Taxpayers United of America’s (TUA) data on the recent Teachers Retirement System pensions was cited by Chicago Tribune
It’s hard to tell how former Lincoln-Way High School District 210 Superintendent Lawrence Wyllie feels about his role as the newest poster boy for excessive state-funded pensions in Illinois.
Wyllie was a highly regarded educator when he retired in 2013, but he’s saying little publicly these days. As the district prepares to close one of its four high schools to narrow a budget deficit, Wyllie is mum about collecting the largest pension in the Teachers’ Retirement System.
His pension is $312,081 this year and will grow to $321,443 next year thanks to an automatic 3 percent annual cost of living increase. That’s a difficult figure to grasp, since the highest gross earnings of his career were “only” $276,307 during his final year of employment.
The formula used to calculate Wyllie’s overly generous pension has been phased out, but taxpayers are still on the hook for the guaranteed benefits.
As outrageous as Wyllie’s retirement pay is, it pales in comparison to others. TRS is one of five pension systems for public employees in Illinois. The state’s highest pension is paid through the State Universities Retirement System (SURS) to Tapas Das Gupta, former chair of surgical oncology at the University of Illinois at Chicago. His annual pension was $466,409 last year.
Coverage: Lincoln-Way School District 210
Coverage: Lincoln-Way School District 210
I think Gupta and other SURS pensioners pulling in shocking paydays are the reason Gov. Bruce Rauner is punishing college students by withholding state funding for higher education during the budget impasse.
Because SURS has bigger pensions, it’s no small feat that for the moment TRS is grabbing headlines for more egregious abuses of taxpayer money. Last week, Taxpayers United of America, one of many groups that has been analyzing Illinois’ pension crisis for years, released updated stats about TRS’ 114,434 pension beneficiaries.
Taxpayers United found that 8,507 TRS members collect pensions in excess of $100,000 a year, and that employees on average pay only 4.1 percent of their estimated lifetime pension payout into the system.
That means you, me and other state taxpayers pay 95.9 percent of pension benefits, on average.
I know numbers can make your head spin sometimes, so I’ll try to keep the math to a minimum. You’re outraged that a civil servant collects six figures a year in retirement, right? Public pensions should be capped at $100,000, watchdogs and ordinary Joes have been saying for years.
Ah, but the state Supreme Court has ruled that denying already earned benefits to pensioners would be unconstitutional. Our legislators can and should reform public pensions moving forward, but is there any way to spare honest taxpayers the burden of excessive benefits already granted to pensioners?
The answer is yes, by taxing retirement income.
This is not a new idea. Taxpayer watchdogs and economists who have studied Illinois’ budget problems have suggested this for years. Illinois is one of just 12 states that do not tax retirement income, the Civic Federation says. Among states that impose an income tax, we’re one of only three that exempt all pension income.
No one wants to punish the salt-of-the-earth teachers and municipal clerks who worked hard all their lives and paid into a system. They deserve a fair pension. Benefits for those folks and elderly collecting meager monthly Social Security payments can easily be preserved by exempting, say, the first $50,000 of annual retirement income.
For the record, Taxpayers United is against taxing retirement income. The group responded in January to an idea floated by Barbara Wheeler, a Republican state representative from Crystal Lake. Wheeler suggested taxing state pensions.
I like the idea. Even if Illinois were to tax retirement income a guy like Wyllie, who owns a residence in Florida, could simply declare residency in the Sunshine State and collect his full pension where retirement income is not taxed.
As much as I’d love for taxpayers to be able to claw back absurdly generous pensions, the state and U.S. constitutions have uniformity clauses that make it illegal to target one group for taxation, even if that group happens to consist solely of obscenely compensated public servants.
Taxpayers United says the solution is to repeal the 1970 Illinois Constitution clause that protects outrageous government pensions from reform. But the state’s powerful unions will block any effort to reform the state Constitution.
In 2012, House Speaker Michael Madigan backed an effort for a constitutional amendment that would have required a supermajority of state legislators to increase pension benefits. It passed unanimously in the House and received only two “no” votes in the Senate.
But a supermajority of voter approval was needed statewide, and in the face of union opposition only 56 percent of voters supported the measure. Consider that to be a test of the likelihood of amending the state Constitution to bring about reasonable pension reform.
As a state, we’ve made zero progress on pension reform, and here’s some math that explains why we’ll never achieve a balanced state budget without pension reform. According to the Illinois Policy Institute, “More than 25 percent of the state’s $32 billion budget … is being consumed by pension costs for downstate and suburban teachers, public-university and college workers, state employees, judges and state lawmakers.”
Illinois has the worst-funded pension systems in the nation, with a shortfall at $111 billion and counting. More than half the $4 billion in state higher-education appropriations go toward the pension and retirement costs of university and college workers, the Illinois Policy Institute says.
Most people concede that Illinois needs more revenue to solve its problems. But higher property taxes should be out of the question, and a higher tax rate on all income shouldn’t be the only solution. Solutions proposed by groups like the Center for Tax and Budget Accountability include a variety of personal, sales and corporate tax increases, as well as “including some retirement income in the personal income tax base.”
It’s not a perfect solution. I’d love to see pensions capped or the Constitution reformed. Local school boards must stop granting end-of-career salary bumps that boost pensions and end up costing all of us dearly.
But realistically, I think comprehensive budget reform for Illinois must include taxes on retirement income above a reasonable exemption limit. That way, at least, taxpayers will have a way to recapture some of the excessive pensions being paid to many public-sector employees.