* My weekly syndicated newspaper column contains a newly revised pension payment number from the Auditor General’s office. Last week, the office claimed the coming fiscal year’s payment, including debt service, would be $5.4 billion. But then AG Bill Holland called me Friday to revise that up to $6.2 billion. The column also corrects a misinterpretation I had on the blog last week about whether unions could negotiate pension benefit changes. Turns out, they can’t…
If you thought Illinois government might get a tiny breather after raising income taxes, think again.
The Illinois House’s new revenue projection for next fiscal year, which begins in July, is $759 million lower than the governor’s. However, the House’s forecast also is $2.2 billion below Gov. Pat Quinn’s projected spending for the coming fiscal year.
Quinn’s proposed budget was whacked last month by Democrats and Republicans alike for its brutal slashing of several human service programs. But even with those Quinn cuts, if the House revenue forecast is used in the final product, they’ll still have to find $2.2 billion in additional spending reductions.
The bad news doesn’t end there. According to some revised numbers issued by the auditor general Friday, next year’s required state pension payment, including debt service, will be $6.2 billion.
Overall, that pension payment will eat up all but about a few hundred million dollars of the recently approved state income tax hike.
And there may not be anything that anybody can do about it.
The Senate Democrats released an opinion by their well-regarded chief legal counsel, Eric Madiar, last week which claimed that pension benefits for current employees are a constitutionally protected contract which cannot be altered.
But could the “contract” with those workers be changed via collective bargaining with government employee unions?
“No,” Madiar says.
As Madiar points out, Illinois’ Public Labor Relations Act does not allow public employee unions to bargain on pension issues. New York’s state law does allow union pension benefit negotiations, Madiar said, adding that New York’s Democratic governor is attempting to strike a deal with the unions to roll back pension benefits.
Madiar says his interpretation of Illinois law is that the pension obligation is an “individual right.” He compared it to the U.S. Constitution’s First Amendment, which he pointed out is not a “pooled” right that can be collectively negotiated away.
Madiar didn’t completely rule out the possibility of a change to the state’s labor relations law to allow unions to bargain away pension benefits on behalf of their members. But he said there likely would also have to be some “acceptance mechanism” by individuals included in the law for it to be constitutionally valid.
It’s also possible, even probable, that if a union did agree to pension givebacks, it could face decertification elections among its various units. Such a move likely then would exempt the newly nonunion employees from any new pension agreement.
In other words, if Madiar’s read is correct, there may be almost nothing that can be done about the state’s pension payment problems.
Meanwhile, back at the ranch, the House’s five appropriations committees will get to work on the new budget this week, using their chamber’s revenue estimates as a spending cap. So far, the Senate has not come up with its own revenue estimate, but it’s expected to be somewhere around the House’s forecast. But the two chambers aren’t even sure as of yet how they intend to reconcile any differences between their revenue forecasts and appropriations levels.
Quite a few Republicans believe the Democrats’ budget exercise is all for show. The Democratic leaders and the governor, the Republicans predict, eventually will cave to pressure from House and Senate members and activists and agree to use the Commission on Government Forecasting and Accountability’s revenue projection, which was $1.7 billion higher than the House’s projection. They very well could be right, but, so far, House Speaker Michael Madigan seems bound and determined to proceed with the lower figure.
And if all that news isn’t bad enough for you, the state has borrowed almost $300 million more from the federal government for its unemployment insurance program just since the beginning of January. The state’s total federal debt is close to $2.7 billion. The debt was interest free until a federal loan program expired Jan. 1. The interest payments are now starting to pile up.
Indiana just enacted a law to pay off its $2 billion in debt by 2019, which resulted in a 21 percent average cut in unemployment checks and a 13 percent tax increase for business. Illinois’ unemployment insurance rate already is one of the highest in the country.
Welcome to Illinois, where the lousy news just never seems to stop.
* Keep that revised pension payment in mind when reading this story…
Most states, on average, have to devote only about 4 percent of their budgets to pensions for government retirees.
But Illinois, in the upcoming fiscal year, will devote what amounts to roughly 15 percent of its budget toward the pensions of its retirees.
* And here’s some more bad news…
Illinois’ prepaid tuition program, a 12-year-old financial plan enabling children to attend state colleges at today’s prices when they have grown up, has the deepest shortfall of any such fund in the United States and is plowing money into unconventional — and some financial experts say high-risk — investments to close the gap.
The deficit of the College Illinois Prepaid Tuition Program also is far larger than the fund is declaring. Administrators recently adopted new calculations that mask its size.
The performance of the $1.1-billion fund is crucial to ensuring that the prepaid plan’s nearly 55,000 family participants get what they have paid for. That’s because, unlike in five other states, Illinois doesn’t promise to bail out the fund if it runs short of cash, contrary to what even some savvy investors and financial planners think. Instead, state law requires only that the governor ask the Legislature for help if the program can’t meet its commitments. Lawmakers are under no obligation to act.
* Other budget stuff…
* Lawmakers looking into reforming pension system — again
* City and State employee pensions face the chopping block
* Black Caucus Meets With Quinn To Discuss Human Services Cuts: State Rep. William Davis (D-East Hazel Crest) told Progress Illinois the meeting wasn’t antagonistic. But he didn’t mince words about what he sees as the consequences of the cuts either. The reductions are “a blueprint for African Americans going to the Department of Corrections,” Davis said. Particularly frustrating is the fact that the cuts are on the table now while corrections is reccommended for a 14.6 percent increase in General Revenue Fund dollars in next year’s budget. “We met with the governor … about other places the pain could be spread around instead of just on poor people,” said State Rep. LaShawn Ford (D-Chicago).
* Finke: Test of wills on budget: The test of wills is going to be with the Senate. Senate Democrats don’t sound like they’re going to just accept the House approach or the House revenue numbers. They could well decide the state can safely spend more money, particularly on human services programs, than the House wants to spend. At some point, they’ll both have to agree on something if the state is going to get a new budget.
* Supreme Court case could affect its own building project
* IMPACT fears effects of budget cuts: Concerned disability rights advocates from the Alton area will join others from around Illinois in Springfield on March 15 to protest the governor’s proposed budget that would cut program funding.
* Funding for prison computer improvements depends on legislature: The Illinois Department of Corrections is in the midst of a $30 million, multi-phase overhaul of its antiquated computer systems, but continuing the project depends upon the General Assembly paying for it in the next fiscal year.
* Taxes Not Withheld For U of I Grad Assistants
* $1 million contract for mayor’s daughter is on table in Dolton: If approved, LL Care and Fitness would earn $117,000 a month, totaling $1.4 million a year, to manage the Dorchester Center, an independent living and banquet facility for low-income seniors, according to records obtained by the Tribune.
* City signs $2.5 million deal for solar-powered trash compactors: The Daley administration has signed a contract with Massachusetts-based BigBelly Solar to provide at least 400 solar-powered trash compactors in the central business district, where pedestrian traffic is heaviest and trash bins need frequent pickups. Each unit holds five times the garbage of a normal trash can and has its own built-in sensor that alerts the city when it’s full. There’s also an attached container for recyclables.
* Treasurers want tax sale reform softened: The Illinois County Treasurers Association is pushing back against a reform bill sponsored by state Sen. Bill Haine, D-Alton, aimed at making delinquent tax sales fairer and more transparent across the state. Specifically, the treasurers group wants Haine to amend provisions in his bill requiring all county treasurers to videotape and audiotape delinquent property tax sales and to use automated bidding procedures. Such mandates would be too costly for some of the state’s smaller counties to put into place, said Dan Welch, the group’s president.
* Transit board seats give elected officials a second public paycheck
- 42nd Ward - Monday, Mar 7, 11 @ 6:01 am:
Sorry, but I can’t muster an ounce of sympathy, much less pity, for Illinois legislators, the leadership in particular. They did it to themselves. They did it to us.
- Sue - Monday, Mar 7, 11 @ 6:50 am:
on the assumption that nothing can or will be done about pensions- why not immediately address substantial retiree health care contribution inceases which would not raise constitutional impairment issues- the state CANNOT afford to continue paying these retirement costs without impacting other pressing needs- Quinn continues to refuse to confront reality while most Governors from both parties are tackling the same issues
- waitress practicing politics. . - Monday, Mar 7, 11 @ 6:59 am:
great-my contributions to my grandchildren’s education are now at risk…
- wordslinger - Monday, Mar 7, 11 @ 7:17 am:
If I’m reading Madiar correctly, he’s saying that under the state constitution and state law, once a past GA set a certain pension benefit level, it’s irrevocable.
That’s a pretty nasty trick bag, especially when coupled with the fact that the General Assembly consistently refused to make make provisions for its past promises.
We need a Supremes ruling to understand what options are available to get out of this mess.
- Just Asking - Monday, Mar 7, 11 @ 7:42 am:
The stock market has had substantial gains in the last 2 years. Does anyone know to what extent this has helped the pension funds? If it is all gloom and doom after 2 years of investment gains, where will we be if the gains stop and/or the market starts to tank?
- Amuzing Myself - Monday, Mar 7, 11 @ 7:43 am:
“In other words, if Madiar’s read is correct, there may be almost nothing that can be done about the state’s pension payment problems.”
The horror!!!!!! They might actually have to pass budgets that follow through on the promises they made! And since they just passed a major tax hike, they might even have to prioritize spending to - get this - BALANCE a budget! Who would have ever thought such a thing could happen in Illinois?!
- PublicServant - Monday, Mar 7, 11 @ 7:45 am:
Word, I think you’re right about needing a Supreme Court ruling on the issue. I simply ask that employees be given time to determine what to do after the ruling. As it stands now, certain bills under consideration say effective immediately and others have a specific date that they will take affect. Once the dust settles, give employees time to decide, so they don’t have to risk getting caught under the new provisions of bills that apply to ‘current’ employees, when not being a ‘current’ employee might be the preferrable option.
- Sue - Monday, Mar 7, 11 @ 8:26 am:
Just Asking-the market returns help but don’t solve the underfunding - the most significant problem has been the State’s perpetual failure to adhere to its own funding obligations added to the Legislature’s continuous improvement to the benefits paid through several early retirement programs none of which have been fully paid for- It would be helpful if the Pension Systems would do a faster job in releasing their returns since they are typically 6 months old when released- it would be nice to know how much the market performance since November 2010 has added to the total returns and reduced the underfunding- if public employees were in Social Security, Illinois wouldn’t be permitted to forego the employer contribution so it is just short of criminal that the law doesn’t force states to make pension contributions on an involuntary basis
- Sue - Monday, Mar 7, 11 @ 8:42 am:
out of curiosity, I just looked at the TRS website- the latest investment reurns posted are from September 30, 2010- How is it possible that they don’t have more current numbers available- it would seem very difficult to manage a portfolio and the state funding problems not knowing what the values are?
- Angry Chicagoan - Monday, Mar 7, 11 @ 8:50 am:
I don’t see an exit strategy other than another tax increase or a constitutional amendment. The unions knew what they were doing when they so aggressively kiboshed ConCon two years ago. The state clearly did not know what it was doing when it spent more than a decade under Edgar, Ryan and Blago making inadequate contributions and placing their faith in the stock market.
- cassandra - Monday, Mar 7, 11 @ 9:05 am:
Because of the advent of universal health insurance in 2014, ending free early retiree health insurance is hanging even lower on the fiscal reform tree than it used to. In public jobs, early retirement really is voluntary for the most part. No layoff agreements, seniority rules, and other protections make it very difficult to lay off older employees eligible for retirement unless they want to go. In 2014, they can buy insurance on the market regardless of pre-existing conditions, just like everybody else out here in the real economic world. If the monies now used for early retiree health insurance could be dedicated to the pensions, this would be an improvement, if not a complete solution.
Yet I don’t think Quinn said much if anything about this expensive perk in his budget address, although he has brought it up before. Why not? Had to check with AFSCME, and they said no? Which is worse, a guv at war with the unions or a guv who takes his marching orders from them?
Back to the real plan which is apparently going to be to borrow as many billions as possible, whatever the interest costs, until the end of his term. And make the “temporary” tax permanent, of course.
- Anonymous - Monday, Mar 7, 11 @ 9:53 am:
We bought a college illinois contacat for our son last year. We were told that there was no risk since it was backed by the state. So now it comes to light that the state can get out of backing college illinois and our investment may not be there in 16 years. What a scam!
- Kasich Walker, Jr.'s Conspiracy Analyst - Monday, Mar 7, 11 @ 10:03 am:
Try finding out how the state & municipal auditors verify that the taxes included in the remittances to utilities and telecomm providers are forwarded to the treasuries of the state and municipalities.
- Bond_player - Monday, Mar 7, 11 @ 10:18 am:
Imposing a new income tax on state pensions is a fast and easy fix on this one. Perhaps a 90% tax on all state pensions over 30,000 per year sounds about right to me
- vole - Monday, Mar 7, 11 @ 10:57 am:
When the pension funds run dry some balance between source and sink will be found. The sink, of course, will have to diminish in size as the taxpayers surely will not be tapped to fully fund this monster as currently composed. The age of scarcity, the long emergency, the gauntlet, the reckoning, is upon us. Be happy!
- Responsa - Monday, Mar 7, 11 @ 11:08 am:
There’s been a lot of goofing on this site about U-hauls and people leaving the state. Ha Ha. But there had better be a serious compromise of some sort, or another legal way out of this pension obligation mess found, because most of us absolutely cannot manage higher real estate taxes. Also, many of us taxpayers see no reason to abide another substantial income tax hike right after this one (which apparently will not solve much of anything).
Look, I get it that unions for state and municipal workers negotiated far-off retirement benefits and job security assurances to help employees plan, provide for, and protect their families’ future. I get that.
I also get that the ability of those “promises made”, to be “promises kept” is now threatened by years of bad management and bad decisions– maybe even financial malfeasance– by decades of political actors in this state. I get that public workers feel angry and betrayed. Trust me, it makes me angry, too.
State workers say it is not their fault and they should not be penalized, or be the ones to suffer. But you know what? I don’t really feel it’s my fault either, or that my family should suffer even more now so your family does not suffer.
Let’s place blame on the governors and elected officials and legislators of both parties who have agreed to the contracts, turned a blind eye, and allowed this underfunding to fester and grow like cancer for years. Fine. Let’s.
Heck, to be fair let’s even add the union leadership into the blame bucket. They’re smart. They surely knew what was going on and that their agreements were largely unsustainable, even as they crowed to the rank and file about the great contracts they had negotiated. Did they ever do anything to push and verify that the state was going to be solvent when it came time for the PSE employees to actually retire? Did the unions themselves ever even raise this possibility with their members and dues payers? Because if they did, it most definitely did not reach the ears of most taxpayers until fairly recently.
But placing past blame does not do much to fix the current problem, does it? And saying “the state has to pay its obligations because it’s the law” doesn’t hold much water when there is simply no money there to be paid.
- Anonymous - Monday, Mar 7, 11 @ 11:17 am:
Sue, If you have an account with TRS, you can get on-line info within 24 hours. And Bond - come on - you have to be joking???? Why should I pay a tax on my retirement when no other retirement is taxed in this state? Where were you when the state balanced its budget over and over by not paying my health and dental claims and I had to pay up front and wait 6 months to be paid back? Or when they laid me off for 6 months and I had to take my kids out of college and got behind on my mortgage? Or when I started 22 years ago and made below poverty wages? Didn’t hear you complaining then, even though I was putting in my forced 4% to retirement and the state was not putting their required share in. All you see is that the state has to pay. Don’t you understand that they have to pay because they haven’t been paying???
- Anonymous - Monday, Mar 7, 11 @ 11:20 am:
Wordslinger - Its pretty clearly stated in the constitution. I, personally, entered into a contract with the state of Ilinois when I accepted a position. That contract GUARANTEES that the provisions of my personal retirement cannot be changed. With that aside, I find it interesting that no one has brought up the possiblility of a constitutional amendment. Given the current mis-information climate amongst the public, you would think that would be a no-brainer!
- Bigtwich - Monday, Mar 7, 11 @ 11:35 am:
==I don’t really feel it’s my fault either==
Well, it is. To be more exactly, the fault of the people elected by the people of the State of Illinois and acting in their name. Further, you got the benefit over the years. Services funded not by taxes but by stealing money on your behalf. The problem is not golden pensions, for the most part Illinois pensions are below the average. The problem is that you had people working for you, you stole money from them, you got caught. Pay up.
- Leave a light on George - Monday, Mar 7, 11 @ 11:40 am:
Bond player has it half right. Tax everyone’s retirement. (Singling out state retirees only I believe would be unconstitutional). Heck tax them at the old rate of 3%. I bet that would generate enough income to fix the budget problems. I also think the R’s could demand enough spending concessions in order to support this new tax that a few of them could vote for it.
Who in Springfield has the gut to propose this?
- Responsa - Monday, Mar 7, 11 @ 12:24 pm:
@bigtwich
Your frustration about the pension underfunding issue is being received and understood by many of us. People do not take this lightly.
But do you really believe that a passionate argument of “…you stole money…, you got caught. Pay up.”, is going to be a particularly compelling and effective message to influence the stressed out and equally hardworking taxpayers of our state?
- reflector - Monday, Mar 7, 11 @ 12:31 pm:
I believe it is time for all pensions of people living in this state to be taxed.My pension is $880.00 a month plus SS and I am sure I could pay income tax.I enjoy all the benefits of living in Illinois,I would not want to live anywhere else.Tax our pensions so we all pay our share.
- Crazy Like A Fox - Monday, Mar 7, 11 @ 1:00 pm:
I like the thought of taxing retirement income and pensions, provided that it only applies above a certain level (i.e. circuit breaker).
Here’s another - reduce the salaries of state employees. That reduces current payroll expenditures and reduces future pensions, since pensions are based on salaries.
Unions can negotiate wage freezes or wage reductions, provided that our state “leaders” really want to solve this problem.
- Rich Miller - Monday, Mar 7, 11 @ 1:46 pm:
===Heck tax them at the old rate of 3%. I bet that would generate enough income to fix the budget problems===
Not even close.
- Loop Lady - Monday, Mar 7, 11 @ 2:03 pm:
According to the NYT business section yesterday, IL pension benefits can be amended as per a legal expert at Sidley Austin here in Chicago…this issue is going to end up debated in court for sure…pretty high stakes wouldn’t you say?
- Rich Miller - Monday, Mar 7, 11 @ 2:08 pm:
===IL pension benefits can be amended as per a legal expert at Sidley Austin here in Chicago===
Yes, that’s been covered many times before, but that lawyer doesn’t work for Cullerton.
- Bigtwich - Monday, Mar 7, 11 @ 2:10 pm:
==But do you really believe that a passionate argument of “…you stole money…, you got caught. Pay up.”, is going to be a particularly compelling and effective message to influence the stressed out and equally hardworking taxpayers of our state?==
No. But if you speak for the taxpayers all I can say is, “Sorry, there is no easy way out.” You got the benefit of the money that should have gone to the pension system, why do you think it fair to have the people the money was taken from have to pay it? That penalizes them and they did not get the benefit. You did. In fact, the wages of state employees are, generally, not all that exceptional and neither are the pensions. You could probably lay off every state employee, around 72,000 I think, and not balance the budget. As for Crazy like a Fox, I have some responsibilities for a business and think it important to keep qualified employees. People are no longer serfs and do not have to stay in these jobs. You probably have people with 20-30 years on the hook but you wipe out the next generation. But, try it in your personal life, make sure you are treated by the cheapest Doctor and represented by the cheapest lawyer in the State. See if you live long and prosper.
- Retired Non-Union Guy - Monday, Mar 7, 11 @ 2:23 pm:
While you can never be sure what will happen in court, the language seems pretty clear. There is a clear pattern of one party fully contributing their defined share and the other party not contributing the determined amount.
Courts, especially federal courts, don’t like to get into state’s business. But there are also financial and political realities at work at the federal level also; the feds don’t want any more broken pension funds dumped on them either.
So if I was taking odds, a federal court will tell the state they have to pay up one way or another and, best case, leave it to the state to decide to cut other expenditures or raise taxes. Worst case a court will order a tax increase dedicated to just the pension fund problem.
The other thing I see coming out of a court case would be new federal rules that states have to follow the same reporting and funding standards as private industry with, maybe, a number of year grace period to “adjust” to the new rules.
- Loop Lady - Monday, Mar 7, 11 @ 2:25 pm:
So is this legal point debateable or is Cullerton running a pr campaign for himself, state employees and the unions? Is he quelling the fury only to be trumped by the courts? I guess time will tell…
- hisgirlfriday - Monday, Mar 7, 11 @ 2:35 pm:
I know it’s totally implausible that any legislators would actually sacrifice for the good of the state this way, but if we actually had decent civic-minded representation in Springfield, would it be constitutional for them to pass a bill that did something like this:
-Any legislator who votes (or has voted) in favor of a state budget that fails to fully fund ALL state pension obligations forfeits his or her ability to ever collect a legislative pension.
- Kasich Walker, Jr. & High Economics - Monday, Mar 7, 11 @ 2:42 pm:
“…AG Bill Holland called me Friday to revise that up to $6.2 billion.”
Until marijuana is removed from Schedule I, IL could stop all prosecution and allow vendors to sell overpriced paraphernalia that comes with an ounce. (The Obama admin won’t fight it if Illinoisans want it.) Tax it at 10% and go for $62 billion — about 178 million ounces at $350/ounce — in sales!
Do it before the neighbor states.
- cassandra - Monday, Mar 7, 11 @ 2:53 pm:
Well, in some ways, couldn’t you say we already have a tax increase to fix the pension problem. As Rich pointed out, the newly revised pension obligation estimate for next year is $6 billion and change and that’s about what the “temporary” income tax increase will bring in. Tax revenues could go up, of course, but if I recall correctly, so do the required pensions contributions, for quite a few years. Looks more and more to me like a permanent tax increase….for the pensions.
- Anonymous - Monday, Mar 7, 11 @ 2:56 pm:
Here is the pension clause from the Illinois constitution: Article XIII, Section 5
“Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminshed or impaired.”
An “enforceable, contractual relationship” means exactly that - BOTH parties must hold up their end of the bargain or it winds up in court. And no one has brought up that point - if the state fails to fulfill their end of their contract with me, I have the right to sue for damages in civil court. Lets see - 4% times 22 years, plus interest is…………..
- OldIllini - Monday, Mar 7, 11 @ 4:33 pm:
There actually is a legal and constitutional way to reduce state pension payments–a buyout program. The University of Illinois just completed a retirement buyout program, with cash to the retirees, enabling UI to reduce faculty and staff payroll.
The same idea–a buyout–could be done with the pension program. Replace the pension with a lump sum rolled into a 401-K. Advantage to the worker is that he/she now owns the nest egg and controls the payouts. Advantage to the state is fewer enrolled in the defined benefit plan.
- CJLane - Monday, Mar 7, 11 @ 6:29 pm:
Loop Lady: “So is this legal point debateable or is Cullerton running a pr campaign for himself, state employees and the unions? Is he quelling the fury only to be trumped by the courts?”
Of *course* it’s debatable. And, as Rich pointed out, the guy who it’s absolutely not changeable works for a guy whose interests are served by it being a “our hands are tied” situation, rather than something they can do something about.
Of course, there is another solution: fire *everyone* some Friday and re-hire them the following Monday, under the new pension rules.
- Six Degrees of Separation - Monday, Mar 7, 11 @ 6:48 pm:
CJ,
That would be a very interesting class action lawsuit involving Rutan, the state constitution, and federal labor law. The state just spent $1 million unsuccessfully defending a lawsuit against 12. How much for 60,000?
- steve schnorf - Monday, Mar 7, 11 @ 7:01 pm:
I don’t think breaks in continuous service change what system you are vested in
- watching from elsewhere - Monday, Mar 7, 11 @ 7:18 pm:
Please help me understand something…I’m seeing all this fuss about changing pension benefits being unconstitutional. Seems to me that the logical solution would therefore be to AMEND the IL Constitution! I understand such a step would have to be approved by the voters, but that’s not at all impossible. Why in the world is this option not being seriously considered?
- JustMe - Monday, Mar 7, 11 @ 9:11 pm:
==on the assumption that nothing can or will be done about pensions- why not immediately address substantial retiree health care contribution inceases which would not raise constitutional impairment issues==
Anyone who thinks that cutting retiree health care isn’t covered by the Illinois constitution probably believes that we can just call “do-over” and cut pensions.
==Seems to me that the logical solution would therefore be to AMEND the IL Constitution!==
First, you would have to amend the federal constitution to get rid of the prohibition against states enacting laws in “impairment” of contracts. The Illinois provision that state employee retirement is a contractual relationship that cannot be “impaired” is almost certainly an invocation of the federal clause, which prohibits states from welching on their obligations by passing laws.
- Retired Non-Union Guy - Monday, Mar 7, 11 @ 9:20 pm:
Because, even if you amend the Constitution, it can’t be retroactively applied. You still have the existing pension debt & obligation. They’ve already changed things for new hires going forward as of 1/1/11 plus previous changes in both vesting and health care going back to the 1970’s.
If you were change to some other system (401 type for example) you actually make things worse because there is no longer “new employee” money flowing into the old fund, which makes it actuarially more underfunded … a non-starter.
I could be wrong but I’m guessing the legislature is playing a game of chicken, hoping to get the whole thing into court, where they end up being ordered to raise taxes. Then it’s no longer the legislature’s fault, it’s the court’s fault. This isn’t about solving the problem; it’s about who is going to get blamed for the solution (which everyone already knows is to raise taxes) … and the goal is to get anyone other than the politician blamed.
- wordslinger - Tuesday, Mar 8, 11 @ 6:19 am:
–Cuomo and Brown are getting their Illinois insults together right now. It isn’t just newby GOP governors who still can’t find enough words to use when heckling us, we are getting newby Democratic governors warming up on stage left.–
A new high in honest discourse. Base an argument on something that hasn’t happened. Well done.
- Rich Miller - Tuesday, Mar 8, 11 @ 6:30 am:
That’s why it was deleted.
- CJLane - Tuesday, Mar 8, 11 @ 9:48 am:
“I don’t think breaks in continuous service change what system you are vested in ”
Okay, but so much of the “we can’t cut benefits” ALSO relies on “it’s a contractual relationship”, as JustMe noted at 9:11.
I completely agree that benefits cannot be cut for time already served–but to maintain that we cannot change them *going forward* for existing employees is effectively saying that they have lifetime contracts. Which is *false*. So, if they are fired, they either (1) agree to take their jobs back under the new pension regime or (2) stay out of public employment, but retain their full, earned-prior-to-termination benefits.
I realize that the concept is a non-starter for about fifty reasons, pretty evenly divided b/t political/cronyism reasons and practical/bad for the public reasons. That doesn’t mean that it should just be ignored, as the mere discussion of it will make everyone who is against it for bad reasons a little nervous, and it might encourage an honest discussion of real solutions.
- CJLane - Tuesday, Mar 8, 11 @ 9:51 am:
“If you were change to some other system (401 type for example) you actually make things worse because there is no longer “new employee” money flowing into the old fund, which makes it actuarially more underfunded … a non-starter.”
Unless I misunderstand, which is *certainly* possible, as I won’t pretend to be anything close to an expert on the actuarial calcs, the “new money” is insufficient to fully-fund the continually increasing future benefits for the employees paying in the “new money”. So, each year the pension plans continue, even with teh “new money” coming in, they become *more* underfunded.