Head of TRS Says Cuts to COLAs Are Inevitable

In a recent interview with Crain's Chicago Business, Richard Ingram, the executive director of the Illinois Teachers' Retirement System (TRS), stated that cuts to the cost-of-living adjustments of pensioners are inevitable.  According to Ingram, in order to ensure the solvency of the TRS pension fund, the state will have to somehow reduce COLAs.  In what could only be called a moment of brutal honesty, Mr. Ingram is quoted as having said the following: “It's very likely that benefits are impaired today, that we're looking at the possibility in the future of not being able to pay them.”  Translation: the state will not be able to fulfill the promises that it has made in the past.  If you are a participant in this pension system, you might not want to be solely dependent on TRS for your retirement.

Click here to read the entire article.

Government Transparency and the Illinois Open Meetings Act

A recent law passed in Illinois requires that all school board members complete training on the Illinois Open Meetings Act.

The problem with the Illinois Open Meetings Act is that it is woefully outdated.  Given the current state of technology (internet, free PDF readers, camcorders, YouTube, etc.), if the politicians in the State of Illinois were serious about government transparency, each entity of state and local government would be required to do the following (at a minimum):

1.  Post information (including board packets or the like - minus the information that is subject to privacy protection or the subject of executive session) online at least two days prior to public meetings.  This would be in addition to the agenda that is required to be posted pursuant to the Open Meetings Act.
2.  Post video recordings of meetings to their websites or to a service like YouTube.  This would be in addition to the minutes that are required to be posted pursuant to the Open Meetings Act.
3.  Post all financial information to their website and update such information at least monthly.

Given the technology available today, there is no reason that each and every citizen shouldn't have this information available to them at their fingertips.  A person should not have to submit a Freedom of Information Act (FOIA) request for anything but the most esoteric information.  If we really want openness in government, we need to bring our Open Meetings Act into the 21st century.

It's Official, Illinois on Road to Ruin

A new report has recently been published by the State Budget Crisis Task Force (apparently you need a task force to tell you what someone who is good in math could tell you).  The State Budget Crisis Task Force is co-chaired by Richard Ravitch (former Lieutenant Governor of New York) and Paul Volcker (former Chairman of the Federal Reserve Board of Governors).  Their new report on Illinois' budget crisis does not paint a pretty picture.  Some highlights from the report summary include the following statements:

"Illinois' budget is not fiscally sustainable." (p. 7)

"Illinois has the worst unfunded pension liability of any state . . . . Illinois will not be able to fund other priorities unless it adopts serious pension reform." (p. 7)

"Illinois' debt is also crowding out the budget." (p. 7)

"It would be better for Illinois to start on a long-run path to a sustainable budget than to live beyond its means for several more years and then face a sudden, painful reckoning." (p. 8)  This could also be said for our school district (in fact, I have been saying this about our school district since I was elected to the board in 2009).  But, it is in the nature of most people to seek to delay the painful reckoning until it can no longer be delayed.  By then it is so large that drastic measures are required.

A couple of other points that are mentioned later in the report:

"Financing deficits, particularly using debt as if it were an element of revenue, is bad financial and budgetary practice." (p.32)

". . .funding pensions, Medicaid, and debt service has diminished Illinois' ability to fund education." (p.37)  In other words, we have starved our future to feed our present.  Can you say "generational theft?"

To read the full report, click here.  To read a discussion of the math involved involved in the problem, click here.

Anothery Canary in the Coal Mine: San Bernardino, CA

Is this the ultimate outcome of the public pension crises?  One day, when the money runs out, when the bond buyers will no longer finance the deficits, and when taxpayers refuse to pay more in taxes, do the pension payments just stop?  While the article is talking about a city (which can file for bankruptcy protection under current law) and not a state (which cannot file for bankruptcy protection under current law), perhaps Illinois politicians should redouble their efforts to reform the state pension systems, for the sake of the pension participants, bond holders (which are, interestingly enough, often pension funds themselves), and taxpayers.  Every day of delay merely makes the problem that much larger (actually, this could also be said of our own school district's deficit spending).

Budget Ideas Anyone?

It should be no secret that Minooka CCSD 201 currently has a multi-million dollar operating deficit and that these deficits are projected to continue for the foreseeable future.  So, the Finance Committee held a meeting on October 18, 2012 to talk about a deficit reduction resolution (the next meeting will be December 5th at 6pm).  Click here to review the proposed deficit reduction resolution.  The proposed deficit reduction resolution purports to save $902,000.  Note, however, that over half of this number ($500,000) comes not from new savings but rather from money that has already been saved in the education fund.

If anyone has any deficit reduction ideas, please send them (either by comment or email).  While coming up with ideas, it may be instructive to go through the budget line by line to come up with savings.  Click here for the detail of the 2013 budget.

Next Minooka 201 School Board Meeting

The next meeting of the Minooka CCSD 201 school board is Wednesday, October 24, 2012. The Committee of the Whole Meeting starts at 6:00 p.m. in the board room (the old library) at the Minooka Primary Center located at 305 Church Street in Minooka. The Committee of the Whole Meeting will be followed by the regular Board Meeting at 7 p.m. Both meetings are open to the public, and everyone is encouraged to attend. You can find the agenda for each of the meetings here.

What Does Fiscal Responsibility Look Like?

At a meeting on September 19, 2012, the school board in Quincy, Illinois (Quincy Public School District #172) passed resolutions stating that they were going to end the all too common practice of end of career salary bumps for district personnel (you can read the resolutions here).  In the resolutions, the Quincy school board stated their reasoning for this move.  The resolutions state that "the [Board of Education] believes the practice of pre-retirement compensation increases to staff members is a contributing factor to the current economic crisis of the [Teachers' Retirement System]" and further that "the [Board of Education] believes it fiscally appropriate to work for the expeditious elimination of such pre-retirement compensation increases as they exist today within the Quincy Public Schools, in order to strengthen the financial condition of the Quincy Public Schools, contribute to the strengthening of the [Teachers' Retirement System] and contribute to the financial integrity of any other retirement systems affected by such increases."

So, at least one Illinois school board is considering the affect that their actions have not only on their own school district (and, therefore, local taxpayers) but on the pension systems as a whole (and, therefore, participants in the pension systems as well as local and state taxpayers).  But, we must keep this in perspective, since these glimpses of fiscal responsibility are few and far between.

For a refresher on our own school board's actions with regard to these matters, see here, here and here.

School Board Nominating Petitions Available

If anyone is interested in serving on the Minooka CCSD 201 school board, nominating petitions are now available for the April 9, 2013 election. Four full terms will be open on the Minooka CCSD 201 school board. The terms of the following board members expire on April 9, 2013: James Satorius, Jeff Budde, Dave Carlson and Doug Martin. Candidates elected on April 9, 2013 will serve a four-year term ending in April 2017. Completed nominating petitions must be returned no earlier than 8am, Monday, December 17, 2012 and no later than 5pm, Monday, December 24, 2012. Click here to be taken to the District information release regarding the nominating petitions.

On the Subject of Property Taxes

Since most of the funding for our schools comes from local property taxes, perhaps we should take a minute to think about the subject of property taxes.  Property taxes are not really "property taxes" at all.  They are, in reality, a form of income tax.  What I mean is that while the tax that you pay is certainly based upon the value of a piece of real property, you do not pay them by selling a piece of that property or deeding a piece of that property to the taxing body.  You pay the tax out of your income.  It is, therefore, a type of income tax, and a highly regressive one at that (meaning that, on average, the lower your income, the higher the percentage of that income is taken in property taxes).  Therefore, when property taxes are increased, it typically has the most impact on those least able to afford the increase. 

It is true that you get a deduction on your state and federal income tax return for the property taxes that you paid.  But a "deduction" is different from a "credit."  A "deduction" does not reduce your income taxes dollar for dollar the way that a "credit" does.  A "deduction" merely reduces your taxable income.  So, if your tax rate is 15%, for example, your income taxes are reduced by 15% of the amount of property taxes you paid.

If you rent property, such as a home or an apartment, you may think that you are not affected by property taxes.  But, it doesn't matter if you own property or rent property, you still pay property taxes (out of your income).  If you are a renter, of course, you do not get a property tax bill, but your rent is based in part upon the property taxes that the property owner pays.

Next Minooka 201 Finance Committee Meeting and Our Continuing Deficit Problem

The next meeting of the Minooka CCSD 201 Finance Committee will be Thursday, October 18, 2012. The Finance Committee meeting starts at 6:00 p.m. in the board room (the old library) at the Minooka Primary Center located at 305 Church Street in Minooka. Finance Committee meetings are open to the public, so everyone is welcome to attend. The Finance Committee will be discussing a new deficit reduction plan to further address our operating deficit.  So, if you want your voice heard during the process, you may want to attend the Finance Committee meeting.  Of course, you could wait until a future board meeting when the deficit reduction plan is voted on, but at that point it might be too late to have much of an impact.

As an informational reminder, here is a link to the Minooka CCSD 201 budget for fiscal year 2012-2013, as well as a link to a previous post regarding the financial projections which were presented to the Finance Committee this past January.  We now know that the EAV (the property value upon which property taxes are based) in the district fell by roughly 8% in 2011, whereas the projections had assumed that the EAV would be stable.  Therefore, updated projections would reflect a bleaker local revenue picture than previously projected.

Lists of Bills and Treasurer's Reports

For those who are interested, here is a link to the most recent Minooka CCSD 201 lists of bills and treasurer's reports by month.