Why Chicago’s Bonds Are Junk
From the Wall Street Journal
Illinois’s domination by public unions has the state dancing on the edge of fiscal freefall. The state Supreme Court ruled last week that Springfield can’t alter pension benefits, prompting Moody’s this week to downgrade the debt of the city, its public schools and park district all to junk status. Now the Chicago Teachers Union wants to make another contribution to the collapse.
In May the union filed an unfair labor practice complaint with the Illinois Educational Labor Relations Board, accusing the school district of failing to bargain in good faith and rejecting mediation to reach a new contract. The union’s complaint? The school district wants teachers to chip in more for their pensions. The horror.
The dispute goes back to 1981, when in lieu of larger pay raises the district agreed to pick up seven percentage points of the teachers’ contribution of 9% of their salaries to their pensions. This is on top of the district’s own contribution. Teachers have since become accustomed to paying only 2% of their salaries for pensions, about $1,496 a year on average.
Many current teachers weren’t in the school system in 1981, but they like the perk of paying a fraction of their pension cost. Who wouldn’t? The 2% contribution is far less than the 9% contributions made by many other public employees in Illinois, let alone the 6.2% payroll tax for Social Security or what private workers pay into 401(k)s.
Teachers are also comparatively well compensated. The Illinois State Board of Education says the average Chicago teacher salary is about $71,000 a year. That compares to Chicago’s median salary of $47,270 in 2009-2013, according to the Census Bureau. The average starting pension for a Chicago teacher retiring in 2011 after a public-school career was $77,496, according to the Illinois Policy Institute. The city will pay a teacher who retired in 2011 some $2.4 million during retirement, up from $1.35 million a decade earlier.
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From the Wall Street Journal
Illinois’s domination by public unions has the state dancing on the edge of fiscal freefall. The state Supreme Court ruled last week that Springfield can’t alter pension benefits, prompting Moody’s this week to downgrade the debt of the city, its public schools and park district all to junk status. Now the Chicago Teachers Union wants to make another contribution to the collapse.
In May the union filed an unfair labor practice complaint with the Illinois Educational Labor Relations Board, accusing the school district of failing to bargain in good faith and rejecting mediation to reach a new contract. The union’s complaint? The school district wants teachers to chip in more for their pensions. The horror.
The dispute goes back to 1981, when in lieu of larger pay raises the district agreed to pick up seven percentage points of the teachers’ contribution of 9% of their salaries to their pensions. This is on top of the district’s own contribution. Teachers have since become accustomed to paying only 2% of their salaries for pensions, about $1,496 a year on average.
Many current teachers weren’t in the school system in 1981, but they like the perk of paying a fraction of their pension cost. Who wouldn’t? The 2% contribution is far less than the 9% contributions made by many other public employees in Illinois, let alone the 6.2% payroll tax for Social Security or what private workers pay into 401(k)s.
Teachers are also comparatively well compensated. The Illinois State Board of Education says the average Chicago teacher salary is about $71,000 a year. That compares to Chicago’s median salary of $47,270 in 2009-2013, according to the Census Bureau. The average starting pension for a Chicago teacher retiring in 2011 after a public-school career was $77,496, according to the Illinois Policy Institute. The city will pay a teacher who retired in 2011 some $2.4 million during retirement, up from $1.35 million a decade earlier.
Read more in our daily News Update...