Four State Retirees Received Cost-Of-Living-Adjustments of More Than $10,000 In 2011

Quinn Cuts funding for handicapped but hands out $10,000 pension increases

If your state pension exceeds $333,333 per year do you really need another $10,000 to make it thru the economic downturn at the expense of the 99.9% of Illinois citizens who do not have such pensions?

Apparently in Illinois it doesn’t matter how much you are getting from the taxpayers, there is always more where that came from. Total COLA’s (cost-of-living-adjustments) for the 205,000 state retirees will total more than $200 million this year compared to .00, zero, none, nada for the 270,000 Illinois Social Security recipients COLA’s.

In fact you could argue that the median full time wage employee in Illinois, making about $35,000 per year, received a negative COLA of $700/yr because his state income tax went up by 2%. And how much more state tax did the four $10,000 amigos pay? None – state pensions are not taxed.

So Joe Sixpack gets his taxes raised by $700 so that multi-millionaire state retiree Tapas Das Gupta can get a $12,053 tax-free raise in 2011. By the way, Mr. Das Gupta has received more than $2.5 million in pension payments so far.


In case you are wondering more than 400 state retirees received COLA increases of more than $5,000 in 2011.

Here’s how to save $2.26 billion for the pension system next year.

There are many ways to save money if there is enough political will. Here are four quick and easy ones:

1. If we tax pensions we could add $350 million in revenue.
2. Eliminate the 3% COLA and save $210 million.
3. Freeze salaries and save $850 million.
4. Increase employee contributions by 5% and save another $850 million.

But even if we saved $2.26 billion and used it all for pensions State Auditor General William Holland says we taxpayers would still have to pay $4.14 billion for pensions (including pension bond payments) or about 12% of the state budget. In other words we still have a big problem. And it gets worse – in 2015 Holland says the tab will be $7.9 billion.

As it stands right now we employer taxpayers are paying 4 times more than the employees and yet all we see and hear are how we are shortchanging the employees. The following chart should put that false argument to rest:

The large employer payment in 2004 was from the $10 billion pension bond established by Gov. Blagojevich. In total for the years 2000 thru 2012 taxpayers have paid in $43 billion (including bond interest) to the employees meager $17 billion. Why aren’t the employees paying half of everything including the pension bond interest? That’s what private sector employees do. If your 401K loses value does your employer make up the entire difference? No, of course not – nor would you expect him to.

Why are public employees special?

Instead of a hiring freeze Quinn hires 19,000 new state workers and puts them in the old expensive pension plan.

Apparently Quinn doesn’t see any budget problems because between April 14, 2010 when he signed the new Pension Reform Law and Dec 31, 2010 the state hired 19,000 new employees, not counting teachers. Every one of the 19,000 is automatically grandfathered into the old expensive (for taxpayers that is) pension plan. That means another potential 19,000 pension millionaires over the coming decades.

And, no, they are not replacing retired personnel. Only 3,197 state employees retired in 2010.

Can you imagine if IBM was losing billions of dollars every year, going to their stockholders and saying “Yes, we are losing billions every year but things aren’t that bad, we’re going to hire 19,000 new employees, give them the best pension plan in the country and, by the way, continue handing out average 5% salary increases.” The CEO would be fired but unfortunately we cannot fire Illinois CEO until 2014.

We need more businessmen and accountants and far fewer lawyers in Springfield if we are ever going to solve our budget and pension problems. Otherwise 1000’s of moving vans with former Illinois residents’ assets will be heading to Wisconsin, Indiana and Missouri and they won’t be coming back either. Why would they?

Bill Zettler is a free-lance writer and consultant specializing in public sector compensation. He can be contacted at this mail address.


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