State University Top 25 Pensions Average $152,000 for 30 years work

By Bill Zettler

Top 100 average $114,000 for only 28 years work.

One of the state pension systems we don’t talk about much is SURS (State University Retirement System). SURS is the system with the dubious distinction of having the Top 13 pensions in the state’s history.

Under SURS employees pay 8% of their salary and can retire with 80% pensions with 36 years “Service Credit.”

Now “Service Credit” does not mean years actually worked because it includes work “credits” such as accumulated sick leave that can be used in lieu of actually working. In fact of the 2,400 academic retirees in the last two years exactly one has worked the full 36 years. All the others have worked less than the maximum required years and of the Top 100 pensions (averaging $114,000/yr) the average years worked is 28.

Teacher years are like dog years – 28 years is really 21 years.

If you are a college academic and teach 36 weeks a year (two 18-week semesters) then your 28 nine-month work years are the equivalent of 21 twelve-month work years the rest of us work. So looking at the Top 100 that way we have $114,000 pensions for what the rest of us would call an average of 21 years of work.

Twenty-one years is exactly ½ of the 42 years most of us work before we can draw on Social Security.

SURS Top 100 retirees pay less into the pension system for their $114,000 than we do into Social Security for $21,000.

If you work from age 21 to age 62, and make the same salary as the Top 100, you can retire on about $21,000/yr in Social Security. However the key point is you would have paid more into Social Security for your $21,000 over your 41 work years than the $114,000 SURS retiree would have paid into his pension plan over his 28 work years. In other words the SURS public employee gets 5 times as much retirement pay for less money invested and he gets it at an earlier age. What’s not to like if you’re a public employee?

SURS employees get free health care too.

If you are a state or university employee you get free health care while you work and after you retire if you have worked at least 20 years. The total health care cost for the state is in excess of $2 million a year. If we asked state employees to pick up ½ of their very generous health care cost the state would save over $1 billion.

So here we are with another case where state employees retire in their 50’s with 6-figure pensions and free health care after paying into the retirement system what is a pittance compared to the costs. Taxpayers, of course, are stuck with picking up the difference in costs.

What the next governor should do.

The next governor needs to be a teacher. He needs to explain to the citizens of Illinois where all the tax dollars go. And when he does people will see that public employees total compensation including salaries, pensions, health care, holidays, sick leave, vacation etc. is far beyond what their peers in the private sector earn.

Then he needs to compare public compensation to other groups such as Wisconsin K-12 teachers whose compensation including pension costs is 45% less than Illinois. See WI comparison to IL here. Furthermore he needs to have a public sector commission look at compensation costs job by job from custodian to administrator with the goal of bringing the public compensation back down to parity with the private sector.

For example how many hours a week does a college faculty member actually teach? Since they get 3 months a year off while still pulling down a full salary is it too much to ask that they put in more time during the limited 9-month work year? How about we ask them to teach one more hour per day in exchange for the 9-month work year?

The governor should lead the way by decreasing the governor’s salary significantly from $180,000 to $120,000 and should forego all pension accruals during his term in office.

His $120,000 salary will allow him to argue for a maximum $10,000/mo salary limitation for all public employees until the budget is balanced. This would save $1.5 billion a year including pension costs.

After all who has a more important job the governor or the 18,000 state employees, including K-Univ., currently making more than $10,000/mo?

And finally, how many taxpayers think a $10,000/mo public salary is a hardship?

Bill Zettler is a free-lance writer and consultant specializing in public sector compensation. He can be contacted at this email address. Click here to read more by Mr. Zettler.