Government Dependency

Scissors, Glue, Pencils? Check. Cleaning Spray?

Insane salaries and pensions must be paid to public workers and retirees, so public schools are now requiring students to bring their own toilet paper, among other items. Also, note that on August 10, 2010, Obama signed into law a bill awarding the states $10 billion from taxpayers to "save 300,000 teachers" and other public workers from layoffs.

August 15, 2010

The New York Times - When Emily Cooper headed off to first grade in Moody, Ala., last week, she was prepared with all the stuff on her elementary school’s must-bring list: two double rolls of paper towels, three packages of Clorox wipes, three boxes of baby wipes, two boxes of garbage bags, liquid soap, Kleenex and Ziplocs.

Kristin Cooper had a long school supply list for Emily, 6.

“The first time I saw it, my mouth hit the floor,” Emily’s mother, Kristin Cooper, said of the list, which also included perennials like glue sticks, scissors and crayons.

Schools across the country are beginning the new school year with shrinking budgets and outsize demands for basic supplies. And while many parents are wincing at picking up the bill, retailers are rushing to cash in by expanding the back-to-school category like never before.

Now some back-to-school aisles are almost becoming janitorial-supply destinations as multipacks of paper towels, cleaning spray and hand sanitizer are crammed alongside pens, notepads and backpacks.

OfficeMax is featuring items like Clorox wipes in its school displays and is running two-for-one specials on cleaners like gum remover and disinfectant spray. Office Depot has added paper towels and hand sanitizer to its back-to-school aisles. Staples’ school fliers show reams of copy paper on sale, while Walgreens’ fliers are running back-to-school discounts on Kleenex.

State and local school financing, which make up almost all of public schools’ money, is falling because of budget-balancing efforts and lower property- and sales-tax revenue.

“Some of the things that have been historically provided by schools, we’re not able to provide at this point,” said Barbara A. Chester, president of the National Association of Elementary School Principals.

On the list for pre-kindergartners at McClendon Elementary in Nevada, Tex.: a package of cotton balls, two containers of facial tissue, rolls of paper towels, sheaves of manila and construction paper, and a package of paper sandwich bags.

Pre-kindergartners in the Joshua school district in Texas have to track down Dixie cups and paper plates, while students at New Central Elementary in Havana, Ill., and Mesa Middle School in Castle Rock, Colo., must come to class with a pack of printer paper. Wet Swiffer refills and plastic cutlery are among the requests from St. Joseph School in Seattle. And at Pauoa Elementary School in Honolulu, every student must show up with a four-pack of toilet paper.

For the retailers, back-to-school season is second only to the holidays, and parents’ longer school-supply lists are a bonus — especially at a time when shoppers are reluctant to spend. While the impact is not enormous, retailers are looking for anything to lift sales.

“It’s newfound business that the retailers didn’t have a year or two ago,” said Steve Mahurin, executive vice president of merchandising for Office Depot.

The shift is notable even at stores that sell much more than office supplies.

“When I walk through the back rooms of our stores where the layaway orders are stored, not only are you seeing things you expect to see — computers, apparel,” said Mark Snyder, chief marketing officer of Kmart, “you’re seeing these sort of household supplies that teachers are asking, school systems are asking, kids to now bring.”

For several years, the lists have been getting lengthier, but in many parts of the country, educators and retailers say, the economic downturn has also pushed them into uncharted territory.

“It’s definitely spiked this year,” said Bob Thacker, senior vice president of marketing and advertising at OfficeMax.

Many stores have tailored their offerings to reflect the demands of local schools, collecting the back-to-school supply lists and stocking inventory accordingly.

Mr. Thacker said the change had meant bigger orders this summer of things like cleaning supplies and paper towels.

“It’s just changed the way our merchants buy things for their different areas,” he said.

In some places, though, parents being asked to make up depleted school budgets are under budget pressure, too, which has left schools without a clear solution.

Malcolm Thomas, the superintendent of the Escambia County school district on Florida’s Gulf Coast, has put supplies like plastic bags, Kleenex and soap under an “optional” category because “we know that people in our community are hurting,” he said. He also seeks donations from local businesses.

If those efforts don’t bring in enough supplies, it means either his teachers — who start at a salary of $32,500 — usually pay for the supplies themselves, or the district “would probably have to get into cutting personnel if we had to supply absolutely everything,” he said.

In Noblesville, Ind., Kristi Smith, 41, a teacher’s aide, said she was sympathetic to the cost pressures at her daughters’ elementary school, but she also thought the supply list was a little extreme.

“Sometimes I think it’s too much,” she said. “Is my fourth grader really going to use 50 pencils herself?”

Ms. Cooper, the Alabama mother, spent her summer making the most of the school-supply stores’ new interest in classroom supplies.

“Each week I go to the stores’ Web sites — Staples, OfficeMax, Office Depot,” she said, and posts the deals on a blog for fellow bargain hunters. “All three of these major stores are offering jaw-dropping deals every week,” she said.

And as overwhelming as it might seem to some parents, she would rather buy the goods than expect Emily’s teacher to do so, she said.

“We don’t expect Wal-Mart cashiers to buy the plastic bags for our groceries, or the mailman to pay for the gas to deliver our mail,” Ms. Cooper said.

Pension Argument Pits 'Haves' and 'Have Nots'

Some want pension system abolished; others say it's the way to attract top-tier teachers

April 27, 2010

Daily Herald - Madge and Jim Pierce spent years scrimping and pumping nearly 40 percent of their income into a 401(k), only to see their funds take a big hit that nearly derailed their 2008 retirement.

"If you don't get some kind of pension, you're really on your own," said Jim Pierce of Grayslake.

But Shirley Forpe didn't have to worry so much about the latest economic downturn. A retired public school art teacher from Palatine, she is guaranteed a pension of $81,600 a year. To make anywhere near the same amount from a 401(k), she figures she would need $2 million in savings.

"I don't think I'm suffering, but I think I earned it," Forpe said.

The difference in financial security between those with public pensions and those without has become glaringly visible during the ongoing recession, so much so that some in the "have not" camp are wondering why their tax dollars are going toward someone else's pension while their own retirements are insecure.

The question has become more insistent as Illinois racks up a staggering $78 billion pension liability - $6,050 for every person in the state - resulting from years of state leaders shirking pension obligations and diverting funds for other needs.

Meanwhile, pensions topped $150,000 last year for 131 retired public school administrators from the suburbs and downstate, though many retired educators get much less.

The debate over pensions for school teachers and administrators is particularly contentious in the suburbs, where salaries that often are among the highest in the state drive pensions up.

Many school board members and superintendents say salaries, and the resulting pensions, are the way they attract top educators to suburban schools.

"When you're asked to meet the kind of academic standards our communities want us to meet, you have to have the people on staff to make that happen," said Bill Dussling, president of the Northwest Suburban High School District 214 school board.

Meanwhile, some are calling for an end to public pensions altogether, advocating replacing them with the same Social Security-plus-401(k) that many private-sector workers must rely upon.

"It comes down to: Why should public employees be considered special?" said Bill Zettler, a Prospect Heights computer programmer.

"Everyone's hurting because of the economy, but now we're all being asked to give money toward state employees' retirements. It's simply not fair."

Yet making such a change is not so simple.

Public pay rises

Guaranteed pensions used to be the trade-off for lower annual salaries in the public sector, like the $7,000 Forpe made during her first year as a teacher.

But in relatively affluent areas like suburban Chicago, government workers now make as much as - if not more than - their private-sector counterparts.

The federal Bureau of Labor Statistics reported in fall 2008 that the average hourly wage for all private-sector workers in the Chicago metropolitan area was $22.36. The average hourly wage for government workers was $30.51.

Statewide, salaries for all teachers average $61,402; administrators average $106,217. Nearly two-thirds of schools in the North, Northwest and West suburbs exceed the state average, an analysis of 2009 district report card data shows, topped by Maine Township High School District 207, paying teachers an average of $94,205 and administrators an average of $139,671; Palatine-Schaumburg High School District 211 at $92,811 and $123,414; and Fenton High School District 100 at $92,373 and $131,638.

As a result of such salaries, pension amounts given to public-sector retirees from the suburbs tend to be much higher than statewide averages.

Consider the Teachers' Retirement System, the state's largest pension program and the one that covers public school teachers and administrators who work outside the city of Chicago. More than half of the state's unfunded pension liability ­- about $44 billion - is promised to this group.

In 2009, the average pension benefit for a TRS retiree was about $43,000 a year, calculated as up to 75 percent of the average of the four highest paid years of work. But retired school administrators from the suburbs can receive four or five times that much.

In 2009, Gary Catalani, former superintendent of Wheaton Warrenville Unit District 200, received the biggest pension payout in the suburbs covered by the Daily Herald, according to TRS. He got a pension of $237,195 a year. Henry Gmitro, the former superintendent of Carol Stream Elementary District 93, received $234,803 a year.

These pensions are guaranteed for life, and they increase each year by a 3 percent cost-of-living raise.

"You've got some educators ... being paid millions of dollars in retirement," Zettler said. "That's nuts."

TRS officials point out that those kinds of payouts are rare. Less than 2 percent of TRS retirees statewide made $100,000 or more in pensions in 2009, TRS officials said. More than 60 percent - or about 53,000 retirees - collected less than $50,000 for the year.

Time for 401(k)?

Yet that sounds generous to many private-sector employees whose guaranteed retirement income is limited to Social Security, supplemented with 401(k) funds that may include employer contributions and other investments that fluctuate with the financial markets.

The Pierces have a Social Security income of about $33,600 for the two of them.

Both employed in jobs that did not provide pensions, they spent seven years socking away nearly 40 percent of their income - Madge deposited her entire paycheck into her 401(k) at the time - and cut back drastically on their spending to prepare for retirement.

Then the recession hit. The downturn in the stock market wiped out between 30 percent and 40 percent of their 401(k) accounts, the main source of their retirement funds.

"Overall, we've done OK, but it was nerve-racking for awhile there," said Jim Pierce, who spent the past 30 years working for a private mail processing company.

In Illinois' pension funds, the state took the hit when investments headed south, driving the pension debt even deeper.

That's one reason pension critics like Zettler, and like Jim Tobin of the group National Taxpayers United, said school teachers and administrators should be converted to Social Security and 401(k)s for financing retirement, a change that many experts say could be made only for new employees.

"We're all in this together," Zettler said. "Public employees should share in the economic risk."

Others, though, question whether getting rid of guaranteed public pensions would produce savings for taxpayers.

For one thing, school districts would likely have to start paying a 6.2 percent payroll tax for all the teachers and administrators who would be covered by Social Security, a cost that would almost certainly be passed on to local property owners. Under Social Security, workers also pay 6.2 percent.

At the same time, the state's existing $78 billion pension debt would still have to be paid.

Members of TRS, who do not contribute to Social Security while working for public schools, send 9.4 percent of their pay toward retirement benefits. Other contributions come from school districts (0.58 percent), the state (amount determined by actuary) and investment earnings.

A 2007 study conducted by the Center for Tax and Budget Accountability, a bipartisan, not-for-profit organization that studies public spending in Illinois, concluded that scrapping pensions and moving public employees to a "defined contribution system" for retirement - a 401(k) plan, for example - would cost state taxpayers more in the long term. The study was conducted as part of the center's Illinois Retirement Security Initiative project.

Defined contribution plans have much higher administrative costs, the study found, to the tune of $275 million to $610 million more per year. At the same time, such plans provide lower benefits for retirees.

The study cites the case of Nebraska, which in the mid-1960s switched state and county employees from guaranteed pensions to a defined contribution system. By 1999, the state discovered that its expenses related to administering and funding the defined contribution system were double what they would have been with the old pension system. The average retirement benefit for public employees, meanwhile, was $11,230 under the new system, compared to $16,797 under the pension plan. The state decided to go back to the pension system.

But because administrative costs are a small percentage of overall costs, the bigger question is how much the benefits cost.

By that measure, Illinois Teachers Retirement System spokesman Dave Urbanek said, it's impossible to compare without assuming how much the employer and employees would contribute, which would be up to lawmakers.

Laurence Msall, president of the Civic Federation, said the idea of switching deserves another look. He pointed out 401(k)-style retirement plans wouldn't be so popular in private industry if they didn't save money. And they'd end the legislature's ability to run up a multi-billion-dollar pension debt.

"The defined contribution plans eliminate the shenanigans and underfunding that occurs. It's much more transparent," Msall said.

So far, Illinois' attempts to fix the pension system have been much less drastic. On April 14, Gov. Pat Quinn signed into law provisions meant to limit pension payments for teachers and most other public employees. The changes, which include an increase in the retirement age, a cap on the amount of income that counts toward a pension, and new limits on annual pension increases are expected to save taxpayers more than $100 billion during the next 35 years. But the changes affect only those who aren't yet hired - and who mostly won't be retiring for decades.

Melba Hanssen, an Itasca resident who worked in public and parochial schools for 35 years in Arlington Heights and Mount Prospect, said she hopes guaranteed public pensions remain, though she recognizes the security her pension gives her compared to people with 401(k)s.

"I have a lot of sympathy for people without pensions, but you don't correct something by tearing down something good," she said.

Teachers' Pension Mythology: When The Going Gets Tough, Just Make Stuff Up

July 11, 2010

ChampionNews.net - Just because you read it in the papers doesn't mean it's true.

There are many supporters of the current pension system including union members, union leaders, state bureaucrats, investment advisors, not to mention various and sundry politicians. Between and among them is a long history of misinformation and lack of transparency when it comes to disclosing real facts about the Illinois state pension systems.

Here are three of the most egregious examples.

No, the pension system is not unfunded by $78 billion because of short payments by the state.

This particular myth is especially popular with teachers and their union bosses and subsequently by their lackeys in the media. The myth goes something like this: over the years, the state has not made payments in full, has skipped payments, etc; and this is the cause of the funding shortfall. In other words it's the taxpayers fault.

Unfortunately for the mythmakers, we have numbers to dispute that claim. Each year state actuaries are required to calculate an amount called the Net Pension Obligation (NPO). It is defined as follows: "NPO represents the cumulative difference between the annual pension cost and the actual contribution to the plan."

In layman's terms the NPO is the state's "past due" amount accumulated over the years.

As of 2009, the NPO for the state pension funds represents about 25% of the $78 billion shortfall. In other words, 75% of the unfunded is NOT "past due"; it is the result of other factors, including $29 billion for investment return shortages and excess employee compensation since 1996.

And by the way, over the last 10 years the tightwad taxpayers have paid more than twice as much into the system, including interest, as the employees have paid in. How much more than 100% more should we be obligated to pay?

Average pensions seem low because they include all the retirees who worked only part time.

For K-12 teachers you can receive a pension with as little as five years work. Pensions are also available to substitutes, part time teachers and hourly paid teachers. For state employees, more than 80% also receive Social Security. This lowers the average pension substantially.

So the $43,000/year average pension for teachers that is constantly being hawked by union leaders and reporters should be compared to the average Social Security pension of $12,800, not to the pensions of private sector workers who work full time for more than 40 years to receive their pension.

In fact over 10,000 members of the TRS (Teachers Retirement System) currently have pensions of over $75,000/year, which means in 10 years, because of the 3% COLA, everyone of them will have pensions in excess of $100,000. That means by 2020, with the ever escalating salaries, there will be about 20,000 members of TRS with pensions over $100,000 paid for by the generous taxpayers of Illinois.

There is a huge surplus of teachers - not a shortage.

One of the oldest and most persistent myths is that we have to pay teachers more and let them retire early and make them millionaires when they retire because there is an acute shortage of them. This is patently false.

Every year the Illinois State Board of Education (ISBE) produces a report titled: "Educator Supply and Demand in Illinois". This report lists in detail how many teachers are needed and how many the state actually produces. In 2008, for example, we produced 28,000 certificated regular teachers and 12,000 substitute teachers, or 40,000 total.

How many do we need? About 12,000. So last year alone we created 16,000 more teachers than we needed; and if you include the substitutes, we created 28,000 more than we needed. Since a teaching certificate in Illinois is good for five years, we have at least 75,000 certified teachers not teaching in public schools. And if certified substitutes only make $100/day, why do we have to pay the people they are substituting for $1,000/day?

And no, teachers are not leaving in droves because the job is so difficult. In fact they are staying in record numbers. The ISBE report also calculates the retention rate of teachers. It is about 95%, higher than any other white-collar job. You would have to be nuts to walk away from the huge salaries and pensions handed out by Illinois public schools.

And, by the way, ISBE says the number of students is decreasing and will continue to decrease in the future. Doesn't that mean we will need fewer teachers as we go forward?

What the next governor should do.

The next governor should use the power of the executive branch to demand more transparency and accountability. We need all pensions on the Internet, sortable by amount, department/school, number of years worked, total employee contributions made, etc. We need quarterly, timely financial statements from each pension fund.

We need summaries of actuarial reports in layman's language with key items like who contributed how much and what are projection costs 5, 10, 15, 20 and 30 years out, etc.

Since the pension systems operates under the Dept. of Insurance, appoint taxpayer-friendly people to the board of trustees instead of those benefiting from the pensions. For example, 6 of the 13 members of the TRS board are former teachers, an obvious conflict of interest, and hardly impartial taxpayer-oriented decision makers.

And most importantly use the bully pulpit to demolish the pension and salary myths that permeate the bureaucracy and media.

Be like Chris (Christy). Tell it like it is and let the chips fall where they may.

Salaries of Administrators and Teachers of Illinois
Average Salaries of Public School Teachers