Retirees Out-Earn Teachers Who Replace Them

Look at the “TRS IL Comprehensive Annual Financial Report for the fiscal year ending June 30,2015”

http://trs.illinois.gov/pubs/cafr/FY2015/fy15.pdf

pdf page 100 has active member data.  Page 109 retirees.

 

In 2015,

  • Average salary for new teachers (under 5 years of service) is $47,796
  • Average salary for soon to retire teachers (25-29 years of service) is $94,410
  • and (30-34 years) $100,785

 

Then look at retiree data.

  • Those retired less than 1 year who worked 25-29 years have an average starting (and current) benefit of $3,222/month = $38,664
  • And 30-34 years experience have $5,646/month = $67,752

 

Note, those retired longer, may have a higher current pension.  Current pensions peak for those retired 10-14 years ago (that would be retired in 2002-2006)

  • 25-29 years experience have a current pension of $4,580 = $54,960
  • and 30-34 years experience have a current pension of $6,295 = $75,540

This tells us a couple things.

  1.  When a teacher who worked a full career (30+ years) retires, the retiree will have a starting pension ($67,752) for not working that exceeds her replacement’s starting salary ($47,796) for working.
  2. Retiree COLA (3% annually compounded) exceeds the amount the salary curves are going up.

From page 100 of the pdf (active teachers salary chart)

trs salary2015

From page 109 of the pdf (retired teachers pension chart)

pension data 2015 p 109

Top 400 Illinois pensions in 2016

Taxpayer Education Foundation has published the top 400 Illinois pensions as of 2016. There are 15,661 state pensioners collecting more than $100,000 per year and 92,386 state pensioners collecting more than $50,000 per year.    taxpayersunitedofamerica.org/wp-content/uploads/Binder1.pdf

Many of these people will receive more in retirement than they did while working.   The system is unsustainable.

Post Employment Compensation

Years ago, and unbeknownst to taxpayers, School district in Illinois began giving retiring teachers extra pay shortly before they retired.  This policy costs the districts very little, but boosted pensions substantially. This practice is one of the leading causes of the unfunded pension liability.

The following table shows the post employment goodies for teachers in Wheaton-Warrenville CUSD 200.

cusd200 post employmentThe affect of this (and similar arrangements in other districts can be seen in the pension payouts.  Take a look at pdf page 109 of

Comprehensive Annual Financial Report
for the fiscal year ending June 30, 2015
Teachers’ Retirement System of the State of Illinois

 http://trs.illinois.gov/pubs/cafr/FY2015/fy15.pdf

pension data 2015 p 109

A teacher who had been retired less than one year (i.e. retired in 2015) who had 30 to 34 years of service on average would be receiving $5,661 in current monthly benefits, or $67,932 annually.   Graphing the current monthly  pensions from this page we get: curr pension 2015 graph

 

Notice the jump in the data about 20 years ago, That would be around 1995.   Could this be due to end of career salary spiking?

Or was there any changes made tot he TRS law around this time that would account for the jump?

 

Taxpayers Cover $4 Million$ in Teachers College Costs

“Taxpayers in 70 suburban school districts paid more than $4 million last year to send 3,085 teachers back to college.”  This increase in education leads to higher salaries and higher pensions.   did an excellent job of covering the details in the Daily Herald:

 dailyherald.com/article/20160803/news/160809691/

Send your comments to:   BoardOfEducation@d211.org

Capping Pensions would save How Much?

The Illinois Supreme court rulings overturning all attempted pension reforms for current retirees and employees means that any real pension fix will require an Illinois’ Constitution amendment and most likely  an agreement with the government-employee unions.  Two suggestions that I (Jan Shaw) have been making are:

 

  1. Tie any Cost of Living allowance (COLA) to inflation and the health of the fund. No COLA if doing so would result in the fund being less than 100% funded.  And cola should never exceed inflation.

 

  1. Many pensions are out of line. Based on 2013 data, we discovered that the average starting pension for a recently retired teachers who worked 30+ years ($70,894), exceeded the average pay for active teachers ($67,558).  Cap pensions at a reasonable amount (set $ amount or percent of the maximum salary for which social security is taken).

 

In order to get a handle on how much could be saved if pensions were capped, I copied data from

The “TRS – Comprehensive Annual Financial Report” made a few basic assumptions and ran some what-if scenarios.

For 2014, the data is on page 104 (of the pdf)  http://trs.illinois.gov/pubs/cafr/FY2014/fy14.pdf

For 2015, the data is on page 109 (of the pdf)  http://trs.illinois.gov/pubs/cafr/FY2015/fy15.pdf

trs pension pay

The charts group retirees based on years of service and how long since retirement.  For each group they show the number of Retirees, the Average current benefit, and the Average original benefit. For my estimates, I assumed that all retires in each group receive the average.  Thus the number of retirees affected based on my computations may be higher than the actual number but the $ savings should be accurate.

 

These savings are based on TRS data only.  Other pension plans would also have savings.

 

Year 2014 2015
Total paid $5,189,487,408 $5,459,528,136
 # retirees 101,184 103,501
 
if capped at $50,000
annual savings $1,118,127,216 $1,279,533,828
%savings 22% 23%
# affected 59,220 61,733
% affected 59% 60%
 
if capped at $55,000
annual savings  $841,750,932 $968,973,684
%savings 16% 18%
# affected 50,975 53,421
% affected 50% 52%
 
if capped at $65,000
annual savings $369,812,448 $476,685,432
%savings  7% 9%
# affected  41,310 48,578
% affected 41% 47%

 

For another data point, see Tax Payers United of America’s “10TH ANNUAL REPORT ILLINOIS STATE PENSIONS” report.  http://www.taxpayersunitedofamerica.org/wp-content/uploads/10th-annual-report-illinois-state-pensions-WEB.pdf

According to it:

15,661 state pensioners each collect more than $100,000 annually

  • GARS – 51
  • JRS – 636
  • TRS – 9,596
  • SURS – 3,955
  • SERS – 880
  • IMRF – 543 92,386

state pensioners each collect more than $50,000 annually

  • GARS – 158
  • JRS – 741
  • TRS – 56,111
  • SURS – 15,628
  • SERS – 13.960
  • IMRF – 5,788

 

GENERAL ASSEMBLY RETIREMENT SYSTEM (GARS)

Only in Illinois, a state on the verge of bankruptcy, can its very own lawmakers accelerate bankruptcy by their very own greed to get what they can before the inevitable event occurs. Yes; Illinois legislators, on both sides of the aisle, passed laws granting themselves golden pensions, for their part-time jobs to represent “we, the people of Illinois.”

In 1995, State Rep. Dave Leuchtefeld (R) was the first to opt out of the General Assembly Retirement System.

Since 2010, Rep. Ron Sandack has advocated for his HB138 legislation that would kill pensions for new lawmakers.

Synopsis of HB138 as Introduced:

Amends the General Assembly Article of the Illinois Pension Code. Restricts participation in the General Assembly Retirement System by members of the General Assembly to persons who become participants before January 1, 2016 and provides that, beginning on that date, the System shall not accept any new participants who are members of the General Assembly. Makes related changes. Effective immediately.

GARS is only 16.8% funded (FY2015). So; it is underfunded by hundreds of millions for a very small number of participants. Taxpayers are on the hook for an even bigger future bill.

EXAMPLES OF NOTE:

#1 HIGHEST GARS PENSION TO-DATE:  Arthur Berman (D) now takes $19,652 a month ($235,824); His pension includes a pension spike via Chicago Public Schools; served as state senator for 31 years; retired in 2000.

Retired Chicago Mayor Richard J. Daley (D) now takes $132,384/year($11,032/month); with some pension spiking. He served as a state senator for 8 years;

Retired Governor Pat Quinn (D) now takes $133,164/year ($11,097/month).  Years of service in legislator undocumented at this time;

Retired House Minority Leader Tom Cross (R) now takes $81,012/year ($6,751/month). He served as a state representative since 1993; and

State Senator Kirk Dillard (R) now takes $6,831 per month ($81,972/year). He served in the state senate from 1994-2014.

Every single one of the examples cited above have pensions significantly higher that their annual pay as part-time legislators; currently about $68,000 per year; more if committee chairman, etc. It is called greed, and taking care of business for themselves.

 

RK 5/7/16