Updates to faculty layoff plan and other stuff

[Neckfansince71]

Seal stated this AM that the passage of this budget is really just a stopgap measure and I would totally agree. ST, I think your proposed "weighted" tax would be a very fair way to handle the pension problem and the basic state tax problem in general! I think Cullerton gets it and I think the senate needs to get this discussion started. jc

[ST_Lawson]

Seal stated this AM that the passage of this budget is really just a stopgap measure and I would totally agree. ST, I think your proposed "weighted" tax would be a very fair way to handle the pension problem and the basic state tax problem in general! I think Cullerton gets it and I think the senate needs to get this discussion started. jc

Right, I liken it to putting a tourniquet on someone who is severely bleeding. The budget stops the bleeding, but we still need to work on fixing the issues that were caused by it (severe loss of blood = unpaid bills & debt) as well as the issues that caused it in the first place (whatever caused the injury = pension obligations, over-spending, etc.).

Personally, I've got a list of things I'd like to see happen, but one would be to tax the pensions as money is removed as 71 mentioned. I did some quick "spitballing" with some numbers, and it seems like something along the lines of 2% for each 10k over 30k would be fair.
Essentially, someone taking 30k or less doesn't get taxed on what they take out. They take 50k, then the first 10k past 30k is taxed at 2%, the second 10k is taxed at 4%, net tax of 600 on 50k for an effective tax rate of 1.2%.
Following this pattern:
75k is taxed $2,050 for an effective tax rate of 2.73%
100k is taxed $5,600 for an effective tax rate of 5.6%
150k is taxed $15,600 for an effective tax rate of 10.4%

The more you get out, the more it's taxed (I'm no expert, but I think that's a fairly standard/basic progressive tax structure). Since it's based on how much you made when you were working, if you were making over six figures, then you're more likely to have investments, more home equity, etc. to help make up the difference. If you're receiving 150k, then that means your average salary over the last few years (5...I think?) was $187.5k...my wife and I combined make less than half that and we're able to put a decent amount towards other investments. Also, a couple of things about this:

1. No "double-dipping"...you get one pension. If you have earned your full ~36 years toward your pension, then that money that would normally get taken out towards another pension does not get taken out...maybe it can go to a 401k/403b or something (no employer matching though). You can get your pension and you can get your salary, but you can't be eligible for two pensions. I know there was a bill about this a while back, so idk if it's actually still a problem or not, but I thought I'd put that out there.
2. 100% of taxes collected from withdrawing pensions goes right back into the pension fund until such time as the pension fund is considered "fully funded". I don't know what that threshold actually is...again, no expert here...but I would think that since people taking out their pensions are the ones being taxed, then it should all go back in to help fund the pensions. I realize that the net result is essentially that people are taking less out of their pension fund (if you made $187.5k a year, would normally take $150k a year out of pension, you're actually taking $134.4k out) but I think it's easier for most people to do the math on the tax structure I listed.

Anyway, maybe I'm completely off-base on this, maybe some of this is already being done, but personally, I wouldn't mind this setup for my situation. My wife and I are both employees of Western, so our salaries are public record if anyone is curious.

Thoughts? Think it's a dumb idea?

[vatusay]

I really like your idea of the pension tax going directly back to fund the pension. Has this been proposed before?

[sealhall74]

Need to put fewer people into the pension system to begin with. I saw the federal government move this direction in the mid-80s when they also reformed their entire pension system. Strategy was to bring in contract personnel from the private sector. They work side-by-side with the on-board fed workers but pay and benefits are all handled outside of the government.

[leatherface]

Understand Western will not be receiving a check next week. Schools have been told to expect delays, and the money will be distributed in installments over a period of time. So, conservative spending habits are still in effect. Good news for the schools, but as discussed, doesn't solve any of the problems of the state. Illinois still faces possible junk status even with this "budget".

[wiu712]

The political fall-out from Thursday's veto over-ride vote is already underway. The headline in today's Macomb newspaper is: Rauner, state GOP party pledge repercussions for over-ride voters.

We have to remember that Western will only be getting 90% of the funding level for FY 18 that it received on July 1, 2014.

Now that the budget is settled, will the Illinois Board of Higher Education take any action on Rauner's request to cut administrative costs and end duplication at the 12 state universities ??? When the regional universities were created in the late 1800's, a person's ability to travel was not what it is today. Perhaps there is a benefit to consolidate and coordinate programs.

[rocki]

Seal stated this AM that the passage of this budget is really just a stopgap measure and I would totally agree. ST, I think your proposed "weighted" tax would be a very fair way to handle the pension problem and the basic state tax problem in general! I think Cullerton gets it and I think the senate needs to get this discussion started. jc

Right, I liken it to putting a tourniquet on someone who is severely bleeding. The budget stops the bleeding, but we still need to work on fixing the issues that were caused by it (severe loss of blood = unpaid bills & debt) as well as the issues that caused it in the first place (whatever caused the injury = pension obligations, over-spending, etc.).

Personally, I've got a list of things I'd like to see happen, but one would be to tax the pensions as money is removed as 71 mentioned. I did some quick "spitballing" with some numbers, and it seems like something along the lines of 2% for each 10k over 30k would be fair.
Essentially, someone taking 30k or less doesn't get taxed on what they take out. They take 50k, then the first 10k past 30k is taxed at 2%, the second 10k is taxed at 4%, net tax of 600 on 50k for an effective tax rate of 1.2%.
Following this pattern:
75k is taxed $2,050 for an effective tax rate of 2.73%
100k is taxed $5,600 for an effective tax rate of 5.6%
150k is taxed $15,600 for an effective tax rate of 10.4%

The more you get out, the more it's taxed (I'm no expert, but I think that's a fairly standard/basic progressive tax structure). Since it's based on how much you made when you were working, if you were making over six figures, then you're more likely to have investments, more home equity, etc. to help make up the difference. If you're receiving 150k, then that means your average salary over the last few years (5...I think?) was $187.5k...my wife and I combined make less than half that and we're able to put a decent amount towards other investments. Also, a couple of things about this:

1. No "double-dipping"...you get one pension. If you have earned your full ~36 years toward your pension, then that money that would normally get taken out towards another pension does not get taken out...maybe it can go to a 401k/403b or something (no employer matching though). You can get your pension and you can get your salary, but you can't be eligible for two pensions. I know there was a bill about this a while back, so idk if it's actually still a problem or not, but I thought I'd put that out there.
2. 100% of taxes collected from withdrawing pensions goes right back into the pension fund until such time as the pension fund is considered "fully funded". I don't know what that threshold actually is...again, no expert here...but I would think that since people taking out their pensions are the ones being taxed, then it should all go back in to help fund the pensions. I realize that the net result is essentially that people are taking less out of their pension fund (if you made $187.5k a year, would normally take $150k a year out of pension, you're actually taking $134.4k out) but I think it's easier for most people to do the math on the tax structure I listed.

Anyway, maybe I'm completely off-base on this, maybe some of this is already being done, but personally, I wouldn't mind this setup for my situation. My wife and I are both employees of Western, so our salaries are public record if anyone is curious.

Thoughts? Think it's a dumb idea?

Is retirement still allowed at 55 as long as you have 20 or 25 years in? Maybe those requirements need to be extended out a bit. I know having the baby boomers hitting retirement age has really put a dent in things as there are more retirees than those paying into the system now.

[ST_Lawson]

Is retirement still allowed at 55 as long as you have 20 or 25 years in? Maybe those requirements need to be extended out a bit. I know having the baby boomers hitting retirement age has really put a dent in things as there are more retirees than those paying into the system now.

36+ years for maxed out retirement (80%) benefits. You can retire earlier, but you don't get as much. I'm on mobile now, but I'll find you the current chart a little later.


Sent from my iPhone using Tapatalk

[wiu712]

In a statement issued today, the Acting President at NIU Lisa Freeman said:

"Even though we are grateful for the clarity and security provided by this latest budget action, it does not alter the fact that we have absorbed a funding shortfall of more than $65 million over the last three years. We must continue the work to enhance the financial stability of NIU by increasing enrollment, becoming more efficient, and aligning our resources with our priorities. There will be some difficult decisions ahead, and I pledge that we will tackle these issues together."

[Tere North]

I would be more than happy to pay state taxes on my "fat" pension and have said that a number of times to a number of people. jc

Me, too, JC!