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Funding Strong Schools & Fair Pensions:

Funding Strong Schools & Fair Pensions:. State Representative Linda Chapa LaVia Northern Illinois Jobs With Justice. Funding Strong Schools & Fair Pensions:. Fixing Illinois’ Revenue Problem. Sponsored By: State Representative Linda Chapa LaVia Northern Illinois Jobs With Justice.

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Funding Strong Schools & Fair Pensions:

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  1. Funding Strong Schools & Fair Pensions: State Representative Linda Chapa LaVia Northern Illinois Jobs With Justice

  2. Funding Strong Schools & Fair Pensions: Fixing Illinois’ Revenue Problem Sponsored By: State Representative Linda Chapa LaVia Northern Illinois Jobs With Justice

  3. Illinois Pension History and Facts Maria Owens IEA-Retired & IRTA

  4. Teacher Pensions • The History • The Here & Now • The Future

  5. HISTORY • 1915 TRS began (Dunne) • 1939 Social Security or TRS (Horner) • 1950 Trouble - 23% funded (Stevenson II) • 1970 New Constitutional Protections (Ogilvie) • 1989 40 year payment (Thompson) • 1995 50 year plan - 90% funded by 2045

  6. History(con’t) • 2003 48% funded - $43B debt – State borrows $10B (Blagojevich) • 2006-7 Cut pension payments by $2B to pay other bills • 2008 Pension debt $42B 63% funded • 2009 Pension Modernization Task Force (Quinn) • 2010 Tier II pension created

  7. Illinois 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.”

  8. Here & Now • 390,000 Active members of TRS • 90,000 Retirees

  9. Member Stats Active Members • Average Age 42 • Average Years of Service 12 • Average Salary $66,044. • Oldest Full-time Teacher 81

  10. Member Stats (con’t) Retired Members Average Age 70 Average Years Service 28 Average Pension $46,452. Oldest Retiree 107

  11. Pensions • 18 pensions (0.02%) are between $200,000 and $250,000, [all administrators]. • 153 pensions (0.17%) are between $150,000 and $200,000, [primarily administrators]. • 1,985 pensions (2.26%) are between $100,000 and $150,000, [mostly administrators]. • 33,885 pensions (38.52%) are between $50,000 and $100,000. • 51,920 pensions (59.03%) are below $50,000 (IEA).

  12. Of the 51,920 pensions, 17,269 are less than $20,000. • The average statewide TRS monthly annuity after 29 years teaching is $3,565. • TRS members DO NOT receive Social Security benefits for their years as an educator. Their sole retirement is their TRS. • The state saves billions by not having to pay into Social Security, which private employers must do; teachers also pay a monthly premium for their healthcare (TRS).

  13. Misconceptions • Teachers also get Social Security. Teachers do not get S.S. Converting to S.S. would cost the state more money and they couldn’t take pension “holidays”. • Teachers get free healthcare. The average cost is $560 per month for a retiree’s healthcare.

  14. Misconceptions (con’t) • A defined contribution plan would cost the state less money. The PMTF found that defined contribution plans cost more. Nebraska recently reverted back to defined benefit plan after 20 years. • Illinois’ pension benefits are overly generous. Illinois ranks in the bottom one fifth of all states for retirement benefits for state workers. US Census Bureau, Employee Retirement Systems of State & Local Government

  15. Misconceptions (con’t) • Illinois’ pensions are too costly. The normal cost across the 5 pensions is 26% under the national average. Bureau of Economic Analysis, 2008 • Illinois’ costs for education are too high. Illinois ranks last (tied with Nevada) for state funding for education. • Illinois has a pension problem. No, Illinois has a revenue problem.

  16. STATE RETIREMENT SYSTEMSFactors Causing Change in Unfunded LiabilitiesFY 1996-2008 Total Increase = $35,668.29 MIL Pension Modernization Task Force

  17. Finding of Gov. Quinn’sPension Modernization Task Force “In sum, the subcommittee finds that the current benefit structure is not the primary contributor to the current pension crisis; the main culprit is the State’s inability to fund its pension system according to actuarial principal.”

  18. Findings of Gov. Quinn’sPension Modernization Task Force “The cost to taxpayers of state-funded pension benefits is less than the private sector, and less than public pensions in neighboring states.”

  19. Retirement Costs Neighboring States Indiana 12.85% Iowa 14.24% Kentucky 7.25% Michigan 11.8% Missouri 8.71% Wisconsin 10.6% “Thus, the Benefits Subcommittee concluded that the future cost of TRS (6.63%) to Illinois is clearly not out of line with other states.” Pension Modernization Task Force www.ilga.gov/commission/

  20. Retirement Cost Comparison PRIVATE SECTOR 10.6% • 6.3% Social Security • 4.4% Profit Sharing and/or 401K TRS 6.63% • PMTF finding: Private Sector retirement costs are more costly than TRS.

  21. The Future • Teacher shortages • Increased burden on homeowners • Increased inequality of education across the state • Negative economic effects • Poor schools produce a poorly educated work force

  22. Websites • Pension Modernization Task Force www.ilga.gov/commission • Center for Tax & Budget Accountability www.ctbaonline.org

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