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illinois policy institute

Pols Looking To Tax Residents Escaping Illinois

Are Illinois politicians looking to enact an exit tax to keep residents from leaving? Does Illinois do its best to get rid of productive people? Will there be any surprises in the veto session or concern for lame ducks? What’s going to be IPI’s push this legislative session with Democrats controlling all chambers of state government? Government Affairs Legislative Analyst for the Illinois Policy Institute, Mindy Ruckman joins Dan and Amy to discuss.

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Ives Within Striking Distance Of Rauner

Jeanne Ives is within striking distance of Gov. Rauner, and GOP voters are within striking distance of completely changing the political landscape in one election. Is there a turnout issue on the Republican side in the Illinois Primary? Is the progressive income tax on billionaires touted by the Democratic candidates for governor a Trojan Horse for a tax increase on all Illinoisans? Illinois Policy Institute's Marketing Manager, Eric Kohn joins Dan and Amy to discuss.

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Proft: Good morning, Dan and Amy. Talk a little bit of state and local politics, you know we're five days away from a primary election. Jacobson: How are you feeling? You're really burning the candle at both ends. Are you getting enough sleep, Daniel? Proft: I am...NOT, Mom, but I'm okay. Jacobson: How are your eating habits? Proft: Thanks to you and your little gerbil... Jacobson: Gerbil food packs? Proft: Gerbil food packs here, I'm managing to survive. New survey out yesterday in the governor's race on the Republican side, this was a survey done by Jeanne Ives' campaign....42-35. Jacobson: WHAT? No way, really? Proft: Rauner's down to a 7-point lead. So this is getting really interesting here with five days to go. Here's something else that's interesting. (Jacobson: Yes?) The turnout so far, total ballots cast...or ballots requested and awaiting return...the Democrats...this is from a bit earlier this week but you get the gist of it...the Democrats, as compared to this time four years ago, so an off-Presidential year, the last governor's race...125% of ballots cast from four years ago. So, they're seeing an uptick in turnout, they're at 125% of ballots cast in 2014, as we stand here a couple of days ago. Republicans? FIFTY percent (50%) of ballots cast from four years ago. (Jacobson: WOW.) So, you've got a real turnout issue on the Republican side. Now that can be a lot of things...it can be in part people that are sometimes Republican, sometimes Democrat deciding to play in the Democrat primary because they think that's where more of the action is, that can certainly be part of it. Can be part of Republicans thinking "Oh, well Bruce Rauner is gonna win this race, so I'll go pick the least competitive Democrat," trying to play that game. Or, and it can also be "Because Rauner is so awful, and I'm so fatalistic about this state, 90% of people think it's on the wrong track, that I'm just not gonna participate after Rauner's betrayals, I'm just done with the Republican party." Jacobson: I don't like that option. Proft: Well, I'm just saying, I mean, it could be...it's a multitude of factors, I'm just saying, so now you know that you've got a competitive primary in the Republican side, that Jeanne Ives can win. On March 13th of 1996...this is not a perfect comparison, but it's about the best we have in terms of huge upsets...on March 13th of 1996, Al Salvi was down 14 points to Bob Kustra, and...for the Republican nomination for US Senate...and of course, those of you old enough to remember, Al Salvi ends up winning that race by a couple of points. Jacobson: I remember. Proft: Yeah, me too. So, so...when things break, they break. Jacobson: What about Glen (?), remember him? He was on the Democratic side, but nobody saw that coming. Proft: Right, another good example, right. When, and...when things break, they break, and there seems to be momentum with Ives and... Jacobson: How was her fly-around yesterday? Proft: and...so Conservatives...Conservatives have an opportunity....like they haven't had in my lifetime, and speaking as a Conservative. And this...there's rarely an opportunity that comes along where you can finally change the political landscape in one election, in one night. I mean, change it for generations...and that's the opportunity that's present in the Republican governor's race. That's there for the taking, if Conservatives come out and vote, and vote for a Conservative candidate to be the Republican nominee for governor. That really is, because if you don't, we're going to have Surrender Republicans, Fake Republicans as Tucker Carlson calls Rauner, against Chicago Democrats. It will be the same old same old, and this Going Out of Business Sale for the state of Illinois will continue in its orderly fashion. Ives, and the possibility of stoking the revolt that has been visited upon all of our Midwest neighbors, that is watershed, that is game-changer, so that's the opportunity on Tuesday, and it is right there for the taking. Not my opinion, the NUMBERS say so. And Jeanne Ives was on Chicago Tonight, flying solo, as we talked about yesterday... Jacobson: Oh yeah! Because Governor Rauner was a no-show. Proft: Mmhmm! Jacobson: I LOVE Gubernatorial debates when...when the "Gubernor" doesn't show up! Because it was really...but it gave her another opportunity just to get her policies across to the people...it was good. Proft: John Cass wrote about it, Amanda Vinicky who did the interview of Ives, said on air that Governor Rauner...MONTHS of not responding to TTW whether he'd participate, and then on the day of the interview, his staff told WTTW that he had another commitment. Jacobson: Well, wasn't he down South, vetoing the gun bill? Proft: *chuckles* Yeah. On...so John Cass writes...he compares Rauner to the knight in the Monty Python movie who "bravely ran ran away". He goes on to write, "Rauner is counting on JB's shrieks to cover the sounds of his own footsteps running away from Jeanne Ives. As I keep telling readers, what is not said, what constitutes the negative political space, is often the most important part of a political story, and at the debate that he ran away from, Rauner's silence was excruciatingly loud. He didn't want a confrontation with Ives on those notorious ads he's been running against her, ads alleging that Ives, the conservative Republican state rep from Wheaton, is a creature of Democrat boss Mike Madigan. It's a complete falsehood, of course, and rather ridiculous, but Rauner must think they're effective. But those lies will make it impossible for him to patch the Republican Party back together should he win the March 20 primary, which is still very much in doubt," writes Cass. And he goes on to detail "Brave Sir Robin Rauner's" various betrayals, which have put him in the position he is, which is starting to drop like a stone. Ives addressed the matter, in part, during her Chicago Tonight appearance. Ives (from Tape:) Rauner said nothing, either. He knew all about this too, he never called for the LIG... Proft (cutting the clip off): THAT's about the Inspector General and sexual harassment, but this is her responding to the commercials in question that John Cass writes... Jacobson: Oh, where she's "with Madigan"? Where they're long-lost lovers? Proft: Yes, right. Ives (from Tape): The truth is that I'm...I would be Mike Madigan's worst nightmare, because I actually have the courage to speak up for taxpayers and expose the games that are going on down there, and to put people in uncomfortable conversations where they actually have to explain their policy choices, and that's something that Governor Rauner failed to do. But make no doubt about it (sic), Governor Rauner has lied to everyone about everything over the last three years, and he's now lying about my record, because he can't talk about his, because he has no record to talk about. Proft: "Lying about me because he can't tell the truth about himself", and here's the Ives value proposition. Ives (from Tape): But you know what, when you put these people in a box....look, nobody, NONE of the Democrat governor candidates and not Bruce Rauner, is going to lead the taxpayer revolt that has to happen in this state. Proft: That's it. The taxpayer revolt. That's the choice, ultimately. Ives is a vessel for the revolt, and Rauner is a vessel for surrender. So, that's your choice. For more on this topic and this race, as well as others and the policy implications, we're pleased to be joined by Eric Kohn, who's the marketing manager at the Illinois Policy Institute. Eric, thanks for joining us, appreciate it. Kohn: Good morning, thanks for having me. Proft: Good morning. So, one of the things that was being bandied about, and was talked about again at last night's Democrat debate, Democrat Gubernatorial Debate, is the Graduated State Income Tax, this is something that the Democrats are intent to do, they are openly talking about it, advertising it, because they think it's politically popular and unfortunately, they're right. But this seems to be the case, that if Democrats remain in control of the General Assembly, and Pritzker or Kennedy or Bist is our next governor, that you're going to see a hard move to graduate the state income tax. Kohn: Absolutely. It has been something you've heard from many of the candidates running, that we need a progressive income tax, that billionaires need to pay their fair share. But, we should actually take a look at what is really being proposed. So, you need...first, you need two things to happen. We have to change the Illinois Constitution, first you'd have to get rid of the clause in the Constitution that mandates a flat income tax. And if they were successful in doing that, then it's the same state lawmakers who are responsible for the political culture in this state, who are responsible for the policy choices that have put the state in the situation it's in, to set the new graduated income tax rates. State Representative Robert Martwick was kind enough to file a bill with progressive tax rates, assuming that this constitutional change would happen, and we took a look at 'em. And what we found out is that anyone in Illinois who's making more than $17,300 a year is going to see their taxes go UP under this plan. And if you want to find out exactly how it would affect YOU, you can go to IllinoisPolicy.org and use our Tax Calculator and find out what it would mean for you if this progressive tax was to become a reality. Jacobson: Well, do you...I mean...so, Chris Kennedy, he keeps saying that he's going to reform the income property taxes, income tax and property taxes in Illinois. Do you know, does anybody know about the actual PLAN that he has? Kohn: I haven't seen the actual plan that he has there, but I think it's worth pointing out that if we look at the current situation, Illinois already has higher property taxes than any other state that doesn't even have ANY income tax, we have higher property taxes than Florida and Texas, every other state that does not have an income tax, we have higher property taxes than. Which indicates again that, you know, it's...this is a different-natured problem, and moving to a progressive income tax, while it's being sold as this way to, "We'll tax billionaires and that's the way we'll fix our state," that's not how it works in reality. In reality, it is a Trojan Horse for tax increases on the middle class. The progressive income tax would mean an overall 21% tax hike on most families, and that's just something that Illinois families cannot take, especially after dealing with the impacts of a tax hike in 2011, it did go away, and then the tax hike that happened last year. Proft: Yeah, it's interesting, too, what's happening in New Jersey, Zero Heads reporting on this yesterday. "New Jersey prepares to raise taxes on ALMOST EVERYTHING as it nears financial disaster. New Jersey's fiscal situation so dire that new Governor Phil Murphy is proposing taxing: online room-booking, ride-sharing, marijuana, e-cigarettes, internet transactions, along with raising taxes on millionaires and retail sales to fund their budget, which would do what? Boost spending on schools, pensions, and mass transit." So, again, we're not the only ones...the only state providing a bad example of how to govern, there are others...but we're still the WORST, make no mistake. But this is exactly what Big Government Republicans and Democrats have been doing that makes us the worst governed state in the nation, and you have Democrats in states like Jersey and Connecticut, California, doing the same thing. Kohn: Exactly. You know, in fairness to Illinois, we often take a look at the numbers and compare between different states, a total tax burden, property taxes etc. And in fairness, New Jersey is often the one state that keeps us from being WORST in the country in a handful of categories. But, you can see the philosophy is generally the same there. You take a look at the impact of the tax hike we had in 2011, our chief economist took a look at it and found that it cost the Illinois economy $56B in real GDP and cost about 9.3K jobs. We fully expect the impact of the 2017 tax hike to be similar to that. And now, here we are again, rather than talking about a spending cap, or spending reforms, or fixing a lot of the structural problems that plague the state of Illinois, now we're talking about a supposed tax to make billionaires pay their fair share, that is actually going to make any Illinoisan making more than 17 grand a year toss up more to Springfield. Jacobson: So, is there a possibility to fund our schools without using property taxes? Kohn: Well, I'm sure it's possible. It would require, again, changing the actual structure, the way we operate state government, which is of course a hard conversation that, of course, people in Springfield really don't want to have. So, instead, we get these conversations like "Oh, we just need to raise the income taxes on the flat tax we have, we need a progressive tax." Meanwhile, property taxes continue to go up. Unfortunately, many in Springfield don't want to have that kind of uncomfortable conversation, so we're having on that, as Dan rightly pointed out, plays popularly when you talk about taxing billionaires, when people, if they go to IllinoisPolicy.org, use our Tax Calculator, see what the impact would actually be on their family, they'll find out what the progressive income tax really is about, and it's about raising taxes on almost all Illinoisans. Proft: There's something interesting, and this is really a below the fold if you don'[t live up in McHenry County, you're not aware of this. But there's an interesting binding referendum on the ballot. This is in McHenry Township, where Bob Anderson, who we've spoken to on the show before, he's like an octogenarian barber from Wonder Lake, has been fighting against Township for a long time and he was able to get a referendum placed on the November ballot, I should clarify, that will ask voters whether to abolish the Township's road district. The binding referendum is sort of the first in...first of recent and note of...under the umbrella of consolidation of government. Illinois has more units of government than any other state, as you were just discussing Eric, that's what in part drives the highest property taxes in the nation, because you have all these taxing bodies, and in many cases there are redundancies. So it's not a...it's not an attack on Township government vs. municipal government vs. county government. You know, sometimes Township government is a better, more responsible actor than the municipal government or the county government, and so on and so forth. The issue is the larger issue of we just have larger and larger layers of government with redundancies and inefficiencies and we have to reduce those layers and those numbers if we're going to reduce people's property taxes and give them their homes back, for example. And so I just wonder what you think about this referendum up in McHenry County, how important it is, and how impactful REAL consolidation of local units of government could be in terms of improving the fiscal stability of the state. Kohn: This could have a huge impact, and yeah, that's a great example of what is going on in McHenry County, there. You know, and it would...people look at this and say "Oh, it's never possible, this never happens." It actually...it has happened before. I hail from Belleville, in Metro East, and Belleville eliminated Belleville Township just about a year, year and a half ago. So, this can happen, and it's going to need to happen, as you said, if we're going to reduce the property tax burdens that Illinoisans have. In addition to Townships, another one that we've proposed, and I think should seriously be considered, is reducing the number of school districts. Not the number of schools THEMSELVES (Proft: Yeah.), but the number of districts that oversee them. Because, of course, each district, you have a Superintendent, you have administration, you have that same kind of redundancy that exists. And that...if we could reduce the number of districts by approximately, I believe, 50%, by having the same approximate amount of students per district that California has, so it just shows you just how out of whack we are there, and each one of those districts with the personnel is what is continuing to drive the property tax burden that Illinoisans are paying and increasingly choosing NOT to pay by getting out of the state altogether. Proft: Well right, and just on that score of consolidation of school DISTRICTS, this...Jeanne Ives makes this point all the time, 1/4 of the school districts in the state, 850 school districts...have ONE SCHOOL. So it's just an unnecessary layer of government, as you're...and administrative bloat...as you're suggesting, Eric. So there's opportunities to restructure the way we do things in Illinois, we could do it, if we're so inclined. Eric Kohn, the marketing manager at the Illinois Policy Institute, IllinoisPolicy.org, Eric, thanks for joining us, appreciate it. Kohn: Thanks for having me!

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Rauner is set to give his budget address next week despite the fact that Illinois hasn’t had a balanced budget since 2001 and he hasn't proposed one in his three years in office. What should be laid out in the budget preview in order to give Illinois families a sense of certainty? Should we be expecting a phasing out of the 32% income tax hike? Marketing manager at the Illinois Policy Institute, Eric Kohn joins Dan and Amy to discuss their spending plan for the state.

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IL House Bill To Imprison Local Officials For Enacting Right To Work Zones

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Dan: Good morning. Dan, and in for Amy this morning, Kristen McQueary of the Chicago Tribune Editorial Board, and uh Kristen, uh this is shaping up to be quite an interesting state and local election cycle uh with uh the new front on the war against cultures of sexual harassment and assault being state houses including ours in Springfield. A Miami Harold piece over the weekend allegations of sexual assault, sexual harassment, and infidelity among the state’s legislators flew like shrapnel from a bomb blast in recent weeks uh and uh talking just about the internal politics there uh related to bad behavior perhaps in some instances maybe even criminal behavior when you talk about sexual assault and of course we had a woman come forward last week, Denise Rotheimer, and accuse incumbent state senator Ira Silverstein of sexual harassment. We’ve had other anonymous claims of sexual harassment and uh we find out that uh actually there were more than two dozen complaints members of the general assembly, maybe not all that were for sexual harassment related because we don’t know because there was no legislative inspector general for years so those complaints just sat there unacted upon and uh this is a failure of the leadership of both parties of the House and Senate starting with the speaker, Mike Madigan to uh fill this vacancy which all of the sudden got filled over the weekend Kristen: Right. D: Evanston lawyer Julie Porter named to the uh long standing vacancy to oversee state legislator ethics as if that’s not an oxymoron. K: Right, so they had someone who was suppos- like an aid who was collecting all of the complaints and uh making pretty decent coin for an obviously a very part time position because there was no inspector general so it was just kind of a legislative assistant and not even bothering to explore or look at them, so how heroic are our legislative leaders now that this has become a hot news story and they all look terrible? Now they’re rushing to fill this position, setting up task forces, passing new laws, um having their members sign statements, reminder policies up it’s it’s a little late. D: Yeah. K: It’s a little late for that. D: To for me, this smacks of a nonaggression pact between the two parties. “You’ve got bad actors in your caucus, I’ve got bad actors in mine, uh let’s just uh take the kind of mutually assured destruction pact. You don’t uh rat on me, and I won’t rat on you and we won’t appoint a legislative inspector general to investigate all this stuff, we’ll just enable it in our caucus by trying- by sweeping it under the rug and uh you know just get on about our business because of course character and uh personal conduct doesn’t matter when it comes to public policy making at least so I’ve been told by so many. K: Well Ira Silverstein was in democratic leadership in the Senate and they were made aware of of some of her complaints quite a while ago and didn’t remove him from leadership until, of course, it became an embarrassing headline and then I think Senator Terry Link also had a role in this where he knew that these complaints were piling up, but he took no responsibility to further- to open them, to read them, to explore them by filling this inspector general post, so they did know these complaints were piling up, they just didn’t bother to explore. D: And I’ve got to tell you, I think now um with a March election 100 days away and then obviously November 2018 election, but uh because they gamed the system to try and cover themselves uh uh uh I I mean I-you’ve got to give Julie Porter time to do her job and review all these complaints and so forth. I want the cl- I want the complaints released with the uh accusers’ names redacted unless the accuser wants to come public. The accusers’ names redact, but they they did this to themselves. This is not violative of their due process rights for those who would jump to that uh defense. It’s not violative. Those complaints should be made public right now because oh we say “well give her time in this process” no-no, no because you’ve got a March primary where you have an opportunity perhaps to hold some of these people accountable. K: That’s true as long as the victims are protected- D: Yes! K: Because many of them, they don’t- they’ don’t want their accus- they don’t want their stories released in a way that would identify them, so if you can protect them, not identify them, and redact enough that we still know the bad behavior and the bad actors, that’s that would be- that would make sense. D: Yeah, that’s what I wanna see K: Is Ira Silverstein up? Is his seat up? I’m looking it up right now to see. D: Ummm I don’t remember- K: Okay. D: I mean it’s not competitive unless somebody wants to get it late and you you know in -into a primary late. Because of course in that area, Skokie, Lincolnwood- K: Well- D: The near north, I mean- K: I’m sure there are better - I mean I-I would welcome a primary for someone D: Well yeah- K: Who’s accused of this thing- D: Well I know, but you don’t wanna- I-I mean the important thing is that we protect the status quo. See? That’s the whole thing, that’s the sexual harassment sensitivity training or whatever it is they’re trying to move- K: Right. D: The idea is change on the outside to protect continuity on the inside. D-Do you understand how this works I mean you do, I’m speaking rhetorically. That’s how this works in Illinois, change on the outside to buffalo enough of the general population one more cycle to protect continuity on the inside and I mean why why wouldn’t they? K: He is up, by the way. D: Why wouldn’t they? We keep fall- we keep falling for, so I don’t know, Ira Silverstein would welcome a primary challenger. I doubt he’ll get one. Maybe his wife? K: She could! She’s a- she’s a Chicago Alderman, right? D: Yeah. Maybe his wife will primary, wouldn’t that be fun? K: Yeah, it would be. D; Kramer vs. Kramer. Uhh and then also this week on on the umm the policy fund with respect to economic policy, uhhh there was this effort that you wrote about last week and uh the veto session that failed, barely, to um uh prohibit these local right to work zones that were passed in communities like Lincolnshire up in Lake County and also to uh imprison local officials who would vote such a- for such an ordinance. K: I-I’m just shaking my head. I ca- I mean this is just so many bridges too far. I understand the opposition to right to work, I still think even even what we’ve talked about in the state are locally approved zones that local officials should have the right to institute as an economic development tool, a right to work zone. We heard from Toyota and-and uh uh from I bev- I believe Cranes reported pretty substantially that part of the reason we didn’t get the Toyota plant was because we’re not a right to work state! But lawmakers are just going to keep ignoring the the truth and the data and pa- try to pass a bill that not only prohibits right to work zones, but would make it a criminal penalty in order to do so. That’s an insanity. D: That failed and there’s a possibility that uh Marty Moyland who’s the uh Madigan roll call vote representing Des Plaines, Park Ridge, Elk Grove Village who will sponsor that legislation will rerun it sans the criminal penalties and pass it to prohibit without the criminal penalties because basically the only reason he didn’t pass it last week over runner’s veto was you just had too many democrats that were absent K: That’s true, I mean I think he just needs one vote, right? And there were concerns raised about the the criminal penalty portion umm so if you I-I- if he brings it up again this week during veto session Tuesday, Wednesday, Thursday that we would have a ban on right to work in Illinois. D: And you’re gonna have some republicans vote for this, some republicans voted for the one with criminal penalties. You know why? Because they’re in open revolt against the governor and it’s every man and woman for themselves. K: Still a bad vote, terrible vote. D: It is a bad vote. K: But I know I-I yeah D: But hh uh for more on this topic, we’re pleased to be joined now by Mailee Smith who is staff attorney and labor expert for the Illinois Policy Institute with which I am affiliated. Miley, thanks for joining us. Appreciate it. Mailee Smith: Hi, thanks for having me this morning. D: So uh uh what is is our read on what is likely to happen in Springfield this week with uh a rerun of the right to work zone prohibition on on the mark? M: That’s exactly what we’re expecting to happen. Um and that’s correct, it missed the veto override but only one vote and there were democrats that were not there that day, so we do expect it to be run again. Now one thing that I would add is that the house sponsor, Representative Moyland has filed an amendment in a trailer bill that would uh take away that criminal penalty. The problem with that is that uh that’s a separate bill. There’s no guarantee that it would be passed, so SB1905, the right to work prohibition could pass this week with that criminal penalty. The trailer bill may not pass, and what we would have is a local right to work prohibition that is going to jail local leaders if they- basically if they disagree with economic policy. K: I mean I just find that to be um really remarkable. Ha-has this been implemented anywhere in the country that you’re aw- that you know of? M: I am not aware that this has been implemented anywhere, this type of criminal penalty. Um in fact, I-I’ve looked at hundreds of hundreds of bills in my legal career, probably thousands, and I’ve never seen a criminal penalty uh just because the lawmakers disagree with an economic policy or a social policy. Um this is definitely a a a unique provision, an um egregious provision and it’s definitely you know undemocratic. D: I think it’s uh modeled after the policy in Havana uh so uh we you know decided with our new partner in peace there, our new trading partner- K: Sure. D: The Castro regime, we decided to take some some of their lead K: Yeah D: When it comes to uh uh labor policy. Um so ju ju on the right to work zones M-M-Mailee, the the basis for those because one of the arguments against them is much like the arguments against um uh different- back in the day- different gun laws by local jurisdiction. Why not either do something uniform at the state level or or do nothing at all? The patchwork of laws around the state make the argument M: Right. Well here’s the thing, there are 27 states with right to work laws, including nearly all of our neighbors, and we know that when businesses are seeking to relocate or expand, they look to see if a state is right to work. You referenced Rockford. We see this first, we saw this first hand last month. Rockford was rejected for the new Toyota/Mazda plant. It was a 4,000 jobs facility and one of the determining factors as reported by Cranes was that Illinois is not a right to work state. The remaining three contenders? They’re right to work states. And so we- having no statewide right to work, we don’t have a way to compete with other locations and what local rights do what local right to work would do is give local leaders the ability to compete. And you know what? If it’s a hodge podge sort of map where some some locations have it and some don’t, I guess what that means is that there are going to be some hodge podge locations of economic prosperity in Illinois and then maybe the rest of the state will follow. K: I mean it’s not different than you know we have TIF districts we have all different when you describe a hodge podge why it-it just it boggles my mind why we keep talking crime in the city of Chicago, lack of economic development, lack of opportunity. If you have- you have areas on the south and west sides of the city of Chicago that haven’t seen economic development- meaningful economic development in generations and yet you still have members of the city council completely bought and paid for by organized labor who would never even consider helping their communities with a right to work zone that would be locally approved. I mean it’s just it-it boggles my mind. I’m also staring at M-Marty Moyland’s uh campaign fund disclosure form at the moment. This is just one- ask me the employee union in the state, just this one labor union has contributed 20- almost $25,000 to him over the years including a $10,000 contribution last year. So who- D: More on the way! K: Well- of course but you don’t have to question whose- who he is representing here. M: That’s right, and that is why the unions in Illinois are such a powerful source and a source to be reckoned with because they are funding- it’s-it’s a vicious circle- where they are uh funding um lawmakers, lawmakers owe them a favor, you never see the economic ball pushed to a place where it’s going to benefit the taxpayers in Illinois. K: I read- I-I had I think I tweeted this out too and so go-go to my Twitter, StateHouseChick to find it because I-I believe there was an article recently that Indiana is growing union jobs faster than Illinois- D: Yes. K: As a right to work state- D: Yeah, true. K: So M: That’s right K: Ju-just all of this resistance is just uh- it doesn’t make any sense. M: And and not just union jobs, they’re growing manufacturing jobs, so during the recession we lost more than 96,000 manufacturing jobs. Um we’ve lost more since then, but our neighboring states with right to work has been gaining jobs. You referenced Indiana. Indiana has gained over 81,000 manufacturing jobs in that same time period that we lost so many. D: She is Mailee Smith, staff attorney and labor expert for the Illinois Policy Institute. Mailee thanks for joining us, appreciate it. M: Thanks for having me!

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Dan Proft: Thank you for joining us on another edition of Against the Current; coming to you from the Skyline Club, on top of the Old Republic building in downtown Chicago. My name is Dan Proft, and our guest on this episode is Ted Dabrowski, who is the Vice President of Policy for the Illinois Policy Institute, the Free Market Think Tank, economic liberty orientated think tank in downtown Chicago. Ted, thanks so much for joining us, appreciate it. Ted Dabrowski: Thanks for having me. Dan Proft: There’s a lot to talk about. You’ve got judicial decisions, as relates to pensions, both at the state level, with regards to Chicago pensions coming on the heels of Illinois Supreme Court’s decision from just a year earlier on state pensions, and then you’ve got the Supreme Court decision because of these Scalia absence on the Friedrichs v. California Teachers Association, as it pertains to forced union dues; that’s a lot to talk about against the backdrop of the second teachers’ strike looming in less than four years, and an almost junk-rated city of Chicago, according to Fitch, mostly because of the inability to solve the pension problem, combined with a junk-rated Chicago public school system, combined with the state, that has the worst credit rating in the United States. So, some challenges I think is a fair assessment. Ted Dabrowski: Some pretty big challenges. Dan Proft: Yeah. So why don’t we start with Chicago public schools, and the looming teacher strike over the teachers’ unwillingness to increase their contribution from 2 percentage points of the 9 percentage points they pay into the pension system to not have the Chicago Public School System pick up the other 7 percentage points anymore, as it’s been the case for the past 3 decades. Of course, the management side wants them to pick it up, so they can start trying to make the math work, and the teachers don’t want to essentially take a pay cut to increase their contribution to their pensions. Why is the teachers’ position unreasonable? Why should they pick up the 7 percentage points that the school system has been picking up for these past 3 decades? Isn’t that just another promise that was made to them, like they say, the Constitution made a promise to them and it shall never be changed? Ted Dabrowski: It’s another perk that Chicago teachers have had for a long time. It was gained back in 1981, and the issue, I think, the bigger issue is that the Chicago teachers do pretty well when you compare them to big cities across the country. They have the highest salaries of any big school district in the nation, and so what’s amazing is… Dan Proft: So higher than New York, higher than California, higher than L.A, higher than Houston. Ted Dabrowski: Higher than Miami, etcetera. So, they do pretty well, and again, it’s something they’ve negotiated, but they’ve done well, and included in that is this teacher pension pickup. That’s fancy words for, “Look, teachers, you don’t have to pay your full pension share, full pension payment you’re required to pay. We, the School District, which means tax payers, will pay it on your behalf”. And that’s been going on for about 3 decades, and the School District is broke, any way you look at it, it’s broke. And so CPS, Claypool and others trying to fix the problem are asking the teachers just to pay their fair share. Dan Proft: And by the way, I had the opportunity on the morning show that I do on AM 560, Chicago’s Morning Answer, to speak with Jean-Claude Brizard, a couple of CPS superintendents ago; this is not the CPS superintendent that’s going to jail, for those of you scoring at home, but they were running billion dollar budget deficits when he arrived as Rahm Emanuel’s first Chicago Public School superintendent. Nothing has changed in the intervening 5 years; in fact, it’s gotten worse, so do we start with the pension pick up and the distribution of who’s picking it up, or do we start with the fact that 9% paying into your pension, that’s also insufficient. Ted Dabrowski: Right, that’s insufficient. I think that the bigger issue is that the School District has been mismanaged for a long time, and you’ve got issues from not funding pensions for nearly a decade, you’ve got issues of Barbara Byrd-Bennett being indicted for fraud. You’ve got a situation where you’ve got a Teachers’ Union that’s willing to strike two contracts in a row, and they’ve won the last contract. They won big; they strike, despite the fact that the city, or the district, was already billion dollars in the hole. They had no business striking then, and they have no business striking now. So really, what you’ve got is a situation… Dan Proft: But they strike because… they struck, they won, so they’re not incentivized to do anything other than strike if they don’t get what they want, because they figure that the politicians will bend over… Ted Dabrowski: Like they have… Dan Proft: Like Tiny Dancer did four years ago. Ted Dabrowski: And he’s even weak. If he was weak then, he’s even weaker now, given the situation he has at home. So this is a situation where the two big groups, the Administration and the Teachers’ Union, they collude when they need to, they strike when it makes sense to then, and in the end it’s all the kids who get left out, and I think that’s the whole sad part of the story, which is why many people talk about bankruptcy. If Rahm Emanuel doesn’t want to do something about the finances, if Karen Lewis doesn’t want to do something about the finances, let it go bankrupt, and finally get a situation where we can get a focus back on the kids and not on the adults. Dan Proft: Well, that’s what the Governor said, Governor Rauner has said, “Bankruptcy needs to be something that the city and CPS take under consideration”. They’ve rejected that because of course, nobody wants to be the person, or people in charge, right, to be taken over by the state, to go bankrupt on my watch; what does that say about my leadership and my management; making the tough decisions to bring us back from the precipice, just rather than pushing us over. So why not – and this is more of a political question than a policy one – but from Governor Rauner’s perspective I’ve offered to pitch in and help. I’ve offered, here are some options, and by the way, I have kind of a 30 year track, because the reason I’m 100 millionaire is because I’m pretty good at reading the balance sheets and understanding what the real world options are, and if they don’t want to entertain real world options, why not just wash your hands and just say, “Okay, geniuses, okay, Tiny Dancer, okay Karen Lewis, whatever, Forest Claypool, you figure it out. But you can come down to Springfield with your pickle buckets and panhandle outside the Capital, and we’re not giving you anymore money”. Ted Dabrowski: Yeah, and I think politically that’s where it goes. I think that’s where it goes, and the sad part is – and I think everybody knows this – is that, you know, we just had a massive property tax hike in Chicago; the largest on record, and that only solves a small part of the problem; we probably need to have another two of those to try to start getting toward balance, and so the sad part is that Chicagoians are already burned with all kinds of nickel and diming fees, and red light… you know, anything you want to talk about, there’s a fee or a tax for it. Chicagioans can’t afford more, and we’ve already heard about people leaving the city. Dan Proft: But at least Teachers’ Union is honest about… I mean, I give them credit… they’re kind of like Bernie Sanders; they are like the honest socialists, as opposed to the disingenuous socialists. Property tax increase – sure. Chicago Teachers’ Union is on board for that; Karen Lewis – yeah; Graduated State Income Tax – yeah; fine. Ted Dabrowski: Financial services is back. Dan Proft: Yeah, on Nassau Street, on the exchanges, financial transactions – good. They’re contemplating the institution of a new city income tax to layer on to all the other taxes – we’re open to that; all they care about is the revenue side; at least they’re genuine about it, so you can have an honest conversation. Tiny Dancer and the Chicago Democrats trying to cling to power, they understand the political difficulty of that, because they have to stand for election outside of 30,000 teachers, and so they play this game like something can be solved by getting a half of billion dollars every other month from the state of Illinois. Number 1 – it doesn’t solve it; number 2 – it’s not going to happen. So do you give the Teachers’ Union at least credit for being honest, so we can have an honest conversation? Like here is where they want to solve the problem; that’s one option. Confiscatory taxation on top of confiscatory taxation; and here’s another option, like you and the Illinois Policy Institute have charted, that presents a real choice for Chicago residents and Illinois residents to consider. Ted Dabrowski: I think you’re right, they are, to say, honest about their motives with you, and Karen Lewis is pretty clear about it, but I think that’s why we call them the most militant union in the US. They say what they want, they strike for it and they go for it. Dan Proft: And they unironically wear red shirts to their rallies. I mean, beat me over the head with a cudgel, I get it. Ted Dabrowski: I think the saddest part for me – and the parents haven’t figured it out yet – still the parents are still backing with the Union. In the first strike they did it still seems like they have backing, but at some point that’s going to break, and when people realize that those strikes mean bigger and bigger taxes, increase in property tax, especially for the low income families, right, because they may not pay property taxes because they’re owners, but they certainly pay higher rent; they certainly pay higher sales taxes, higher X, Y and Z, and at some point there’s got to be a connection. Dan Proft: But those are the unseen costs that they don’t kind of…are people connecting the dots. Because it seems to me what Karen Lewis is good at doing – and to some extent, Rahm is good at doing as well – is presenting it like Rahm and Karen Lewis are on the opposite sides. They’re not on the opposite sides. They’re fighting over who gets to be the central planner in charge, right? And so the free market perspective of the economic liberty movement, to some extent has to also bear some culpability for not charting a third way, and explaining to people that you’re getting played by both sides. They’re not looking out for your best interests, and they don’t have a plan that solves this without imposing additional duress on you, on your children, on the taxpayers read large, so that the city continues to shrink and the number of revenue producing wards continues to winnow, and we continue the death spiral to a place that you’re not going to be insulated from in terms of pain. Ted Dabrowski: No, I think you’re right, but these guys have always worked together. That’s why I said they collude. They’re like two monopolies, or an oligopoly, and they work together pretty closely; they choose to fight every once in a while, but never – and if you think about this, are the discussions and the fights about better outcomes – we don’t hear much about that; it’s all about who’s going to win the power struggles; whether it’s Rahm or there’s Karen Lewis; whether it’s Claypool, whether it’s Rauner in the takeover; but nobody’s talking about how to help the parents win. And what you’re right about is that really this is a battle over who controls billions of dollars in salary, and billions of dollars in pension payments. And Rahm loves to be in control of that, and so does Karen Lewis. Dan Proft: I know, the 6 billion dollars CPS budget; what is it, a third of it is salaries? Ted Dabrowski: Oh yeah, you’ve got over 2 billion, sure. And so that’s the control power, and so when we talk about, and you’re right, the free market movement that hasn’t done a great job in Chicago, in Illinois, about saying “Hey, it’s time we take the power out of Rahm Emanuel; it’s time we take the power away from Karen Lewis, and give it to the families; let them be in control of the dollars, and let them hold schools accountable”, and by that I mean the parent would have the ability to walk away from the school and use that public money for a private school, if he/she wasn’t having their kids’ needs met. Dan Proft: Or a public school. Ted Dabrowski: Or a public school. It could just be give them the power to walk, and when the parents have that power, then the public schools would have to listen. Dan Proft: Well, you say, you know, the parents side with Karen Lewis and the Teachers’ Union; well, that’s because they experienced the teachers. Right, their kids experienced the teachers, and so they like Mrs. Smith, who teaches 4th grade, and they like Mr. Jones, who teaches 8th grade. They know those two, so when Mrs. Smith or Mr. Jones or their local school principle says, “Are you going to throw in with me, or are you going to throw in with that little cleptocrat on the 5th floor of City Hall?”, that’s an easy choice. Ted Dabrowski: It is, but I think, though, more and more teachers are starting to realize; and if you’re a 35 year old teacher and you hear the arguments going on, you say, “Wait a minute, is there going to be a pension for me? I’m going to contribute for years; will there be a pension for me?”, and I got a call yesterday, as a matter of fact, from a teacher; she’s 67, retired from CPS, lives in the suburbs, and she’s scared to death whether her pension is going to be cut totally. Dan Proft: When did she retire? Ted Dabrowski: She retired just a few years ago. Dan Proft: So about the average age of 63, which is like the average age of a CPS teacher retiring? Ted Dabrowski: The average retirement age is closer to 60, so over half retire in their 50s, and you’re hitting on a good point, Dan. The reason these pensions are so expensive is because the average worker who works there is retiring in their 50s, most of them with full benefits, and because they get automatic costs for living adjustments, those pension benefits double after 25 years. It’s a fantastic gig, and it’s something that tax payers can’t afford. Dan Proft: Let’s talk numbers, kind of get out of the unfunded liabilities and the billions, and this and that, that don’t mean anything to most people, and you can’t kind of distill down to something they can’t relate to. Let’s relate it. So the Chicago public school teacher retiring in 2014 with 30 years in max out in terms of pension, what annual pension are they receiving? Ted Dabrowski: About 68,000. Dan Proft: $68,000? Ted Dabrowski: Right. $68,000. Dan Proft: Which is almost 40% more than the medium household income in Illinois? Ted Dabrowski: Sure, close. And you can compared a medium household income; that’s more than one person. Dan Proft: So maybe it’s 25% more than the medium household income in Chicago. It’s still a big number. I’ve looked at the work that you and Illinois Policy Institute has done, and I just want to relate these numbers because they are staggering for anybody that works in the private sector, and frankly, anybody that works. This is IPI numbers – a Chicago public school teacher retiring in 2014, 30 years in will have paid these around numbers, $133,000 into their pension, will receive 2.1 million dollars back, a 15,000% plus return on investment. Ted Dabrowski: And let me just say one thing, that that 133 is giving the teacher credit on having made the full payment, when in fact the school district was picking up… Dan Proft: Would they had made less than 25% of it. Ted Dabrowski: Correct. So it’s phenomenal. These are great returns. Dan Proft: You’re right. So how do we have a bankrupt school system, and a bankrupt city, and a bankrupt… I mean, come on? Ted Dabrowski: And how many people in the private sector have 2 million dollars from having their career sitting there waiting for their retirement? Dan Proft: What’s the private sector counterpart? I think you guys have this too. So if you wanted the average retiree kind of same-similar situated, if you wanted to receive 2.1 million dollars in pension benefits back, pay yourself 70 grand+ a year in retirement, how much would you have had to contribute into your 401? Ted Dabrowski: Around one and a half million dollars, because interest rates are so low, so you’d have to put in a lot of money just to get that. Dan Proft: So in the private sector it’s one and a half million dollars in for 2.1 back; at CPS it’s 133 in for 2.1 million back. Ted Dabrowski: Correct, and this is phenomenal. And it’s not sustainable, I mean, don’t forget the reason why it’s so high. That 2.1 million is because they get that 3% automatic bump in their pension benefit each period. Dan Proft: The cost of living adjustment turned out to be an annuity because that’s seven times the rate of inflation for the last decade. Ted Dabrowski: Correct. And so basically, somebody’s pension benefit doubles over 25 years. It’s phenomenal. Dan Proft: And this is the case – not to get too far field off of teachers and CPS's; that’s really kind of at bar with the strike looming in May – but the numbers for Chicago firefighters, for Chicago police officers, for city of Chicago municipal employees, for city of Chicago laborers, and the laboring public sector, they’re basically the same. Ted Dabrowski: Pretty similar, yeah; of course, Chicago police and fire will be a little higher. But basically it’s the same, and you’re talking about the average career worker getting somewhere in 2 million dollars and more in retirement; and it’s really hard to ask taxpayers who are struggling to pay that over and over again. Dan Proft: And so, when you look at these numbers, the public sector union, a lot of the ranking file, the response is “Wait a second; why are you attacking teachers, and firefighters and police officers? Don’t you respect the job we do?” And even if you say you respect the job that we do, “Hey look, we play by the rules that were set forward by the politicians that set the rules, so why should we take a haircut, when they made a promise and we relied on that promise?” Ted Dabrowski: I think it’s a good argument. Look, I always want to blame the people who set the laws. It’s the politicians who agreed to bad deals. I think everybody fights for their own special interest, whether it’s the Teachers’ Union, or an employee wanting a raise, or better terms, so I think it’s important that we don’t vilify teachers or cops; my kids go to the public schools. I love my kids’ teachers. I think they do a great job, but the bottom line is this is not about that. This is about the state’s ability, and people’s ability, and taxpayers’ ability to pay for these benefits, and so I don’t think we should vilify them, but I think there has to be realization that the agreement, whatever it was… we should meet whatever obligations we made; whatever’s been promised and has been earned we should pay. But going forward we need to strike a new deal, and I think that’s what this whole discussion is about. Striking a new deal that’s fair for the public sector workers, but also fair for the tax payers that fund them. Dan Proft: Yeah, I just want to emphasize that, because this seems to get lost in the conversation; I have the opportunity to talk to and hear from the public sector workers a lot in my radio program, and they don’t seem to hear it when I say “Wait a second, whatever you’ve earned, even if it was a bad deal, you should get, because there was reliance created by the state, you did anticipate these benefits, you earned the benefits, you should receive what you’ve earned. Full stop; however, at a date into the future, certain, like a year from now, there’s a new deal for the existent workers who have not earned those benefits, because they haven’t worked those days in the future yet, as well as for new hires, that is not going to be the same deal that you have now”, and point of fact, don’t we have that with the state employers with the tier 2 for new higher at this point, even at present? Ted Dabrowski: Yeah, so of course, tier 2 is a brand new employee, but I think what we’re saying is that for even existing employees – and this happens in the private sector every day. The private sector can’t take away benefits you’ve already earned. That would be a huge problem, and that shouldn’t happen here in Illinois either, at the state or city level. But going forward, we have to have a deal that allows the state budget, the city budgets – because we haven’t talked about cities; this is a huge problem all across Illinois with pensions for firemen and policemen… Dan Proft: And nationally. Ted Dabrowski: And nationally, of course. It’s a huge problem everywhere, and it’s pushing up property taxes – I’d like to talk about that in a minute, about all the taxes that are going up, but at some point there has to be another deal, because here’s the issue; right now you and I are saying we want to protect benefits we’ve already earned; if we ever go into bankruptcy courts, federal courts don’t care about state Constitution; federal courts trump the state Constitution, so like you saw in Detroit, like you’ve seen in Alabama, like you’ve seen in Rhode Island, pensions have been cut as a result of bankruptcies, and so if the public sector union workers don’t finally realize that they can actually have their pensions cut under bankruptcy, they’re going to get hit with exactly what they don’t want to see. Dan Proft: So many of them are listening to their public sector union bosses, rather than looking at the math and just taking a common sense approach to it to say “Do I really want to pay Russian roulette with my retirement?”. It’s not roulette; it’s Russian roulette, because all it takes is one federal bankruptcy judge to say, for example, “Yeah, states cannot go bankrupt under federal bankruptcy code”. But if pension funds go upside down and they can no longer pay out beneficiaries, then I’m going to say that pension funds are separate and distinct from the state, and instead of checks in the mail you get IOUs until they figure it out. Ted Dabrowski: Or you have a 15% - 20% haircut. And I think that’s a real distinct possibility. That’s why I think at some point, and I think the state ruling recently that came out last week… Dan Proft: This is on Chicago pensions. Ted Dabrowski: On Chicago pensions; where it starts to say that things like pension benefits can’t be collectively bargained if there’s some exchange, some consideration given for changes in the pension benefits… Dan Proft: Simple contract law theory. Ted Dabrowski: Exactly. And that being the case, I think behooves the unions. And let’s talk about Chicago policemen and firemen. You were talking about teachers and others. The worst funded pensions in Illinois right now are the Chicago fire and police pensions. They have about 25 cents of every dollar they should have in their account. So imagine, you have your 401(k), you open it up and you think you have $100,000. You open it and there’re only 25,000. You’re missing three quarters of the money. That’s exactly what’s happening to policemen and firemen right now. And I don’t know why they’re not jumping up and down and saying “I want a new deal. I want something better. Promise me what I’ve earned, but give me a new deal going forward”. And I think that’s what they should be fighting for, because they run the big risk of having a massive haircut. Dan Proft: If you have a police fund or a firefighter pension fund that’s only a quarter funded, are those pension funds salvageable. Ted Dabrowski: I think, we’ve run numbers, I think we can salvage them, but it’s painful, right? And you’ve got to have a long term process, but you got end the game now. But effectively, in any private sector scenario, they’re bankrupt; they’re done. They would have been closed up if they were part of a private sector group, they would have been closed, liquidated and gone. So it’s something, I think, they have a huge interest in hitting the table and negotiating. I think the way to look at this, Dan, if we can stop the bleeding now, and move to a new 401(k), stop playing go and forth for all benefits earned going forward, then what we do is we treat the unfunded liability as debt. Chicago just has a bunch of debt and it’s going to take years to pay that debt off; but I think it can work with Chicago’s numbers if we stop the pain. Dan Proft: Then you can start to bend the cost curve and catch up. Ted Dabrowski: Exactly, but it’s not just police and fire, you have to do that for teachers’ pensions and for the other pensions in Chicago, so it has to be a whole deal, because remember, you have one taxpayer in Chicago, and that one taxpayer has to pay all those pensions and Cook County pensions as well, and of course, the shortfall at the state-level; so we have to be careful to respect the taxpayers in Chicago. Dan Proft: It seems to me the taxpayers are starting to understand what is in the offing, and I just look at out-migration; is there any better indication of the vitality of a community, county or state than whether people choose to live there or not, and in 2015, according to the census, Cook County lost more population than any other county in the country; this against the backdrop of the state of Illinois continues to compete with New Jersey for the largest out-migration year after year. Ted Dabrowski: I think that’s the biggest issue, and it’s something that we talk a lot about as respecting the taxpayer. And I don’t think Rahm Emanuel, Michael Madigan, they don’t understand… sorry, they may understand, but they don’t care; it doesn’t fit into the political calculus, but the reality is that people are leaving and I think more telling them the 2015 numbers is the out-migration that occurred between 2000 and 2010 by middle class Blacks. 180,000 blacks were lost during that period, and if you look at what happened in Detroit; first you lost the White taxpayers when you had the White Flight, but the problem really happened in Detroit when the middle-class Blacks left. And then the tax base was gone, and I think Chicago has to start thinking about how to protect its residents – doesn’t matter what color they are – but if you don’t protect your tax base you’re done. And we’re entering that spiral today. Dan Proft: Well that’s interesting, so I have a conversation with my aldermen; I’m in the 42nd ward when, you know, the wards that looks fancy on the outside, and you hear this propaganda from the likes of a Brendan Reilly, who’s just a toady for Madigan and for Tiny Dancer. Well, look at the planters on Michigan Avenue, and look at the tower cranes with new rental units going up in Streeterville. Everything’s on the up and up, and my response to them is, even let’s accept your premise, that this ward, one of 50 wards, is on the up and up; explain to me how you think – let’s say there’s 10 wards, 20% the city, that are kind of revenue producing wards that have substantial economical activity ongoing – so you’re telling me that 80% of the city can burn to the ground around us and we’re not going to be impacted? Do you really believe that? Does anybody really believe that except a craven feudal lord, which is what these aldermen are? Ted Dabrowski: I remember the first time I went to Detroit right after the bankruptcy, and I came back and wrote about it, and the lessons I learned from it, as it relates to Chicago; a lot of pushback, you know, Chicago is not a Detroit. Dan Proft: No, never happen here. Ted Dabrowski: And listen, Chicago’s not a Detroit when you think about the diversification of businesses; you walk down in the loop here, it’s hot, man, it’s rocking, it’s a lot of stuff going on, but I think what people forget is bankruptcy is not about what you look like; bankruptcy is whether you can afford to pay your debts. It’s simply that, and you take the best paid athletes in the nation. A lot of them go bankrupt; they’re making 100 million dollars, but they go bankrupt because they don’t manage their spending, and I think that’s where Chicago is. Dan Proft: Yeah, how can they be bankrupt? They’ve got a nice home, they’ve got a nice car and they wear nice clothes? How can they be bankrupt? How can Antoine Walker – he’s an NBA champion – how can he go bankrupt? Terrible investments; he put his money to use in all the wrong places. That’s how you can go bankrupt. Ted Dabrowski: And I think that’s where Chicago is. Chicago is exactly there. And let me make one other point, and I think this is important. Chicago’s got a big footprint. We used to have 3.5 million people, right? We’re down way below that. The population in Chicago now is below the 1920s. That’s a massive change. We still have that same infrastructure, and I don’t just mean physical infrastructure, like the highways and all that. We have the same public sector infrastructure, and that public sector infrastructure’s not shrinking fast enough with the city. What it’s doing is it keeps growing; the cost of that infrastructure, the unions, the teachers, the police and fire; it’s too expensive. It’s outpacing the growth of what people make in the city, and that’s what’s going to break us. Dan Proft: So you wanted to talk about the taxation that your median Chicago resident faces. Let’s talk about it. Ted Dabrowski: What you see in Chicago is a lot of people saying “Oh, property taxes are much, much lower in Chicago than they are in the suburbs. Dan Proft: Subsidized by commercial. Ted Dabrowski: Subsidized by commercial one, but two, they are relatively lower, but what people don’t talk about is the… you know, Daley was a genius. We all know that. He knew that he shouldn’t go after property taxes, so what he did, and the other who followed, is they came up with a bottled water tax, and a dollar tier tax, then you had to add the red light cameras, they had every kind of tax and fee to hide the fact that the raising taxes on you. And it’s really hard to track what’s going on, so we did all the numbers, and it’s amazing how much higher, when you take all the taxes that there are in Chicago than in any other city – Evanston’s a competitor – but any other city in Illinois, the taxes are tremendously high. So I think there’s a lot of deceit, the press hasn’t wanted to talk about it properly, none of the politicians want to talk about it, but Chicagoians are taxed up the zahzoo, and in the end, middle class families know it; I think, when we talked about the Black families earlier, schools aren’t working for them, crime is certainly hurting them, and taxes are going against them; why stay? And I think that’s a question that people ask themselves. Dan Proft: Sure, and they ask themselves and they’re answering in the negative. Why stay? It makes no sense not to stay. Ted Dabrowski: And it’s not easy for people to leave, right? It’s hard to pick up and leave. Dan Proft: Right, sure. You laid down routes, you made an investment here, it is a great city, it’s a beautiful city, it’s a fun city; great restaurants and night life and arts and culture. Why do I want to leave here? I don’t want to leave here, but you’re making it such as I can’t make it make sense to be here. And frankly, even someone like me - who does relatively well, because I’ve got phony baloney job on the radio that pays me a lot of money and I work 20 hours a week - even me, I say, “Gosh, move over to Northwest Indiana and lower my cost of living by 40%, my muffling it up by 40%? What am I doing here? Ted Dabrowski: You’re hitting on the issue that recently I was in South Chicago, and I met with this company, Modern Drop Forge – they’re a big steel stamp planter, steel stamper – and they tried to stay in Illinois, they worked hard, nobody paid attention to them; this is a year and a half ago; and so they finally looked at Indiana, and Indiana opened their arms, said come here, the company eventually moved there. I was at there, I think I was telling you about this. I went to their new facility, this massive, beautiful huge facility; state of the art, and a lot of the workers who didn’t want to move to Indiana from Chicago, they went and they looked at the house prices and said wow; they looked at the property taxes, much lower; school choice. Dan Proft: And what you get for those numbers in terms of home and property. Ted Dabrowski: It’s a huge home, and he said he took his wife, this worker who didn’t want to go, he took his wife; they moved. And they’re so happy; and I saw him at the new plant, he’s ecstatic, and that’s what people are experiencing, and we shouldn’t force people to look at those alternatives, but I think what we’re doing is we’re making it such that people… people don’t move because their taxes are high. People move because things get difficult, the opportunities aren’t there, it gets too costly; they finally make a calculus and some way say “Hey, I’m going to go somewhere where there’s a new opportunity”. Whether it’s Atlanta, Houston, Dallas, whatever. Dan Proft: Well right, it’s cumulative. It’s not a single tax, it’s not that if I don’t have a city sticker, my fine is going to be like $42,000 to make the numbers work for the city for one year additional. It’s just the cumulative impact of every time you turn around, you’re just being fleeced. Ted Dabrowski: So it comes around to that’s why we need these massive reforms, and until we get them… Dan Proft: Which, by the way, the funny thing is, the other side, that has been unwilling to advance these structural reforms says we need these structural reforms. What did Rahm come in on? He came in on a wave of here’s a tough guy, he was the Chief of Staff to the President of the United States, and he’s going to make these tough decisions. He’s going to endure the political capital that must be spent to make the difficult decisions to bring the city back, to right the financial ship; and he hasn’t done it. Ted Dabrowski: This is Rahm though, right? He was the guy that was going to let nominate crisis go to waste. Dan Proft: The tutu should have been the leading indicator that this was not a tough guy. Ted Dabrowski: A lot of people were excited, and it’s amazing, because he actually did something that is pretty bold when he first came in. He went down to Springfield, and he sounded like he was proposing the Illinois Policy Institute’s ideas. He talked about COLA – Cost of Living Reforms – producing them, he talked about bringing retirement agents down, and he talked about optional 401(k) style plans for workers. That was awesome, he actually went down to Springfield and did that, and Daley didn’t do that, he didn’t go down to Springfield. So there was a lot of hope in the beginning, but quickly, once the negotiations got tough, once Karen Lewis put her foot down, he caved. Dan Proft: Well the 401(k) thing was interesting, because the response you get from a lot of people is “I don’t want to be subject to market fluctuations; I guess it’s okay if everybody else who is not in the public sectors is subject to market fluctuations with respect that they’re 401(k)s, but we want a guarantee, the define benefit plan”, and so the response to that, that we want this guarantee, 401(k) doesn’t work for us, at the university level, this is kind of an under-reported story, but you were the first one to kind of alert me to this. There are thousands of actual university employees, public employees in this state who are part of a 401(k) retirement system within the larger public university system, so number 1 – is it working for them? – number 2 – if it is, why don’t we scale it? Ted Dabrowski: Well, what’s amazing is that somewhere along the way, 1998, not Mike Madigan, but a guy named Robert Madigan, he passed a law that allowed university professors to have a 401(k) style plan. Why? University professors wanted that portability. They wanted to control their retirement fund. They wanted it to be in their name that they could take when they left the state if they left. Now what’s amazing is that we would allow a professor to have that, right, but not a Chicago fireman, a policeman, or a teacher, who should have their ownership, their own title and control over that money; rather than being dependant on Madigan or Rahm Emanuel, these university professors can take their money and nobody can touch it. And what’s interesting about that whole thing is we’re sitting again almost on record highs in the stock market; these guys are doing really well. The money that’s in there is going up, and despite the massive recovery of the stock market, Illinois’ pensions continue to do worse and worse. Dan Proft: The public sector pension funds. Ted Dabrowski: The public sector pensions get worse despite this massive improvement in the stock market. Dan Proft: So I guess the argument would be made, wait a second, if Dan Proft with his financial guy can figure out where to put his money and how to distribute risk and how to have a balanced portfolio, then why can’t a Chicago police officer, Chicago firefighter, Chicago teacher do the same thing? They can do the same thing. I’m no smarter than they are. My financial advisors are no smarter than the financial advisors they could have access to. Ted Dabrowski: They make it so easy now to invest. You just call Charles Schwab, you call Fidelity, and they make it easy. I think that’s the whole thing, you know, public sector employees have gotten so in bed with the government, that they’re letting the government control their lives for them, including their retirement lives, and the government’s made a disaster of that, and people are scared that they may not have a retirement. We argue that the workers should have control; they should have that freedom to control their own retirement account. If they want the state to manage them, let them. But for those who want something different, give them the option; it’s only fair. Dan Proft: I want to go back to the Chicago public school system for a second, because we got a couple of things, a couple of chiblits that are always advanced by the Teachers’ Union, and their acolytes that need to be addressed. One is this idea the state’s not paying; it’s fair share the CPS, that’s the problem. Why don’t we just start there? Let’s do one at a time. So CPS receives a majority of its funding from the state, which is materially different than all the Collar County districts – well, most of the Collar County districts – and for the Collar County districts that it’s not materially different, that are majority funded by the state, they end up – districts like Matteson; low income – they end up subsidizing; so you have low income people in Matteson subsidizing people in Chicago. Ted Dabrowski: Well, let me just hit the first point. We’ve run the numbers, we’re going to be releasing them pretty soon. What Forest Claypool says, he’s using a logic that I don’t think makes sense, but let’s follow him with his logic; he says they have 20% of the students; they should get 20% of what the state doles out, to all the districts; and he says that that’s not true; well, we’ve run the numbers, and if you take the last ten years, including pensions, because he argues that Chicago public school district pays their own pensions, whereas the state pays the pension for all the other school districts; he says that’s unfair; and you could, at face value, agree with that; what Forest Claypool doesn't tell you is that the funding formulas for education more than make up for what the city looses on a pension, so bottom line is that we ran the numbers for the last 10 years; they’ve gotten more than their share every single year in the last 10 years, with the exception of this past year. They’ve gotten more on average than all the other school districts. So they’re getting their share, and I think we’re going to debunk his myth. He has to stop complaining that he needs a state bailout and start focusing on what reforms he can pass in Chicago. I think that’s where he really needs to focus on. Dan Proft: And so let’s just kind of again do this; like a little bit of classroom math – not common core style either, because I don’t know how to do math common core style – but the city of Chicago spends around 15 grand – a little bit north of that, but let’s use round numbers – 15 grand per kid per year. So classroom of 30 – keep it simple – that’s 450 grand per classroom in the city of Chicago; 650 schools, a little bit less than 400,000 kids like it normally used to be, because of the exodus from Chicago; so $450,000 per classroom; the teacher all-in cost the district $120k a year; let’s say you spend another 50 grand on supplies, because that’s 150. It’s a $1,700 per kid for the pension pick up, for the pension costs, so again, let’s round up to 2 grand; so that’s another 60 grand. So it gets me to 210; let’s say we throw another 50 in for the building of the infrastructure and all that – per kid – so that’s 260. Where’s the other 200 grand per classroom in Chicago go? Does anybody know? Because I asked Karen Lewis this question, I asked Forest Claypool this question, I asked aldermen in the city of Chicago this question. Nobody has the answer to this question. And the other thing that’s even more infuriating than not having the answer is nobody much seems to care. Ted Dabrowski: It kind of reminds me, after they closed the 50 schools and – I forgot who did the analysis – but they couldn’t find the computers, they couldn’t find a lot of the supplies, they were gone; and they can’t track themselves. I think the biggest issue was CPS, is that they’re too damn big, right? It’s a monolith, and they can’t manage themselves, and I think that’s the big issue. Dan Proft: So at the state-level or at the city-level, because the dynamics are very similar? Illinois Policy Institute, what’s a path forward? Everybody gets the benefits they’ve earned up to a date certain; what’s the path forward? What does that look in terms of retirement age? Pension contribution, all of the cost of living adjustments, all of the drivers for cost in the system? What should that look like, that is respectful and reasonable that we can potentially afford, that provides that balance? Ted Dabrowski: So let’s come back to that state university retirement system plan that’s a 401(k). That thing’s been around for 17 years. You’ve got about 1700-1800 workers and retirees in it. What that plan does, and the people who are on that 401(k) style plan, they don’t get social security, so the 401(k) style plan they get is robust enough to meet IRS standards, and to give a sufficient retirement. And what it does is the state puts in 7% into the 401(k) every paycheck, and the employee puts in 8%, so every paycheck period, 15% is going into their retirement account. And that’s been deemed good enough, and has been around for a long time, and many people get it. So we think that’s a good basis for creating a plan for all workers, new workers, and for benefits going for choosing some starting date; we think that would be a great start. You know, there could be debates on how to structure it, but we think that’s a really good start because going forward, what it would mean is that all the benefits that have been earned, any worker or retiree would continue to get… retirees wouldn’t be affected by this plan, but all workers would have earned their benefits up to a point, then going forward, everything goes into a 401(k) style plan. So it’s a fair plan, you respect retirement ages, you respect all that, and it does a lot to fix the problem in Illinois. We’ve run numbers and it depends on how strict we are with the terms, but we believe that we can cut the unfunded liability by 30-40%, which is pretty massive, and we can create a repayment plan on the rest of the debt that gets us out of this problem; in 30 years, but in one that there’s control and certainty, rather than the one we have today which is uncertain. Dan Proft: And to repeat just for emphasis, that means you’re not messing with the retirement age, you’re not messing with COLA's, or the other component parts of a person’s employment or retirement? Ted Dabrowski: Correct. I think what you want to do is leave what people have earned, because I think it’s all a question of constitutionality. Dan Proft: But even prospectively, even for the new hires today. Ted Dabrowski: Well the new hires today are looking for 401(k) plans. Dan Proft: Right, but you’re saying “Hey, if you have 30 years in and you’re 50, 55, 60, whatever, because you’ve got the 401(k), we’ve more or less achieved a solomonic balance of – we’re paying 7%, you’re paying 8%; you’re managing your funds; not defined benefit, it’s defined contribution like it exists in the private sectors, to the extent that even those exist in the private sector today – and everybody’s charting their own course. Ted Dabrowski: Right, and then from then on we just manage the debt that we have and the outstanding liabilities, but we don’t keep creating these unfunded liabilities which we’ve seen just keep growing every single year. They grow out of control. It’s like a mortgage that grows every year, rather than paying it down, it just keeps growing and growing, no matter how much you put in it. That would be the example of a home owner. You keep paying down your debt and it keeps getting bigger, and you can’t get control of it. Dan Proft: Right, and it would also obviate the need to make our mortgage payment with a credit card, which is essentially what we’re doing now, to the extent that we still get credit card companies that will issue us credit cards effectively, because at some point the bond markets are going to seize up and they’re going to disallow borrowing, except that usurious Soprano rates, like CPS just did. Ted Dabrowski: Here’s another point I wanted to make. So we talked about this 401(k) style plan already existing in Illinois; so it’s like some pipe dream we have; this is something that’s a legitimate plan that works, and if it’s good enough for our university professors, why isn’t it good enough for anybody else? But it’s not just Illinois that’s done this; we’ve had massive reforms across the country, and Michigan actually started this. In 1997 they moved all their employees to 401(k) style plans; back in 1997. Dan Proft: Michigan, big union state. Ted Dabrowski: Big union state, 1997, and so they got ahead of this long time ago. Let me give you another state that did a big change. They did a hybrid half, pension half 401(k) style plan, and that was Rhode Island. Democratically controlled legislature, they got it passed; big reform, very painful, but they did it. And Alaska has passed in 2006 a 401(k) style plan for new employees, and most recently Oklahoma passed one. So this is something that’s happening across the country. It’s not some dream, it’s happening. Dan Proft: So the question I’m sure a lot of people are thinking is “If it’s happening across the country and it’s working for 17,000 university professors who are not bitching about it – at least we don’t hear from them bitching about it – why haven’t we scaled it already?” Ted Dabrowski: Well, I think it’s been easy for Karen Lewis and others to say the rich aren’t paying enough. All we need are more taxes. And unfortunately, the union members have bought that argument. They’ve bough that argument that the taxes need to go up. There’s a solution, there’s a promise been made; don’t change what we got as a promise, no matter whether it’s 20 years into the future. Let’s just raise taxes to solve our problems, and at some point there’s going to be revolt. It’s not a big revolt, it’s a quiet revolt by people just leaving the state, leaving the city over and over again. Dan Proft: Isn’t that the problem? Again, it’s a political problem, but people leave the state; we essentially have a hollowing out in the city and the state. People that are insulated from bad public policy, the very rich and the very poor, that are beneficiary to the transfer payments, they don’t feel it, they don’t live in the world of trying to make ends meet, and so that’s what you’re left with, and frankly, that’s the constituency of the left. That’s the constituency of the established power structure in Chicago and the General Assembly. Ted Dabrowski: I think the big issue that’s going to continue to drive change are the property taxes. We’re seeing places, like you said, Matteson, and nearby - Southland – communities, where the tax rates on property, so the effective tax rate on a home is about 4-5% of the value. So if somebody would have tried to buy that house today would have to pay the cash for that home, they’d have to pay the value for that home, and within 20 years, because of taxes, they would have repaid for that home again. Dan Proft: So for most people with a 30 year mortgage, they pay for their home twice. What you’re saying is in Illinois and a lot of regions you’re going to pay for your house the third time because of the property taxes. Ted Dabrowski: Exactly, and that’s why people are starting to walk away from their homes in the Southland area. So you got a place where the manufacturing companies have gone. You see the big swaths of land just empty, and you’re starting to see now these nice big homes that have collapsed in value, and people walking away because they can’t afford it anymore. Between the mortgage and a second mortgage being the property taxes, they’re leaving. Dan Proft: And here’s something else I hear too, a lot of small and mid-sized businesses, 25 to 250 employees, they don’t make headlines when they leave, they don’t make headlines when they lay people off, they’re not big enough, but they’re impactful. They represent three quarters of the jobs in the state. They’re just quietly closing up shop, or they’re downsizing, and kind of methodically moving operations somewhere else. And it’s one of those things, like the old kind of sun also rises, how did you go bankrupt - gradually, then suddenly. So it’s kind of the whole thing, it’s like wait a second. Where did all the businesses in Elk Grove Village and the ring suburbs around O’Hare go? Well they slowly moved out over the course of the last ten years. Now how do you get them back? Ted Dabrowski: That’s really hard, and that’s why I always argue that… I talk a lot about the one reform that we can do tomorrow, and it can be agreed upon all the parties as new employees. Move to 401(k) style plans tomorrow. New employees don’t have a contract, they’re not protected by the Constitution, they would just enter with a new contract. Make it a reasonable, fair, 401(k) style plan. Then people would say “That wouldn’t save a whole lot of money”, but I’m saying “It may not save a whole lot of money, but that sure would send a different message than any message that we’ve sent over the last 25 years”; and that would send a message to the rating agencies, that reform is coming, that’d send a message to future employers, people that want to live in Illinois, but we’ve got to send a positive message, and right now there’s no positive message, and we know with the budget flight there’s no positive message. We need a positive message. Dan Proft: I want to level-up one level of education; the post secondary education in universities, we’ve talk about this cadre of university of professors in a 401(k) system, okay, but a lot of the discussion and the consternation in the context of this current state budget impasse is about universities, and they’re not receiving the funding they’ve become accustomed to from the state, and so there’s the prospect of laying off employees, and there’s a protest on campuses, state colleges, universities, and it’s all directed at the state of Illinois; what are they doing, they’re divesting from higher education. Well, it turns out, and this is some good work that’s been done by State Representative Mark Badneck - who’s a Freshman Republican from Oswego, Plainfield area - it turns out that if you do a little bit of comparison, in terms of what the state of Illinois provides in per pupil support, as compared to their conference peers – whether it’s Illinois State in the Missouri valley, or University of Illinois in the big 10 – it turns out we’re providing almost twice as much state support for pupil than the conference peers in other states, and yet tuition at our state schools is still 40% higher than their peers, their conference peers in those states. Explain that dynamic. Ted Dabrowski: Well, we looked at the numbers in higher education, and it’s easy to blame the lack of a budget right now. It’s easy to do that because it’s easy to point the finger at somebody. Dan Proft: That’s why they’re doing it. Ted Dabrowski: And that’s why they’re doing it, and of course, no budget has created a crack, sorry, is showing all the cracks that exist in higher-ed. But this problem has been building for 10 or 15 years or more, right, and a lot of it has to do with how much public funding is making it to education from the federal government and the state. And what these universities are doing is they’re taking all the available money they can find, and they’re hiring administrative staffs that are much too large, they’re bloated, and they’re paying massive salaries and massive pensions. And so when you look at what’s happening, it’s tuition's are having a double, not because education’s doing that much better; it’s all going to fund big, big administrations and super big pensions. Dan Proft: And we saw… we’re talking about the Chicago teachers’ strike in the not too distant past. How about the U of IC 1,100 professorate strike that was just two years ago – 2014. And they wanted to lift the floor for essentially part-time adjunct facility from 30 grand to 45 grand; 50% increase in base salary, and of course, that levels all the way up; we increase the floor here, and that increases the floor at every rung above that. And so how do we get out of that trap? Ted Dabrowski: It’s the same issues we’re talking. We’re talking pensions again. Dan Proft: Well, we’re talking salaries plus pensions. Ted Dabrowski: What happens is that these salaries are high and so what’s happened now is that when you take the state appropriations to go to education, higher-ed, they’ve actually grown a lot in the past decade. They’ve grown about 60% in the last decade; from 2.6 billion to over 4 billion. So it’s a big chunk of change; the problem has been is that 50% of all that money, 50% of what the state appropriates isn’t making it to higher-ed, it’s going to pay for pensions, and I was amazed when we did our work the other day, to find community colleges; community colleges pay their top person $500,000 a year. Dan Proft: You mean like the president of the university. Ted Dabrowski: The president, right. And of course, like you said, all those salaries get scaled up. Dan Proft: Tell us the story just for illustrative purposes, because it speaks to a larger cultural problem. In your research, the white paper that I read that you did in concert with colleagues at Illinois Policy Institute, a $900,000 administrator at the University of Illinois? Ted Dabrowski: Yeah, $900,000. Dan Proft: What the frack does that administrator do that warrants $900,000?! Ted Dabrowski: Included in that was a roughly $450,000 retention bonus after few years. Dan Proft: Okay, so what the frack does that administrator making 400 grand do that warrants a $450,000 retention bonus? Ted Dabrowski: Exactly. That person will probably get somewhere in the range of who knows, 8 to 9 to 10 million dollars in pensions. Think about that money, how many kids, how many scholarships that would fund in a given year for kids that tend Chicago State; that one person. Dan Proft: But they don’t hear, I mean you may hear it incredulously, but you’re going to hear it. Well, you want to attract and attain talents in academia, don’t you? Ted Dabrowski: So you can say that, now the question is, to how many people do you pay that? There’s a great study done by the Illinois General Auditor, and he looked at the number of administrators that these universities have, and it’s amazing. We looked at Chicago State… Dan Proft: This is like the Teldar Paper story, like all these vice-presidents, they just send memos back and forth; I can’t figure out what they do; this is the Michael Douglas moment? Ted Dabrowski: Well, nobody knows what they do, but they’re walking around through halls, but the point was, for Chicago State, they have one administrator for every 18 students. Dan Proft: Not one professor. Ted Dabrowski: No, they have one faculty member for every 16 students. So it’s almost the same number. Dan Proft: One administrator per every professor? Ted Dabrowski: Yes, so you could be sitting in a class, and your professor would be giving you a lesson, and there’d be an administrator right there watching over, making sure things are good. Dan Proft: A supervisor. Ted Dabrowski: You know, and again, a lot of that is because federal mandates, etcetera, but you can’t have that kind of bloat and not expect your tuition's to double, as they have in Chicago state, to the point where – here’s the sad part – the tuition's have gotten so high that you can’t have a kid who wants to work and go to school, because it’s just too expensive. And that’s why they’ve come to rely on scholarships. They’ve come to rely on free money because it’s no longer affordable. If these community colleges were meant for these kids to have an opportunity, why have we priced them out of touch? Dan Proft: So at the post-secondary educational level, where there’s community colleges, and we have some good community colleges, you know, 50 somewhat community colleges that provide… at least you can get your gen-ed requirements knocked out at a lower cost/credit hour at the community college before you go on to a four year university. But what you’re suggesting is that actually that’s not even the case anymore, and oh, by the way, because K-12 education, if so subpar, a lot of the costs at the freshman sophomore post-secondary education level is remediation, you’re paying for high school twice. I mean, if you talk to community college presidents, and university presidents, college presidents in the state, they’ll tell you the one in three kids that are going on at post-secondary education, I’m paying for them to do high school again for the first year, because they’re not prepared to do post-secondary work; so we’re paying for high school twice, and then we’re paying for administrators layered on to kids that are going to post-secondary education, not ready for the work, and then we wonder why the medieval poetry major can’t get a job when they get out of NIU, Illinois State, or U of I, or wherever, or Northwestern, for that matter. Ted Dabrowski: I think you’re capturing the problem really well, and what’s really scary is that not only can’t they get a job, but many of them have debt that they’ll never going to be able to repay, and that’s why you’re seeing these problems, right? You’re seeing trillions of dollars maybe becoming the next big problem in our country, with all this student debt the kids can’t pay back. A lot of it, again, bring it back around, a lot of it driven by pensions. Dan Proft: Fundamentally, if we’re thinking about K-12 education, and we’re thinking about higher education, with the bleak financial picture that we’ve painted, and the systems that have effectively been set up – let’s be just real honest about it – have effectively been set up to pay generous salaries and benefits to the adults in the system, not to educate children and to program for success in life. Ted Dabrowski: The Jerry Jones Program. Dan Proft: Clearly that’s not happening for the majority, then if there was one or two things where you could wave a magic wand at the Illinois Policy Institute and say this is the way to kind of a halt and do a 180, take a step back, and then chart a completely different course, what are those one or two things that get us off this path to ruin that we’re on, and onto a path of fulfilling the mission as stated of K-12 and post-secondary education? Ted Dabrowski: I think K-12 – I’m huge in empowering parents; I’m speaking generally, off course of some great public schools; and there’s people who are dedicated… Dan Proft: As there are at the post-secondary level. Ted Dabrowski: Listen, it’s not that people aren’t dedicated and they don’t care. I think systemically, and I think CPS, I’m sure there’s thousands of teachers and employees that care, I think the system is broken. The system – I’d say – is morally bankrupt. And it’s not going to work, and so until you get into a situation, and again, we’re seeing this happen again, same like we talked about 401(k)s, we’re seeing the same thing for school choice plans. Parents should be given the choice over where their kids go to school, and that’s one super empowering for parents who feel like they’ve been just totally left out of this, and that they think that more money is the solution, rather than being given a choice and control over their children’s education. So I think that’s number one. And we just saw Nevada, all of its 500,000 public school students have been given the choice of a voucher up to that $5,000; all of them. It’s amazing, state-wide, amazing. There’s now 26 states that offer school choice. Why isn’t Illinois one of them? Why isn’t Chicago one of them? Dan Proft: So that’s K-12 at the university level the problem is choice, right? Because Illinois, all the auto makers in the 70's have been insulated from competition, and kids are taking their GI bill, their Pell Grant, their stafford loan money, and they’re not going to school in Illinois. Ted Dabrowski: Right, they’re going outside, and they’re not coming back, and I think that higher-ed is a bigger problem, because it’s also a federal piece to it. You’ve got all that federal money, the schools know it, the schools know that the kids can borrow, and so therefore they raise their tuition and their hiring their jobs program to match that. So I think we need to stop a lot of what’s been happening there, and that would allow the cost come down dramatically; if we didn’t have all these subsidies feeding the cost up; but until we do that, I think it’s going to be tough. With that said, there’s a lot that can be done locally, because we don’t have to pay the salaries that we pay, and 2, we don’t have to have the administrative bloat that we have; and we certainly don’t need to have the pensions that we have. There’s no reason why people are getting 7 and 8 and 10 and 12 million dollar pensions. Dan Proft: So other than scaling the 1,700, go back to the 1,700 person university professors in a 401(k) style program, would you say that the state should starve the beast of academia? And force them to make changes that they’re otherwise not inclined to make, as long as you keep the spigot open? Ted Dabrowski: Well, sadly, that’s what’s happening, right? And it shouldn’t be that way; you’ve got a lot of people in pain now. You’ve got kids who thought they had a scholarship, now they don’t. They don’t care about those problems; then they had to have a plan. You’ve got teachers, professors who thought they had a job; they may lose them. And the way it’s happening now it shouldn’t be happening. It should be the administrations taking control of what they do and running an efficient system, but they’ve never been forced to do it, and Governor Rauner and the budget impasse is making them do that. They don’t like it, they don’t like having a gun to their head, but it’s forcing them to look at their costs, and it’s how it may happen. Dan Proft: So effectively, I mean, this K-12 or university, the common denominator is you have to have families be the accountability mechanism to how their tax dollars are being spent for the experience of their children, they have to be an accountability mechanism for their own local K-12 schools, they have to be an accountability mechanism for the universities they send their kids, for those kids to go onto post-secondary education. Ted Dabrowski: That’s absolutely right, and it’s interesting when you think about Chicago, and this comes back again empowering parents, families, the residents. Not the bureaucrats. When you look at the Laquan McDonald case, right, and you’ve got a Chicago, a police force and or mayor, or a attorney general who can hide information from the public for more than a year. When you have a situation where a school district can strike two times in a row on families; when you have a police force, when you try to take the problems of a Jason Van Dyke and discipline him – the police officer that shot Laquan McDonald, but you can’t use his old history of complaints, there’s a lot of things that the public is not seeing, and they seeded that too much of their power is residence to the Government, and a lot of what we’re talking about today is giving the power back to the residents. Give it back to the families, at least give it back to the people. Dan Proft: He is Ted Dabrowski, he’s the Vice- President of Policy at the Illinois Policy Institute. Nobody does more numbers, reality based research on these intractable problems in terms of the quality of public education in the state from pre-k through post-secondary than Ted and his team at the Illinois Policy Institute. You should read their stuff religiously so you’re empowered with the information they have researched and called to be that accountability mechanism that we’re talking about. Pleased to have Ted Dabrowski, Vice- President of Policy from the Illinois Policy Institute on this edition of Against The Current. Thank you for joining us, Ted, thank you. Ted Dabrowski: Dan, I appreciate it.

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Is Math an Opinion? IL Policy's Ted Dabrowski on Public Sector Salaries and Pensions

On this edition of Against The Current, Dan Proft is joined by Illinois Policy Institute Vice President of Policy Ted Dabrowski for a discussion on public sector salaries and pensions in the City of Chicago and the State of Illinois in K-12 education, at the collegiate level--like explaining why an U of I administrator makes $900k--and for public safety personnel. Dabrowski frames the choices Illinois families and policymakers alike face and suggests the way back from the fiscal abyss for the worst-run, worst-rated major city and state in America.

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Dan Proft: Thank you for joining us on another edition of Against the Current; coming to you from the Skyline Club, on top of the Old Republic building in downtown Chicago. My name is Dan Proft, and our guest on this episode is Ted Dabrowski, who is the Vice President of Policy for the Illinois Policy Institute, the Free Market Think Tank, economic liberty orientated think tank in downtown Chicago. Ted, thanks so much for joining us, appreciate it. Ted Dabrowski: Thanks for having me. Dan Proft: There’s a lot to talk about. You’ve got judicial decisions, as relates to pensions, both at the state level, with regards to Chicago pensions coming on the heels of Illinois Supreme Court’s decision from just a year earlier on state pensions, and then you’ve got the Supreme Court decision because of these Scalia absence on the Friedrichs v. California Teachers Association, as it pertains to forced union dues; that’s a lot to talk about against the backdrop of the second teachers’ strike looming in less than four years, and an almost junk-rated city of Chicago, according to Fitch, mostly because of the inability to solve the pension problem, combined with a junk-rated Chicago public school system, combined with the state, that has the worst credit rating in the United States. So, some challenges I think is a fair assessment. Ted Dabrowski: Some pretty big challenges. Dan Proft: Yeah. So why don’t we start with Chicago public schools, and the looming teacher strike over the teachers’ unwillingness to increase their contribution from 2 percentage points of the 9 percentage points they pay into the pension system to not have the Chicago Public School System pick up the other 7 percentage points anymore, as it’s been the case for the past 3 decades. Of course, the management side wants them to pick it up, so they can start trying to make the math work, and the teachers don’t want to essentially take a pay cut to increase their contribution to their pensions. Why is the teachers’ position unreasonable? Why should they pick up the 7 percentage points that the school system has been picking up for these past 3 decades? Isn’t that just another promise that was made to them, like they say, the Constitution made a promise to them and it shall never be changed? Ted Dabrowski: It’s another perk that Chicago teachers have had for a long time. It was gained back in 1981, and the issue, I think, the bigger issue is that the Chicago teachers do pretty well when you compare them to big cities across the country. They have the highest salaries of any big school district in the nation, and so what’s amazing is… Dan Proft: So higher than New York, higher than California, higher than L.A, higher than Houston. Ted Dabrowski: Higher than Miami, etcetera. So, they do pretty well, and again, it’s something they’ve negotiated, but they’ve done well, and included in that is this teacher pension pickup. That’s fancy words for, “Look, teachers, you don’t have to pay your full pension share, full pension payment you’re required to pay. We, the School District, which means tax payers, will pay it on your behalf”. And that’s been going on for about 3 decades, and the School District is broke, any way you look at it, it’s broke. And so CPS, Claypool and others trying to fix the problem are asking the teachers just to pay their fair share. Dan Proft: And by the way, I had the opportunity on the morning show that I do on AM 560, Chicago’s Morning Answer, to speak with Jean-Claude Brizard, a couple of CPS superintendents ago; this is not the CPS superintendent that’s going to jail, for those of you scoring at home, but they were running billion dollar budget deficits when he arrived as Rahm Emanuel’s first Chicago Public School superintendent. Nothing has changed in the intervening 5 years; in fact, it’s gotten worse, so do we start with the pension pick up and the distribution of who’s picking it up, or do we start with the fact that 9% paying into your pension, that’s also insufficient. Ted Dabrowski: Right, that’s insufficient. I think that the bigger issue is that the School District has been mismanaged for a long time, and you’ve got issues from not funding pensions for nearly a decade, you’ve got issues of Barbara Byrd-Bennett being indicted for fraud. You’ve got a situation where you’ve got a Teachers’ Union that’s willing to strike two contracts in a row, and they’ve won the last contract. They won big; they strike, despite the fact that the city, or the district, was already billion dollars in the hole. They had no business striking then, and they have no business striking now. So really, what you’ve got is a situation… Dan Proft: But they strike because… they struck, they won, so they’re not incentivized to do anything other than strike if they don’t get what they want, because they figure that the politicians will bend over… Ted Dabrowski: Like they have… Dan Proft: Like Tiny Dancer did four years ago. Ted Dabrowski: And he’s even weak. If he was weak then, he’s even weaker now, given the situation he has at home. So this is a situation where the two big groups, the Administration and the Teachers’ Union, they collude when they need to, they strike when it makes sense to then, and in the end it’s all the kids who get left out, and I think that’s the whole sad part of the story, which is why many people talk about bankruptcy. If Rahm Emanuel doesn’t want to do something about the finances, if Karen Lewis doesn’t want to do something about the finances, let it go bankrupt, and finally get a situation where we can get a focus back on the kids and not on the adults. Dan Proft: Well, that’s what the Governor said, Governor Rauner has said, “Bankruptcy needs to be something that the city and CPS take under consideration”. They’ve rejected that because of course, nobody wants to be the person, or people in charge, right, to be taken over by the state, to go bankrupt on my watch; what does that say about my leadership and my management; making the tough decisions to bring us back from the precipice, just rather than pushing us over. So why not – and this is more of a political question than a policy one – but from Governor Rauner’s perspective I’ve offered to pitch in and help. I’ve offered, here are some options, and by the way, I have kind of a 30 year track, because the reason I’m 100 millionaire is because I’m pretty good at reading the balance sheets and understanding what the real world options are, and if they don’t want to entertain real world options, why not just wash your hands and just say, “Okay, geniuses, okay, Tiny Dancer, okay Karen Lewis, whatever, Forest Claypool, you figure it out. But you can come down to Springfield with your pickle buckets and panhandle outside the Capital, and we’re not giving you anymore money”. Ted Dabrowski: Yeah, and I think politically that’s where it goes. I think that’s where it goes, and the sad part is – and I think everybody knows this – is that, you know, we just had a massive property tax hike in Chicago; the largest on record, and that only solves a small part of the problem; we probably need to have another two of those to try to start getting toward balance, and so the sad part is that Chicagoians are already burned with all kinds of nickel and diming fees, and red light… you know, anything you want to talk about, there’s a fee or a tax for it. Chicagioans can’t afford more, and we’ve already heard about people leaving the city. Dan Proft: But at least Teachers’ Union is honest about… I mean, I give them credit… they’re kind of like Bernie Sanders; they are like the honest socialists, as opposed to the disingenuous socialists. Property tax increase – sure. Chicago Teachers’ Union is on board for that; Karen Lewis – yeah; Graduated State Income Tax – yeah; fine. Ted Dabrowski: Financial services is back. Dan Proft: Yeah, on Nassau Street, on the exchanges, financial transactions – good. They’re contemplating the institution of a new city income tax to layer on to all the other taxes – we’re open to that; all they care about is the revenue side; at least they’re genuine about it, so you can have an honest conversation. Tiny Dancer and the Chicago Democrats trying to cling to power, they understand the political difficulty of that, because they have to stand for election outside of 30,000 teachers, and so they play this game like something can be solved by getting a half of billion dollars every other month from the state of Illinois. Number 1 – it doesn’t solve it; number 2 – it’s not going to happen. So do you give the Teachers’ Union at least credit for being honest, so we can have an honest conversation? Like here is where they want to solve the problem; that’s one option. Confiscatory taxation on top of confiscatory taxation; and here’s another option, like you and the Illinois Policy Institute have charted, that presents a real choice for Chicago residents and Illinois residents to consider. Ted Dabrowski: I think you’re right, they are, to say, honest about their motives with you, and Karen Lewis is pretty clear about it, but I think that’s why we call them the most militant union in the US. They say what they want, they strike for it and they go for it. Dan Proft: And they unironically wear red shirts to their rallies. I mean, beat me over the head with a cudgel, I get it. Ted Dabrowski: I think the saddest part for me – and the parents haven’t figured it out yet – still the parents are still backing with the Union. In the first strike they did it still seems like they have backing, but at some point that’s going to break, and when people realize that those strikes mean bigger and bigger taxes, increase in property tax, especially for the low income families, right, because they may not pay property taxes because they’re owners, but they certainly pay higher rent; they certainly pay higher sales taxes, higher X, Y and Z, and at some point there’s got to be a connection. Dan Proft: But those are the unseen costs that they don’t kind of…are people connecting the dots. Because it seems to me what Karen Lewis is good at doing – and to some extent, Rahm is good at doing as well – is presenting it like Rahm and Karen Lewis are on the opposite sides. They’re not on the opposite sides. They’re fighting over who gets to be the central planner in charge, right? And so the free market perspective of the economic liberty movement, to some extent has to also bear some culpability for not charting a third way, and explaining to people that you’re getting played by both sides. They’re not looking out for your best interests, and they don’t have a plan that solves this without imposing additional duress on you, on your children, on the taxpayers read large, so that the city continues to shrink and the number of revenue producing wards continues to winnow, and we continue the death spiral to a place that you’re not going to be insulated from in terms of pain. Ted Dabrowski: No, I think you’re right, but these guys have always worked together. That’s why I said they collude. They’re like two monopolies, or an oligopoly, and they work together pretty closely; they choose to fight every once in a while, but never – and if you think about this, are the discussions and the fights about better outcomes – we don’t hear much about that; it’s all about who’s going to win the power struggles; whether it’s Rahm or there’s Karen Lewis; whether it’s Claypool, whether it’s Rauner in the takeover; but nobody’s talking about how to help the parents win. And what you’re right about is that really this is a battle over who controls billions of dollars in salary, and billions of dollars in pension payments. And Rahm loves to be in control of that, and so does Karen Lewis. Dan Proft: I know, the 6 billion dollars CPS budget; what is it, a third of it is salaries? Ted Dabrowski: Oh yeah, you’ve got over 2 billion, sure. And so that’s the control power, and so when we talk about, and you’re right, the free market movement that hasn’t done a great job in Chicago, in Illinois, about saying “Hey, it’s time we take the power out of Rahm Emanuel; it’s time we take the power away from Karen Lewis, and give it to the families; let them be in control of the dollars, and let them hold schools accountable”, and by that I mean the parent would have the ability to walk away from the school and use that public money for a private school, if he/she wasn’t having their kids’ needs met. Dan Proft: Or a public school. Ted Dabrowski: Or a public school. It could just be give them the power to walk, and when the parents have that power, then the public schools would have to listen. Dan Proft: Well, you say, you know, the parents side with Karen Lewis and the Teachers’ Union; well, that’s because they experienced the teachers. Right, their kids experienced the teachers, and so they like Mrs. Smith, who teaches 4th grade, and they like Mr. Jones, who teaches 8th grade. They know those two, so when Mrs. Smith or Mr. Jones or their local school principle says, “Are you going to throw in with me, or are you going to throw in with that little cleptocrat on the 5th floor of City Hall?”, that’s an easy choice. Ted Dabrowski: It is, but I think, though, more and more teachers are starting to realize; and if you’re a 35 year old teacher and you hear the arguments going on, you say, “Wait a minute, is there going to be a pension for me? I’m going to contribute for years; will there be a pension for me?”, and I got a call yesterday, as a matter of fact, from a teacher; she’s 67, retired from CPS, lives in the suburbs, and she’s scared to death whether her pension is going to be cut totally. Dan Proft: When did she retire? Ted Dabrowski: She retired just a few years ago. Dan Proft: So about the average age of 63, which is like the average age of a CPS teacher retiring? Ted Dabrowski: The average retirement age is closer to 60, so over half retire in their 50s, and you’re hitting on a good point, Dan. The reason these pensions are so expensive is because the average worker who works there is retiring in their 50s, most of them with full benefits, and because they get automatic costs for living adjustments, those pension benefits double after 25 years. It’s a fantastic gig, and it’s something that tax payers can’t afford. Dan Proft: Let’s talk numbers, kind of get out of the unfunded liabilities and the billions, and this and that, that don’t mean anything to most people, and you can’t kind of distill down to something they can’t relate to. Let’s relate it. So the Chicago public school teacher retiring in 2014 with 30 years in max out in terms of pension, what annual pension are they receiving? Ted Dabrowski: About 68,000. Dan Proft: $68,000? Ted Dabrowski: Right. $68,000. Dan Proft: Which is almost 40% more than the medium household income in Illinois? Ted Dabrowski: Sure, close. And you can compared a medium household income; that’s more than one person. Dan Proft: So maybe it’s 25% more than the medium household income in Chicago. It’s still a big number. I’ve looked at the work that you and Illinois Policy Institute has done, and I just want to relate these numbers because they are staggering for anybody that works in the private sector, and frankly, anybody that works. This is IPI numbers – a Chicago public school teacher retiring in 2014, 30 years in will have paid these around numbers, $133,000 into their pension, will receive 2.1 million dollars back, a 15,000% plus return on investment. Ted Dabrowski: And let me just say one thing, that that 133 is giving the teacher credit on having made the full payment, when in fact the school district was picking up… Dan Proft: Would they had made less than 25% of it. Ted Dabrowski: Correct. So it’s phenomenal. These are great returns. Dan Proft: You’re right. So how do we have a bankrupt school system, and a bankrupt city, and a bankrupt… I mean, come on? Ted Dabrowski: And how many people in the private sector have 2 million dollars from having their career sitting there waiting for their retirement? Dan Proft: What’s the private sector counterpart? I think you guys have this too. So if you wanted the average retiree kind of same-similar situated, if you wanted to receive 2.1 million dollars in pension benefits back, pay yourself 70 grand+ a year in retirement, how much would you have had to contribute into your 401? Ted Dabrowski: Around one and a half million dollars, because interest rates are so low, so you’d have to put in a lot of money just to get that. Dan Proft: So in the private sector it’s one and a half million dollars in for 2.1 back; at CPS it’s 133 in for 2.1 million back. Ted Dabrowski: Correct, and this is phenomenal. And it’s not sustainable, I mean, don’t forget the reason why it’s so high. That 2.1 million is because they get that 3% automatic bump in their pension benefit each period. Dan Proft: The cost of living adjustment turned out to be an annuity because that’s seven times the rate of inflation for the last decade. Ted Dabrowski: Correct. And so basically, somebody’s pension benefit doubles over 25 years. It’s phenomenal. Dan Proft: And this is the case – not to get too far field off of teachers and CPS's; that’s really kind of at bar with the strike looming in May – but the numbers for Chicago firefighters, for Chicago police officers, for city of Chicago municipal employees, for city of Chicago laborers, and the laboring public sector, they’re basically the same. Ted Dabrowski: Pretty similar, yeah; of course, Chicago police and fire will be a little higher. But basically it’s the same, and you’re talking about the average career worker getting somewhere in 2 million dollars and more in retirement; and it’s really hard to ask taxpayers who are struggling to pay that over and over again. Dan Proft: And so, when you look at these numbers, the public sector union, a lot of the ranking file, the response is “Wait a second; why are you attacking teachers, and firefighters and police officers? Don’t you respect the job we do?” And even if you say you respect the job that we do, “Hey look, we play by the rules that were set forward by the politicians that set the rules, so why should we take a haircut, when they made a promise and we relied on that promise?” Ted Dabrowski: I think it’s a good argument. Look, I always want to blame the people who set the laws. It’s the politicians who agreed to bad deals. I think everybody fights for their own special interest, whether it’s the Teachers’ Union, or an employee wanting a raise, or better terms, so I think it’s important that we don’t vilify teachers or cops; my kids go to the public schools. I love my kids’ teachers. I think they do a great job, but the bottom line is this is not about that. This is about the state’s ability, and people’s ability, and taxpayers’ ability to pay for these benefits, and so I don’t think we should vilify them, but I think there has to be realization that the agreement, whatever it was… we should meet whatever obligations we made; whatever’s been promised and has been earned we should pay. But going forward we need to strike a new deal, and I think that’s what this whole discussion is about. Striking a new deal that’s fair for the public sector workers, but also fair for the tax payers that fund them. Dan Proft: Yeah, I just want to emphasize that, because this seems to get lost in the conversation; I have the opportunity to talk to and hear from the public sector workers a lot in my radio program, and they don’t seem to hear it when I say “Wait a second, whatever you’ve earned, even if it was a bad deal, you should get, because there was reliance created by the state, you did anticipate these benefits, you earned the benefits, you should receive what you’ve earned. Full stop; however, at a date into the future, certain, like a year from now, there’s a new deal for the existent workers who have not earned those benefits, because they haven’t worked those days in the future yet, as well as for new hires, that is not going to be the same deal that you have now”, and point of fact, don’t we have that with the state employers with the tier 2 for new higher at this point, even at present? Ted Dabrowski: Yeah, so of course, tier 2 is a brand new employee, but I think what we’re saying is that for even existing employees – and this happens in the private sector every day. The private sector can’t take away benefits you’ve already earned. That would be a huge problem, and that shouldn’t happen here in Illinois either, at the state or city level. But going forward, we have to have a deal that allows the state budget, the city budgets – because we haven’t talked about cities; this is a huge problem all across Illinois with pensions for firemen and policemen… Dan Proft: And nationally. Ted Dabrowski: And nationally, of course. It’s a huge problem everywhere, and it’s pushing up property taxes – I’d like to talk about that in a minute, about all the taxes that are going up, but at some point there has to be another deal, because here’s the issue; right now you and I are saying we want to protect benefits we’ve already earned; if we ever go into bankruptcy courts, federal courts don’t care about state Constitution; federal courts trump the state Constitution, so like you saw in Detroit, like you’ve seen in Alabama, like you’ve seen in Rhode Island, pensions have been cut as a result of bankruptcies, and so if the public sector union workers don’t finally realize that they can actually have their pensions cut under bankruptcy, they’re going to get hit with exactly what they don’t want to see. Dan Proft: So many of them are listening to their public sector union bosses, rather than looking at the math and just taking a common sense approach to it to say “Do I really want to pay Russian roulette with my retirement?”. It’s not roulette; it’s Russian roulette, because all it takes is one federal bankruptcy judge to say, for example, “Yeah, states cannot go bankrupt under federal bankruptcy code”. But if pension funds go upside down and they can no longer pay out beneficiaries, then I’m going to say that pension funds are separate and distinct from the state, and instead of checks in the mail you get IOUs until they figure it out. Ted Dabrowski: Or you have a 15% - 20% haircut. And I think that’s a real distinct possibility. That’s why I think at some point, and I think the state ruling recently that came out last week… Dan Proft: This is on Chicago pensions. Ted Dabrowski: On Chicago pensions; where it starts to say that things like pension benefits can’t be collectively bargained if there’s some exchange, some consideration given for changes in the pension benefits… Dan Proft: Simple contract law theory. Ted Dabrowski: Exactly. And that being the case, I think behooves the unions. And let’s talk about Chicago policemen and firemen. You were talking about teachers and others. The worst funded pensions in Illinois right now are the Chicago fire and police pensions. They have about 25 cents of every dollar they should have in their account. So imagine, you have your 401(k), you open it up and you think you have $100,000. You open it and there’re only 25,000. You’re missing three quarters of the money. That’s exactly what’s happening to policemen and firemen right now. And I don’t know why they’re not jumping up and down and saying “I want a new deal. I want something better. Promise me what I’ve earned, but give me a new deal going forward”. And I think that’s what they should be fighting for, because they run the big risk of having a massive haircut. Dan Proft: If you have a police fund or a firefighter pension fund that’s only a quarter funded, are those pension funds salvageable. Ted Dabrowski: I think, we’ve run numbers, I think we can salvage them, but it’s painful, right? And you’ve got to have a long term process, but you got end the game now. But effectively, in any private sector scenario, they’re bankrupt; they’re done. They would have been closed up if they were part of a private sector group, they would have been closed, liquidated and gone. So it’s something, I think, they have a huge interest in hitting the table and negotiating. I think the way to look at this, Dan, if we can stop the bleeding now, and move to a new 401(k), stop playing go and forth for all benefits earned going forward, then what we do is we treat the unfunded liability as debt. Chicago just has a bunch of debt and it’s going to take years to pay that debt off; but I think it can work with Chicago’s numbers if we stop the pain. Dan Proft: Then you can start to bend the cost curve and catch up. Ted Dabrowski: Exactly, but it’s not just police and fire, you have to do that for teachers’ pensions and for the other pensions in Chicago, so it has to be a whole deal, because remember, you have one taxpayer in Chicago, and that one taxpayer has to pay all those pensions and Cook County pensions as well, and of course, the shortfall at the state-level; so we have to be careful to respect the taxpayers in Chicago. Dan Proft: It seems to me the taxpayers are starting to understand what is in the offing, and I just look at out-migration; is there any better indication of the vitality of a community, county or state than whether people choose to live there or not, and in 2015, according to the census, Cook County lost more population than any other county in the country; this against the backdrop of the state of Illinois continues to compete with New Jersey for the largest out-migration year after year. Ted Dabrowski: I think that’s the biggest issue, and it’s something that we talk a lot about as respecting the taxpayer. And I don’t think Rahm Emanuel, Michael Madigan, they don’t understand… sorry, they may understand, but they don’t care; it doesn’t fit into the political calculus, but the reality is that people are leaving and I think more telling them the 2015 numbers is the out-migration that occurred between 2000 and 2010 by middle class Blacks. 180,000 blacks were lost during that period, and if you look at what happened in Detroit; first you lost the White taxpayers when you had the White Flight, but the problem really happened in Detroit when the middle-class Blacks left. And then the tax base was gone, and I think Chicago has to start thinking about how to protect its residents – doesn’t matter what color they are – but if you don’t protect your tax base you’re done. And we’re entering that spiral today. Dan Proft: Well that’s interesting, so I have a conversation with my aldermen; I’m in the 42nd ward when, you know, the wards that looks fancy on the outside, and you hear this propaganda from the likes of a Brendan Reilly, who’s just a toady for Madigan and for Tiny Dancer. Well, look at the planters on Michigan Avenue, and look at the tower cranes with new rental units going up in Streeterville. Everything’s on the up and up, and my response to them is, even let’s accept your premise, that this ward, one of 50 wards, is on the up and up; explain to me how you think – let’s say there’s 10 wards, 20% the city, that are kind of revenue producing wards that have substantial economical activity ongoing – so you’re telling me that 80% of the city can burn to the ground around us and we’re not going to be impacted? Do you really believe that? Does anybody really believe that except a craven feudal lord, which is what these aldermen are? Ted Dabrowski: I remember the first time I went to Detroit right after the bankruptcy, and I came back and wrote about it, and the lessons I learned from it, as it relates to Chicago; a lot of pushback, you know, Chicago is not a Detroit. Dan Proft: No, never happen here. Ted Dabrowski: And listen, Chicago’s not a Detroit when you think about the diversification of businesses; you walk down in the loop here, it’s hot, man, it’s rocking, it’s a lot of stuff going on, but I think what people forget is bankruptcy is not about what you look like; bankruptcy is whether you can afford to pay your debts. It’s simply that, and you take the best paid athletes in the nation. A lot of them go bankrupt; they’re making 100 million dollars, but they go bankrupt because they don’t manage their spending, and I think that’s where Chicago is. Dan Proft: Yeah, how can they be bankrupt? They’ve got a nice home, they’ve got a nice car and they wear nice clothes? How can they be bankrupt? How can Antoine Walker – he’s an NBA champion – how can he go bankrupt? Terrible investments; he put his money to use in all the wrong places. That’s how you can go bankrupt. Ted Dabrowski: And I think that’s where Chicago is. Chicago is exactly there. And let me make one other point, and I think this is important. Chicago’s got a big footprint. We used to have 3.5 million people, right? We’re down way below that. The population in Chicago now is below the 1920s. That’s a massive change. We still have that same infrastructure, and I don’t just mean physical infrastructure, like the highways and all that. We have the same public sector infrastructure, and that public sector infrastructure’s not shrinking fast enough with the city. What it’s doing is it keeps growing; the cost of that infrastructure, the unions, the teachers, the police and fire; it’s too expensive. It’s outpacing the growth of what people make in the city, and that’s what’s going to break us. Dan Proft: So you wanted to talk about the taxation that your median Chicago resident faces. Let’s talk about it. Ted Dabrowski: What you see in Chicago is a lot of people saying “Oh, property taxes are much, much lower in Chicago than they are in the suburbs. Dan Proft: Subsidized by commercial. Ted Dabrowski: Subsidized by commercial one, but two, they are relatively lower, but what people don’t talk about is the… you know, Daley was a genius. We all know that. He knew that he shouldn’t go after property taxes, so what he did, and the other who followed, is they came up with a bottled water tax, and a dollar tier tax, then you had to add the red light cameras, they had every kind of tax and fee to hide the fact that the raising taxes on you. And it’s really hard to track what’s going on, so we did all the numbers, and it’s amazing how much higher, when you take all the taxes that there are in Chicago than in any other city – Evanston’s a competitor – but any other city in Illinois, the taxes are tremendously high. So I think there’s a lot of deceit, the press hasn’t wanted to talk about it properly, none of the politicians want to talk about it, but Chicagoians are taxed up the zahzoo, and in the end, middle class families know it; I think, when we talked about the Black families earlier, schools aren’t working for them, crime is certainly hurting them, and taxes are going against them; why stay? And I think that’s a question that people ask themselves. Dan Proft: Sure, and they ask themselves and they’re answering in the negative. Why stay? It makes no sense not to stay. Ted Dabrowski: And it’s not easy for people to leave, right? It’s hard to pick up and leave. Dan Proft: Right, sure. You laid down routes, you made an investment here, it is a great city, it’s a beautiful city, it’s a fun city; great restaurants and night life and arts and culture. Why do I want to leave here? I don’t want to leave here, but you’re making it such as I can’t make it make sense to be here. And frankly, even someone like me - who does relatively well, because I’ve got phony baloney job on the radio that pays me a lot of money and I work 20 hours a week - even me, I say, “Gosh, move over to Northwest Indiana and lower my cost of living by 40%, my muffling it up by 40%? What am I doing here? Ted Dabrowski: You’re hitting on the issue that recently I was in South Chicago, and I met with this company, Modern Drop Forge – they’re a big steel stamp planter, steel stamper – and they tried to stay in Illinois, they worked hard, nobody paid attention to them; this is a year and a half ago; and so they finally looked at Indiana, and Indiana opened their arms, said come here, the company eventually moved there. I was at there, I think I was telling you about this. I went to their new facility, this massive, beautiful huge facility; state of the art, and a lot of the workers who didn’t want to move to Indiana from Chicago, they went and they looked at the house prices and said wow; they looked at the property taxes, much lower; school choice. Dan Proft: And what you get for those numbers in terms of home and property. Ted Dabrowski: It’s a huge home, and he said he took his wife, this worker who didn’t want to go, he took his wife; they moved. And they’re so happy; and I saw him at the new plant, he’s ecstatic, and that’s what people are experiencing, and we shouldn’t force people to look at those alternatives, but I think what we’re doing is we’re making it such that people… people don’t move because their taxes are high. People move because things get difficult, the opportunities aren’t there, it gets too costly; they finally make a calculus and some way say “Hey, I’m going to go somewhere where there’s a new opportunity”. Whether it’s Atlanta, Houston, Dallas, whatever. Dan Proft: Well right, it’s cumulative. It’s not a single tax, it’s not that if I don’t have a city sticker, my fine is going to be like $42,000 to make the numbers work for the city for one year additional. It’s just the cumulative impact of every time you turn around, you’re just being fleeced. Ted Dabrowski: So it comes around to that’s why we need these massive reforms, and until we get them… Dan Proft: Which, by the way, the funny thing is, the other side, that has been unwilling to advance these structural reforms says we need these structural reforms. What did Rahm come in on? He came in on a wave of here’s a tough guy, he was the Chief of Staff to the President of the United States, and he’s going to make these tough decisions. He’s going to endure the political capital that must be spent to make the difficult decisions to bring the city back, to right the financial ship; and he hasn’t done it. Ted Dabrowski: This is Rahm though, right? He was the guy that was going to let nominate crisis go to waste. Dan Proft: The tutu should have been the leading indicator that this was not a tough guy. Ted Dabrowski: A lot of people were excited, and it’s amazing, because he actually did something that is pretty bold when he first came in. He went down to Springfield, and he sounded like he was proposing the Illinois Policy Institute’s ideas. He talked about COLA – Cost of Living Reforms – producing them, he talked about bringing retirement agents down, and he talked about optional 401(k) style plans for workers. That was awesome, he actually went down to Springfield and did that, and Daley didn’t do that, he didn’t go down to Springfield. So there was a lot of hope in the beginning, but quickly, once the negotiations got tough, once Karen Lewis put her foot down, he caved. Dan Proft: Well the 401(k) thing was interesting, because the response you get from a lot of people is “I don’t want to be subject to market fluctuations; I guess it’s okay if everybody else who is not in the public sectors is subject to market fluctuations with respect that they’re 401(k)s, but we want a guarantee, the define benefit plan”, and so the response to that, that we want this guarantee, 401(k) doesn’t work for us, at the university level, this is kind of an under-reported story, but you were the first one to kind of alert me to this. There are thousands of actual university employees, public employees in this state who are part of a 401(k) retirement system within the larger public university system, so number 1 – is it working for them? – number 2 – if it is, why don’t we scale it? Ted Dabrowski: Well, what’s amazing is that somewhere along the way, 1998, not Mike Madigan, but a guy named Robert Madigan, he passed a law that allowed university professors to have a 401(k) style plan. Why? University professors wanted that portability. They wanted to control their retirement fund. They wanted it to be in their name that they could take when they left the state if they left. Now what’s amazing is that we would allow a professor to have that, right, but not a Chicago fireman, a policeman, or a teacher, who should have their ownership, their own title and control over that money; rather than being dependant on Madigan or Rahm Emanuel, these university professors can take their money and nobody can touch it. And what’s interesting about that whole thing is we’re sitting again almost on record highs in the stock market; these guys are doing really well. The money that’s in there is going up, and despite the massive recovery of the stock market, Illinois’ pensions continue to do worse and worse. Dan Proft: The public sector pension funds. Ted Dabrowski: The public sector pensions get worse despite this massive improvement in the stock market. Dan Proft: So I guess the argument would be made, wait a second, if Dan Proft with his financial guy can figure out where to put his money and how to distribute risk and how to have a balanced portfolio, then why can’t a Chicago police officer, Chicago firefighter, Chicago teacher do the same thing? They can do the same thing. I’m no smarter than they are. My financial advisors are no smarter than the financial advisors they could have access to. Ted Dabrowski: They make it so easy now to invest. You just call Charles Schwab, you call Fidelity, and they make it easy. I think that’s the whole thing, you know, public sector employees have gotten so in bed with the government, that they’re letting the government control their lives for them, including their retirement lives, and the government’s made a disaster of that, and people are scared that they may not have a retirement. We argue that the workers should have control; they should have that freedom to control their own retirement account. If they want the state to manage them, let them. But for those who want something different, give them the option; it’s only fair. Dan Proft: I want to go back to the Chicago public school system for a second, because we got a couple of things, a couple of chiblits that are always advanced by the Teachers’ Union, and their acolytes that need to be addressed. One is this idea the state’s not paying; it’s fair share the CPS, that’s the problem. Why don’t we just start there? Let’s do one at a time. So CPS receives a majority of its funding from the state, which is materially different than all the Collar County districts – well, most of the Collar County districts – and for the Collar County districts that it’s not materially different, that are majority funded by the state, they end up – districts like Matteson; low income – they end up subsidizing; so you have low income people in Matteson subsidizing people in Chicago. Ted Dabrowski: Well, let me just hit the first point. We’ve run the numbers, we’re going to be releasing them pretty soon. What Forest Claypool says, he’s using a logic that I don’t think makes sense, but let’s follow him with his logic; he says they have 20% of the students; they should get 20% of what the state doles out, to all the districts; and he says that that’s not true; well, we’ve run the numbers, and if you take the last ten years, including pensions, because he argues that Chicago public school district pays their own pensions, whereas the state pays the pension for all the other school districts; he says that’s unfair; and you could, at face value, agree with that; what Forest Claypool doesn't tell you is that the funding formulas for education more than make up for what the city looses on a pension, so bottom line is that we ran the numbers for the last 10 years; they’ve gotten more than their share every single year in the last 10 years, with the exception of this past year. They’ve gotten more on average than all the other school districts. So they’re getting their share, and I think we’re going to debunk his myth. He has to stop complaining that he needs a state bailout and start focusing on what reforms he can pass in Chicago. I think that’s where he really needs to focus on. Dan Proft: And so let’s just kind of again do this; like a little bit of classroom math – not common core style either, because I don’t know how to do math common core style – but the city of Chicago spends around 15 grand – a little bit north of that, but let’s use round numbers – 15 grand per kid per year. So classroom of 30 – keep it simple – that’s 450 grand per classroom in the city of Chicago; 650 schools, a little bit less than 400,000 kids like it normally used to be, because of the exodus from Chicago; so $450,000 per classroom; the teacher all-in cost the district $120k a year; let’s say you spend another 50 grand on supplies, because that’s 150. It’s a $1,700 per kid for the pension pick up, for the pension costs, so again, let’s round up to 2 grand; so that’s another 60 grand. So it gets me to 210; let’s say we throw another 50 in for the building of the infrastructure and all that – per kid – so that’s 260. Where’s the other 200 grand per classroom in Chicago go? Does anybody know? Because I asked Karen Lewis this question, I asked Forest Claypool this question, I asked aldermen in the city of Chicago this question. Nobody has the answer to this question. And the other thing that’s even more infuriating than not having the answer is nobody much seems to care. Ted Dabrowski: It kind of reminds me, after they closed the 50 schools and – I forgot who did the analysis – but they couldn’t find the computers, they couldn’t find a lot of the supplies, they were gone; and they can’t track themselves. I think the biggest issue was CPS, is that they’re too damn big, right? It’s a monolith, and they can’t manage themselves, and I think that’s the big issue. Dan Proft: So at the state-level or at the city-level, because the dynamics are very similar? Illinois Policy Institute, what’s a path forward? Everybody gets the benefits they’ve earned up to a date certain; what’s the path forward? What does that look in terms of retirement age? Pension contribution, all of the cost of living adjustments, all of the drivers for cost in the system? What should that look like, that is respectful and reasonable that we can potentially afford, that provides that balance? Ted Dabrowski: So let’s come back to that state university retirement system plan that’s a 401(k). That thing’s been around for 17 years. You’ve got about 1700-1800 workers and retirees in it. What that plan does, and the people who are on that 401(k) style plan, they don’t get social security, so the 401(k) style plan they get is robust enough to meet IRS standards, and to give a sufficient retirement. And what it does is the state puts in 7% into the 401(k) every paycheck, and the employee puts in 8%, so every paycheck period, 15% is going into their retirement account. And that’s been deemed good enough, and has been around for a long time, and many people get it. So we think that’s a good basis for creating a plan for all workers, new workers, and for benefits going for choosing some starting date; we think that would be a great start. You know, there could be debates on how to structure it, but we think that’s a really good start because going forward, what it would mean is that all the benefits that have been earned, any worker or retiree would continue to get… retirees wouldn’t be affected by this plan, but all workers would have earned their benefits up to a point, then going forward, everything goes into a 401(k) style plan. So it’s a fair plan, you respect retirement ages, you respect all that, and it does a lot to fix the problem in Illinois. We’ve run numbers and it depends on how strict we are with the terms, but we believe that we can cut the unfunded liability by 30-40%, which is pretty massive, and we can create a repayment plan on the rest of the debt that gets us out of this problem; in 30 years, but in one that there’s control and certainty, rather than the one we have today which is uncertain. Dan Proft: And to repeat just for emphasis, that means you’re not messing with the retirement age, you’re not messing with COLA's, or the other component parts of a person’s employment or retirement? Ted Dabrowski: Correct. I think what you want to do is leave what people have earned, because I think it’s all a question of constitutionality. Dan Proft: But even prospectively, even for the new hires today. Ted Dabrowski: Well the new hires today are looking for 401(k) plans. Dan Proft: Right, but you’re saying “Hey, if you have 30 years in and you’re 50, 55, 60, whatever, because you’ve got the 401(k), we’ve more or less achieved a solomonic balance of – we’re paying 7%, you’re paying 8%; you’re managing your funds; not defined benefit, it’s defined contribution like it exists in the private sectors, to the extent that even those exist in the private sector today – and everybody’s charting their own course. Ted Dabrowski: Right, and then from then on we just manage the debt that we have and the outstanding liabilities, but we don’t keep creating these unfunded liabilities which we’ve seen just keep growing every single year. They grow out of control. It’s like a mortgage that grows every year, rather than paying it down, it just keeps growing and growing, no matter how much you put in it. That would be the example of a home owner. You keep paying down your debt and it keeps getting bigger, and you can’t get control of it. Dan Proft: Right, and it would also obviate the need to make our mortgage payment with a credit card, which is essentially what we’re doing now, to the extent that we still get credit card companies that will issue us credit cards effectively, because at some point the bond markets are going to seize up and they’re going to disallow borrowing, except that usurious Soprano rates, like CPS just did. Ted Dabrowski: Here’s another point I wanted to make. So we talked about this 401(k) style plan already existing in Illinois; so it’s like some pipe dream we have; this is something that’s a legitimate plan that works, and if it’s good enough for our university professors, why isn’t it good enough for anybody else? But it’s not just Illinois that’s done this; we’ve had massive reforms across the country, and Michigan actually started this. In 1997 they moved all their employees to 401(k) style plans; back in 1997. Dan Proft: Michigan, big union state. Ted Dabrowski: Big union state, 1997, and so they got ahead of this long time ago. Let me give you another state that did a big change. They did a hybrid half, pension half 401(k) style plan, and that was Rhode Island. Democratically controlled legislature, they got it passed; big reform, very painful, but they did it. And Alaska has passed in 2006 a 401(k) style plan for new employees, and most recently Oklahoma passed one. So this is something that’s happening across the country. It’s not some dream, it’s happening. Dan Proft: So the question I’m sure a lot of people are thinking is “If it’s happening across the country and it’s working for 17,000 university professors who are not bitching about it – at least we don’t hear from them bitching about it – why haven’t we scaled it already?” Ted Dabrowski: Well, I think it’s been easy for Karen Lewis and others to say the rich aren’t paying enough. All we need are more taxes. And unfortunately, the union members have bought that argument. They’ve bough that argument that the taxes need to go up. There’s a solution, there’s a promise been made; don’t change what we got as a promise, no matter whether it’s 20 years into the future. Let’s just raise taxes to solve our problems, and at some point there’s going to be revolt. It’s not a big revolt, it’s a quiet revolt by people just leaving the state, leaving the city over and over again. Dan Proft: Isn’t that the problem? Again, it’s a political problem, but people leave the state; we essentially have a hollowing out in the city and the state. People that are insulated from bad public policy, the very rich and the very poor, that are beneficiary to the transfer payments, they don’t feel it, they don’t live in the world of trying to make ends meet, and so that’s what you’re left with, and frankly, that’s the constituency of the left. That’s the constituency of the established power structure in Chicago and the General Assembly. Ted Dabrowski: I think the big issue that’s going to continue to drive change are the property taxes. We’re seeing places, like you said, Matteson, and nearby - Southland – communities, where the tax rates on property, so the effective tax rate on a home is about 4-5% of the value. So if somebody would have tried to buy that house today would have to pay the cash for that home, they’d have to pay the value for that home, and within 20 years, because of taxes, they would have repaid for that home again. Dan Proft: So for most people with a 30 year mortgage, they pay for their home twice. What you’re saying is in Illinois and a lot of regions you’re going to pay for your house the third time because of the property taxes. Ted Dabrowski: Exactly, and that’s why people are starting to walk away from their homes in the Southland area. So you got a place where the manufacturing companies have gone. You see the big swaths of land just empty, and you’re starting to see now these nice big homes that have collapsed in value, and people walking away because they can’t afford it anymore. Between the mortgage and a second mortgage being the property taxes, they’re leaving. Dan Proft: And here’s something else I hear too, a lot of small and mid-sized businesses, 25 to 250 employees, they don’t make headlines when they leave, they don’t make headlines when they lay people off, they’re not big enough, but they’re impactful. They represent three quarters of the jobs in the state. They’re just quietly closing up shop, or they’re downsizing, and kind of methodically moving operations somewhere else. And it’s one of those things, like the old kind of sun also rises, how did you go bankrupt - gradually, then suddenly. So it’s kind of the whole thing, it’s like wait a second. Where did all the businesses in Elk Grove Village and the ring suburbs around O’Hare go? Well they slowly moved out over the course of the last ten years. Now how do you get them back? Ted Dabrowski: That’s really hard, and that’s why I always argue that… I talk a lot about the one reform that we can do tomorrow, and it can be agreed upon all the parties as new employees. Move to 401(k) style plans tomorrow. New employees don’t have a contract, they’re not protected by the Constitution, they would just enter with a new contract. Make it a reasonable, fair, 401(k) style plan. Then people would say “That wouldn’t save a whole lot of money”, but I’m saying “It may not save a whole lot of money, but that sure would send a different message than any message that we’ve sent over the last 25 years”; and that would send a message to the rating agencies, that reform is coming, that’d send a message to future employers, people that want to live in Illinois, but we’ve got to send a positive message, and right now there’s no positive message, and we know with the budget flight there’s no positive message. We need a positive message. Dan Proft: I want to level-up one level of education; the post secondary education in universities, we’ve talk about this cadre of university of professors in a 401(k) system, okay, but a lot of the discussion and the consternation in the context of this current state budget impasse is about universities, and they’re not receiving the funding they’ve become accustomed to from the state, and so there’s the prospect of laying off employees, and there’s a protest on campuses, state colleges, universities, and it’s all directed at the state of Illinois; what are they doing, they’re divesting from higher education. Well, it turns out, and this is some good work that’s been done by State Representative Mark Badneck - who’s a Freshman Republican from Oswego, Plainfield area - it turns out that if you do a little bit of comparison, in terms of what the state of Illinois provides in per pupil support, as compared to their conference peers – whether it’s Illinois State in the Missouri valley, or University of Illinois in the big 10 – it turns out we’re providing almost twice as much state support for pupil than the conference peers in other states, and yet tuition at our state schools is still 40% higher than their peers, their conference peers in those states. Explain that dynamic. Ted Dabrowski: Well, we looked at the numbers in higher education, and it’s easy to blame the lack of a budget right now. It’s easy to do that because it’s easy to point the finger at somebody. Dan Proft: That’s why they’re doing it. Ted Dabrowski: And that’s why they’re doing it, and of course, no budget has created a crack, sorry, is showing all the cracks that exist in higher-ed. But this problem has been building for 10 or 15 years or more, right, and a lot of it has to do with how much public funding is making it to education from the federal government and the state. And what these universities are doing is they’re taking all the available money they can find, and they’re hiring administrative staffs that are much too large, they’re bloated, and they’re paying massive salaries and massive pensions. And so when you look at what’s happening, it’s tuition's are having a double, not because education’s doing that much better; it’s all going to fund big, big administrations and super big pensions. Dan Proft: And we saw… we’re talking about the Chicago teachers’ strike in the not too distant past. How about the U of IC 1,100 professorate strike that was just two years ago – 2014. And they wanted to lift the floor for essentially part-time adjunct facility from 30 grand to 45 grand; 50% increase in base salary, and of course, that levels all the way up; we increase the floor here, and that increases the floor at every rung above that. And so how do we get out of that trap? Ted Dabrowski: It’s the same issues we’re talking. We’re talking pensions again. Dan Proft: Well, we’re talking salaries plus pensions. Ted Dabrowski: What happens is that these salaries are high and so what’s happened now is that when you take the state appropriations to go to education, higher-ed, they’ve actually grown a lot in the past decade. They’ve grown about 60% in the last decade; from 2.6 billion to over 4 billion. So it’s a big chunk of change; the problem has been is that 50% of all that money, 50% of what the state appropriates isn’t making it to higher-ed, it’s going to pay for pensions, and I was amazed when we did our work the other day, to find community colleges; community colleges pay their top person $500,000 a year. Dan Proft: You mean like the president of the university. Ted Dabrowski: The president, right. And of course, like you said, all those salaries get scaled up. Dan Proft: Tell us the story just for illustrative purposes, because it speaks to a larger cultural problem. In your research, the white paper that I read that you did in concert with colleagues at Illinois Policy Institute, a $900,000 administrator at the University of Illinois? Ted Dabrowski: Yeah, $900,000. Dan Proft: What the frack does that administrator do that warrants $900,000?! Ted Dabrowski: Included in that was a roughly $450,000 retention bonus after few years. Dan Proft: Okay, so what the frack does that administrator making 400 grand do that warrants a $450,000 retention bonus? Ted Dabrowski: Exactly. That person will probably get somewhere in the range of who knows, 8 to 9 to 10 million dollars in pensions. Think about that money, how many kids, how many scholarships that would fund in a given year for kids that tend Chicago State; that one person. Dan Proft: But they don’t hear, I mean you may hear it incredulously, but you’re going to hear it. Well, you want to attract and attain talents in academia, don’t you? Ted Dabrowski: So you can say that, now the question is, to how many people do you pay that? There’s a great study done by the Illinois General Auditor, and he looked at the number of administrators that these universities have, and it’s amazing. We looked at Chicago State… Dan Proft: This is like the Teldar Paper story, like all these vice-presidents, they just send memos back and forth; I can’t figure out what they do; this is the Michael Douglas moment? Ted Dabrowski: Well, nobody knows what they do, but they’re walking around through halls, but the point was, for Chicago State, they have one administrator for every 18 students. Dan Proft: Not one professor. Ted Dabrowski: No, they have one faculty member for every 16 students. So it’s almost the same number. Dan Proft: One administrator per every professor? Ted Dabrowski: Yes, so you could be sitting in a class, and your professor would be giving you a lesson, and there’d be an administrator right there watching over, making sure things are good. Dan Proft: A supervisor. Ted Dabrowski: You know, and again, a lot of that is because federal mandates, etcetera, but you can’t have that kind of bloat and not expect your tuition's to double, as they have in Chicago state, to the point where – here’s the sad part – the tuition's have gotten so high that you can’t have a kid who wants to work and go to school, because it’s just too expensive. And that’s why they’ve come to rely on scholarships. They’ve come to rely on free money because it’s no longer affordable. If these community colleges were meant for these kids to have an opportunity, why have we priced them out of touch? Dan Proft: So at the post-secondary educational level, where there’s community colleges, and we have some good community colleges, you know, 50 somewhat community colleges that provide… at least you can get your gen-ed requirements knocked out at a lower cost/credit hour at the community college before you go on to a four year university. But what you’re suggesting is that actually that’s not even the case anymore, and oh, by the way, because K-12 education, if so subpar, a lot of the costs at the freshman sophomore post-secondary education level is remediation, you’re paying for high school twice. I mean, if you talk to community college presidents, and university presidents, college presidents in the state, they’ll tell you the one in three kids that are going on at post-secondary education, I’m paying for them to do high school again for the first year, because they’re not prepared to do post-secondary work; so we’re paying for high school twice, and then we’re paying for administrators layered on to kids that are going to post-secondary education, not ready for the work, and then we wonder why the medieval poetry major can’t get a job when they get out of NIU, Illinois State, or U of I, or wherever, or Northwestern, for that matter. Ted Dabrowski: I think you’re capturing the problem really well, and what’s really scary is that not only can’t they get a job, but many of them have debt that they’ll never going to be able to repay, and that’s why you’re seeing these problems, right? You’re seeing trillions of dollars maybe becoming the next big problem in our country, with all this student debt the kids can’t pay back. A lot of it, again, bring it back around, a lot of it driven by pensions. Dan Proft: Fundamentally, if we’re thinking about K-12 education, and we’re thinking about higher education, with the bleak financial picture that we’ve painted, and the systems that have effectively been set up – let’s be just real honest about it – have effectively been set up to pay generous salaries and benefits to the adults in the system, not to educate children and to program for success in life. Ted Dabrowski: The Jerry Jones Program. Dan Proft: Clearly that’s not happening for the majority, then if there was one or two things where you could wave a magic wand at the Illinois Policy Institute and say this is the way to kind of a halt and do a 180, take a step back, and then chart a completely different course, what are those one or two things that get us off this path to ruin that we’re on, and onto a path of fulfilling the mission as stated of K-12 and post-secondary education? Ted Dabrowski: I think K-12 – I’m huge in empowering parents; I’m speaking generally, off course of some great public schools; and there’s people who are dedicated… Dan Proft: As there are at the post-secondary level. Ted Dabrowski: Listen, it’s not that people aren’t dedicated and they don’t care. I think systemically, and I think CPS, I’m sure there’s thousands of teachers and employees that care, I think the system is broken. The system – I’d say – is morally bankrupt. And it’s not going to work, and so until you get into a situation, and again, we’re seeing this happen again, same like we talked about 401(k)s, we’re seeing the same thing for school choice plans. Parents should be given the choice over where their kids go to school, and that’s one super empowering for parents who feel like they’ve been just totally left out of this, and that they think that more money is the solution, rather than being given a choice and control over their children’s education. So I think that’s number one. And we just saw Nevada, all of its 500,000 public school students have been given the choice of a voucher up to that $5,000; all of them. It’s amazing, state-wide, amazing. There’s now 26 states that offer school choice. Why isn’t Illinois one of them? Why isn’t Chicago one of them? Dan Proft: So that’s K-12 at the university level the problem is choice, right? Because Illinois, all the auto makers in the 70's have been insulated from competition, and kids are taking their GI bill, their Pell Grant, their stafford loan money, and they’re not going to school in Illinois. Ted Dabrowski: Right, they’re going outside, and they’re not coming back, and I think that higher-ed is a bigger problem, because it’s also a federal piece to it. You’ve got all that federal money, the schools know it, the schools know that the kids can borrow, and so therefore they raise their tuition and their hiring their jobs program to match that. So I think we need to stop a lot of what’s been happening there, and that would allow the cost come down dramatically; if we didn’t have all these subsidies feeding the cost up; but until we do that, I think it’s going to be tough. With that said, there’s a lot that can be done locally, because we don’t have to pay the salaries that we pay, and 2, we don’t have to have the administrative bloat that we have; and we certainly don’t need to have the pensions that we have. There’s no reason why people are getting 7 and 8 and 10 and 12 million dollar pensions. Dan Proft: So other than scaling the 1,700, go back to the 1,700 person university professors in a 401(k) style program, would you say that the state should starve the beast of academia? And force them to make changes that they’re otherwise not inclined to make, as long as you keep the spigot open? Ted Dabrowski: Well, sadly, that’s what’s happening, right? And it shouldn’t be that way; you’ve got a lot of people in pain now. You’ve got kids who thought they had a scholarship, now they don’t. They don’t care about those problems; then they had to have a plan. You’ve got teachers, professors who thought they had a job; they may lose them. And the way it’s happening now it shouldn’t be happening. It should be the administrations taking control of what they do and running an efficient system, but they’ve never been forced to do it, and Governor Rauner and the budget impasse is making them do that. They don’t like it, they don’t like having a gun to their head, but it’s forcing them to look at their costs, and it’s how it may happen. Dan Proft: So effectively, I mean, this K-12 or university, the common denominator is you have to have families be the accountability mechanism to how their tax dollars are being spent for the experience of their children, they have to be an accountability mechanism for their own local K-12 schools, they have to be an accountability mechanism for the universities they send their kids, for those kids to go onto post-secondary education. Ted Dabrowski: That’s absolutely right, and it’s interesting when you think about Chicago, and this comes back again empowering parents, families, the residents. Not the bureaucrats. When you look at the Laquan McDonald case, right, and you’ve got a Chicago, a police force and or mayor, or a attorney general who can hide information from the public for more than a year. When you have a situation where a school district can strike two times in a row on families; when you have a police force, when you try to take the problems of a Jason Van Dyke and discipline him – the police officer that shot Laquan McDonald, but you can’t use his old history of complaints, there’s a lot of things that the public is not seeing, and they seeded that too much of their power is residence to the Government, and a lot of what we’re talking about today is giving the power back to the residents. Give it back to the families, at least give it back to the people. Dan Proft: He is Ted Dabrowski, he’s the Vice- President of Policy at the Illinois Policy Institute. Nobody does more numbers, reality based research on these intractable problems in terms of the quality of public education in the state from pre-k through post-secondary than Ted and his team at the Illinois Policy Institute. You should read their stuff religiously so you’re empowered with the information they have researched and called to be that accountability mechanism that we’re talking about. Pleased to have Ted Dabrowski, Vice- President of Policy from the Illinois Policy Institute on this edition of Against The Current. Thank you for joining us, Ted, thank you. Ted Dabrowski: Dan, I appreciate it.

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Dan Proft: Good afternoon, Dan Proft back on another edition of Illinois Rising; my co-host this week is Hilary Gowins; she is the managing editor of the Illinois Policy Institute, Hilary welcome! Hilary Gowins: Thanks, I’m glad to be here. Dan Proft: Very good, so a big week in state government; the fight this week over funding of higher education; not just the funding of universities themselves, but also map grants; and there’s a rally at Chicago State University, where cameras were there, so then Jesse Jackson Senior was obviously there as well, following the cameras as he is want to do, and he took the occasion of this rally at Chicago State for map grant funding, to compare governor Rauner to segregations governor George Wallace, and from the 60’, Jesse Jackson is saying the following: Jesse Jackson: Apparently he's indifferent to racism and poverty. He’s willing to sacrifice this school on the altar of a budget. Dan Proft: Governor Rauner indifferent to racism and poverty; that’s the charge that Jesse Jackson lodged, in addition to the comparison to George Wallace, which of course is indicative of Jesse Jackson Senior not being a serious person; but the underlying issue of map funding; Rauner wants to do one thing with a bi-partisan bill sponsored by Ken Dunkin, Chicago democrat, that will fund map grants, and Madigan and Cullerton want to do another thing with the bill that wouldn’t fund map grants, and someone Rauner is the modern day segregationist. It’s quite a contention that Jesse Jackson and some of the University presidents, and certainly their democrat legislative leaders in Springfield are making, isn’t it? Jesse Jackson: Yeah, it’s an interesting point to bring up. Really, the map grant situation is a bi-product of a higher education system that has brought tuition cost for students that are totally unaffordable for low income, or even middle class kids; and it’s a system that has been brought about under the watch of Madigan and Cullerton, much longer than Rauner’s ten year, so the problem goes back a lot farther than what they’re pointing out right now. Dan Proft: Well, let’s bring our friend Ted Dabrowski – he’s the vice president of Policy at the Illinois Policy Institute – into this conversation. Ted, thanks for joining us, appreciate it. Ted Dabrowski: Thank you. Dan Proft: So earlier this week, in my morning show, we talked to state representative Mark Badneck, republican freshman from Plainfield, who became an expert in this area of higher-ed funding, and he makes the point that we spend twice as much as the average state per student, and yet tuition at Illinois College Universities is 30-50% higher than their conference peers, so it’s not a spending problem – at least, relative to other states – and yet we have high tuition, and yet the people that are in charge are not to blame, the guy who’s up there for 12 months and is actually trying to fund map grants is. Can you kind of unpack all of this for us? Ted Dabrowski: Yeah, I think what’s happened is this whole budget crisis is being used to blame Rauner and his attempts to reform higher education finance, but when you strip out the problems, this budget crisis is really exposing the massive cracks that exist in higher education; and what’s happened is – these university leaders don’t want you to know it – but they’ve created these massive job programs at higher-ed, and they’ve blown up the number of administrators they have – they have way too many administrators – the pay is so high that the only way to pay all those people – the executive pay that they’re getting – is to really raise tuition; raise the rates that are no longer affordable for that person trying to make ends meet; and so you’ve got too many administrators, way too high executive pay, massive pensions, and the way they’re doing that is just take it off the hide of the kids in high tuitions. Hilary Gowins: Yeah, Ted, so I was looking at the numbers, I saw a report that you wrote – that was released last week – and I saw that, for example, the highest paid admin at University of Illinois, Chicago, in 2014, she made $887.000 in salary and bonuses, which would have funded approximately 329 map grants. So that sort of brings to light the disparity of the problem here. Dan Proft: One administrator made 900 grand? Hilary Gowins: One administrator. So Ted, can you unpack that too? I mean, let’s talk about tuition, because tuition in the last ten years at state schools in Illinois has doubled. Ted Dabrowski: Yeah, they’ve doubled it, and I think you’re hitting a why, and it’s not just that high end guys who get that, but Paula Allen Meares got nearly $900.000 in 2014 from the University of Illinois. Think about what tuitions have to be to pay for that; but it’s not just her at the top spot; there are so many administrators now, the growth in administration has far outpaced the student growth – which has really been pretty small. Dan Proft: She should have to coach the men’s basketball team at UEI in addition to whatever else she’s supposedly doing for 900 grand. Ted Dabrowski: Well, I don’t know, Dan, I think that should be getting her about 2 million to 3 million. Dan Proft: Yeah, I know, but 900 grand for an administrator, what does she do? Ted Dabrowski: Yeah, it’s amazing, but it’s more than numbered administrators in addition to that, so let’s talk about Chicago State, which has been the one that’s gotten a lot of the attention. It’s gotten to the point now – this is amazing – that there’s almost one administrator for every professor. So it’s almost as if you were standing in your class, and then you were there, there’d be a professor talking, an administrator right there standing right next to him/her, overseeing what’s going on, and that’s what’s driven up the cost so much. Dan Proft: That’s like the Department of Ag Joke. A guy walks in the Department of Agriculture, and he sees a guy at his desk with his head down, and he’s crying, and he walks up and says, ‘What are you crying about?’, and the guy picks up his head and he says ‘My farmer died’. No? No? I thought that’s a good one, I liked that, that’s a pretty good government humor. Hilary Gowins: Pretty good. Ted Dabrowski: That is. Hilary Gowins: Ted, I think the bottom line, what is making me so angry about this, is that at the end of the day, the problem for families is that college, even at a state school, is unaffordable, it’s out of reach, it’s not something that you can get if you’re a kid by working your way through school; tuition is growing at a rate that we just can’t keep up with. Ted Dabrowski: Well yeah, I was talking to a buddy of mine, and we both worked our way through high school – I went to Georgia Tech – and we worked our way through all the time; you could do that back then – you could have a job, earn a decent amount of pay, and tuition was affordable enough that you could do both. Today, it’s really hard to do that. Tuitions have doubled in the last decade, and jobs are harder to come by, especially in Illinois, so to do that is phenomenal. Dan Proft: And so these map grants – let’s go back to this, because this was the topic du jour on higher-ed this week – map grants that are provided to a wide range of Illinois Colleges and Universities for students. Go back to the political fight in Springfield. Governor Rauner vetoes the legislative leaders’ proposal in this area; they failed to overwrite his veto, and he has got a bi-partisan piece of legislation that would fund the map grants for these students – that is a wait in action. Explain the difference between the two and what happened this past week. Ted Dabrowski: The democrats want to pass a bill that effectively just spends money that we don’t have. And Rauner, of course, is trying to get the reforms. There are two things going on: one, he wants the budgetary reforms, so that we don’t keep doing the [excess? 00:08:19] penny borrowing, and having an unbalanced budget that we’ve had for now nearly two decades; that’s number one – number two though is before you enhance more money to the colleges and universities, he wants to see them reformed, because if not, all they do is they take the state money, and they hire more people, and they raise tuition. And so it defeats the purpose of trying to fund higher-ed. So he’s trying to come up with a bill that is funded, that there is money there to give, due to the map grants, and can assure that when we pay map grants then suddenly we’re not funding – then we have a problem if we don’t have revenues for that, we’re just going to create more problems with the social service agencies that are waiting for money; so he’s trying to avoid multiple problems at the same time. Dan Proft: And so, one of the other things was some of these university presidents saying ‘We don’t want to get involved in politics, we’re not playing politics, we haven’t been told by legislative leaders to appear or not appear with the governor and any other politician, because this was an allegation the governor had made, that Madigan told them ‘Don’t appear with the governor until after the primary’; yet Chicago State, the president there, is rallying with Jesse Senior while he’s calling the governor George Wallace. Ted Dabrowski: I think what’s amazing is that University Pres. may want to look at their administrative staff. We just calculated the numbers, and if Chicago State reduced its loaded administration – and I mentioned they have one administrator for every faculty member – if they reduced their administration by a third, they could fund any one of those map grants that is not funded today. Dan Proft: Right, and so it’s worth appointing – I don’t think I’ve said this explicitly – the map grants are for low income students, so they’re the champions of low income students, but they won’t reorganize their own house to free up money to provide access to their college and universities for their said low income students. Ted Dabrowski: Yeah, and then that’s why I think in the end it should become job programs for adults, and they’re forgetting the kids who now can’t afford to go there. I think we have to flip this thing on its head and change the narrative; it has nothing to do with a budget crisis – it has all to do with the decades long loathe and growth in salary and pensions. We didn’t even talk about pensions; that’s eating up most of the state aid that’s going from the state to the universities. Dan Proft: And so that’s the point, going back to this twice as much as the average state on higher-ed what Illinois spends for student; it’s not like that money is going to the classroom – very much like at the K-12 level, it’s going to the administrative overhead pensions, the benefits, and the like. Ted Dabrowski: That’s right, and if you look at the pensions that all these administrators would get, most of them are retired in their fifties, because they were allowed to retire in their fifties, and they’ll bring in three to five to six million dollars in pension income, and that’s what the kids’ tuitions are trying to pay for, and it just doesn’t work that way. It shouldn’t work that way. Dan Proft: He is Ted Dabrowski – he’s the vice president of Policy at the Illinois Policy Institute. Ted, thanks so much for joining us, appreciate it. Ted Dabrowski: Thank you. Dan Proft: Dan Proft back with Hilary Gowins; she is the managing editor of the Illinois Policy Institute, and criminal justice reformed the big issue for the Illinois policy institute. Governor Rauner, big issue for him. He formed in Illinois State commission on criminal justice and sentencing reform in his first year in office, trying to reduce the prison population in Illinois by 25%, and if you’re going to do that, need to work with law enforcement, and think perhaps about creative things to do to help non-violent offenders get on a path to being productive citizens, and this is an initiative the Illinois Policy Institute is pursuing as well. Hilary Gowins: Right. So, a lot of the numbers here show that what we’re doing now is just basically us banging our heads against the wall; so we know that really half of ex-offenders who serve their sentence and leave the prison will end up back behind bars within three years. On the contrary, if a person is employed within a year of being released, they are only 16% likely to go back behind bars, so something’s got to change. These aren’t just numbers, these are real people’s lives, we’re losing human capital, and we’re spending a lot of money in the process, and it’s just not working. Dan Proft: You’re right, you need to have people that have a stake in society; they’re less likely to commit a crime if they got a stake in society; and so, the balancing of you have to punish people who break the law, you have to keep the rest of society safe from criminal predators, but there needs to be some ability for the system to make judgment calls about somebody committing an offense – mostly non-violent offenses, I’d suggest – and they pay their debt, and they get it, and they made a mistake, and they’re unlikely to make that mistake again, how do we reintegrate them into society in a way that they can be productive? Hilary Gowins: Well, one of the biggest problems is that even when a person’s rehabilitated, and they serve their time, and they do their time and they get out, we’re telling them no to meaningful work. They’re not able to find jobs that allow them to support themselves and their families, and that’s the biggest problem: if you can’t find work, all of a sudden, it’s a lot easier to go back to what you know, and that might land you back behind bars. Dan Proft: You put them back in the desperate straits that maybe incentivized them to make a bad choice in the first place. Hilary Gowins: And it’s not hard to understand. Well, we’ve got a good case study in this, and this young lady spoke at an Illinois Policy Institute event recently; her name is Lisa Creason, she comes to us from Decatur, and Lisa, thanks so much for joining us. We appreciate it. Lisa Creason: Thanks, thanks for having me. Dan Proft: And so, on this issue of criminal justice reform and helping people that make a mistake reintegrate into society so they don’t make those same mistakes again, you have a particular compelling story to tell. Why don’t you tell us that story about making a bad choice when you were a young woman, then getting back to making good choice. Lisa Creason: Well, when I was 19 - that would have been back in 1993 - I was convicted and found guilty of attempted robbery. I had walked into a local restaurant, and told the cashier to give me the money out of the cash register. I was at a very desperate time of my life at that time; I was a single mom with a young child at home, and we needed some food, and I was about to be evicted from my apartment, and it was just a really bad time; in a moment of despair I made a very bad decision that landed me a felony conviction. Dan Proft: And just to fill the detail on this event, when you said ‘Give me the cash and the cash register’, were you armed at the time? Lisa Creason: No, I wasn’t very experienced in this field, thank God. I just really went in and made a demand the cashier refused and I split. Of course, I didn’t even make an attempt to conceal my identity when I went into the store, because I just really believed that my thinking was just so desperate at the time, that I really hoped something would change in my life to get me on the track I needed to be on. Hilary Gowins: And Lisa, I think what is compelling about your story is you’re so upfront about the fact that you were in a bad place in your life, and you made a bad decision, and you had to pay the consequences, but I know that a lot of people have been inspired by your story, because after you went through all of that, you came out and you worked hard, and now you got your nursing degree, and you just want to get back to work and put food on the table for your kids, but you’re being told no. Tell me about that. Lisa Creason: When I came home, I really wanted to give back to my community, because I felt like that was what I needed to do in order to pay back the little bit of trouble that I had given them; so, of course I started working with at risk teens and doing things within the community to reduce violence, but then I went to school so that I could be able to invest in my children’s future, as far as their college, their stability, and as you said, I graduated and then proceeded to take my state licensing test, and I received a not so nice leatherback that said that I was permanently barred from taking the licensure test due to a 22 year old felony conviction that I just spoke of. Dan Proft: And just to be clear, you did serve time in prison for the offence? Lisa Creason: I did, I was sentenced to three years, and I served one year in prison, and then was released to the Work Release in Decatur, Illinois, and I successfully completed that program, and just charged from there. Dan Proft: And then the subsequent two decades that are prior to wanting to sit for your nursing exam, no incidents with the law, just taking care of your family? Lisa Creason: Actually I had an incident in 1999 with a traffic situation, where I claimed the responsibility for driving a vehicle that I actually was not driving, but other than that, no. No further incidents other than that. Hilary Gowins: And Lisa, I know that your story is incredible, and it shows how frustrating this process can be, and what’s even harder, probably for you and for a lot of people listening to hear, is that there are more than 110 of these occupations that the state licenses, so you have to get permission from the state to work in these fields, barbers, beauticians, all different kinds of careers, and people like you, Lisa, who maybe made a mistake are being told no, even if you just want to be productive and get a job, you can’t get this license to work. Lisa Creason: Well, see, the crazy thing in my situation and like others like me is, in fact the state did tell us yes at one point in time; I was granted a waiver from the Illinois Department of Public Health, that granted me permission to pursue the nursing field in 2005, but then lawmakers came back in 2011 with this new law that restricted licensure for forcible felonies, and they didn’t allow any room for individuals like myself who had already went through the process, and been granted a waiver. Dan Proft: Now that’s given raise, that’s interesting: the state giveth and the state taketh away. Lisa Creason: You’re right. Dan Proft: It’s given raise to senate bill 42, which would allow ex-offenders like you the chance to petition the state like you did the Department of Health back in 05’, to petition the agency that regulates these professions, as Hilary was describing, the chance to get a waiver, so that if you’ve proven that you’re a contributing member of society, and you would make a great nurse, or whatever profession the state licenses, that you can get a waiver and pursue that. Lisa Creason: And that’s correct, and that’s why senate bill 42’s so important, because without this bill we’ll restricting hundreds of careers, from nursing to becoming a barber; I mean, it’s ridiculous, the things that are restricted with this law; but it’s been proven – it just makes more sense to Illinois – because it’s been proven repeatedly through research, study after study after study, that if ex-offenders are fully employed, with good substantial employment, then they are less likely to reoffend. It just makes more sense, to keep more people out here paying taxes, contributing to the economy, instead of taking more tax money away from the tax payers to warehouse people that don’t necessarily need to be warehoused, they just needed an opportunity and didn’t have one. Hilary Gowins: And Lisa, just like you said, this is common sense, this isn’t a republican or democrat issue, our system needs to get smart on crime, not hard on crime anymore, and give people a chance at work, and taking care of themselves. Lisa Creason: What being hard on crime has gotten us has become very cold hearted to the families that are involved beyond being hard on crime. Everybody makes a mistake in life, whether it’s a criminal mistake, whether it’s a mistake with our value system in life, everyone knows what it’s like to make a mistake and regret that mistake. We have to remember how to have empathy for the next person, and the family they’re bringing up, as we want to make the state better, because the cycle has stop somewhere. Dan Proft: Speaking of family, you mentioned you were a single mom when you committed that crime. What subsequently happened if you got out of prison with the child you had at the time and then subsequent children? How was your family? Lisa Creason: Well, my family’s great, thank you! I have a sixteen year old son and a ten year old son who are still at home, they’re both honor roll, they participate in sports. My daughter has grown. She’s a certified nursing assistant, and she currently attends college for dental hygienist, and then I also have custody of a long time friend of my son’s, who’s adoptive mother passed away a few years back, so I’ve got a lot of kids around, but that’s a blessing. Dan Proft: Wow, and it’s a great turn-around story too. Lisa Ceason, thanks so much for joining us and good luck. Appreciate it! Lisa Creason: Thank you, have a good day. Dan Proft: You too. Dan Proft: Dan Proft back with Hilary Gowins this week; she’s the managing editor of the Illinois Policy Institute, and Hilary, we were just talking to Lisa Creason about ex-offenders and criminal justice reform in the state of Illinois to give people who made a mistake but have paid their price, and set themselves on the straightened arrow, give them a chance to be contributing productive members of society. This is something the Illinois Policy Institute has taken up with some strange bedfellows, including the ACLU; can you give us a framework of what you were trying to do? Hilary Gowins: Yeah, we are doing everything to emphasize reforming bad policies that prevent people who have made a mistake and served their time from being productive members of society, essentially. So we’re going to talk to Jim Glasgow here in a minute, and the reason that we are working with Jim and the people on his program is because Jim, who is the Will County State’s Attorney, his group founded the first drug court in Illinois. So a drug court is a program that takes people who are charged with possession… Dan Proft: Not violent drug offenders. Hilary Gowins: Not violent drug offenders, no. So these people are charged with possession, they’re addicted to heroin, or whatever it may be, and instead of going to prison, which costs $38,000/year/inmate in Illinois, they put them through a rehabilitation program that costs $3000/successful graduate; so think about that: that’s $38,000 versus $3000, and we’re actually doing something productive, that gets people out of the system, gets the felony off their records, so once they’re rehabilitated, they can get back to work, they can get on with their lives, and they’re going to be out of the system. So this is the great program. Dan Proft: So let’s bring in the aforesaid Will County State’s Attorney, Jim Glasgow. Jim, thanks so much for joining us, appreciate it. Jim Glasgow: Pleasure. Dan Proft: So you were a bit ahead of the learning curve on this – the Will County Drug Court you created back in 1999, so you have a pretty good body of evidence to suggest how this is working for non-violent drug offenders, not only in terms of helping them with their addiction, so they don’t commit petty crimes, or worse, but then also helping them get on a pathway to being productive citizens. Just give us a sense of what’s happened over the seventeen years now that this program has been in place in Will County. Jim Glasgow: That’s a tight timeframe, Dan, but back in 1998, I saw a grant come across the wire for half a million dollars for a drug court; but it was a judicial grant, so I went for the chief judge, and got his permission to write it, because I had the staff to do it. We didn’t know how to incite this – it’s on East Coast and on West Coast, and saw the courts in action – and when we opened our court in late 99’ – early 2000’, there were about 500 drug courts nationwide. Today there’s 3400. I think that is a resonating validation of how effective they are, and I always like to tout the fact that, 2000 we had a graduate of our drug court, that avoided a felony conviction. She went to college, she went to Law School, and I hired her as a prosecutor in my office, and then ceremoniously I had her attend drug court graduation, and make the motion dismiss the felony charges against the drug court graduates, just as she had it done for her. Now when you talk about the value of drug courts, just take that one person who’s not a lawyer, that could have been a convicted felon, take them out over a 75 year lifespan each way, Dan, tell me how many millions of dollars difference you have there. Dan Proft: Yeah, and is there any data on recidivism rates in terms of those that go through the drug court versus those that have been imprisoned? The non-violent drug offenders… Jim Glasgow: Our drug court’s been phenomenally successful. I’ve had great people personnel running the court; Julie McCabe-Sterr is running it now, and she’s – I call her Mother Theresa – she’s been running it since 2004 and the results have been phenomenal. We basically have a 95% success rate. Only 5% of the graduates have reoffended with a drug offence. That’s phenomenal. The normal recidivism rate is 65-75% on up. In the prior programs that were in place there were well intentions, and I won’t mention them, but they’ve pretty much put the individual on their on so that they’ll be good, and they weren’t; in fact, we still get people from those programs into our drug court, who failed there, give them a second chance, and with the intensive counseling that you get in drug court, first there’s incarceration, then there’s impatient treatment, then there’s constant – you know – urine drops, then we put you in a halfway house for six months, get you a job as we’re weaning you back into society. The total cost is about $3000. When you consider it costs $30,000 to lock someone up in prison during the same period of time; we’ve a Redeploy Illinois program we could talk about sometime, where we’re diverting non-violent property offenders who are just cycling through DOC into the work force, and that instrument has potential. Getting back to the drug court, we’ve had a tremendous increase in heroin overdoses, and but for our drug course, we thought it would be much worse if I had at least a half a dozen of the graduates come up to me after graduation, shake my hand and thank me because they said, ‘I’d be dead if it wasn’t for this court’, because the heroin that’s out on the street today, I’m sure you know, is so deadly, the potency is higher than we’ve ever seen it before, and here we were averaging single digit overdoses – maybe low teens and in 2009 we spiked the 29, and then we hit the highest 53 in 2012, and we repeated that last year; we’ve knocked it down a little bit for two years, but the drug court has been the bastion to keep us on task here, but there’s no way, once you’ve started using heroin - you’re not the same person. Your rational thought process has come undone. You’re basically – they call it – chasing the dragon. And sadly, we’ve had three fatal overdoses in our drug court; that’s how compelling… where you have the sword of Damocles over your head with a prison sentence or a felony conviction, you got the state of the art treatment, the state of the art psychological help, and you still can’t stay away from the drugs. Dan Proft: Well, I’ll tell you what, 95% success rate, it’s great, not just in terms of the expense that you’re saving taxes, but turning people’s lives around, which is more important, and frankly, with our prisons being about 30% overcrowded, it seems that that’s a much better path for law enforcement than the incarceration path. County State’s Attorney Jim Glasgow, thanks so much for joining us, good luck with the program, appreciate it. Jim Glasgow: Dan, thank you very much. Take care! Dan Proft: Dan Proft back with Hilary Gowins; managing editor of the Illinois Policy Institute, and Hilary, this week, the Chicago Teacher’s Union telegraphed that they are prepared to strike, or maybe reiterate it – they’ve been saying that for several months now; maybe as early as April 1st if CPS goes through with the threat to stop making the 7% contribution to teacher’s pensions that it’s been making for the last 7 years – 7% of the total 9% that teachers contribute to their pensions, which – what’s the average pension for CPS teacher? Hilary Gowins: Well, I know the average salary is about $70,000, and lifetime payouts are about $2,000,000 for most workers. Dan Proft: And I saw that – I think the average pension for recently retired career teachers – $73,350; that’s – in real dollars, in present value – that’s more like a pension that’s north of $2,000,000 dollars. Hilary Gowins: Right. Dan Proft: So think about the average family man. I always try to put this into real dollars. The average family in Illinois, do you know how long it takes to save $2,000,000 dollars to pay yourself $73,000 dollars a year in retirement? Forever; infinity; you can’t do it. Hilary Gowins: Well, the medium household income in Chicago is $40,000, you know, so that’s something to think about, and what’s really sad is that instead of talking about kids and how we’re going to improve the 66% graduation rate that CPS has… Dan Proft: And I don’t even believe that number. Hilary Gowins: Right, well they’ve inflated it to 69% and since walked it back to 66%, but instead of talking about kids and how we’re going to improve education for 350,000 students, we’re talking about asking people to pay into their retirement, instead of us picking it up for them; since 1981, Chicago has paid 1.2 billion dollars in pension pick-up costs. Dan Proft: Well, it’s a third party administrator for the adults in the system, that’s just what CPS is, and it’s interesting that you know 350,000 kids in the system. I remember, not so long ago, that number was 400,000 kids; so you’re seeing people flee that system, people who can, and of course those that cannot are the ones that are treated the worst at exorbitant prices; the strike that CTU – Chicago Teacher’s Union – is talking about, why wouldn’t they strike, when they’ve struck three, four years ago, they rolled Tiny Dancer and City Hall, so why wouldn’t they do the same thing and receive the same benefit? They’ve got 300 million dollar increase in salary and benefits as a result of the last strike; why not continue on and that means CPS has to borrow money at Tony Soprano rates, or somebody has to be carved up to fund their guaranteed salaries and pensions, then so be in; and what disincentive do they have to do that, because who stood up and said no to them, except, perhaps, governor Rauner? Hilary Gowins: Right, and if you look at Illinois labor law, they’re actually not allowed to strike on April 1st, based on the steps they’d have to go into an actual strike, but that’s exactly what they did in 2012, so you know, the rules don’t really matter, I guess, to CTS and CTU. Dan Proft: Well, who’s going to stop them? Hilary Gowins: Nobody’s going to stop them. They’re saying that asking teachers to pay the full 9% toward their pension costs is an unfair labor practice, but the problem is that they’re not willing to come to the negotiation table in good faith; CPS is saying ‘We will give you raises if you just pay for your pension cost’, and they’re saying that that’s unfair; but truth is that Chicago teacher pensions have just half of the funding that they need to pay out for retirement costs now, so the system has to change. Dan Proft: And CPS; I don’t want to give anyone the impression that CPS is wearing the white hat in this story; CPS, the latest toddy in charge Forrest Claypool, they’re just as craven and disingenuous as the Chicago Teacher’s Union in terms of the finances. I mean, what’s Forrest Claypool been doing – and Tiny Dancer, by extension? They haven’t proposing structural reforms, they’ve been running down to Springfield with their ten cups saying ‘Give us half a billion dollars’. Hilary Gowins: Right, nobody wants to talk about structural reforms, they don’t want to talk about what it’s going to take to get kids an education; they don’t want to talk about that. They want to talk about ‘Well, give me this much money so that we can just make it by for another year’. Dan Proft: And another thing too, you mentioned the inflated 66% graduation rate; let’s even take that to be true, for the sake of discussion, what percentage of those 66% are coming out ready for the workforce or post-secondary education? Hilary Gowins: What’s really low, a lot of the kids who end up going to college after they graduate – whether it’s the city College of Chicago, or somewhere else – they end up having to take remedial courses anyway, because they weren’t ready to be in college in the first place. Dan Proft: Yeah, I remember when the consortium in Chicago School Research over at University of Chicago started looking at that; what is Chicago public school graduate? What’s really happening after they graduate, they found – this is about a decade old – they found initially that about 1/10 high school freshman CPS would get a bachelor’s degree by the age of 25. 1/10 – so, in 400,000 kids, now 350,000 kids – 1/10 will get a BA by 25. Now I think that number has moved up to maybe 1/6, but still, 50-60% of 350,000 kids that are going to get a bachelor degree by the age of 25, death of civilization numbers. Hilary Gowins: Right, I mean this is a system that is just churning kids out; it’s not good, something’s got to change, and when you consider that in neighborhoods like Englewood, unemployment is hovering somewhere around 20%, there are neighborhoods in Chicago that are really struggling, and a lot of those kids in those neighborhoods are stuck going to CPS schools. They can’t get out, there are no alternatives; the kids really suffer. They can’t leave these schools, and here we are talking about teacher pensions. Dan Proft: Discriminating against children based on their household income and their address, dis-proportioning minorities, same thing with employment. Wall Street Journal this week – story on the state with the worst employment for African-Americans in the country; the worst – Illinois, north of 40% in the forth quarter last year; under Chicago democrat rule, the black caucus in the city council, the black caucus in the general assembly, the Chicago democrats who have run the city of Chicago for 100 years; who’s being left behind? Hilary Gowins: Yeah, kids just don’t have hope. Dan Proft: Dan Proft back with Hilary Gowins; managing editor of the Illinois Policy Institute, and Hilary, governor Rauner – got a little animated this week. I’d like to see him get off script and talk like the guy that was the candidate that people decided needed to be the governor, and really get after the legislative leaders in Springfield. You can only offer so many olive branches before you need to take those branches and woop some people with them, and that’s what he started to do this week, when he addressed the issue of higher-ed funding, and what Cullerton and Madigan are doing with a bi-partisan bill that is on the table to fund higher education. Here’s governor Rauner: Bruce Rauner: We’ve got a dictatorship of one individual who cares about politics over people. Dan Proft: And he’s talking about House Speaker Mike Madigan, of course. Governor Rauner went on on topic. Bruce Rauner: We have a bi-partisan bill to fund our universities with 160 million dollars right now. Speaker Madigan is managing this process for political games, political gain in the primary election, not to help our students. Dan Proft: And so the question is this war of words between governor Rauner and Mike Madigan, this war of wills too on matter like higher-ed funding, how do you think this plays out for the governor? Hilary Gowins: I think that Rauner is telling the truth, obviously; Madigan and Cullerton have been in Illinois politics for more than eighty years, so that just tells you how in trench they are with the status quo. Many in the media continue to shield Madigan, and I don’t know that this strategy is necessarily working out for Rauner right now. Dan Proft: And he went on, and he had – apparently – kind of a private conversation with Cullerton, that he decided to make public in a very entertaining way. It’s a rather incredible statement that he relayed Cullerton made to him. Bruce Rauner: And you know what the president Cullerton said to me in private? He said, ‘Bruce, I’ve lived in Mike’s shadow for 37 years, I’m not going to step out now’. Can you believe that? You wonder why Illinois is in such deep yogurt ladies and gentlemen? Dan Proft: No, I don’t wonder. I don’t wonder at all. It’s a real profile encourage down there with senate president John Cullerton, who lords over a super majority of democrats and is very comfortable in Mike Madigan’s shadow. Hilary Gowins: Yeah, here’s the problem, I think people like us, Dan, and a lot of our listeners, are very involved in Illinois politics; they read about Madigan and his antics, but there are tons of other people in Illinois who just, you know, they don’t know the nuances. I think Rauner is really missing an opportunity to change the conversation, to pull a down-draper, and instead of focusing on… Dan Proft: Oh, you went mad men on us. Hilary Gowins: The men behind the curtain, who are Madigan and Cullerton, I think he needs to start talking about the things that we were talking about at the top of this show, which include the breakdown in higher education funding, for example. He would be really smart to do that, and here’s a great opportunity, but right now we’re talking about two men who the most people in Illinois don’t really know exist. Dan Proft: So you’re suggesting he needs to do more explaining. This is – forget the competing bills, forget Madigan’s a dictator of one – although I think more and more people are becoming aware of Mike Madigan and it is difficult, especially for the left, to defend the idea of the guy who’s been here for twelve months is the problem; not the guy who’s been in charge for three decades, especially after they’ve spent the last eight years saying everything that’s happened during the Obama administration is George Bush’s fault. They put him in a little bit of a trick back, the left, but to your point, when you talk about higher-ed, or you talk about the Chicago public schools, or any other budget matter, system change is a nice phrase, but you got to drill it down so you can bring people along with you. Hilary Gowins: Right, and I’m not saying that he should avoid exposing Madigan and Cullerton for what they really are; and they’re people who are out for themselves, and out to protect the elite members of their inside circle, but he has to balance that with things that people understand. He has to speak to the people, and to do that he needs to talk about things like higher education in terms of look at how much tuition has cost us and it’s doubled in the last decade for Illinois public universities; why is that? Talk about loaded administrative roles, talk about pensions that take up more than half of the higher-ed funding; he has to break it down for people. Dan Proft: I think actually that’s an excellent point, and I think it’s underappreciated, particularly by republicans – they just want to play this democrat game rather – I think people viscerally know what’s happening, but they don’t know the details, and they want details; they want to understand it. You got a kid going to college, you want to understand it; why am I paying more to send my kid to U of I than my friends in Indiana are paying to send their kids to IU, or University of Iowa, or any other. I mean, people do want to be brought along and understand that, and if you do that then you turn people into proselytes just for your message, and can start to have a multiplier effect where you can – as you said – change the conversation and start to change some outcomes. Hilary Gowins: Right, this hits people at home. This hits families where it hurts. Rauner’s done a good job talking about things like property taxes, which everybody who owns a home in Illinois feels. We’ve talked to – at the Illinois Policy Institute – a woman in Crystal Lake – who is paying $1,100 for her mortgage and $1,500 a months for her property tax. Telling people numbers like that, it shocks them.

 

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Dan Proft & John Tillman

On this edition of “Illinois Rising”, Dan Proft and John Tillman, CEO of the Illinois Policy Institute, discuss legislation to expand charter schools in Illinois and Trump's swagger heading into Super Tuesday. They explain why Illinois residents have the least confidence in their state government compared to residents of every other state in the country. And they take a look at Mike Madigan's strong primary election challenge from Duke Graduate, Jason Gonzales.

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Dan Proft: Good afternoon, Dan Proft, and joining me on this edition of Illinois Rising is Illinois Policy Institute president and CEO, John Tillman. John, the presidential campaign is going on, you may have noticed. John Tillman: This is an election year? Dan Proft: Yeah, it is, but I wonder if the outcomes are going to be fait accompli before they get to March 15th when candidates come to town and Illinois voters have a chance to make their selections. I’m referring on my morning show to President Elect Trump, already at this stage; is that where you’re at, or are you holding the candle for another candidate? John Tillman: I think given that we’re just finishing the eighth year now of President Hillary Clinton’s victory from 2008, I don’t think we should jump to conclusions here. There’s a long ways to go – I think only about 5% of the delegates have been selected; I think after Super Tuesday, it’ll be about a third – but there’s still a huge backload chunk of delegates that go all the way out into June. So I don’t think anything is a set in stone; I think the bigger question is who’s going to rise and get above the 40% mark and put Trump into second place. Can Rubio do it? It seems to me Cruz is starting to fade. And with all these conversations about politics, by the way, Dan, they are my personal opinions, of course. Dan Proft: I understand that – your right as American – given to you by our Lord above. For some perspicacious insights… John Tillman: Percipications, Dan? Dan Proft: Perspicacious. John Tillman: Perspicacious, aha. Dan Proft: Yes, perspicacious insights into the state of play and the presidential race we’re not joined by Chris Robling, Republican Strategist and Principle at Clearspan Strategic. Chris, thanks for joining us! John Tillman: And you’d better see a doctor about that p-word. Chris Robling: Good to be with both of you. Hello, John, hello, Dan. Dan Proft: So, Chris, President Elect Donald Trump – your reaction. Chris Robling: I think we have to get out of politics and we have to get into something bigger. There’s something bigger going on here, I guess, and I think – I don’t know how you guys felt personally when you saw that 45 coming out of Nevada – but I just thought ‘This guy has somehow linked himself to the spirit of the moment’, and it’s no longer about anything with which we’re familiar from the typical political realm. We’ve gone into sort of a phenomenon in which he has connected with people, a lot of people… and it’s a lot of people, it’s not everybody, but it’s a lot. Dan Proft: Well, let me suggest something, that we have seen this phenomenon before, and the synonym for populism in 2008 was hope, and the synonym for populism in 2016 is winning. We just have a populist candidate on our side eight years after democrats had one on theirs. Chris Robling: Yeah, I want to believe that. I think that’s really terrific, Dan. Please, I want to subscribe to your newsletter, because, let me tell you, what’s troubling to me is not so much the fact that he’s struck this chord and generated this response; it’s all of this stuff on the side. There are these very concerning elements of how he has gotten here and I think that… two things, two quick points: number one, I agree with Chris Matthews, and that’s rare, very rare… Dan Proft: Mr. Tingle. Chris Robling: 20 years I’ve never agreed with this guy, but I think Chris Matthews appropriately parsed out the Trump proposal, and Trump’s basic proposal is ‘Either we have a country or we don’t. That’s what I saw at the City Club in Chicago in June, that’s what I’m hearing tonight. I think there is a brilliance to that. John Tillman: But I think that… oh, go ahead, Chris, I thought you were done, sorry. Chris Robling: That’s the big concept under which the guy is operating. Now the little concept is sort of his own personal style, and that personal style is kind of a brawling New York real estate developer, and I think that that’s laid down some things that are offensive to me as a long time conservative, Reagan conservative kind of guy, and that’s not to deny there weren’t things very offensive about Obama. It was hope and change eight years ago; I completely agree with that too, Dan. John Tillman: Yeah, but I think what’s interesting about Dan’s narrative there about populism is the difference between Trump and Obama is that Obama ran as a populist driven with demagoguery and ideology. Trump is running as a populist driven by narcissism – and of course, Obama has his share of that, but Trump has no ideology that is discernable. We have no idea what he will actually do if he becomes president, and that is both thrilling and terrifying to me at the same time; could be great, maybe he becomes Reagan, right? Can you believe that? On the other hand, maybe he’s the second coming of Barrack Obama. Chris Robling: Reagan’s personnel chief, Pendleton James said famously, ‘Personnel is policy’; the great stuff Illinois Policy Institute puts out is well written and it’s well thought out, well reasoned and everything else, but you need actual human beings to physically get that stuff done, and if real people don’t get it done, it’s still just words on a page. Okay. I agree with you. We don’t know exactly what he’s going to do on X or Y or Z and there are some things that are very troubling about what he says. I’m not as troubled on this whole Muslim thing; Donald Trump is in Dubai, Donald Trump has got a big tower in Turkey. I don’t think he’s got personal animus to categories of fellow human beings, but I think that, on the other hand, he might take us in a Smoot-Hawley protectionist direction that would be disastrous, not just for our overall macro-economic health, but would also hurt many working Americans, because in the long run, protectionism hurts the middle class; they’re the ones who pay the price. Dan Proft: As we look at Illinois, with the primary here a couple weeks away – so Hillary Clinton has about a twelve point lead on Bernie Sanders; Donald Trump has about twelve, thirteen point lead on Ted Cruz; now, of course, that could change; there’s momentums of funny things, even happens on Super Tuesdays and the like, but don’t you find that interesting: The republican primary elector of Illinois giving Donald Trump a double digit lead? Chris Robling: Well, I remember gubernatorial candidates a few short years ago who was very, very much out there calling for an appropriate revolution in Illinois governance. Dan Proft: Yeah. How’d that work out for that guy? Chris Robling: Well, but I thought he was laying down a lot of markers that got picked up by a guy named Bruce Rauner. John Tillman: You’re too early, Dan, too early. Dan Proft: Yes, yes, the story of my life. Chris Robling: Well, everybody needs a John the Baptist, and so Dan the Baptist went there… John Tillman: Wow! You know how that ends, right? Dan Proft: You’re going to be a smote down for that comparison, Mr. Robling. Chris Robling: But I want to say, I think that people are fed up. This gets back to the beginning. There is a spirit of the age, okay? A zeitgeist right now and I believe that this is directly aimed at Obama’s excesses and at the establishment republican’s recesses, okay? Too much from Obama, too little from the republicans; we’re sick of everybody; let’s try Trump. Dan Proft: Well, and what does Trump represent? I agree with you, it’s psychological; it’s not substantive, and so it’s swagger. I’ve got the swagger, I’ve won in life, and now I’m going to bring winning to you after you have been fleeced by a government you’ve financed by both parties for the last 15 years; and then blamed for everything that’s going on top of it. You’re losing your – kind of – access to economic opportunity, as well as the culture – what you thought defined America; I mean, culturally there’s been a huge shift, even just from 2012 to present. Chris Robling: I couldn’t agree more, and honestly, I’m going to use a name here probably for the first time on your august radio program: I’m not really sure where Donald Trump and his many former spouses, and then the sort of fashion stuff, and he has always… and then you get to the Kardashians, and then you’re into God knows what. So there’s some kind of weird societal acceptance of all of this excess that’s going on, and I think that the regular voter – you go to the regular voter in South Carolina, you go to the regular voter in Nevada; ‘Well, that shows that he’s a successful business man’. There is this sort of broad societal whatever if takes to win kind of thing, and now it’s being applied to politics. John Tillman: I think the part of that that is interesting; I don’t think that there is a broad societal acceptance of all of these things. I think there’s a media-cultural-arts acceptance of all of this, and so therefore it feels like it’s been mainstream, but I think that what Trump is tapping into – to go back, really way back to the silent majority; the people that just sort of live their lives, go to work, most of them go to church, maybe not all the time; they might not be the most devout person, but they’re trying, right? They’re aspirational, and all these things to try to live a good civic life. And they see all of this stuff from Kardashians, to Trump, and just the craziness that goes on, to the Super Bowl halftime show, and they’re like, ‘What is our world coming to?’ So he is appealing to that; it’s that sense of rebellion, of the elite status quo on both coast that people are responding to, and that desire is trumping policy imperatives. Chris Robling: That, I think, is very well said, and goodness only knows what he’s going to do about taxes. Goodness only knows what he is going to do about social security, about entitlements, you know? In many respects, we’re playing in a realm that is defined by Obama’s cowardice to deliver on his own self-generated campaign promise to address entitlements. That has, in my opinion, overwhelmingly set the landscape of 2016 and beyond. ‘I missed the press release, I missed the white paper’, what is he doing to do about entitlement. Dan Proft: Yeah, right, that’s the thing. The concern is you don’t know what to be concerned about. John Tillman: It’s going to make him great. Chris Robling: It’s going to make him the greatest ever. Dan Proft: Chris Robling, Republican Strategist, Principle at Clearspan Strategic. Chris, thanks for joining us! Appreciate it! Chris Robling: Great to be with you, thanks! Dan Proft: Dan Proft back with John Tillman, president and CEO of the Illinois Policy Institute. John against the backdrop of the bankrupt CPS and proposal by governor Rauner – essentially foster a state takeover of CPS as they can’t seem to manage their finances or educate children, two kind of important things. John Tillman: But they do employ teachers and pay them well with excellent benefits and retirement programs. Dan Proft: They do, and they also want to crowd out competition in that space. Charter schools have been positive innovation, provide more competition, more choice for families in Chicago, and elsewhere, but in particular in Chicago, where choices are desperately needed, and yet, what the Teacher’s Union want, and what Rahm Emanuel and other politicos in Chicago seem to be willing to deal is to cap charter schools. It’s a very curious thing, because on the one hand, there seems to be an agreement outside of the Teacher’s Union that charter schools were a positive innovation, as I described, and so we want a limited number of those. John Tillman: Right, you want to cap the children’s potential to do better. They agree that charter schools are a better option for some kids – maybe not all kids, but some kids – and now we want to limit that. What a bizarre thought. It’s really a chit in the negotiations with the Union, it has nothing to do with the children. Dan Proft: We don’t want to satiate ourselves with too much goodness in Illinois. John Tillman: Because we have so much already. Dan Proft: That’s right! You have to limit that; small doses. State representative Barb Wheeler, Republican from McHenry County has introduced legislation to lift the cap on charter schools in Illinois, and she joined us now. Barb, thanks for joining us, appreciate it. Barb Wheeler: Oh, great to be with you, Dan! It’s always a pleasure. Dan Proft: So kind of unpack the legislation that you’ve introduced, and the impetus for introducing it. Barb Wheeler: I’m a big fan of charter schools. I think they do a tremendous throughout the state, specifically in Chicago and areas where families need access to high quality schools. I’m a big believer in competition. So this arbitrary number that the state has in regard to the cap of 120 statewide charters, basically the bill, it’s not a new bill, it’s been introduced and reintroduced, and I’m introducing this year to remove the cap throughout the state. John Tillman: Barb, John Tillman here! Hi, how are you doing? Thanks for introducing that bill. It’s been around for a while; maybe with a governor advocating for us we can see a little bit more attraction; in the past, these kinds of pieces of legislation have gotten bipartisan support, and what I think is interesting about this is you live out in the bucolic suburbs, and yet you’re trying to lift the cap not just for a statewide, but would have the biggest impact in the city of Chicago. Tell people why you care about that; why it’s important to you. Barb Wheeler: Thank you again for having me on today. Dan and John, I know that you know that I’m a former teacher. I think that being able to provide the best quality education for students is my number one priority as a state rep. I’ve done tours to charter schools, I’m a big fan of school choice, I’m a big fan of home schooling, and being able to provide everyone throughout the state with all of their options, and the best options for the students is a priority. I think getting rid of the charter school cap in the state of Illinois always comes up when they’re negotiating the union contract, especially in the city. The time on this bill is good. You restart the conversation, and you’re right: Governor Rauner’s a big fan of charter schools, he’s a big fan of education for all students and providing the best opportunities for them. That’s without a doubt. I got to give the new director Tony Smith of K-12 education a lot of credit too. It’s really important to him to create autonomy within the classroom and be innovative to it, which goes along with what the charter schools are trying to do as well. John Tillman: As a former teacher, I’m sure that you must have – whether you wanted to or not – have been a member of the Illinois Education Association, of course, in Chicago, through Chicago Teacher’s Union. The unions have come out strongly against this legislation in the past; they will again, and every chance they get, they oppose any kind of expansion of choice for parents for better educational outcomes. Since you were once a teacher and part of that union, what can you tell people to help them understand why the teacher’s representative of the union is always so in opposition to legislation that would actually improve children’s educational outcomes. Barb Wheeler: It’s interesting, I often think about that. The stuff that teachers – individual teachers in the classroom want to do is to be innovative, not demanded by the state and this is exactly what they do, they really push back on so much state testing, how that’s mandated by the state, they really want – the magic word is – autonomy, which is, quite honestly, if you would ask them individually how they feel in regard to the overall and overarching ideas of charter schools and choice, I think that is they drilled out and think about it, they would be more in agreement with individual schools to be able to have some more freedom, especially within their own classroom. Having said that though, the members of a larger and very strong lobbyist group have a lot of pull and is very powerful in the state of Illinois, and I often wonder whether the IEA is more concerned about their number growing their numbers in the membership than really representing their members’ true intentions as they close the door and teach it in their own classroom. I do believe that that is often times a polarizing issue. Dan Proft: She is state representative Barb Wheeler, Republican from Crystal Lake. Representative Wheeler, thanks so much for joining us, appreciate it. Barb Wheeler: Well, thanks for having me. Dan Proft: It’s interesting too, to Barb’s point about the teachers. On the one hand they say ‘That’s not fair because charter schools don’t have all these mandates that they have to comply with like we do’. Instead of saying ‘Why don’t we remove the mandates for everybody, and give everybody the latitude and the flexibility?’, they say ‘No, make their situation worse, just like it is for me’, rather than making everybody’s situation better. John Tillman: I once, years ago, on Craig Dellimore’s Show, debated the chief education officer for the city of Chicago, and this is exactly how it played out. I said ‘Why are charter schools performing almost the same level as suburban and downstate schools with the same kids in the city, because those kids are taken by lottery, they’re not selectively enrolled?’, and she said ‘Well, because the charter schools don’t have to operate under the collective bargaining agreement’, and so then I said ‘Why don’t we charterize the entire system?’, and of course, she had a meltdown. Dan Proft: Right, there you go. For more on this topic, from an association global perspective, we’re now joined by Jelani McEwen the External Relations Director for the Illinois Network of Charter Schools. Jelani, thanks so much for joining us. Appreciate it. Jelani MrEwen: Thanks for having me, Dan. Dan Prof: Give people a sense of the state of play with charter schools. One of the things that’s often argued by Karen Lewis and other Teacher’s Union heffes is that, ‘Look, a lot of the charter schools are not out performing in their neighborhood schools; it’s a mixed bag, and so this is why we shouldn’t be divesting from the local school and funding these charter schools’. Jelani McEwen: Well, I can say we know that to not be true; 100% false. INX briefly did an analysis of student enrollment patterns in Chicago, and so what we did was we took every charter school, and we looked at their students, and determined where that student would have gone to school if they followed the zoning pattern; if they’d been to the school based upon their home address, where would they have gone? And so we took all the student schools that they should have gone to, and created an average on the CPS, on Chicago Public Schools, school quality rating policy metrics, we took an average of that, and then we compared that average for all of the schools they should have gone to, to the quality of the school they’re in. And in Chicago, 72% charter schools were performing at a higher level than the average of the schools students otherwise would have been zoned to. John Tillman: Jehlani, John Tillman here. I think one of the things that you have done such a great – your organization and charter schools in general have done a great job – and just this moral-righteous storyline that we need to get out, which is Chicago kids can compete; Chicago kids can’t perform when the educational system is responsive to their individual needs. That’s what the charter schools do. Jehlani McEwen: Completely true. I think that’s one of the biggest issues I struggle with, with the union rhetoric. Sometimes, the argue is that because the communities and the young people that are in the schools come from a vulnerable, low income backgrounds, that those are the hurdles that forbid them from learning, and they’re not accountable for those outcomes. But that’s not true. We have proof points across Chicago of charter schools that are serving low income kids, that are serving low income communities, and they’re growing, and they’re learning. Poverty is not a bar that prevents people from learning, right? We know now that a school coacher that is supportive, that believes in the kids, that a curriculum that is prepared to meet the purse-right needs of each learner, and a managing structure that can manage themselves well, those are leverage for change that can help all children learn, especially our most vulnerable kids. Dan Proft: Now, one of the other arguments that’s advanced is – and this is against private schools as well, but also charters – is that the difference between these competitive options is that they don’t have to take all-comers, where the local schools do. Jehlani McEwan: That’s not true either. Charter schools are open enrolment schools. Any student in the city of Chicago can apply to these schools and if they are picked through a lottery, right, it’s randomized because there’re more students who want a seat in the building that there are seats, there’s a lottery, but we have to take anybody who comes. We have to help whoever comes through the doors whether we have the resources to or not; so that’s a common misconception. We don’t get a choice in who comes in the building, we’re not selective. Dan Proft: And I suppose the fact that there’s more demand than supply says something about the state of affairs. John Tillman: Oversubscribed, yes. Jehlani McEwan: You’re totally true. Dan Proft: Alright. He is Jehlani McEwen, External Relations Director for the Illinois Network of Charter Schools. Jelani, thanks so much for joining us. Appreciate it. Jehlani McEwan: Thank you, Dan, appreciate it. Dan Proft: Dan Proft back with John Tillman, president and CEO of the Illinois Policy Institute. Illinoispolicy.org And John, new gallup poll and some interesting results. Not particularly surprising, except with one exception; which is it… except with one exception, it’s a little bit redundant, sorry about that. New gallup poll shows Illinois residents are the least confident in their state government, of any residence in the country; three quarters of Illinoisans say they are not confident in their government; compare that to North Dakota, on the other end, where 8 in ten North Dakota residents are confident in their state government. The only thing that’s surprising to me about these numbers: I want to meet that 25% that are confident in the Illinois state government. John Tillman: Right, right. They work for the government, Dan, that’s why. That’s who they are. Dan Proft: Yes, exactly. Or it’s like Madigan and Cullerton packing the vote, just like they do on Election Day here, they’ve got their ends on gallup. Well, for more on this and what distinguishes those state governments that have the trust of their residents, versus those like Illinois that do not, we’re now joined by Todd Davidson, from the State Policy Network, where he works as a policy specialist. Todd, thanks so much for joining us. Appreciate it. Todd Davidson: Yeah, thanks, Dan, thanks for having me on. Dan Proft: So, with respect to this survey, where Illinois bring you up the rear as we all want to do when it comes to things like trust and government and quality of life, what is it that distinguishes those at the bottom of the list in terms of residence trusting their government from those at the top of the list, like North Dakota? Todd Davidson: Yeah, Dan, there are a couple things that I saw in this, and I think the most important of all of this is just jobs in that state: job creation. If a person has a job, they come home from work and they see their care for their family, they’ve been rewarded for their hard work, they’ve a confidence in the future, and then they have confidence in their states economy, and then they have confidence in their states government. Illinois, Rhode Island, Connecticut, New Jersey, all those states at the bottom, not creating jobs, personal incomes aren’t growing, whereas the states at the top, you see job growth – higher than average job growth – and people are being rewarded for their work. Dan Proft: And Illinois is the seventh worst unemployment rate in the country, I think. Todd Davidson: Yeah, at the end of the year 5.9, which was pretty terrible. John Tillman: John Tillman here. It’s particularly terrible, Todd, when you look at the labor participation rate in Illinois, more people are getting on food stamps that they are finding new jobs and when that ratio starts to flip, it goes to the very core of what you’re saying. I think what’s interesting about that, the ones that are performing well is big states, small states, northern states, southern states, east and west, and so the common denominator is jobs, and the other thing I think is interesting – that politicians ought to figure out – is when you have a really robust tight growth economy, the people are pretty forgiving. They’ll let an awful lot of carnage go on – that’s what happened here in Illinois for decades until it all came home to roost. Todd Davidson: As truly, winning is kind of a deodorant that gets rid of anything; people are very forgiving when they’ve got a job and they have that confidence. Dan Proft: What about on the spend side, you talked about employment now; kind of all of these are inextricably linked, but when you look at the states that are distributed across this gallup poll from 1 to 50, is there anything on the spend side, the states that are more inclined to have balanced budgets versus states that have out of balance budgets, and unfunded liabilities versus funded pensions, and those sorts of things. Todd Davidson: Yes, I look at that correlation, and I see another really high correlation. You got states like Nebraska, who has pretty good prudent management of their government. They do have a couple of problems, but for the most part, they’ve got healthy preserves and a good balanced budget. Utah is probably the best example of good prudent conservative governments and budgeting, and then on the other hand, Illinois – of course, you guys know all about Illinois, but Rhode Island, Connecticut, Pennsylvania, for instance, is looking at a three billion dollar tax increase right now, because they need to balance their budget. Even, unfortunately, my home state of Kansas, is in a little bit of budget trouble when you see them… I think that explains why they’re so far down the line. John Tillman: That’s interesting; I thought that governor Sam Brownback was solving all the problems in Kansas. Todd Davidson: He’s done a good job at lowering the tax burden, but as you know, got caught up in kind of a political fight that left a little bit of a budget hole that’s taken them a few years to dig out of, and it’s been a pretty nasty fight, but I imagine as they get that corrected and the lower tax rates start to reward them economically, that state’s going to grow. It is really good on job creation, it’s got a pretty low unemployment rate, but I think that slight fiscal situation is dragging it down, for the time being. Dan Proft: And when you have a state like Illinois, with three quarters of the populous not having faith in their government, something else that tends to happen is people leave, and so I wonder, at the bottom end, where Illinois is, if you see, those are the states with the largest out-migration as well, which kind of furthers the economic death spiral in states like Illinois. Todd Davidson: Yeah, absolutely. I talked to my friends at the Yankee Institute there in Connecticut, and big news out of Connecticut was the leaving of General Electric this past January, but that’s not even the real story; the true story: small businesses like Borgeous’s Universal, this business makes the steering joints that you probably used to drive your car at work today. It’s been in Torrington, Connecticut, which is a town of 35.000 people, for 101 years, and it had 43 employees, they moved out of that state for South Carolina. It’s stories like that that are putting Connecticut down at the bottom. Illinois, you got the same thing. A well documented story – Jesse Huerta – I’m sure you can tell it much better than I can. John Tillman: Jesse Huerta worked in Cook County, and eventually relocated over to Indiana and became a supervisor at a manufacturing facility over there, and did a video with us, and just tells this amazing story, but he didn’t want to leave, and this what I think is interesting about this, that we’ve started talking about it a little bit, is while 50% of the people in Illinois say they would leave if they could, nobody wants to leave; people have their homes and families here. They want to stay here, they want to see a change, and that’s what I think is what’s interesting about the battle we have unfolding here in Illinois right now, between the Rauner point of view, and the progressive Madigan point of view. Dan Proft: He is Todd Davidson, policy specialist at the State Policy Network, Todd, thanks so much for joining us. Appreciate your time! Todd Davidson: Thanks, guys. Appreciate it! Dan Proft: Dan Proft back with John Tillman, president and CEO of the Illinois Policy Institute. John, many interesting legislating primaries, this primary season, March 15th, just a couple of weeks away; one of the more interesting ones, because of the incumbent is Mike Madigan, house speaker Mike Madigan, who has been the house speaker since Illinois has been incorporated in 1818, but he’s just another state legislator like everybody else, he’s got to run every two years in his South – Westside district, he’s facing a challenger from a young man named Jason Gonzalez, and I say young because he’s my age, makes me feel young; John Tillman: You just did that to hurt my feelings. That’s why you did that. Dan Proft: Yes, sure, right. Just to distinguish… John Tillman: A little stab at the gray haired dude over there. Dan Proft: Yeah, I mean, might be respectful of my elder. John Cash wrote about Jason Gonzalez this week, and the challenge that he is mounting against Mike Madigan. It’s interesting – I think there’s a lot of enthusiasm to see somebody who is actually pretty sharp, and this Gonzalez kid is; he’s got pretty impressive academic credentials, he’s well-spoken, he’s been successful in business. John Tillman: Yeah, and the trusting backdrop before all that, life story challenges growing up, difficulties, got a little trouble with the law, had a total turnaround, redemption, these are the kind of things that I thought the democrat party would champion; that a guy who starts up with some trouble, then finds his path, gets great degrees from MIT, and I think Duke, but apparently Mike Madigan’s campaign literature is really wanting to focus on the bad part of Jason Gonzales’ life. I’m so surprised. Dan Proft: I hope Mike Madigan’s life ends how Jason’s started, with trouble with the law. We’ll have to see how that goes. John Tillman: With the attorney general Lisa Madigan, I don’t know how likely that is. Dan Proft: No, that’s going to have to federal prosecution of some sort, but Madigan… Is Madigan really vulnerable? Seems to me, as I’m watching this race unfold, there’s a lot of unbounded hopefulness, but unbounded. John Tillman: Well, I know you are always more tough on these questions than I am; first of all, I said all along, I think this is a long shot. But sometimes long shots come in. Will this one come in? It’s a long shot, so the odds are no, but what I think is interesting about the discussion is how seriously Madigan is taking this race; normally, as you know, the way it works, Madigan chooses his primary opponents; they actually work for him, the people that collect the signatures for his primary opponents, to fill the ballot, are people that work for him. Dan Proft: Well, it just makes it easier. John Tillman: It’s just much simpler when you’re on both sides of the victory. Dan Proft: Totally. John Tillman: In fact, it just illustrates just how corrupt the system is; when Jason Gonzalez went in 15 minutes before the deadline to drop off his petitions, there was a Mike Madigan employee who had both stacks of petitions for the other two people, because there’s four people now on the ballot – the other two, a man and a woman, both also with Hispanic names, just to kind of confuse people about the Hispanic challenger – and it wasn’t just that; those kinds of shenanigan standard are having some parking problems in Mike Madigan’s district. Dan Proft: I think it’s nice to see somebody that keeps the soviet style system of elections going. John Tillman: Right. Dan Proft: And Mike Madigan certainly does, with Gonzalez as the exception, but yeah. So Gonzales has a campaign office in the district, of course, and all of a sudden, after he moved into his campaign office, and John Kaz writes about this, no parking tow zone signs go up in front of his district. John Tillman: And I think it was February 23rd to March 15th, right? Dan Proft: Right. John Tillman: Just a coincidence! Being the primary day… Dan Proft: Well, I appreciate the candor. Don’t do it like April 1st , make sure you understand, this is just for you, and just through the primary. The things that’s actually interesting about this, is I find this to be representative of a kinder, gentler Mike Madigan, because back in the day, instead of just putting the no parking signs up to harass your opponent that way, they just ripped off the sidewalk. You know, so you couldn’t walk John Tillman: Right. So you couldn’t get inside your building. Dan Proft: There’d be horses there, right, maybe put some scaffolding up too, so you don’t have any visibility. John Tillman: We have two weeks left, Dan, don’t give them ideas! Dan Proft: True, I was just saying, maybe Mike Madigan has lost his edge, but it is interesting, because the more Madigan does something like this – and when you have a challenger who’s not intimidated, like Gonzalez, this – a cruise to his benefit – people see him being persecuted, people see him treated unfairly, people see Madigan for what he is, and that’s continuing to happen. I think there’s a recognition of Madigan in the last couple of years, particularly since the last year, since governor Rauner’s been elected, an awareness of him, the kind of person he is, the kind of ruling class pawl that he is; that maybe hasn’t been the case even for most of the last three decades. John Tillman: Yeah, and I think that as the district where Madison is continues to change demographically – now everybody says demographics are destiny – I think Mike Madigan’s very likely to prove that’s not true this time, but I think Jason Gonzalez’s play is for the long run, and to try to make inroads, and say, you know what, it’s time for us to pick somebody who represents our interests – 71% Hispanic district there. Dan Proft: Well, the other things too would be interesting, democrat primaries tend to be more on the center-right side; certainly I do, and I believe you do too in your role as a private American citizen. John Tillman: Citizen John? Dan Proft: Yes, but seeing some new generation democrats challenge the old guard democrats, seeing some democrats are willing to step out on particular votes, willing to say that ‘If I’m elected in this primary I’m not going to vote for Mike Madigan as speaker; I’m going to be truly independent because I may not affiliate with the Republican party, but I see the power structure in the Chicago democrat party as just as illegitimate.’ John Tillman: I think what’s interesting about that is we’ve long said that the democrat’s agenda has hurt people in the poor parts of the city, people who are dependent on public education in the city, if you happen to be – whether you’re a poor middle-class African-American that crosses the spectrum, you are being screwed by the system. If you’ve bought a beautiful house down in Southern Cook County, in Flossmoor, and you’re African-American, or you’re struggling to survive and you’re living in a rental property on the South or West side, and you happen to be African-America, or for that matter Hispanic, the democrat party has been screwing you for decades, and that is starting to settle into people’s consciousness, and that’s – I think – what the Gonzalez candidacy and the other people you’re talking about are all about. Dan Proft: And I also think very much like what’s been starting to happen to the republican party over the last several cycles. Talented young people in their 30s and 40s, they’re getting sick of this wait your turn mentality. The republican party did it to its detriment for the better part of the last two and a half decades until recently, the last several cycles, and of course, the Chicago democrat party has done the same thing, and maybe they’re sowing the seeds of their own minority status. John Tillman: The new blood coming up isn’t actually interested in having a career in politics and making their living through politics. They’re actually interested in changing things, and I think that’s also the big difference. Dan Proft: Dan Proft back with John Tillman, president and CEO of the Illinois Policy Institute. John, at the start of the show we talked to Chris Robling about the presidential campaign as it wanted to treat Illinois in March 15th , and I got a question for you, as Trump is starting to pile up victories, as he is starting to appear to be the inevitable republican nominee, you have conservative intellectuals Erick Erickson, some of the writers over at The Federalist saying better Hillary than Donald Trump. I will not vote for Donald Trump, and there are some that say ‘I’m not going to vote for Donald Trump’, and some ‘I’d rather have Hillary’… the argument is that we don’t want to be responsible for an enemy inside our perimeter. Better to have an enemy where the lines are drawn and we fight that enemy, than allow someone like Donald Trump, who could be a facsimile of Obama or Hillary in our camp to define the Republican Party, to define the conservative movement and destroy it from within your conservative intellectual. You a subscribe to that theory? John Tillman: That is one of the most insane positions I have ever heard. Hillary would be… Dan Proft: Describing you as a conservative intellectual? John Tillman: Exactly. Both are true. This is an insanity, and it’s actually an indulgence. What this reflects is people now on the right who are mirroring what people on the left do, the people in the North Shore who go ostentatiously to the black tie events to support some ostentatious charity that helps the poor and disadvantaged, rather than going to the soup kitchen on a Sunday and volunteering, and then they can’t help but always talk about that, and they’re ‘holier than thou’, I am such a worthy human being trying to take care of everyone at the cocktail party or at the dinner circuit. This is the same thing. I am so pure, I am so wonderful, I am so enlightened, that I will not deign to vote for Donald Trump versus Hillary Clinton. Have they been paying attention who Hillary Clinton is?! She is an amoral, dishonest, power hungry politician who gives not one wit about the poor, the disadvantaged or the average American people, and will use the executive branch and abuse it even more than this president – Obama – has currently done. It is dangerous. The debate I had is, who would you rather have in office for the Republican Congress, though they are weak and they have problems there, to hold check on? Would you rather have the progressives have control of the judiciary and the executive branch for another 4 years, with an impotent congress, or do you rather have Trump and all the risks that are there, that I acknowledge, be tried to hold in check by a more robust congress who’s worried about his excesses. I will take that every day. Dan Proft: Well, alright then, I think you’re right to describe this as a bit of an indulgence, you know? It’s easy to be a theoretician or an op-ed writer at one of these opinion journals and take this position in the long game, where people are really suffering in the short run and the prospect of eight years of Hillary Clinton, for example, the kind of damage that would do. Think about the eight years of president Obama. Could we survive it? Of course we could survive it. We can survive anything, but it doesn’t mean that we should make the incline that much steeper coming out of potentially sixteen years of Obama and Hillary Clinton progressive policies; but they would say in response, just to play this out a little more, they would say ‘Look, you have to look long term; if Trump is an authoritarian in a way that president Obama has been, and essentially concedes all these foundational principles, and then the policies that stem from those principles, then he destroys the party, he destroys the movement, and you won’t be able to put Humpty Dumpty back together again after four years of Trump. John Tillman: I think that’s just preposterous on its face. One of the things you and I both know, because we’re both people involved in this in our citizen lives, is you build a movement from the extremes back to the middle. So you build a movement from the pro-liberty, pro-freedom point of view, from the right back to the center, and if Trump goes south on the right, then it is incumbent upon all of us who care about the freedoms that we fight for every day to hold him accountable, and that the work that we’ve all done here is Illinois, it started out by holding republicans accountable – they were a little uncomfortable with that, but now we have the situation, and we are now where we have less of that and we can actually start working across the aisle in terms of the work we do in politics or legislative advocacy. It’s the same idea here: if Trump goes rogue, it’s up to us to solve the problem. That is a much better problem for us to have than the other one.

 

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