1. Public Pension In Crisis
The Charges:
• Poorly Run
• Highly In Debt
• Expensive
• Overly Generous Benefits

2. Public Pensions Under Pressure
Trends in Wages/Benefits Public & Private
Private Sector Pension Elimination
Government Debt/Pension Systems Debt
Pension System Trends Colas, Tiers, DC’s
Public Support
POGO

3. Defined Benefit vs. Defined Contribution
• 16-19% for 30 – 35 Years

4. Defined Contributions – Problems
Risk
Incompetent Investor
High Cost
No Economy of Scale
Poorly Funded

5. Defined Contribution - Benefits
No Risk of Employer Bankruptcy
Nearly Tamper Proof
Portability
People Like Them

6. Defending Public Pensions
Not Identical – No one answer
• SS Integration
• Source of Employer Payment
• Quality of Payment Guarantee
• Level of Benefit
• Member/Employer Contribution
• Age/Service Requirement
• Funded Ratios/Unfunded Liability
• DB vs. DC

7. POGO – “We have met the enemy
POGO – “We have met the enemy ... and he is us” Unions can make problems worse
Demand Unfunded Pension Improvements
Exploit Loopholes When Negotiating
Settle for Pension Sweeteners vs. Real Contract Improvements
Let Funding Deteriorate
Make it Easier to Retire Early

8. Unions Can Make Things Better No one can ignore 6% of Electorate
Close Loopholes
Incentivize Non-Retirement
Discourage Early Retirement
Insist on Full Funding
Seek Stable Revenue Sources
Find Creative Funding Solutions
Win and Hold Allies
Strengthen Political Arm

9. Problems in Illinois State System in Debt
35 Years of Pension Debt/Compounded
42 billion 1 billion 4 billion
% funded 60% 90% 100%

10. Proposed Solutions Lease the Lottery Bond the Debt
Raise Taxes GRT vs. Income Tax
Increase Gambling
Move Costs from State to Local Employer
Organize
Raise Member Contribution
Remove Cola
Raise Retirement Age/Slash Benefits

11. “At the banquet table of nature, there are no reserved seats
“At the banquet table of nature, there are no reserved seats. You get what you can take, and you keep what you can hold. If you can’t take anything, you won’t get anything, and if you can’t hold anything, you won’t keep anything. And you can’t take anything without organization.” A. Philip Randolph

12. Table 1: Real Changes in Average Teacher Salary, 1965 to 2005
Years Average Annual Gain Years Average Annual Gain
$1, $811
($ 205) $ 55
($ 855) $ 43
$ $ 55

13. Figure 1: Real Average Teacher Salaries 1963-2005
55,000
50,000
45,000
40,000
35,000
30,

14. Table 2: Annualized Changes in Real Average Teacher Salary, 1994-95 to 2004-05
Growth of Decline of $ Total
$400 or more Growth of $1 to Decline of $1 to or more per
per year $399 per year $399 per year year
States

15. Table 3: Comparison of Teacher Pay with Other Professions 1994-95 to 2004-05 1995 Salary
Profession (in 2005 Dollars) Salary Real Increases
Attorney $ 83,231 $ 100, %
Full Professor $ 86,577 $ 97, %
Buyer $ 58,308 $ 61, %
Engineer $ 76,567 $ 80, %
Asst Professor $ 49,158 $ 51, %
Computer Systems Analyst $ 72,769 $ 75, %
Accountant $ 53,110 $ 54, %
Teacher $ 47,115 $ 47, %

16. Figure 3: Teacher Pay Compared with Average U.S. Wages, 1963-2005
$55,000
$50, 000
$45,000
$40,000
$35,000
$30,000
♦,Average Teacher Salary □ Average Salary for U.S.