Archives for category: Pensions

Troy LaRaviere is principal of Blaine Elementary School in Chicago. He was invited to speak on a problem at the Chicago Civic Club, where civic and business leaders convene. The topic was bankruptcy and the schools. Troy was the only school-based educator on the panel.

Here is the link to the event (you might want to hear Paul Vallas on the topic).

And here is Troy’s presentation:

“I recommend watching the last few minutes of Paul Vallas’ presentation in which he lays out the basic rules CPS operated by before the financial crisis. This part of his talk begins at the 36:00 time segment. I think all of Chuck Burbridge’s presentation is worth listening to, and that George Panagakis’ presentation on the intricacies of bankruptcy was eye-opening. This panel represents the first time I’ve prepared all of my remarks beforehand, so I’ve included those remarks below. I learned a lot from my participation on the panel and I hope you learn from it as well.

“Prepared Remarks

“Thank you to the City Club for inviting me to this panel and luncheon. Unfortunately I could not take advantage of the lunch as I am fasting today in solidarity with the 12 parents and community members who are in their 9th Day of a Hunger Strike to save Dyett School as the only open enrollment neighborhood high school left in their community (I mistakenly said “city” in my remarks). This gesture on my part is relatively insignificant when compared to the sacrifice they are making on behalf of their children. But I make it nonetheless before I begin my remarks.

“As residents and taxpayers we have to do more than identify problems. We have to identify and understand the source of those problems. If we don’t neutralize that source then we might be able to solve this problem today but that source will rear its head a few years down the line to re-create the same havoc that it’s wreaking on us today.

“We’re being told that pensions are the problem. We have a problem with pensions but pension are not the source of our problem. This administration consistently misappropriated pension funds, and then attempts to convince us that pensions themselves are the problem. That’s like a thief stealing your rent money and then attempting to convince you that the landlord is the problem.

“The source of our problem is city and school officials who spend and borrow money in a manner that is reckless and corrupt; the parasitic private sector banks and investors who are always looking for creative ways to rip off taxpayers, and the state legislators who enabled this irresponsible fiscal behavior in the first place.

“For the sake of time, I’m going to focus my comments on this administration’s reckless borrowing and the bank that benefit from it. When the Tribune attempted to look into the cost of this borrowing their reporters and attorneys were forced by CPS to spend a year getting the details about how much it spends in interest on its massive debts. So not only are they putting us in debt but they tried to prevent us from finding out just how much debt they put us in.

“Interestingly enough, CPS recently hired Ernst and Young to do an analysis of their structural deficit. That analysis shows that pension costs are projected to rise only 32% over seven years, while debt service is projected to rise 350% from $119 million to $421 million. THIS is the debt that’s driving up costs. This debt is not owed to teachers. This debt is owed to financial institutions like the Pritzker Group, Goldman Sachs and Northern trust—all Emanuel Campaign contributors; and his administration wants to ensure they get paid what they’re owed.

“This debt is also owed to banks and investors who virtually swindled CPS out of $100 million. Financial institutions like Bank of America and the Royal Bank of Canada. They have documented evidence that these banks knew that the auction rate securities market was about to collapse while they were preparing to underwrite a massive auction rate bond issue for CPS.

“That’s illegal. You can sue them and get those millions back. But the Emmanuel administration refuses. They want them to get what’s owed to them even though they got it in through corrupt and deceptive practices.

“This administration wants to pay your tax dollars to EVERYONE they owe, except one group. The only people the Emanuel administration doesn’t want to pay what they’re owed are teachers.

“Let me say it again another way.

“The only group of people the Emanuel administration doesn’t want to pay, just happen to be the only group of people who actually worked for what CPS owes them–spent their entire careers working and sacrificing for what CPS owes them.

“PNC Bank didn’t sacrifice a more lucrative career to dedicate itself to teaching science and mathematics. Chicago’s teachers do that.

“Goldman Sachs didn’t sacrifice time with their own families to stay after school to tutor struggling readers. Chicago teachers do that.

“None of these institutions spent consecutive years of his career working with four struggling students in hopes that that sacrifice and investment of time would pay off on their graduation day …. only to have those hopes destroyed when the news reaches you that you’ll be preparing instead for their funerals—in part, as a result of the neglect of their communities by many of the same people responsible for the neglect of their schools. Their names: Miguel. Tyray. Roberto. Candace. Those are the names I carry with me, but teachers all across Chicago have names of their own etched in their memories forever.

“As our teachers feel this district coming in to take what little they do get in return for their sacrifice, this administration’s hollow, empty, and hypocritical use of the term “shared sacrifice” to justify this encroachment must seem profoundly disrespectful and painfully ironic.

“To reiterate. The source of our problem is:

(1) city and school officials who spend and borrow money in a manner that is reckless and corrupt;

(2) the parasitic private sector banks and investors who are always looking for creative ways to rip off taxpayers, and

(3) the state legislators who are all too eager to create a legislative environment in which this legalized theft can occur.

“If anyone is made to sacrifice, it has to be members of these three groups, because the behavior of teachers did not cause this problem. The behavior of these three groups caused this problem. Teachers have already made their sacrifice a thousand times over, and those whose behavior caused this crisis have no right to ask them for more.”

Fred Klonsky reports on his blog that Thereis a dangerous bill in the legislature that would wipe out all school funding and pensions and appoint acommission of legislators to start from scratch.

Since this is apparently Governor Bruce Rauner’s idea, you can be sure whatever happens will hurt the state’s public schools and benefit charters.

The bill has passed the State Senate and awaits action in the House.

Get involved. Speak out.

Over the past generation, Detroit has suffered from de-industrialization, middle-class flight, high poverty, joblessness, and abandonment by the state and civic elites. One reform after another has failed to “save” its schools, because reformers ignored the root causes of poor academic performance.

 

Now, conservative Michigan Governor Rick Snyder plans to get rid of public education and turn Detroit into an all-charter district like Néw Orleans. This is now public officials’ favorite way of getting rid of their responsibility, by handing it off to the private sector.

 

Here is one analysis of the continuing abandonment of the children of Detroit. I don’t usually cite partisan sources but this is as good an in-depth a review as I have seen. If you spot any errors, let me know.

 

It is a sad story. Our nation can’t afford to educate its poorest children. Actually, it can afford to but chooses not to. They need small classes; arts programs; experienced teachers; stability. None of that is part of the plan. We lack the will to help those who most need a good education.

A comment from a reader who signs as M:

 

Contracts are sacred…unless they’re made to a teacher.

 

What is perhaps the most disheartening is that the deformers have identified every crutch that we leaned on for determining education policy and worked in earnest to commandeer them or dismantle them.

 

Education research – let’s hire a bunch of researchers to generate what we want to say

 

Standards – Let’s govern what’s taught in classrooms whether it’s reasonable or not, educationally sound or not (this leads into all the VAMish nonsense)

 

School boards – let’s buy the races or have control seized from them, or both (buy the board then have it turn over power).

 

Money – Let’s find every end run through taxes and otherwise that will take money out of the schools from the students we’re trying to save, and blame that on teachers for being so greedy that they need to accept less – let’s take their money spend it elsewhere then blame them for their bloated pensions too.

 

Purpose of Education – Rather than being student centered it is now job market centered with schools being responsible for generating appropriate human capital (the student matters so much as they need to be come the chattel for said market)

 

I went into teaching to help students and make a living to help support my family. Pretty simple. If you look at the lens of effectiveness through all of these elements and how they’ve shifted over the last 20 years, it’s pretty disheartening.

 

They are succeeding (right now anyway) in turning school from a place of wonder, fun, community, and learning, into a hellish individualistic market centered hell hole focused on prepping each individual student for the test they must pass to be deemed “good product” – that takes away from so much of developing students into the types of neighbors we’d want in society. The message is insanely cynical.

Mike Klonsky updates us on Rahm’s financial hustle. 

Rahm Emanuel, who learned his creative financing tricks, like “scoop and toss” bond financing while working for Bruce Rauner at GTCR, plans to borrow $500M from the Chicago Teachers Pension Fund, one day after paying the Fund $634M in overdue required city contributions.

The real cost of this trickery is felt right in the classroom with 1,400 teachers and staff being hit with lay-off notices yesterday.

That is what is called “chutzpah.” He pays the pension contribution, borrows from the teachers’ pension funds, and lays off 1,400 teachers.

Bruce Rauner never held public office until he ran for Governor of Illinois as a Republican against Democratic incumbent Pat Quinn. Who is Bruce Rauner?

Ken Previti has a word for him: Sociopath. This is his word, not mine. Rauner cuts autism programs to pay for high-priced hires, like the new “education czar,” who will make a quarter million a year. Rauner loves charters. He even has one named for him. Previti quotes a conversation I had with Rauner in front of about a dozen people a few years back. I asked him if it bothered him that charters like his enroll small proportions of students with disabilities or ELLs. He said it didn’t bother him at all. He said that charters were for students who were highly motivated and eager to work hard. When I asked what he thought we should do about those other children, the ones rejected by charters, he said he didn’t care, it was not his problem. I would say Bruce Rauner is heartless. I would say he is indifferent to those he considers less worthy than himself.

Rauner is an equity investor. He made a lot of money managing pension funds for public employees. Forbes says he is worth nearly a billion dollars. That means he is very, very rich. Now that pension funds made him super-rich, he wants to get rid of them. Edward Siedle, who writes about pensions for Forbes, writes:

With an estimated personal net worth of nearly a billion and a stable of high-end residences, managing state workers’ retirement savings for decades– shielded from public scrutiny– has worked out very nicely for private equity titan Bruce Rauner.

You’d think he’d be thanking his lucky stars that public pensions have contributed generously to his lifetime of opportunity.

You’d be wrong.

Today Rauner is using some of the millions he garnered from workers savings to fund a run for governor of Illinois. As the Republican Gubernatorial Candidate he wants to “reform” state pensions and force public workers into the same poorly-designed 401(k)-style plans that have utterly failed to provide retirement security for private sector employees.

After having paid his firm, GTCR, and Wall Street billions in private equity asset-based and incentive fees, Rauner believes Illinois public pensions can’t afford the lavish $2,500 in average monthly benefits promised to workers.

Personally, I have never understood why someone who is “nearly a billionaire” (or in the case of former Enron trader John Arnold, is a multi-billionaire) wants to take away the pensions of working people who barely scrape by. I don’t get their motivation. It baffles me.

Because so mAny hedge-fund managers and corporate chieftains are in the “reform” camp, we Ssume that they must know a lot about financial and managerial matters, even if they are clueless about education and learning.

Jeannie Kaplan, who served two terms on the Denver school board, says that assumption of financial prowess is wrong.

She writes in a comment on the blog:

“Denver has been the victim of both education and financial reform. I have been remiss in not writing about financial failures here because of the complexity of the issue.

“But the bottom line in Denver is in 2008 then superintendent Michael Bennet and current superintendent Tom Boasberg, borrowed $750 million in a risky variable rate swap deal to supposedly fill the unfunded liability in DPS’ pension.

“How has that worked out? UAAL has risen from $400 million to over $700 million and the pension debt has risen from $300 million to $950 million. Yes that’s right, close to one billion dollars.

“The two were somehow able to get the Colorado legislature to write off (they call it an offset) bank and legal payments with the end result being less actual money is being paid into the pension. A legal defunding. Amazing, no?”

Jeannie Kaplan plays the game of “Where’s Waldo?” to describe the curious absences of Denver’s Broad-trained superintendent over the past few months. Crises were handled by subordinates. It turns out that Tom Boasberg was busy lining up votes in the legislatures to reduce funding for the teachers’ pensions.

She writes:

“What was the true importance of this bill? Well, one could always dream it was about restoring the educational opportunities “education reform” has stolen from our kids but in spite of Boasberg’s declaration about two or three more teachers per building, we who have followed this Broad trained superintendent know better. The reality of his appearances at the Capitol and the reality of his lobbying efforts are not really about more teachers. After all, “reformers” don’t believe in smaller class size, so they only mention it when they think it will score points with the public, and obviously politicians. What is and is not important to the superintendent has become abundantly clear in these last months: grade changing, weapons in schools, reorganizations, not so important. Defunding a public pension, politics and winning, pretty important. The reality is if you are a businessman and privatizer masquerading as an educator you really only care about the bottom line. If you can sell paying bankers and lawyers hundreds of millions of dollars instead of putting that money into your company’s pension plan and then sell that scenario to the public and state legislators as somehow having “saved” money, you will be regarded by the business world as a success. Forget about learning, forget about the people, forget about safety, forget about data. Just show me the money. And silly me. I thought the head of a public school district should care about delivering an equitable 21st century education, care about the welfare of his constituents, not just in theory but in reality. This superintendent’s absenteeism and abdication of leadership can now be explained. Who knew that finding Waldo would be easier than finding the DPS superintendent?”

Investigative reporter David Sirota says in Salon that Néw Jersey Governor Chris Christie’s presidential campaign will be derailed not by the George Washington Bridge lane-closing scandal but by a public pension scandal. As usual, follow the money.

Sirota writes:

“At issue are the fees being paid by New Jersey’s beleaguered public pension system to Wall Street firms. In recent years, Christie’s officials have shifted more of the retirement savings of teachers, firefighters, police officers and other public workers into the hands of private financial firms. That has substantially increased the management fees paid by taxpayers to those firms. Indeed, while Christie says the pension system cannot afford to maintain current retirement benefits, pension fees paid to financial firms have quadrupled to $600 million a year — or $1.5 billion in total since he took office in 2010.

“In recent months, details have emerged showing that Christie officials have directed lucrative pension management deals to some financial companies whose executives have made contributions to Republican groups backing Christie’s election campaigns. Additionally, Christie’s officials have admitted that they have not been fully disclosing all the fees the state has been paying to private financial firms.”

Ken Previti reports that the Illinois Supreme Coutrt unanimously struck down the law cutting teachers’ pensions. See:

“Justice Lloyd Karmeier writing for the court. ‘It is our obligation, however, just as it is theirs, to ensure that the law is followed. That is true at all times. It is especially important in times of crisis when, as this case demonstrates, even clear principles and long-standing precedent are threatened. Crisis is not an excuse to abandon the rule of law.’
(This) violates the state’s constitutional clause that pension benefits ‘shall not be diminished or impaired,’ the Supreme Court affirmed Friday.”

– “Pensions & Investments Online”

Open the link to see a picture of Ken and his wife celebrating.

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