Governor Quinn Proposes Bold Plan to Stabilize the Public Pension System

* Please note that this is a press release from Gov. Quinn's Office

CHICAGO – April 20, 2012. Governor Pat Quinn today announced a bold plan that secures public workers’ retirement while fixing the state’s  pension  problem  that  has  been  created  over  decades  of  fiscal  mismanagement. The proposal is expected to save taxpayers $65 to $85 billion based on current actuarial assumptions. The changes will lead to greater certainty  in  Illinois’  business climate, respond to concerns  from  ratings’  agencies  regarding  the  state’s  unfunded pension liability and support the  continuation  of  the  state’s  capital  plan  that  is  putting  hundreds  of  thousands  of  Illinois residents back to work. The Governor’s  proposal  follows weeks  of  discussion  by  the  Governor’s  pension  working group.

“Unsustainable  pension  costs  are  squeezing  core  programs  in  education,  public safety and human services, in addition to limiting  our  ability  to  pay  our  bills,”  Governor  Quinn  said.  “This  plan rescues our pension system and allows public employees who have faithfully contributed to the system to continue to receive pension benefits. I urge the General Assembly to move forward with this plan, which will bring a new era of fiscal responsibility and stability to Illinois.”

Illinois’  pension  system  is  now  under-funded by $83 billion due to decades of inadequate funding by past lawmakers and governors, and the promise of increased benefits without sufficient revenue to pay for those benefits. Under Governor Quinn, as annual required contributions increased dramatically, the state paid exactly what the law required into the pension systems. The fiscal year 2013 payment, $5.2 billion, now makes up 15% of general revenue fund spending compared to 6% a few years ago.

The Governor’s  proposal  provides  for  100%  funding  for  pension  systems  by  2042  and  makes  the  following   changes to the current plan:

3% increase in employee contributions.

Reduce COLA (cost of living adjustment) to lesser of 3% or 1⁄2 of CPI, simple interest.

Delay COLA to earlier of age 67 or 5 years after retirement.

Increase retirement age to 67 (to be phased in over several years).

Establish 30-year closed ARC (actuarially required contribution) funding schedule.

Public sector pensions limited to public sector employment.

In consideration for the changes above, employee pay increases will continue to be counted in the calculation of their pension and employees will receive a subsidy for their health care in retirement. The state can no longer provide current levels of both pensions and retiree healthcare to employees upon retirement. Currently 90% of retired state employees pay nothing for their healthcare costs. States comparable to Illinois in size and demographics provide little to no assistance for retiree healthcare costs.

The  Governor’s  plan  also  calls  for phasing-in the responsibility for paying normal costs of pensions to each employer, including school districts, community colleges and public universities.
This plan reflects the discussions of the working group. The working group continues to work in an effort to find full consensus on all elements of the proposal. Members of the pension working group include Sen. Mike Noland, Sen. Bill Brady, Rep. Elaine Nekritz and Rep. Darlene Senger.

What Do Teachers Want?

By Diane Ravitch

Dear Deborah,

We heard a lot last month about the MetLife Survey of the American Teacher. It showed that teachers across the nation are demoralized and that their job satisfaction has dropped precipitously since 2009. The proportion thinking of leaving teaching has gone from 17 percent to 29 percent, a 70 percent increase in only two years. If this is accurate, it would mean the exit of one million teachers. I hope it is not true.

What has happened in the past two years? Let's see: Race to the Top promoted the idea that teachers should be evaluated by the test scores of their students; "Waiting for 'Superman'" portrayed teachers as the singular cause of low student test scores; many states, including Wisconsin, Florida, Louisiana, Michigan, Indiana, and Ohio have passed anti-teacher legislation, reducing or eliminating teachers' rights to due process and their right to bargain collectively; the Obama administration insists that schools can be "turned around" by firing some or all of the staff. These events have combined to produce a rising tide of public hostility to educators, as well as the unfounded beliefs that schools alone can end poverty and can produce 100 percent proficiency and 100 percent graduation rates if only "failing schools" are closed, "bad" educators are dismissed, and "effective" teachers get bonuses.

Is it any wonder that teachers and principals are demoralized?

Another survey, released about the same time, has not gotten the attention it deserves. This one conducted by Scholastic and the Bill & Melinda Gates Foundation is called Primary Sources: 2012. It contains valuable information about what teachers think.

Among other things, the survey asked teachers what they believe will have the greatest impact on improving academic achievement.

This is what teachers said were the most important factors:

1. Family involvement and support (84 percent said it would have a "very strong impact");
2. High expectations for all students (71 percent said it would have a "very strong impact");
3. Fewer students in each class (62 percent said it would have a "very strong impact");
4. Effective and engaged principals and building-level leaders (57 percent said it would have a "very strong impact").

These were the factors that teachers said were least important in improving academic achievement:

1. A longer school day (6 percent);
2. Monetary rewards for teachers based on the performance of the entire school (8 percent);
3. Monetary rewards for teachers based on their individual performance (9 percent);
4. A longer school year (10 percent).

Other factors that teachers thought were relatively less important: common assessments across all states (20 percent thought these would have a "very strong impact" on academic achievement); and common standards across all states (29 percent).

Teachers believe that families are crucial for improving student academic performance, but about half of the teachers surveyed say that parent participation in their school has declined, and only about 10 percent said that parent participation had increased.

Sixty-two percent of teachers say that the best measures of student performance are ongoing, formative assessments, the kinds that are integrated into daily instruction and give the teacher immediate feedback. Fifty-five percent of teachers say that class participation is "absolutely essential" as a measure of student performance. Performance on class assignments" is viewed as "absolutely essential" by 47 percent of teachers.

The least valuable measures of student academic achievement, according to teachers, are: tests from textbooks (4 percent); district-required tests (6 percent); state-required standardized tests (7 percent); and final exams (10 percent).

When teachers were asked whether the state standardized tests were "meaningful benchmarks" to measure students' progress or to compare schools, only 5 percent agreed strongly.

It is interesting that the least useful measures, in the eyes of teachers, are the state-required standardized tests that policymakers use to punish and reward students, teachers, principals, and schools. Only 7 percent of teachers consider them to be "absolutely essential" measures of their students' academic performance. Yet, to policymakers, this same measure is the only one that matters.

Teachers are quite willing to be evaluated, contrary to popular myth spread by politicians. But they want to be evaluated in a professional manner, by principal observation and review, by formal self-evaluation, by peer observation and review, by their department chair's observation and review, and by assessment of their content-area knowledge.

When asked about the challenges they face, 62 percent of teachers say they have more students "with behavioral problems that interfere with teaching" than in the past; 56 percent say they have more students living in poverty; 50 percent say they have more English-language learners; 49 percent say they have more students who arrive at school hungry; and 36 percent say they have more students who are homeless. Policymakers tend to dismiss all these social and economic issues as unimportant. Teachers don't, because they see them every day in real time.

Our policymakers often say that merit pay will lead to the retention of the best teachers. Teachers don't agree. They say that the factors that are "absolutely essential" to keeping them in the classroom are "supportive leadership" (68 percent); "more family involvement in students' education" (63 percent); "more help for students who have behavioral or other problems that interfere with learning" (53 percent); and "time for teachers to collaborate" (50 percent).

By contrast, teachers rank the following factors as least important in keeping them in the classroom: "pay tied to teachers' performance" (4 percent); "in-school teaching mentors/coaches for first 3 years of teaching" (15 percent); "opportunities for additional responsibility and advancement while staying in the classroom" (15 percent).

What do teachers want? They want to spend less time on discipline and more time collaborating with their colleagues and preparing lessons. They want more resources for the students with the greatest needs. They want more training to reach every student in their care.

Unlike the MetLife survey, the Scholastic-Gates survey found that 51 percent of teachers plan to teach "as long as I am able," even past retirement age, and another 32 percent expect to teach until they reach retirement age. So while MetLife concluded that 29 percent were ready to quit, Scholastic-Gates tallied this group as 16-17 percent.

To the policymakers who seem to think that teaching is an easy job, and to those who write letters to the editor asserting that teachers don't work hard enough or long enough, consider this: The Scholastic-Gates survey says in its conclusion that "On average, teachers work about 11 hours and 25 minutes a day." (Although on Page 13 of the report, the survey says that "teachers work an average of 10 hours and 40 minutes a day, three hours and 20 minutes beyond the average required work day in public schools nationwide.") Whether it is one or the other doesn't really matter. This is a demanding job that requires enormous dedication and gets inadequate support from families, from policymakers, from elected officials, and from the public.

The teacher comments that accompany each page of the report are illuminating. One teacher says, "In my school, we are feeding the children, clothing the children, and keeping many of them from 7:30 a.m.-6:00 p.m." Another says, "I am a general education teacher, but at least 50 percent of my class each year has special needs. At least 25 percent of these students have extreme behavior problems which interfere with teaching the other students to learn."

The goal of the survey "is to place teachers' voices at the center of the conversation on education reform by sharing their thoughts and opinions with the public, the media, and education leaders." Is anyone listening?

Diane

Pensions: Proposals and Town Hall Meeting April 30

Much of my time in the legislature has been spent working on our state's enormously challenging pension problem.  This work has most recently manifested itself in two bills that I've filed, as well as a Town Hall Meeting that I'll be hosting on Monday, April 30, at 7pm, at the Glenview Police Station, 2500 East Lake Avenue.

The first bill, House Bill 6149, sets up a new type of plan, known as a cash balance plan, for future public employees.  Like our current systems, a cash balance plan is a type of defined benefit plan; however, its benefits are tied closely to contributions and investment returns, the risk is shared between the state and the employee, and costs are predictable.  You can read a one-page description of the bill here and an additional list of frequently asked questions here.

This bill constitutes an attempt to solve a very basic problem: on the one hand, the state has demonstrated a clear inability to properly manage traditional defined benefit plans -- we consistently underfund them, we repeatedly fall victim to actuarial error, and we create loopholes that can be and frequently are abused in ways that are both offensive and expensive.  On the other hand, switching to a 401(k)-type defined contribution system would create a huge cash flow problem for the pension funds and would leave our public employees, the majority of whom will not receive Social Security, without any guaranteed retirement security.  A cash balance plan splits the difference in that it provides a guaranteed minimum benefit for every employee but has predictable and manageable cost and is not susceptible to abuse.

 

The second bill, House Bill 6150, creates a Benefit Buyout program for current employees, giving them an option to forgo future benefits in exchange for an immediate cash payout. Current employees could choose to increase their retirement age, or choose to forgo future automatic increases in their pensions. Actuaries would then calculate the savings to the state and the employee would get an immediate check for one-third the savings.  You can read a more detailed one-page description of the plan here.

 

The idea behind this plan is that research shows that some employees value immediate compensation more than they value deferred compensation.  HB6150 would give them the option to take a portion of that compensation while saving the state an enormous amount of money, making it a tremendous win-win cost-saving opportunity.

 

These bills do not by themselves solve our state's pension challenges -- nor does it make sense to pretend that as a freshman legislator I'll be able to single-handedly close the book on one of the most substantively, politically, and legally challenging issues we face.  However, as a number of groups have convened to address this increasingly urgent problem and many policy proposals seem to be on the table -- including some very sensible and innovative ones -- I think that House Bills 6149 and 6150 represent a genuine and valuable addition to the discussion.

 

I tremendously value all feedback, and I'd love to discuss these pension ideas with anyone who is interested, either one on one or especially if you're able to join us at the Town Hall Meeting on Monday, April 30 at 7pm at the Glenview Police Station.  I anticipate a robust and constructive discussion and I would greatly appreciate if you could join us.

Letter from President Klickna

Colleagues:

 

I wanted to take a moment to update you on the fight to make sure every IEA member gets the pension that he/she has been promised.

 

As IEA President, my focus is always on our members.  On the issue of pensions, that means protecting benefits of members as well as funding of the pension systems. The main discussion should be and must be - as it has always been- the funding of the pension systems.

 

We refuse to allow the conversation about how to fix the systems to be focused solely on benefits. The top issue is funding – it’s how we got into this mess, and only through funding can the pension systems get back on solid financial footing.

 

The Illinois Constitution makes it clear that benefits for state pension system annuitants cannot be diminished or impaired. IEA has always insisted that any pension ideas that we would be willing to consider must be constitutional and fair to members.  That has not changed, nor will it.

 

TRS Trustee Resolution

The TRS trustees recently approved a resolution on pensions that has not been well explained in the news media. ( Read the resolution )

 

The resolution is clearly focused on funding of the systems. It calls upon the state of Illinois to get serious about its debt to the pension systems (the state currently owes more than $43 billion to TRS alone). The state ran up this debt by using “Illinois math” to decide how much to pay the state systems. The TRS resolution is a call to end this practice.

 

Among other things, the resolution:

 

·         Calls on the state to pay the systems the amounts dictated by actuarial science (the amount the state needs to contribute to ensure the systems remain capable of paying benefits to current and future retirees)

o        The problem is that the state for decades has paid, essentially, what it has felt like paying and has given the pension systems an I.O.U. for the remainder. This is what has caused the pension crisis.

 

·         Calls on the state to to fix Tier II, the new set of pension benefits that went into effect for employees hired after January 1, 2011. 

o        The contributionTier II employees make exceeds the value of the benefit; therefore, the employee is paying some of the State's portion.  To fix that, the State needs to pay more. This must be addressed and it will cost the state money to do so.

 

Solutions

 

It is important to understand that, though the TRS Trustees and TRS Executive Director, Dick Ingram, are very focused on the pension problem, they have not made any proposals for addressing the crisis and do not intend to do so. That is not the role of TRS.  It is the responsibility of the unions representing the participants in the pension systems to engage in discussions about proposals that could impact their members.

 

There has been a lot of discussion regarding comments attributed to Mr. Ingram about the COLA. Please note that the trustees’ resolution does not reference COLA. That is NOT part of the resolution adopted by the Trustees. 

 

The reason COLA is being discussed at all is because the cost of it is huge ($50 billion out of TRS's liability of $81 billion), and legislators have mentioned this cost for a long time.

  

Even though the media attention to Ingram’s comment has diverted many people's focus to anger and distrust, your association’s focus has not changed; we are fighting to find funding solutions to the Illinois budget pension problems.

 

We will only consider constitutional proposals. IEA attorneys, as well as those representing the other members of the labor coalition, will guide us. All of these top-quality legal minds understand what is, and isn’t, constitutional.

 

 

What you can do 

 

Current and future annuitants have a huge stake in this issue. You owe it to yourselves to be informed and to make your feelings known.

 

·         Attend Dick Ingram's TRS town hall meetings.  (schedule)

o        Listen to the data, ask questions, raise your views.

 

·         Don't get diverted by the media who want to create distrust from within our own ranks. INSTEAD,

o        Direct the conversation with legislators, etc. back to the real focus - funding of our pensions.

 

·         Check the IEA website for updates and be prepared to act on short notice on any legislation regarding your retirement benefits.

 

I assure you, as your IEA President and as a TRS Trustee, IEA and TRS will never stop fighting for the people we represent. We remain deeply concerned about the future of pensions for all our members and we continue to work daily to ensure our members get the pensions they have paid for.

 

Thank you for your support and your continued work in contacting legislators. 

 

 

 

At Home Lobbying

Region,

I will be sending you two documents that should be  used for back home lobbying.  The first is a powerpoint of the current proposals in the state legislature and where the IEA stands.  The second is a webinar in which our lobbyists explain the issues.  You can use these to get informed. 

I have been invited to an educator's forum held by Daniel Biss for next Wednesday.  I am going to find out if I can bring additional people and will let you know right away. 

I also want to bring to your attention a new web site for connecting with other IEA members for the purpose of lobbying.  It was a new business item at the RA, but denied for insurance and cost.  But the site was created and is active.

Illinois Teachers and Neighbors United database (Read below before entering)

The Illinois Teachers and Neighbors United database offers users the opportunity to opt-in for the purpose of finding pro-public education individuals with whom you can choose to coordinate local, political activity. This link does not imply IEA endorsement but is a notification of some of its members’ activities. NOTE: IEA does not own or operate this database and accepts no responsibility for what happens to personal information that users input into the database, including whether that information may be shared or sold.

Please read the databases’ Policies and Terms disclaimer carefully before opting in.

Also, be aware that Scott Walker has been invited to speak to our legislators in Springfield.  Make your voice heard to deny this or go to Springfield to protest.