Teacher Unions Say Pensions Are Too Low

Unions Think Top 25 TRS Pensions Should Be $82 Million Higher.

By Bill Zettler

One of the top legislative priorities of the Illinois Education Association is a plan they call “80, 30 and out.” It would allow teachers to retire after 30 years with a pension equal to 80% of their salary. This is in contrast to the current plan of 35 years at 75% of salary.

If implemented the “80, 30 and out” plan would mean a teacher (or administrator) could retire at age 51 with full pension equal to 80% of the average of his last four years salaries.

Here’s the quote from the ift-aft website:

  • An increase in the ceiling from 75% to 80% of earnings for all retirement systems
  • A “30 years and out” with no penalty retirement option for all systems

Even the Teachers Retirement System, a state agency under the Department of Insurance, supports retirement at age 55 with 30 years. This should come as no surprise since 6 of the 13 members of the Board of Trustees is required to be a teacher or former teacher. Democratic governors appointed the other seven members of the board after receiving millions of dollars in political contributions from the teacher unions. Blagojevich alone received over $1.7 million from the teachers including checks for $300,000, $300,000, $250,000, $225,000 and $200,000.

Unions are out of touch but not out of money.

The teacher unions in Illinois have more money available to spend than any other Illinois political group. They have contributed over $45 million to Illinois politicians since electronic records began in the 1990’s. To see which politicians got how much see “Golden Handcuffs…” Their 160,000 members keep sending in their dues every payday (they are deducted automatically and submitted to the local union by the school districts.) Since we know teachers’ salaries go up every year by 7%, the union dues keep stacking up in the union’s bank account. The IEA itself had revenue of more than $47 million in 2009.

The teacher unions are inherently political organizations because only by political means can they increase transfers of wealth from the private sector taxpayers to their members. Increases in teacher salaries, benefits and pensions come about by the political assignment of an ever-increasing percentage of available tax revenues to the benefit of the teachers at the expense of less powerful political groups such as the poor and the elderly. How can the poor and the elderly compete with the teacher union’s $45 million in political contributions?

That is how teachers at Avoca District 37 can sign a contract for 35% salary increases (minimum) over the next five years with political approval while politicians, at the same time, cut $90 million from the Department of Human Services, money originally earmarked for the handicapped, mentally ill and poor seniors.

This is how $45 million in political contributions begets $100,000 salaries for 9-month part-time public employees. Too bad the poor don’t contribute more maybe then they would get increases too.

Increasing pensions from 75% after 35 years to 80% after 30 years increase pension payouts by 30%.

At the end of this article there is a table showing how the pensions would change if the 80/30 plan had been in effect for just the Top 25 TRS pensions. As you can see the average pension payout would have increased by more than $82 million just for these 25 people. Note also the union plan does not include any increase in the teacher’s contribution rate meaning the every extra dollar would be on the back of the taxpayer.

Also note number 7, Reginald Weaver actually works for the National Education Association but we lucky taxpayers get to pay his $10 million pension.

Also the average years actually worked in Illinois averages 34 years for this group as compared to most private sector employees working at least 45 years. In fact none of these pension millionaires worked more than 42 years. How can a partial career make you a multimillionaire?

What the next governor should do:

First, instead of increasing pensions the governor should revert the pensions back to where they were when they were “guaranteed” by the state constitution in 1980. That would be 60% at age 60 growing to a maximum of 70% at age 66. See “Back to the Future…”

Second, he should also insist on a sharing of risk between employees and employer. If the pension funds do not earn a rate of return assumed by the trustees then the cost should be split 50/50. Currently the entire investment risk lies with the taxpayers.

Third, the maximum pension any public employee could earn cannot exceed the average family income for Illinois currently about $75,000/yr.

Fourth, replace as many pension trustees as possible with accountants, actuaries and businessmen so we can have an honest, taxpayer friendly appraisal of investments and benefits.

Fifth, use Wisconsin’s K-12 system as a model for pay and benefits reform in Illinois. See WI – IL comparison here.

Illinois taxpayers are ready for comprehensive pension reform. Let’s hope the next governor is ready too.

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.