Archives for category: Pensions

Pennsylvania Governor Tom Corbett has stormed the state with the message that public pensions are bankrupting the state.

But Joe Markosek, Democratic chair of the House Appropriations Committee, says that Corbett is wrong.

Corbett’s $3 billion in education cuts has hurt every district in the state, far more than pensions, forcing districts to raise property taxes to keep their local schools open.

A statement from the Chicago Teachers Union:

STATEMENT
FOR IMMEDIATE RELEASE CONTACT: Stephanie Gadlin
June 9, 2014 312/329-6250

CTU on SB1922 signing: “Emanuel’s Law is another slap in the face to the citizens who put the governor and mayor in office.”

CHICAGO—The Chicago Teachers Union (CTU) is greatly disappointed at the signing today by Gov. Pat Quinn of Senate Bill 1922, a proposal by the mayor of Chicago that will cut the retirement savings of thousands of city workers and school employees, and a slap in the face to the citizens who put the governor in office. The Union maintains that this short-sighted proposal does not, in any way, solve Chicago’s pension problem, and is just another attack on communities and citizens who continue to be victims of draconian policies out of Springfield and the fifth floor of City Hall.

The worker retiring today under this “Emanuel’s Law,” earning an average of $23,000 a year will lose nearly $10,000 in earning power within twenty years. In 2034, this retiree’s pension 20 years from now will only be worth $15,982 per year in today’s dollars – a pension in 2034 that is worth $7,018 less than the retiree’s pension today. She will lose more than 18 percent of her total pension over 20 years.

This is nothing more than continued disinvestment in our city, neglect of public employees and the straddling of taxpayers who must bear the brunt of this so-called pension crisis instead of those who crippled our economic system in the first place. CTU members do not receive social security benefits and therefore must absorb the expense of all future health care costs.

“We have to call this what it is—which is theft—because these people are stealing from dedicated city workers like the paraprofessionals in our schools,” said CTU President Karen Lewis. “Instead of any accountability for those who actually caused this problem, Emanuel’s Law brutally attacks the people who are most vulnerable, our seniors and municipal employees who remain on the frontlines in our city.”

The CTU has called for various revenue proposals to not only eliminate the pension debt but also provide critical resources for neighborhood schools, including a LaSalle Street Tax of $1 per financial transactions such as stocks, bonds, currency, futures and credit default swaps. In addition, the Union supports a 1 percent commuter tax which could draw $350 million every year; and, changes to the city’s controversial TIF program.

Under “Emanuel’s Law, school clerks, teachers’ aides and support services staff will join nurses, cafeteria workers and librarians in losing a third of their retirement life savings. “It is time public employees stop shouldering the burden of a shortfall created by politicians, corporations and the elites in Illinois who refuse to pay their fair share of taxes,” Lewis said. “This was an opportunity for Pat Quinn to stand up for everyday citizens instead of standing in the gap for the mayor and his well-funded pension reform allies.”

The CTU represents 4,000 active members and thousands of retired members in the Municipal Employees’ Annuity and Benefit Fund of Chicago (MEABF), and was not part of any negotiation with the City of Chicago in the creation of SB1922. The Union will continue to vigorously fight this attempt at pension heist as part of the We Are One Chicago coalition and will support litigation to challenge the new law.

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The Chicago Teachers Union represents 30,000 teachers and educational support personnel working in the Chicago Public Schools and, by extension, the students and families they serve. CTU, an affiliate of the American Federation of Teachers and the Illinois Federation of Teachers, is the third largest teachers local in the country and the largest local union in Illinois. For more information visit CTU’s website at http://www.ctunet.com

In one of her very best articles, AFT President Randi Weingarten names the real retirement crisis. Many American workers, having paid into pension funds, will retire into a life of poverty because of a campaign to wipe out defined benefit pension plans.

Randi writes:

“America has a retirement crisis, but it’s not what some people want you to believe it is. It’s not the defined benefit pension plans that public employees pay into over a lifetime of work, which provide retirees an average of $23,400 annually (although some public officials fail to make their required contributions to these and then claim they are unaffordable). It’s not the cost of such plans, which may ultimately cost taxpayers far less than risky, inadequate and increasingly prevalent 401(k) plans. It’s not Social Security, which is the healthiest part of our retirement system, keeps tens of millions of seniors out of poverty and could help even more if it were expanded. The crisis is that most Americans lack the essential elements of a secure retirement–pensions and adequate savings. They’ll depend on Social Security to stave off poverty once they stop working, and it will not be enough.

“The crisis is that the economic collapse that started in 2007, triggered by fraudulent and risky financial schemes, wiped out many Americans’ personal savings and decimated many state and city pension investments. And while the stock market and many pension investments have rebounded, for numerous Americans the lingering economic downturn, soaring student debt, diminished home values, the responsibility of caring for aging parents and other financial demands have made it hard, if not impossible, to save for retirement.

“The crisis is that the median retirement savings for all working-age households–according to the Federal Reserve–is $3,000, and only $12,000 for those near retirement. And that retirement insecurity is made worse by state-sponsored pension theft in places like Illinois, where public employees are being robbed of pension funds they earned and contributed to over decades of public service.”

Matt Taibbi and David Sirota “have written about the vast sums spent to undermine the retirement security of ordinary Americans. John Arnold, for example, a former Enron executive who walked away with a fortune from the bankrupt company, has spent tens of millions in his crusade to deny public employees guaranteed benefits at retirement. This, after public pensions reportedly lost more than $1.5 billion as a result of their investments in Enron.

“Their investigations have exposed the hypocrisy of some Wall Street hedge fund managers like Dan Loeb, who seek to profit from public employee pension funds at the same time they support abolishing such benefits. The problem is the hypocrisy–not hedge funds or Wall Street per se. And it’s their disconnectedness from the economic pressures regular people face every day just to meet their basic needs, pressures that only grow once their working years are over.”

We must muster the will to protect retirees and workers so that they do not consigned to a life of poverty, courtesy of billionaires who are whipping up a public frenzy against their fellow citizens.

We hear the same refrain across the nation: public sector pensions are destroying our economy. The modest pensions paid to teachers, police officers, firefighters, and social workers are a threat to our future.

Matt Taibbi examined these claims in this article in Rolling Stone. Read it and weep or rage or get active to stop the zillionaire’s from looting the hard-earned pensions of public sector employees.

Read David Sirota’s report “The Plot Against Pensions.”

Read David Sirota’s exposé of the PBS deal to take $3.5 million from Arnold for a series about the “pension crisis.”

Read about PBS’ decision to return Arnold’s money.

Read about David Sirota’s discovery that the Arnold Foundation underwrote a Brookings report on public pensions.

The puzzle: why would a multi-billionaire devote so much effort to stripping people of modest pensions that they earned for working 25-30 or more years? What is it that he finds so troubling about a man or woman receiving $40,000, 50,000, or 60,000 a year in retirement? Would he prefer penury for pensioners?

Peter Dreier, a professor at Occidental College and fervent advocate for public education, asks why public education continues to lavish so much favorable attention in the leaders of the privatization movement while disregarding dissenting voices or–worse–treating our nation’s public schools shabbily.

He suggests that the Republican attack of public funding of PBS may have made the network dependent on the billionaires who favor privatization and view public schools with contempt.

With the sole exception of Bill Moyers, who has run programs about ALEC’s efforts to destroy every public service, and who recently interviewed me about the profit motive in the privatization movement, PBS has made no effort to investigate the assault on public education across the nation.

Dreier contrasts the lavish attention devoted to the privatization propaganda film “Waiting for ‘Superman,’” with the absence of attention to a remarkable new film celebrating the daily struggles of public schools in Pasadena, California. This film, “Go Public,” tells the true story of life in a public school. Will it appear on public television? That’s up to you.

The same might be said of “Rise Above the Mark,” another well-produced film that tells the story of real life in schools today and the insidious efforts to destroy public education by the powerful and complicit politicians.

David Sirota recently compelled PBS to return $3.5 million to billionaire John Arnold, who had underwritten a series on the “pension crisis,” an issue dear to him as a critic of defined benefit pensions.

Maybe Dreier’s critique will encourage PBS to give equal time to our nation’s public schools, not just their critics.

PS: I mistakenly attributed the article to another wonderful Paul–Paul Horton. Wrong! My bad!

David Sirota, who has become one of our nation’s top investigative reporters, here tells the story about how Chicago’s Mayor Rahm Emanuel says there is no money, that public pensions have emptied the city’s coffers, and that he has to close schools because of a huge deficit. But Sirota says that the Mayor has found plenty of money for favored projects, funded by his “Tax Increment Financing districts.” This is a shocking story though not many who live in Chicago are likely to be surprised. During the teachers’ strike in 2012, when the city claimed it could not afford smaller classes or libraries or anything that the schools needed, there were many complaints about the use of TIF funding for an unnecessary stadium. Read on.

 

Sirota writes:

 

This same story, portraying public employees as the primary cause of budget crises, is being told across the country. Yet, in many cases, we’re only being told half the tale. We aren’t told that the pension shortfalls in many US states and cities were created because those same states and cities did not make their required pension contributions over many years. And perhaps even more shockingly, we aren’t being told that, while states and cities pretend they have no money to deal with public sector pensions, many are paying giant taxpayer subsidies to corporations — often far larger than the pension shortfalls.

Chicago is the iconic example of all of these trends. A new report being released this morning shows that the supposedly budget-strapped Windy City – which for years has not made its full pension payments – actually has mountains of cash sitting in a slush fund controlled by Mayor Rahm Emanuel. Indeed, as the report documents, the slush fund now receives more money each year than it would cost to adequately finance Chicago’s pension funds. Yet, Emanuel is refusing to use the cash from that slush fund to shore up the pensions. Instead, his new pension “reform” proposal cuts pension benefits, requires higher contributions from public employees and raises property taxes in the name of fiscal responsibility. Yet, the same “reform” proposal will actually quietly increase his already bloated slush fund.

But it gets worse: an investigation by Pando has discovered that Emanuel has been using that same slush fund to enrich some of his biggest campaign contributors.

How a “shadow budget” is bankrupting Chicago

The new report, from the taxpayer watchdog group Good Jobs First, shows how Chicago’s roughly 150 “tax increment financing” (TIF) districts divert property taxes out of schools and public services and into what is now known as Chicago’s “shadow budget.” That’s a slightly nicer term for what is, in practice, Emanuel’s very own sovereign wealth fund.

Living up to his billing as “Mayor 1%,” Emanuel has used the fund to (among other things) offer up $7 million of taxpayer cash for a new grocery store, $7.5 million for a proposed data center, $29 million for an office high rise and $55 million for a huge new hotel (and that latter project is on top of $75 million more in tax money Emanuel has offered up to build a private university a new basketball stadium). And these are just a few of the corporate subsidy proposals in a $300 million spending spree Emanuel has championed at the very moment he has pled poverty to justify pension cuts, property tax increases and the largest school closure in his city’s history.

Stephen Sawchuk reports in Education Week on a study finding that most teachers will not stay on the job long enough to collect a pension.

He writes:

“The report from Bellwether Education Partners, a Washington-based consulting group, contends that states’ current defined-benefit pension policies, which pay out according to a fixed formula, are not well aligned with a profession that has grown rapidly younger and more mobile. And that could put teachers at serious financial risk later on in their lives.

“For the paper, analysts Chad Aldeman and Andrew Rotherham used “withdrawal” tables—state estimates on teacher-turnover rates—to estimate the percentage of teachers who will earn a pension in every state. They drew on each state’s assumptions for female teachers aged 25 who began teaching after Aug. 1, 2013. (Keep in mind that the state formulas are different for male teachers or those of other ages, and these stats would look different for them.)

“Based on those assumptions, only 45 percent teachers in the median state will qualify for payouts, a process that typically takes 5 years. And only 20 percent will reach the normal retirement age of 58.

“That’s a lot of money left on the table. Many teachers won’t even meet the vesting requirements. And for those that don’t, states typically allow teachers to take only the contributions they made into the pension plan if they leave the profession, or move to another state. “

Of course, many states are trying to ditch defined benefit pensions altogether.

And it must be noted that one of the implicit goals of the current “reform” movement is to encourage teacher turnover, specifically to reduce future pension costs. That’s not good for the teaching profession or for children or for education, but it helps cut costs.

Rupert Murdoch definitely does not like David Sirota.

Sirota is the journalist who broke the story about the Arnold Foundation funding PBS’ pension series. Arnold thinks all those greedy pensioners are bankrupting the country. Can’t have that!

Murdoch rushed to denounce Sirota and defend his fellow billionaire.

What is it with these billionaires? It is ok for them to live in luxury, right? Why do they want to cut the pensions of people who just want a decent retirement?

Texas billionaire John Arnold, who has drawn attention for his interest in public sector pension reform (meaning that public sector pensions are too generous), is supporting both sides of the gubernatorial race in Rhode Island.

David Sirota wrote about how the Arnold Foundation underwrote a PBS special on the pension crisis and underwrote a Brookings Institution report on the same subject. PBS returned $3.5 million to the foundation because of Sirota’s disclosure.

Arnold is also a major supporter of charter schools, Common Core, and other “reforms” favored by corporate reformers.

The Providence Journal reports:

” PROVIDENCE, R.I. – Billionaire Houston philanthropist John Arnold is not only investing heavily in the political future of state General Treasurer and gubernatorial candidate Gina Raimondo — he’s also backing a national education effort showcasing her Democratic rival: Providence Mayor Angel Taveras.

“Arnold’s philanthropic organization, the Laura and John Arnold Foundation, has awarded $4.25 million in grants over the last three years to “Education Reform Now,” 501(c)(3) nonprofit organization with ties to the “Mayor’s for Educational Excellence Tour,” according to the foundation’s website.

“Taveras, a Democrat in his first term, is one of four mayors taking part in the tour, which is meant to highlight new education efforts in their cities.

The tour includes San Antonio Mayor Julian Castro, Denver Mayor Michael Hancock and Sacramento Mayor Kevin Johnson and is scheduled to stop in Providence on April 25.

“Education Reform Now” is operated by “Democrats for Education Reform,” a New York-based political action group that supports, among other things, closing down failing schools and establishing national education standards.

“Last week, the Laura and John Arnold Foundation confirmed that it helped finance the nonprofit and nonpartisan Brookings Institution’s report, “Pension Politics: Public Employee Retirement System Reform in Four States.”

“The report, released last month, highlights the state pension system overhaul that Raimondo spearheaded in 2011 as a national model.”

So, billionaire Arnold hails Raimondo as a “pension reformer,” and supports Taveras an an “education reformer.”

This may be the most important article you read this week or month or year.

Crack investigative journalist David Sirota, who blew open the story of the financing of the PBS series on pensions, now demonstrates the five rules of what he calls “native advertising.”

In this case, the same John Arnold Foundation that underwrote the PBS series with $3.5 million, underwrote a report by the Brookings Institution on the need to rein in pensions of public sector workers.

Sirota demonstrates that this is far from accurate, that there are other views, but that Brookings did not present a balanced account. It added to the echo chamber of those who want to cut pensions but ignore huge tax cuts for corporations.

Most telling is the David vs. Goliath claim, where the rich corporate sector presents itself as the little guy against the powerful unions.

He writes:

“Rule 4: Portray the native advertiser as an underdog and its work as heroic, all while ignoring facts to portray the native advertiser’s opponents as an evil Goliath

“The best native advertising flips the script. It casts the monied native advertiser as the earnest underdog David and the native advertiser’s disadvantaged opponent as the big bad Goliath. The Arnold-funded Brookings paper does exactly this.

“For instance, the paper asserts that “public employee unions are one of the most—if not the most—powerful political actors in state politics.” Readers are expected to believe that this makes unions the omnipotent villain that needs to be thwarted by poor powerless corporations, even though that’s the opposite of what the data show.

“According to the National Institute on Money in State Politics, unions have spent a combined $1.7 billion on state politics since 2000. That’s a lot – but it is dwarfed by the $8.1 billion spent on state politics by the business sector in that same period. Those numbers are hardly surprising or secret – they track the same rough ratio that exists at the federal level.”

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