The pension plans need to be eliminated just like they have been at every private sector company.

Of course, we are going to pay the people already in the plan.

All new hires, no pension.

End of story.

People must learn to be responsible for themselves.

Thom,

You know what? I have no idea what your argument is. From 1995 to 2007, the pension deficits have increased from $15 billion to $47 billion. We cite the same sources.

I am more confused about your last post. If part of the cause of the $45 billion deficit cumulative to 2003 is due to $6.4 billion in investment losses (the deficit would have been lower if there were no investment losses) and now you said that that loss was "had significantly declined" by 2008, then why hasn't the deficit gone down by $6.4 billion (to $38.6 billion instead of $45 billion)?

You do know (maybe I should not assume this) that the pension plan is assumed to earn 8.5% return. If it realized a 9% return in the last four to five years, there is no way that the 0.5% "excess" could have any significant impact on the deficit.

Lastly, I have identified three solutions.

1. Increase taxes
2. Cut benefits
3. Tax pension contributions of employees similar to social security.

And I appreciate that you have none. I do not know why you even bother to post anything. Really bizarre.

Lastly, I am not bankrupting the state. Rather, if the Governor and the legislature do not fix this mess, the state will bankrupt itself. Someday there will be no money to pay the pensioners and guess what, there will be nobody to bail them out.

Dan,

We have gone round and round. I've written a thousand words trying to get you to make a legitimate argument. It hasn't worked.

You were the one making the huge deal out of the three years 2001-2003, you are the one talking about the $6.4 billion deficit knowing full well that through FY2007 that amount had declined significantly, if not all but disappeared.

So I don't see what else can be said. The system is in significant deficit, if the nations financial challenges can not be overcome, it will certainly get worse. I believe their will not be any attempt at any sort of reform till Blago's gone. No one trusts him. That' just they way it is. What to do? as I have said previously I haven't a clue. I look forward to seeing constructive ideas from groups such as the Civic Federation. And that doesn't mean saying "lets just bankrupt the state as you suggested previously."

THREE POINTS TO SEE IF WE CAN AT LEAST AGREE TO DISAGREE

1. I see your point. But does it matter? You and I both cite the $23 billion reason from 1995 to 2003. From 1995 to 2000, the individual components offset each other, for example, benefit increases were offset by funding or investment gains or funding. This $23 billion is a NET number over that period. Unfortunately, there are no numbers on line for this period to isolate the differences by year. Will knowing these numbers by year change the analysis and conclusion? We are where we are.

2. Taking this one step further, the report said that $6.4 billion of investment losses contributed to the deficit by 2003. First, remember these are losses compared to an assumed 8.5% return each year. If the fund gained say $10 billion (over 8.5%) from 1995 to 2000 and lost $16.4 billion from 2000 to 2003, is that an issue? Generally people take a long view of pension plans. Even you have stated that the returns have been 9% since 2003 (for a slight gain over the 8.5% target). Maybe the net gains in the 90's even with a bull market did not result in a large gain, pointing to the problem of using an investment return that cannot be achieved.

But if you take this concept further, then you are saying that the underfunding and benefit increases from 1995 to 2000 were camoflauged. And you know, I agree. BOTH. Where would we have been in 2000 if there were no benefit increases since 1995, zero deficit?

3. I have never said the problem was solely benefit increases. It is a combination of all of the above. The problem is that they need to be OBJECTIVELY sorted out. Using the best numbers I could find (you use the same), benefit increases contribute to about a third of the problem. And I think that is understated since benefit increases in one year that could not be funded became underfunding in the next. To the tune of the entire $23 billion? No, but some number.

But in any case, the state cannot afford the current plans as they are structured. So again, what is your plan to fix this?

Dan,

Your entire thesis seems to be that the system went badly wrong in the years 2001-2003 and it was largely due to benefit increases, and when I challenge you you go back to numbers from the time frame of 1995 to 2003.

It's hopeless discussing it if you can't give us a straight answer.

Answer this please! Simple question. What exactly, on a year by year basis, was the reason that the deficit increased by $9.411 billion in 2001, $9.666 billion in 2002 and $8.158 billion in 2003

I think that the investment gains in the early 90's offset the underfunding during the same period plus the increases in the benefits that were also granted. Unlike David in Egypt, the state took the funds during the bountiful periods and "spent" (committed) them. Then during the lean periods, they took it on the chin.

I do not think there are any unrealized gains. Unlike a private pension plan and the Illinois Municipal Retirement Fund, the state pension plans mark there assets to market. The more prudent way of handling these gains would be to amortize them over a ten to 20 year period. IF this method was used, there would have been deficits in 1995 to 2000 due to the combination of underfunding and benefit increases.

Great question, I hoped I answered.

Something else that is not clear from these numbers (that, or I haven't been paying close enough attention): since money not invested in the early to mid-90's missed out on one of the greatest bull markets in history, does the $10.6 billion attributed to underfunding include unrealized investment gains?

The following is my past post that summarizes from the Civic Federation Report (the same source that you cite).

"The following summarizes the issues from the Civic Federation (this is my summary, Thom posts four pages, just trying to keep it simple):

Underfunding $10.6 billion
Investment losses $6.4 billion
Increased benefits $5.8 billion"

The Civic Federation simply did not detail all $5.8 billion of the increased benefits (the items that you pasted on your comment).

And the item for an INDEPENDENT ACTUARY. How much of this problem relates to the what I will call "unfunded benefit increases"? For example, if you grant a benefit say in 1995 and then do not fund it, in later years is this a benefit increase or underfunding? We know that substantial benefit increases were granted before 2000.

SOLUTIONS

True to form, Thom Higgins is MUM. Just like Barak Obama on the banking crisis. All bluster, no solutions?

I see Mrs. Kravitz is still at it. Claiming the problem is pension underfunding. Good one. BTW, I hear Mrs. Kravitz is mad at Dianne McGuire for her dirty politics.

Check out what Ms. McGuire is up to here.

http://www.dianne-mcguire.blogspot.com/

Word on the street is that Higgins is upset with McGuire. Thom, you get in bed with a skunk you come out smelling like one buddy.

Dan,

Your entire thesis seems to be that the system went badly wrong in the years 2001-2003 and it was largely due to benefit increases. Simple question. What exactly, on a year by year basis, was the reason that the deficit increased by $9.411 billion in 2001, $9.666 billion in 2002 and $8.158 billion in 2003. You make a big deal out of benefit increases. All I can find for those three years are the following;

2001 SERS Rule of 85 added; alternative formula $ 650,000,000
conversion from Step Rate to Flat Formula
2002 SURS added 30 years of service and out provision $ 60,000,000
2002 SERS added highway maintainers and DHS $ 170,000,000
security to alternative formula
2003 SERS Early Retirement Incentive $ 2,370,000,000

This totals $3.25 billion. What was the cause for the remaining $23.985 billion? I maintain it was two factors; 1) financial losses in the stock portfolio due to stock market declines, and 2) lack of funding by the state of Illinois.

I am of the opinion that both are direct effects of the economic after effects of the 9-11 tragedy. I also note for the nth time that for the TRS the financial returns from approx 2000 to 2007 are just about at the anticipated 9% per year apparently negating financial losses as an argument as to why we are at deficit today. Which is a excellent illustration as to why looking at three years out of context means nothing.

I await your alternative view.

WHY IS 2000 TO 2003 IMPORTANT

For the THIRD TIME here are the pension deficits from 1996 to 2007 from the Civic Federation Report--THE SAME REPORT THAT YOU PASTE TO YOUR RESPONSES!!!!!!

(the first column is the deficit, the second is the change from 1996, the third is the cumulative change from 1996)

1996...20,027
1997...13,712....(6,315)....(6,315)
1998...14,320...... 608.....(5,707)
1999...15,345.....1,025.....(4,682)
2000...15,569.......224.....(4,458)
2001...24,980.....9,411......4,953
2002...34,946.....9,966.....14,919
2003...43,104.....8,158.....23,077
2004...35,093....(8,011)....15,066
2005...38,601.....3,508.....18,574
2006...42,257.....3,656.....22,230
2007...45,790.....3,533.....25,763

Thom, here are the numbers. I am being benevolent and assuming that 1995 was the same as 1996. You can see that the problem mushroomed from 2000 to 2003. Since then, the deficit has increased by $2.7 billion. The intent was flat with the bond proceeds infused in 2004.

You can see that from 1996 (and I am assuming the same balance in 1995) to 2000, the deficits DECLINED. Let's assume they were zero. What this means is that unfavorable variances were offset by favorable variances, the way you are suppose to run a pension plan.

Then the deficits increased $23 billion from 2000 to 2003. If a study of the deficits from 1995 to 2003 account for the $23 billion, then these causes converged in this period.

I will admit, as you have (may I note), that this is more complex than these reports. I suspect that there were unfunded deposits that were offset by investment gains between 1995 and 2000. Had the state properly funded these costs during this period, they would have reduced the impact of investment losses that I believe did occur during 2000 to 2003 (the popping of the tech bubble and 9/11).

Thom, here are the ACTUAL numbers. Are you simply ignoring them? Or don't you understand them?

TEACHER PAY

I will say it the third time. The median income in 2007 for a median employed Napervillian MALE living in District 203 was $87,601. For a FEMALE, this amount was $56,485. The median age of employed people is at least 45 years old. SOURCE: US Census Bureau

My comment, a 203 teacher who is 45 years old would be making better than these numbers, I stated $90,000. Now, a teacher who is 45 years old would have between 20 and 23 years of service in 203.

So going to THECHAMPION.ORG database of District 203 teachers (that is provided by the Illinois State Board of Education and District 203), I did not even have to get out of the B's to find three teachers who met my condition. Here are the names, number of years of service and salaries for 2007.

Kathleen Angelos....21 years......$91,961
Lisa Antonio........19 years......$91,720
Brian Bakke.........20 years......$93,286

Are these three people hypothetical? The District's average salary excluding all perks might be right. But then the average salary would not be a teacher with at least 20 years of experience.

I think you should check your data from 203. They have a poor track history on accurate financial information. Imagine the poor folks who were forced to lie about the $511 tax increase in 2002 that became $1,250 or more. Accomplices to criminals go to jail with the criminals.

THOM'S SOLUTIONS

Still waiting. TYPICAL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Anonymous,
You make no sense. By the way-teachers are still underpaid and would be even if they made double what your "fuzzy math" indicates.

Dan(anonymous 9-22-08),

I’m sorry, but I have a problem accepting criticism from you when you are still playing games with numbers and time frames.

Posting a slug of numbers as you do without any context beyond a year is meaningless.

For the nth time you use numbers from 1995 to 2003 but claim they are from the years 2000-2003 in order to prove your “it all went bad there” thesis.

It’s hopeless, you write 500 words, but if there isn’t any attempt to honestly discuss the situation, it’s a little hard to have a conversation.

Same goes for your hypothetical 45 year old teacher making 90K .

IGNORES HIS OWN QUESTIONS

Thom's specific question,

"If, as you state, the cause of our current problems are all contained in these three years, then please explain to us why.
What specifically happened in those three years that has caused the pension system to be unsustainable?"

I responded. Let the numbers tell you all of the information (that I also have previously posted on this site):

1996...20,027
1997...13,712....(6,315)....(6,315)
1998...14,320...... 608.....(5,707)
1999...15,345.....1,025.....(4,682)
2000...15,569.......224.....(4,458)
2001...24,980.....9,411......4,953
2002...34,946.....9,966.....14,919
2003...43,104.....8,158.....23,077
2004...35,093....(8,011)....15,066
2005...38,601.....3,508.....18,574
2006...42,257.....3,656.....22,230
2007...45,790.....3,533.....25,763

Note, problem from 1996--$26 billion. Growth from 2000 to 2003 $28 billion. This is where the problem exploded.

The following summarizes the issues from the Civic Federation (this is my summary, Thom posts four pages, just trying to keep it simple):

Underfunding $10.6 billion
Investment losses $6.4 billion
Increased benefits $5.8 billion

All of this information has been posted numerous times before.

SOLUTION WE CANNOT AFFORD

From Thom's last post

"There is a plan in place that is intended to reduce the unfunded pension liability to 90% by 2045. The state passed the bill. Problem Solved! Oh, they immediately ignored it. That ain’t gonna get it done."

The State immediately ignored this plan BECAUSE THEY CANNOT PAY FOR IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!

SOLUTIONS ARE NEEDED, NOT RHETORIC

I put forth three solutions in my prevoius posts.

1. Cut benefits
2. Raise taxes
3. Increase teacher contributions including a state tax on contributions by teachers.

Let's contrast this to Mr. Higgins. His words say it all:

"As I’ve said before I have no idea what the solution is."

Just like the corrupt Republicans and the current Democrats. We do not need people who put down others and have no answers. Great, he can cut and paste from computer files.

But for all of his dispariging comments, HE HAS NO ANSWERS.

By the way, if you go back to all of these posts, what have I advocated? An independent actuary, not one hired by the pension plans, evaluate the pension systems and give management (the Governor and legislature) a real plan that is economically and fiscally sound.

I support constructive action even if it further destroys the state such as a tax increase.

COMMENTS ABOUT AVERAGE SALARIES

Two simple points. First, the District computes average salaries, not the average salary for an employee who is 46 years old, the median age for a working person in Naperville. Also, they exclude additional duty pay that can increase a salary by at least 10 percent if a teacher has any ambition.

Second, I know all teachers are paid the same. My point was that a teacher salary at $90,000 is comparable to the male salary ($87,601 in 2007) for ALL Naperville MALE residents. However, it was greater than the median for ALL working FEMALE residents ($56,485 in 2007)..

Thom, NO,NO.

It is clear that Thom has NO INTENTION of being sincere about this question. His contradictions AMAZE ME (no solutions--ridiculous). Instead, he has appointed himself to be a Soviet styled propaganda machine to discredit all of my comments. What is he worried about?

First a comment responding to this by Dan Denys;

The typical teacher at 45 probably makes $90,000 (using THECHAMPION--203 could supply us with better info). I think the gaps are significantly greater for women.

If, in fact, the Champion does tell us the average teacher is making $90K, that's pretty much par for the course with them. If you look at D203 budget stats you will see that the average salary is in the $65K range, $25K less than Denys claims. Further there is no, no, distinction in the contract between men and women.

Regarding the pension issue, to a certain degree it is pointless to debate Mr. Denys, as he keeps shifting the goal posts; i.e. data points and time frames. If we were to have a meaningful debate he would be willing look at where we are today, not attempt to “cherry pick” specific time frames to make his case. Mr. Denys continued attempt to frame the 2000-2003 deficits as something other that the tragic result of 9-11 illustrates his lack of seriousness in discussing the subject, and my prior criticism stands.

I’ll make two brief comments, and then re-produce at prior post.

1. the $6.4 billion in investment returns losses is from 1995 to 2003, and even then it doesn’t reflect where we are today.

I will speak only for the TRS, but if you go out through 2007 they have returned an average annual return of something like 9.0% from the period 2000-2007. I expect that the other retirement systems have had similar returns. Kinda kills the $6.4 billion loss argument, although I suspect Mr.Deny’s will bring up our current market troubles somehow.

2. The $5.8 billion increase in benefits, occurred from 1995 through 2003.

The $5.8 billion increase in benefits did not occur between 2000-2003, rather they are from the time period 1995 through 2003. If you will read below there are a number of mitigating factors to look at, especially the $2.5 billion in early retirement expenses. Yes, $2.3 billion was incurred in 2003, but it was due to Blago’s early retirement offer, as he wanted to significantly reduce staff counts, due to the state’s shaky finances. Think the financial after effects of 9-11 had anything to do with that? Does Dan take into account the salary saved due to the payroll cuts? No. (btw I’m shocked at the reduction in the number of state employees in the last 5-8 years)

Granted, the Civic Federation report doesn’t take us to today. However it can help you to see where we were then, and the factors in play in the time frame the report covers, if you are willing to be honest in your analysis. If I felt we could have an honest exchange I’d go back and re-create some of my prior posts talking about where we are today, but it just isn’t worth it. Here’s a prior post that helps a bit;

The following from the Civic Federation report

http://www.civicfed.org/articles/civicfed_220.pdf

THE PROBLEM: HISTORIC UNDERFUNDING OF THE STATE PENSION FUNDS
The State of Illinois retirement systems historically have suffered from underfunding. This has ensured that Illinois consistently reports one of the lowest funded ratios among the fifty states.
TH here, the Civic Federation is telling us upfront on page 3 the number 1 problem is underfunding,

Reasons for Chronic Underfunding of Retirement Systems: 1970-2003

The principal reasons for the State of Illinois’ historic failure to fund its pension systems in an actuarially sound manner over time are outlined below. For over thirty years, annual State contributions have been less than the necessary amount (the interest and current costs) determined by the retirement systems’actuaries. The State of Illinois’ contribution shortfall totaled $10.6 billion between 1995 and June 2003. This increased the amount of underfunding.

Investment Losses.

The State pension funds experienced investment losses of $6.4 billion between 1995 and 2003. Investment returns are a significant part of the funding stream of a retirement system. This problem has been exacerbated by the practice of failing to make adequate contributions to the funds.

TH here, I can say that at least the TRS has had boomer years since 2003. They are just about at their 9% projected annual investment return for the period 2000-2007.

Failure to Increase Payments in 1990s Economic Boom.

After implementation of the 1995 law, annual funding decisions adhered to a fixed, ramped-up payment schedule but did not adjust for the cyclical opportunity provided by the long 1990s economic expansion to contribute in excess of the fixed payment amounts provided for in the 1995 funding law. This was a lost opportunity to improve the funding situation.

Increased Benefits.

Between FY1995 and FY2003, Governors Edgar and Ryan, with encouragement from succeeding General Assemblies, weakened the impact of the pension funding reform law by adding $5.8 billion in new pension benefit enhancements. This further increased the State’s aggregate pension liabilities

TH again, Not to get partisan, but I note Denys constant attempt to blame Democrats for all our ill's. Gee I didn’t know Edgar and Ryan were Dem’s! ( Dem’s have their own sins of course see below)

I’ll go a bit further and comment on the increase benefits of $5.8 billion in the 1995-2003 period. Here is the breakdown from the same source;

1995 TRS Early Retirement Incentive $ 150,000,000
1997 SURS Conversion from Step Rate to Flat Formula $ 180,000,000
1998 TRS Conversion from Step Rate to Flat Formula $ 1,000,000,000
1998 SERS Conversion from Step Rate to Flat Formula; $ 1,250,000,000
Alternative formula final rate of pay conversion from
average of final 4 years to pay on final day
2001 SERS Rule of 85 added; alternative formula $ 650,000,000
conversion from Step Rate to Flat Formula
2002 SURS added 30 years of service and out provision $ 60,000,000
2002 SERS added highway maintainers and DHS $ 170,000,000
security to alternative formula
2003 SERS Early Retirement Incentive $ 2,370,000,000

Now the biggie is the SERA This is State employees that took a great deal offered by the governor to early retire and thus reduce staff counts (huge number) and payroll. So we saved money on payroll at the cost of increased retirement costs. Was it a good deal for the state going forward, or did Blago take the quick saving now, with greater costs coming after he’s gone? Dunno
Go here to read about the cost and savings of the early retirement program. I’ve only glanced at it http://www.ilga.gov/commission/cgfa2006/Upload/2006_JUNE_ERI_Report.pdf

The second biggie is the teachers, and state employees increase in benefits in 1998. As I understand it teachers had to elect to buy the benefit for years served before 1998 and their contribution was increased to pay for it going forward. I've have no idea what percentage of the benefit the teachers increased contribution (1%?) was supposed to cover. Regardless, even if they paid 100% of the cost, it still has to be accounted for on the debit side.
Which brings me to this comment. To truly understand pension funding and the mess we are in fully you probably have to be an actuary. And spend hours. As I’ve said before I have no idea what the solution is. There is a plan in place that is intended to reduce the unfunded pension liability to 90% by 2045. The state passed the bill. Problem Solved! Oh, they immediately ignored it. That ain’t gonna get it done.

To all,

One more thought.

No matter what the deficit, the history (benefit enhancements, underfunding, fiscal soundness of policies, investment gains or losses) really do not matter. We are where we are.

The question is whether we raise taxes, cut benefits, or require teachers one way or another to fund a larger share of the cost. At this point, we should note that their pension benefits are substantial. In the 203 "negotiations", the District promoted their lifetime earnings for a typcial teacher. Well, let's include the pension. Then compare it to a comparable worker (nurse, accountant, car salesman) and see how the plan compares. I advocate this because I have no clue.

There are three outcomes.

If it is comparable (both to amount and funding), then the state (and us as taxpayers) need to pay more to fund the cost.

If it is less, we have to increase benefits AND tax more.

If it is more, than teachers (or school districts) have to pay more. In the case of school districts, part of the solution would be lower pay increases to offset the cost.

If you look at the Naperville census information (and I am doing this from memory, the comment can be adjusted for actual information), the typical male worker makes $75,000 and is 45 years old. The typical teacher at 45 probably makes $90,000 (using THECHAMPION--203 could supply us with better info). I think the gaps are significantly greater for women.

What does this mean? On average a teacher is doing better. But stop. If you look at the Naperville census data, over 20% make more than $100,000. This means two things. First, the real median (not mean or average) salary is lower. But there are a sizeable group of people making substantially more money.

And that latter group is where teachers and other public officials focus there salary demands and attempt to compete. But these people make up less than 5% of the US workforce. Also, they make this money by taking huge risks, something teachers are not doing.

Again, let's put all of the issues on the table and negotiate fairly. This has not been done in 203 and the state for at least eight years.

First, to all, I would like to compliment Thom on a very civil post. It should push on the debate.

I will focus on all pension plans (you were right when you corrected me many posts before) and the Civic Federation report that you pasted on the web site (9/10, 12:41 AM).

From my post of 9/2, 8:13 AM

Change in pension fund deficits from 1995 to 2003 (initial focus of report)

FY95 Deficit Not shown
FY96 Deficit $20 billion (assume FY95 is the same)
FY03 Deficit $43 billion

Change $23 billion increase (more than 2X's!!!!)

Causes of change cited by Civic Federation

Underfunding $10.6 billion
Investment losses $6.4 billion
Increased benefits $5.8 billion

WHY ARE THESE YEARS RELEVANT?

Pension liabilities are debt of the taxpayers of the state. Before this three year period, the debt was $15 billion. The cost to pay this debt off using the state funding assumptions was $1.4 billion per year. Three years later, the debt was $43 billion. The cost to pay this off using the same assumptions is $4 billion per year.

As you stated earlier, there are many moving parts to this analysis. But at a minimum, when you are in financial stress, you do not increase your debt by $5.8 billion in new benefits. Further, you devise a plan to address losses. During that three year period problems were not addressed and costs were increased.

In the private sector, the result? BANKRUPTCY. In the government sector, ???????? Right now, it is illegal spending (the current tax structure cannot pay off these costs along with other state obligations).

One final comment. The "underfunding" in the state reports are also "problematic" for two reasons. First, the funding requirements during the 80's and the 90's were understated by an unrealistic investment assumption--the 8.5%. If a more reasonable number, one REQUIRED in the private sector, of 6% was used and funded, the funding should have been addressed earlier.

Second, the added benefits did not start in 2000. Look at the following page from the TRS web site:

http://trs.illinois.gov/subsections/general/history.pdf

A fifteen page brochure on how benefits were increased. The same was true for the other pension plans. In short, state pensions were like Social Security, give more benefits, have future people fund. Everything after page 8 has contributed to the deficits that the taxpayers now need to address.

A CONTRAST

Look at IMRF. The following says it all:

http://www.imrf.org/pubs/100%20percent%20funding/fact_sheet1.pdf

Note that they value assets on an actuarial basis. They are 92% funded on this basis, 100% funded on market value. One public pension plan gets in right in the state. This should be the model for the rest of the state.

This pension problem has been around for 40 years. But it was made worst during this three year period. Why? GEORGE RYAN. Ryan knew he was going to jail when he was elected governor. He tried everything to save himself. His legacy? We know about his conviction, he tried to cover it with his death sentence grandstanding (with a general rather than specific pardon). I would add financial ruin to his legacy. All in an attempt to buy his "get out of jail card."

This is a cruel mess. I fully understand why teachers and other employees do not want to give up benefits, who would. What about the airline employees? Salaries were rolled back ten years, pensions were limited to $30,000 to $35,000 (the PBCC limits). How about the Bear Stearns guys? They had all of their retirement in Bear Stearns stock. They lost 85% of their value, a pain for a person with either $1 million or $100 million in stock. Lehman will be worst.

As I think I said earlier, it would be nice to waive a wand and make this nightmare go away. Madigan needs four more representatives (makes House and Senate veto proof) to implement his plan--doubling on income taxes on all who make more than $75,000. He wants this done before the 2010 election for his daughter.

This is one solution, raise taxes. The others is to have the employees pay. One option would be to take pay increases to fund the increase in pension liabilities. No salary increases (like everyone else who is fortunate to keep their job) to retain the pension benefits. See, I did not list this one before, there are more ideas. I do not think that taxpayers should foot 100% of this largess, but that is my OPINION. But we need to address.

Dan,

If, as you state, the cause of our current problems are all contained in these three years, then please explain to us why.

What specifically happened in those three years that has caused the pension system to be unsustainable?

Thom, you have the last words. YOU HAVE NO SOLUTIONS. YOUR WORDS.

I would not want to bore all the people of the various questions that have been posed to you that your paragraphs of responses say nothing. Or your simply bombast.

Why are the three years relevant? The problem did not grow before or after. The cause of our current problems are all in those three years.

You are right on the investment returns. But as I stated many posts before, the earnings in the good times should offset the losses in the bad times. The earnings rate should be reasonable like corporate pensions that assume closer to 5 to 6% rather than the 8.5% used by ALL of the state pension plans. Then the losses from 9/11 would have had no impact on the taxpayers. But rather than waste our time, either read the articles on this subject (I posted one several pages earlier) or consult an actuary.

The $28 versus $23 billion is not relevant. But I was using the numbers in the report that I summarized earlier. I would not want to misquote the printed numbers.

But again, your final words. YOU HAVE NO SOLUTION TO THE PROBLEM. In reality, you do not want to admit the real solutions, cut benefits or increase taxes. WHY THE CONSTANT STATE OF DENIAL??

Let’s try to recap here;

Dan Denys is sounding the fire alarm over the state pension program.

He has made a huge issue regarding how the deficit skyrocketed between 2000 and 2003. However, he is the only person obsessing on these three years, seemingly in a vacuum. Why?

Because he wants to scare people into thinking those three years are typical! He is cynically using the financial ramifications of the aftermath of the 9-11 tragedy (both investment losses and state contributions) to make his anti-pension argument.

He also tends to get the TRS (Teachers Retirement System) numbers and the larger State of Illinois Pension system numbers confused, and he picks and chooses numbers from various times frames that will support his argument.

Look at this statement of his;

You can only blame 9/11 investment losses for $6.4 billion of the shortfall, per the Civic Federation. Not the entire $23 billion

The time frame for the $6.4 billion loss is from 1995 and 2003 per his source! Does he really expect us to believe that for the years 1995 to 1999 their investment return was zero, and that the $6.4 billion loss is only for the years 2000-2003? Seriously?

I guess he hopes no one actually read the report.

Also, for the record, the increase in the deficit (all sources) for the period of 2000-2003 was $28 billion not $23 billion.

Just like Denys plays with time frames and numbers, he also plays fast in loose with peoples words. From my prior post;

“I suspect that nothing will happen until Blago’s gone (soon please) as no one trusts him with this kind of issue.”

Magically becomes;

(AS YOU ADVOCATE FOR AT LEAST 2 MORE YEARS

Definition of suspect;

1. To surmise to be true or probable; imagine

Definition of advocate;

1. One that argues for a cause; a supporter or defender

My saying “ I suspect” hardly means I am advocating for it. Just another silly attempt to twist my words in order for Mr. Denys to attempt to mislead the reader.

"You are chutzpah incarnate!"

NOW THAT IS REALLY CONSTRUCTIVE! Shows your true colors. You are really constructive on arguments.

You can only blame 9/11 investment losses for $6.4 billion of the shortfall, per the Civic Federation. Not the entire $23 billion. And if you are correct (and I would not stake any credibility on these reports, they only show the tip of the iceberg) and the funds did earn 9% over the last ten years (I am not so certain), then the 9/11 losses had NO impact.

MORE ADMISSIONS

"I've said before I haven't a clue as to the way out." WOW. All talk, no substance.

Wouldn't you rather say, there are just two solutions. Cut benefits or raise taxes. Just like Obama, you cannot say it straight. Need to perform the Heimlick maneuver on you!!!

Our government is a disaster because people have avoided problems for years (as you are advocating). Social security, Medicaid, state pensions. And the other problem is that personal responsibility is no longer part of government solutions. John Kennedy said it best, "Ask NOT what your country can do for you, but what you can do for your country."

The 1995 plan for pensions does not work. There is not enough state money. As I have stated, if the legislature puts off this issue (AS YOU ADVOCATE FOR AT LEAST 2 MORE YEARS), then the courts should be brought in to prevent the state from violating ITS constitution that prohibits spending more than you have. INCLUDING PENSIONS!!!

ALL TALK, NO SOLUTIONS. Way to go Thom!!!!

Regarding Dan Denys post of September 12th

You are chutzpah incarnate!

To double down on your attack of the pension system with your continuing OBSESSION WITH THREE YEARS by acknowledging that the reason for the skyrocketing deficits in these years was investment losses and lack of state funding, all the while ignoring the one overwhelming reason, namely the financial effects of the 9-11 tragedy, as a construct for you to attack the pension system, is, simply, as I’ve stated before, beyond human decency and comprehension. Do you really think people are this stupid?

You play fast and loose with the truth in your other supporting comments too. A quick example; for the TRS (I refuse to take the time to look up the rest) they all but made their projected 9% annual return, when the total returns are averaged out annually for the years encompassing the 9-11 tragedy to the present.

You should be ashamed of yourself.

For Anonymous on Sept 12th @ 4:09 PM

Regarding this;

1. Is the pension funding matter 100% due to underfunding? I was confused by your post 9/10 12:41 AM. You pasted the summary that Dan referred to that infers there are other significant issues as well. This was John Q. Public's original question.

First a clarification, This was JQP’s original question

The $64 billion question is: what would be the TRS' unfunded obligation, if any, if the state had been making it's fair contribution these past two decades

This was my best estimate as a response to JQP’s question, indicating the total amount of underfunding. The 2007 total liability is what?, 24 Billion or so? so lets say half is because of this one issue. Rough numbers.

To answer John Q’s number as best I can, the number is this;
$4.320 billion (my swag based on 45% of the $9.6 Billion deficit prior to 98)

$5.803 billion ( which is 45% of the $12.9 billion deficit 1998-2006)

$1.739 billion 2007 alone ( I still can’t believe it)

$11.86 billion my best estimate thru FY2007

To answer your question, No. The problem is not just because of underfunding but also a host of other issues. Please see my posts above that talk about them. Is the uiderfunding the largest single concern? Yes.

To this;

2. What is your solution? That state is bankrupt and cannot meet its current bills. How should this be addressed?

Well, no the state isn’t bankrupt. There is a plan in place, authorized by the GA and signed into law, that offers a path to 90% funding in 2045. The problem is the state isn’t following it. Now the problem is you can’t be flippant as Denys likes to be by saying “Let’s just BK the state and tell them tough luck!” It just doesn’t work that way. He does also offers a bunch of solutions, and that’s fine, but he’s not a member of the GA so it doesn’t mean much and they probably aren’t taking his calls. Or mine either.

The state is having a tough time funding the plan every year. At some point the GA will probably say we need to look at this. I’ve said before I haven’t a clue as to the way out. There are laws regarding all this, entrenched forces on the employees side (would you say “hey, forget about it”?), and I suspect that nothing will happen until Blago’s gone (soon please) as no one trusts him with this kind of issue. You might want to go look at the link above for the Civic Federation report from 06 that talked about possible reforms.

OBSESSION WITH THREE YEARS

Here is why, look at the numbers from the Civic Federation yourself.
Year...Deficit....Change...Cum Change
1996...20,027
1997...13,712....(6,315)....(6,315)
1998...14,320...... 608.....(5,707)
1999...15,345.....1,025.....(4,682)
2000...15,569.......224.....(4,458)
2001...24,980.....9,411......4,953
2002...34,946.....9,966.....14,919
2003...43,104.....8,158.....23,077
2004...35,093....(8,011)....15,066
2005...38,601.....3,508.....18,574
2006...42,257.....3,656.....22,230
2007...45,790.....3,533.....25,763

As you can see from these numbers, the problem exploded between 2000 and 2003. The report points out $10 billion in underfunding, the other $13 billion is investment losts and benefit increases. I also question whether benefit increases in the 90's also contributed to the funding challenge.

That is why the three years are relavant.

INVESTMENT RETURNS

I do think that part of these problems relates to investment returns. The state plans assume returns of 8.5% (I do not have time to go back and check). But we know that the plans suffered major investment losses in the early 2000's (at least 10%). Now let's use Thom's cited 9% return over the past five years. This is not enough to offset the losses.

From my studies, an investment return should be one that can be realisitically realized over time even though there will be shortages in some periods of times and excess earnings in others. For these plans, there are only losses since it is nearly impossible to achieve the investment assumption in the best of times.

This entire concept of using an unreasonalbly high investment return (because NOBODY CAN BEAT THE MARKET) was well summarized in the following article:

http://www.nasra.org/resources/Use%20of%20Corporate%20Pension%20Accounting%20Standard.pdf

Besides underestimating the deficits, it also places unreasonable pressures on the taxpayers as a result.

One final cite, this issue is of concern to the actuaries. In fact they are calling for papers (research on this very topic). Again, here is cite:

http://www.soa.org/research/other-research-projects/data-requests/cfp-2008-public-plans.aspx

In short, everyone has been mislead to the exact costs of these plans. No wonder nobody can fund them.

I noticed that this blog has fallen off the main page. It is too bad. But I have two simple questions for Thom Higgins that he has never answered.

1. Is the pension funding matter 100% due to underfunding? I was confused by your post 9/10 12:41 AM. You pasted the summary that Dan referred to that infers there are other significant issues as well. This was John Q. Public's original question.

2. What is your solution? That state is bankrupt and cannot meet its current bills. How should this be addressed?

And can you keep your answer to each question to 50 words or less.

Thank you.

By Another second anonymous on September 10, 2008 1:19 AM
FYI...

It is very obvious to this reader that many people on these posts wish ill on our public servants and that it is NOT just about the money.

By the way no police officer or fireman takes home $7k per month in pension. The last poster (1:30pm) is either stupid or ignorant.

____________________________________________________________________

Thanks for pointing out your ignorance.

It has been reported in the Naperville Sun and on this blog site that former Police Officer Robert Marshall receives an annual $85,000 retirement pension. The information was obtained by the Naperville Sun directly from the City of Naperville through a Freedom of Information Request! Are you saying the City of Naperville lied when providing this information? I don't think so!

$85,000/12 is $7,083.33. So here is one example! The infamous Drew Peterson receives a little under 7k but he did not get his full pension since he was fired in his 29th year! He was only a Sergeant in a town that pays much less than Naperville! Sorry, but police do receieve 6k to 8k pensions very frequently especially in Naperville due to the very high salary structure.

Apparently you don't want the taxpayers in Naperville to know the TRUTH and keep them sleeping.

And at the expense of repeating myself, in his capacity as pro-tem City Manager, he is receiving upwards of $150k in salary while building a second pension for retirement in 8 years. Collecting a pension from a city that continues to gainfully employ you, has been referred to as DOUBLE DIPPING on this Blog Site and "maybe" even by executives in the Naperville Sun!

To the best of my knowledge Mr. Marsahll had no prior experience in running a city after having been a police officer for 30 years.

I will not make an accusation that maybe he got his job because he is connected or knows someone. I do not know for certain!

But his being in this position sure raises a lot of questions! And suspicians!

Anyone who thinks that connections don't play some kind of role in City Hiring Practices in my opinion is naive.

No one is saying our police and firefighters are not qualified. They are very qualified. But since every qualified police officer in the State of Illinois would rather work in Naperville for 60k than in his community for 30k or 40k one has to wonder how those who get jobs in Naperville obtain that employment.

I guess Blogger Diana determined that an NPD police officer makes more than an FBI agent who is usually more qualified than an NPD officer and is considered the cream of the crop in the field of public safety!

Naperville is a beautiful city with very litte hard core crime. It is pleasant to work here. For 87 years in a row every police officer has been able to return every evening to be with his family. This is the way it should be!

Police officers and firemen deserve to be paid well. Paying them 40k is much more reasonable and fair than paying them nearly 60k a year for a STARTING SALARY. I am sure many very qualified men and women would love to get their hands on a NPD or NFD starting position at 40k per year. Why are we offering nearly 60k? Can anyone answer this question?

And as I said earlier, reducing salaries also results in massive reductions in pension pay-outs thus helping our Police and Fire Pension return to solvency and proper funding!

Finally, I wish no ill on our public servants! I am simply trying to control taxation in this town which is completely out of control. The city portion of my real estate tax bill went up nearly 19% last year. I expect it to go up at least that much this year!

Most of our homes have declined in value considerably since the real estate bubble exploded in the last year. Most residents think they will be getting a tax reduction next year and are counting on it to make ends meet.

Little do they know that is not possible without the city reducing and curtailing expenses. As your house goes down in value, Naperville City Officals will hammer you on the TAX RATE and you will end up paying more.

MARK MY WORDS! I have been around and know how the system works!

Mr. Higgins,

Thanks for reposting my post from the Fireman Thread here. I was just about to do it after the attacks I got on myself including from "Another Second Anonymous" who called me stupid! I guess sometimes those who call others stupid, are the ones that are totally IGNORANT since they can not even debate and research.

I assure you it is correct Mr. Higgins. After an hour of looking in old archives of this Blog Site I found it. The post was directly from Councilman Bob who we all knew at the time was the REAL THING!

Imagine this FALSE POST made earlier today:

___________________________________________________________________

By Anonymous on September 9, 2008 8:27 PM
The city contribution includes the 9.45% they take from the firemen's paycheck. The city's portion was 10.96%. That's where the 21.16% comes from.

____________________________________________________________________

I am really surprised Host Ted allows so much misinformation to be posted on his threads such as this one. Host Ted, I believe was fully aware of the CM BOB Post in May. So he knew this post is false, so what is the point of posting it.

I also don't know why Host Ted allows people to call bloggers who work hard and research on this thread, stupid!

Again, the Napergatians had an issue with this kind of behavior on this Blog Site. They complained to Moderator Jim and he did not stop it. We see that the 300-500 Napergatians who were very active gave up on this Blog Site. I think that is unfortunate since they were hard working researchers.

I hope Host Ted takes the necessary measures to keep the new group of bloggers in line. It would be nice if we could grow our numbers again and bring back the old glory to Ted's Threads when he was approaching nearly 1000 posts per thread.

The more bloggers on this thread that are reputable and credible, the better chance we can get to the bottom of City Hall and get the information we need to hold our City Officials and City Council Members ACCOUNTABLE!

Retirement - "the period of one's life after leaving one's job and ceasing to work".

Pension - "a regular payment made during a person's retirement from an investment fund to which that person or their employer has contributed during their working life."

But what really makes more sense?

Should we adjust the amount taxpayers contribute?

OR

Should we adjust the amount city employees contribute?

OR

Should we adjust the minimum retirement age to 65 or higher before benefits are collectible?

OR

Should we adjust the minimum number of years worked to 30 before benefits are collectible?

OR

Should the percentage of final pay that is payable be adjusted based upon the total value of the account at retirement and an actuarial assessment?

OR

Should government pension systems be disbanded and converted over to 401(k) plans and let government employee self-manage their retirement like all other workers?

Private corporations have had to change to focus on global competition and as a result have had to change their benefit programs or face going out of business. Government does not compete in the same kind of environment. Governments are a legal monopoly. Unions working in government agencies are a monopoly working inside of a monopoly. They have become self-serving and unaccountable.

Seems unfair that government employees look to the taxpayers to solve their pension problems especially when there are many other solutions. Let's not forget all of the government employees who stood by idly and did nothing at the state and federal level while all of the private sector pension and benefits systems were systematically dismantled and thrown out leaving hundreds of thousands of private sector employees with their careers, benefits, and retirement in shambles while short term investors walked away with all of the pension money. Maybe, just maybe if some of these same government employees had done something, anything, to stop what happened in the private sector we would be somewhat sympathetic to what is now happening with government pension funding. Fact is the government, our government, stood by and did nothing and allowed it to happen. Excuse us if at this point we really don't have a problem with major reform in government pensions. Excuse us if at this point we really don't care if the government pension system goes broke or not. Excuse us if at this point we really don't care if the government goes broke and files for bankruptcy. Maybe once the government is in bankruptcy the same judges who oversaw and approved all of the changes that decimated the private sector will take the same knife to the government benefit system and order the change and reform that is needed and which our own elected representatives are so gutless in bringing about voluntarily.

Anonymous on 9-8 @ 8:26 pm

The following from the Fire Station thread. I believe it to be correct.

By Councilman Bob on May 27, 2008 11:21 AM
Here are the answers to Belinda's questions:

QUESTIONS: How much does a police officer pay towards his pension per paycheck as a percent of his gross income? What do the taxpayers directly and indirectly pay towards his pension? Do policemen and firemen have equal pensions?

ANSWERS FROM CITY FINANCE DIRECTOR:

Most recent data is for fiscal year 2007 (May 1, 2006 - April 30, 2007).

For FY 07, Police contributed 9.91% of their pay to their pension. Fire contributed 9.46%. City contributions are limited to the property tax line item and contributed an additional 18.7% for police and 21.16% for fire. The two groups do not have equal pensions. City contributions are up recently due to the underfunded status of the plans.

FYI...

Police and Firefighers in Illinois typically get their pensions calculated at 2.5% of salary per year up to a maximum of 75%. Assuming one starts at age 25 they would qualify for 75% pension at 55.

It is very obvious to this reader that many people on these posts wish ill on our public servants and that it is NOT just about the money.

By the way no police officer or fireman takes home $7k per month in pension. The last poster (1:30pm) is either stupid or ignorant.

Not positive, but I think my post above referencing the Civic Federation report is posted anonymously. It's mine.

.

A comment responding to Anonymous @ 10:37 AM

What you, and others might be surprised to know is Dan Denys and I know each other. We faced off when he was running for the school board in 07 (I was part of a group that opposed the Taxpayers Ticket of which Dan was a member, along with Mike Davitt). Amazingly, we actually had drinks together in early 2008 and talked about school issues. But the wheels fell off in these very blog pages over the D203’s facilities referendum last spring. And while I understand, appreciate, and essentially agree with your comments, I have for the last 9 months now dealt with Mr. Denys’ continually attempting to mislead readers. He has always posted in the same dishonest manner that he has on this tread. It hasn't been pretty, and it hasn't been fun rebutting him.

So yeah, I’ve been hitting him pretty hard these days. I’m repulsed by his actions, and it’s such a complete waste of time. He’s a bright guy. I personally think these blogs could be an excellent resource for residents. Do I spend way too much time rebutting Denys? Yup. Does it get in the way of trying to get to the fact of the matter about various issues? Big time. If he would have enough sense to make a legitimate, truthful argument (and that doesn’t mean he has to agree with me), then perhaps we could all end up learning something, and advancing our understanding. But I’m not hopeful, and I’m not going to let him play fast and loose without challenging him. And from time to time I communicate to him my personal distaste of his tactics. It’s only directed towards him. Let me offer my apologizes if I offended anyone else’s sensibilities.

Let me spend some time on benefit increases, and unfunded liabilities, and bring us up to the present, as opposed to Dan’s three year obsession.

The following from the Civic Federation report

http://www.civicfed.org/articles/civicfed_220.pdf

THE PROBLEM: HISTORIC UNDERFUNDING OF THE STATE PENSION FUNDS

The State of Illinois retirement systems historically have suffered from underfunding. This has ensured that Illinois consistently reports one of the lowest funded ratios among the fifty states.

TH here, the Civic Federation is telling us upfront on page 3 the number 1 problem is underfunding,

Reasons for Chronic Underfunding of Retirement Systems: 1970-2003

The principal reasons for the State of Illinois’ historic failure to fund its pension systems in an actuarially sound manner over time are outlined below. For over thirty years, annual State contributions have been less than the necessary amount (the interest and current costs) determined by the retirement systems’actuaries. The State of Illinois’ contribution shortfall totaled $10.6 billion between 1995 and June 2003. This increased the amount of underfunding.

Investment Losses. The State pension funds experienced investment losses of $6.4 billion between 1995 and 2003. Investment returns are a significant part of the funding stream of a retirement system. This problem has been exacerbated by the practice of failing to make adequate contributions to the funds.

Th here, I can say that at least the TRS has had boomer years since 2003. They are just about at their 9% projected annual investment return for the period 2000-2007.

Failure to Increase Payments in 1990s Economic Boom. After implementation of the 1995 law, annual funding decisions adhered to a fixed, ramped-up payment schedule but did not adjust for the cyclical opportunity provided by the long 1990s economic expansion to contribute in excess of the fixed payment amounts provided for in the 1995 funding law. This was a lost opportunity to improve the funding situation.

Increased Benefits. Between FY1995 and FY2003, Governors Edgar and Ryan, with encouragement from succeeding General Assemblies, weakened the impact of the pension funding reform law by adding $5.8 billion in new pension benefit enhancements. This further increased the State’s aggregate pension liabilities

TH again, Not to get partisan, but I note Denys constant attempt to blame Democrats for all our ill's. Gee I didn’t know Edgar and Ryan were Dem’s! ( Dem’s have their own sins of course see below)

I’ll go a bit further and comment on the increase benefits of $5.8 billion in the 1995-2003 period. Here is the breakdown from the same source;

1995 TRS Early Retirement Incentive $ 150,000,000
1997 SURS Conversion from Step Rate to Flat Formula $ 180,000,000
1998 TRS Conversion from Step Rate to Flat Formula $ 1,000,000,000
1998 SERS Conversion from Step Rate to Flat Formula; $ 1,250,000,000
Alternative formula final rate of pay conversion from
average of final 4 years to pay on final day
2001 SERS Rule of 85 added; alternative formula $ 650,000,000
conversion from Step Rate to Flat Formula
2002 SURS added 30 years of service and out provision $ 60,000,000
2002 SERS added highway maintainers and DHS $ 170,000,000
security to alternative formula
2003 SERS Early Retirement Incentive $ 2,370,000,000

Now the biggie is the SERA This is State employees that took a great deal offered by the governor to early retire and thus reduce staff counts (huge number) and payroll. So we saved money on payroll at the cost of increased retirement costs. Was it a good deal for the state going forward, or did Blago take the quick saving now, with greater costs coming after he’s gone? Dunno

Go here to read about the cost and savings of the early retirement program. I’ve only glanced at it http://www.ilga.gov/commission/cgfa2006/Upload/2006_JUNE_ERI_Report.pdf

The second biggie is the teachers in 1998. As I understand it they had to elect to buy the benefit for years served before 1998 and their contribution was increased to pay for it going forward. I've have no idea what percentage of the benefit the teachers increased contribution (1%?) was supposed to cover. Regardless, even if they paid 100% of the cost, it still has to be accounted for on the debit side.

Which brings me to this comment. To truly understand pension funding and the mess we are in fully you probably have to be an actuary.And spend hours. As I’ve said before I have no idea what the solution is. There is a plan in place that is intended to reduce the unfunded pension liability to 90% by 2045. The state passed the bill. Problem Solved! Oh, they immediately ignored it. That ain’t gonna get it done.

Responding to Dan Denys (anonymous post of 9-12 @ 11:42 Am)

Ah, the old mis-direction ploy.

First you incorrectly go on, and on, about how the teachers liability mushroomed from 2000 to 2003. Of course this isn’t true.

My only observation particularly as you isolate the changes for Teachers from 2000 to 2003 is that the liability mushroomed from $15 billion to $43 billion. Since then they have grown at 10% annually excluding the pension bonds.

After I call you on it, you then say this;

In Illinois, the liability for ALL state pensions increased by $30 billion in three years to $45 billion between 2000 and 2003. At that point, the "underfunding" was $10 billion. What about the other $35 billion?

Well you got the fact that it’s the entire state retirement system, but what's with the three years 2000-2003? The study you pull them from covers 1996 to 2007. The only one who is looking at these three years in isolation is ....you!

Why do you do this? Because a $30 billion deficit (actually 28 billion) in only three years helps you make your anti pension case. Hopefully, people are paying enough attention to realize all this is, is you manipulating data attempting to mislead readers. When I offer my complete and total revulsion that you would cynically use the financial consequences our nations greatest civilian tragedy to further your anti tax crusade, you do what?

You Pivot!

Suddenly today, you are now talking about the 8 year year period, ending in 2003

Change from 1995 to 2003 (initial focus of report)
FY95 Deficit Not shown
FY96 Deficit $20 billion (assume FY95 is the same)
FY03 Deficit $43 billion
Change $23 billion increase (more than 2X's!!!!)
Causes of change cited
Underfunding $10.6 billion
Investment losses $6.4 billion
Increased benefits $5.8 billion

Now, I’m not going to waste my time once again ferreting out all your misstatements, or what the positive investment returns were for the years 1995-2000 that “netted out” against the investment losses that followed equaling the $6.4 billion net loss for those 8 years, nor an I going to waste any time delving into the timing, or amount of funds the state underpaid in the years following 9-11, although I would surmise that with the recession after 9-11 the state coffers were a little tight afterwards, and it wasn’t pretty, leading to that huge $28 billion three year deficit.

So once again, it’s apparent that none of Dan’s words are intended to fairly discuss this issue, rather we see on display classic Dan Denys; manipulate, misdirect, obfuscate. But, enough of Dan’s shenanigans.

The city contribution includes the 9.45% they take from the firemen's paycheck. The city's portion was 10.96%. That's where the 21.16% comes from.

The city contribution includes the 9.45% they take from the firemen's paycheck. The city's portion was 10.96%. That's where the 21.16% comes from. Look it up.

Firefighters union backs pension system reform

Members of the Naperville Professional Firefighters (Local 4302) share the concern of our community over the solvency and viability of firefighters' pension funds.

As Mike Mitchell's story in the Aug. 24 Sun notes, firefighters contribute nearly 10 percent of our salaries to our pension fund.

Our pension contributions remain constant. What fluctuates is the employer's share of contributions and investment returns, which is why we supported reforms to funding methods.

Unfortunately, a loophole in existing law allows local governments to hire independent actuaries who can overestimate investment returns on pension funds. As a result, some public safety pension funds (which include those for police officers) may have seen growing gaps in proper funding.

Firefighters also have asked for broader investment latitude so that our pension fund investments can take advantage of market growth. We will continue to responsibly monitor the investment markets and work toward strengthening our funds without asking for additional funds from taxpayers.

As taxpayers, we understand the concerns of property owners in Naperville and we will continue to serve our community proudly while we look for ways to strengthen the future of our retirement funds without adding to the tax burden.

Rick Sander

President

Naperville Professional Firefighters Local 4302

-------------------------------------------------------------------

President Rick Sander(Firefighters Local 4302),

I took the liberty to post part of your letter which was published in the print edition of the Naperville Sun.

You seem to be patting yourself on the back because your pension contributions remain constant at 9.91% and indicating everything else may be the problem because of fluctuations. I and every taxpayer would love to match your contribution of 9.91% and remain constant year after year. We would love to have that luxury. We don't mind giving you matching contributions of 9.91% even though our employers only give us matching contributions of 6.2% for our Social Security as required by Federal Law.

The reason that the City of Naperville can't remain constant as you guys are at 9.91% is because you guys want to retire at age 51 with 75% of your final salary. Those two 9.91% contributions(yours and the taxpayes) could never allow you this luxury even with a good return on invested money because they are not nearly close to making those kinds of pay-outs possible.

Are you aware the taxpayers paid not only 9.91% into your fund last year but 21.16% and we still have a $53 million defict shortfall.

We would be all for you guys to take your 9.91% and our 9.91%, invest it as you please and where you please, and pay yourself according to what you have or are capable of making.

Trying to get better investment returns is not so easy. You need to take on riskier investments for better returns and lately risky investments such as Freddie Mac and Fannie Mae netted negative 90% returns. I would recommend taking the money and playing it safe in banks with complete FDIC insurance. One reason you firemen are in such a deep hole is because of your poor investments.

Naperville and its taxpayers have been consistant and constant in funding you at least the matching 9.91%. The only reason that it is not constant is that they have had to double the matching funds to keep it from becoming a 100 million deficit instead of a 53 million deficit.

The story is not about actuaries who overestimated returns. They estimated the market would do 8.5% and it appears to have done less. No one can estimate what the market will do. They should estimate a 4% return and set your pensions accordingly. The problem is firemen seemed to feel a sense of entitlement that they deserve a 75% pension at age 51 and in the end, you and I know, that can only come if you dip very deep into the taxpayers' pockets.

For you to pretend that you care about the taxpayers, amounts to hogswash. All you care is about getting your 75% pension benefits. You and I know that is only sustainable if the taxpayers pay at least 50% matching contribution funds. A constant 9.91% will not do it from our side unless you guys agree to retire at age 65 and accept a 50% pension instead of a 75% pension. At that point, it is possible that you would not need any more funds from us besides the matching funds we do and should provide.

You talk the talk but are not willing to walk the walk. You do not want to make sacrifices but you want the taxpayers to make the sacricfices for you.

At this point 200 Firemen paying 9.91% into the pension fund can not support 3 dozen retired firemen. Need I remind you with 200 contributing and so few retirees, you are 53 million in the hole...deficit in accounting terms!

In 2 decades you will have 212 active firemen paying 9.91%(plus matching funds from the taxpayers of course) trying to support 212 retired firemen. Can you not see what an obstacle that will be for your children and our children to provide for 212 Firemen demanding 90k for their 40 years of retirment...plus I am sure some cost of living raises.

This will amount to $19,080,000 in the first year and probably close to $800,000,000 for 40 years if you factor in some Cost of Living Increases. How do you suppose we are going to be able to come up with that kind of money?

You claim you want your pension fund to be properly funded like Social Security and 401Ks. Well, the reason 401ks are always properly funded is because they pay out according to what one has accumulated in them. In other words if they can only afford to pay out 2000 dollars a month that is all they do. But if they tried to pay out 7-8000 dollars a months as your funds do, they would also not be properly funded.

Social Security also is temporarily properly funded because the pay-outs are reasonable. My Mon worked 40 years before retiring and receives $930 dollars per month....that is it! If the social security tried to pay her and every other citizen $7000 per month as police and firemen receive, they would be not only improperly funded but bankrupt.

I don't think you guys in the police and fire department get it. You guys are underfunded because you are asking too much in retirement pensions combined with asking for a very young retirement age. That is the crux of the problem.

401k don't have guaranteed returns on investment. They make what they make and people find a way to live on it by buckling up.

Basically, you guys are trying to say if we find the next Google Stock, we will have our 75% without much additional funding from the taxpayer. But if we don't find the next Google Stock, we will come to you, rain or shine, so that you make sure we get our 75% retirement pension pay-outs! That is what you are saying while pretending to be taxpayer friendly.

The taxpayers did not short you last year or any year. Last year we gave you 21.16% in taxpayer contributions to help you guys out even though we pay into your fund annually whatever is required of us. The numbers will never work out until you fire fighters either agree to make 50% contributions, increase your retirement age and/or reduce your pension beneifts. It may even take all 3 to make ends meet as far as what you guys are expecting and promised by the establishment folks who are clueless to the depth of the fiasco they created.

Another thing you can do to help firemen and taxpayers is reduce the starting salary before the next 12 are hired for Fire Station #10. As I have pointed out before, reducing the starting salary by 20k and bringing it in line with other towns reduces the pension outlays by at least $15,000 per year for any future employee. Avoiding unnecessary promotions in the last year would also help keep pension costs down.

I think if you are sincere in conquering this problem, you need to compose a new letter to the editor.

Good luck, President Rick Sander!

I expect you to keep your promise and not ask for additional funds from the taxpayers or add to our tax burden! Talk is cheap....let us see if you can walk the walk. Maybe you can start by asking the taxpayers to limit their contributiions to 9.91% this year and relieve of us of any additional 21.16% bail-outs as we just did in the most recent year.

Thank you!

I know the teachers union despises this site, but here is more information for people who want a different perspective.

http://www.thechampion.org/category.asp?id=12

Here was all I could find on the Illinois Federation of Teachers web site.

http://www.ift-aft.org/UserFiles/File/catalog/512/Retiring%20Wisely%204-06.pdf

The IEA care less. They do not even acknowledge a problem. See attached.

http://www.ieanea.org/page6402611.aspx

Make an informed decision by reviewing this information.

BAFFLED

Thom continues to duck the issues (sorry Concerned Citizen that I disagree with you). For the last time, I will outline what I feel is relevant.

1. REASONS FOR DEFICITS

The best document I could find was the Civic Federation report. The link is as follows:

http://www.civicfed.org/articles/civicfed_220.pdf

I picture is worth a thousand words. Unfortunately, I cannot post them on this web site. I would suggest that everyone who is reading this post go to page 7 of the referenced reports and study them (and the narrative as well).

Here is a financial summary.

Change from 1995 to 2003 (initial focus of report)

FY95 Deficit Not shown
FY96 Deficit $20 billion (assume FY95 is the same)
FY03 Deficit $43 billion

Change $23 billion increase (more than 2X's!!!!)

Causes of change cited

Underfunding $10.6 billion
Investment losses $6.4 billion
Increased benefits $5.8 billion

These are definitive facts compiled by an outstanding, independent organization, not me, not Higgins.

Why is this relevant (and not "nonsense" per Higgins)? Since 2003, the unfunded liability went up only $2 billion. State funding from operating funds and bonds have generally kept pace. In fact, going back three blogs, I think there was a $2 billion adjustment--INCREASE--for "unfavorable actuarial assumptions" (I do not recall the exact amount, nor is it necessary to go back). So we have kept even in the last five years.

But Thom's numbers point to more underlying problems with benefit increases that are negating the impact of higher funding. Does that meant the state and us as taxpayers will always have a $45 billion or more problem? That is scary.

2. PENSION CONCERNS

I have two. First, the investment assumption used by public plans is significantly higher than that used in the private sector and for the matter "mandated" in the private sector by PBCC and the IRS. Implication? Twofold. First, it underestimates liabilities. Second, when there are market losses such as noted above, they are not offset by periods of market gains (such as was realized since 2003). Impact of such poor policies--forces increased funding when assumptions are not realized.

Second, the granting of additional benefits for such poorly conceived and funded plans was not well thought out. Did the State save $5.8 billion in return for these pension enhancements? NO. More startling is that these amounts were grossly underestimated when approved (per the Civic Federation examples noted). Plus how much of the funding problem is really not funding these enhancements? If we eliminated all enhancments going back to 1970, did the state underfund at all?

3.WHAT IS GUARANTEED?

The "swirl" among the unions is that these pension payments are ABSOLUTELY GUARANTEED to employees. You do not see these comments when benefits were added.

It would be nice to get answers to the following

Could the current early retirement benefit be eliminated for all employees with less than 20 years of service?

Could the current early retirement be moved out one year each year for all employees until it reached 70, the same age as Social Security benefits?

By the way, if either of these options could and would be implemented, I would fully support an early retirement option at appropriate actuarial reductions. For that matter, lump sum payouts as well.

The other alternative being proposed is a two tier retirement approach. But note that the savings are not material as cited by the Democratic Attorney General of San Diego.

4. SOLUTIONS

Great, we have a $45 billion problem. Even higher if more reasonable investment assumptions were used. But what are the solutions?

A. INCREASE TAXES. Let's be clear, if there is a net increase of four Democratic legislators in the state house, there will be a referendum to implement at graduated income tax. The current Democratic plan is to DOUBLE the income tax on people with incomes over $75,000. (Sidebar--Diane McGuire is part of this plan!!!!).

B. RATIONALIZE BENEFITS. I would start with the early retirement benefits. I would also base the benefits on the lifetime of service and not the best five years. But there are many options. Again, the rationale from the taxpayer is that benefits were both generous and not affordable. The state cannot live beyond its means.

C. TRANSFER FUNDING COSTS. Two years ago the state "eliminated" the 20% salary adjustments for pensions. However, as I read the law, a school can still provide the 20% salary increases and the pensions would be calculated using the higher amounnts. However, the State will bill the local school districts for the cost of the higher pension benefit. Is this the way the state does not alter its benefits? If so, make the cost of all excessive benefits such as early retirement a local school district cost. Then the teachers will have to negotiate to have the cost paid by the local district if they wish to retain the benefit. This would have a positive impact on the state pensions since teachers are the largest pension. The state also has a surcharge for pension deductions for those employees who want to increase their benefits for the 2.2% Buy In. Increase these contributions so they cover the full cost. If a teacher wants a higher benefit, pay for it. There is precedent.

C. TAX EMPLOYEE CONTRIBUTIONS. About 50% of all teachers do not pay Federal or state taxes on their contributions to their pension plans. (Thom, go to the union 203 web page for "Sheltered Retirement http://www.nuea203.org/downloads/paycheck.pdf). The state should subject 7.65% of the 9% contribution should be subject to the 3% (proposed 6% Democratic tax increase) like all other taxpayers. There should be no tax shelter on the portion of pension contributions comparable to Social Security. (The Fed's should do the same and commit the additional revenues to Social Security.)

D. ?????? I have asked for others, particularly Thom, but to date, SILENCE.

SUMMARY

Now you will note that all of the above have been stated by me in the past. I do not see any name calling, personal attacks, or whatever in any of these comments. My biggest issues is that the Sun outlined some of the issues, but not the solution. I know I lean heavily on what causes the problem to come up with a solution. But so do the unions, they view it as 100% taxpayers responsibility and taxes are the only solution.

Or just keep incresing the benefits with no additional funding. One day, the only people who will be living in the state will be the pensioners and others supported by the state and no tax payers.

Note to Concerned Citizen

Go back and check the blogs from which he pulled those citations. They go back 18 months. Make sure you read all of his comments. His two common themes are either that I am the most ignorant person in the world or my positions are facist (way too right wing). Again, it takes two two to tango and he needs to look into a mirror.

Note to Thom

My clients have concerns on these issues. Let me outline school district issues.

Which teachers have benefited the most from these pensions? Where are the 100 pensioners from that have a $1 billion in pension benefits? Suburban Cook County and the collar counties.

What is a common characteristic? Republican (up till now) and at least upper middle class.

How has the rest of the state faired? Chicago has its own pension plan with no state support of the deficit and substantially lower benefits (partially due to the negotiation of their contract that pays them less then the suburbs). Downstate lags as well, they still have teachers that get paid $25,000 per year.

The characteristics of this group. Democratic.

What do my school district clients fear? Actions by the state to pass the pension costs just like the school costs back to the local taxpayer. How? State makes all school district's responsible for the retirement benefits in excess of the average. Another? Convert TRS to an IMRF funding mechanism (while a state plan, the local governments are 100% respoonsible for funding). Eliminate the state subsidy for pensions. Transfer this money to the state aid formula to distribute the amounts. Grant a one year moritorium on tax caps for tax increases to fund pensions.

Outcome of either idea? Local school budgets would have to increase by at least 20 to 30% of teacher salaries. Since teachers salaries are 80% of budgets, this is a 16% to 24% increase. The increase in state aid? Less than 5%, if anything. Just another 15 to 25% increase in property taxes, only in the suburbs. I can see Reverand Meeks, the suburbs want local control, let's give them MORE. 203 would be punished by this change.

Why hasn't this happened? There has been peace between the Chicago Teachers Union and the state organizations (it use to be that Chicago's teachers were represented by a different teachers union than the rest of the state, but I do not have the details. If you are interested, you can research. ) The current unity has prevented these power plays from happening.

The second reason, Blagovich and his supporters have not figured this out.

The third, it is a bit complex and could be hard to implement.

By the way, I strongly feel that debate and review of issues provides a clearer understanding and better outcomes. If you were not singularly focused on discrediting me, our comments might be more productive. I think the summary above includes 90% of our respective ideas (I am hedging because I never say 100%).

I am not expecting you to agree, but I think the above is relevant. If you had an answer, you would be a state hero. Unfortunately, there are only tough choices with painful outcomes for each.

To follow on what Concerned Citizen wrote,

It seems as of late that there has been way too much going on that is personal based as opposed to issues based. In reading back in what has been posted by everyone there are quite a few who's hands are less than lily white when it comes to this. There is a fair share of blame to be metered out all around and Dan D isn't the only guilty party here. Truth be known there are some regular posters who always insist on having the last word on everything, there are some regular posters who manipulate, twist, and distort what others post, there are some regular posters who argue just for the sake of arguing, and there are some regular posters who are nothing more than cyber bullies.

Once people start attacking each other instead of addressing the issues it tends to take the whole thread down not up. There are several regular posters who tend to come off as aloof and consistently rub most other people the wrong way. Whether they are aware that they come across as grating and crass is anyones guess. Of course the possibility exists that they deliberately choose the words they write in an attempt to provoke an emotional response or to start a fight.

Regardless, the fact remains that everyone can help do their part to keep Potluck from becoming a snake pit by showing other posters more respect. If you feel compelled to specifically address another poster and you are not writing a compliment then you probably should resist the temptation to click on the submit button. Please address the issues, not the poster or their faults. We can see those same faults as easily as you can. Remember it takes two to argue. Try not to get baited by some of the traps used by some of the regular posters. Stick to the high moral ground, stick to the issues and the games some of these posters are playing will become self-evident to everyone else soon enough.

I have been following several blogs and have read many contributions from both Dan D. and Thom Higgins.

As a result of Dan D.’s post dated 09/08/08 7:38am, I post here to say:

Dan D., it has not gone without notice (of this reader), that you deviate from the issue(s), provide information that is inaccurate and resort to name calling.

You stated that you are on the receiving end of harsh and slanderous comments. Have you taken a moment to reflect on the following?

“I think every important person in Naperville has seen the Omnia proposals.-Dan D.”

You have successfully delivered a harsh (inconsiderate) and slanderous (insulting) comment to all of us reading these blogs – especially to anyone who is interested in any development in our community.

You did not name call as you have before (Bully Higgins (who cannot be civil in any manner)…."Guru" Thom "Gladys Kravits" Higgins.), but you did insult this reader.

Thom Higgins, I will continue to read your posts knowing that these are posted with honesty, integrity, maturity and to the issue(s) at hand. Thank you for your contributions!

Dan D. I leave this post with the following question…
Will it be Thom Higgins that is ignored or will it be you???

Dan

Have you no shame? Your words;

In Illinois, the liability for ALL state pensions increased by $30 billion in three years to $45 billion between 2000 and 2003. At that point, the "underfunding" was $10 billion. What about the other $35 billion?

Continually using the narrow range of the years 2000 thru 2003 is deeply, deeply, disingenuous. All funds had significant investment losses due to 9-11. For you to use the financial consequences of our nations most tragic event, to further your anti-tax crusade, defies human understanding.

If anyone cares, I’ll rebut the $10 billion - $35 billion nonsense.

'

The following are complete, utter, fabrications;

Higgins has asserted that 100% of the problem was underfunding. PERIOD

OR YOU RAISE TAXES LIKE THE UNIONS AND HIGGINS STRONGLY SUPPORT.

Second, in that post, Higgins stated five times that I was either the most ignorant person in the world….

As I said above, I believe, once written, here in these blogs and elsewhere, your words, with their reckless disregard for the truth, allow for no possible excuse, or justification; there is no acceptable explanation.

It appears to me that you seem unwilling, or incapable, of making an honest argument. Apparently you are willing to live with the conclusions people ultimately draw from your comments.

LOOK IN THE MIRROR

Responding to HIGGINS post 9/6/08 10:41 PM

First, here is a quote from his 20th paragraph

"I will lastly note that the second largest factor in the deficit looks to be the early retirement programs that while they had the beneficial effect of reducing the cost, and number, of state employees, it was to the real detriment of the pension system. (consider it passing the buck, squared) I found a report discussing the cost and benefits to the state of the various ERO programs."

My point exactly. And in all of this morass of information, only 40 to 60% of the problem has been identified. INTERESTING.

Second, in that post, Higgins stated five times that I was either the most ignorant person in the world or purposely trying to mislead people in an anti-tax crusade. These are very harsh and slanderous comments.

One major issue was my incorrect citation of the Civic Federation report. My apologies to all, if you go back to my post, I was trying to see what the state was projecting the pension cost would be in 1995 to 2000 when these benefit increases were approved. After an hour of searching, I found this report that showed the explosion of the liability that is now causing us problems. And I incorrectly cited that it was TRS and not all plans. You would think that I caused World War III.

I'm done. We all see how everyone ignores Higgins, I will listen to all of you and ignore him as well.

TO ALL

I really do not want to have the last word.

But in San Diego, the problem with the pensions were granting too many benefits.

In Illinois, the liability for ALL state pensions increased by $30 billion in three years to $45 billion between 2000 and 2003. At that point, the "underfunding" was $10 billion. What about the other $35 billion?

Higgins has asserted that 100% of the problem was underfunding. PERIOD. When somebody else raises an alternative, at least partial cause, his war machine goes into action.

No matter what has caused this current situation, it needs to be addressed. If you follow the arguments of the various Illinois unions, once you approve a benefit change, it is an ironclad contract, even if it cannot be supported. I on the other hand feel that if the benefits are not sound, maybe roll them back. For example, rescind early retirement that we no longer need since there is a teacher shortage--make then work to 67 to 70 like the rest of us who cannot tap our pensions and social security. By the way, this is also the problem with the police pensions. OR YOU RAISE TAXES LIKE THE UNIONS AND HIGGINS STRONGLY SUPPORT.

Why do I bother? Becasue public debate should result in better public policy. This issue has been swept under the carpet. WHY? Because the plans are to double the income tax on families making more than $75,000--more than half of Naperville since the median income income is somewhere around $100,000 (I have forgotten the exact amount, another blast from Higgins is on the way). Pure and simple.

But true to form, Higgins does not address these issues. The last two posts perpetuate his personal attacks. As the old saying goes, people who live in glass houses ought not throw stones. I think every important person in Naperville has seen the Omnia proposals. Ever wonder why people ignore you?

Dan,

Please for once stop and reflect on your own words. In your latest post you accuse me of ranting, but these are your words, not mine from this and the other pension thread;

Thom "KING OF BOMBAST"

NOTICE HOW THOM DOES NOT ADDRESS THE BENEFITS AND PROPOSED SOLUTIONS. WHO IS PAYING HIM? REZKO?

Throughout this thread, Bully Higgins (who cannot be civil in any manner)….

But more interesting are "Guru" Thom "Gladys Kravits" Higgins's comments

you can see that Thom did not have a 203 education (he says he attended school with Drew Peterson, you can see how that would affect him--class act!!!!!)

Truly, who is ranting here?

You seem unable to comprehend the corrosive effect your words have on your credibility. I was completely serious when I stated previously that I believe words and actions define a man. It is your words and actions that have served to define you to the public as someone who is supremely uninterested in making a serious and truthful argument.

Consider for a moment; can you say to yourself “I’m proud of the comments I’ve made in this blog”? Can you honestly say that you would be proud for your business associates, friends, and family to read them? You have school districts as clients. What would they make of the staggering amount of false and inflammatory comments made by you in these blogs? Would you deny ownership? Apologize? Seriously, what would you do?

As I said above, I believe, once written, here in these blogs and elsewhere, your words, with their reckless disregard for the truth, allow for no possible excuse, or justification; there is no acceptable explanation.

Your words here tell the world, “This is who I am”. Are you sure you are willing to live with the conclusions people draw from them?

TO ALL OTHER READERS (other than HIGGINS)

My posts have been from authoritative sources. There are problems for which the causes have not been clearly isolated. If you do not identify the causes of the problems, you cannot solve them. Simple.

As most people who have looked at Higgin's rantings, they are not worthy of response. Just a question, what does he stand for? What is he so angry about?

For those who have followed this, I cite a Civic Federation study of all state funded penions, sorry that my cite was off. At least I cite my sources unlike the rampant plagerism at Central (couldn't resist). But, TRS (teachers) is a the major component of all state funded. Were only the other pension plans (besies Teachers) soley cause the $30 billion increase in liability from 2000 to 2003 that we are trying to cope with? Of course not. I think any solution for TRS should be made for all state pension plans. Further, state mandates should be eliminated for local pension plans like Fire and Polic and let the local governments negotiate benefits with their unions.

Even in Higgin's last post, he notes the TRS liability increased by $22 billion, underfunding cause $5 billion. What about the other $17 billion?

For the last time, just like San Diego, the state dramatically increased pension benefit both in amounts (the 2.2% flat rate versus a phase in was highly sought by unions) and early retirement. Based on my review of the numerous reports, these changes should have also been immediately funded rather than dragging it out for 15 years. Further, the full impact of these changes were underestimated. Just like an actuary told me back in late 1990's, the impact of the state changes would not be fully appreciated until 2005 or later. Now we know!

The alternatives are simple. Maintain the benefits, then increase taxes. That is the Democratic plan, get four more Democratic house representatives (including Diane McGuire, by the way) and the state income tax will be at least doubled on families making more than $75,000 per year.

Or we can follow Mr. Aguirre's example and hold the legistlature accountable. Illinois has a balance budget requirement. ENFORCE IT even if it means bankruptcy for the state to fix what the legislators won't do.

Now, does Higgins have another solution? He professes total support of the Illinois Democratic position which is to increase taxes. If that is the case, say so. I would like to see less draconian efforts since we have the highest property and sales taxes already. An income tax increase will put us on top with New York and California as the highest taxed people. Even Ohio, under a Democratic governor who refused to be Obama's running mate, has cut taxes. And per the WSJ, the state's economy is improving in these economic times. That is my vote!!!

I will simply post the editorial from Saturday's Wall Street Journal. We need a politician in Illinois (from any party) that has the courage of

A San Diego Retirement
September 6, 2008; Page A10

Unfunded public employee pensions are a crisis waiting to erupt across the country, so a political brawl in San Diego is worth watching. In a welcome change, a public official is looking out for taxpayers rather than for unionized public workers.

San Diego first disclosed huge funding shortfalls in its public pension plan six years ago. Officials have since been charged with fraud by the SEC, the city has had its bond rating slashed, and both the IRS and the SEC have demanded changes in the way the city's pensions are administered. Yet the generous pension benefits that were handed out by the derelict politicians and triggered the crisis remain in place -- a billion-dollar liability hanging over city taxpayers for decades to come.

This summer, San Diego's mayor succeeded in negotiating a reduction in retirement benefits for city employees -- but only for new hires, starting in 2009. The deal left the benefits negotiated in 1996 and 2002 untouched, and both city politicians and unions say those bennies are "sacrosanct." They include 50,000 years of pension credit for time not served that the city all but gave away, as well as a provision that allowed employees to take early retirement and a deferred-retirement program at the same time.

San Diego's contributions to the pension fund have quadrupled in recent years, and the fund is still $1.2 billion in the hole. California state law caps property tax levies. So San Diego has paid for the increased contributions by deferring road maintenance, and skimping on library funding and municipal recreation programs. And the city is still falling further behind.

The garden at this skunk party is City Attorney Mike Aguirre, who has made himself very unpopular with the political establishment by suing to rescind the 1996 and 2002 pension promises. Though a liberal Democrat normally sympathetic to unions, he says the benefits were granted as part of "the largest municipal securities fraud in American history," and so taxpayers shouldn't have to honor them.

As for the mayor's recent deal on future benefits, Mr. Aguirre says "that might save us $22 million 40 years from now." By contrast, he figures he can shave $900 million off the $1.2 billion deficit if he prevails in court. His case was tossed out of trial court but is now under appeal.

The battle has been so contentious that one member of the City Council and a local judge both attempted to unseat Mr. Aguirre in a primary earlier this year. Judge Jan Goldsmith won the primary, but Mr. Aguirre, who came in second, will get a rematch in November's runoff. Mr. Aguirre, who used to represent victims of Ponzi schemes in private practice, says these pension giveaways are the same beast. "But unlike most Ponzi schemes, this one is financed with taxpayer dollars," he says.

The same goes for elsewhere around the country, where politicians have also padded pensions to buy union support, knowing that the bills will come due long after they've left office. In New York state, Albany has been granting expensive retirement benefits for years on the basis of cost estimates prepared by a actuary being paid by the same unions who stand to benefit from the increases. And in New Jersey, state lawmakers shortchanged the public pension funds in the 1990s by rewriting the accounting rules to make it look like they were fully funded.

Taxpayers in those states need a rabble-rouser like Mr. Aguirre willing to stand up to union interests. The San Diego attorney faces a tough re-election battle in November, but he's setting off an alarm that voters across America need to hear

Well, it looks like once again, it falls to me to debunk Mr. Denys and his numbers.

To recap, John Q. Public asked this question,

The $64 billion question is: what would be the TRS' unfunded obligation, if any, if the state had been making it's fair contribution these past two decades?

To answer John Q’s number as best I can, the number is this;

$4.320 billion (my swag based on 45% of the $9.6 Billion deficit prior to 98)
$5.803 billion ( which is 45% of the $12.9 billion deficit 1998-2006)
$1.739 billion 2007 alone ( I still can’t believe it)
$11.86 billion my best estimate thru FY2007

In my post of 9-4 I discussed the various factors that comprise the total $22.5 billion unfunded liability thru FY2006. Please note it is an unalterable fact that the total TRS liability thru FY2006 is $22.5 billion, and the state’s non-payment (unfunded obligation) for the period 1998 thru 2006 is $5.803 billion. I have not found what the shortfall in state contributions was in the period before 1998. Benefit increases (granted in 1998) that Mr. Denys makes so much of, was only $1.088 billion in this period 98-06.

Ignoring this, in his typical fashion, Dan Denys continued to make this claim,

My only observation particularly as you isolate the changes for Teachers from 2000 to 2003 is that the liability mushroomed from $15 billion to $43 billion. Since then they have grown at 10% annually excluding the pension bonds.

This, of course, is completely factually incorrect; I made a post below his, once again correcting Mr. Denys. What is his response?

MY LAST COMMENTS ON THIS THREAD

And this,

Those were not my numbers, rather the Civic Federation, a venerable organization that is the major "watch dog" for Chicago and state politics.

Of course, he offers no acknowledgment that he was incorrect.

For the record, those numbers actually are in the Civic Federation report, it’s just they are not solely for the TRS! The numbers represent the total liability thru FY2003 for the entire state retirement system. Not just the teachers. There are four other groups, state employees, College professors, judges, and the general assembly members included in the system along with the teachers. BTW deficit thru FY2006 is $40.7 billion and thru FY2007 is $42.1 billion.

Dan knows this, but as his intention is to mislead readers, he’s not about to explain himself.

And of course he’s more disingenuous than that actually.Not only did he try to pass off the whole system deficit as the TRS deficit, he specifically picked the time frame immediately after 9-11 where the investment returns were strongly negative, as a red herring to try to make us all believe that it is the norm, and further, that the deficit is due to increased benefits. As shown in the actuarial reports for the longer period 1998 thru 2006, benefit increases amounted to only $1.088 billion. They are hardly the real problem, but claiming they are helps him further the, “teachers are getting too good a deal argument”.

BTW, Everyone, including the Civic Federation, indicate that the state’s lack of payments is the number one problem with the pension system. Indeed, the Civic Federation has suggested the retirement system be shut down, not because it disagrees with it, but simply because it doesn’t trust the state to make it’s payments. Pretty sad.

Money quote;

In reviewing the record of the past thirty years, we have seen no evidence that the General Assembly has the requisite fiscal discipline to transparently execute a well-funded defined benefit (DB) retirement system. For that reason, we think that a shift to a defined contribution (DC) system must be seriously considered for new hires when such a shift is deemed financially feasible.

I will lastly note that the second largest factor in the deficit looks to be the early retirement programs that while they had the beneficial effect of reducing the cost, and number, of state employees, it was to the real detriment of the pension system. (consider it passing the buck, squared) I found a report discussing the cost and benefits to the state of the various ERO programs. If anyone want the link let me know and I will dig it up.

Sources;

http://www.ilga.gov/commission/cgfa2006/Upload/0707PERS.pdf

http://www.civicfed.org/articles/civicfed_220.pdf

Finally, a personal comment to Dan.

As you and I have battled in these blogs all these long months, it has, unfortunately, not been a constructive, thoughtful exploration of a variety of issues (mostly, if not entirely, related public education, and now, pension issues). Instead, tragically, it has been you mounting a completely transparent campaign where you will say anything, truth be damned, in order to further your extreme anti-tax crusade, causing me to spend countless hours fact checking you, explaining the truth of various matters, and thereby illustrating how utterly disinterested you are in making a legitimate, truthful argument. It’s quite a sad and tragic tale looking back on it

With apologies to P.D. James; To my mind, words and actions define a man. It is your words and actions that have served to define you to the public as someone who is supremely uninterested in making a serious and truthful argument. This, as much as anything else, is what doomed your school board candidacy. Regardless, once written, here in these blogs and elsewhere, your words, with their reckless disregard for the truth, allow for no possible excuse, or justification; there is no acceptable explanation. Your words tell the world, “This is who I am”. They stand unalterable and unforgivable. Sincerely, I do not understand how you can be so blind as to not see how terminally damaging to your credibility your statements have been.

MY LAST COMMENTS ON THIS THREAD

The "evil" Thom returns (or is it newly found "Obama arrogance").

John Q. Public

Those were not my numbers, rather the Civic Federation, a venerable organization that is the major "watch dog" for Chicago and state politics. I wish we had a similar branch in Naperville. Maybe then we would not have this wasteful spending and tax increases that are destroying this area.

I agree with your point on the investments. But that only explains a portion of the increase. Benefit increases and some other unknown factors do as well (by the way, Higgins numbers, while for a different time frame--not 2000 to 2003, show the same).

But remember, the liability that was flat in the 90's almosted TRIPLED in just 3 years. That is the root of the problem. Identify the causes and fix it.

But imagine. If that was private industry in 2003, the panic button would have been pushed. Instead, Ryan and Blago (one convicted, one under a microscope) glossed over an issue that has had fiscal devastation. Look at the airlines. Major losses due to fuel, cut operations 20%. The financial sector, 20 to 30% have been laid off.

Government--PRINT MONEY. Even though they do not have the authority to do so.

The Republicans (or someone responsible) should put the state into bankruptcy and fix this mess because the crooked Republican (Ryan) ignored it and the current leaders (all Democrats are not doing anything).

Or raise taxes. Notice how quiet it is before the election. That is why Mike Madigan is funding Diane McGuire's election. Four more Democrats in the Illinois House and everyone making more than $75,000 will have their income tax doubled.

Just as people have fled Cook County, they will move out of state. All because of mismanagement.

John Q.

Please note from my response to you yesterday this,

$346 million Investment Returns (I believe this is reflects changes in the required reporting of assets. FYI They had a very good year in FY 2007 of 18.3%, and have averaged 9% for the last 10 years)

They did have a couple of bad years, 02 and 03 I believe, but the average return over ten years including this period speaks for itself.

You are in exceedingly dangerous waters responding to Mr. Denys facts and figures without first fully vetting them.

dan d wrote:

"My only observation particularly as you isolate the changes for Teachers from 2000 to 2003 is that the liability mushroomed from $15 billion to $43 billion. Since then they have grown at 10% annually excluding the pension bonds.

"My interpretation. Major benefit increases were granted in the late 1990's and not funded. Then five years later and thereafter, the deficits ballooned due to these benefit increases, but the blame is placed on not funding only (no mention of the benefits)."

Another factor to consider: the Wilshire 5000 index peaked at 14,296 in March of 2000; in February of 2003, it stood at 7973.

Dan

Will you please stop playing games, especially with numbers? I really don’t have time for this.

Your statement:

My only observation particularly as you isolate the changes for Teachers from 2000 to 2003 is that the liability mushroomed from $15 billion to $43 billion. Since then they have grown at 10% annually excluding the pension bonds.

Wrong, wrong, wrong, wrong.

As noted in my post above and easily verifiable, The increase in the unfunded liability for the TRS (teachers retirement system) from the years 1998-2006 is $12.9 billion added to the previous deficit of $9.6 billion for a total of 22.5 Billion thu FY2006, just about half the deficit you claim above.

It is interesting to note (although 1 years data is only that) the unfunded liability increased $1.45 billion in FY2007. However the states total funding deficit was $3.321 billion. It was a positive $6.064 billion in investment returns above and beyond the actuarial assumptions that reduced the total deficit for the year to only $1.45 billion
Other factors of note in this one year snap shot is a $2.735 billion change in actuarial assumptions (I haven’t time to look to see if I can find what they are), and another $1.138 billion in the dreaded “Other” (“Other”, it drives me crazy)

Finally this:

both of us have cited official state of Illinois documents (TRS in my case, done essentially by the teachers to increase funding, ILGA that has a tendancy to hide state problems when it is politically expedient).

This, along with a host of other comments in your posts above, apparently intended to discredit reporting organizations and their accounting practices, illustrates that you are not serious in exploring this difficult issue fairly and seriously, rather you are looking to spread misinformation, and, incite anger against the pension system, and it’s recipients.

Specifically here, the teachers have zero, zero, to do with this reporting, and the TRS administrators don’t either frankly. The State of Illinois has a fiduciary responsibility to report to the citizens of Illinois, and they utilize independent organizations (Buck Consultants for the TRS) to prepare evaluations of the health of the system. No one is challenging the accuracy of the numbers, the accounting standards used, or the integrity of the agencies reporting them, except for you apparently. Frankly, considering the financial disaster you unleashed with your failed Illinois school bond deal that caused the IRS agent investigating it to characterize your bond program as a “farce”, I hardly think you are in any position to opine negatively on the legitimacy of financial reports, or the ethics of the organizations that are reporting them.

Maximus,

Councilman Bob did a lot of research for us about police and fire pensions while you were in hibernation.

I believe he found out that the city contributed between 19% to 21.16% in double matching funds to the police and fire pensions. I can not remember which percentage is for which department. The police and firemen contributed between 9-10% towards their own pensions. I believe one was 9.4% and the other was 9.91% but I can not remember which one was which again!

It was also revealed that a police officer/fireman will earn 75% of his highest salary upon retirement after 30 years in the form of a pension until the day he leaves this earth.

The Naperville Sun also discovered that City Pro Tem Manager Bob Marshall was collecting his 75% pension of about 85k while being paid upwards of 150k for being PT City Manager. I believe the information was obtained thru a FOIA REQUEST!

Now that you have come out of hibernation, please tell us where we are misinformed since you appear to have filled up the application for the Police and Fire Departments.

Tell us how Councilman Bob misled us. Tell us how the Naperville Sun mislead us. Tell us how Host Ted mislead us.

I believe they gave us very factual information and we are using it to the best of our memories on this blog site!

Thank you in advance for you response!

I hope everyone notes that my post and Thom's passed in the mail (I would not have posted my comment had I known that he responded).

Thom, I do not need your "get out of jail card". Rather, both of us have cited official state of Illinois documents (TRS in my case, done essentially by the teachers to increase funding, ILGA that has a tendancy to hide state problems when it is politically expedient).

However, as the billions are thrown around, both Thom and I point to the same factors--benefit increases, lack of funding, and investment gains. And both of us have a significant "OTHER".

My only observation particularly as you isolate the changes for Teachers from 2000 to 2003 is that the liability mushroomed from $15 billion to $43 billion. Since then they have grown at 10% annually excluding the pension bonds.

My interpretation. Major benefit increases were granted in the late 1990's and not funded. Then five years later and thereafter, the deficits ballooned due to these benefit increases, but the blame is placed on not funding only (no mention of the benefits). But as I have always stated, the "management" of Illinois (I view that as the Governor and legislature) need to get a handle on this and then take the appropriate action.

My opinion (with a strong background on these matters) is that the benefit "enhancements" (2.2 change, early retirement) caused the deficits, not the funding, that followed. If that is the case, the obvious answer would be to roll back the benefit "enhancements" that we cannot afford.

This would apply to all underfunded government pensions. Or let's test bankruptcy and let the courts decide if the Democratic governor and legislature does not adopt balanced budgets.

WHAT HAPPENED TO THOM?

True to form, I think the threshhold question was asked by John Q. Public, what are the causes of the funding? I gave him my short answer, Thom has disappeared.

There can be only three reasons.

1. Something awful has happened to Thom. I hope not, I do not wish bad things on anyone.

2. Thom cannot get an explanation about how the deficit increased by $30 billion in three years. Underfunding does can only account for $5 to $10 billion. Maybe he is as confused as I am.

3. Maybe he is done with this post. As you note, his sole goal is to ridicule me, distort my comments, and disappear.

Unfortunately, the best thing for Illinois residents to do would be to get out of the state before the bill for this cost is sent.

I see there is plenty of individuals that are not very informed about Police/Fire Pensions. I would suggest to all the naysayers go and fill out an application for the Police and Fire Departments. Then we can talk.

For John Q Public’s question of 9-1-08,

The $64 billion question is: what would be the TRS' unfunded obligation, if any, if the state had been making it's fair contribution these past two decades?

The total unfunded liability thru FY2006 was $22.5 billion. I have not been able to find the exact answer for the entire $22.5 billion, but here is what I know.

Chart 3 on page 23 of the PDF (14 in the report proper) of the Financial Conditions of the Illinois Public Employee Retirement System, link below, tells us the following:

Deficit prior to 1998 $9.6 billion
Increase in liabilities 1998 thru 2006 $12.9 billion

BTW Increase in the unfunded liability for FY 2007 is $1.39 billion (different source. All due to lack of state payment see below)

Breakdown of the $12.9 billion

$653 million Salary Increases ( I assume this is above the actuarial assumptions made previously)

$346 million Investment Returns (I believe this is reflects changes in the required reporting of assets. FYI They had a very good year in FY 2007 of 18.3%, and have averaged 9% for the last 10 years)

$5.803 billion The biggie. This is the amount of required state funding not made. Looks like they have under funded an average of 40% during the period. ($1.739 billion was added to the $5.803 in FY2007)

$1.088 billion Benefit Increases (granted in 1998)

$846 million Changes In Assumptions (changes in mortality etc)

$4.117 billion Other (don’t you just love this? If I have time I’ll try to find out what this comprises. Part of it is the early retirement program I believe.)

Lastly regarding Dan Denys long pieces recently. Dan gets a “get out of jail free card” from me. I’ve got the 5th Ave. study and the corresponding Omnia onslaught to prepare for and don’t have the time to fact check him.

Source for the above:
http://www.ilga.gov/commission/cgfa2006/Upload/0707PERS.pdf

To Mr. Fair Comparison; Thank you for the kind words.

To Holy Grail sorry about the rant,felt I had to inform A.A.of his incorrect assumptions. It was not my intention to become the narrator of this site--just tired of the rants with regard to city services. I don't have all the facts and that is why I enjoy reading the posts of T.H and others. As you can see the idea of 50 words is tough for A.A. and myself how about 100-150 words.

Mr. Po, errr Mr. Police,

yeah, go ahead and vote for Obama... which will have nothing to do with your property tax rate, by the way... and just wait and see how much your federal tax goes up. And it will definitely be way more than $200.

But then again with all that easy money overtime this summer, that is just chump change to you!

Hey Another Anonymous...

WAA WAA.

My property tax only went up about $200 last year. Sounds like you are living in the wrong place.

Vote Obama.

Mr. Po...?

What is Po short for? Mr. Police?

Yeah we are all grateful that there are people who CHOOSE to be teachers and police officers. These are actually bona fide careers now a days... golly gee they even offer college degrees in both of these fields. It is interesting to note that all of these teachers who have above average educations and all of the police officers in Naperville who also have college degrees are incapable of speaking up and representing themselves and have to resort to union representation the same as unskilled factory workers. Go figure what they learned in college.

Does the average person equate police or teacher with the word hero... absolutely not for their normal day-to-day work. There are rare occasions when someone goes above and beyond and truly has been a hero. Unfortunately and all too often the word to often thrown around for less than heroic action which tends to dilute the true meaning and value.

Mr. Po,

I believe you or someone with a similar name identified yourself as a local police officer but not from Naperville!

Good try, but equating police officers and fire fighters as heroic as those in the military is completley unjust and unfair!

Those in the military make a fraction of what police officers and firemen make. They are truly sacrificing their lives for their country and our freedom. The money they make can barely feed and clothe them. They truly risk their lives for us. Just last week we had 2 brave Napervillians killed in the line of duty serving in Afghanistan and Iraq.

All you do is discredit yourself and every police officer and firemen in Naperville when you put them on the same pedestal as those in the military. I just find that offensive!

I was walking in downtown Naperville a few days ago and ran into a marine who had both his legs blown off in Iraq recently by a bomb! He was walking on 2 artificial steel legs. I had tears in my eyes and my heart felt so heavy for him!

I don't see where you and the handful here feel police officers and firemen are heros equal in caliber to those fighting in Iraq and Afganistan for our freedom.

Police officers have jobs like the rest of us. They don't even have one of the 10 riskiest jobs in America and those jobs don't include the military which is obviously riskier. They get paid nearly 60k for writing tickets and breaking up a few domestic fights here and there. No police officer in the history of Naperville has ever been shot and wounded or killed. We are talking nearly 2 centuries.

They work for 20 to 30 years, collect pensions equal to twice what most of us make in the real world for working 40-50 hour weeks, and are given jobs by Naperville City Officials upon "retirement" paying them 135k or 180k to manage the parks, the city or whatever!

Pretending that police officers and firemen are heroes to justify outrageous wages and pensions is nothing but a smokescreen to corruption and improprieties.

These police officers will not even donate their time to charity events...instead they charge us overtime. This is not what I call heroism...this is what I call an appetite for taxpayer money!

Police officers are good citizens who have respectable well paying jobs. That does not translate to heroism. Our Naperville Police are paid twice what average police make in the nation and yet have little to no risk regarding their well being. They are paid almost twice what New York City and Detroit cops are paid. St. Louis Cops are lucky to end with a salary after 30 years equal to that of a rookie 21 year old cop in Naperville.

In due time afte the citizens in Naperville are socked with a few more 20% annual increases in real estate taxes to afford these out of control police and firemen salary and wages, the residents will finally wake up in masses....have no fear...it will happen.

By that time it will be too late for our government officials to save themselves or the establishment that keeps them in office.

Just wait and see! The saying "Pigs get fat and hogs get slaughtered" always proves true. It never fails! Time will show you, Mr. Po how it works. Right now our public servants and officials getting fat at taxpayer expense. Soon everyone who is getting fat will be "SLAUGHTERED!"

Property value go hand in hand with high quality education and low crime. Thank you to our great teachers and police.

By the way....Last time I checked we live in a democratic party controlled state that wants to increase school/pension funding. Like i have said before-pensions are not going anywhere. Obama is a supporter of pensions and it looks like he is going to be running the USA for the next several years.

TEACHER/POLICE/FIRE/MILITARY:
Remember, the people complaining about the job you do on this post are in the minority. Most people in this country support you and the great job you do. You are heros and all deserve to be compensated for your hard work.

If teachers outside 203/204 are not being paid for continuing education then why in the world are teachers inside 203/204 being paid? There has been this huge argument about how all of the school districts have to offer the same or the teachers will go somewhere else. If that truly is the case we shouldn't have one underperforming teacher in either of these school districts because the theory has been put out there that the best teachers from other districts would be clamoring to take these jobs.

How is it that it never happened?

As for long hours... that is a mixed bag. Some do, a whole lot don't. And yes there are a whole bunch of teachers who grade papers, homework, and such during the school day. Ask the students why it takes 3-4 weeks sometimes to get grades back? Fact is a whole bunch of teachers are working other jobs... some private employment, some school related like clubs and sports, some are tutors, etc. They find plenty of other financially lucrative ways to fill their evenings other than putting in long hours grading school work as you imply. I've got a whole bunch of relatives, neighbors, and friends who are teachers and I know very well from first hand observation what they are doing when they are not at school. Like any other job or occupation the number of hours worked each week relates to dedication, efficiency, desire, and work/family balance. Some teachers just like other occupations are better at maintaining the balance than are others. And some simply voluntarily choose to go the extra mile and that is commendable. No, teachers are not like landscapers. Landscapers get time and a half after 40 hours and on Saturdays which most work. I'm not sure I've seen a school in Illinois with school hours that come even close to 40 hours.

Mr. Fair Comparison,

It seems like you are the one ranting and not Another Anonymous.

He has been laying fact after fact. Some of his/her information was previously posted by Councilman Bob therefore I presume it is credible.

While he/she provides us with details and facts, you provide us with rants and requests for 50 word limitations. Have you appointed yourself the new moderator for this blog site?

I would like to see the issue of runaway police and fire fighter salaries and pension addressed in a public forum. Their compensation has to be commensurate with their work, performance, risk, and comparable towns.

It is time we stood up to the bullying of the unions. If our city council can not stand up to the unions, than we need to elect new city council members who can. It is as simple as that!

And it is a little ridiculous to say the least, that police/firemen can collect pensions after 20 years of service while still in excellent physical health while the rest of us can at most collect a half a Social Security check if we elect to retire at 62 instead of 70. Where is the fairness?

I am amazed how many police officers have retired with nice pension with the City of Naperville and immediately been selected for leadership roles in various high ranking positions by the "good old boys network" thus collecting additional huge salaries while supposedly retired and unable to continue performing due to 20 or 30 years of back breaking work on the police force.

I have a right to ask since my taxpayer dollars are funding this nonsense. If MFC wants to give all his personal money to the police and firemen, he can be my guest. But he can not expect the rest of us to follow his devotion to taxpayer waste of hard earned dollars!

Like Tomerhera I am also in support of AA.

I think Tim West needs to step it up and keep his love for his cat Job personal and out of the valuable pages of the Naperville Sun.

If we don't have time to tackle these issues of pension waste resulting in outrageous taxes, how can we devote all this time to birds, bees, and Job the cat!

Looking at Mr. West's Blog Site, one can see what a failure it is. It seems to be duplicating this site and nothing but a waste of energy. He is lucky to get one poster per topic and most have 0 posters. I do not know why Host Ted allows this waste of web space to continue.

I agree with AA that the police salary and pension is completely out of control and would rather see Mr. West explore this in a serious manner.

I am not sure I agree with the others that are stating teachers are over paid or that their pensions are outrageous. I believe teachers get less than half the pensions of police and firemen! They don't get S.S. so I think their compensation is fair!

Anonymous (9/2/08 @909):

Not all teachers get free continued education-I would say that based on conversations with teachers outside dist 203/204 that most pay for them out of pocket.

Many CPS students in chicago could not be educated if you spent $50k a year on each of them. The teachers can only watch them 8hrs per day. Look at test scores in your community.

Il give you seasonal work. That is what they get for putting in long hours during the school year. Do you really think they put exams, grade homework, and grade tests during their planning periods? You make it sound like teachers are in the same likes as landscapers.

Most of the people on this thread whine about teacher pay, however are not intellegent to come up with solutions. Without a solution that both sides can agree on nothing will change and the pensions will continue. You cannot just snap your fingers and have pensions disappear and teacher salaries reduced by half. Never will happen.

Mr. Po,

Of course if teachers are paid $100,000 salary plus the another $30,000 contribution to a 401k then they would no longed be in need of some of the other taxbase provided benefits like FREE continuing education. Yes, teachers are more educated than most... kind of goes with the territory thought, don't you think? Would you have students educated by uneducated people and end up with results like CPS?
But with this kind of compensation there would be no need for tax base subsidized continuing education and all of these teachers would be free to pay for their masters and other advanced degrees out of their own pockets just like other workers do.

While we are talking about teacher compensation though, let's try not to forget that we have to talk about the annualized rate of compensation for what is basically seasonal work. Even many of the occupations that traditionally have been classified as seasonal work actually have more work days per year than teachers.

Teachers, by and large, have a pretty good gig. Great hours, great pay, great benefits, lot's of time off. Be careful though, because if the teachers mess too much with an already good thing and the backlash could be really harsh. Enjoy it and don't rock the boat.

MESSAGE TO JOHN Q. PUBLIC

Nice, the $64 BILLION DOLLAR QUESTION, the game show grows. My take.

This is also a LOADED question. TRS published a list of "pension changes" from inception (sorry Thom, I do not have the time to find the link, but I think you have seen the same document). These changes SIGNIFICANTLY INCREASED benefits just as the baby boomers began to retire (in fact, gave them lucrative early retirement options as well). IN SHORT, THE LEGISLATURE GRANTED HUGE INCREASES IN THE 90'S AND EARLY 2000'S.

At the same time, they did not increase taxes to fund this FUTURE COST. Further, the highest paid districts (primarily suburban districts) took advantage of LOOPHOLES such as the 20% end of service increases that FURTHER INCREASED TEACHERS RETIREMENTS beyond what actuaries had projected. This last factor created a significant adjustment to the liability.

To fund all of these costs, our income taxes should have been increased by at least 25% when the provisions were granted (or they should not have been granted). Now that the liability has grown, a 50% increase will be needed (this is commonly referred to as the impact of compound interest). The answer from Blago, issue bonds that will be paid in the future to fund the plan. Oh, by the way, his bet is that the pension funds will be able to earn more than 8.5% on its investments over the next 40 years (they did that in two years after losing 25% in the early 2000's). NOT A CONSERVATIVE ASSUMPTION.

SHORT ANSWER, EXISTING TAX REVENUES WERE NOT SUFFICIENT TO FUND THE COSTS WHEN THE INCREASED BENEFITS WERE GRANTED (AND TAKEN ADVANTAGE OF). THERE SHOULD HAVE BEEN A TAX INCREASE AT THE SAME TIME OR NO BENEFIT INCREASE.

POSITION ON DEFINED CONTRIBUTION/401K PLANS

I think we are all entitled to our positions. I know many senior officers of companies with defined benefit plans. When they get to retirement age, they (unlike state plans) have the option to take the pension benefit or a lump sum payment and invest the money themselves. Almost all of the people take the money.

Why? Part of it was how the lump sum was calculated, it use to be based on investing in US Treasuries, the lowest (although most secure) interest rate available. Everyone felt they could invest and earn a higher return. That calculation has been changed to use a higher interest rate (corporate bonds) that reduces the payout.

The other reason related to life expectancy. If you lived longer than the assumed life expectancy, your money would run out compared to a regular pension payment. But if you lived shorter, you lose with a pension.

So, people weigh these factors and prefer to do so alone. Same is true in Australia, Chile and Great Briton. People get to control their earnings. Imagine if we had only our portion of Social Security, we would be able to live forever.

IN SHORT, THIS IS BOTH AN ECONOMIC AND PERSONAL PREFERENCE ISSUE. Not everyone wants to be hearded like sheep, they like to control their own destiny.

COMMENT TO THOM

I thank you for your 75% civil post. I have analyzed pensions as part of my work for 30 years. For example, in evaluating these liabilities for clients, actuaries, particularly for government plans, have not been that forthcoming. But remember, they work for the PENSION PLAN that is controlled by the WORKERS, a conflict of interest in my opinion. (This is not the case in the private sector!)

I will also note there is volumes of data and little concrete analysis. We use to call this if you cannot convince them with the fact, overwhelm them with details. And even in the "details" there are blatant contradictions. For example, the pension report of the legislative committee you listed shows TRS needing 20.5% for the next 40 years. TRS's 2007 report shows this number at over 25%.

I think the more interesting numbers would be what these reports said in 1997 when the increased benefits were granted. I suspect, the numbers were in the mid teens at most. If my suspicion is correct, it would reinforce the "bate and switch".

In fact, I just spent a half an hour looking for some document from that time horizon. I could not find one. However, the following report provides some insight:

http://www.civicfed.org/articles/civicfed_220.pdf

If you dig into the report, you will note that the unfunded liability went from $15.5 billion to $43 billion from 2000 to 2003 (page 7). This is where the analysis needs to be placed. In the report, they note three causes, but I do not think they adequately explain a $38 billion increase (or 4 TIMES). They are

Underfunding $10.6 billion
Investment losses 6.4 billion
Benefit increases 5.8 billion

Causes identified $22.8 billion (60% of $38 billion)

Not to get too detailed, but investment losses are to be spread over time--ACTUARIAL CHANGES--(under the assumption that the good years offset the bad years). If that is the case, the report only identifies 43% of the increase.

The Civic Federation is an organization I respect (full disclosure, I was on their committees from 1990 to 1997) and they do not have the entire answer.

So Thom, instead of name calling and nit picking details, let's get the facts. And note that these deficits occurred under the infamous GEORGE RYAN and the cooperation of the DEMOCRATIC LEGISLATURE. Maybe he was a bigger crook than we all thought.

Need to go.

Mr. Po well said, imagine a teacher with a masters degree or higher bring down $100,000 before the age of 50 with 30 years experience. Oh and then reality set in. Still a wonderful thought.

You would have to raise teacher, police and fireman salaries significantly to compensate for the lack of a pension. Say... 25%-30% above their annual salary every year. This money could be placed into a 401k type of program.

No public employee would go along with somebody taking their guaranteed money away without just compensation.

Here is a proposal.... Annual teacher salary $100,000salary + $30,000contribution to 401k. I think that would be fair to everybody. Teachers are more educated than most, therefore should be paid more than most.

Im sure the anti police/fire/teacher/military people will disagree as they seem to believe they should be working for minimum wage.

Dan,

Regarding your last two long posts, I have to tell you that while they may make an attractive argument, based on your past history of falsifying documents in order to advance your position, unless, and until, you can provide credible links backing you up, color me skeptical. And credible links doesn't mean The Champion.

To Thom and Dan D:

The $64 billion question is: what would be the TRS' unfunded obligation, if any, if the state had been making it's fair contribution these past two decades?

The same question goes for the police and firefighter's funds. In the recent Sun article the Naperville finance director (?) indicated that these funds were in good shape, and that, unlike the state, Naperville has never given itself a pension holiday. But, according to Councilman Bob, the city's contribution to these funds right now is 18.7% for the police and 21.16% for the firefighters. These are awfully high percentages, and leave me wondering if we have always paid about this much, or are now making up for artificially low actuarial projections in the 90's when the stock market was booming?

I agree with Thom that 401K's are not a suitable replacement for defined benefit pension plans. Between people who flat out do not participate in their employer's plan and those who do participate, but invest their money either too conservatively or too aggressively, we are setting ourselves up for a retirement crisis a few decades from now---and that's not even taking into consideration the challenges facing the Social Security and Medicare programs. At the same time, I don't think traditional defined benefit plans are suitable for most people in the private sector any more, since these plans reward people for longevity with a single employer, but there is so much more fluidity in the job market than in days past. Portable cash balance plans are probably the best option.

For the public sector, I think defined benefit plans can be a good option, with a few adjustments. Actuarial projections to calculate the employer's contribution and to ensure the health of a plan are a good idea, but pension holidays should NOT be allowed, and there should be a baseline amount of, say 6%, that the employer MUST contribute every year regardless of the actuarial projection. On the other hand, benefit amounts need to be calculated in a manner that minimizes the impact of end of career salary jumps. Also, benefits should be reduced, perhaps permanently, for people who begin collecting before the Social Security early retirement age.

A.A. Please be careful when assuming, I am self-employed have no reliance on gov. programs and am banking on less than published social security benefits when they become avail. upon my retirement. Thanks for skirting around the constructive criticism of one of the longest lasting Sun employees. You are correct that I do feel the establishment does a good job though incorrect in the comment that I don't like change. I feel change can be a very good thing. I do enjoy the benefits provided me in this city and country as a whole but rest assured I depend on my income for a livelihood. For the peace and services provided (that some may take for granted) I am grateful and will pay with my tax dollars. This includes the police officers, fireman, teachers and so many others that have made my and my families life very comfortable indeed!
A special thanks to Thom Higgins for putting much info. in a format that the average working class guy can understand. Thom maybe you could do a little moonlighting for the Sun to bring greater clarity to this important topic, thanks again.

FUNDING MECHANISMS

A quote from the report Thom linked:

All of the pension information was computed "In accordance with the funding method contained in current law". Note: THEY DO NOT USE GENERALLY ACCEPTED PRINCIPALS REQUIRED BY THE FASB, SEC, AND IRS. These funding techniques will allow the pension deficits to grow for the next 45 years and then miraculously fall to 10% of total liabilities in the last five. The liability would still be double the current levels at the end of 50 years.

IF THE PBCC HAD JURISDICTION, ALL STATE PLANS WOULD BE ABOLISHED AND LOWER PENSIONS WOULD BE IMPLEMENTED. Ask the airline pilots, they lost 60% of their pension benefits.

The reports show that funding needs to be increased by at least $2 BILLION IN THE NEXT two years to meet this UNACCEPTABLE FUNDING STANDARD. If a more reasonable funding standard were employed, the cost would probably be double.

WHAT IT WILL TAKE

Let's see, the state's budget is still $1 BILLION out of balance. Thom correctly points out pensions are not being funded at the lower level, another $1 BILLION. In two years, the state needs another $2 BILLION to fund pensions at a level that is grossly inefficient. If SEC and IRS rules were used, there should be another $2 BILLION.

THE TOTAL? $5 to $6 BILLION. The current income tax generates $10 billion, so just to break even on these needs (and you know the line is long for more social spending and I suspect that Medicaid is probably another $2 BILLION in the hole), we would have to increase our income taxes 50%.

Let's have a referendum. They did this in Japan in the late 1990's--increase taxes or cut pensions. The Japanese outcome, pensions were cut.

WHAT'S WRONG?

Simple. Thom, a reasonable percent of salary for combined pension (be it 401k, defined contribution, defined benefit or a combination of the three) and social security in the private sector is about 15 to 17% using FASB, SEC, and IRS policies (in fact, you cannot finance more!!). We would only have a minor problem if the state plans could be funded at 19% using these policies. In order to hit these marks in the private sector, benefits are reduced (either voluntarily or by the PBCC) so that pensions are not out of line.

At the state and local levels, the DRAMATIC increase in pension liability and UNFUNDING has occurred in the past ten years. A very cute play. Raise the benefits and then three to five years later complain that they are not being funded. You have looked at the numbers, this STRATEGY has been the rule in Illinois.

But as I have said at least three times before, have an independent actuary review these plans and determine what is fair--just like what our grandparents and parents received--NOT THE FRAUD OF THE LAST TEN YEARS. My "gut" is that at least some of the problem has been increases in benefits when the rest of the world was lowering them. Your parents and grandparents never got the plans that are on the table now. And I appreciate that Thom acknowledges that he does not know the answer to this very important question.

Looking at the teachers plan, the average teacher in the plan has only been working ten years. We can meet the commitment that they have earned for ten years and replace it with a new plan for the remaining 20 to 30 years of their employment. It would still be a better plan than anywhere in the private sector. In fact, a business could not provide the types of benefits (particularly early retirement) in accordance with IRS laws, they are not allowed.

WHAT'S WRONG WITH 401K'S?

Look at the success of Australia. They eliminated pensions and social security and converted to a "NATIONAL 401K". This new plan has resulted in the elimination of government budget deficits. In fact, they have so much money they bought the Chicago Skyway and are looking to buy more of America. Australians feel secure and their economy had been doing well. Same for Chile and Great Britain.

A union member recently relayed to me how almost 90% of their negotiated salary increase was used for finance pension and healthcare shortfalls. If the teachers want a defined benefit pension, let their union provide it. The state can give them 15% (like everyone else) and let them figure out how to dole out benefits. Just like 90% of other union workers. Same for health insurance.

There is no absolutely right answer. But when governments are spending disproportionate amounts of funds for pensions CALCULATED IN THE METHOD PROSCRIBED BY LAW, we currently have the wrong answer.

ONE POINT OF INFORMATION

PENSION COSTS AS A PERCENT OF SALARIES

The accounting profession (FASB and the SEC) and the government through ERISA detail the calculation of pension expenses. The required method for these organizations is to show pension expenses as including normal cost, a 20 to 30 year amortization of unfunded costs, and a 10 year averaging (smoothing) of actuarial gains and losses. Funding such amounts results in fully funded pension plans or the PBCC takes them over.

Unfortunately, the actuarial report for the TRS never show such "traditional" calculation. Instead, they show a payment that is based on a percent of salary funding plan with a 50 YEAR amortization of the unfunded costs. THIS IS NOT AN ACCEPTABLE FUNDING FORMULA.

But using this formula, the pension contributions need to be over 25% per the TRS report. SINCE TRS DOES NOT DISCLOSE THE APPROPRIATE FUNDING LEVEL, one can only estimate. However, other studies indicate that percent of salary funding under estimates pension costs by at least 25 to 50%. That is the basis of my comment that real contributions should be between 35 and 50% rather than the 25.5% noted in the TRS report.

Again, I have worked with pension funding for various clients and the calculations are complex. The GASB (the Government Accounting Standards Board) is 30 years behind private industry in mandating accounting policies that will truly report the full liability of pension plans and health care benefits. BILLIONS OF LIABILITIES ARE BEING ADDED TO GOVERNMENT FINANCIAL STATEMENTS. It's like an alchoholic, you have to know you have a problem before you can address it.

So you begin to get the picture. Laws were passed granting huge pension benefits, but the costs were NEVER disclosed. Now based on outside pressure from the credit community, governments have to fully report these liabilities (and they had not in the past to the same degree) and people focus the criticism on the lack of funding rather than the EXCESSIVE BENEFIT INCREASES that have caused these deficits. As an aside, private industry have either eliminated or REDUCED benefits of defined contribution plans.

As AA has stated, let's look at what Chicago is doing. They are looking at how to invest the anticiapted $2 to $3 billion from the sale of Midway Airport. One answer is to shore up the pension plans. With one caveat--benefits have to be adjusted.

It is time to fix this mess rather than turning our head. And remember, I outlined three steps to fix it.

In support of A.A.,

I'm glad to see someone else is tired of the inane ramblings of TW. As a subscriber to the Sun, I'm amazed that they allow columns like his to take up space on such topics as the latest restaurant he's eaten at or the latest antics of his cat named Job. Why not devote a page everyday or at least more than once a week to the Potluck Roundup. It's far more informative and entertaining than either TW's column or Dave Sinker's "funny and irreverent" muses.

P.S. I hope I stayed under MFC's 50 words or less limit.

My posts are very self-explanatory. I wrote them and understand what I wrote. I think you are having a hard time comprehending what I am writing. I am sorry for that but I can not help you.

As far as Tim West, if he has an issue with anything I have said, I am sure Host Ted will allow him to respond if he wishes.

As far as Napergate it is alive and well as long as we have GOVERNMENT WASTE and HIGH TAXES.

I am sorry you are in denial regarding so much about this town!

I also sorry I had to go over 50 words and upset you.

It seems like you are an establisment type of guy who wants NO CHANGE but wants everything to remain as is, since you appear to be a benefactor of this government waste that result in high taxes.

Enjoy your benefits and priviledges while they last!!! All good things eventually come to an end including those on the receiving end of government improprieties!!!

Regarding this statement by Dan Denys:

1. The actuarial reports for TRS show continued "real dollar" increases to fund the pension. NO THOM, Funding at 19% is not enough, it needs to be MUCH MORE.

If you will go here
http://www.ilga.gov/commission/cgfa2006/Upload/0707PERS.pdf

And go to Appendix B pg 66 on the PDF, you will see that the states contribution (for the entire state retirement system) is about 20% of the forward payroll cost (teachers only is 19.5%). And yes, the future increases in “real dollars” compared to today’s payroll are more than 19%, but what’s your point? All projections assume a fixed percentage of inflation, and other factors that lead to higher costs in the future. So the following seems just silly;

Raise taxes to fund the benefits over 15 to 20 years on a level payment rather than an increaseing amount, a reasonable financial plan.

A level dollar amount? Why is it reasonable to pay a higher amount today with dollars that are more “worth more” today than they will be in the future? It doesn’t make sense.

The essential issue with the state pensions is the $42 billion funding deficit. While there are a number of factors creating the deficit, people living longer, early retirement offers, and benefit increases, the biggest (most expensive) single issue is the state not making timely payments into the system, as has happened again just this year! Here is what I posted previously;

The General Assembly adjourned on May 31 after passing House Bill 5701, as amended, that contains the pension appropriations for the fiscal year 2009 budget. The new fiscal year begins on July 1. House Bill 5701 provides state appropriations for TRS in the amount of $1,196,488,000, or approximately $255,301,000 less than the amount the TRS Board of Trustees certified as the required amount under the 50-yearfunding plan.

Dan likes to give us his pronouncements on what he thinks should be done. I’ll come out and say that the state wasting a lot of time coming up with a plan, and then defaulting on funding it, is not going to solve anything. Dan says that 19% is fair (I’m totally shocked at that statement coming from him frankly), to the extent that the actuarial assumptions are correct then, assuming the state comes up with what they say they will pay, we should be OK. But will the state come up with it? I doubt it, and therein lies the problem. Ultimately I suspect that there will be some kind of funding catastrophe, and then just like the others who have seen their retirement plans blow up, these folks will get less than they were promised. It’s not a good thing.

Could instead everyone be able to sit at a table and knock together a better outcome in advance? That’s the $42 billon question, and I’m not hopeful. If there are actuarial changes that cause a higher cost to the state do we seriously have to look at the cause? Yes, but it's really complicated. Blago wanted to cut costs and offered a big time early retirement deal. A ton of folks took it, reducing the state payroll, but blowing a hole in the retirement system. Is that the employees fault? No.

Should the system be dumped for a 401K system? No. The loss of professionally managed pensions in this country is a real loss for all of us. What impresses me is how well the TRS runs their retirement system. From 1998 thru 2007 the system returned an AVERAGE 9.49%. I’ll admit I haven’t done as well and 99% of the rest of us haven’t either, and that’s the magic of a well-run pension system, and what allows it to pay greater amounts than SS. 401K’s? I’ll be dead or close to it, but they are the ticking time bomb for the late baby boomers and Gen x’ers. If you read the statistics at how poorly the overwhelming majority of people do managing their own retirement funds, it’s beyond sobering.

Dan tries to make this into some kind of uber ideological struggle, but the fact of the matter is well run pensions have allowed our parents, and grand parents to live healthy, rewarding lives after retirement, and that’s what the American dream is all about.

We also all need to remember that all the “pensions” we are talking about here are not on top of SS, they are in lieu of SS and 401K or traditional pension as in the private sector. Is the aprox $45,000.00 a retired teacher receives too much? I don’t think so. Should the system be fair? Yes, but I’m not a benefits specialist, or an actuary, that can tell you that it should be X instead.

Lastly, I really love this,

Yes Thom, I am not fit to serve a socialistic government, do not want to do so. And if it gets worst, I will join the legions that leave it behind for you to support them

Well, I guess I wonder which socialistic government are you talking about? Our local city council, and/or state government? There are a whole lot of Democrats AND Republicans in both who believe in pensions, and retirement security. Our federal government is probably the most “socialistic” by your definition. Seriously where are you thinking of going?

To A.A. thanks for keeping the opinions criticism to 50 words or less. Please reread your rant regarding Mr. West and tell the class where constructive criticism comes in. If you would not mind also let us know about retiring at 41 with a larger pension than someone at 70. Leave napergate alone as most are tired of beating that dead horse. Thanks in advance I look forward to some facts.

To Just The Facts Ma'm on August 31, 2008 10:24 AM,

Very well said!

When I was in Las Vegas, 8 steel and iron workers were being honored for passing away while building the massive City Center for MGM.

Their names were painted on steal and iron structures throughout the massive complex. This is only in the last year.

Another 14 workers were killed from other trades since the building on this complex was initiated.

We have had one policeman killed in Naperville in nearly 200 years in the line of duty. He actually was not killed but had an accident on his motorcycle chasing a robber. If someone in the NPD would eliminate motorcylces, the risk to any NPD officer becomes NEGLIGIBLE!

Trying to pay the police and firemen starting salaries of nearly 60k and huge pensions to boot when they retire under the pretense they are risking their lives everyday for us borders on NONSENSE!

Paying police officers starting salaries of nearly 60k at age 21, is ridiculous since the NPD building would be surrounded by highly qualified applicants if we paid the going market rate of 40k that most municipalities do! Paying 20k more than necessary, also increases the pension costs upon retirement by 15k more than necessary. Our city public officials would like to blame this whole fiasco on state officials. But how are they responsible for this 15K! They are not! Our city officials are!

We need to come to our senses before the soccer Mom ousts all our publicly elected officials on the simple agenda of GOVERNMENT WASTE and HIGHER TAXES. I see it happening soon. If an Alaskan hockey Mom can oust the entire government in Alaska, I am sure a Naperville Soccer Mom can oust our Naperille Municipality Elected Officials for the same reasons!

Please step forward soon, Ms. Soccer Mom! Let us get the job done!
Let us stop GOVERNMENT WASTE and OUT OF CONTROL TAXES. Let us not forget how much our taxes were increased last year.

Our current public officials have no respect for the 5% cap on tax increases that most city and state agencies in Illinois honor either by law or voluntarily. All they do is spend, spend, spend and find ways to enrich enrich and enrich each other at TAXPAYER EXPENSE.

We now have 4 police officers running our city after Mr. McGury was swiftly crowned as Park District Director. And like Mr. Marshall he is collecting a police pension from Naperville while collecting another 135k from the Naperville Park District. Expect the Finance Director to soon be replaced by another police officer who just retired and begain collecting his 90k pension. Where does this all end!

It was a mistake to allow our city officials to have HOME RULE! As you can all see, they abused it by increasing our taxes 20% last year instead of 5%. I hope a referendum can be put back on the ballot eliminating HOME RULE. We would not have to watch our city officials so closely as they would only have 5% of our money to screw us out of as a MAXIMUM!

The City of Chicago and the Chicago School System both watched expenses in addition to making some personnal cuts, and had NO TAX INCREASES this year! Kudos to them and shame on us!

Our city officials think the taxpayers are fools. Let us show them who the fools are in the next election. As the saying goes "pigs get fat, hogs get slaughtered."

Our public officials were not happy being fat...they wanted to be slaughtered in the next election...let us give them their wish!

ACTION PLAN FOR ALL (and not just for Thom "Gladys Kravitz" Higgins)

1. The actuarial reports for TRS show continued "real dollar" increases to fund the pension. NO THOM, Funding at 19% is not enough, it needs to be MUCH MORE.

2. Go back to my original plan.

FIRST

Evaluate the reasonableness of pension benefits compared to the private sector.

SECOND

Raise taxes to fund the benefits over 15 to 20 years on a level payment rather than an increaseing amount, a reasonable financial plan.

AND/OR

Cut benefits to reasonable levels. This could be to end current plans (that freezes benefits to only what has currently been earned--much lower than what people will earn--but fulfills "contractual obligation", establish two tiered employees (new employees would get a lower benefit), or whatever other plan results in costs that are soundly funded with current revenues.

THIRD

If government does not reasonsibly behave, the people footing the bill (the taxpayers) should take action to force them to do so. The state CANNOT pay its bills unless it raises taxes. So either raise taxes or cut costs. Just like we have to do in our personal lives.

The munipal unions are petrified of the changes that NEED to take place. And they ignore calls to determine if what they have is reasonable (as does Thom, all of the time). The airlines are running just fine despite union attempts to gain back the excesses that they have received. There is no sympathy for any of their workers--did not hear Barry O mention them once.

And Thom, you are just like Obama, all talk and no substance. I outlined three points in the previous post, you like the liberal left IGNORE them because you do not want to discuss the "real truths". Because they are INDEFENSIBLE!!!

From my vantage point, we cannot afford the current pensions GENOROSITY at any level of our government (by the starting at Social Security all the way through municipal plans). In the private sector, excessive pension plans have gone away through bankruptcy and the PBCC. And I know many people that have been impacted by these actions. They understand that they made a poor choice in employment and had to rebuild their careers. And interestingly, the government plans are WORST than these companies.

Go back to John F. Kennedy, "Ask not what your country can do for you, but what you can do for your country." My position, our country that is based on self initiative and competition is the most successful in the world. That is why people try to get in here. We have succeeded despite the inefficiencies of our government. That is my position, period. Don't try to put any other liberal spin into it. And I respect those who disagree, but that does not mean that we have to let them ruin our country with this new liberalism.

Yes Thom, I am not fit to serve a socialistic government, do not want to do so. And if it gets worst, I will join the legions that leave it behind for you to support them.

One thing I always hear is the police officers and fire fighters are heroes because they put their lives on the line every day for us. At any moment these public servants can be killed in the line of duty serving the public. While I would agree that being a police officer or fire fighter is a noble profession worthy of our respect, but to characterize those occupations as heroic due to the high possibility of being killed just does not match the facts. The fact is those occupations are not as dangerous as people think. In fact those professions do not even crack the top ten of the most deadly occupations in America. I have listed the top ten below. These truly deadly occupations are generally paid far less than our public servants with little job protections and insignificant or no pensions at all. The people entering these occupations know the deal when they take the jobs. And these jobs are also very important to our daily safety and life. And please, I in no way wish to take away from the fine work our fire fighters and police officers do for us every day. But we need to take emotions and assumptions out of the discussion and work with what the facts actually are when we are talking about compensation and pensions.

Top Ten Deadly American Occupations:
Fishers and related fishing workers
Aircraft pilots and flight engineers
Logging workers
Structural iron and steel workers
Refuse and recyclable material collectors
Farmers and ranchers
Electrical power-line installers and repairers
Roofers
Driver/sales workers and truck drivers
Agricultural workers

Mr. Fair Comparison,

Sun Employees including Tim West are not above or immune from constructive criticism. Constructive criticism is good and can make one better.

Host Ted obviously feels so, or he would not have published my post.

I said what I had to say in less than 50 words! Hope you are happy!

If Tim West has an issue with my remarks, he can respond. He is a big boy! He did not appoint you to be his spokesperson! Have a good evening!

Never say never!

Guess what people....

Pensions are never going away! There is NOTHING that any of you can do about it. They are guaranteed.

Your hatred towards our teachers, firemen and police is pathetic. You make it sound like these people are criminals. And it is obvious that it is just about the money.

None of you are better than any teacher, firemen or police officer.

Enjoy your future tax increases to fund these brave, educated and worthy HEROS.

I have wish of my own and that is that A.A. would be less windy and less critical of Sun employees. Say what you have to say in 200 words or less,& leave Mr. West alone. There are many constructive things to do in the early morning hours none of which include polling what paper is being delivered on the driveways.

For Dan Denys

Dan, This is simply defies human comprehension:

you can see that Thom did not have a 203 education (he says he attended school with Drew Peterson, you can see how that would affect him--class act!!!!!)

Yes, Drew Peterson attended Willowbrook HS for three years that I attended there.

So did about 3500 other students. I never knew the man, then or now. I've never brought up Peterson in any posts, you have, illustrating that disagreeable trait you have of trying to link me to people I've never met, in some kind of sociopathic attempt to make me look bad. What in the world do you think making these kinds of statements this gets you? Do you really think anyone with an ounce of sense doesn't see through this?

Same goes for this:

But more interesting are "Guru" Thom "Gladys Kravits" Higgins's comments

It's just pathetic.

Now to the subject at hand. Regarding this statement:

If 19% would fund everything including debt, that would be reasonable.

Dan, we've both gone over the actuarial reports. We both should be able to agree that 19-20% will fund the teachers pension system to 90% in 2045 (assuming the state actually makes the required payment, and we both know they aren’t ). So, while you are free to disagree by saying no, it's really 35-50%, then it is incumbent of you to tell us why, and show us the math.

This shows how little regard you have for realistic solutions, and serious conversations of how to achieve them:

Let's put Illinois and Napervilee into bankruptcy like Vallejo California and Bridgeport Connecticut.

First, a city can't wake up one morning and say "let's go bankrupt today so we can default on our employees pensions" You have made the general statement a number of times that you want to "stiff the Police, firemen and teachers" just like the "Union pilots and others employees got stiffed on their pensions in the past." A rough quote of your previous statements.

While I have to assume you find some emotional charge in calling for throwing our municipal government, and the lives of its employees, into chaos, fortunately there are serious people who care about this issue on both side of the political aisle. Darlene Senger has, or is about to be, endorsed by a union specifically because of her strong commitment to find a way out of the pension morass. She and Diane certainly aren’t calling to bankrupt the city just to destroy the retirement security of a lot of good and decent people.

If you hadn't attempted to be elected to D203's school board I'd probably just blow it all off as not worth my time. But your constant, outrageously hyperbolic statements, perfectly illustrate just how uninterested you are in seriously exploring an issue, and frankly, how unsuited you are to take part in any kind of civic government, or, for that matter, any serious conversation regarding the real issues that we face. In that vein, it's important that people realize just who you are, and what you are made of. Gotta tell you, you’re doing an hell of a job letting us all see just who you are.

The pension controversy is the NUMBER 1 issue in this state. PERIOD.

If we did not "owe" the teachers over $2 BILLION plus more IOU's, the state could balance its budget.

But more interesting are "Guru" Thom "Gladys Kravits" Higgins's comments:

"It's the actuarial changes, increase in benefits, and additional costs due to early retirement that seem to be the "gift" here."

TRUE!!!!!!!!! Not just the state failing to make the payment. AGREE 100%!!!!!!!!!!!

"I want to say Naperville is paying 19% too but I don't know what the breakdown is. When you realize the state/city isn't making the 6.5% SS contribution and most companies match 2-3% for a 401K the 9% employer contribution seems reasonable."

HUH?!?!?!

You can see that Thom did not have a 203 education (he says he attended school with Drew Peterson, you can see how that would affect him--class act!!!!!). I would TOTALLY agree that a 9% contribution would be very reasonable. But as he says, it is 19% and that is nowhere near enough (either for the police, firemen or teachers).

If 19% would fund everything including debt, that would be reasonable. But to truly fund all costs would require contributions of 35 to 50%. This PROVES one thing, the benefits are FAR to GENEROUS compared to the private sector. As Thom said in the first quote from his statement.

Solutions.

1. Put teachers, firemen, and policemen in the IMRF. They have a balance plan that does not require 19% contributions from the governments. You know why this would be unpopular? Because all of the SWEETHEART deals in the police, fire and teachers plans would go away.

2. Tell Mike Madigan how much extra the suburban police, fire and teachers make compared to their peers in Chicago. How can he support these people to the detriment of his voters. Let's take the issue to his ward and show how he supports greed. Let Chicago raiser property taxes to $15,000 so their employees can get what ours do.

3. Let's put Illinois and Napervilee into bankruptcy like Vallejo California and Bridgeport Connecticut. Cap taxes, cap salaries and benefits. In a meaningful way.

Anonymous,
Very good point differentiating quitting from retirement.
Everyone has a right to quit as you succintly stated. If you and I retire at at 41, the Social Security System will not let us collect till we turn 62, 66, or 70. We get more if we choose a later date but not even half of what a police officer gets even if we choose age 70.

It is ridiculous that a police officer can quit at age 41 and collect more retirement money than an ordinary citizen who worked till age 70 and could hear his bones cracking upon true retirement.

This is injustice at its worse! This is insanity!

I am a little dissappointed in Editor Tim West who would rather write about Blue Humming Birds in his back yard than tackle serious issues in his town.

He started a blog site that no one wants to touch with a 10 foot pole. After 30 years, the guy has no popularity or following. He does not get it. He does not care that he will retire with no memories or legacy. He does not care that he will be supporting police officers retiring at age 41 while he is still working after having much heart surgery! Is it fair that he has to work after such serious surgery while police officer that can run marathons collect $85,000 a year some of it I assume from his earnings if he lives in Naperville.

I would like to see Publisher/Editor Ted Slovick really convert this Naperville Sun to serious investigative reporting with hard hitting editors as in the Chicago Sun Times. Promises have been made and yet all we hear is Blue Hummingbirds singing on the valuable editorial pages of the Naperville Sun.

I would like to see the Naperville Sun return to its once deep penetratin and influence in Naperville. I would like to see the Naperville Sun wake up the sleepy residents in town who for the most part do not understand how government is separating them from their wallets. How government is taking a bigger piece of their wallet year after year!

I believe the Naperville Sun can use its print edition to shake and rattle the establishment into towing the line on taxes. The Chicago newspapers brought Chicago in line and both the city and schools are having no tax increases this year....yes you heard me right....no tax increases in Chicago!

The Napergate Man in the 90's used the pages of the Naperville Sun to pressure the political system in Naperville. To a great extent he succeeded. What is holding the Naperville Sun back from doing its duty to society?

Saying we have a small staff and so much to do when Tim West is focusing on Blue Hummingbirds in his back yard is no excuse for not doing the investigative and editorial reporting that is expected of a top notch newspaper!

While the politicians follow this blog site religiously, the masses unfortunately do not read this blog site....yet! That seems obvious to me! Until the masses begin reading this blog site and realizing how the City of Naperville is screwing them out of their hard earned money, the print edition of the Naperville Sun is the only hope we have.

The Daily Herald is not an option in Naperville. I found 2 newspapers in driveways this morning at 6am amongst 327 houses I passed in my subdivision while taking a walk. That is less than 1% circulation! It is not an alternative to the Naperville Sun. Their circulation numbers are highly exaggerated and most of their copies are handed out free. No one wants that paper! I don't know why since I have never bothered to read it due to its very poor circulation.

In summary, I hope Host Ted realizes the value of his print edition and puts it to use. The residents can not lead the battle against the City of Naperville. It does not work that way. In Chicago the battle was led by numerous Chicago Sun Times columnists and editors who blasted the City of Chicago day after day and week after week. It worked. Chicago succumbed. They are working on dealing with their pension problems and as I mentioned earlier cut costs to the point of having no tax increases this year.

Kudos to the mother Chicago Sun Times. Let us hope the daughter Naperville Sun can follow the lead of its mother and leave those Blue Hummingbirds alone. After all they do not subscibe to the Sun and can not even read. If Tim West is so concerned about them, he should place a bird feeder in his backyard and feed them. That would make the birds happy and hopefully he can write about issues that concern Napervillians and make homo sapiens happy by putting more disposable income back in their wallets and purses and out of the government's greedy hands!

Government worker pension reform is long overdue. Entitlement programs like this are nothing more than socialist welfare systems. No government worker should be able to retire after 20 years and immediately start collecting a pension for the rest of their life. Especially not when they have in some cases 20-25 years of career life remaining for a normal retirement at age 65.

If they retire after 20 years at age 41 when they are still perfectly capable of working another 24 years they should not receive a dime. Pensions should not be paid out before age 65. If they can no longer perform the work, then so be it. Let them find another line of work. Happens all the time to other people. There are lots of examples and if they get too old to perform the job they simply have to find something else to do. Enough of this welfare. If they want to quit, well no one can stop them from quitting, but we have to stop calling quitting retirement because they are two different things.

Eric,

Go ask the City of Naperville! They announced that the police and fire pensions are $53 million in the deficit. They were there estimates, not mine.

They were probably trying to make themselves look as good as possible and the true numbers are probably worse.

We currently have 400 police and firemen that will one day be retired.

Take your calculator out and pay each one $80,000 per year in pension benefits.

That 80 million number you mentioned can pay these public servants for only 2.5 years. Maybe 3 years if they could make some good investments. (Return on investments in the last decade have been near 0. If you were invested in Nasdaq or mostly high tech stocks, your return is a negative 60% the last 10 years...yes, NEGATIVE!)

Most of these police officers and firemen are in excellent shape and may live 40 years after retiring at age 51. Do the math, Eric?

How can we pay them for the last 37 years of their lives? We can't!
We are already in the deficit and we only have a few dozen retired police officers and a few dozen retired firemen.

If the 400 today can't afford a few dozen retirees today, how will the 400 tomorrow afford 400 retirees in the future???

We have more workers than retirees becasue Naperville grew so much in the last 3 decades.

But now that Naperville is not growing much anymore, the day will come when retirees equal workers. If they live 40 years after retirement, the day will come when retirees exceed workers.

I am no genious! I am not the Finance Director of the City of Naperville!

I am not paid to do this analysis!

I don't have a crystal ball!

But common sense and logic indicates the HANDWRITING IS ON THE WALL and our Finance Director does not see it!

Therefore, I am reiterating my call for his RESIGNATION!!!

Another Anonymous on August 28, 2008 9:34 AM

There is currently over $80 million in the Naperville Police Pension fund. Why do you believe that this amount is actuarially insufficient to meet the needs of the fund?

"There'd be no pay but on their deathbed they'd receive total concsciousness."

So they'd have that going for them. Which is nice.

To Mr. Po:

There'd be no pay but on their deathbed they'd receive total concsciousness.

Ask a dumb question.....

Dear Fellow Bloggers,

I think most of you missed my point. I understand that police officers pay 9.4% into the pension fund. I am all for the City of Naperville matching not only 6.2% as in Social Security but the full 9.4% for the police.

But the problem that no one seems to be grasping is that this 18.8% collected annually from each officer and the city matching funds is not enough to pay retiring police officers 75% of their final salary for the rest of their lives with annual cost of living increases.

The city of Naperville has not been delinquent in making its payments as the state of Illinois. They have been making their contributions religiously. Last year if I recall correctly, the city contributed nearly 21.16% or more than twice what police officers contributed. I believe this number was provided by Councilman Bob! As Thom I am writing from memory, but my memory usually is not that bad.

Despite all this we have a 53 million deficit shortfall that is growing annually. We the taxpayers have to make up this shortfall year after year. If the pension investments have 0 or negative returns because of bad investments, future pensions are not reduced. The taxpayers are called in to the rescue to make up the short fall. This is unfair!

If what is collected from the police and the city is only enough to sustain 40% pensions for the police and firemen, why are we paying them 75%. The City of Naperville is not a charity! The taxpayer have a right to contribute to whatever charities they want and can not be forced to contribute to the police and fire officers above and beyond the generous matching funds we already contribute annually!

We need to give the unions this 18.8% to invest and pay pensions according to the money they have and whatever return they can obtain on that money. If they can afford to pay 90% pensions upon retirement to their rank and file, all the power to them. But if they try to pay 90% pensions and only have money for 40% pensions, please don't come to the Naperville Taxpayer for the difference. Again, we are not a charity!

This is what is happening! They are coming to us for the difference of what they are capable of paying and what they are actually paying.

Neighboring Aurora is giving their police 10% matching funds and they finally cut off the umbilical cord. It is a new plan the state authorized a few years ago. I am not sure if it only applies to new police or to both old and new! But at least steps have been taken to get the union off the mother bottle of taxpayer money!

Another problem with our pensions comes from the huge starting salaries we offer our police in Naperville. Yes, over $59,000 according to the Naperville Police Web Site. Anyone who believes the average salary of an NPD police officer is only 65k as has been posted here frequently, is not in touch with reality. A third year Naperville police officer is making close to 65k. A 15 year police officer is probably making 90k and a 30 year police officer is probably making 120k. This assumes of course they got a few promotions over their 30 year career which most do.

When you have very high ending salaries, you have very high pensions. Pensions are based on salary. The higher the salary, the more unaffordable the pension. Another reason why we are $53 million in the deficit with the situation worsening and not getting better any time soon!

I do not believe the City of Naperville has its pulse on the situation. I believe the Finance Director could be doing much better in keeping the City Council informed as opposed to painting rosy pictures as if nothing is wrong...as if there is no crisis! Sorry buddy but there is a BIG CRISIS and if you don't recognize it soon you will be terminated and you may have your own PERSONAL CRISIS as the job market is very tough these days!

I just read that both the City of Chicago and the Chicago School System are both having no tax increases this year. None...zilch! I read it in yesterday's Chicago Sun Times. I am sure Host Ted can verify.

It is apparent they understood that taxpayers are trying to make ends meet in their own households and do not need any additional burden from government.

What has our City Finance Director done to alleviate the burden on Naperville Taxpayers....sorry Thom Higgins, he has done nothing and there is no need to be kissing up to him. He is not in touch with reality!

At one time Naperville was growing by 10k a year in population. In the last few years we are growing 1k per year in population. Name one Naperville building inspector that was laid off? Name one planning officer that was laid off? Name one permit issuer that was laid off? We have a 90% decline in growth and no one is laid off. The city of Chicago had a 4000 reduction in students this year and they laid off 439 teachers. Yes, again Host Ted can verify in yesterday's Sun Times....the mother of the Naperville Sun.

In Naperville we got the money so we just keep getting fatter and fatter. We keep wasting and wasting! It seems an implosion will have to take place before our City Finance Director can tell the City Council, we have a PROBLEM! He is massaging the problem and unfortunately someone I highly respect like Mr. Higgins was messermized by the massage. Don't be fooled Thom with their statements! Follow their actions! Follow the money trail and you will see a DISASTER in the MAKING!

The finance director needs to be criticized and held accountable! He needs to understand a wealthy town like Naperville with blocks and block of mansions contributing much more than the average Chicago homes, should not be in any kind of deficit. We should have a surplus! A massive surplus!

Where is all our money going? How dare we think of subsidizing Omnia or the Children's Museum? What kind of joint venture did we enter in with the new development on Van Buren and Main? How much is this Carillon costing each taxpayer?

Chicago households on average have more kids than Naperville households. Their average tax per home is around 5k. It seems like the average tax per home in Naperville is approaching 15k rapidly. Chicago schools can make ends meet and yet Naperville Schools need referendum after referendum to make ends meet despite the fact that we pay 3 times more per household than they do and have less kids per household in the school system. Where does our money go, Thom? Yes, our kids do better than their kids in school but that does not explain why we have shortfalls for our school systems. Maybe we have too many administrators making too much money. Look at what they did to the Naperville Central Principal. They created a job for him that was not there before. If the job was not necessary before why is it necessary now. It is not! But someone likes to burn taxpayer 100 dollar bills as if they were not earned!

I am no expert in schools so I better stay focused on the police and firemen who I know a little more about. However my limited knowledge indicates that the average teacher pension is less than half of that of a police officer or fire fighter. I think that is UNFAIR!

In my opinion a teacher works much harder than any police officer or fire fighter. She has much more responsibility than either. She has much more stress than either. She takes her work home with her. In the summer when most of us believe they are doing nothing, they are preparing for the next year and attend many sessions in school.

And I believe there is more risk to the life of a teacher than either a police officer or fire fighter. If a police officer or fire fighter follows standard procedure and is trained properly there is almost no risk to his or her life. What rational to pay them the highest salary in the nation outside some stupid bankrupt cities in California? Did not some Napergate Girl spend an entire evening and do a thorough analysis for us a few months back? I believe her name was Diana! Many bloggers verified her information to be accurate!

In summary let us be fair to the police and firemen and match their entire contribution. Let them do what they want with the money! Let them invest it in safe bank CDs with FDIC insurance or risk it in the stock market in the hopes of making better returns. Give the union all the money. Give them the responsibility! Shift the burden on them!

But the union must be told the pensions must come out of what is collected. If police officers live to be 150 years old, that is not the taxpayers problem. That is their problem! If they want to pay 75% and have a 53 million deficit, they must understand that is their problem and not the taxpayers' problem. What is so hard to grasp here!?! The union must come up with the 53 million deficit...not the Naperville Taxpayer. The union must understand there is a correlation between high salaries and unaffordable pensions!

Finally, I would like to say the entire pension system sucks and bring inequalities amongst Americans. Everyone in America should be on Social Security and treated equally! No one is better than another! City employees should all be put into the same social security system that the Naperville Taxpayer is on. Yes, they can't live on Social Security and neither can we! They must try to save as we try to save. They finally earn more money than the private sector so should be able to save. They do not have to shell out 10k for heath insurance like most of us Napervillians have to, so they should be able to save much more and much easier than we can! With all this favoring them, how dare they expect a PENSION! How dare we give them one! Let us abolish pensions once and for all!

Let us stop kissing up to the police and fire fighters as if we owe them. We don't owe them one copper penny! They owe us $53,000,000 and counting! Please pay the Naperville Taxpayer back! Thank you!

By Mr. Po on August 28, 2008 12:19 AM

Southeast side,
If you were God them what would you pay teachers and police on an annual basis? This is a serious question and if you cannot answer it in a serious manner than you should not post anymore.

Who died and made you God of the board?

Southeast side,
If you were God them what would you pay teachers and police on an annual basis? This is a serious question and if you cannot answer it in a serious manner than you should not post anymore.

Let me get this straight now, we pay our teachers a below market rate, then compensate by offering a great pension plan and benefit package. time goes on and we sweeten the pension deal in an effort to have older teachers retire early (circa 1980's). Time passes with the great investment era of the 1990's (everyone is happy). This decade hits and market returns are stagnate at best. To cut costs many employees public and private take cuts in medical benefits. This decade is also accompanied by sky high real-estate appreciation in most parts of the country. For many in the public sector (teachers) this new environment regarding appreciating housing costs can not be absorbed by skimpy starting salaries and meager raises. To add insult to injury to get ahead in most districts one must have a masters degree or better. In the past many districts would help with tuition stipends. But with cost cutting of this decade this has become an endangered benefit.

In the future I am sure there will be a story about how unaffordable our city is for the public servants who work here. The teachers and staff that help make our city great are not pulling down the huge salaries that are being thrown around on this blog. I assure you that the teachers that are instructing some of those that are reading this are not thinking of their "life of leisure" on easy street when they retire. Instead they just like YOU & ME are worried about the high housing,fuel and food costs that all of us are experiencing. These same teachers get to do this while being paid substantially less than what is avail.in the public job market. This is especially true when considering the advanced degrees that over half of teachers have acquired.

If the ground rules change regarding pensions and benefits so be it. Just be prepared to pay substantially higher salaries to many under paid teachers.

Another Anonymous,

Boy I really don't want to get pulled into the debate again, and I know the teachers pension program much better than the Police/Firemen, but I can tell you a huge difference between the teachers pension and SS is that the pension fund invests the funds. SS of course doesn't. The teachers fund is very well managed and has returned about 8% plus on average. I think P/F pensions are all managed individually, town, by town. but I'm not positive. I Remember seeing a 6.5% return assumption for these pensions but not 100% positive.

The global issue is the benefit is agreed to on a state wide level and then the actuaries figure out what it takes to pay the benefit. The teachers actuary report on the condition of the system broke down the 19% the state is paying (or supposed to be paying) more or less as 9% for the natural funding rate, 4% additional for early retirement costs/changes in the actuarial assumptions (living longer) and 6% additional to make up for the funds the state never paid into the fund as it should. BTW the state stiffed the fund again this year. This is all off the top of my head, but I think it's correct. I want to say Naperville is paying 19% too but I don't know what the breakdown is. When you realize the state/city isn't making the 6.5%SS contribution and most companies match 2-3% for a 401K the 9% employer contribution seems reasonable. The also certainly should get any funds the state skipped out of paying.

It's the actuarial changes, increase in benefits, and additional costs due to early retirement that seem to be the "gift" here.

I'll mention that Kreiger, Naperville's finance Dir is extremely well regarded. I believe the pension details are negotiated on a state wide basis, he has no say so on the pension benefits.

Another Anonymous, you also have to keep in mind that social security was never meant to be a retirement plan, just one part of the plan. A pension is meant to be the whole plan.

Social security is going to go bankrupt only because our duly elected representatives have used it as the government piggy bank for years instead of investing the money to keep the system solvent.

Another Anonymous on August 27, 2008 4:56 PM

The difference between local public safety pensions and social security is the size of the enrollment and local management. It's far easier to work with 500 members than 200,000,000 members. It's like apples and oranges to compare the small pension boards to social security. If one compares commissioned salaries to tax levy, the result would be that the city contributes about 10% of the amount of salaries to the fund per year. Subtract off the 6.2% amount that would be required if the officers were eligible for social security and you have a city contribution to pensions of 3.8%. Not a bad comparison to the private sector. It's just that the pension boards can do a whole lot more with such a small number of participants than nationwide governmental entitlements.

I think there is a lot of confusion here.

I do not get Social Security but most people I know get around 1500-2000 dollars from Social Security. Let us assume they make this average of 65k that bloggers are throwing around. Social Security is suppose to go bankrupt in the near future because it it paying out more than it is taking in.

I guess these people pay 6.2% into the Social Security System for 45 to 50 years and get out 1500 to 2000 dollars.

Now we have police and fireman paying 9.4% for 20-30 years and getting 6000 a month as in the Drew Peterson case or $7000 a month as in pro-tem Manager Bob Marshall.

If you do the math this crisis is quite obvious.

If 6.2% for 50 years can barely pay $2000 dollars how can 9.4% for only 30 years pay $7000 dollars. It simply can't!

Keep in mind since in some cases Social Security does not pay out till age 70, people are almost half way in the grave when they start getting paid. Maybe they will get 2000 dollars for 10 years or roughly $240,000 before they are fully in the grave assuming they live to 80. If they live to 91 they will get approximately half a million.

Now if City Manager Bob Marshall lives to 91, he will get roughly $3,400,000 before he is in the cemetry. Almost 7 times as much as the Social Security guy!

Keep in mind the S.S. guy paid into the fund for 50 years. Mr. Marshall paid into the pension fund for 30 years.

At 6.2% the S.S. guy would have paid $201,500 into the S.S. fund if he averaged $65,000 a year.

At 9.4%, Mr. Marshall would have paid $183,000 into the Police Pension Fund if he averaged $65,000 a year.

So you have the S.S. guy paying 240k and reaping a half a million if he is lucky. And S.S. says it will be bankrupt soon. It seems like this 240k should have earned enough interest to pay this poor guy his half a million without fear of bankruptcy. And since the employer matched it with 6.2% he should be able to get his money even if the money earned 0 interest!

And you have Mr. Marshall paying $183K and reaping $3.4 million. Now does anyone still not understand why we have a $53 million deficit that is growing. Even if the city of NAPERVILLE contributed 6.2% there is no way to pay $3.4 million back! Impossible!!!

Since the City Finance Director does not seem to understand simple mathematics, I am hereby calling for his RESIGNATION!

I just think pensions for public employees (including teachers) need to be more in line with the public sector.

For the most part, many of the public employees pensions are in line with the public sector, as many are considered blue collar jobs. As anyone in the many blue collar unions can tell you, the pensions are good if you choose the right union. I had a friend recently retire from the Operators Union that receives the $7000 a month that you all seem to think is outrageous. He worked for private sector companies all his life, and still got his pension. He, as many government employees have done, made a decision early in his life to work for someone that paid him well and had a good pension at the end of his career. Because of his union, the higher ups in his company couldn't take away his benefits as has happened in corporate America. He is not whining about public pensions, because his union made sure he got his, his wages never took a huge drop because the CEO's pay went up so much, and he is set for life.

Anonymous, 9:44AM:

Don't you realize that Social Security works the same way? It's a big, perfectly legal Ponzi scheme. Here, do some reading: http://en.wikipedia.org/wiki/Ponzi_scheme#As_a_political_metaphor

Mason at 5:57PM,

If the pension funds are being designed, funded, and operated as you describe in the last paragraph of you post then the trustees of all of these pension plans are headed for jail once these pension plans start to implode.

The last time I checked running a pyramid scheme was illegal and that is exactly what you have described.

So am I GUARANTEED social security when I retire at my full retirement age in 20 years? Who knows. Are the teachers and public servants GUARANTEED their pension when they retire? It looks like. There is no way that every worker's retirement/pension is going to be the same. There will always be the haves (CEOs and upper management) and the have nots. CEOs negotiate their benefits when they come on-board with a company. The average worker doesn't have that flexibility. I just think pensions for public employees (including teachers) need to be more in line with the public sector. From what I've seen, the City of Naperville pays relatively generously -- not on the low end of the scale. But it's really who you know to get a City job -- not what you know.

Anonymous on August 26, 2008 2:49 PM

There is a partial problem with your statement that government pensions are underfunded. It is the state operated pensions that are underfunded (teachers, IMRF, Judges, state employees, etc.). When you are talking about public safety employees (police and fire), these are not state operated pension funds but local. Each municipality operates its own police and fire funds. By state law the pensions must be funded as determined by the state department of insurance or by an actuary. Second, when you are talking about trade and craft employees, these employees participate in their union pension plan that must be funded as required by law (ERISA).

Southeast Side,

Changing the subject is not a defense or a justification for out of control unaffordable pensions upon retirement.

Many CEO and the boards that hire them are CORRUPT! Very corrupt! When a hand picked board allows a CEO like that of Home Depot to make $200 million a year there are serious consequences resulting and market forces take care of that.

Lowe's and Menard's who were not stupid enough to pay their CEO $200 million gave Home Depot an old fashioned licking. The stock market price of HD tumbled in almost half. The Board felt the pressure of the shareholders and dismissed the HD CEO. End of story!

In summary, "Southeast Side" using the corruption in some private corporations to defend outrageous pensions for Naperville Public Employees does not hold water. That situation can, will and was remedied by market forces.

But the market forces unfortunately can not fix a broken Illinois Pension system. We the taxpayers have to fix it with our votes. The politicians cater to the police and firemen because they can count on their votes. We have to let these politicians know that we outnumber the police and firemen and that they can no longer count on our votes if they do not fix this broken pension system.

I believe if we can get a referendum abolishing home rule, we can break the unions and their will. They are strong enough where they can sneeze and our city council will implement 15-25% increases in taxes to help subsidize their pensions. If we can limit our politicians to 5% increases in our real estate taxes, they would finally be able to tell the union, NO, NO and NO is the answer when they want subsidies for their 53 million deficit shortfall.

At that point we would have 2 options:

1. Bankrupt the city and be released from all our pension liabilities.

2. Get the unions to accept pensions that our commensurate with contributions made to the fund by city employees and reasonable matching funds similar to those paid by the private sector(2-4%).

When shareholders find out that corrupt boards are paying themselves enormous salaries they divest. I have been a player in the stock market for many years. I owned 5000 shares of HD. When they paid this CEO 200 million, I voted with my money and dumped all my shares...each and everyone of them. I am sure many of my fellow shareholders followed suit. I saw the HD stock fall from 40 to the low 20s. We the shareholders made them pay a heavy price! I doubt the new CEO is getting anything like the former one. I don't know and will never invest in a company again with such a stupid and corrupt board.

Yes, I agree with you that no CEO officer is worth 4000 times what an average employee at HD is worth. I also to this day refuse to shop at HD and I am sure many others who are aware of this situation also don't shop there anymore. We made HD pay for their GREED!

What you are describing is a terrible situation of corruption that no one writing here supports!

So lets get back to the subject at hand. Do you feel it is right to pay City Manager Bob Marshall a pension of $85,000 a year upon his retirement from the police dept. at age 51. We paid him very well for his services. Almost $113,500 a year. That is much more than 99.5% of American make. He even made more than entire families in Naperville make living under one roof. The median household income in Naperville is $97,077 (1st of 261) for 2007. Yes, we have the highest household income in the nation for cities with over 100k in population. It is a fact that former Police Officer Bob Marshall made more than that by himself while others had to depend on their wives and children to achieve an income much less than his.

And to add insult to injury, while collecting this enormous pension from the City of Naperville, he remains gainfully employed by the same City and collecting a salary of over 150k while building a SECOND PENSION for his retirement.

Now tell me that is fair "Southeast Side." I am not going to say Mr. Marshall is corrupt...because he is not! But the system that allows this nonsense is as corrupt as the HD board and CEO that allowed a 200 million dollar salary and topped off with a multi-million dollar termination balloon.

I suggest we give all this money that is collected from police officers including the matching funds paid by the City and give it to the union. Then tell the Union to pay whatever it wants to its retires from this money. My guess is they may be able to afford a 25% pension at most. The other 50% is being financed and subsidized by the Naperville Taxpayer. That simply sucks and is intolerable!

Asking private citizens who get no pension to support public servants with a 75% pension is madness. It is unacceptable! It is insanity! These pensions have had no success investing their money in the stock market just like private citizens. But somehow they feel a sense of entitlement....like we the taxpayers have to compensate them because their investments failed to achieve their financial goals(8.5% returns) in the disastrous economy of the last 10 years as ours failed.

This is unfair and puts a lot of stress on Naperville Taxpayers. While we are making less, while the returns on our 401ks have not been there, we are suppose to step up to the plate and subsidize our police for writing tickets, our firemen for putting out a handful of fires each year, our electricians for turning on the electricity after 2 storms a year, and our public works for fixing a few potholes in our streets.

Give me a break! We compensate our public servants very well for the jobs they do. Very well! We pay our NPD officers more than any other police dept in the state. Only a few towns in California thought they could afford to pay more and they filed for bankruptcy!

Maybe we can not break the promises we made to our current public servants but we don't have to promise new hires these ridiculous pensions. Even if we offered no pensions, there would be lines fighting for these police jobs that pay over $59,000 to a 21 year older. We will get the cream of the crop for that price! Even without a pension as most 21 year olders don't even know what a pension is! I did not at that age and never thought to ask for one from my corporate employers. I was just happy to have a nice job and a paycheck. And just for the record I made less than one third of that 59k for my first job out of college despite graduating with honors from a reputable university!

Hillary Clinton just stated at the DMC that 47 million Americans don't even have health insurance. And yet we give our cops and firemen full health insurance. Where are we screwing them? We take excellent care of our public servants?

But there are LIMITS! Paying 75% upon retirement for inflated salaries is not acceptable. While I don't have a specific example about Naperville, I do know that a fireman named Kurt from nearby Lisle was promoted from Lieutenant to Captain right before retirement. He got his promotion at his retirement party. They made sure they retired him in a way so his pension equaled his last salary before the latest promotion...at the ripe young age of 51 and in excellent health. The man jogs 5 mile a days at Edward's and does not have an ounce of fat on him. He will certainly live to be 101. There was no stress from his job that ruined his physical or mental health. And Lisle taxpayers will have to pay him roughly 80k for 50 years. That is 4 million bucks in retirement! Lisle paid him well enough to support a family and accumulate 4 real estate investment properties that are fully paid for. He would be just fine without a pension. So why does he need a pension to live like a KING at taxpayer expense? And at the young age of 51 he is looking for another job in the corporate world. What a life! Stop telling me public servants have it so bad! If only private employees had it half as good.

This example in Lisle borders on total insanity! He did not feel his job was stressful! He described his job of 30 years as mostly boring. Nothing to do most of the times. The biggest responsibilities were cooking the nightly meals and keeping those fire engines shined up. Many nights they never got a single call. Basically that translates to getting paid for a nice 8 hour uninterrupted sleep.

How stressful is a Naperville Police Officers job during this Last Fling? He will earn 75 dollars an hour or 900 dollars a shift walking up and down Jackson Rd. I have seen one fight the last 20 years at the Last Fling and I personally broke it up as no police were in sight. Big Deal! I did not feel there was serious risk to my life by stepping between 2 drunk idiots trying to punch each other. What risk is there to a police officer who is in better shape than me(or should be), who is wearing a vest, who is carrying mace, who is carrying a stun gun, who is carry a pistol, who is professionally trained and who is usually accompanied by one other cop or a group of cops.

Some bloggers here are acting like our police are in Iraq or Afghanistan and should be paid WAR WAGES. Unfortunately, we are paying them better than WAR PAY and those that are truly risking their lives are getting LOUSY PAY despite truly putting their lives on the line for our freedom.

We just had 2 brave marines from Naperville die last week. It is insulting the memories of these fine soldiers to say the NPD is risking their lives for us everyday.

The only police officer that ever died in the line duty was pursuing a robber on a motorcycle. This is so unfortunate! But I have been on record before knowing of this incident, stating that police do not belong on motorcycles. And apparently no lesson was learned from this unfortunate incident as some police officers are issued these dangerous vehicles to fight crime. The union should be protecting these police officers by demanding the elimination of ALL MOTORCYCLES on the NPD.

I hope the taxpayers wake up and take away this home rule our city officials have abused in unimaginable ways!!! Enough said!!!

Anon. 9:24 a.m. Please check with a tax accountant /tax attorney regarding 401k plans as rules have changed with regard to when and how old a person may be, to start receiving proceeds

To Naperville Sun There is so much more to this type of story that should be covered in future articles. 1) Many public employees and their employers do not pay into the social security system 2) Pay scale for public employees is many times substantially less than what is offered in the private sector. 3) Time value of the investment made by the public employee and the employer. 4) Waste and corruption at state gov. level.
The tone of this article is that all public employees are on easy street "once they retire" and the taxpayer is holding the bag. What needs to be investigated is the root causes of the short fall before blame is assigned that all defined pension plans are a bad deal.

For the record I am not a fan of these types of plans because the financial discipline required by a number of gov. agencies along with unions make the possibility for a positive outcome remote at best.

Southeast Side,

In the last 20 year this county has lost hundreds of thousands of union jobs.

Some jobs were outsourced. Some jobs were privatized. Some jobs moved to other states. Some jobs moved overseas. The unions protected absolutely none of these workers.

The union workers that remain have no more job or pension security than the hundreds of union jobs that have already been lost forever. Union workers would like to believe otherwise. Union leaders certainly want union workers to believe that they are being protected.

The maximum amount of security any union is able to provide is determined by the length of the union contract. As we have seen in recent years when companies file for bankruptcy the entire contract can get tossed out or the terms rewritten at the discretion of a presiding judge. There has been more than one company that has voluntarily gone into bankruptcy because of their union contract. And that is but one of the current tactics available to business, there are lots of others.

In the current legal and business environment there simply is not one single union that is able to protect it's members if management is determined and committed to ridding itself of union workers. And it does not matter if it is a private sector business or government. Believe it.

"Government pension expense (including teachers) needs to be brought more in line with the private sector. I work at a law firm in Chicago. This firm matches (up to 2%) of my 401k contribution for retirement. That's it. So,yes, I think 6.8%+ is too high."

Your employer is also paying 6.2% of your salary to Social Security, which makes 8.2% of your pay that your employer pays for your retirement.

"Previous posters have also commented the some public employees (teachers included) do not pay social security -- so they don't receive social security when they retire. But all along during their working lives that means they are getting to keep more of the earned dollars than those that work in the private sector."

Except that teacher's have to pay more than 9% of their salary to their retirement fund. So that is actually LESS of their money that they get to keep.

To respond to a couple of thoughtful comments. If a municipal employee retires and then takes a job where social security is deducted they first have to work 40 quarters to qualify for benefits like everyone else. The government penalizes that retired employee when they apply for social security because they are already collecting a government pension (truly the definition of double dipping). The penalty is approx. 60%. So yes, if they worked somewhere else for at least 10 years full time they could collect social security but at a greatly reduced amount.

I have spoken to several people who's employers match pension amounts that are equal to or in some cases greater than 6.8% of their salary. Obviously this isn't the case everywhere but being educated about your future benefits should be a part of everyone's job search.

One of the Anonymous posters had some figures about how long the money will last. You have to be at least 50 years of age with 20 years of service at a minimum to retire. You get 50% with those numbers. You don't get 75% unless you have 30 years of service. That retiree's contributions from his/her first day of service have been accruing interest for 20 years. The person who replaces the retiree starts contributing towards the fund and that interest accrues. Within 7 years the replacement is making the same or more as the retiree did on his/her last day. The replacement is now contributing more money to the fund than the retiree(s) did and he/she still has to work at least 13 more years before he/she can collect it. The replacement retires, the person he replaced is dead or close to it, a new person is hired and the cycle continues.

Mason,

The starting pay for a Naperville Police Officer is over 59k. It is very unlikely the average pay is only 6k more.....very unlikely!

Secondly, I have no problem with this $4420 number. They deserve it!

That is not the problem. The problem is that $4420 number can not sustain the 75% pensions we are giving out.

That is why we have a $53 million deficit! What is coming in is not equal to what is going out?

In the last 10 years the returns from the stock market are about 0.
In the private sector our retirement funds made nearly nothing.

In the public sector if they were counting on 8.5% return from the market and it is not there, we the taxpayers have to shell it out to make up for the non-performing stock market or commercial markets.

That is unfair!

What don't you get Mr. Mason!

How much more simpler could one be!!!

And don't forget we pay full health insurance for our public servants with out tax money while most of us have to pay for our own health insurance. Just gave the wife a check to mail for 1012 dollars that represents our monthly premium. Is that fair?

You appear to have no sense of reality!

As far as risk, not one NPD officer has ever been shot and killed on duty in nearly 2 centuries. Let us not exaggerate the risk to our fine men and women in blue. There is much more risk working at any factory in Naperville! THAT IS THE TRUE REALITY!!!

Dianne G says:

."Government" pensions should be brought in line with the private sector.

How about private pensions being brought in line with the public sector? The city employees are in a union - unions protect their employees from being taken advantage of.

How about creating a "society" instead of just an "economy". How about having a country with less inequality. In the 1960's, CEO's made an average of 40 times more than their employees - now it is over 4000 times more. And these companies complain that they can't possibly afford to pay for retirement? or Healthcare? The quest for the almighty dollar is sending jobs overseas and bankrupting our country. CEO's making multi-millions are bankrupting our country.

Are you in a union? If not, who's looking out for you? Do you have a CEO making 1000 times more than you? 2000, 3000, or 4000 times? Do you think he's looking out for you?

So if I understand the pro-pension group correctly, my job is not as important as those whose choose to dedicate their life to public service (because that of course is the reason they all do it). Given how unimportant and selfish my job is, I shouldn't dare be critical of the pension system? I'm not saying they should or shouldn't receive a pension, but to dismiss others criticisms with comments about "restoring power during a storm" is ridiculous.

Also, a quick google search of the 10 most dangerous jobs does not list any of the aforementioned public service positions (and I had a good laugh at the poster that mentioned the potential inherent dangers of being an educator -- as if they are any greater than the inherent dangers in any other job).

It's a rough economic climate right now, some have to forgo contributions to retirement plans just to make ends meet. Doesn't really seem all that fair that they get a free pass.

My dad was a former "volunteer" fireman in Naperville and we lived across from a fireman that lost his life responding to a fire when I was a youngster. I really don't think my dad or our neighbor were firemen to be called heroes. They were firemen because they wanted to be and it is a profession that pays decently. Government pension expense (including teachers) needs to be brought more in line with the private sector. I work at a law firm in Chicago. This firm matches (up to 2%) of my 401k contribution for retirement. That's it. So,yes, I think 6.8%+ is too high.

Previous posters have also commented the some public employees (teachers included) do not pay social security -- so they don't receive social security when they retire. But all along during their working lives that means they are getting to keep more of the earned dollars than those that work in the private sector. And what's to stop a retired public employee from then getting a private sector job for the minimum amount of time to then be eligible for social security benefits as well?

I certainly appreciate the electric dept employee that gets the electricity turned back on, the police officer that responds to a 911 call as well as the firefighters. But let's not bankrupt our city to pay for a 75% retirement pension.

Assuming Mason's numbers are reasonably correct... $6,110 plus $4,420 equals $10,530 yearly contribution times 20 years (without factoring lower earnings in prior years) equals $210,600 total contribution.

Assuming the $65,000 is the final four year average, 75% pension equals $48,750.

$210, 600 divided by $48,750 equals 4.32 years. So after this theoretical 20 year police officer retires as age 41 he has recouped both his and the cities total contribution before age 46. With an average live expectancy of at least another 20 years... where is this additional money coming from?

Pension investments? Not likely. The pensions are all underfunded. One of three things must happen... we do nothing and let the pension systems implode and file for bankrupcy, we terminate the pension systems and convert them all over to 401(k) plans like the private sector, or we drastically change the current structure in terms of who contributes how much, when benefits can be collected, and how much benefits will be received.

To those who say their is a fourth option... i.e. the taxpayers bailing the pension system out.. forget it. We are not interested. It is not our pension. We didn't create this mess. We are not interested in funding it any more than we already have.

Since all the union hacks who have posted above have their heads in the sand and don't want to dare breath a word about reform I guess they want anyone to touch their pensions. Fine with me, we will just wait until their pension systems implode. If that is what they want who are we to argue?

To add to what Mason said:

Normally besides a 401(k) contribution the employer and employee will contribute 6.2% each to social security. For a police officer or firefighter the city and employee do not pay social security. If one subtracts off the normal social security contributions, that reduces the amount paid to 3.2% employee and 0.6% city.

Let's look at the numbers. Not the number the city pays for ALL employees. That final number is intimidating to taxpayers. Let's break it down for one employee so we can get a simplistic view of what the city pays. The average pay for a policeman or fireman is approx. $65,000. Some may think this salary is too high. It is the going rate for comparable chicagoland departments, so let's keep on task with the pension numbers.

$65,000 x 9.4% (employee contribution)= $6,110 per year
$65,000 x 6.8% (City of Naperville contribution)= $4,420 per year

$4,420 per year for the city's portion of the pension does not seem out of line. Many private industry 401k's that match employee contributions will put more than $4,420 into an employee's matching 401k fund.

Once an employee retires the city no longer contributes money for that employee. He or she receives their pension from the earnings the pension fund produces from the combined contributions of employees both past and present.

Is the final number intimidating? Sure it is, but with 1,000 employees, most of whom get a pension, that number is going to be large. City employees don't get social security because they are receiving a government pension.

The next time a Naperville Electric employee restores your power during a storm be sure and tell him he's not worth an extra $4,420 per year. The next time a Naperville police officer responds to your home for a 911 call be sure and tell him he's not worth an extra $4,420 per year. The next time a Naperville firefighter saves your loved one be sure and tell them they're not worth an extra $4,420 per year.

Please when making comparisons between the private and public sectors remember that public safety employees and teachers do not receive social security benefits. Therefore, in making your comparisons you have to add to private retirement benefits the public social security benefit to correctly draw your conclusions.

Let us not forget that many employees in the public sector do not pay into the social security system. The pension and any accumulated savings is what awaits these public servants. Note that many in the public sector will have social security, along with 401k plans and if lucky (or Mature) enough to have participated in a defined pension plan.

When the whole picture of wages (which lag behind the public sector), lack of social security participation, and inherent occupational dangers (police, fire, and sometimes educators), the pension rate of 70-80% of wages may not seem so unreasonable.

The area that may have to be addressed is the age of retirement for some of our public servants. But then again do we want a policeman or fireman being forced to work until 65 because of retirement issues, I am not so sure I do.

"Government" pensions should be brought in line with the private sector. No one gets 75% of their salary when they retire in private sector. Being a police officer, fireman, public works employee or teacher is a career that I'm sure many would choose even without the very generous pension that awaits them after 20+ years of service. None of us are guaranteed tomorrow -- we have to live the best we can for today (making some provisions for the days ahead if we are so lucky to be here). It's time our elected officials (city, state & federal) stood up and did the right thing -- get all government pensions under control.

Pensions are guaranteed by the constitution.

I would be ok with making a switch to future employees say... matching every $1 dollar that is contributed-City pays $5 dollars up to a maximum of 40% of annual salary. That seems to be fair. Or have the city place 25-40% of an employees salary into a retirement savings account.

Yes, a first great first step would be to rescind home rule authority. Let us see if our City Officials can contain overall increases to 5% or less as state rule demands!!!

State rule in case some bloggers don't know limits real estate tax increases to 5% per year. Last year many residents experienced 15-25% city of Naperville tax increases!!

If our city council members are limited to 5% increases, either they control costs or the City of Naperville files bankrupty. I would love to see our officials perform under some stress and pressure.

Anyone can run the wealthiest town in America with over a 100k by taxing the hell out of everyone. Maybe even primates shooting darts could do as well as some of our city council members who never read the voluminous packages given to them Monday evening. Some don't even bother picking them up till right before the meeting! That is how prepared they are! Let us see how 9 chimpanzees can do running our city compared to our 9 city council members!

At least if the chimpanzees are throwing darts or flipping coins for their decisions, we have a 50% chance that the unnesscessary library deck will not be built. With our current city council we have a 100% chance that this ridiculous deck would be built.

Maybe the Napergate Man should run a slate of 9 chimpanzees to compete with our 9 city council members. Who knows? They just may win!!!

Representative Meyer says he has heard nobody who is concerned about the pension system? He either didn't ask or wasn't listening. Wonder what his state pension will be when he retires in January. (Oh, and are we going to be on the hook for his medical insurance, too?)

The pensions for police, fire, public works, etc. attract qualified people who are willing to lay their lives on the line every single day so that everyone in this city can enjoy a certain quality of life. They are out in the streets dealing with problems and people that most don't want to be near. They are willing to protect your family and your property...and might have to give their life or be injured to do so. They work weekends and holidays, and all through the night...many times sacrficing time with family to serve citizens.

If you think that you are being shortchanged and cheated, then I suggest the following: go on a series of ride-a-longs with the police during the day and during the midnight shift and see what they see, go to the fire department and spend a 24 hour shift with them as they go to calls and extract drivers from their cars so they can get medical treatment, go out with public works when it is -10 degrees below zero in february and help them fix a water main break to you can have a warm shower in the morning.

Do these things and you will have an appreciation for the employees that keep this city going. But I know that most will not because they have no interest and just don't care.

Police officers are murdered trying to serve and protect, fire fighters die trying to their jobs, and public works employees are severly injured all the time. Is a pension to much to ask for if they should survive 20 or 30 years of dedicated service to the community?

What a wonderful idea to throw out the the pensions of public servants and not compare the compensation packages of those in the private sector. Lets take educators for example. Beginning educators have been underpaid for decades,one way to even the playing field was to offer better benefits. Then the 1980's arrive and someone has the bright idea to institute early retirement to make way for new and less expensive teachers to take the place of the older (sorry more mature) ones.This early retirement pkg. seems like a great idea at the time. But like all good things the day has arrived to dismantle this burdensome early retirement and convert to a 401k type program. The area of compensation that should stay the same is the substantial contribution the district must come up with and this should be accounted for in real time and not years after the teachers have retired. This would still give many teachers/ educators the opportunity to retire before 65 years old with a large nest egg in their own account.

This program works very well with small and medium size businesses because all costs are accounted for in real time and don't accrue into future decades. Good luck convincing the unions that this is a viable solution.

Outsource and privatize. Let the private sector be responsible for submitting a competitive bid for whatever the market will bear for the services delivered by various city departments. And let the private sector forces determine the pay, the benefits, and the retirement plans.

When America first became a separate county our forefathers never envisioned armies of public servants living off the labors of others. In fact the whole idea and concept of civil service was originally intended to temporary work. It was never intended to be full time, much less to span an entire career. The signers of our Constitution would be appalled at what has taken place for this was never their intent.

We simply have too much government. For an example of the absolute worst of the worst just take a look at the size of the city finance department. We have legions of workers doing nothing but sucking more and more tax dollars out of everyone and hordes of workers trying to make sure every last dime is collected from every tax. I'd like to know how many tax dollars are needed every year just to pay for the salaries, benefits, retirement, space, equipment, utilities, etc., etc. just consumed by this one department.

This country is getting closer and closer to the point where it is time for another tea party! Remember unfair taxation without representation?? We have allowed our tax man to become that which we originally despised so much in others that we were forced to have a revolution. We have been apathetic about taxes and fees for way too long and it is starting to strangle the lifeblood out of every citizen and taxpayer.

I am convinced that no matter how much money we throw at government that it simply can not find a way to control itself and live within it's means. The government appetite for tax money is insatiable. We simply must come up with some solutions to end the madness. One of the first steps in Naperville would be to rescind home rule authority. We absolutely have got to start somewhere. A first step is better than no step.

The current public pension system is a joke and will soon be dismantled.

I like the way Southeast Side on August 25, 2008 9:10 AM, tries to blame it all on CEOs (or at least rationalize it).

Let's see, DAD ----- the sins of a small handfull of CEOs is, in your opinion, a good reason to allow bloated and unaffordable pensions for a hundred million public workers? Do you even understand the concept of relativity?

Public employee pension plans will never be sustainable. It does not matter what government pension experts, government employees, and union officals say or write.

Pension payouts as stated for public employees are not warranted or justified. Only by increasing taxes can payouts continue. Look higher taxes will be forth coming for all. Here are several problems why these plans cannot be sound, but not the only problems.

1. Inflation
2. Early retirement
3. Longevity. (Life expectancy is about 79 years for males and 81
years for females)
4. Increasing payouts, about 3% a year for public employee retirees.

Legislators who are generously paid for part time work and with generous retirement plans are not going to do anything. Even the members of Naperfville's City Council will receive pensions. Also lets throw in for good measure the unrealistic pension plans for elected officals in DuPage County.

The pension system is not sustainable, the benefits are way out of line with reality. The history and philosophy of pensions have been twisted beyond recogniton.

In conclusion, most believe as I do, organized crime is a problem, but organized government may be a bigger problem.

In my opinion as a financial professional,and former police pension trustee; Municipal, state, teacher, and gov't DP pension plans are a disaster waiting to happen. Given current actuarial assumptions, the underfunded status of most plans,and the future tax funding that will be required it is not a question of if but when these plans will implode.

With Social Security if you retire prior to age 65 you receive lowered benefits. With 401(k) if you withdraw funds prior to retirement age the IRS hits you with a heavy tax penalty. Add in to that the fact that the retirement age has been slowly inching up past 65 only more clearly helps to illustrate the out of balance differences between private sector and public sector retirement plans.

Step one for all government pension reform should be to discontinue the current practice of allowing able bodied people to retire while they are still capable of working. Even if these workers have "vested" right in a pension plan after a given number of years, they should not be allowed to draw one cent of "retirement" money until they reach the normal retirement age of 65 or possibly even later years if Social Security keeps making the retirement age older. Like like all other normal Americans, if they draw any retirement pay before age 65 they should have a severe and permanent penalty on the amount of money they receive each month.

Another positive reform change would be to once and for all end the practice of double and triple dipping. While the Naperville Sun pointed out some of the typical inequities of the current situation it failed to illustrate some of the more flagrant abuses as well. One example would be the widespread practice in the fire service of holding a firefighter position in two different fire departments at the same time. A typical fire department shift is one day on followed by two days off. What typically happens is a fire fighter works one day on for ABC Department, then work another one day on for XYZ Department, then take one day off. And guess what? They still get two full days off every week. Since both towns have different pension boards and retirement plans they actually draw two 75% pensions when they retire. And the fire department administrators know this is going on and openly allow work rule violations to allow it. This is just one example, there are others.

Instead of whining about why somebody else has a pension, we should be complaining why we don't, especially while CEO's get HUGE compensation packages.

"Redskin" says it's "too costly to employ people" - Business shift jobs overseas because they are focused on the short run bottom-line. But it is starting to catch up with us - if every employer sends jobs overseas then there will be nobody left here to buy your product - it is penny-wise and pound foolish. Sending jobs overseas strengthens those overseas economies and weakens ours.

America needs universal health care that is smarter ( spending $500K on operations for dying 80 year olds is dumb ) - instead of just lining the pockets of Big Pharma. America needs higher taxes on millionaire CEO's and celebrities. Americans need to start working together to make this a better place.

Big business has been dealing with the pensions, employee health care, retired employee health care problem for a decades now. Just shift the jobs overseas. Or go out of business. Then they don't have to comply with those adverse, draconian, pesky labor laws, labor contracts, employment law and all the other things that our BIG FAT government has created and MAKE IT TOO COSTLY TO EMPLOY PEOPLE! (Read the entire FMLA Act just for fun) Of course a municipality cannot shift jobs overseas but we are seeing an example now of why business does. To that retired Sgt.: Enjoy your pension. After dealing with 30ys of Naperville nut bags, you've earned it. And take it out of here. Complete the spending cycle somewhere else. I guess the really smart people forget that if you live here, you spend those pension $ here too. I suspect the real motivation is that Dukin Dick Furstenau is jealous that your pension income is more than his. Thats why he wants the law changed.

Holy Toledo!

53 million pension deficit and our City Finance Director does not forsee a problem.

Let us start a search for a new Finance Director and let make sure he is not a former police officer!