Wednesday, June 20, 2012

Is The Illinois Political Bank Heist Underway?

When asked why he robbed banks, famous bank robber Willie Sutton replied, "Because that's where the money is."

It appears that Illinois legislators are quite familiar with Willie's logic. They apparently want to determine funding requirements for teachers' pensions in the "where the money is" manner.

In my opinion, as well as being inept, these Illinois politicians are just plain nuts. But let's continue.

Adding to what Willie Sutton said, "Deep Throat" of Watergate fame advised journalist investigators Woodward and Bernstein to "follow the money." To me that sounds like something Illinois politicians need to hear and heed, so let's do that.

You see, Willie didn't say he robbed banks because that's whose money it was. Of course, almost all of the money in a bank belongs to its depositors and not to the bank itself.

Willie only said that he pulled bank heists because that's where the money was. And there's a huge difference between where it is and whose it is.

Another piece of solid advice worth paying attention to is that if we know where we're going to end up, we may as well just start there.

So where will the Illinois politicians end up if they indeed follow the money trail? On the doorstep of Illinois taxpayers, that's where. It's the taxpayers' money that is sitting in the school's account, so we may as well start there. Because when the hunt is over and the decisions about paying for teachers' pensions have been made, we'll certainly end up there.

But first, let's review some more silliness from the Ilinois political class. Thanks again to my old friend Sid for forwarding the below referenced article about pension funding for teachers' pensions.

Districts oppose plan to shift funding for pensions has this to say in part:

"School districts pushed back hard Tuesday against the notion that they are sitting on large cash reserves and can afford to take over the funding of their teachers’ pensions as proposed by the state’s top Democrats.

The Illinois State Board of Education and the governor’s office released numbers showing that more than half of the school districts in Illinois have cash reserves equal to six months worth of funding.

Aides to Gov. Pat Quinn said the numbers bolstered the case for making schools eventually take over pension funding, part of the approach to the state’s $83 billion pension debt crisis favored by the Democratic governor, House Speaker Michael Madigan, D-Chicago, and Senate President John Cullerton, D-Chicago. Quinn, Cullerton and Madigan argue that it’s unfair for Chicago taxpayers to pay the overwhelming majority of their teachers’ pension costs while the state picks up the costs for downstate and suburban teachers.

“These numbers prove that it is certainly affordable for school districts to have a stake in the contracts they negotiate,” said Quinn spokeswoman Brooke Anderson, who added that the Government Finance Officers Association recommends that school districts have two months worth of cash on hand.

The State Board of Education cautioned that the numbers were only a snapshot in time that is a year old and don’t take into account further education cuts passed this year by the General Assembly, the fact that many districts are using their reserves to deal with already-passed state cuts and delayed payments and rising costs — points echoed by the school districts themselves. . . .

Legislative Republicans remain opposed to the cost shift, and the data is not helping convince them otherwise.

“The more I dive into this … you get into the minutiae, it’s actually caused me to have greater concern,” said House Minority Leader Tom Cross, R-Oswego. “Some (districts) can absorb it, but most are struggling.”

My Take

This position of Illinois Democrats is totally absurd. What it says to me is that these politicians, if serious, aren't fit for office. 

What they're saying is that if local school district A has saved up and has a cushion or rainy day cash fund and district B has no money, we in effect should take the money from A and give it to B. 

But what if the reason A has cash is that A borrowed it and has a huge debt load to service, while B has no debt at all? Then what? In other words, if we're looking at the cash account, we need to look at the liability accounts as well. And all other assets, too. It's the total picture that matters and not the cash account.

So rather than using the cash method, why don't we decide based on which district has the tallest teachers, the best or worst baseball team, the newest or oldest school buildings or some other equally irrelevant factor? 

Cash is but one single item on a school's balance sheet. It's used to pay teachers, pay utilities, buy buses, make pension contributions, purchase office supplies and for many other things as well, of course. 

But that has nothing to do with respect to which district should pay how much compared to what other districts should pay regarding funding requirements for teachers' pensions and such. It's just plain nonsense to suggest otherwise. 

Thanks. Bob.

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