This page contains a single entry from the blog posted on September 22, 2012 10:04 AM. The previous post in this blog was 57 channels and nothin' on. The next post in this blog is Streetcar stupidity takes it to next level today. Many more can be found on the main index page or by looking through the archives.

E-mail, Feeds, 'n' Stuff

Saturday, September 22, 2012

Pension doo hitting fan in Chi-town

Having skipped its pension contributions for many years, Chicago is supposed to start tripling them in another year under state law. But the school district has drained its reserves. And it cannot easily turn to the local taxpayers because of a cap on property taxes. Borrowing the money would be difficult and expensive as well, because of a credit downgrade this summer. One of the few remaining choices would be to make deep cuts in other services.

The whole thing is here.

Comments (14)

Pornland will be there soon enough.

MY favorite quote from the piece:

"Retirees say they are dismayed at the way their fund has been neglected, though they generally say they believe their benefits are safe. "

Obviously, none of those teachers taught math, or economics, or logic, or accounting.

The article states "Teachers in Chicago, as in many cities, do not earn Social Security credit for their years in the classroom." I assume that's a polite way of saying that teachers also do not pay into Social Security? Just wondering how that works. Other than railroad workers, who pay into the Railroad Retirement Fund, I wasn't aware there are other entire professions exempt from social security.

rt3, that's correct. Some public employers and their employees pay into social security, others don't. The only other class of non-payers that I'm aware of are certain religious employers or individuals objecting on religious grounds. Lots of SSA rules for all of the above.

From the Washington Post:


"Teachers are required to contribute 9 percent of their salary to their pensions, and support personnel must contribute 8.5 percent, as opposed to 6.2 percent if they were part of the Social Security system. But the Chicago Public Schools system pays for 7 percent of the employee contribution. So the more relevant comparison is a 1.5 to 2 percent contribution for CPS employees compared to 6.2 percent for private sector workers paying Social Security tax."

And the self-employed private sector is much higher than 6.2%.

Why should teachers in Chicago be exempt from paying into FICA ?
Even soldiers do.

The only other class of non-payers that I'm aware of are certain religious employers or individuals objecting on religious grounds

Employees of international organizations don't pay; and their employers don't pay either.

Those of you zeroing in on the 6.2% should double it. Yes, the employer pays that part; the employer pays your part, too, if you think about it.

Allan - Good call.

"Borrowing the money would be difficult"

Or you could just take it out of the general funds budget $1B at a time like Oregon.

There's no problem. Keep the current path. Should a problem appear down the road (where the can was kicked) the federal government will bail them out. Just a little payback for all the political support over the years, don't you think?

State law? No problem. Springfield will carve an exception for Chicago, resolving the crisis. That's how finances are managed in Blue states.

What they say about payback?

Non-payback is twice as much.

Trusting politicians? Not advisable.

My California will be the setting for the ultimate pension "crisis". Due to the cap on property taxes, and the sliding revenue from businesses everywhere, the shadows are looming. The liberal-controlled state is in essence bankrupt. The once-flush statewide fund is shrinking due to investment losses. No help there.

The can getting kicked down the road will turn out to be a live bomb, overlooked by the union "cleaners" and their well-supported representatives.

Don't forget that a large part of the issue with pensions is the Federal Reserve's money policy of zero interest rates and massive dollar printing (electronically).

How can anyone make a profit with investments these days when the interest rate is far below the rate of inflation?

Government workers deserve the pension they were promised. Just because everybody is being screwed by the banks, doesn't mean we should be trying to screw our fellow workers in a race to the bottom.

Clicky Web Analytics