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*** UPDATED x1 *** Oops

Thursday, May 31, 2012

* As I reminded subscribers this morning, the Chicago Tribune endorsed all but one serious House Republican candidate in the 2010 general election. The Tribune mainly used the pension reform issue as its excuse for going all-in for the GOP.

Yesterday, the Tribune came out against the pension reform plan sponsored by House Speaker Michael Madigan, and today it doubled down

We won’t be surprised if, by late Thursday, the Democrats who dominate both legislative chambers produce something they proclaim is a major pension overhaul. But if any legislation they pass doesn’t truly solve the crisis, we hope Gov. Pat Quinn will stick to his threat and keep lawmakers in Springfield until they do. […]

If the majority Democrats push through pension reform lite at the last minute, with virtually no Republican input and with genteel treatment of current workers, they will have delivered one more in a long line of feckless legislative sessions that didn’t fix the most pressing danger to state government’s financial future. […]

But on the year’s most crucial issue — pension reform — lawmakers have perpetuated their decades-long habit of popping huge legislation on the eve of adjournment, creating an artificial rush to an uninformed decision. At that point, bosses rule and gotcha politics trumps good policy. […]

By nightfall Thursday, the best option may be for Quinn to let June 1 arrive, then order lawmakers to set aside any consideration of pension reform lite and instead negotiate more dramatic reforms — with both parties participating.

* Trouble is, after that editorial was written House Speaker Michael Madigan announced that he would transfer sponsorship of the pension bill to House Republican Leader Tom Cross

Illinois House Speaker Michael Madigan abruptly reversed course late Wednesday night, promising to remove a key provision from his pension restructuring bill and could clear the way for the measure to pass the General Assembly today.

In another dramatic moment on the House floor, the powerful Chicago Democrat said Democratic Gov. Pat Quinn asked him to drop a provision that would have shifted the “normal” cost of pensions for teachers and university employees from the state to local school districts, universities and community colleges. Normal costs are the total benefits accrued by active employees each year.

Republicans had pledged to vote against Madigan’s pension plan if it included the cost shift.

“I had an interesting meeting this morning with Governor Quinn,” Madigan said late Wednesday. “And I was surprised that the governor disagreed with me on the issue. He agrees with you. He agrees with the Republicans. He thinks that we ought to remove the issue of the shift of normal cost out of the bill.

“I disagree with the governor, but he is the governor,” Madigan said. “This is his request.

So, Leader Cross now owns a plan that the Tribune despises. I wonder how that’s gonna go down at the Mothership?

*** UPDATE *** The Illinois Review may now regret publishing this headline since Tom Cross is the bill’s current sponsor…

Oops.

[ *** End Of Update *** ]

* Earlier in the day, Gov. Pat Quinn’s administration hedged on the cost-shifting plan

Radogno asked Stermer if Quinn would support a proposal removing the cost shift but leaving other provisions, the core of which offers employees and retirees a choice between lower cost-of-living adjustments coupled with guaranteed access to the state health-care plan, or higher cost-of-living adjustments without access to the state health-care plan.

Stermer hedged, saying the governor is considering anything that could fix the $83 billion unfunded pension liability facing the state.

* Related…

* ADDED: The Choice Between Two Unconstitutional Options is Not Constitutional

* Editorial: A last gasp for pension reform?

* Madigan announces possible pension reform deal in Springfield

* Madigan reverses course, paves way for pension reform

* Pension legislation gets new life in General Assembly

* Pension shift to local schools to be removed from plan

* IL pension reform in limbo as lawmakers mull cost shifting

* Pension overhaul, budget face uncertainty

* Our Opinion: Gradually shift cost of teacher pensions

* Our View: Pension nightmares and political legacies

* Five reasons why Illinois Policy Institute supports local pension accountability

- Posted by Rich Miller        


35 Comments
  1. - PublicServant - Thursday, May 31, 12 @ 8:49 am:

    So much for everyone taking a haircut huh Rich?


  2. - Reality Check - Thursday, May 31, 12 @ 8:51 am:

    Nothing good can come of this confused and headlong rush. This bill should be tabled or voted down and lawmakers should keep working with the unions and local employers (school districts, universities) on a plan that everyone can support.


  3. - bobh - Thursday, May 31, 12 @ 9:05 am:

    Thanks for reminding me how wise it was for me to cancel my Tribune subscription


  4. - red eft - Thursday, May 31, 12 @ 9:05 am:

    On pension reform, I am particularly concerned with those who have already retired, basing their decisions to retire on a radically different landscape and who may not yet be eligible for Medicare and on those pre-1986 hires who may never have access to Medicare. This is a sloppy plan that has not looked at all of the implications. It would have been possible to come to consensus on a less punitive fix.


  5. - downstatedem - Thursday, May 31, 12 @ 9:10 am:

    sound isn’t working on term drawing feed?


  6. - HUH! - Thursday, May 31, 12 @ 9:12 am:

    Hard to imagine why this state is in such a financial mess!


  7. - Wensicia - Thursday, May 31, 12 @ 9:12 am:

    ==So, Leader Cross now owns a plan that the Tribune despises. I wonder how that’s gonna go down at the Mothership?==

    Bruce Dold’s head explodes?


  8. - Cassiopeia - Thursday, May 31, 12 @ 9:22 am:

    Nice sidestep by Madigan to take the Quinn knife out of his back and put in Cross’s.

    Now Quinn AND the Republicans will own the failure if/when this goes down in flames.


  9. - Cards Fan - Thursday, May 31, 12 @ 9:22 am:

    Maybe I am a pollyanna, but at least there is a biparitsan effort in Illinois for some kind of reform to the pensions. Its time to end this passing it on down the road.


  10. - Fed up - Thursday, May 31, 12 @ 9:25 am:

    The cost shift made sense. Make the local governments have some skin in the game. Seems like another realignment of the deck. Hairs on the titanic and now Madigan is pulling cross’s strings and Making him wear the jacket. No wonder the Illinois GOP is a joke.


  11. - Archimedes - Thursday, May 31, 12 @ 9:32 am:

    The “genteel treatment of current workers” is sure telling. The current plan could reduce the unfunded liability in the neighborhood of 20%, worth about $1.5 billion a year in reduced cost to the State (level payments over 30 years). That’s all from the current workers and retirees. I think a lot of the media has forgotten or ignored the part of the bill that freezes the pension benefit at current salary if the member does not take the “new deal” with lower COLA that is delayed to age 67. Maybe it is too complicated for them - but that is the big motivator to go to the “new deal”, not the loss of health insurance when retired (at least for non-SERS members).

    That feature is also the hardest to prevail on in a legal challenge - it sure seems to be a diminishment of already accured benefits, let alone contractually promised future benefits. Ironic that Madiar defended it yesterday when his written analysis (The Great Pension Debate)seems to argue the opposite - that both accrued and future benefits are contractually protected from diminishment. In this case, there is diminshment and no consideration (you lose the health insurance AND the salary increase as the basis for pension).


  12. - Yellow Dog Democrat - Thursday, May 31, 12 @ 9:41 am:

    I, for one, never believed that Cross, Republicans and the Tribune wanted to pass pension reform.

    The continued insisting that the retirement age be raised is an excellent example of the stonewalling excuses.

    Is Illinois really in as bad a financial shape as they say if a proposal to reduce the state’s pension obligations by $27 to $49 BILLION can be so eagerly opposed by the GOP?

    All Madigan has to do to ensure Cross wears the jacket is put 32 Democratic votes on the bill. If the majority of Republicans vote for it, it will pass. If Cross doesn’t put a majority of Republicans on it, it will fail.

    The beauty, of course, is that the Tribune thought they were getting the last word on pensions. They did, it just so happens they put their foot in their mouth.

    Ty must be pulling his hair out.


  13. - just sayin' - Thursday, May 31, 12 @ 9:47 am:

    Mike Madigan demonstrates once again that even at his age he can run circles around Tom Cross and the rest of the hapless Republicans.

    Brilliant move yesterday.


  14. - Yellow Dog Democrat - Thursday, May 31, 12 @ 9:51 am:

    @Rich -

    File this one under “Covering your tracks.”

    Here’s how the Tribune’s reporters were describing the pension reform legislation at 6:47 am today, after it became the CROSS pension bill:

    comprehensive government worker pension reform plan”

    (Emphasis added.)


  15. - Choice? - Thursday, May 31, 12 @ 9:56 am:

    Bad move on Cross in sitting in this pension committee. A life lesson is being taught me thinks.


  16. - western illinois - Thursday, May 31, 12 @ 10:00 am:

    OOps I have been focusing on the coerced aspect of the penion choice. Read ADDED Each choice does have a clear violation of contract either the pay raise count or the COLA. As noted yesterday AZ courts with similar pension law have ruled on COLA and increased contributions. I would expect the pay increases to be similar
    I would expect other states to try the choic trick now if the choice never comes to legal resolution here. Often courts find the one illegal item and stop there


  17. - PublicServant - Thursday, May 31, 12 @ 10:00 am:

    66 to 88 Billion dollars is being “shifted” to employees, and retirees, who have great uncertainty over what their premiums for health insurance will be going forward, but Cross and the Republicans have no problem voting for that cost shift and uncertainty. But when it comes to the “everyone takes a haircut” pension cost shift to local school districts, so they can pay for the cost of their own teacher pensions he’s against it because of the uncertainty involoved. What a hypocrite.


  18. - bigred1955 - Thursday, May 31, 12 @ 10:04 am:

    lets not forget SB 1313 is sitting on Quinn’s desk that give CMS authority to increase insurance cost for both retired and current employees. For my salary, wife and kid would be 22K per year.

    http://www.ilga.gov/legislation/BillStatus.asp?DocNum=1313&GAID=11&DocTypeID=SB&LegId=57042&SessionID=84&GA=97


  19. - Willie Stark - Thursday, May 31, 12 @ 10:05 am:

    Just like any other propaganda outlet masquerading as an objective news source, they’ll find a way to rationalize it and explain it away - or, better, just ignore that it ever happened. The Tribune’s world view and view of the Speaker can never fail, it can only be failed.

    They mystery of why circulation continues to decline and people don’t trust newspapers deepens.


  20. - T - Thursday, May 31, 12 @ 10:16 am:

    Well, the right-wingers (and that includes IR), despise Cross so it probably won’t matter either way. Cross is - God forbid - a statesman.


  21. - wordslinger - Thursday, May 31, 12 @ 10:33 am:

    If cost-shifting is dead, it’s a big win for wealthy suburban school districts and property taxpayers.

    In my high school district, OPRF 200, we have more than 100 teachers pulling down more than $100K and administrators pulling down up to $200K.

    We also have reserves totaling a year of operating expenses.

    I imagine it’ a similar story at New Trier, Stevenson, Hinsdale Central, Deerfield, etc.

    I don’t know that downstate taxpayers are better off helping to pay the suburban pensions than they would be just paying their own.

    But thanks, anyway. And Chicago taxpayers, too.


  22. - mark walker - Thursday, May 31, 12 @ 10:44 am:

    Madigan’s plan was a full long-term solution, involving pain, and some unfairness, to all related parties, but despite being “all-powerful” he couldn’t get it passed.

    So now we go on to the GOP-lite version, which gets us 75% there, but mostly harms only the traditional Dem political allies.

    At least it’s something.


  23. - Yellow Dog Democrat - Thursday, May 31, 12 @ 10:50 am:

    I can’t wait to see what the bill’s Senate sponsor says.


  24. - Yellow Dog Democrat - Thursday, May 31, 12 @ 10:51 am:

    @mark walker -

    75% of the way there still means we need to come up with $30 billion in cuts somewhere else.


  25. - Freeman - Thursday, May 31, 12 @ 10:53 am:

    If he helped craft that aspect of the legislation or supports it, then IR should change that headline. Or at least include his name. And they should have from the start.

    When we’re dealing with issues that impact the long term viability of our state, more equity and less politicization, please. Regardless of ideology or partisanship.


  26. - Freeman - Thursday, May 31, 12 @ 10:59 am:

    Cross now has a chance to take credit for pension reform, or blame Dems. for voting against it. A little legislative jiu-jitsu and this could turn out very well.

    It could also go up in flames.

    Be interesting to see what happens.


  27. - Jechislo - Thursday, May 31, 12 @ 11:05 am:

    I just called Cross’s office. You can tell by talking to the lady who answered the phone that he is between a rock and a hard place.

    I still think this whole pension changing process should be done in a manner other than the knee-jerk change-the-whole-bill-every-6-hours way this one was done.

    Table it and bring it up in the veto session.


  28. - mark walker - Thursday, May 31, 12 @ 11:07 am:

    YDD: I don’t like it either.

    We’ll see if the GOPers have the courage to push for serious sacrifices from their political bases.


  29. - Yellow Dog Democrat - Thursday, May 31, 12 @ 11:17 am:

    === We’ll see if the GOPers have the courage to push for serious sacrifices from their political bases. ===

    LOL. Yeah. Right.

    I think Cross inadvertently pointed to the solution in his response to Biss.

    The solution available to Democrats is to “adjust” the school funding formula.

    Instead of funding all schools across the state at 77% of the EFAB-recommended levels, fund schools at 100 percent, starting with the poorest school districts, and when the money runs out, it runs out.

    When wealthy school districts no longer receive a penny from the state, Republicans will find a way to ensure public education is fully funded.


  30. - Anon - Thursday, May 31, 12 @ 11:50 am:

    No doubt, the Speaker is a very intelligent man, with whom there probably could have been provisions made. Unfortunately for Cross and the rest, their emotions did get the best of them. I believe the Speaker was doing the right thing, unpopular yes, but necessary, everyone should contribute.


  31. - hisgirlfriday - Thursday, May 31, 12 @ 12:37 pm:

    Was Cross really letting the emotions get him, or was he tactically just trying to throw a wrench into this to throw things into overtime and disguising that with emotion? Maybe I giving him too much credit (sort of).


  32. - Choice? - Thursday, May 31, 12 @ 12:41 pm:

    I think the simple fact that if the State saves any amount of money on pension reform of existing or retired employees it would constitute a diminishment of their benefits.


  33. - Archimedes - Thursday, May 31, 12 @ 1:38 pm:

    Amendment 7 (Cross) to the pension bill will require school districts to pay a lump sum acutarial cost for any increase in compensation given at any time during the final four years of employment that are used to figure retirement. That cost will be significant - and put back a lot of the cost that was opposed by Republicans with the Normal Cost going to School Districts.

    It would have been wiser of Cross to estimate that cost before putting that in the Amendment that passed the Pension Committee.


  34. - soccermom - Thursday, May 31, 12 @ 3:55 pm:

    @Word — Don’t forget that (to the best of my recollection) the OPRF Board gave Susan Bridge a huge bump in her last year — when she took early retirement to avoid getting hit by a new law that prohibited giving such end-of-career bumps as pension sweeteners.


  35. - Yellow Dog Democrat - Thursday, May 31, 12 @ 4:28 pm:

    @Archimedes -

    I think the Madigan plan would have been cheaper for school districts.

    As I read Cross’s language, school districts will now be on the hook for 100% of all raises over four years. That’s a potentially large, and wildly unpredictable cost.

    From a management perspective, your much better off having costs that are known.


Sorry, comments for this post are now closed.


* Afternoon updates
* Hospitals back removal of income tax sunsets
* The other strategy
* *** UPDATED 1x *** Quinn onboard; Rauner latches onto term limits proposal
* Because Illinois is a real battleground state
* Quinn dodges Rahm question on "Morning Joe"
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