[House Speaker Michael Madigan spoke at Elmhurst College yesterday for more than an hour, then held a brief press conference afterward. He almost never does that, so this will be the first of a few posts on his speech.]
* An AP reporter was obviously quite disappointed in Speaker Madigan’s speech…
Madigan is arguably the most powerful man in Springfield, with the ability to make or break deals. But anyone hoping to find out specifically where he stands on some of the state’s most urgent issues wouldn’t have learned it from his address at Elmhurst College’s Annual Government Forum.
Changing future pension benefits for current state employees would make an interesting national debate and ultimately could be decided by the courts, he told a packed room. Illinois’ underfunded pension liability now exceeds $85 billion and lawmakers already have changed benefits for future employees to help reduce the costs.
But Madigan didn’t mention that he had introduced legislation along with House Minority Leader Tom Cross to create a three-tiered pension system for current employees, and wouldn’t address reporters’ questions afterward whether there are enough Republican and Democratic votes to bring the bill to the House floor.
School districts don’t pay into teachers’ pension systems like other employers do, leaving that obligation to the state - accounting for half of the $4 billion the state pays into five pension systems annually, he complained. He said later that it would be reasonable to ask them to pay, but would not say whether anyone was planning to introduce legislation to force them to do so.
With Madigan, however, you gotta read between the lines. For instance, here’s CBS Chicago’s take on the pension issue…
Illinois House Speaker Michael Madigan says local school districts haven’t been paying into their teachers’ retirement systems, and he thinks it may be high time that they did. […]
“In the current budget, our payment is about $4 billion – $4 billion to those five (pension) systems. One half of the $3 billion is the TRS, the Teachers Retirement System,” Madigan said. […]
“I don’t think it’s out of line to ask the local districts ‘Why don’t you contribute to this cause? These are your employees,’” Madigan said.
And here’s WBEZ’s take on the same issue…
Pension costs that are draining Illinois’ budget could be shared by local school districts.
The idea seems to be gaining steam among top Democrats, including Illinois House Speaker Michael Madigan, who gave a rare, hour-long speech at Elmhurst College Tuesday morning to talk about the challenges facing Illinois. […]
“I never found anybody who could tell me why the state of Illinois stepped up one day and said, ‘OK, school districts, we’ll just pick up all your pension costs,’” he said.
If the state made schools pay for their retired teachers, it would likely shift the cost to property taxes. It’s an idea that Senate President John Cullerton and Governor Pat Quinn have talked about, too, which means it could become part of legislation this spring.
* I listened to the full audio of the event (subscribe to hear it) and came away believing that Madigan was leaning toward this idea.
*** UPDATE *** Somehow, I missed this relevant story from Illinois Statehouse News…
llinois’ 12 percent increase in higher education spending this year isn’t going to benefit students. Instead, the additional funding for fiscal 2012 is going into the State Universities Retirement System, or SURS, to address its underfunded pension program.
“These SURS appropriations do not go to individual institutions or agencies and are not available to be used for educational purposes,” according to the footnote in a study released Monday by Illinois State University, or ISU.
SURS, which is responsible for the pensions of the state’s university employees, is facing an unfunded liability — how much it owes in benefits compared with how much assets it has on hand — of $17.2 billion, according to its 2011 annual report.
[ *** End Of Update *** ]
* On the budget stuff, however, the AP reporter was spot on. From the Chicago News Cooperative…
“We’ve got huge budget problems in this state. Why? Well, there was overspending in the past and many people engaged in the overspending. It wasn’t just one or two people,” he said.
Madigan blamed the shortfalls in part on Republicans, even though Democrats have held majorities in the House and Senate and controlled the governor’s mansion since 2002. Most budget votes, including budgets that delayed or skipped pension payments, have been carried with Democratic support.
Asked whether he should bear greater blame, having served in Illinois government in an influential position for nearly 30 years, Madigan said it took more than “one person” to drive Illinois into a pattern of spending beyond its means.
* Sen. Dillard was rather diplomatic…
Madigan accepted some of the responsibility for the state’s financial woes. He said the legislature spent more than the state took in during many budget cycles, which led to the state owing millions of dollars in unpaid bills. Madigan has been House Speaker since 1983, with the exception of two years when Lee Daniels, an adjunct faculty member in Elmhurst College’s political science department, was speaker. As speaker, Madigan controls what bills come to the House floor, but said he was “one of many” who signed off on overspending.
“There are plenty of legislators from both parties who would rather spend than cut,” Madigan said following the event.
Sen. Kirk Dillard, a Hinsdale Republican, agreed with Madigan that there are numerous state lawmakers who share the blame for the state’s economic problems. He said he commends Madigan for shouldering some of the responsibility, but added that Madigan has been the one constant in the Illinois legislature throughout the economic decline.
Discuss.
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- wordslinger - Wednesday, Jan 25, 12 @ 1:49 pm:
–He said he commends Madigan for shouldering some of the responsibility, but added that Madigan has been the one constant in the Illinois legislature throughout the economic decline.–
Let’s see, Dillard was the legislative chief for Thompson, COS for Edgar and then a Senator. I guess he was the other constant.
The school pensions are the biggie. Suburbanites will start paying attention to state government when that bill comes around.
- Kerfuffle - Wednesday, Jan 25, 12 @ 2:55 pm:
Wordslinger - You forgot that he was also on Pate staff before that. He’s been around in some capacity wince 1977 so he has 5 years head start on Madigan.
- Rich Miller - Wednesday, Jan 25, 12 @ 2:58 pm:
Kerfuffle, if you mean 1967, you’re only a year off the mark. Madigan started his first House term in 1971. Of course, don’t forget he was a Con-Con delegate before that.
- Sue - Wednesday, Jan 25, 12 @ 3:10 pm:
Mr. Speaker- leave it to you to dodge the responsibility of curtailing costs and instead look for an additional revenue source- The School districts have never had a say on benefit levels or all of the STATE early retirement schemes- Does anyone think the benefit levels would be where they are at if there had been local control?
- Abu Iskandr - Wednesday, Jan 25, 12 @ 3:14 pm:
Just so I understand the Speaker’s suggestion, the one area where poorer school districts are not at a competitive disadvantage to wealthier urban/suburban districts (pension funding) should be taken off the State’s plate and handed back to the very same local school districts that can’t afford the competitive salaries to attract quality talent in the first place?
- reformer - Wednesday, Jan 25, 12 @ 3:21 pm:
It’s clear from the speech that the Speaker does not have a plan to address our state’s fiscal morass other than muddle through for years by continuing to balance the budget. Of course muddling through gets a whole lot tougher if the income tax hike mostly expires in 2015.
Muddling through means the backlog of unpaid bills will remain undiminished for years to come.
Muddling through means continued cuts to education funding, even though IL already ranks 50th in the percent of state funding.
Muddling through means continued cuts to social services, even though was already rank 50th there.
In short, vital state services will continue to face the scalpel for years to come, and that could become the meat ax if the income tax hike expires.
- Cook County Commoner - Wednesday, Jan 25, 12 @ 3:26 pm:
So the school districts should contribute to their teachers’ pension plans because the teachers are their employees? And magically the teachers’ pension costs are no longer a problem? from the taxpayor’s perspective it doesn’t matter whether these pension costs are assessed against already unbearable property taxes or another state income tax hike. Our wallets don’t know the difference. Instead of kicking the can down the road, the state is merely kicking the can onto another road. And these roads all lead to financially stressed-out taxpayors. This sort of thinking would be humorous, except officials consider this to be real problem solving and want a pat on the back for their innovative thinking.
- reformer - Wednesday, Jan 25, 12 @ 3:29 pm:
Abu
You make a good point.
Why should only Chicago taxpayers be responsible for paying for their teachers, while being taxed for everybody else’s as well?
- wordslinger - Wednesday, Jan 25, 12 @ 3:32 pm:
–And magically the teachers’ pension costs are no longer a problem? from the taxpayor’s perspective it doesn’t matter whether these pension costs are assessed against already unbearable property taxes or another state income tax hike.–
Unless you’re a Chicago taxpayer who pays for CPS pensions and other Illinois teacher pensions.
- Katiedid - Wednesday, Jan 25, 12 @ 3:40 pm:
CCC - You’re right, it doesn’t magically solve the problem, but it does make it more equitable, at least in the longer term. Right now, the districts have less of an incentive not to spike people’s pay at the end of their career and whatnot for a pension boost. They don’t pay the pension liability and all they have to pay is a short-term salary increase and it’s an easier contract provision during negotiations. If they have the liability for it on the back end, though, the thought is that they would then be more rational. I’m not blaming the districts here; it would only be natural for them to be doing it that way now. Also, why should a taxpayer in the Cairo school district be being paying the pension costs for a teacher in the New Trier district?
In addition, from the discussions I have seen, the unfunded liability would not be transferred to the schools; only the current pension costs, so the state would still be on the hook for all of the unfunded part. Meaning, it isn’t meant to solve the funding problems of the past, only going forward. Of course, the easy question there is whether that’s how it will be billed or if they’ll try to claim that it’s solving the pension funding problem.
- Corey Patterson - Thursday, Jan 26, 12 @ 9:21 am:
Are folks aware that ISN is owned or at least affiliated with the Koch Industries…just sayin..
Illinois Statehouse News is indeed, a Koch Brothers
production. It takes some digging to figure this out since Illinois Statehouse News and its inter-related entities go to great lengths to
cover their tracks.
The Koch Brothers and other right-wingers fund a number of state level “think tanks” and “media outlets”. In Illinois, we have both – the
Illinois Policy Institute and Illinois Statehouse News (ISN).
According to its home page, ISN “is a product of the Franklin Center for Government and Public Integrity, a non-profit, non-partisan
organization.” The Franklin Center distributes funding it receives from right-wing organizations to a growing number of state level “news” organizations like ISN. Here is a good article about the Franklin Center and the proliferation of right—wing media outlets like
ISN that it funds:
http://host.madison.com/ct/news/opinion/column/article_262d0061-ee13-51c6-8035-1f14a4ce0bff.html
The Franklin Center is a spin-off of the Sam Adams Alliance, a libertarian group funded by the Koch Brothers. The connections between
these groups is illustrated by an internship announcement posted on the website (and since taken down): “Interested parties can apply for
a Sam Adams Alliance internship through the Charles G. Koch Summer Fellow Program administered by the Institute for Humane Studies and the State Policy Network.”
John Tillman, now president of the Illinois Policy Institute, founded
the Sam Adams Alliance.
- Yellow Dog Democrat - Thursday, Jan 26, 12 @ 10:40 am:
Classic Madigan judo.
Republicans complain about pension costs?
Madigan suggests suburban school districts should start picking up the tab for the generous salaries benefits they’ve been offering to lure teachers from Chicago.
As Rich’s analysis points out, there’s no reason that every Chicago lawmaker shouldn’t vote for this.
I wonder what the AFL-CIO and IFT will say?
If they are smart, they’ll take the deal Madigan is offering to get cuts off the table.
BTW, from a philosophical and political stand point, I’ve always thought that using state government as a pass-through to fund local units of government was a pretty dubious idea.
Indiana, for example, allows local counties to impose their own income tax rather than do a revenue share.
Our sales tax receipts ought to atleast reflect what share of the sales tax collected is going to the state, to local government, and what the retailer keeps for himself.