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Except this isn't really about public employees wanting more. This is about the fact that CPS didn't make good on payments for quite some time. Lawmakers haven't helped the situation any either. The public employees just want CPS to make their legally-obligated payments using fiscally-responsible funding methods and/or they want lawmakers to adequately reform the system. The public employees are really just stuck in the middle of a mess right now.
Read the article I linked in my last post for more information.
When the market was up (last time, a number of years ago), the teacher's union negotiated for bigger pension benefits instead of negotiating for bigger pension contributions to support the pension promises that had already been made. So the union screwed its own members. But the teachers vote for the leadership of the teacher's union, so they are partly complicit in their self-screwing.
When will Rahm and his staffers start sacrificing their ridiculous pay to help save Chicago?
Oh wait.... Cutting their salaries would be incredibly unfair and unjust.
Shame on me for mentioning this. Sorry.
I'll just agree with him on all solutions he has for the city like nearly all other North Siders: Simply just saying the city needs further gun control and firing more teachers.
So do we know what percentage the pension system is funded at now? I'm shocked that it was funded 100% as little as 15 years ago.
It took some research, but I found the answer!
"CTPF’s funded ratio as of June 30, 2014, rose to 51.5% from 49.5% in 2013. The ratio was nearly 100% in 2002."
This was taken from the most recent annual financial report for the fiscal year ending June 30, 2014. http://www.ctpf.org/AnnualReports/pop2014.pdf. Presumably, with this most recent payment, there will be a change evident in the next annual financial report.
When the market was up (last time, a number of years ago), the teacher's union negotiated for bigger pension benefits instead of negotiating for bigger pension contributions to support the pension promises that had already been made. So the union screwed its own members. But the teachers vote for the leadership of the teacher's union, so they are partly complicit in their self-screwing.
Teachers don't get to negotiate either of those things. Law governs the size of contributions and benefits, not CPS or the union. CPS and the union can only negotiate benefits for current employees, salaries, and working conditions. I suppose that both parties can lobby lawmakers to change the pension system, but that's not quite the same as negotiating with each other.
Now, if you're referring to the 7% pension pick-up that CPS pays for the current teachers as part of their salary and benefits, then, yes, that's negotiable. To be clear, law requires teachers pay 9% of their salary into the pension fund. CPS and the union negotiated to have CPS pick up the first 7% of that as a benefit for current teachers. Nothing else is negotiable between those two parties. The rest is defined by lawmakers.
This is why there has been such an outcry to get the state government to fix these issues. They are the only ones who can.
Hers another discrepancy from the article. The guy in the article said the average payout was $45k a year without explaining further. That was a red flag to me.
If this article is right, he obviously incorporated all of the people who only taught for 10 years etc. or otherwise fudged the numbers. This says the average payout for a CPS teacher who taught for 30 years is actually $77k annually.
That's a heckuva lot of money. Anyone whose worked in the private sector knows how much you would have to be banking to pull $77k for life starting at age 55 in a 401k -- comparatively, I think the average American 401k is a paltry 70k total.
I am not saying it's right or wrong; I'm saying its an absolute boatload of money. Like, I would imagine, close to doubling your actual salary.
Plus no market risk. All of that money is invested. When the market tanks, as it always does, the money has to come from somewhere else.
Teachers should be very well paid but the bottom line is the total compensation packages are probably well in excess of the qualifications and competitiveness for the job at this point.
Last edited by jonnynonos; 07-04-2015 at 08:21 AM..
I do see some factual errors with the article you've posted, one being that the social security contribution rate is higher and another being that teachers only pay 2% into the system. The social security legally-mandated contribution rate is 6.2%. Teachers in the CTPF are legally mandated to contribute 9%, although 7% of that is picked up by CPS as a benefit, according to the current contract (which I explained in my last post). I'm sure the author of the article had good intentions, but it doesn't appear that he fully understood the differences between legal mandates and contract negotiations.
I guess I'm not sure why the guy in the first article WOULDN'T include all of the people in the system (including those who have only taught for 10 years, etc., as you say). He said it was the average, which one would assume includes everyone. There are many, many teachers who get into teaching later in their lifetime and don't teach for 30+ years but still work long enough to become vested in retirement. The ones who put in 30 years or more will obviously earn more in retirement, not to mention those who worked as principals or other administrators later in their careers and earned bigger bucks.
I think it's generally foolish to compare the private and public sectors, as there are so many things that differentiate them from one another. However, since the private sector comparison has already been made, I'll say that the difference between a 401K and public pension system is that, in the private sector, employees are allowed to choose how much they contribute or how much they put towards retirement, even with the employer-matching benefit that often exists. In the public sector, employees are legally-mandated to contribute a specific percent, even if they would prefer to contribute more or less, and the percentage is typically higher than what a private sector employee contributes. I think many teachers, especially younger ones, would like to have some of that money in their hands rather than being legally required to put it in a retirement fund, even if it means getting less in retirement, but the choice is not theirs to make.
I do see some factual errors with the article you've posted, one being that the social security contribution rate is higher and another being that teachers only pay 2% into the system. The social security legally-mandated contribution rate is 6.2%. Teachers in the CTPF are legally mandated to contribute 9%, although 7% of that is picked up by CPS as a benefit, according to the current contract (which I explained in my last post). I'm sure the author of the article had good intentions, but it doesn't appear that he fully understood the differences between legal mandates and contract negotiations.
I guess I'm not sure why the guy in the first article WOULDN'T include all of the people in the system (including those who have only taught for 10 years, etc., as you say). He said it was the average, which one would assume includes everyone. There are many, many teachers who get into teaching later in their lifetime and don't teach for 30+ years but still work long enough to become vested in retirement. The ones who put in 30 years or more will obviously earn more in retirement, not to mention those who worked as principals or other administrators later in their careers and earned bigger bucks.
I think it's generally foolish to compare the private and public sectors, as there are so many things that differentiate them from one another. However, since the private sector comparison has already been made, I'll say that the difference between a 401K and public pension system is that, in the private sector, employees are allowed to choose how much they contribute or how much they put towards retirement, even with the employer-matching benefit that often exists. In the public sector, employees are legally-mandated to contribute a specific percent, even if they would prefer to contribute more or less, and the percentage is typically higher than what a private sector employee contributes. I think many teachers, especially younger ones, would like to have some of that money in their hands rather than being legally required to put it in a retirement fund, even if it means getting less in retirement, but the choice is not theirs to make.
Fair enough, but my point is that its always going to come down to a brawl between the taxpayers and unions. Less so in the 90s when things were rosy and there was in my opinion a much, much healthier middle class. But when people with comparable education feel like they are getting sc##ed you are not going to get much sympathy from a public sector that is overworked, underpaid, has very little job security and has no "guarantee" of anything.
I'm sure teachers can take more of their salary and put it into some sort of retirement vehicle if they want.
The largest sector entering the workforce now is old people -- Walmart greeters etc. and that's with an artificially pumped up, booming market since the recession.
Once the market corrects and people start seeing their retirements shrink before their eyes -- watch out.
I see your point. And, yes, it's true that teachers can contribute even more of their salary into a 403b fund, on top of what goes into the pension system, if they choose. They cannot contribute less though, which is an option private sector employees have.
I guess I just don't see this particular situation as a battle between taxpayers and unions. I think that's a misunderstanding that is being floated around out there right now. The real problem at this moment in time is that the state legislature needs to fix the pension system (change the laws that govern the funding structure and/or the benefits). It's totally out of the hands of the union and CPS. The misunderstanding is occurring because, while this pension crisis is going on, the union and CPS just happen to be up for a contract renegotiation. The pension crisis would be occurring even if there were still a few more years on the current contract. Due to the pension crisis, there is a serious impact on CPS's ability to negotiate with the union, but the contract renegotiation and the pension crisis are really two separate things going on at one time.
"CTPF’s funded ratio as of June 30, 2014, rose to 51.5% from 49.5% in 2013. The ratio was nearly 100% in 2002."
This was taken from the most recent annual financial report for the fiscal year ending June 30, 2014. http://www.ctpf.org/AnnualReports/pop2014.pdf. Presumably, with this most recent payment, there will be a change evident in the next annual financial report.
Thank you. I would rep you again but I can't since I repped your last post. Most helpful.
I see your point. And, yes, it's true that teachers can contribute even more of their salary into a 403b fund, on top of what goes into the pension system, if they choose. They cannot contribute less though, which is an option private sector employees have.
I guess I just don't see this particular situation as a battle between taxpayers and unions. I think that's a misunderstanding that is being floated around out there right now. The real problem at this moment in time is that the state legislature needs to fix the pension system (change the laws that govern the funding structure and/or the benefits). It's totally out of the hands of the union and CPS. The misunderstanding is occurring because, while this pension crisis is going on, the union and CPS just happen to be up for a contract renegotiation. The pension crisis would be occurring even if there were still a few more years on the current contract. Due to the pension crisis, there is a serious impact on CPS's ability to negotiate with the union, but the contract renegotiation and the pension crisis are really two separate things going on at one time.
I realize the structure is very complicated but at the end of the day Rahm is proposing a property tax to fund it and the pension manager who wrote the article you posted cites a tax increase as the first way to shore up the system.
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