I often read letters-to-the-editor or get an email from a teacher that says something like: “I worked 30 years as a teacher and …” But when I check the official state records that teacher has worked 28 or 29 not the 30 mentioned.
Why is that? Well teachers get pensions paid on “Service Credit” not actually on the years worked in Illinois. “Service Credit” is a concept that boosts pensionable years worked in IL with giveaways that have been added over the years to increase teachers’ pensions for no reason other than they are teachers.
I know of no private sector system where the workers receive pensions based upon more years than they have actually worked.
Service Credit scam 1: pensions paid on 75,000 years of sick leave never worked.
The major way to get Service Credit is via sick days. Every teachers’ contract contains an allowance for “sick days” averaging about 12 days per year. If the teacher doesn’t take the days off as sick leave (most of the suburban schools have 2-3 personal days on top of sick days so they can use those for real sick days) they can accrue them for up to 2 years Service Credit when they retire. In the teacher world a year is 34 weeks or 170 days. Therefore a 54 year-old teacher who only worked 33 years can use 2 years sick leave to get the full 35-year pension. By the way Our famous 54 year old, $189,000/yr Music teacher did exactly that. Worked 33 years, took 2 years sick-leave credit and presto he retired on 75% or $130,000/yr.
Of course almost no one is sick twelve days a year, year after year after year, for decades. But in IL this is a public employee benefit called, euphemistically, “sick leave” to make it sound better. It is not “sick leave”; it is a political gift.
Some contracts give teachers extra sick leave so they can retire early. In District 214, a day’s sick leave can be purchased for $20 at retirement meaning a teacher with a $100,000 pension can use all of her sick days then, just prior to retirement, purchase 340 days or two years Service Credit for $6,800 thereby increasing her pension by $4,400 per year, plus 3% COLA, for the rest of her life. That $4,400 extra pension payment that cost the teacher $6,800 has a cash annuity value of about $110,000. The $103,600 difference is paid for by you know whom: the taxpayer.
So should that $103,600 additional pension cost be guaranteed by the constitution?
Service Credit scam 2: “Optional Service Purchase”: Pay $63,000 get $1.2 million.
Teachers may also “purchase” Service Credit, at an extreme discount, for teaching previously in other states.
Retirees have paid nominal amounts for 82,700 out-of-state work that by definition is not Illinois work. If it’s not Illinois work why do Illinois taxpayers have to pay pensions for it?
On average teachers paid $3,100 for each “Optional Service” year and received $2,400/yr pension increase for it. That $2,400 plus the 3% COLA for 25 years has a cash annuity value of $60,000 so teachers get a 20 to 1 return for every year of “Optional Service” purchased. The difference between what they pay and what they ultimately receive is paid for by the taxpayers of IL.
In one case a retiring superintendent paid $63,000 to “Purchase” 10 years service credit, which increased her pension by over $50,000. Since she was only 55 years old when she retired that extra $50,000/yr had a cash annuity value of about $1.2 million. In other words taxpayers handed a school employee over $1 million pension bonus for absolutely no reason. This superintendent also received a $287,000 ERO payment from the school district to the TRS.
John Conyers paid even less: $27,909 for 10 years out-of-state service. Add in 2 years for sick leave and here’s a man who only worked 18 years in IL but has a $230,000 pension thanks to the generous taxpayers of Illinois.
Were these million dollar giveaways guaranteed by the state constitution? If you ask the teachers the answer is “absolutely.” If you ask me it is a total corruption of the purpose of pensions. Legal but totally corrupt.
Why do Illinois taxpayers have to pay pensions for work not done at all or done in another state?
As you can see in every single case the “Service Credit Years” used to calculate these very large pensions are considerably more than the years actually worked in Illinois.
Also note how young these people are: all of them 54 to 57 years of age.
The purpose of government is not government employees.
The purpose of government is to provide for the common good at a level and for a cost agreed to by the voters and taxpayers. What possible common good (as opposed to personal good) is provided by a government that gives away billions of dollars to young retiring public employees?
And the moral question is similar: why are we giving billions away making public employees multi-millionaires while at the same time cutting public services to the truly needy? I thought progressive policies were designed to help poor people not millionaires?
So the teacher-political industrial complex has come down to these three corrupt concepts:
- The complex is allowed to create a public service that is bereft of competition, cost control or measurement.
- The complex is given license, by those they elect, to make laws and regulations (pension laws for example) that benefit themselves at the expense of the public.
- The complex is provided benefit assurance by enforcement power over the taxpayers – if you don’t pay your taxes we will seize your property to pay for those superior benefits.
At some point in time the 95% of IL citizens not enjoying the expensive benefits of public pension system must have control over the costs associated with the 5% who do have those benefits.
We cannot continue to elect politicians who ignore the will of the 95%.
Bill Zettler is a free-lance writer and consultant specializing in public sector compensation.