Bob McQuillan Note:
August 14, 2012
All summer we have heard the talk of pension reform in the state of Illinois. The solution for one of the largest pensions: shift the burden to the local homeowners through their property taxes. Arguments can be made for and against this change but the one key that can't be disputed is that local property taxes can not continue to increase. If this change is made and the pensions are exempt from the tax cap, like debt service repayment, our property tax increases will be unbearable. The only solution is to place a freeze on property taxes and require referendums for any increase in any property tax. If the local taxpayers are going to be paying teacher pensions, we must have a say in how they are structured.
The following aticle is copied from the Chicago Tribune, August 12, 2012
By Bruno Behrend
August 12, 2012
Illinois public policy has become such a Gordian knot that even good policy yields potentially horrible outcomes. With the state budget straining to meet payments — even after a huge tax increase — Illinois will soon be unable to meet its rapidly expanding pension bill.
This is why some legislators in Springfield are pushing to shift teacher pension costs back to local school districts. This is good public policy that reverses one of the worst policies ever enacted in Illinois.
Allowing the state to take responsibility for local contract decisions, combined with the state's massive and unwarranted benefit expansions, has resulted in a massive subsidy to property-rich school districts. It has allowed districts to shower their employees with high salaries and benefits, putting the state taxpayer on the hook for sweet pension deals.
The most solvent pension fund in the state, the Illinois Municipal Retirement Fund, is solvent precisely because local government is mandated to pay for benefits as they are conferred. This means that unlike profligate school districts and other agencies with their state pension subsidy, municipalities must pay into the pension system in real time.
So, if it is such a good idea, and if Illinois is too tapped to meet its growing pension payments, why would anyone be against shifting the pension responsibility back to local entities? It's quite simple. Your property taxes, already the highest-grossing tax in the state, will blow through the ceiling.
This can be proved by a simple resolution making the rounds in your local school districts. One such resolution, passed in Lemont, has a long-winded set of lamentations. Each one begins with a "Whereas" and ends with a "nothing is our fault." It ends with a paragraph that should send shivers up the spine of every Illinois property owner.
Section 2(c) states that "if legislation shifting responsibility for paying for any portion of the state's share … is enacted," that any such spending on the part of the local district should be "specifically exempt" from the "limitations of PTELL." Let me decipher that for you. Any extra spending on pensions will not be under Illinois' already watered-down state property tax cap, the Property Tax Extension Limitation Law.
If this resolution should make it into any law that shifts pension responsibility back to local control, property taxes will spike. This is why so many legislators from suburban and rural districts are against shifting the pensions. What is a legislator to do?
The answer is quite simple. Tie any shift of pension responsibility to expanding and strengthening Illinois' tax cap law. Make the cap apply to all counties, remove all exemptions for debt and new construction, and place every dime of local spending under the cap (inflation rate or 5 percent, whichever is less). If the local district wants more money for new spending, let them go to the citizens to ask for it in an even-year November election.
The property tax is currently the single largest tax in the state, collecting an estimated $24 billion this year. This is almost double the $13 billion or so hauled in by Illinois' individual income tax. Cook County Democrats, Chicago Mayor Rahm Emanuel and Cook County Treasurer Maria Pappas included, are already warning of skyrocketing property tax bills before any discussion of a pension shift.
Every $100 of extra cost puts your home out of reach of more potential buyers. Therefore, shifting pension responsibility without a freeze on property taxes will destroy Illinois property values for a generation. The answer is simple. Freeze property taxes first, shift the pensions second and squeeze the fat and excessive debt out of local government. It's simple, elegant and fair.
Bruno Behrend is executive director of For the Good of Illinois, an Illinois nonprofit that focuses on government transparency and fiscal responsibility.
Copyright © 2012, Chicago Tribune
Posted by James Cullen
August 11, 2012
It was the worst of times for most; it was a better time for a few.
This is a tale of two groups: the citizens and the advantaged.
"Illinois cannot continue down this path at the expense of our children." ---Governor Pat Quinn
“An informed citizenry is the only true depository of the public will.” —Thomas Jefferson
________________________________________________________________________
Before the public meeting of the Geneva School Board on Monday, August 13 at 7:00 pm to decide on the largest part of Geneva's property taxes, as described at the bottom of this post, here are some relevant facts, by the numbers:
1. PROPERTY TAXES / HOME VALUES
+ 20 %
- 25 %
+ 20% is about how much the Geneva School District 304 property tax levy has increased in the last five years, as reflected on our property tax bills.
- 25% is a ballpark estimate of the typical percentage decrease in Geneva home values in the last five years.
2. INCOMES
- 10 %
+23 %
+ 2 %
- 10% is the percentage decrease in the median family income of Americans in the last five years, per the U.S. Census Bureau. This is probably approximately true of Geneva families also.
+ 23% is the approximate percentage increase in the “Salaries” portion of the Geneva School District’s “Educational Fund” in the last five years, from 2006-07 to 2011-12, per the District CUSD 304 website.
+ 2% is the percentage increase in the total student population in Geneva schools in the last five years, per the District CUSD 304 website.
3. NET WORTH
- 39 %
+23 %
- 39% is the approximate percentage decrease in median net worth of Americans from 2007 to 2010, per the Federal Reserve.
+ 23% is the percentage increase in the “Employee Benefits” portion of the Geneva School District’s Education Fund in the last five years, per the District CUSD 304 website. In the 2011-12 budget, the Employee Benefits constitute 10.7% of the combined total of the Salaries plus Employee Benefits. This figure includes the employees’ health care benefits (paid 100% by the district in the case of the teachers, plus 60% for the teacher’s family).
Geneva's property tax bills include a portion entitled "Geneva School District 304 Pension." On the subject of public employee pensions, Illinois Governor Pat Quinn issued a press release on Aug. 5, 2012 that included the following message:
"Illinois cannot continue down this path at the expense of our children,” Quinn said. “We must enact comprehensive pension reform that eliminates the unfunded liability to repair our pension system and give the next generation the education they deserve.”
Quinn proceeded in an interview on WLS am radio on Aug. 9 to add some detail to his point and emphasize its urgency. He said that, under current Illinois rules, an Illinois teacher who retired 20 years ago with a pension benefit of $60,000 per year at that time by now receives a pension benefit of $120,000 per year!
The approximately 50% unfunded liability in Illinois’ public pension funds is a debt burden on Illinois’s income taxpayers, a group that in one year or five years will include many of Geneva’s current students, and by 17 years hopefully will include almost all of them.
Illiinois’ local school boards are key decision makers in determining how big that future tax burden on today's students will be. But it is clear that today's students when they grow up will be the worst-hurt victims of today's excessive School District 304 spending.
4. THE TWO GROUPS
26,600
1,000
26,600 is the approximate population of Geneva. (The Geneva School District extends beyond the boundary of the city, but this is a useful enough number to use.) These are the hard-working, conscientious, fine people of Geneva. They make Geneva a superb place to live. Almost all of them are in families or households that have suffered financially for the last five years. Many have lost their jobs, been downsized, suffered lower family incomes, lost homes to foreclosure, and maybe lost hope.
1,000 is the approximate number of current Geneva CUSD 304 employees, plus those who retired from the district in the last five years. These are the hard-working, conscientious, fine employees of the School District. They, along with the diligent, loving parents of the students, are key to making Geneva’s schools highly rated. Some may be like most Americans generally who have seen their home values and investments decline substantially in the last five years. This group has seen their salaries and benefits generally increase an average of approximately 23% over the last five years.
5. THE STUDENTS
12
12
16
12 is a reasonable estimate of the average age of all the students in the Geneva school District, from ages 5 to 18.
12 is a reasonable estimate of the average number of years from now when the average student will become an Illinois income tax payer (and a federal income taxpayer).
16 is a reasonable estimate of the average number of years from now when the average student will, hopefully, become a homeowner, and thus a property taxpayer, in Geneva or a similar community that has similar patterns and histories of school district budgets and tax levies. That is, if they can afford the property taxes.
6. ELECTED OFFICIALS
536
7
536 is the number of people who work for and represent us in Washington, D.C., and who decide how much federal income taxes Americans will pay. They include the president, the senators, and the congressmen and women. These folks are the subject of 24/7 news broadcasts, particularly as the November elections of most of them draw near. Most Americans focus a great deal of attention on these elected officials, as they have a huge impact on all of our lives and our futures, and on future generations.
7 is the number of people who decide what the Geneva School District levy portion of the Kane County property tax bills will be. These are the seven elected, unpaid volunteer citizens who give generously of their time, energy and skills to serve the community as the Geneva Board of Education.
The Geneva school levy constitutes about two-thirds of the total Kane County levy, which also includes lesser levies from about a dozen other local taxing bodies. As the second installment due date of Sept. 4 approaches, many Geneva residents may notice that this full-year bill is not much less than their federal income tax bill for the year, and may in some cases be more, particularly because the property tax is deductible from the federal income tax liability.
The Board of Education has the ultimate authority, and is in a position, to see that all parties involved are treated fairly—students, School District employees and taxpaying families and households.
The seven School Board members serve four-year terms, and four of these seven seats are to be elected by Geneva’s citizens in April 2013.
7. THE MOST IMPORTANT LESSON
1
1 represents the most important lesson that I and my fellow students learned from our teachers in our student years. The teachers did a good job of teaching us reading, writing and arithmetic. I don’t remember much about trigonometry from high school, but what had the most lasting impact, and was the most important thing they taught us, was what they taught us by their example. The No. 1 thing they taught us was good values. By their example, they taught us, among other values, the golden rule, being a good citizen, fairness toward others and justice.
8. AFTER POMP AND CIRCUMSTANCE
62
62 is a reasonable estimate of the number of years Geneva’s students on average hopefully will live as adults after graduation from high school, enjoying the benefits of the fine education they received from Geneva’s schools plus in most cases from higher education. They will be enjoying the economic fruits of their labor, and performing their duty as citizens by paying property taxes, Illinois income taxes, federal income taxes and numerous other taxes, just as generations before them had.
They will, however, bear the burden of much higher taxes than generations before them, because of spending decisions made by elected officials in the past and in the present, particularly including local school boards. Gov. Quinn is fighting for these children. As he said on Aug. 5, "Illinois cannot continue down this path at the expense of our children.”
BOARD OF EDUCATION MEETINGS
The Geneva Board of Education will be discussing its proposed budget for 2012-2013 (which it will soon adopt) at its meeting at 7 p.m. Monday, Aug. 13, at the district’s Coultrap Facility at 1113 Peyton St., Lincoln Street entrance. All meetings of the School Board are open to the public, which enables citizens to inform themselves about the budget and other plans of the School Board. The board normally invites the public to comment at its meetings. At some recent meetings of the board, dozens of concerned citizens have attended, and many expressed strongly-held convictions on certain aspects of the proposed budget. Subsequent Board of Education meetings are scheduled for August 27, September 10 and September 24, as listed on the District website and on this website.
The school website also states that the Board of Education can be contacted through the Board Secretary at (630) 463-3010 or by emailing Board@Geneva304.org. After the 2012-13 budget is formally adopted by the full board, possibly on Aug. 13, it will then be displayed to the public for 30 days before approval at a public board meeting prior to Sept. 30.