pass on making other decisions. The normal pension payment in NJ for every teacher and state government worker is normally 1.5-2% of the State budget. The problem is now making up 20 years of missed payments plus the earnings those contributions would have generated.</p>
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<p>Post 20…what exactly did you mean?</p>
<p>Its obvious that there is an endemic problem of states and municipalities making promises that taxpayers are not willing to fund. If you look at the data in the study in the attached link, the funding of the various retirement systems across the country ranges from disastrous at the bottom to so-so at the top (with a couple of exceptions). It includes every state and the separate plans within each state. </p>
<p><a href=“http://media.navigatored.com/documents/StateofStatePensionsReport.pdf”>http://media.navigatored.com/documents/StateofStatePensionsReport.pdf</a></p>
<p>Illinois is a complete disaster. No other word for it. Some of the other studies on this issue express the overall shortfall in per capita terms, which gets your attention. </p>
<p><a href=“State Pension Plans: Liabilities, Funded Ratios”>http://www.governing.com/gov-data/state-pension-funds-retirement-systems-unfunded-liabilities-obligations-data.html</a></p>
<p>Taxpayers were willing to fund the pensions at 1.5-2% of their State budgets it was governors who decided they wanted to buy votes and misappropriated the funds. These same political animals are now trying to convince the masses that it is greedy public workers that created the problem.</p>
<p>Well, it’s also just plain too many retirees. People are living longer and collecting this money for decades. The same thing as is happening with social security. We don’t die at 66 anymore and it’s getting expensive.</p>
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<p>That teachers didn’t do anything wrong. The state government did. That to read this topic as teacher bashing makes no sense since no one said anything negative about teachers, people were saying negative things about those who mismanaged the state’s funds. </p>
<p>“It was always my understanding that black people say “Illa-noise” and white people say “Illa-noy” but I don’t know if that’s really how it works.”</p>
<p>@vlandenschlutte - that has got to be one of the most racist post’s I’ve seen on CC.</p>