"Five reasons Chicago is in worse shape than Detroit" via Bloomberg

[erikd]

Finally, a voice of reason in this thread...

It's one thing to be a Detroit cheerleader, but bashing Chicago does nothing to solve the catastrophic problems facing Detroit.

Who is bashing Chicago on this thread?

The Bloomberg article is about the worsening financial crisis in Chicago, and specifically the problem of underfunded city pensions, which was a major factor that led to Detroit's bankruptcy. Nobody is bashing Chicago or saying that it is a bad city, but the reality is that Chicago is facing a pension debt crisis that is similar to, and possibly even worse, than Detroit's was prior to the bankruptcy. Discussing the similarities of the situations is not "bashing" Chicago.

[erikd]

I don't buy this but if it's true it doesn't matter. Chicago is economically relevant. People care about Chicago. If it is in worse shape than Detroit there are more than enough people to care about it to keep it from going bankrupt. When it comes to finance Chicago is second to New York nationally.

This is the denial part that the Bloomberg article was talking about.

Bankruptcy isn't about economic relevance or having enough people that "care about" the entity facing financial insolvency. Donald Trump has taken his companies through bankruptcy four times, and he is still very wealthy and economically relevant. Orange County, California went bankrupt in 1994, despite the fact that they were in a period of rapid economic and population growth, and are one of the largest counties in the country. General Motors is still one of the largest and most economically relevant companies in the world, even though they went through bankruptcy a few years ago. The list of examples goes on and on...

The social stigma of bankruptcy has lessened in recent years, especially since the Great Recession, and more Americans are coming to view bankruptcy as a logical and reasonable way to reorganize and reduce structurally unsustainable debt.

In the current political climate, it is extremely unlikely that the Democrats, Republicans, and Unions in Chicago and Illinois will voluntarily work out an agreement that restores solvency to the pension crisis in Chicago. The Democrats and Unions will not voluntarily agree to significant pension reductions, and the Republicans will not voluntarily agree to significant funding increases, so bankruptcy is the most likely scenario. They all know that the current system is insolvent and unsustainable, but none of them are willing to voluntarily accept the conditions needed to fix the problem, because of the political fallout.

I will be shocked if the city of Chicago doesn't go through bankruptcy in the near future. They should do it now, but I expect that they will do everything possible to kick the can down the road and delay the inevitable. They have been increasing their bond debt and skipping pension payments, and now their credit rating has been downgraded to junk status. This is exactly the same thing that happened in Detroit as our financial situation unraveled.

When it comes to financial insolvency, economic relevance and "people caring" doesn't matter. When there isn't any money left to pay the bills, and your credit is tapped out, the jig is up.

[313WX]

Who is bashing Chicago on this thread?

The Bloomberg article is about the worsening financial crisis in Chicago, and specifically the problem of underfunded city pensions, which was a major factor that led to Detroit's bankruptcy. Nobody is bashing Chicago or saying that it is a bad city, but the reality is that Chicago is facing a pension debt crisis that is similar to, and possibly even worse, than Detroit's was prior to the bankruptcy. Discussing the similarities of the situations is not "bashing" Chicago.

Again, focusing on and overblowing the negative aspects of other cities does nothing to benefit Detroit.

[rb336]

Again, focusing on and overblowing the negative aspects of other cities does nothing to benefit Detroit.

no, but it does add to understanding what is going on in cities across the country. as middle class and working class wages are squeezed, the cities that are still largely supported by taxes on their wages will be forced into tight situations. This process started earlier in Detroit, but it is happening everywhere, and will accelerate if the Trans Pacific Partnership is passed.

[gazhekwe]

I am still irked by the assumption that municipal and other government pension benefits are "disproportionate." Wesley Mouch that was your term up there. ^^^^

These workers were assured these benefits as part of their compensation package at a time when workers were valued, and thus to attract the best workers. Had they received lower benefits, they would have gotten higher pay. It was actually smart to have the benefits since people are notoriously unlikely to fund their own retirement. The workers also kicked into the system. The government employers' part was to keep the benefits funded using the revenues kicked in and other worker compensation funds. This is where the employers all fell short. The workers did their part. They have already paid all they were asked to pay into the system and they already did all the work for their entire career. They did the job, they made the payments, so how is their compensation disproportionate?

[313WX]

no, but it does add to understanding what is going on in cities across the country. as middle class and working class wages are squeezed, the cities that are still largely supported by taxes on their wages will be forced into tight situations. This process started earlier in Detroit, but it is happening everywhere, and will accelerate if the Trans Pacific Partnership is passed.

Detroit situation was unique though [[basically, we were an one-industry town where all of the old money in said industry collectively considered Detroit proper disposable and fled the city limits). No city will ever face the circumstances that caused Detroit to decline to the extent it did.

As other posters have stated above, other municipalities have plenty of room to raise revenues and cut expenses, as they haven't experienced the flight of capital Detroit has. And that probably won't change in the foreseeable future.

[Wesley Mouch]

I am still irked by the assumption that municipal and other government pension benefits are "disproportionate." Wesley Mouch that was your term up there. ^^^^

These workers were assured these benefits as part of their compensation package at a time when workers were valued, and thus to attract the best workers. Had they received lower benefits, they would have gotten higher pay. It was actually smart to have the benefits since people are notoriously unlikely to fund their own retirement. The workers also kicked into the system. The government employers' part was to keep the benefits funded using the revenues kicked in and other worker compensation funds. This is where the employers all fell short. The workers did their part. They have already paid all they were asked to pay into the system and they already did all the work for their entire career. They did the job, they made the payments, so how is their compensation disproportionate?

That's correct. Disproportionate. Higher pay AND significantly greater pension contributions for more desirable working conditions.

Nobody working in the private sector is getting company defined pensions plus gold-plated healthcare while still in their 40s.

[Bham1982]

Bham you should go the Old Town Art Fair in Chicago this summer and then maybe stroll through the park down to the beach to take in the skyline and if you still think it isn't beautiful I'll apologize for wasting your time and money but my guess is that apology won't be necessary.

I know Old Town in Chicago very well, and if you think that Old Town's workers cottages and 1980's postmodern condo boxes trump the glories of Paris and Barcelona, then yeah, we're definitely gonna have to disagree on that one. Wells Street isn't exactly La Rambla, or even Brooklyn, Boston or SF for that matter.

Chicago is vibrant but not very attractive, at least if we're comparing to places outside of the industrial Midwest. It's flat and very utilitarian in built-form. Like all the cities in the Midwest, it was built for hardworking folks who don't like ostentation.

[Bham1982]

I am still irked by the assumption that municipal and other government pension benefits are "disproportionate." Wesley Mouch that was your term up there. ^^^^

The "blame the public sector workers" line is a total canard.

The fact is that Chicago [[and Illinois) gave these pensions to their workers. The workers didn't force it, it was given to them by the elected officials. If people don't like the pensions, fine, but blame the politicans, not the recipients.

And Chicago's pension system is not out-of-line with other major cities. Actually many cities [[NYC, LA, SF, Boston) have even more generous pension systems, yet they have excellent credit ratings.

The difference is that Chicago [[and Illinois) haven't funded their pension system. Basically they refused to fund it, then are facing bankruptcy, and now demonize the workers, who have guaranteed pensions. Sorry, but no. The workers aren't at fault, it's the idiot politicians who either 1. Should have refused the pensions or 2. Should have properly funded the pensions.

Yet Mayor Rahm magically finds money for a proposed Star Wars museum, massive sports stadium subsidies, tax breaks for his corporate buddies, and other nonsense. He has refused to raise taxes, and he has refused to cut spending.

[emu steve]

One of the classic cases of political 'voodoo financing' for public pensions was Christine Todd Whitman [[R - N.J.).

She used zero coupon bonds. She got money then but the principal and interest [[together) was due far down the line. [[Zeros don't pay annual or semi-annual interest - the amount is all due at once. E.g., a $1,000 bond might be sold for $250. When the bond matures, the holder collects the entire $1,000. Nothing in between. The interest rate is 'locked in' [1998] so the interest rate might be say a number of times higher than it would be today.)

http://www.washingtonpost.com/busine...00b_story.html

Now the zeros are coming due in big principal amounts and Christie needs to figure how to come up big, big bucks to redeem the maturing zeros.

[TTime]

I know Old Town in Chicago very well, and if you think that Old Town's workers cottages and 1980's postmodern condo boxes trump the glories of Paris and Barcelona, then yeah, we're definitely gonna have to disagree on that one. Wells Street isn't exactly La Rambla, or even Brooklyn, Boston or SF for that matter.

Chicago is vibrant but not very attractive, at least if we're comparing to places outside of the industrial Midwest. It's flat and very utilitarian in built-form. Like all the cities in the Midwest, it was built for hardworking folks who don't like ostentation.

Your simple assessment of Old Town leads me to believe you don't know it as well as you think you do. Anyway, no point in arguing taste.

[Bham1982]

Your simple assessment of Old Town leads me to believe you don't know it as well as you think you do. Anyway, no point in arguing taste.

If you are arguing that Old Town isn't actually as I described "workers cottages and po-mo condo boxes", then you are simply ignorant of Old Town's housing stock.

It's a traditionally working class neighborhood with utilitarian housing. It started to gentrify during the 1960's, as it was the hippie neighborhood for Chicago during that turbulent era. It was fully gentrified by the 1980's, when typical condo boxes and McMansions started springing up everywhere, between the older cottages and urban renewal-era townhouses and subsidized housing.

[TTime]

If you are arguing that Old Town isn't actually as I described "workers cottages and po-mo condo boxes", then you are simply ignorant of Old Town's housing stock.

It's a traditionally working class neighborhood with utilitarian housing. It started to gentrify during the 1960's, as it was the hippie neighborhood for Chicago during that turbulent era. It was fully gentrified by the 1980's, when typical condo boxes and McMansions started springing up everywhere, between the older cottages and urban renewal-era townhouses and subsidized housing.

Ha yes I lived there for 5 years and as I said your assessment is simple and wrong. The area may have those ingredients but to say that's all it consists of is silly. Since it's a gorgeous day today and neither one of us is overly argumentative and depressed I'm going to have to sign off and say good day.

[BankruptcyGuy]

I am still irked by the assumption that municipal and other government pension benefits are "disproportionate." Wesley Mouch that was your term up there. ^^^^

These workers were assured these benefits as part of their compensation package at a time when workers were valued, and thus to attract the best workers. Had they received lower benefits, they would have gotten higher pay. It was actually smart to have the benefits since people are notoriously unlikely to fund their own retirement. The workers also kicked into the system. The government employers' part was to keep the benefits funded using the revenues kicked in and other worker compensation funds. This is where the employers all fell short. The workers did their part. They have already paid all they were asked to pay into the system and they already did all the work for their entire career. They did the job, they made the payments, so how is their compensation disproportionate?

Don't confuse Chicago's system with Detroit's. Chicago and Illinois are the home to every pension-boosting trick in the book. Because of their culture of government corruption, speaking out about that or anything else wouldn't get you very far.

My favorite is this true story: there is an Illinois rule that your time as a union rep gets tolled [[added) to your pension. The idea was simple--if you work for a government agency, and take a year off to run the union, and come back, that year would be added on. Not crazy.

Two former union bosses [[that is to say, they never did anything but work for the union) were hired on as teachers, right at the end of their careers. Those two bozos now receive a lifetime pension and lifetime healthcare benefits.

Here's a couple more:

Ed Geppert, the former president of the Illinois Federation of Teachers [[IFT) is one of those union leaders, according to OpenTheBooks data. Teaching social science at Cahokia High School from 1969 to 1977, Mr. Geppert earned, on average, $12,100 a year. When he started at the union in 1980, he took in a salary of $32,650 and, although no longer teaching, he continued to remain in the TRS system.
By 2004, Mr. Geppert was making $217,000 annually as chief of staff at the union, and continued to contribute to the retirement system. When he decided to retire that same year, he got a $43,000 raise, bumping up his salary to $260,000, and his pension payout, which is based on his four highest consecutive salaries at the union, according to OpenTheBooks.com.
In 2007 Mr. Geppert came out of retirement to become the union’s president. In addition to collecting his union paycheck, he also collected his pension. Today, Mr. Geppert receives $203,076 annually from the pension, plus a 2 percent raise or a cost-of-living adjustment tied to the Consumer Price Index annually, based on whichever is higher, according to OpenTheBooks.com.

and

The sixth-highest Illinois teacher pension — $265,152 per year — goes to former National Education Association President Reginald Weaver, who spent the latter half of his career in Washington lobbying for the union and then doing education consulting. Mr. Weaver’s pension was predicated off his union earnings, not just his teacher pay.
Mr. Weaver defends the pension system and his payout as guaranteed by the 1987 law.
“I don’t see where it has been a disadvantage to anyone to have had that legislation passed. There’s not that many people who it affects,” Mr. Weaver said. “The largest teacher pensions are given to the administrators, not those who worked for the union.”

It's not a fair system when the ones asking for and the ones receiving benefits are on the same side. Chicago is loaded with stories like that.

[Wesley Mouch]

Don't confuse Chicago's system with Detroit's. Chicago and Illinois are the home to every pension-boosting trick in the book. Because of their culture of government corruption, speaking out about that or anything else wouldn't get you very far.

My favorite is this true story: there is an Illinois rule that your time as a union rep gets tolled [[added) to your pension. The idea was simple--if you work for a government agency, and take a year off to run the union, and come back, that year would be added on. Not crazy.

Two former union bosses [[that is to say, they never did anything but work for the union) were hired on as teachers, right at the end of their careers. Those two bozos now receive a lifetime pension and lifetime healthcare benefits.

Here's a couple more:

Ed Geppert, the former president of the Illinois Federation of Teachers [[IFT) is one of those union leaders, according to OpenTheBooks data. Teaching social science at Cahokia High School from 1969 to 1977, Mr. Geppert earned, on average, $12,100 a year. When he started at the union in 1980, he took in a salary of $32,650 and, although no longer teaching, he continued to remain in the TRS system.
By 2004, Mr. Geppert was making $217,000 annually as chief of staff at the union, and continued to contribute to the retirement system. When he decided to retire that same year, he got a $43,000 raise, bumping up his salary to $260,000, and his pension payout, which is based on his four highest consecutive salaries at the union, according to OpenTheBooks.com.
In 2007 Mr. Geppert came out of retirement to become the union’s president. In addition to collecting his union paycheck, he also collected his pension. Today, Mr. Geppert receives $203,076 annually from the pension, plus a 2 percent raise or a cost-of-living adjustment tied to the Consumer Price Index annually, based on whichever is higher, according to OpenTheBooks.com.

and

The sixth-highest Illinois teacher pension — $265,152 per year — goes to former National Education Association President Reginald Weaver, who spent the latter half of his career in Washington lobbying for the union and then doing education consulting. Mr. Weaver’s pension was predicated off his union earnings, not just his teacher pay.
Mr. Weaver defends the pension system and his payout as guaranteed by the 1987 law.
“I don’t see where it has been a disadvantage to anyone to have had that legislation passed. There’s not that many people who it affects,” Mr. Weaver said. “The largest teacher pensions are given to the administrators, not those who worked for the union.”

It's not a fair system when the ones asking for and the ones receiving benefits are on the same side. Chicago is loaded with stories like that.

Thanks for the stories. Seems to make a case for a cap on pension payouts. I can't think of a reason why anyone needs to get a $262,000 public pension -- especially when based on work outside of the school system. Thanks.

[corktownyuppie]

I've stayed silent on the boards for awhile, and I've been sitting on the sideline here, too. But I now feel compelled to state my opinion on this. I prefer to do so in bullet-point form.

- I believe that the loss of pensions as a retirement system has disproportionately affected the middle-class, low- to- middle-educated, employee.

- I take a neutral position about whether or not a pension benefit is disproportionate, and I oppose mandatory pension caps. Of course I believe that some pension systems are unfair, and I oppose those. But a system being "fair" is absolutely irrelevant if it is not first *solvent*.

- What I believe is totally absurd and should be intolerable is the failure to fund pension plans. If you want to promise every retired janitor a 6-figure pension at age 50, have at it. But the funding of that pension must happen immediately, without delay, and with full transparency. If the voters are ok with funding a very generous pension, then so be it. But the idea that you can promise the world and then kick the can down the road must end now. Pension funding needs to be like income tax withholding...that money gets set aside into a separate account that is sheltered away from general funds. And it must be deposited just like payroll.

- Some municipalities have worked around this by depositing money into the pension funds and then turning around and borrowing it [[generally at a reasonably fair market interest rate). I stop short of saying that it should end. But it should definitely be capped at some conservative amount...5-15% or so. I recognize that this limits the funds available for cities to borrow. So be it. If pension funds are going to be constitutionally protected, then it should require a commensurate measure to allow them to be overly exposed to local debt.

- No more payouts based on short-term gains. Capital markets are cyclical. Before a pension fund starts paying out bonuses because of gains in the fund value, it should first be required that the fund be at like 120% of funding level.s

- Full transparency must now and forever be a component of the pension system. Every pension holder receiving a check should see the words "YOUR PENSION IS XX% FUNDED" on the check. For those who are getting direct deposit, it should be e-mailed monthly alongside every pension check they get. For employees who are contributing into the plan, the same rules should apply. How in God's name a municipality can allow their pension and health liabilities to be funded at only 30% is totally absurd. 90% is an A-, 80% is a B-, 70% is passing. 30% is just ridiculous.

=========

In the case of Illinois, I believe that the constitutional protections will eventually come up against the financial abilities to pay. The question then will be whether the population votes to raise the taxes necessary or to amend the constitution. That question will likely be more relevant as time goes on.

Remember...alcohol was considered unconstitutional for awhile, too. That didn't last forever.

[BankruptcyGuy]

I've stayed silent on the boards for awhile, and I've been sitting on the sideline here, too. But I now feel compelled to state my opinion on this. I prefer to do so in bullet-point form.

- I believe that the loss of pensions as a retirement system has disproportionately affected the middle-class, low- to- middle-educated, employee.

- I take a neutral position about whether or not a pension benefit is disproportionate, and I oppose mandatory pension caps. Of course I believe that some pension systems are unfair, and I oppose those. But a system being "fair" is absolutely irrelevant if it is not first *solvent*.

- What I believe is totally absurd and should be intolerable is the failure to fund pension plans. If you want to promise every retired janitor a 6-figure pension at age 50, have at it. But the funding of that pension must happen immediately, without delay, and with full transparency. If the voters are ok with funding a very generous pension, then so be it. But the idea that you can promise the world and then kick the can down the road must end now. Pension funding needs to be like income tax withholding...that money gets set aside into a separate account that is sheltered away from general funds. And it must be deposited just like payroll.

- Some municipalities have worked around this by depositing money into the pension funds and then turning around and borrowing it [[generally at a reasonably fair market interest rate). I stop short of saying that it should end. But it should definitely be capped at some conservative amount...5-15% or so. I recognize that this limits the funds available for cities to borrow. So be it. If pension funds are going to be constitutionally protected, then it should require a commensurate measure to allow them to be overly exposed to local debt.

- No more payouts based on short-term gains. Capital markets are cyclical. Before a pension fund starts paying out bonuses because of gains in the fund value, it should first be required that the fund be at like 120% of funding level.s

- Full transparency must now and forever be a component of the pension system. Every pension holder receiving a check should see the words "YOUR PENSION IS XX% FUNDED" on the check. For those who are getting direct deposit, it should be e-mailed monthly alongside every pension check they get. For employees who are contributing into the plan, the same rules should apply. How in God's name a municipality can allow their pension and health liabilities to be funded at only 30% is totally absurd. 90% is an A-, 80% is a B-, 70% is passing. 30% is just ridiculous.

=========

In the case of Illinois, I believe that the constitutional protections will eventually come up against the financial abilities to pay. The question then will be whether the population votes to raise the taxes necessary or to amend the constitution. That question will likely be more relevant as time goes on.

Remember...alcohol was considered unconstitutional for awhile, too. That didn't last forever.

Very nice points, all. My editorial $0.02:

Defined benefit programs are only as good as the party standing behind them. VERY frequently throughout history have private pensions failed. The PBCG provides whatever limited insurance the company purchased, and pensions are cut. IIRC, my grandfather's pension from LTV Steel was cut by 33% or so when they declared bankruptcy.

The correlation between industries with pensions and bankruptcies is NOT coincidental. At the time of GM's bankruptcy, it had a $130B pension fund. Let's say the prognosticators miss by 1% [[i.e. estimate 7% and earn 6%). At that point, GM would take a $1.3B loss. That's not sustainable. Steel, car makers, airlines, you name it. Once you start down that path, it's very difficult to sustain the necessary contributions.

Defined contribution plans require, by definition, that contributions be paid up front. There can be deferred compensation, sure, but you get a statement every month, showing what you've got put away.

The fundamental problem is one of human nature. We fall too easy into optimism, which keeps us sane. It also means that we tend not to be great planners for the future. We think investment returns will be better, long-term, then they actually will be, and it causes us to under-fund our future needs.

On the public sector side, I think it's too much to ask municipalities and states to stare at pension funds with billions of dollars in them, and not reflexively react to either shortchange the plans or draw money out to fund immediately what their constituents believe are pressing and important programs.

As a result, my humble opinion is that public sector pensions should be banned. Public sector employers will likely have to boost pay to reflect the change in the overall benefit package. If the politicians or bureaucrats make a promise, they should keep it, and now. They should stop doing a disservice to both their employees and their citizens by making promises and not funding them.

[Ray1936]

corktownyuppie said: "In the case of Illinois, I believe that the constitutional protections will eventually come up against the financial abilities to pay. The question then will be whether the population votes to raise the taxes necessary or to amend the constitution. That question will likely be more relevant as time goes on."

As you likely know, Michigan's Constitution clearly says public employee pensions may not be lessened, yet the bankruptcy judge lessend them. He stated, "A state constitution is a contract, and contracts may be revoked." Illinois, take heed.

Fortunately, my pension did not take much of a hit, but the complete loss of healthcare is a killer. Especially having a diabetic wife.

[mwilbert]

On the public sector side, I think it's too much to ask municipalities and states to stare at pension funds with billions of dollars in them, and not reflexively react to either shortchange the plans or draw money out to fund immediately what their constituents believe are pressing and important programs.

I don't think this is the right way to look at it. The problem isn't that states or municipalities are tempted to underfund their pension plans, or take money out of them for other purposes. That is a general problem with people and savings, and moving it into a defined contribution plan doesn't fix the underlying problem; it just moves it from the public entity to the employees, generally to their detriment, both because group pensions are a more efficient way to save for retirement [[because you can average the savings rate between people who live a long time and those who die early) and because when people are switched from defined benefit to defined contribution plans the employer contributions generally become less generous.

In my view, the actual problem is that the rules governing public pensions have been too loose. It isn't as if it isn't possible to properly fund pensions. The problem is that doing it is expensive, and losing the ability to fudge the contributions or to magically tie pensions to a salary level which an employee may only attain for a few years makes it less attractive as a form of compensation. I would make the rules at least as tight as the ones private entities need to follow under ERISA, preferably tighter, and see who still wants to offer defined benefit plans.

[corktownyuppie]

corktownyuppie said: "In the case of Illinois, I believe that the constitutional protections will eventually come up against the financial abilities to pay. The question then will be whether the population votes to raise the taxes necessary or to amend the constitution. That question will likely be more relevant as time goes on."

As you likely know, Michigan's Constitution clearly says public employee pensions may not be lessened, yet the bankruptcy judge lessend them. He stated, "A state constitution is a contract, and contracts may be revoked." Illinois, take heed.

Fortunately, my pension did not take much of a hit, but the complete loss of healthcare is a killer. Especially having a diabetic wife.

Your point is a good one, accurate and relevant. The loss of healthcare hits hard, especially for those who are pre-medicare age.

The situation in Chicago is a bit different as the Illinois Supreme Court actually ruled in the opposite direction, arguing that pensions take a superior position to other contracts and that pension reform is -- unlike in Michigan -- unconstitutional, at least in the form which was brought before the court.

http://www.pionline.com/article/2015...out-of-options

So essentially we down to two fundamental choices...either fund the pensions that were promised or amend the constitution to make pension reform legal. I don't have a pony in the race, other than that I am glad that the court is forcing the citizens to "face reality".

Either fund the promises you made by raising taxes. Or amend the constitution to allow for pension reform, which can only happen if the citizens push legislators to do it.

Either of those two choices will be incredibly painful, but now we'll see where the citizens of Illinois really stand. This looks to be the real battle royale...it might even turn out to be an even bigger fight than the Detroit bankruptcy.

[Cincinnati_Kid]

Don't confuse Chicago's system with Detroit's. Chicago and Illinois are the home to every pension-boosting trick in the book. Because of their culture of government corruption, speaking out about that or anything else wouldn't get you very far.

My favorite is this true story: there is an Illinois rule that your time as a union rep gets tolled [[added) to your pension. The idea was simple--if you work for a government agency, and take a year off to run the union, and come back, that year would be added on. Not crazy.

Two former union bosses [[that is to say, they never did anything but work for the union) were hired on as teachers, right at the end of their careers. Those two bozos now receive a lifetime pension and lifetime healthcare benefits.

Here's a couple more:

Ed Geppert, the former president of the Illinois Federation of Teachers [[IFT) is one of those union leaders, according to OpenTheBooks data. Teaching social science at Cahokia High School from 1969 to 1977, Mr. Geppert earned, on average, $12,100 a year. When he started at the union in 1980, he took in a salary of $32,650 and, although no longer teaching, he continued to remain in the TRS system.
By 2004, Mr. Geppert was making $217,000 annually as chief of staff at the union, and continued to contribute to the retirement system. When he decided to retire that same year, he got a $43,000 raise, bumping up his salary to $260,000, and his pension payout, which is based on his four highest consecutive salaries at the union, according to OpenTheBooks.com.
In 2007 Mr. Geppert came out of retirement to become the union’s president. In addition to collecting his union paycheck, he also collected his pension. Today, Mr. Geppert receives $203,076 annually from the pension, plus a 2 percent raise or a cost-of-living adjustment tied to the Consumer Price Index annually, based on whichever is higher, according to OpenTheBooks.com.

and

The sixth-highest Illinois teacher pension — $265,152 per year — goes to former National Education Association President Reginald Weaver, who spent the latter half of his career in Washington lobbying for the union and then doing education consulting. Mr. Weaver’s pension was predicated off his union earnings, not just his teacher pay.
Mr. Weaver defends the pension system and his payout as guaranteed by the 1987 law.
“I don’t see where it has been a disadvantage to anyone to have had that legislation passed. There’s not that many people who it affects,” Mr. Weaver said. “The largest teacher pensions are given to the administrators, not those who worked for the union.”

It's not a fair system when the ones asking for and the ones receiving benefits are on the same side. Chicago is loaded with stories like that.

This is utterly ridiculous that they can get away with this. This example is why this country will face another economic hardship in the near future, 2008-09 was just as precursor of things to continue with this economic disparity.

[rb336]

The situation in Chicago is a bit different as the Illinois Supreme Court actually ruled in the opposite direction, arguing that pensions take a superior position to other contracts and that pension reform is -- unlike in Michigan -- unconstitutional, at least in the form which was brought before the court.

Actually it is no different. The Michigan courts uphold Michigan law. A federal judge ruled that those protections aren't immune from bankruptcy proceedings

[Wesley Mouch]

This is utterly ridiculous that they can get away with this. This example is why this country will face another economic hardship in the near future, 2008-09 was just as precursor of things to continue with this economic disparity.

They are not getting away with anything. What these fine people did was simply to follow the law.

The road to hell is paved with good intentions. Here, Illinois passed a law to allow public sector employees to participate in their union. Good intention. Then, some follow the letter of the law to their advantage. Bad result. Lesson? Don't mess up your laws with little rules.

[corktownyuppie]

Actually it is no different. The Michigan courts uphold Michigan law. A federal judge ruled that those protections aren't immune from bankruptcy proceedings

Ahhhhhh yes, you are right. I stand corrected.

[Wesley Mouch]

Ahhhhhh yes, you are right. I stand corrected.

CTY, nice to see your posts. Your ability to step back from the line and weigh in on the issues is appreciated.

Can you [[or BG) explain this a little further? Are you saying a federal judge may yet weigh in on Illinois bankruptcy law, as bankruptcy is a federal process? Thus, Illinois may yet get municipal pension reform by law rather than by running out of money?