Compass [WINTER 2012] Illinois labor law created union monster

Fending off the next big bailout: state pensions

The 2012 Illinois Piglet Book

John Tillman’s 2012 election analysis

IllInoIs PolIcy InsTITuTe | WInTer 2012

Illinois labor law created union monster

insideCompass

About us The Illinois Policy Institute inspires changes in hearts, minds and laws through its mission to promote personal freedom and prosperity in Illinois and America. As a leading independent, 501(c)(3) research and education organization, the Institute generates positive and sustainable policy solutions for citizens and lawmakers that help unleash talent and entrepreneurial ability.

190 S. LaSalle St., Suite 1630, Chicago, IL 60603 312.346.5700 | 802 S. 2nd St., Springfield, IL 62704 217.528.8800

3 letter from the ceo

4 Letter from Springfield

5 Donor profiles: Randy Nornes and Nancy Anetsberger

6 John Tillman’s 2012 election analysis

8 cover story: Illinois labor law created union monster

11 lawmakers play by their own set of pension rules

12 Fending off the next big bailout: state pensions

14 Liberty Justice Center continues fight for liberty in Illinois

15 chicago charter schools top list of best performers

16 Policy & impact update

17 62% of counties violating web transparency laws

18 The 2012 Illinois Piglet Book

20 Teacher retirement: who should pay?

22 Institute events

26 Digital outreach expands impact of liberty movement

27 staff spotlight: John Knowles

Editor-in-Chief Daniel AnthonyCreative & Art Director Teresa O’LearySenior Editor Hilary GowinsProduction Director Teresa O’LearyEvents Editor Chris Andriesen

An Illinois Policy Institute publication

WINTER 2012 | COMPASS | 3

Leading policy indicators

John TillmanCEO

You have heard of leading economic indicators – those reports that provide a glimpse of what’s on the horizon and help inform your spending and investment decisions. In that same vein, our work is a leading policy indicator. This issue of the Compass, along with all of our other work, provides you with something special – a policy early warning system. So whether you prefer the printed word, Tweets, eCompass emails, videos or our policy PDFs, you have multiple mediums through which to get an indicator of the future. More than a year ago, we were the first to warn about the coming campaign to change Illinois’ Constitution and impose a progressive income tax. Some on the left and in the media ridiculed the notion. Today there is a full-blown, union-funded campaign. You can read Vice President of Policy Ted Dabrowski’s take on page 12. For years the Illinois Policy Institute has been warning that the unions were gaining ever more power in government and over taxpayers. Some claimed we were like the boy who cried wolf. Today, following the Chicago Teachers Union strike, it is now accepted that the unions wield unprecedented power and can hold us all hostage since they are a monopoly provider of public services. To learn more about the real source of union power, read Director of Labor Policy Paul Kersey’s analysis on page 8. We have been saying for years that charter schools are a key part of improving the lives of Chicago’s children, especially those who are poor and disadvantaged. To see just how well charters are doing to change children’s lives for the better, read Director of Education Reform Josh Dwyer’s charter excellence article on page 15. To reform Illinois, we must face the truth. No one provides such an early indicator of the truth across such a broad array of issues as our amazing team at the Institute. We are grateful for the support you provide to make this important work possible. Merry Christmas and happy holidays,

John Tillman – Chief Executive Officer

P.S. I predict we will soon hear that Medicaid is broke once more despite last year’s “reform.” This is your leading policy indicator at work!

Letter from the CEO

4 | COMPASS | WINTER 2012

You may be facing another state income tax hike sooner than you thought. And you can do something about it.

Two years ago, House Speaker Mike Madigan, Senate President John Cullerton and Gov. Pat Quinn used a lame duck session to ram through their 67 percent tax hike on a purely partisan vote. They sold this as a temporary measure with a partial sunset in 2015.

The state’s Democratic leadership may ram through another tax hike during a special session in January. The most likely outcome is that they’ll try to make the 2011 tax hike permanent. They could try to take the rates even higher – maybe 6, 7 or even 8 percent. Are you ready to lose another week’s pay to a tax hike? I’m not.

Why are Illinois Democrats pushing this now? A few key reasons:

• Overspendingmadness. Democratic leaders can’t keep their wasteful spending habits in check. They need quick cash to placate their special interest constituencies.

• Lameducks. At least 15 percent of the Legislature will be lame ducks after the election, and the temptation to vote for tax hikes with the hopes of landing cushy state jobs or contracts will be high. We’ve seen it before.

• 2014gubernatorialrace. No Democrat who runs for governor in 2014 will want to deal with an expiring tax hike – it raises awkward questions about keeping promises. Better to take it off the table now.

• Progressivetax. Union-funded forces want to put a progressive income tax on the 2014 ballot. It’s an easier sell if it is framed as a tax cut for more people, which they can more clearly do if they make the 2011 tax hike permanent now.

• Asatradeforpensionreform. It’s possible that Democrats will pitch the tax hike as a trade for wishy-washy pension reform – the blueprint is the Medicaid package from May. This is a trap that Republicans must reject. Good policy results trump a seat at the table.

If you look closely, you can already see the state’s liberal forces laying the necessary groundwork. Be on guard.Can we count on you to help us send a strong message?

Sincerely,

Kristina RasmussenExecutive Vice President

P.S. Put the tax hikers on watch: we’re fed up and ready to fight. Visit illinoispolicy.org to learn more.

Kristina rasmussen – executive Vice President

Letter from SpringfieldBehind closed doors: Another income tax hike?


Randy Nornes is a natural optimist with a thirst for success. He is the executive vice president of Aon Corp., and recently celebrated his 25th anniversary with the company. Randy and his wife are active in their community, supporting various civic and charitable organizations, such as Boardroom Bound, Youth Technology Corps, Envision Unlimited and Arogya World. Randy also serves as chairman of the board for the Mid-America Club.

Randy and his family live in Naperville, but he and his wife plan to move to downtown Chicago after their children leave home.

“Illinois is a terrific place to raise a family,” he said. “I used to live and work in New York. Chicago offers all the benefits of a big city, with few of the hassles.”

Despite his love for Illinois and general optimism, Randy is having a difficult time remaining positive about his state.

“Based on the path we are on, Illinois is headed toward collapse,” he said. “Corruption and incompetence are so ingrained in public policy that voters seem oblivious. Low-information voters allow this to continue.”

Randy continues to support the Illinois Policy Institute because it highlights critical issues and provides invaluable information to Illinoisans.

“Change will occur when people see the facts and realize that politicians have been misleading them for years,” he said.

Former President Ronald Reagan once said, “All great change in America begins at the dinner table.” For Hinsdale resident Nancy Anetsberger, the cultural tradition of discussing politics and policy at the dinner table began at a young age. Today, that tradition continues in her own home. When her son Jordan, a junior at Hillsdale College, interned at the Illinois Policy Institute this summer, his activities and experiences sparked lively dinner conversation.

Nancy has spent most of her life in Illinois. She loves the state’s heritage and the legacy of Abraham Lincoln. She has a particular interest in economic policies that directly impact small businesses in Illinois, like the one her husband owns.

Passionate about turning Illinois around, Nancy firmly believes that state tax rates and wasteful spending discourage business development in the state, which hurts families.

Her concerns led her to support the Institute’s work.

“I am so glad that our family has become more aware and involved with the Institute,” she said. “We are very impressed with the wide-ranging projects to which the Institute devotes itself. The Local Transparency Project was particularly interesting to us, and we reviewed the audit results of our local taxing bodies. Using the results of Institute’s audit, our local government has made significant improvements in the quality and usability of its website.”

Aside from politics, Nancy enjoys cooking, photography, scrapbooking and volunteering in her local community at the Hinsdale Police Department. We thank Nancy and her family for their dedicated support and hope our work will spark many more lively dinner conversations in their home.

Randy Nornesby MaryAnn McCabeExternal Relations AssociatePhoto: Mark campbell creative

Nancy Anetsbergerby Natasha Malik External Relations AssociatePhoto: Mark campbell creative

Donor profiles


The re-election of President Barack Obama and the loss of Republicans in the Illinois House and Senate, which reduced the party to a superminority status, should be a wake-up call for everyone in the liberty movement. I’ve spent weeks reviewing the inputs and the outcomes, trying to make sense of it all.

The following are some of my initial reflections – you’ll read much more from me in coming months about what we can and must to do better to win the future for freedom.

1.AlookattheProgressiveCoalition’sorganizationandpersistence. The Progressive Coalition includes government and private sector unions, the trial bar, government-dependent nonprofits and the radical green movement. These groups are aligned for a singular common purpose: to use government to extract wealth and income from the private sector for their own distribution and consumption.

Powerful unions are at the apex of the Progressive Coalition because they have a constant stream of funding that flows into their coffers from mandatory dues. This money feeds the entire political organization state-by-state, county-by-county, local board-by-local board. They hire, train and deploy organizers directly or as part of their larger coalition and through nonprofits. These organizers, lobbyists, nonprofit staffers and rank-and-file members identify persuadable voters, then contact and persuade this targeted audience. This goes on year-round, every year, whether there is an election or not.

2.TheCenter-RightCoalitionneedstostepitup. The Center-Right Coalition has no singular unifying, organizing purpose other than broad agreement on a range of principles and issues. Most of the Center-Right Coalition just wants to be left alone, usually only coming together for election cycles. While some elements of the coalition are permanent, such as think tanks and other advocacy groups, the vast majority are candidate-dependent.

Here’s a great illustration of how the Center-Right Coalition is too often doing too little too late: The union-led Progressive Coalition hired its Ohio campaign director through Obama for America in March 2009. The Center-Right Coalition – with fragmented leadership – hired its Ohio campaign director through the Romney campaign following the 2012 primary season. As this is being written, prospective GOP candidates for Illinois’ 2014 gubernatorial race are announcing and planning their campaigns. They will all build a campaign infrastructure around their personal needs. Meanwhile, House Speaker Michael Madigan is planning for 2014 and how he can turn out the vote regardless of who the Democrat nominee is. He is recruiting candidates for the General Assembly and has

by John Tillman – Chief Executive Officer

2012 election analysis


been every day for the past 40 years. He is training, evaluating, teaching, mentoring, punishing and cajoling now, just as he has always done. What is the center-right doing?

3. Invest in structure.The Progressive Coalition has permanent infrastructure staffed by professional, well-paid, highly motivated organizers. They have a leadership and operational structure with well-defined roles, responsibilities, accountability mechanisms and clear consequences for good or bad performance.

The Center-Right Coalition has no comparable structure. The good news is that this is fixable. Further good news is that a number of leaders in Illinois began investing in addressing this issue during the past two years and those investments will continue in 2013 and beyond. The effect for this cycle was insufficient but a foundation was laid, lessons were learned and growth of structural capacity will continue.

The bad news is that this growing capacity will be opposed by the party structures and the consultancy class because it will be perceived as a threat rather than the help it really is. That must be overcome.

The Center-Right Coalition must continue to build the permanent infrastructure that can compete to win and advance a liberty agenda. This infrastructure must not be accountable to any candidate, party or to the consultancy class. It must be accountable to its investors and its mission: to see that a free enterprise agenda prevails in Illinois.

4. Caucus leadership and brand differentiation. You have to have compelling brand distinction to persuade more voters to your side. It’s Marketing 101.

Lexus and BMW compete. They want the same customers, but they have two distinct brands. Does BMW say, “We are almost just like Lexus?” No. BMW is the “ultimate driving machine.” This differentiation attracts a different set of drivers and expands BMW’s customer base over time. Similarly, Republicans need to increase their appeal by separation, not by blurring the difference.

5.Inclusivity. The Center-Right Coalition must invest in reaching out to nontraditional target groups. Free market ideas serve everyone far better than those from the Progressive Coalition. The center-right must invest in making that case in a way that is genuine and consumable. Do this and voters will come.

6.Itisaboutculture,notjustpolitics. Progressives work daily to change cultural attitudes toward issues in a way that makes their political solutions more palatable.

A perfect example is the January 2011 income tax hike that was supposed to be temporary by sunsetting at the end of 2014. The Progressive Coalition began a cultural campaign to make the tax hike permanent since the day it passed. The Center-Right Coalition must do a better job of representing its ideas and influencing narratives in nonpolitical, culturally appealing ways.

We must absorb these lessons, but we must not take the wrong lessons, either. In 2008, Wisconsin, Ohio, Michigan, Pennsylvania, Florida and others all went solidly for Obama. Two years later, every one of these states turned red or redder. It is the work we do tomorrow, next week and in the months to come that will determine our destiny – not the disappointing results of 2012.


“Remember that I have power …You are my creator, but I am your master; obey!” -The Frankenstein monster in Mary Shelley’s “Frankenstein”

Today, Illinois is dealing with its own version of Frankenstein’s monster. Like the idealistic scientist Victor Frankenstein, the Illinois General Assembly meant well when it created and empowered government employee unions. Just as the scientist in Mary Shelley’s novel created a monster by defying the laws of nature, however, our lawmakers trifled with fundamental rights and principles of government and created all-powerful unions that prevent much-needed reforms.

In the book – unlike many movie versions – the monster turned on its creator, menacing and eventually delivering an ultimatum to the doctor who brought it to life. Likewise, government unions often have managed to dominate state and local governments, making wage and benefit demands that have become more and more unaffordable.

Illinois labor law created union monsterby Paul Kersey - Director of Labor Policy


Government unions have become powerful because they have a monopoly on the workers hired to enforce laws, teach in public schools, run public transportation and many other state and local government services. Workers must accept unions as their representative, and public officials must negotiate with union officials over how government will function and how much it costs. Government union officials have made the most of the leverage the state has given them by negotiating expensive contracts that don’t improve the effectiveness of the services they provide.

At the same time, government officials guarantee that unions receive millions of dollars under the guise of membership dues and agency fees – unions collect these guaranteed funds with no questions asked. Union officials have used that power to build a dominant political machine. No other interest group in Illinois has a built-in money advantage like government employee unions.

A few months ago, Chicago Mayor Rahm Emanuel confronted the militant Chicago Teachers Union, or CTU, that demanded 30 percent raises and watered-down evaluations on pain of strike.

When negotiations between the school district and CTU became stagnant, the team at the Illinois Policy Institute reported how out of line union demands were with the fiscal and educational reality in Chicago.

When CTU walked, Institute staff challenged the conventional wisdom about teacher bargaining, reminding the media and the public of the $1 billion budget deficit that the district faces in the 2013-14 school year, a financial hole that should have made pay raises out of the question. The Institute challenged the union’s excuses for poor academic performance, calling for a stronger evaluation process. The Institute also pointed out that, under state law, it is illegal for the union to strike over evaluations or the rehiring of laid-off teachers, two topics that figured prominently in the union’s demands. The Institute made sure that newspapers and television networks understood that the strike was illegal and why, securing more than 200 news appearances within a three-week span with media outlets like The Wall Street Journal, NPR, Fox News Channel and Univision.


In the end, Emanuel made big concessions: teachers got hefty, across-the-board pay hikes, and evaluations are as weak as state law allows for and include loopholes that the union will be able to manipulate to protect ineffective teachers. When the contract was announced, the Institute explained why the deal would do little to improve public education and is bound to lead to layoffs. But as bad as the deal was, there was a silver lining: Emanual could and should promote charter schools and vouchers to give parents more choices. And the day after public schools in Chicago reopened, a guest column in the Chicago Tribune, coauthored by Institute CEO John Tillman and Director of Labor Policy Paul Kersey, made the case for a revamped labor law that restores freedom, the thing that “scares government union bosses most of all.”

Illinois labor law makes unions powerful and at the same time unaccountable to the public. This is why they can intimidate so many of our elected officials. Right now, Gov. Pat Quinn could have state retirees pay more for their health care, a move that would save taxpayers more than $1 million a day. He shouldn’t need the union’s permission to make this move – state law specifically gives his office the responsibility to set rates for state retiree health insurance – but he hasn’t up to now because he fears a state employee strike and the loss of union support in the 2014 gubernatorial election. The American Federation of State, County and Municipal Employees – not the General Assembly, the courts or the public – is blocking changes that would improve the state’s finances and provide relief to taxpayers. The union has become monster and master.

“Frankenstein” was story with a moral: it is dangerous to trifle with life. Likewise, the story of unions in Illinois has its own moral: lawmakers should not trifle with the fundamental principles on which America was founded. In the American tradition of government, individuals have the right to speak for themselves and associate with others at their own discretion; but under Illinois labor law, workers are forced to accept the representation of a union that may not respect their individual values and interests. Government is supposed to be accountable to the public and nobody else, but under Illinois state labor laws elected officials are forced to bargain with unions

over basic governmental decisions, such as how to spend public money or how public employees are expected to perform their jobs.

The Institute exists to defend the basic principles of sound, limited government. The state of Illinois has violated the principles of individual freedom and public accountability, and in the process created a government union monster that threatens to bankrupt the state. The Institute calls for a new labor law that respects the rights of individual workers and leaves the public in control of government.

The Institute has already begun to alert the public to the monstrosity that government unions have become, and shown them what it will take to regain control of their government: an end to guaranteed union dues, more individual freedom for government employees and changes to the bargaining process that will ensure that any contracts that are signed are in the public’s best interest, not just the union bosses’.

Watch Roadblock to Reform at youtube.com/illinoispolicy


It’s no secret that Illinois lawmakers have done a good job of feathering their own retirement nests – at the expense of Illinois taxpayers.

In fact, a number of former lawmakers have six-figure pensions.

But what about the most famous living alum of the Illinois Legislature – President Barack Obama?

He served only seven years in the Legislature before moving on, but his stint in Springfield proved to be a lucrative addition to his retirement plan.

If the president had served as a rank-and-file state worker instead of a state legislator, however, he wouldn’t receive a pension at all. Regular state workers must work a minimum of eight years before they’re eligible to receive a pension.

But Illinois lawmakers created different rules for themselves. Only four years of service in the Legislature is required for lawmakers to retire at age 62. And they can retire at age 55 if they have eight years of service in the General Assembly.

Obama’s service as an Illinois state senator is estimated to earn him a $15,270 annual pension if he retires at age 62. His initial monthly benefit would be $1,272.

To put this in perspective, a man or woman buying an annuity would need $332,091 in cash at the same retirement age to yield the same annual income as Obama’s estimated state pension.

After accounting for a 3 percent annual compounded cost-of-living-adjustment and an average life expectancy, Obama could be in line to receive a lifetime pension payout of $383,535.

“Where else would you be able to get a pension like that for a part-time job that you only held for seven years?” said Frank Keegan, editor of State Budget Solutions. “I would challenge anyone to find any state worker getting that good of a deal.”

Members of the Illinois General Assembly Retirement System, or GARS, contribute 11.5 percent of their salary to the pension system. The estimated total amount Obama would have contributed as an employee toward his pension is $55,076.

“This is absolutely ridiculous,” said Kristina Rasmussen, executive vice president of the Illinois Policy Institute. “He could get a far greater return than someone in the private sector could ever expect to receive. And if he had worked as an ordinary state worker he wouldn’t have been eligible for a dime in pension payments.”

The pension estimates were calculated using the Illinois Policy Institute’s online pension calculator at illinoispolicy.org.

This year, Illinois taxpayers will contribute $14.15 million to GARS. Under new accounting rules from Moody’s Investors Service, the Illinois Legislature’s pension system is only 13-percent funded.

In addition to the pension, Obama is eligible for free retiree health care funded by Illinois taxpayers after having served four years in office.

Illinois state legislators aren’t just cheating the system – they’ve created a system that cheats Illinois.

To subscribe to the Reeder Report, a twice-a-week e-letter that provides insight and perspective to policy and political insiders, visit reederreport.com

by Scott Reeder - Journalist in Residence

Lawmakers play by their own set of pension rules


Fending off the next big bailout: state pensionsNo one saw the Troubled Asset Relief Program, auto or housing bailouts coming. Congress, in crisis mode, forced through these ill-fated bills, with no real time for debate or reflection. The result was the creation of some of the most destructive policies our country has ever seen.

To stem the tide of the bailout culture, the Illinois Policy Institute is attempting to fend off the next potential federal bailout: states and their nearly bankrupt pension systems. The Institute launched its No Pension Bailout project in September, with Sen. Jim DeMint, R-S.C., at its side, to prevent the federal government from bailing out states that have mismanaged their funds.

Across the country, state pension funds are dramatically underfunded. Recent calculations put the value of unfunded pension obligations at $2.5 trillion – and possibly as high as $4 trillion. That’s more than one-

sixth of the entire U.S. economy and more than all taxes paid to the federal government last year.

Sadly, the past few years have shown what happens when large institutions face big challenges. When institutions are deemed too big to fail, the federal government feels the need to swoop in and bail them out if times get tough. Witness the billions poured into General Motors Co., American International Group Inc., Fannie Mae, Freddie Mac and the rest of the banking sector.

There’s already movement afoot for the next big bailout.

In his fiscal year 2012 budget, Gov. Pat Quinn said that “significant long-term improvements” to the state’s pension debt would come from, among other things, “… a federal guarantee of the debt.” According to his budget director at the time, Quinn also met with Treasury Secretary Tim Geithner and other White

by Ted Dabrowski -Vice President of Policy

Sen. Jim DeMint, R-S.C.

Watch the no Pension Bailout press conference with sen. Jim DeMint at youtube.com/illinoispolicy


House officials in 2009 to secure federal backing for $14 billion in pension obligation bonds.

Quinn is not alone. Earlier this year, Rep. Hansen Clarke, D-Mich., introduced a bill to Congress that sought half a billion dollars in federal loans to solve Detroit’s financial crisis and underfunded pension program.

We cannot let a federal bailout of state debt become the next “sudden” crisis. Until a federal bailout is completely off the table, state and local governments will continue to delay the structural spending reforms so critical to their states’ long-term fiscal health.

The No Pension Bailout project raises awareness about the risks of another bailout and partners with organizations around the country to stop this idea in its tracks. The Institute held a national press conference in Washington, D.C., joined by DeMint, state lawmakers and experts from the Cato Institute, the American Legislative Exchange Council, State Budget Solutions and The Heritage Foundation. The Institute also worked closely with the staff of the bicameral Joint Economic Committee in its efforts to prevent a federal bailout of state debt.

The project has been covered by The Wall Street Journal, Fox Business, Fox News Channel and many other media outlets across the country. The No Pension Bailout project was featured in the news more than 43 times since its launch in August. The Institute also authored an 80-page study analyzing the impact of a federal bailout of state pension debt and launched www.NoPensionBailout.com, which allows users to control an interactive bailout simulation to see how taxpayers in more fiscally responsible states will bear the brunt of any bailout’s costs.

As long as state and local government think a federal bailout is an option, they will continue to delay making the structural reforms they so desperately need. The Institute will continue to work nationwide with its allies and partners to end the talk of bailouts and get states back on track toward serious spending reforms.

Nowhere are these reforms needed more than in Illinois. Quinn must reject the notion of a bailout immediately and get to work on enacting real reforms – Illinois can’t afford to wait until crisis mode sets in.

http://nopensionbailout.com/


Liberty Justice Center continues fight for liberty in Illinoisby Diane Cohen - General Counsel, Liberty Justice Center

The Liberty Justice Center, or LJC, is entering its second year of operation, continuing its mission of defending liberty and the rights secured by the Illinois and United States Constitutions. LJC provides free legal representation to those whose constitutional rights have been violated by government and overreach by bureaucrats. LJC is a project of the Illinois Policy Institute and supports the Institute’s vision to make Illinois first in economic outlook and job creation and a free enterprise leader for the rest of America. LJC pursues cases that advance freedom and create broadly applicable precedents.

Two of our cases, Beaver’s Donuts v. city of Evanston and Julie Crowe v. city of Bloomington, seek to advance economic liberty by vindicating the rights of Illinois’ entrepreneurs to earn a living. LJC joined with James Nuccio and Gabriel Wiesen of Beaver’s Donuts to file a lawsuit challenging a city of Evanston ordinance that bans them from operating a food truck in the city solely because they do not own a brick and mortar restaurant in Evanston. So far, the city has provided no health or

View all of our cases at libertyjusticecenter.org. Before submitting a case for review, visit libertyjusticecenter.org and click “Cases” to see if the case fits LJC’s parameters. If it does, email the details and relevant contact information to [email protected]. Send mail inquiries to “Case Inquiries at the Liberty Justice Center,” 190 S. LaSalle St., Suite 1630, Chicago, Illinois 60603.

Liberty Justice Center

safety justification for this ban and has filed a motion to dismiss the case. This motion is being briefed and is currently pending in Cook County Circuit Court.

We also continue to work on behalf of Bloomington resident Julie Crowe, a would-be entrepreneur who wishes to start a specialized vehicle-for-hire catering service. Bloomington’s city manager has blocked Crowe’s business because the added competition was deemed not to be in the “public interest.” This case is in the discovery stage and LJC will be moving toward filing a motion for summary judgment that seeks to strike down the city’s unconstitutional policies and practices in the next several months.

LJC’s fight against Illinois’ unconstitutional campaign finance law also continues in the U.S. District Court in Chicago. While LJC did not prevail in its efforts to gain emergency relief in advance of the November 2012 election, this case will continue in the trial court in the coming months.


Chicago charter schools top list of best performersby Josh Dwyer - Director of Education Reform

When the Chicago Teachers Union went on strike, many parents of public school students had to scramble to find a safe place for their children to stay during what would otherwise be a regular school day. Some parents took time off work, even at the risk of losing their jobs. For about two weeks, students missed class and extracurricular activities, losing momentum and valuable learning time.

But in Chicago’s charter schools, class continued as normal, and teachers continued working with parents to ensure student success. Schools were exceeding expectations, posting gains in reading and math scores. Teachers were not striking, even though they worked longer hours for less pay. Here, everything was calm; hopeful, even.

Chicago’s charter high schools are a welcome change from the typical Chicago Public School story of schools struggling to meet minimal standards and teachers complaining about intrusive administrators, performance evaluations and so-called lackluster pay. In fact, charter high schools in the city have – on average – outperformed their public counterparts.

A recent report of 2012 ACT test scores created by the Illinois Policy Institute found that charter schools held the top nine spots for open-enrollment, non-selective public high schools in Chicago.

In addition, the report showed that charter schools have been outperforming their public school peers on the ACT for the past five years – increasing their scores by 17 percent while traditional schools gained less than a 5 percent boost.

Charter schools offer a real alternative for Chicago’s children. This is why the Institute supports abolishing the charter school cap – which arbitrarily limits the amount of charter schools that are allowed to open in the state – and has urged Chicago to use charter schools in their school turnaround process.

Charter schools prove that offering school choice not only improves the overall school system, but also students’ chances for success.

17.7

20.519.9

18.818.6

17.217.5*17.5

2007 2008 2009 2010 2011 2012

16.017.0

18.0

19.0

20.021.0

Top 10 chartersTop 10 traditional schools

17.418.0 17.7

18.5

Top 10 charters outperform top 10 open-enrollment, non-selective, traditional high schools in ChicagoAverage of ACT composite scores: 2007-2012

Source: Chicago Public Schools’ Strategy, Research, and Accountability Office, www.cps.edu/SchoolData/Pages/SchoolData.aspx, Illinois Policy Institute*Scores from only eight charter schools were available in 2007

http://www.cps.edu/SchoolData/Pages/SchoolData.aspx


Gov. Pat Quinn is cooking up another multibillion -dollar tax hike for Illinois – a progressive income tax.Lawmakers already took an additional $1,500 from Illinois families’ shrinking budgets with a record 67 percent income tax hike in 2011. But this money grab wasn’t enough to satisfy Springfield’s addiction to spending, which is up 85 percent per capita after inflation since 1990.

Advocates for the progressive tax sell it as a fair tax, which will only affect the rich. But this couldn’t be further from the truth. These myths have muddied the water surrounding the real issues behind the progressive tax.

The Illinois Policy Institute is working to set the record straight.

The union-funded Center for Tax and Budget Accountability is distributing a progressive tax plan that would increase taxes on 85 percent of hardworking taxpayers in Illinois; it would destroy a minimum of 65,000 jobs; it would hit the middle class; and it would exaggerate future swings in revenues, leading to more deficits and nearly impossible budget planning.

Perhaps the most disconcerting fact about the progressive tax is that it’s discriminatory. It taxes success and hard work, penalizing everyone from an entrepreneur working her way out of her parent’s home to parents working extra jobs to pay for their children’s education to out-of-state businessmen whose investments could create jobs in Illinois.

Illinois has a spending problem – it doesn’t need another tax hike to chase away more businesses and residents.

When new businesses are stifled by high taxes and over- regulation, job growth suffers.

New analysis by the Illinois Policy Institute confirms this fact, and proves that the creation of healthy new businesses is the key to more jobs in Illinois.

Net company migrations into the state and the expansion and contraction of existing companies matter when it comes to job growth, but these factors are secondary to the influence of business births and deaths.

The numbers speak for themselves – from 1995 to 2009, Illinois ranked 50th in the nation in total job creation and 48th in the nation in total job creation from new business. In fact, the state lost jobs during this period, which happened in only six other states.

While Illinoisans were being crushed by these job losses, lawmakers across the state were busy courting big companies like CME Group Inc. and Sears Holdings Corp., which received hundreds of millions of dollars in tax breaks just to stay in Illinois.

The study’s data show that Illinois’ total job growth is highly correlated with how well Illinois fosters the creation of new companies and how well it provides an economic environment that promotes profits and success. Illinois must revitalize its toxic business environment and embrace a reform agenda that lowers taxes, reduces regulation and burdensome red tape, ends corporate favoritism and restores Illinois’ fiscal order.

Illinois needs a new sweetheart deal – one for all job creators.


There’s nothing fair abouta progressive tax

Fostering creation of new companies is key to job growth

Policy&impactupdate



Without good information, citizens cannot engage effectively with their government.

Why does this matter? Without engaged citizens, government officials can carry out their agendas unchecked.

That’s why the Illinois Policy Institute conducted the Local Transparency Project, which included a website audit of 79 out of Illinois’ 102 county governments.

By state law, local government entities in Illinois that maintain a website are required to post a meeting calendar, agendas, minutes of past meetings and information on filing a Freedom of Information Act, or FOIA, request on the site.

However, the Institute found that an alarming number of Illinois counties are violating state laws.

The Institute found that:• 43 percent of the counties investigated were not in

compliance with the Open Meetings Act, or OMA• 54 percent were not in compliance with the Freedom

of Information Act• 62 percent were in violation of either OMA or FOIA

website transparency laws

Unfortunately, there is very little recourse for citizens to compel counties to comply with OMA and FOIA website transparency laws. Citizens can file a complaint with the public access counselor at the Illinois Attorney General’s office, but this office acts more as an informal educational office rather than one that actually demands compliance with state law.

Without accurate, complete information, citizens cannot fully engage with government. And when left unchecked, Illinois politicians are free to practice a culture of wasteful spending, ignore their core government responsibilities and engage in corruption.

Illinoisans have a right to transparent government.

62% of counties violating web transparency lawsby Brian Costin - Director of Government Reform

When left unchecked, Illinois politicians are free to practice a culture of wasteful spending, ignore their core government responsibilities and engage in corruption.


New Piglet book highlights culture of wasteful spendingby Ben VanMetre - Senior Budget and Tax Policy Analyst

The 2012 Illinois Piglet Book highlights nearly 200 examples of wasteful government spending throughout the state. Each item stems from the decisions of politicians who have lost sight of the core government services they were put in place to maintain.

Illinoisans will be better off when leaders end the state’s corrosive culture of out-of-control spending. It’s time for government officials to cut the waste and begin respecting taxpayers and their money.

Just how bad is this spending problem? Some of the most egregious expenditures are shocking.

From $9,941 for “Speedy-the-Turtle” bobbleheads to $200,000 for customized, eco-friendly zip lines, Piglet 2012 highlights some wasteful spending that may seem humorous. But then there’s a $2,261,009 cable TV bill taxpayers paid for prison inmates to get their weekly fill of Seacrest and Snooki. And yes, we checked, MTV made the long list of TV channels that prisons provide. Other favorites include CMT, Fox Sports, ESPN, BET, the Home Shopping Network, Speed and Spike TV.

In another example, Illinois actually broadcasts its wasteful government spending. Between 2011 and 2012 the state spent $16 million on advertisements, which included paying the Chicago Yachting Association $3,200 for a full-page advertisement to promote North Point Marina and spending $18,000 with Radio Disney Group to promote select performances, including a Selena Gomez show, at the state fair.

And Illinois governments are willing to shell out thousands of dollars for other barnyard fun, too. Perhaps some of the most outrageous waste in Illinois occurs at the local level, where Rock Island County paid $20,489 to Swine-time Pig Racing and spent $19,678 on carousel ride reimbursements.

piglet 2012

Rock Island County spent $1,101 on lipstick tubes.

read The 2012 Illinois Piglet Book at illinoispolicy.org/piglet

The 2012 Illinois Piglet Book was produced by the Illinois Policy Institute in conjunction with Citizens Against Government Waste.

http://illinoispolicy.org/piglet

FALL 2012 | COMPASS | 19

And some local park districts in Illinois are just giving away taxpayer money. The Chicago Ridge Park District spent $18,444 on giveaways, which included beach balls, chip clips, pinwheels, tote bags and flyswatters.

Other examples of waste in Piglet 2012 come in the form of grants, subsidies and special tax treatment for businesses, along with handouts for nonprofits and associations.

When the government gives millions of taxpayer dollars to MillerCoors and Boeing Co. for relocation, and thousands of taxpayer dollars to AT&T Inc. and Navistar International Corp. to train employees, the logic offered up is that this transfer of resources promotes a skilled labor force and greater business activity.

But the story that’s rarely told is that to fund this corporate favoritism, the state must take money from families, corporations, small businesses and struggling entrepreneurs. That weighs down investment and growth, resulting in fewer startups, lost economic output and reduced job creation. That’s real waste.

The Illinois Policy Institute believes the role of government is to promote economic freedom and individual liberty. Freedom and liberty are unduly infringed upon when the state taxes families and businesses to send the spoils to frivolous programs, special interest groups and businesses with lobbyists.

State officials in Illinois must end the culture of habitual overspending, eliminate waste and return focus to providing core government services.

It’s time to cut the crap.

9 52

The Illinois Department of Commerce and Economic Opportunity gave a $200,000 grant to Shawnee Bluffs Canopy Tour Inc. to build eco-friendly, customized zip lines.

Rock Island County paid $20,489 to Swine-time Pig Racing.

Watch the Piglet 2012 video series at youtube.com/illinoispolicy

Read the book. See the zipline pig. See the prison pig.

http://youtube.com/illinoispolicy


who should pay?

by Diana Rickert - Director of Media Relations

At several stops on the Illinois Policy Institute’s summer debate tour, the program opened with the following question to audience members: How many of you think Illinois politicians are honest and keep the promises they make?

Unsurprisingly, few hands rose. Yet in Illinois, politicians are entrusted to oversee the retirement security of hardworking and dedicated teachers. Illinois politicians have demonstrated they are the last people who should be in the retirement business – and there’s a way to start taking away politicians’ power over pensions: local pension accountability.

In the private sector, both employer and employee make contributions toward Social Security. In city, county and almost every other level of Illinois government, a similar arrangement is in place; the employer (taxpayers, via government) pays an employer share toward government worker pensions, and the worker makes an employee contribution. But that’s not how it works in Illinois public education.

In nearly two-thirds of Illinois’ K-12 school districts, teachers pay little to nothing toward their own retirement. Instead, the employer (taxpayers, via school districts) pays the employee contribution toward retirement savings. Then, when it comes to the employer (school district) share, the state picks up the tab.

What results is an accountability gap. Local school districts set salaries and pensions and then give the bill to the state. The governments making spending decisions are not held accountable for the costs.

In April, Gov. Pat Quinn proposed ending the state’s practice of paying the “employer share” of teachers’ pensions on behalf of local school districts. Quinn’s proposal is similar – but not identical to – a March proposal by the Institute called “local pension accountability.”

However, during the spring legislative session, pension reform came to a standstill over this issue. School district officials claimed it would result in program

Teacher retirement:


cancellations, increased class sizes, property tax increases or even destroy public education. These are myths. Here is the truth:

The average cost to school districts in Illinois for picking up the “employer” share of pensions is just 3.7 percent of total expenditures.

Teachers in two-thirds of Illinois school districts pay little to nothing toward their own retirement. Instead, the school districts pay the “employee” share of retirement savings.

If school districts stopped paying the employee share, and instead started paying the employer share, then 468 out of 866 school districts would see cost savings.

To educate the public about this issue and why it is a necessary component of comprehensive pension reform, the Institute hosted an eight-stop debate series across the state called the Local Pension Accountability Tour. The debates focused on the question of who should pay

the employer share of teachers’ pensions: local school districts or the state.

The Institute held debates in Springfield, Carbondale, Quincy, Lemont, Decatur, Crystal Lake, Skokie and Rockford. Local legislators, civic leaders and members of the news media moderated the debates. Institute pension experts appeared opposite representatives from local school boards, and representatives from the Illinois Education Association and the Illinois Federation of Teachers.

Hundreds of engaged citizens attended the debates, and each stop received significant coverage in local media. The Institute’s debate series provided a home to much-needed debate about the issue. But most important, the conversation changed many minds about how to implement transformative pension reform that will put Illinois on the path to leading the nation in economic performance.

The Illinois Policy Institute’s Diana Rickert talks with TV reporters about pension reform after the Institute’s Local Pension Accountability Tour stop in Rockford.


Institute events

Who’s counting? A cocktail hour with John FundOn Sept. 25 the Illinois Policy Institute and Citizens for Responsible Government hosted John Fund, a columnist for National Review magazine and a frequent contributor to Fox News Channel. Fund discussed his most recent book, “Who’s Counting?,” which focuses on many problems of America’s election system, ranging from voter fraud to a slipshod system of vote counting that noted political scientist Walter Dean Burnham calls “the most careless of the developed world.”

Who’sCounting?

How Fraudsters and Bureaucrats Put Your Vote at Risk 09.25.12

On Oct. 1, the Institute hosted Yaron Brook, president of the Ayn Rand Institute. Brook argued that the reason government intervention increases is a set of prevalent and deeply entrenched cultural ideas — specifically moral ideas. He also spoke about his new book, Ayn Rand’s growing popularity and how Rand’s ideas can help transform states like Illinois.

Photos: Mark campbell creative

“Free Market Revolution”: Yaron Brook discusses new book


Watch the In Black and White: Yaron Brook video at youtube.com/illinoispolicy

“Free Market Revolution”: Yaron Brook discusses new book



Tax Competition and 4% Growth: What the Midwest Can Show the Rest of the Country

On Sept. 18 the Illinois Policy Institute partnered with the George W. Bush Institute to host a day-long conference discussing how different tax rates affect business behavior and why low-tax states are growing while high-tax states are stagnating. The event featured academics, elected officials and business leaders who shared the theory behind tax competition and their experiences working with different tax environments. Presenters included: • Indiana Gov. Mitch Daniels • Margaret Spellings, president, U.S. Forum for

Policy Innovation, former U.S. Secretary of Education

• Jimmy John Liautaud, CEO and founder, Jimmy John’s Gourmet Sandwich Shops

• Bruce Rauner, chairman, GTCR LLC• James Glassman, founding executive director,

George W. Bush Institute

• David Booth, co-CEO and chairman, Dimensional Fund Advisors

• Edward Lazear, Jack Steele Parker Professor of Human Resources Management and Economics, Stanford Graduate School of Business

• John Cochrane, AQR Capital Management Distinguished Service Professor of Finance, The University of Chicago Booth School of Business

• Congressman Aaron Schock, R-Ill.• Brian Wesbury, chief economist, First Trust

Advisors LP• Michael Hicks, director, Center for Business and

Economic Research• William Little, president and CEO, Quam-Nichols

Co.• Amity Shlaes, director, 4% Growth Project, George

W. Bush Institute• Byron Trott, chairman and CEO, BDT Capital

Partners


Institute events

Watch Gov. Daniels’ keynote address at youtube.com/illinoispolicy



On Nov. 6 the Illinois Policy Institute celebrated 10 years of promoting economic freedom and individual liberty in Illinois with an election night watch party. Institute staff were joined by more than 200 supporters and friends.

Tax Competition and 4% Growth: What the Midwest Can Show the Rest of the Country 10 years

Photos: Mark campbell creativeWatch The Fight for Freedom at youtube.com/illinoispolicy



Digital outreach expands impact of liberty movement

“In the beginning of a change, the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot.” — Mark Twain

We often hear stories from Illinoisans who find comfort in knowing others are working to advance liberty in our state — some are shocked to learn such a community exists.

Digital innovations continue to change how members of the growing liberty movement engage with each other and the Illinois Policy Institute. We are committed to developing an ecosystem that accelerates the growth of our community and allows you to quickly and easily consume and share information with your friends, family and elected officials.

As part of these efforts, we are launching a redesigned www.illinoispolicy.org and will be expanding our social media efforts, which currently include Facebook, Twitter, YouTube and Google+.

We will also continue to offer our weekly eCompass newsletter to provide breaking news and an insider look at what’s happening in Springfield and throughout the state.

These are just a few of the ways we’re working to better serve you. We look forward to staying in touch online and connecting with you in person at our next event.

A message from the Illinois Policy Institute


Staff spotlight: John Knowles, Vice President of External Relations

John Knowles learned the ins and outs of fundraising as chief of staff to the House Minority Whip of the Michigan House of Representatives, and applies his love of history and the free market to his work at the Illinois Policy Institute.

Q:YoulivedandworkedinFloridaformorethanthreeyears.Whatweresomeoftheperks?

A: A lot of the people there have the freedom to choose to live anywhere – and they choose Florida. There’s a reason for that. One is the climate, but another is that the leaders in Florida have shown wisdom in employing a lot of the policies the Illinois Policy Institute supports in terms of low taxation, restrained government and a pro-business environment.

Florida is evidence of why these policies are successful. Its economy is booming. Its population has increased. It’s not without its challenges, but it generally does better than the rest of the country.

Q:Whatdoyouthinkourcountryneedsmost?

A:What I think is really special about the United States is that we tell people if they’re industrious and have high integrity they can be and do whatever they want. That’s a great promise. At some point along the line, that promise was warped and manipulated into something very different – a guarantee of wealth or some certain lifestyle – and I think that was a terrible mistake. I’m fearful that our original notion might be in its final generation.

Q:CanyoudescribeyourinteractionswithInstitutesupporters?

A:What unites Institute supporters is that while they come from widely varying backgrounds and perspectives, they all believe that Illinois can be saved. Our supporters tend to be the ones who are inherently optimistic, mostly because they’re successful and they know what it’s like not to start out that way. They’ve lived lives of aspiration, endurance and fortitude, and they’ve had a lot of success, so they believe nothing is impossible. That’s a great group to be around.

The Illinois Policy Institute measures its success on impact and change. Developing and sharing outstanding lib-erty solutions are crucial first steps and a major part of what we do. We are only satisfied, however, when our ideas translate into real, practical policy solutions that, upon adoption, make Illinois the best state in America for people to live and prosper.

Our pursuit of this vision is only possible because of your support and we cannot thank you enough. Because of your decision to invest in our work, the freedom agenda in Illinois is stronger than ever before. The impact of your donation has been felt through the media, in the halls of the Statehouse, and throughout our state’s political establishment.

This commitment to return value to you in the form of real progress for the cause we both love will not waver at all throughout 2013 and beyond. As you know, there is much more to be done. We are just getting started, and the best is yet to come.


TWITTer.coM/IllInoIsPolIcy FACEBOOK.COM/ILLINOISPOLICY youTuBe.coM/IllInoIsPolIcy

With your help, we can translate ideas into solutionsby John Knowles - Vice President of External Relations

http://twitter.com/illinoispolicy

http://facebook.com/illinoispolicy


Compass [WINTER 2012] Illinois labor law created union monster

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