Tag Archives: Illinois

Administrators over kids: Seven ways Illinois’ education bureaucracy siphons money from classrooms, by Ted Dabrowski and John Klingner

Posted on June 9, 2018 | Leave a comment

Bankruptcy doesn’t just happen, there are usually reasons for it. Read this and you’ll have a better idea why Illinois teeters on the abyss. From Ted Dabrowski and John Klingner at wirepoints.com:

Listen to education officials’ demands for more money and it’s easy to believe Illinois grossly underspends on K-12 education. A $7.2 billion funding lawsuit to double state contributions to classroom spending, a $40,000 minimum wage demand for teachers, and lawmakers’ rejection of limits to school district borrowing might bolster that impression.

But the truth is Illinois already spends a lot on education – more than any other state in the Midwest. It’s just that much of the money is going to all the wrong places.

At $14,180 per student, Illinois spends far more than its neighbors on education – 44 percent more on a per student basis than Kentucky and Indiana, 22 percent more than Michigan and 21 percent more than the national average.

The problem arises when all those dollars are doled out. Billions of dollars are being siphoned away from the poorest districts by the state’s burgeoning education bureaucracy.

Just look at the facts:

  • Illinois’ non-teaching staff has ballooned by 50 percentin the past two decades, while student enrollment has grown just 11 percent.
  • Illinois has more school districts than the nation’s four most efficient, big-population states (Florida, North Carolina, Virginia and Georgia) have, combined. That means thousands of excess administrative and non-teaching staff in Illinois.
  • Pension costs have grown so quickly they’ve devoured nearly 50 percent of the state’s contribution to downstate education in recent years. In 2017 alone, the state spent $11 billion on education for downstate districts – $5 billion of that went to pay for downstate teacher pension costs.

Illinois is spending billions on district offices, administrators and multi-million dollar pensions instead of providing more classroom funding. That isn’t fair to poor districts like Taylorville CUSD 3, which only spends $7,400 per student and is one the plaintiffs in the lawsuit.

Illinois’ high per-student spend shows why the state doesn’t need to hit up Illinoisans for more education money. Instead, the state just needs to redirect the money it already has to the places and students that need it most.

The education establishment knows there isn’t enough money to both preserve their system and fund Illinois’ neediest districts. But officials don’t want to give up the system they benefit from.

So, they mislead Illinoisans into thinking more money is the only solution. The $7.2 billion lawsuit is the most egregious example of that – it’s all about the self-preservation of Illinois’ education bureaucracy.

To continue reading: Administrators over kids: Seven ways Illinois’ education bureaucracy siphons money from classrooms

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30,000 Six-Figure Illinois Educators Cost Taxpayers $3.7 Billion, by Adam Andrzejewski

Posted on June 5, 2018 | Leave a comment

Ever wonder why Illinois is going bankrupt? From Adam Andrzejewski at forbes.com:

We mapped the exclusive club of 30,000 Illinois educators with either salaries or pension payouts greater than $100,000 costing taxpayers $3.7 billion annually.

Illinois teachers are starting their three-month summer break. But when it comes to teacher salaries, there’s no break for taxpayers. Last week, the Illinois legislature passed a new mandate requiring base pay of $40,000 for Illinois educators. (Cue the teacher’s union cheering.)

Yet, lawmakers refuse to cap the payouts for the most highly compensated public employees who burden the system with unsustainable salary and pension costs. The payouts are so large, by our calculation, the equivalent of $1 out of every $3 in individual income tax is paid out to retired teachers.

For 30,000 Illinois educators, the new “minimum wage” is $100,000+. Nearly 20,000 of these employees are currently working, while the other 11,766 are retired – pulling down six-figure pensions.

Thanks to an interactive tool we’ve built at our government transparency web site, OpenTheBooks.com, every taxpayer in Illinois and across the country can search the $100,000 Club at the teachers’ retirement system by zip code. Want to see who in your backyard makes a $150,000 salary for teaching drivers ed or PE classes? What about the retired art teacher with a $100,000+ lifetime pension annuity?

It’s a game the whole taxpaying family can play! Use it and be amazed – and also help out reform-minded legislators and Gov. Bruce Rauner’s team identify waste. Click here to access the map below.

OpenTheBooks.com

Search the $100,000+ Salary & Pension Club 2017 (Teachers’ Retirement System, TRS)

Using our interactive mapping tool, quickly review (by zip code) the 30,000 Illinois educators who make more than $100,000 – either from a salary or public pension. Just zoom in, click a pin (zip code) and scroll down to see the results rendered in the chart beneath the map.

Here’s how it breaks down in just three of 850 school districts:

  • In Township HSD 214 in Arlington Heights, 617 working educators made $100,000 or more in addition to 578 retirees receiving six-figure annual pension payouts.
  • In Palatine Township HS 211, there were 594 educators pulling down six-figure salaries and 533 retirees receiving six-figure lifetime pensions. Read the superintendent’s response here.
  • In Naperville CSD 203, there were 374 educators making $100,000 or more while another 278 retirees received six-figure pension payouts.

To continue reading: 30,000 Six-Figure Illinois Educators Cost Taxpayers $3.7 Billion

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Rating agencies warn, Illinois flirts with junk, by Ted Dabrowki and John Klingner

Posted on April 29, 2018 | 1 comment

The mystery is why anyone still considers Illinois bonds investment grade. They’ll be junk soon enough. From Ted Dabrowki and John Klingner at wirepoints.com:

llinois’ brutal political campaigns may have distracted attention from the reality of the state’s crumbling finances, but an upcoming $500 million bond borrowing by the state will remind investors and Illinoisans alike how little has improved.

Both Moody’s and S&P recently affirmed Illinois’ one-notch-above-junk rating in preparation for the state’s upcoming bond.

And Moody’s continues to maintain a negative outlook on Illinois’ rating. That means a downgrade by the agency is more likely than an upgrade in the next year.

The reasons for the rating agencies’ pessimism are obvious. It’s not just what lawmakers have failed to do, it’s what lawmakers continue to do that’s dragging the state down.

The state continues to operate at a deficit despite nearly $5 billion in new taxes in 2018. And the shortfalls aren’t being compensated with spending reforms. Instead, the state continues to primarily use interfund sweeps to make the general budget balance. And the agencies don’t expect any big reforms this year – not with a stalemate that might ensue during this campaign season.

Bond investors are demanding a heavy price from Illinois for the increased risk they are being asked to take.

According to Municipal Market Data, Illinois will pay yearly interest rates that are 2.1 percentage points higher than the states with the best credit ratings – states that include Indiana, Iowa and Missouri. By comparison, states like Connecticut and New Jersey, states with severe pension crises, only pay about 0.85 percentage points more than the best-rated states. Illinois and its taxpayers are being heavily penalized for the state’s fiscal and governance mess.

To continue reading: Rating agencies warn, Illinois flirts with junk

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Harvey, the first domino in Illinois: Data shows 400 other pension funds could trigger garnishment – Wirepoints Special Report by Ted Dabrowski and John Klingner

Posted on April 17, 2018 | 4 comments

A little town in Illinois can’t make payments to its police pension fund and the state is garnishing the town’s tax revenues. It’s the shape of things to come; call it pension musical chairs and the game has begun in Illinois. From Ted Dabrowski and John Klingner at wirepoints.com:

Harvey, the first domino in Illinois: Data shows 400 other pension funds could trigger garnishment

You’d be mistaken to think Harvey, Illinois has a unique pension crisis. It may be the first, and its problems may be the most severe, but the reality is the mess is everywhere, from East St. Louis to Rockford and from Quincy to Danville. A review of Illinois Department of Insurance pension data shows that Harvey could be just the start of a flood of garnishments across the state (click here to see the list).

Harvey made the news last year when an Illinois court ordered the municipality to hike its property taxes (already at an effective rate of 5.7 percent – six times more than the average in Indiana) to properly fund the Harvey firefighter pension fund, which is just 22 percent funded.

Now, the state has stepped in on behalf of Harvey’s police pension fund. The state comptroller has begun garnishing the city’s tax revenues to make up what the municipality failed to contribute. In response, the city has announced that 40 public safety employees will be laid off.

Under state law, pensions that don’t receive required funding may demand the Illinois Comptroller intercept their municipality’s tax revenues. More than 400 police and fire pension funds, or 63 percent of Illinois’ 651 total downstate public safety funds, received less funding than what was required from their cities in 2016 – the most recent year for which statewide datais available.

Two-thirds of Illinois’ 355 police pension funds failed to receive their full required contribution in 2016. And 60 percent of Illinois’ 296 firefighter pension funds suffered the same fate.

If those same numbers continue to hold true, all those cities face the risk of having their revenues intercepted by the comptroller.

To continue reading: Harvey, the first domino in Illinois: Data shows 400 other pension funds could trigger garnishment – Wirepoints Special Report

 

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Posted in Collapse, Debt, Government, Pensions, Politics

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Thousands Abandoning Illinois and Its Big Government Debacle, by Schiffgold

Posted on December 23, 2017 | 2 comments

The ship of state Illinois is listing badly. From Schiffgold at schiffgold.com:

There is a mass exodus from Illinois.

According to the US Census Bureau, the Prairie State lost a net 33,700 residents in fiscal year 2017. More people bailed out of Illinois than any other state in the US. And based on calculations the folks over at ZeroHedge worked out, the exodus was even worse than the Census Bureau numbers indicate.

Of course, the net population loss masks the true gross outflow of Illinois residents as it doesn’t account for natural births/deaths. Assuming that Illinois has the same natural population growth as the US as a whole (0.7%) implies that the state lost a staggering ~125,000 residents in aggregate, or roughly 1 man/woman/child every 4.3 minutes.”

So, why the big rush to bail out of the great state of Illinois?

The state is a fiscal mess.

Over the summer, the Illinois legislature pushed through a budget that included $5 billion in tax hikes. Even so, the state’s bond rating continues to teeter just above junk status. Moody’s wasn’t particularly impressed with the new Illinois budget.

The $36 billion fiscal 2018 budget and $5 billion income tax increase passed by lawmakers over the extended Fourth of July holiday weekend, may fall short in addressing the state’s financial woes, particularly its huge unfunded pension liability and $15 billion unpaid bill backlog, according to Moody’s. ‘On both those fronts, it’s not yet clear if the legislation being enacted will have a substantial and clear positive effect.”

Apparently, the people of Illinois aren’t impressed either. They’re abandoning ship.

This isn’t anything new. As government officials at every level in Illinois ran finances into the ground, the state’s Ponzi Scheme – otherwise known as its pension system – slowly collapsed. Just consider this selection of ZeroHedge headlines about the Prairie State.

  • Illinois Pension Funding Ratio Sinks To 37.6% As Unfunded Liabilities Surge To $130 Billion
  • Illinois Unpaid Vendor Backlog Hits A New Record At Over $16 Billion
  • The State Of Illinois Is “Past The Point Of No Return”
  • “What The Hell Is Going On In Chicago” And Other Highlights From Trump’s Speech To FBI Grads

No wonder people just packed up and left.

To continue reading: Thousands Abandoning Illinois and Its Big Government Debacle

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Posted in Business, Collapse, Debt, Economy, Financial markets, Government

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Buying Illinois Debt – BOLD or Bad? by Dennis Miller

Posted on July 27, 2017 | Leave a comment

Is State of Illinois municipal debt, which outyields all other municipal debt except Puerto Rico’s, a good deal? A bad idea, says SLL. From Dennis Miller at theburningplatform.com:

The Illinois debt saga continues. The state operated without a budget since 2015. In June, just before their fiscal year end, both S&P and Moody’s downgraded Illinois’ credit rating to one level above “junk bond” status.

Moody’s said:

“Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance, allowing a backlog of bills to approach $15 billion, or about 40% of the state’s operating budget. During the past year of fruitless negotiations and partisan wrangling, fundamental credit challenges have intensified enough to warrant a downgrade, regardless of whether a fiscal compromise is reached in an extended session.

…By our calculation, the state’s unfunded pension liability for its five major plans in aggregate grew 25% in the year ended June 30, 2016, to $251 billion.

…After eight downgrades in as many years, Illinois’ rating is an outlier among states, most of which are rated at least eight notches higher.”

Fox News reports the Governor agreed.

“We’re like a banana republic,” Rauner said earlier this month, after the General Assembly failed, yet again, to pass a budget package by the regular session deadline. “We can’t manage our money.”

Illinois Comptroller Susana Mendoza chimes in:

“My Office has very serious concerns that, …the State of Illinois will no longer be able to guarantee timely and predictable payments in a number of areas that we have to date managed (albeit with extreme difficulty)…

We are effectively hemorrhaging money as the state’s spending obligations have exceeded receipts by an average of over $600 million per month over the past year.”

A political soap opera

Bloomberg follows the events and reported “…Yields on the state’s 10-year bonds soared (Emphasis mine) to 4.8%. …That’s the highest yield of all 22 states Bloomberg tracks.”

On Sunday July 2nd, the Illinois House approved a budget, sending it to the governor who promptly vetoed the bill. It includes a 32% income tax increase. He said, “This tax hike will solve none of our problems. In fact, in the long run, it will make our problems worse, not better.”

To continue reading: Buying Illinois Debt – BOLD or Bad?

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Why Illinois Is In Trouble – 63,000 Public Employees With $100,000+ Salaries Cost Taxpayers $10B, by Adam Andrzejewski

Posted on July 27, 2017 | Leave a comment

If you think that Illinois, under severe financial pressure, is laboring mightily to cut unnecessary expenses like huge salaries for bureaucrats, you’re wrong. From Adam Andrzejewski at forbes.com: 

OpenTheBooks.com

The ‘Big Dogs’ of local government in Illinois.

Illinois is broke and continues to flirt with junk bond status. But the state’s financial woes aren’t stopping 63,000 government employees from bringing home six-figure salaries and higher.

Whenever we open the books, Illinois is consistently one of the worst offenders. Recently, we found auto pound supervisors in Chicago making $144,453; nurses at state corrections earning up to $254,781; junior college presidents making $465,420; university doctors earning $1.6 million; and 84 small-town “managers” out-earning every U.S. governor.

Using our interactive mapping tool, quickly review (by ZIP code) the 63,000 Illinois public employees who earn more than $100,000 and cost taxpayers $10 billion. Just click a pin and scroll down to see the results rendered in the chart beneath the map.

Here are a few examples of what you’ll uncover:

  • 20,295 teachers and school administrators – including superintendents Joyce Carmine ($398,229) at Park Forest School District 63, Troy Paraday ($384,138) at Calumet City School District 155, and Jon Nebor ($377,409) at Indian Springs School District 109. Four of the top five salaries are in the south suburbs – not the affluent north shore.
  • 10,676 rank-and-file workers and managers in Chicago – including $216,200 for embattled Mayor Rahm Emanuel (D) and $400,000 for Ginger Evans, Commissioner of Aviation – including a $100,000 bonus. Timothy Walter, a deputy police chief, made $240,917 – that’s $146,860 in overtime on top of his $94,056 base salary. Ramona Perkins, a police communications operator, pulled down $121,318 in overtime while making $196,726!
  • 9,567 college and university employees – including the southern Illinois junior college power couple Dale Chapman ($465,420) and Linda Terrill Chapman ($217,290). The pair combined for a $682,000 income at Lewis and Clark Community College. Fady Toufic Charbel ($1.58 million) and Konstantin Slavin ($1.04 million) are million-dollar doctors at the University of Illinois at Chicago.

To continue reading: Why Illinois Is In Trouble – 63,000 Public Employees With $100,000+ Salaries Cost Taxpayers $10B

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The Way Chicago “Works”: Graft, Corruption, Political Connections, Bribes, Unions, by Mike “Mish” Shedlock

Posted on July 17, 2017 | Leave a comment

The incarceration rate for Illinois governors (4 out of the last 7, or 51 percent) is staggeringly high when you realize that as governors they can use all their legal and illegal powers, patronage, and connections to stymie investigations, prosecuting attorneys, grand juries, and the rest of the criminal justice system. From Mike “Miss” Shedlock at mishtalk.com:

Those who wish to understand how things work in Chicago need read a single article that ties everything together: Teamsters boss indicted on charges of extorting $100,000 from a local business.

A politically connected Teamsters union boss was indicted Wednesday on federal charges alleging he extorted $100,000 in cash from a local business.

John Coli Sr., considered one the union’s most powerful figures nationally, was charged with threatening work stoppages and other labor unrest unless he was given cash payoffs of $25,000 every three months by the undisclosed business.

The alleged extortion occurred when Coli was president of Teamsters Joint Council 25, a labor organization that represents more than 100,000 workers in the Chicago area and northwest Indiana.

Coli, 57, an early backer of Mayor Rahm Emanuel, was charged with one count of attempted extortion and five counts of demanding and accepting prohibited payment as a union official.

Coli could not be reached for comment, but a statement posted Wednesday on the Teamsters Local 727 website announced he planned to retire at the end of the month after 46 years in the union.

In the statement, Coli said he had decided it was time “to begin a new chapter” and that he wanted to spend more time with his family.

The Coli family has been active in politics for years and is well-known for spreading around union cash to various candidates. Coli and his relatives have also been accused in civil lawsuits in both state and federal court of running the union like a racket — accusations they have vehemently denied.

To continue reading: The Way Chicago “Works”: Graft, Corruption, Political Connections, Bribes, Unions

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Doug Casey on the Illinois Debt Crisis

Posted on July 4, 2017 | Leave a comment

Doug Casey welcomes Illinois’s impending bankruptcy: governments going bankrupt will be the only way to reduce their size and power. From Casey at Casey Research via lewrockwell.com:

Justin’s note: Illinois is dead broke.

Every month, it spends $600 million more than it collects in taxes. The state is now $15 billion in debt. There’s no telling how much worse its financial situation will become, either.

After all, Illinois hasn’t had a budget in two years. If it can’t put one together by tomorrow, Standard & Poor’s will cut its credit rating to “junk.” It would become the first state ever with this distinction.

This would have serious implications for the 13 million people living in Illinois. It could trigger a nationwide debt crisis. Doug Casey and I discuss why in the interview below.

Justin Spittler: Doug, what do you make of Illinois’ debt crisis?

Doug Casey: It’s absolutely wonderful.

Perhaps this brings out a little bit of the quasi-Leninist in me, because Lenin said “the worse it gets, the better it gets.” I’d like to see all of the states go bankrupt for the same reasons I said the federal government should default on its debt.

Most of what all levels of government do is usurped from society. Assuming you even accept the principle of legal coercion—I don’t—there’s very little that a government should do.

Justin: What sort of things should the government not do?

Doug: Education, for one.

The numbers vary, but typically it costs about $12,000 per year to educate a grade school student. It’s a completely absurd amount. Most of it is wasted on administration, bureaucracy, compliance, and overhead. But that’s not the point.

The point is that the state shouldn’t be in charge of kids’ education, because inevitably it turns into indoctrination. Teachers work for their employer, the government. The interests of the government are not necessarily those of either the children or the parents. State education works on the premise that parents are in general too ignorant and irresponsible to care for their progeny. And maybe that’s true—the proof being that they’re willing to send kids off to be incarcerated and indoctrinated by government employees for eight hours a day.

The bankruptcy of Illinois might push things in the direction of privatization and localization of education. Local schools generally get State and Federal funds, and have to obey State and Federal rules. Education necessarily becomes rote, non-innovative, PC, and one-size-fits-all. Teachers, which are less and less necessary in the Internet world, are roboticized and disincentivized.

To continue reading: Doug Casey on the Illinois Debt Crisis

 

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“From Horrific To Catastrophic”: Court Ruling Sends Illinois Into Financial Abyss, by Tyler Durden

Posted on July 1, 2017 | Leave a comment

The fiscal situation in Illinois just got a whole lot worse. From Tyler Durden at zerohedge.com:

First Maine, then Connecticut, and finally late on Friday, confirming the worst case outcome many had expected, Illinois entered its third straight fiscal year without a budget as Republican Governor Bruce Rauner and Democratic lawmakers failed to agree on how to compromise over the government’s chronic deficits, pushing it closer toward becoming the first junk-rated U.S. state.

By the end of Friday – the last day of the fiscal year – Illinois legislators failed to enact a budget, and while negotiations continued amid some glimmers of hope and lawmakers planned to meet over the weekend, the failure marked a continuation of the historic impasse that’s left Illinois without a full-year budget since mid-2015, and which, recall, S&P warned one month ago will likely result in a humiliating and unprecedented downgrade of the 5th most populous US state to junk status.

Then came the begging.

According to Bloomberg, on Friday Illinois House Speaker Michael Madigan, a Democrat who controls much of the legislative agenda, pleaded with rating companies to “temporarily withhold judgment” as lawmakers negotiate. “Much work remains to be done,” the Democrat said on the floor of the House Friday, before the chamber adjourned for the day. “We’ll get the job done.”

Meanwhile, the state remains without a spending plan, its tax receipts and outlays mostly on “autopilot”, leaving it with a record $15 billion of unpaid bills as it spent over $6 billion more than it brought in over the past year, and with $800 million in interest on the unpaid bills alone. The impasse has devastated social-service providers, shuttering services for the homeless, disabled and poor. The lack of state aid has wrecked havoc on universities, putting their accreditation at risk.

To continue reading: “From Horrific To Catastrophic”: Court Ruling Sends Illinois Into Financial Abyss

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