Yearly archive for 2016

Taxpayers United of America’s Executive Director, Jared Labell, was quoted by Madison Record, IL Senate Republican Press, and Wire Points IL about TUA’s recent release of the 10th Annual Illinois State Pensions Report.

The great promise of financial security in retirement is being threatened amidst an aging population and Congress tapping into and making use of federal Social Security trust funds for other purposes, according to Taxpayers United of America (TUA).

Thompson

In Illinois, the situation is even more dire because private sector workers and taxpayers must support lavish public sector pension plans, the group says.
A total of 15,661 Illinois state pension plan participants are receiving more than $100,000 a year in retirement payouts, according to TUA’s 10th annual analysis of state public sector pension plans. A total of 92,386 are receiving more than $50,000 a year, analysis shows.
Those figures do not include police and fire department employees, which are funded at the local level.
In a recent press release, the TUA points a finger at former Governor James R. Thompson who raised Illinois personal and corporate income tax rates 20 percent in 1983 and 1989.
The TUA says that as of this year, Thompson is due to receive $147,477 from his state pension plan. A 3 percent cost of living adjustment (COLA) added another $4,424 to that as of July 1.
In stark contrast, those on Social Security will receive a COLA of just 0.2 percent for 2017 – an average annual increase of $24 based on a $1,000 per month payment.
That’s nearly 185 times less than what Thompson receives, TUA director of operations Jared Labell told the Record.
He also said that Thompson isn’t the only state official who helped enact tax policies that ultimately created excessively high-value state pension plans from which he or she benefited.
Labell said that in the near future the TUA will be analyzing the benefits received by other state officers who are responsible for the tax policies that support the benefit plans.
In some instances, he said, state pensioners recoup all the money they plowed into state pension plans during their working years in just one year after retirement.
All this is taking place as the state’s five major public sector pension plans sink under the weight of promised payouts they cannot meet, he said.
The threat of bankruptcy looms as ¨all of them continue to rack up unfunded liabilities,¨ Labell said.
Taxpayers United identifies IMRF (Illinois Municipal Retirement Fund) as the ¨gold standard¨ among Illinois public sector pension plans. Yet, IMRF’s self-disclosed funded to unfunded liability ratio stands at 87.3 percent, which ¨still leaves it billions of dollars in the hole – $4.8 billion,¨ Labell pointed out.
Compounding the problem is that that the returns on investment pension plan managers project are typically around double what they actually turn out to be, he continued. Taxpayers are on the hook and wind up making up any shortfalls.
He said that state revenues are being diverted to meet public sector pension plan payouts. That’s threatening municipalities’ ability to provide basic, essential services in some cases – public lighting, law enforcement and education, LaBell said.
Illinois ¨has the worst funded pension plans in the U.S.,” Labell said. “The number thrown around is that they [the state’s largest pension plans] have at least $111 billion of unfunded liabilities.¨
An estimate by Chicago-based Truth in Accounting pegs the figure at close to $200 billion, he added.
What’s been happening amounts to a systematic redistribution of income and wealth in favor of state elected officials and public sector employees at the expense of all those who work in the private sector, he said.
¨State pension and salary increases are far outpacing those in the private sector…What we see is a widening gap in the distribution of income and wealth. Only a fraction of the workforce are receiving increases while the mass of the workforce is paying for their lavish retirements,¨ Labell commented.
What should, and can, be done?
Labell said that a good first step would be to improve public transparency, public pension accounting rules and standards, and how estimates of future returns on investment are derived and calculated.
¨Most of the time ROIs are placed in the 8 or 9 percent range, but in reality they are closer to 3 or 4 percent,¨ he said.
Furthermore, pubic sector pension funds need to adjust to the realities of today’s aging demographics, and they need to catch up with changes private-sector pension funds made decades ago, he said.
That includes shifting from defined benefit to defined contribution plans, such as corporate 401K plans, LaBell continued.
¨We don’t necessarily fault public sector employees for taking jobs that promise lucrative pensions in retirement,” he said.
“We certainly understand, and can appreciate, that point. But there’s no talk of making changes for new hires, or at least offering the option of 401K plans. And that’s potentially disastrous for taxpayers and future retirees, who may not see pension payouts in future years.¨
This article was also featured by
 

Wirepoints Illinois News

Illinois Senate Republican Press

Taxpayers United of America’s Executive Director, Jared Labell,was quoted by Madison Record about the recent release of TUA’s 10th Annual Report of Illinois State Pensions.

Two Edwardsville pensioners, whose combined annual pension is almost $476,000, made the top 400 in Tax Payers United of America‘s 10th Annual Report of Illinois State Pensions.
More than 15,000 state pensioners in Illinois each collect more than $100,000 a year while more than 92,000 annually collect more than $50,000, according to the report issued June 23.
“Nearly 75 percent of these top government pensioners are collecting more than $200,000 a year in taxpayer-funded pensions,” Taxpayers United of America Executive Director Jared Labell said in the press release that announced the report. “These government pensions accumulate to multi-million dollar payouts over a natural lifetime, and for many government retirees, they will collect more than their total contributions to their pension fund while employed within two years of retirement.”
Taxpayers United of America is a Chicago-based tax watchdog group that was founded 40 years ago this month.
The report analyzes data from Illinois’ General Assembly Retirement System (GARS), Judges’ Retirement System (JRS), Teachers’ Retirement System (TRS), State Universities Retirement System (SURS), State Employees’ Retirement System (SERS) and the Illinois Municipal Retirement Fund (IMRF).
Taxpayers United of America is not the only group pointing to pensions as a contributing factor in the state’s present financial crisis. Southern Illinois University Paul Simon Public Policy Institute Director David Yepsen told the Madison – St. Clair Record earlier this month he predicted it taking several years of bringing pension deficits into balance.
There also has been an analysis of how much taxpayers in Madison County would have to pay if they were to fund existing pension debt. Tax bills would at least double, that analysis showed.
The Taxpayers United of America report lists actual pension amounts, particularly those paid to the top 400 pensioners in the state.
Labell said that it is difficult to break all those figures down by county and determine how much Madison County taxpayers contribute toward the pensions of those 400 and more.
“Unfortunately, the six pension funds (five state funds, plus IMRF) did not provide sufficient data to accurately breakdown all of the pensioners by county,” Labell said. “However, our research shows that there are about 300 government retirees in the Madison and St. Clair area collecting pensions of at least $100,000 annually. While those are staggering numbers, the six-figure threshold isn’t enough to be included on our list of Top 400 pensions. Nearly our entire list contains pensions in excess of $200,000.”
Among those 400 are David Werner and Morris Cooper, both retired from Southern Illinois University in Edwardsville, who are No. 76 and 156 respectively on that list and who draw their pensions via the State Universities Retirement System.
Werner, chancellor of Southern Illinois University from 1998 to 2004, receives an annual pension of $252,704, more than the $246,018 he contributed to the fund, according to the report. Cooper, who remains professor emeritus in the University’s Medical Microbiology, Immunology and Cell Biology department, receives an annual pension of $223,187, slightly less than the $226,656 he contributed to the fund, according to the report.
“Nearly 90 cents of every income tax dollar sent to Springfield during the 2011-2015 67 percent income tax hike went to funding the state pensions,” Labell said. “So taxpayers in the Madison County area are losing out with the rest of the state.
Taxpayers United of America also suggests some solutions in the report, including short-term and long-term policy changes.
“Firstly, the defined benefit pension system is always a financial risk, so defined contribution 401(k)-style plans are preferable, and new hires should be transitioned immediately,” Labell said. “Current employees should also be allowed to transition to these new plans. Decreased cost-of-living-adjustments are necessary, as well as increased retirement ages and contribution totals to their own government pensions.”
Long-term solutions must include amending or repealing the pension-protection clause, Article XIII, Section 5, of the Illinois Constitution to make substantive changes to the government pensions in the state, Labell said.
“Allowing municipalities, school districts, and other taxing districts to reorganize through Chapter 9 bankruptcy is another option to protect taxpayers and restructure unfunded liabilities,” he said. “Federal legislation to expand the US bankruptcy code would preempt state level prohibitions to making necessary reforms and override the Illinois Constitution’s pension-protection clause. This is the most difficult but systemic reform of Illinois’ unfunded government liabilities.”

Taxpayers United of America’s Executive Director, Jared Labell, made an appearance on Watchdog Radio with guest host Jacob Huebert, airing on Cities 92.9, the News and Talk of Bloomington-Normal.