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How Illinois cut teacher and public worker pensions without a fight

[This article was originally published on May 23 at Second City Teachers.]

The typical deal that screws working people and benefits the rich in Springfield gets done behind closed doors.

Former Illinois Speaker of the House of Representatives Mike Madigan who was indicted on corruption charges and is awaiting trial got the House to pass a bill known as Tier 2 Pension in which he sold out all future teachers and public employees hired after 2011.

It was passed to solve the state’s pension funding problem. Except, it didn't. Not by a long shot.

Former Speaker Mike Madigan helped to destroy teachers’ pensions.Mike Madigan was known as the ‘union guy’ who stopped Gov. Bruce Rauner’s attacks on unions when he wanted to turn Illinois into a Right to Work state with reduced pay and benefits for its public workers. The Chicago Teachers Union gave him tens of thousands of dollars so that he would sponsor pro-teacher legislation.

But they made one deal with the devil that has divided the CTU and its younger members who got sold out. In an article published ironically enough on May 1, 2023 - otherwise known as Workers Day - on Yahoo News entitled “New Chicago Mayor Brandon Johnson Inherits America’s Worst Teacher Pension Mess,” it was noted that Chicago’s pension contributions have risen substantially over time despite not contributing what its actuaries recommended.

“The result is that the Chicago Teachers’ Pension Fund is in worse financial health than it was a decade ago, despite the ramp-up in contributions and very strong decade of investment returns.”

The Tier 2 law passed in 2010 raised the age at which new Chicago teachers and all state employees could retire from 55 or 60 to 67, and drastically reduced the cost-of-living adjustments (COLA) for retirees.

The Tier 2 hired on or after 2011 would now need to work at least 10 years before qualifying for any retirement benefits. But in today’s onerous teaching climate, how many Chicago Public School employees make it to 10 years? According to the article, pension experts estimate that 30 percent of new employees will leave the district in the first year and less than 1 in 3 will make it to 10 years.

When I read the following, my eyes started spinning:

“In other words, the majority of Chicago employees in Tier 2 won’t qualify for any pension from the system. Of course, some long-term employees will still qualify. But on average, the city estimates it’s not spending any money at all on Tier 2 member benefits.”

Holy cow, as Harry Carry the Cubs announcer would say!

So that state law Madigan and the Democrats rammed down the throats of legislators not only screwed our young teachers out of receiving any pension, but it didn’t do anything to solve the pension crisis!

Who’s your daddy?

The other incredible piece to this disgusting puzzle is the silence of the unions over the past dozen years in the face of this unbelievable crime on its members.

This was a classic play by the ruling class to destroy union solidarity. Force your younger members into a horrible deal in which they essentially get no pension, but the older members get a great deal, provided they can last in today’s crazy conditions. I’ve been a Chicago teacher delegate for over 15 years, and in the beginning we would hear reports from our pension trustees about how the Pension Fund was performing. But in the last six or seven years there have essentially been no reports, aside from a political stunt from CORE to get the House of Delegates to vote to endorse two teacher trustees candidates who won their last elections - President Jefferey Blackwell and Vice President Jacqueline Price-Ward.

The CTU finally started the ball rolling to stop this injustice on its own members. They created the Tier 2 Committee that I joined. And they sponsored a Lobby Day in Springfield recently. And there are plans to sue the state because you can’t just stop providing any retirement benefits. There’s a federal law against that. Another incredible fact from the article - Tier 2 members contribute 9 percent of their salary, but their benefits are just 8.99 percent, so they’re getting negative 0.1 percent in retirement benefits. Chicago teachers are part of the 40 percent of teachers in the country who don’t get Social Security. Someone could teach for nine years in Chicago and have no retirement at all outside their personal savings.

The federal law states that employees qualify for retirement benefits after five years, but there is no protection for public-sector workers.

This reminded me of the massive school closings in 2013. Not only did it help destroy the communities that were anchored in the schools on the South and West Sides, but it did little to save money for the City. There were over 900 comments on the alarming Yahoo News article, and a few in the beginning were intelligent enough to talk about the problem. But it soon turned into teacher and union bashing, reminiscent of the period of time in 2010 when the Tier 2 law was passed as the billionaire education reformers did everything to demonize public school teachers and their unions and the schools they taught in.

“How about freeze their pensions and switch to 401(k) or 403(b) plan, with a 4% match, like those in the private sector. Fund your retirement like the rest of us. BTW, 32% of workers in the private sector don't have access to a 401(k) or pension from their employer,” wrote Samurai.

The late great founder of Substance News George Schmidt made it a policy to not allow people to comment if they didn’t use their real names. These comments did not have real names attached, so I suspect anti-working people and pro-business groups like the Civic Federation and Illinois Policy Institute trolled the comments section because they all followed the teacher and pension bashing line to a T after about the 40th comment. Remember, there were over 900 comments.

So how did our legislators get everyone to swallow this horrible life-threatening pill for the public?

The legislative director of the Illinois Federation of Teachers (IFT) said the Tier 2 bill was rushed through the General Assembly in about nine hours, with little or no notice to groups who would be affected. This reminded me of how Mayor RIchard Daley got the disastrous parking meter deal done in the City Council, a quick and dirty deal the councilmen in his pocket voted yes to that essentially gave a private bank consortium 9 or 10 billions of dollars for a measly one billion. You gotta work fast to fool the people! Funny enough, it was the Republicans who complained, not the Democrats. One said he was hearing from people who felt that their money was being stolen that they will never see in retirement. Another one warned that this would violate the “Safe Harbor” provision in which federal law states that Illinois teachers do not have to participate in Social Security as long as the benefits paid out are at least equal to what Social Security pays. That would put school districts on the financial hook to enroll in the Social Security Fund and pay back whatever retirement money they stole from their teachers. That could mean school districts, not just Chicago, would have to make as much as 10 years worth of back payments into Social Security.

Which leads to another glaring problem. Employers such as state universities and downstate firefighters told the lawmakers this is what would lead to staffing shortages, which we see today, because it will be difficult to recruit new employees with no decent pension to offer.

One of the biggest gains of the last Chicago Teachers Strike in 1987 before the CTU historic strike in 2012 was getting CPS to pay 7 percent into the pension.

Some people are now saying that young teachers do not know what a pension is and that is not why they entered the profession. But it is damn awkward to phrase it mildly for two sets of employees to be working side-by-side, doing the same job, and earning vastly different pension benefits, with one group of employees paying a premium to subsidize pensions for the other group.

“When are we going to start being honest with the people that you folks work for and tell them they’re getting screwed by Tier 2 and pretty soon there are going to be chickens all over the place coming home to roost,” said Republican Rep. Steven Reick during the Tier 2 hearing in Springfield, according to the State Journal Register in the 2019 article “Illinois Tier 2 pensions continue to anger teachers, other public employees.”

This reminds me of Donald Trump stealing the working class thunder and Hillary Clinton calling the working poor “deplorables.” According to Forbes, the Tier 2 Pension hearing had no actuarial review. “And why didn’t the law have an actuarial review? Because it was created behind closed doors." They noted too that it was only the Republicans questioning the bill that they had no time to talk to their constituents about because it was a “take it or leave it” bill to supposedly save the pension system.

It didn’t. It made it worse.

“This bill was dumped out today as an Amendment,” said Republican Rep. David Reis. “We barely had time to look at it in committee. Teachers are in school all day. What a perfect way to do this. I think it’s shameful.”

The unions complained that they were cut out of the negotiations, with the IEA President saying at the time they were willing to discuss making sacrifices but worried about future pension holidays.

Reis asked Speaker Madigan at the time, according to Forbes, how much money would the state save with Tier 2. Madigan told him, with a straight face I assume, “We don’t have actuarial numbers relative to this Amendment. We would say that we would expect that the savings would be over a hundred billion dollars.”

Quite the opposite, as we reported above, the pension debt has only grown since then, and if you’re keeping score, Madigan is about to go to prison. Democrat Senate President John Cullerton, whose cousin went to prison but now lobbies this very same legislature, even threatened the reps to vote in favor of Tier 2 or else there would be a bond downgrade “if we don’t show that we’re trying to address our structural deficit.”

Just like the parking meter scandal, screw over the people in favor of the rich and pray the people and their unions say nothing if you do it fast enough in the middle of the night, with a few threats thrown in. No analysis, wow! Just, wow!

The CTU now got religion and wants to fix this. They first sent out emails at the beginning of the school year with the headline: “You deserve your retirement. Let’s fix Tier Two and anti-teacher social security provisions.”

They wrote that they are determined “to beat back the Tier Two provisions that divide CTU members and undermine our retirement funds.” They encouraged people like myself to join the Pension & Insurance Committee Tier Two Subcommittee. They said the law was passed during the “drumbeat of anti-teacher and anti-pension rhetoric that had been allowed to build up both nationally and in Illinois."

The unions, they noted, did little to challenge these attacks. CORE was elected in 2010 just as the law was put into place (did they work quickly on this so that CORE would not be organized enough to fight it?). They further wrote that the goal of the legislation was to drive a wedge between those already paying into the pension and those who would pay later, encouraging members to drop out, which they are doing. The Chicago Teachers Pension Fund said that is a big worry with the new teachers leaving the system and taking their pension contributions with them, and rightfully so!

“The district is saddled with debt because they raided our pensions and they still owe that money they snatched away from their own retiring employees. After politicians and CPS cheated the CTPF for 15 years, the funding level had dipped dangerously low - providing politicians with an excuse to cut benefits for future pensioners by establishing the Tier Two plan."

Even the big business anti-pension class realized they got caught with their hands in the cookie jar. The Illinois Policy Institute is pushing hard for public workers and teachers to go to a defined contribution pension plan which is the 401(k), not a pension at all, but pretending to be one. All risk is on the teacher to make the payments and pray there is no downturn in the markets when they retire. Illinois Policy notes that pensions take up 26 percent of the Illinois budget, which is more than double the national average.

The Civic Federation is “concerned” about recent bills in the legislature to rectify the Tier 2 problem, including two that would increase benefits for Chicago firefighters hired after 2010, which passed the Senate unanimously. They’re concerned because of no analysis done (hmm, that’s funny, neither was there an analysis done when Tier Two was first passed in 2010!) and about how much they would cost “responsible governments” and taxpayers.

The Civic Federation does not give a rat’s ass about the common Joe taxpayer, they are concerned first and foremost with corporate profits, which come at the expense of Joe and his pension if he's lucky enough and his standard of living. Funny also that the Civic Federation is calling for an actuarial analysis when the recent CTPF actuary said the state is not contributing enough into the pension funds which will hit like a neutron bomb in the not too distant future!

But the Civic Federation denies reality - they say the sky's not blue but actually purple - because “as the number of Tier 1 employees hired before 2011 continue to age and retire and as Tier 2 employees hired since 2011 continue to represent a larger share of the workforce, governments’ pension costs are expected to decline over time.”

The latest actuary report as we stated ordered by the CTPF claimed the exact opposite - the costs have increased! I guess if you repeat the lies of the Civic Federation enough, people will …

The CIvic Federation, which liberal media outlets like WBEZ and reporter Sarah Karp claim are neutral and “bi-partisan” (how about anti-people, Sarah?) keeps close tabs on our pensions. Why? Because they do not want corporations to pay taxes, only loser taxpayer deplorables like us who they suddenly care about when it comes to having to finance working people’s retirement. Say yes to millions for CEOs and Crest commercials everywhere! No, to working people living above the poverty line if it conflicts with the corporate bottom line!

The Civic Federation claims that of the City of Chicago’s four pension funds, about half are in the Tier 1 and the other half in the Tier 2 or 3 (which was added to some Chicago funds in 2017, not the teachers).

But dang it, they admit, there is an IRS law known as safe harbor where if Tier 2 benefits do not meet the minimum benefit standard, then yes, damn it again, either the benefits might have to be increased or employees might have to pay 6.2 percent of their salary to Social Security, matched by an equal employer contribution.

Gulp!

They wrote that there are several pending proposals in Springfield to enhance Tier 2 benefits, but without that suddenly crucial analysis needed. Senate Bill 1629 would change the calculation of the final average salary from the highest eight consecutive years within the last 10 years of service to the highest four consecutive years of service. SB1630 would bring back the Cost of Living Adjustment so cruelly ripped from our younger teachers hired after 2011. They noted that union reps are arguing that there should not be two tiers of benefits at all. “However, it is clear that such an outcome would jeopardize the hard-won financial stability attained over the last several years by Illinois and Chicago and result in the “reversal of recent bond rating upgrades for both governments.” A complete lie!

In other words, we rich people will no longer invest in the city if you do not let us destroy the state and city pension system. “Benefit enhancements are likely necessary to meet Safe Harbor requirements, but the solution should be thoroughly vetted, actuarially sound and the most cost effective of all possible options.”

Amen to that!



Comments:

June 7, 2023 at 3:38 PM

By: john kugler

lie down with dogs, you will get up with fleas

this write up is self interest union propaganda ...

ctu leadership allowed the pensions to become two tiered without any labor actions ...

sdg is an ally $$$ of madigan so she could have reversed this if she wanted too ... and has self-proclaimed to be the puppet master of Illinois politics ... so begs the question is there power or just hot air ...

so basically it is the story of someone throwing a non-swimmer into the deep end and then pulls you out from drowning, proclaiming they saved you ... in this case pretending to save you ...

... in a time when the economy is shrinking and a forecast of a labor force that will flip to more retirees than workers in the next generation ... there needs to be better ideas than give give, give me more ...

well we do have more, more fleas ... HiHo

dr kugler

https://subx.news

June 14, 2023 at 12:20 AM

By: David R. Stone

Flea-infested pension

Jim Vail's article cogently lays out the problems with the two-tier pension system for Chicago Public School employees. Dr. Kugler accurately places much of the blame upon prior leaders of the Chicago Teachers Union, who lay down with the fleabag former Illinois House Speaker Mike Madigan to allow this pension theft to occur. Now, years later, the same caucus retains leadership of the CTU. Yet that doesn't mean (as Kugler charges) that Vail's article is union propaganda.

It is possible (and I hope it is true) that CTU leadership is serious about finally fighting Tier 2 pensions. At least CTU now admits it is a necessary fight. Let's focus on how to win the fight, rather than spend time laying the blame for battles that were lost (or not even fought) in the past.

-David R. Stone,

retired teacher with a tier 1 pension but still willing to fight for my tier 2 colleagues

June 17, 2023 at 3:25 AM

By: John Kugler

pandering to the middle

Since the mayoral election is over it is time to slide a few steps right to the middle to get ready for the contract negotiations coming up. Don't want to be too radical towards the dude that ctu paid to get into office ... might look bad ... Narratives are created not given ... HiHo

dr kugler

subx.news

June 18, 2023 at 9:38 AM

By: David R. Stone

Tactical steps to the left

Dr. Kugler, you have been an astute observer of politics and of the Chicago Teachers Union for a long time, and your cynicism is usually justified. Yet it will take specific details, not just snarky comments, to disprove anything in Jim Vails’s article.

You are quite correct that the current leadership of the CTU will probably fail to live up to its radical rhetoric when it comes time to negotiate with Mayor Brandon Johnson for a new contract. Yet that will be a separate battle from efforts needed in Springfield to repeal the two-tier pension. In fact, the mayor, the union leadership and the rank and file all have a reason to fight together for fair pensions supported by Illinois state funding. There will be plenty of times for us to have fights within the union movement, but for now—

Solidarity!

-David R. Stone

June 26, 2023 at 7:06 AM

By: J.S. Whitfield

Politicians Should Stay Out of Classroom Decision making

https://www.edweek.org/teaching-learning/most-teachers-want-politicians-to-stay-out-of-their-classroom-decisionmaking/2023/06?utm_source=nl&utm_medium=eml&utm_campaign=eu&M=7124124&UUID=ab0fe616c7c23b6bee6e805852dbdca4&T=9511470 (copy & paste this link for illustrations)

Most Teachers Want Politicians to Stay Out of Their Classroom Decision making

By Sarah Schwartz — June 23, 2023

Teachers say they feel caught in the midst of a culture war, and they want politicians to stay out of their classroom decisionmaking.

When politicians do talk about schools, teachers want them to focus on education issues more broadly—and they want their elected representatives to listen more to educators and families.

These findings on teachers’ beliefs about the intersection of politics and schools come from a new survey of about 1,200 traditional public and charter school teachers, released by the National Alliance for Public Charter Schools and administered by the Harris Poll, a market research firm.

The Real Reason Why Students Don’t Ask Teachers for Help (Opinion)

The results illuminate the difficult political line that a lot of educators are walking right now.

Since 2021, 18 states have passed laws or taken other measures to restrict how teachers can discuss race, gender, and issues deemed “controversial” in the classroom. All of these laws have been introduced by Republicans. With one political party attacking educators’ classroom practice, teachers have said it can be challenging to defend their profession and advocate for public education without facing claims of partisanship.

“Everything is political in education, especially public education,” said Irene Sanchez, a Latino studies teacher in the Azusa Unified school district in California who was not involved in the study.

Her Latino studies class is in part an attempt to teach students history that they might not get in mainstream social studies courses. “You’re having pushback from people who don’t get it, like, ‘Why can’t things just stay the same?’ But they don’t see the fact that people made these choices to deliberately leave out groups in our history,” Sanchez said.

Findings from a National Alliance for Public Charter Schools and Harris Poll survey on teachers' perspectives on politics.

Other surveys have shown that these bans aren’t popular among educators—regardless of political affiliation.

Data from a 2022 Ed Week Research Center survey shows that educators across the political spectrum opposed these laws. When asked whether the government should restrict how teachers talk about certain issues—including slavery, religion, politics, and gender and sexual orientation—a majority of teachers said no on every topic. Opposition to restrictions varied by topic, ranging from 68 to 77 percent of teachers.

This shared perspective makes sense to Sanchez. Restrictions on specific instructional choices can have ripple effects that would affect the profession as a whole, she said.

“Once people start banning these books like they’ve been doing—it’s wrong, for one,” said Sanchez. “But two, it’s going to lead to us losing more power over what we can teach, and the power we have as a collective.”

‘Valuing the service’ that teachers provide

The National Alliance for Public Charter Schools survey also asked teachers about their biggest challenges right now.

The top response was student behavior and discipline issues, with 74 percent of teachers citing that as their most pressing problem. After that, the next most common challenge was pay, with 65 percent of teachers choosing this option.

Concerns about student behavior have also surfaced in other surveys conducted after the start of the pandemic. In an Ed Week Research Center survey from April, 70 percent of educators said that students were misbehaving more now compared to 2019.

The findings on pay in this survey were nuanced. Only 7 percent of respondents said they were motivated to teach based on the salary. But 84 percent said they believe higher pay and better benefits would help teachers stay in the profession.

Teachers get into the profession because that’s where their hearts lie, said Nathaniel Dunn III, a 3rd grade teacher at i3 Academy in Birmingham, Ala. Dunn was also named a 2023 Changemaker by the National Alliance for Public Charter Schools.

But even if teachers aren’t in it for the money, they need a baseline level of financial stability, he said. “We’re thinking about things that we shouldn’t have to be thinking about: Can we save money for next week?” Dunn said.

Sanchez linked these issues of compensation to teacher retention.

“If people want to ensure that teaching remains this profession where you get those most highly qualified people, I think politicians do need to pay attention to what teachers are saying—that they need more resources, they need more compensation. Those are the things that I think teachers want to communicate: That politicians should be valuing the service that teachers are providing to our society.”

Sarah Schwartz

Staff Writer, Education Week

Sarah Schwartz is a reporter for Education Week who covers curriculum and instruction.

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July 2, 2023 at 12:14 PM

By: john kugler

pensions vs. sexual predators and groomers

laughable to talk about tiered pensions when it was this leadership that was in power that let it happen, did nothing at the time and now says it will fix it .. there is no discussion on the matter.

On January 1, 2011, the Illinois legislature established two sets of pension eligibility requirements. Members who joined CTPF or a qualified reciprocal system prior to January 1, 2011, are Tier 1. Members who joined CTPF on or after January 1, 2011, are Tier 2.

... and anyone that tries to paint it as an organizing drive to better the conditions of the working man is a fake ...and part of faux narrative building including you dr stone ...

... and issues the ctu puts forth to "rally" the troops are distractions ...

... when an organizations promote sexual predators and groomers there is not too much to talk about pensions ... simply put they are criminals who endanger woman and children ... and the institution itself ...

... what is the position of ctu on skalinder and have they done an investigation into why Jackson Potter allowed him to continue to be a NBCT after he knew about the allegations of his activities at Kelly and then later about the sex club he was running in his basement ... why did it take the kelly delgate whose daughter was the victim of the predator to discover him continuing to be a paid mentor inside of the ctu HQ with other teachers, to get him removed from ctu duties almost a year after ctu leadership knew about the issue... maybe it is because jesse and Julie ran the same rape cover up scam the ISO ...

... and you you talk about fighting for pension legislation that this leadership allowed to happened without a fight ... silly distractions from the very people who are the oppressors ...

ask yourselves how many young black men have died since brandon has been in office ? if my people were being murdered everyday on the streets i would have put all resources into the issue yet you have a hillbilly president and her whitney young privileged vp talking racism on twitter ... HiHo

PS dr stone you should read these few books they my help you see what you have been tricked into thinking and believing ... especially waiting for the dangling fruit of a pension ...

Pedagogy of the Oppressed. Paulo Friereo; Myra Bergman Ramos [Translator] (1970) New York: Herder and Herder.

The Revolt of the Masses. José Ortega y Gasset (1932) Authorized Translation from the Spanish. New York: W.W. Norton.

The Shock Doctrine: the Rise of Disaster Capitalism. Naomi Klein (2007). Alfred A. Knopf Canada.

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