State's pension crisis has local impact : News : Oswego Ledger-Sentinel : Hometown Newspaper for Oswego and Montgomery, Illinois
|State's pension crisis has local impact |
|Public pensions account for about 4% of all Kendall County wages|
|by Matt Schury|
The words "pension crisis" have both defined and paralyzed Illinois' General Assembly for more than a year.
With retirees living longer, pension accounts underfunded and investments taking a big hit in the recession, the problem of how the pensions promised to government employees will be paid looms large.
It's a situation that doesn't just affect Springfield. Even in a county as relatively small as Kendall, there are about 1,250 people receiving public pensions- in a total amount equal to about four percent of all wages paid to county residents.
From teachers to state and county employees to judges and former community college teachers, there are a vast array of retirees receiving compensation for their years of work.
While state pension funding is being debated in Springfield, those who are responsible for administering it and those who receive it say there are some myths and facts that need to be sorted out about the different pension systems in the state.
Four pension systems
Roughly $39.5 million in public pension dollars came into Kendall County last year to retired public workers who were part of one of the four pension systems the state of Illinois offers to government employees.
The information in this article came from multiple Freedom of Information Act (FOIA) requests the Record sent to the four respective retirement systems. It indicates most residents who worked in Kendall County retired here but some of the retirees worked outside Kendall County and settled here after retirement.
Information from the State Employee Retirement System (SERS), State University Retirement System (SURS) and Illinois Municipal Retirement System (IMRF) is for retired employees who, records show, live within a zip code within Kendall County. FOIA officers for the Teachers Retirement System (TRS) would not release retirees' zip code information for the Record, citing privacy issues. As a result the information in this article for TRS recipients pertains to employees who worked for districts in the county at some point in their careers.
Broken down by specific program, the Teachers Retirement System (TRS) accounted for the majority of the pension funds- $22.5 million- paid to employees of seven school districts located mainly in Kendall County. Those included: Yorkville 115, Oswego 308, Plano 88, Lisbon 90, Newark High School District 18, Newark Grade School District 66 and the Kendall County Special Education Cooperative.
Recipients of the Illinois Municipal Retirement Fund (IMRF) who live in Kendall County took in $7.7 million in 2012. About $5.7 million went to beneficiaries of the State Employee Retirement System (SERS) and $3.6 million went to retired employees in the State University Retirement System (SURS).
The Judges Retirement System (JRS) is a subcategory of the SERS. It also includes the General Assembly Retirement System (GARS). The only Kendall County resident receiving an annual public pension from GARS is former U.S. Speaker of the House Dennis Hastert who collects $25,647.72 annually, based on his service in the Illinois House before he was elected to Congress.
There are an estimated 1,250 government retirees who worked in or are living in Kendall County who are receiving some type of retirement benefit from one of the three systems. The number of TRS recipients who worked for school districts in the county is about 466.
Additionally, there are 493 retirees receiving benefits from the Illinois Municipal Retirement Fund (IMRF) who live in Kendall County, 148 in the SERS program and 143 in the SURS program.
The number of retirees receiving annual benefits over $100,000 totaled 21, with 13 of those retirees belonging to the TRS.
In 2012, the overall top three annual public retirement beneficiaries in Kendall County were former Yorkville Superintendent Thomas Engler: $176,411 (according to the TRS), former Judge Grant Wegner: $161,895 (according to the JRS) and former Judge Jim Wilson: $160,182 (according to the JRS). Former Oswego School District Superintendent Karl Plank was second on the list of Kendall County TRS earners, collecting an annual public pension of $146,984.
The retired public employee living in Kendall County earning the highest public pension in 2012 in the IMRF system is Steven Booth who retired after working 37 years for the City of Aurora. Booth is collecting an estimated $108,358. Ralph Pfister, long-time executive director of the Yorkville-Bristol Sanitary District, is second on the IMRF public pension earners list with $100,084.
The former Kendall County official earning the highest public pension in 2012 in the IMRF system is former Kendall County Sheriff's Chief Deputy Terry Tichava who is collecting an estimated $90,987. Tichava retired in 2010. Second on the list is former State's Attorney Dallas Ingemunson whose annual public pension is $77,089, according to IMRF records.
Top public pension earners in the SURS in Kendall County include Susan Maul, who retired from the University of Illinois at Urbana with 33 years of service and collects $101,415. Darrell Semelroth retired from Triton College after 36.3 years and collects an annual public pension of $100,654.
The Teachers Retirement System annual economic impact study for 2012 shows 4,640 members in Kendall County with 3,020 active and 935 inactive or retired members. Benefit recipients include 685 with annual net benefits totaling $28.8 million. Retirees total 620 with annual net benefits estimated at $27 million. The average current age for TRS retirees is 68, according to the report.
The TRS annual net benefits in DeKalb County totaled $30.5 million and $37.2 million in LaSalle County. In the State of Illinois, the total annual net benefits in the TRS were $3.1 billion last year.
Median pensions for the four systems vary. For instance, in 2012 the median annual public pension for TRS recipients was about $47,000, while IMRF retirees in Kendall County receive a median annual pension of $9,205. The median annual public pension for SURS recipients was $14,794 last year and $37,940 for members for the SERS.
Statewide the average pension for an IMRF member was about $17,000 in 2011, according to the agency. The average employee in the IMRF puts in about 22 years of service before they retire.
As a comparison, as of 2009 there were 11,520 Kendall County residents receiving Social Security payments. An estimated 71.7 percent of them, or 8,260, received retirement benefits based on the earnings over their lifetime.
The Social Security Administration website offers an example of a worker born in 1951 whose earnings increased over his lifetime to $110,100 in the most recent year. That person's estimated monthly retirement benefit would be $1,704 or $20,448 if they retired this year. If the person waited until age 66 to retire, their full retirement benefit would be estimated at $2,272 a month or $27,264 a year.
Employees pay 6.2 percent of their earnings to Social Security, an amount matched by their employers.
In 2011, $918.8 million in wages were paid out to all public and private employees throughout Kendall County, according to the Illinois Department of Employment Securities.
Linda Horrell, communications manager for IMRF, says IMRF, like most defined benefit public pension systems, relies on investments.
"It's really investment income that pays the bulk of these pensions," Horrell said. "For every dollar that we pay in pensions, 60 cents comes from investment income."
Additionally 27 cents of every dollar comes from the employer and 13 cents comes from the employee.
The most securitized retirement system of the four is the TRS. Dave Urbanek, spokesman for TRS, says most people don't realize the mechanics of how these retiree pensions are calculated.
"Just like the state set up the school districts, the state set up the pension system, and teachers have always contributed. Right now it's 9.4 percent (that teachers contribute) but when it started out it was four percent. But that was back in 1939," he said.
The formula to determine benefits figures the number of service years accumulated with TRS multiplied by the employee's final average salary, which is then multiplied again by 2.2 percent to equal the pension benefit they will receive.
The maximum any member can receive is 75 percent of their final average salary but that's only with 35 years of service, Urbanek said. The final average salary for members is the highest consecutive four years of salary out of the last 10 years of salary reported to TRS.
TRS members can retire at age 55 if they have 35 years of service and receive what is call a "full benefit"-everything they are entitled to, Urbanek says. From there, the amount they're entitled to shrinks depending on the number of years they worked and their age.
Urbanek stresses that the state is not making their full contribution to TRS, which, coupled with the fact that the costs of pensions continues to rise, spells trouble.
"Those two trends will be on a collision course probably in 20 to 25 years," he said. "The size of the unfunded liability we have now is huge and the legislature in recent years--because of the state's generally poor financial situation--has been telling us we are not going to be getting all of the money that we should be getting."
The State Employee Retirement System (SERS) includes retired Illinois Department of Transportation employees, corrections employees, state police officers as well as retired judges.
Tim Blair, executive secretary for SERS says most members are paying 4 to 8.5 percent of their take home pay into the system. Additionally, some law enforcement officers contribute 12.5 percent of their salary to their pension.
"The vast majority of our folks are in their early to mid-60s when they retire, they're not 50 with eight years of service getting an $80,000 pension," he said. "We are just an average system."
Money goes back
into local economy
Horrell adds that in most cases pensions are vital to the local economy. IMRF's calculations show $7.6 million in public pension dollars come into Kendall County's economy annually.
"People don't understand what a major economic engine pensions are because in 2012 we paid over $1 billion to people living in the state of Illinois and that money comes back into the economy," she said. "That money gets churned right back into local economies when grandma goes to the hairdresser or grandpa goes to the bowling alley."
The biggest misconception people have, of the TRS, Horrell said, is that pensions are somehow separate from the economy as a whole.
"When you listen to critics of public pensions, everybody just thinks that pension money flies out the door, into a black hole and is never seen again," Urbanek said. "Teachers in Illinois don't get Social Security, they don't participate in it," he said. "They use their pensions to go to the grocery store, to put gas in their car, to go to the hardware store, to pay their taxes-- everything that a working family or a family not in retirement would use money for. It's by no means a free lunch for teachers."
It takes 44 years, Blair estimated, for most people who are not public safety officers to reach full SERS benefits or 75 percent of their salary.
"I should qualify this by saying I do realize that most people in the private sector don't have a DB (defined benefits) plan," he said. "But that's a problem I think-when you have better benefits than the people who are paying for them. It's not as bad as it's made out to be in the press."