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*** UPDATED x1 - IFT Responds *** The next time you blame the state for skipping pension payments, remember this

Thursday, May 31, 2012

* For a while, yesterday’s pension reform debate in the Senate Executive Committee focused on the state’s past failure to make pension payments. But one Senator objected to the claims by unions that this is all the General Assembly’s fault

Teachers unions have protested cuts to their benefits, saying it was lawmakers’ actions, skipping payments into pension funds, that created the debt.

Senate Republican Leader Christine Radogno shot back during a hearing, presenting old paperwork from 2005 showing that both the Illinois Education Association and Illinois Federation of Teachers supported skipping the payment then.

“There’s plenty of culpability to go around,” the Lemont Republican said.

* I asked the Senate Republicans for the list of proponents and opponents of the bill which allowed the state to skip pension payments. Here it is…

SB 27 Proponnents:

Rich Frankenfeld, IEA “testimony if necessary”
Derek Blaida, CPS
Steve Preckwinkle, IFT “testimony if necessary”
Laura Arterburn, IFT
Michael McGann SEIU
Kurt Anderson SEIU

Opponents:
Randy Witter, Retired State Employees Association
Martin Noven, Treasurer’s office (Topinka)

Topinka was furious about the pension payment holidays back then and, as it turns out, she was right.

*** UPDATE *** From the Illinois Federation of Teachers…

SB 27 originally contained other pension language including changes to the Early Retirement Option and end of career salary increases that reduced the state’s cost for pensions by over $80 billion. In addition to supporting these pension reforms, the unions also supported increased gaming revenues, a higher cigarette tax, or the issuance of Pension Obligation Bonds to cover pension costs. The leadership refused to consider these options and chose to add the pension holiday at the last minute. We never supported that provision of the bill.

- Posted by Rich Miller        


26 Comments
  1. - Anonymous - Thursday, May 31, 12 @ 9:23 am:

    How ironic. Frankenfeld retired from the IEA and is now getting his second dip at, of all places, TRS.


  2. - Michelle Flaherty - Thursday, May 31, 12 @ 9:27 am:

    What were they thinking?!


  3. - RIGHT - Thursday, May 31, 12 @ 9:29 am:

    Topinka was furious about the pension payment holidays back then and, as it turns out, she was right.

    DUHH!


  4. - Yellow Dog Democrat - Thursday, May 31, 12 @ 9:44 am:

    @imteacher -

    I wasn’t in the room, and I wouldn’t characterize it as blackmail, just “horse trading.”

    But yes, teachers unions were probably told that without the skip in pension payments, there would be cuts in education funding; SEIU was likely told the same thing with regard to health care funding.


  5. - titan - Thursday, May 31, 12 @ 9:47 am:

    Was it just the teachers’ unions? Or were other pensioner groups in on it too?


  6. - Michelle Flaherty - Thursday, May 31, 12 @ 9:47 am:

    YDD,
    And the irony is that without substantial pension reform, ed funding and human services will take a huge hit in next year’s budget to accomodate the growing pension payment and another huge hit the year after that and the year after that …


  7. - lincolnlover - Thursday, May 31, 12 @ 9:52 am:

    No AFSCME proponents in 2005?


  8. - Inactive - Thursday, May 31, 12 @ 9:56 am:

    Is that the whole story? I’d bet the “if necessary” vote went along with “provided it is made up in the next year” or whatever. I’m thinking this is a bit of a half truth and misleading in order to inflame.


  9. - KurtInSpringfield - Thursday, May 31, 12 @ 9:59 am:

    As a member of AFSCME, I am relieved they were not proponents of that bill in 2005. As I understand it, AFSCME, at some point in the past, actually filed a lawsuit to force pension funding, but the courts struck it down.


  10. - Pension Junkie - Thursday, May 31, 12 @ 10:00 am:

    Debunking the urban legend of “pension holidays”, and in response to Senator Rodagno, Dragnet’s Joe Friday said it best, “Just the facts ma’am”:

    According to Comptroller Topinka’s FY2010 Comprehensive Annual Financial Report (CAFR), the FY2006-2007 pension holiday’s were repaid in the form of additional contributions from FY2008-2010 ( http://www.comptroller.state.il.us/index.cfm/linkservid/083E57BA-1CC1-DE6E-2F48783E3F984EF7/showMeta/0/ p.122)

    “Funding Policy and Annual Pension Cost. Member contributions are based on fixed percentages set by statute ranging from 4.0% to 12.5%. The state’s funding requirements have been established by statute (Public Act 88-593) effective July 1, 1995 and provide for a systematic 50-year funding plan with an ultimate goal to achieve “90% funding” of the systems’ liabilities. In addition, the funding plan provides for a 15-year phase-in period to allow the State to adapt to the increased financial commitment. Once the 15-year phase-in period is complete, the State’s contribution will then remain at a level percentage of payroll for the next 35 years until the 90% funded level is achieved. However, Public Act 94-0004 decreased the required funding levels for fiscal years 2006 and 2007 to $938.400 million and $1.375 billion,
    respectively, and requires the State’s contribution to increase in equal annual increments from fiscal years 2008 to 2010 to ensure that the fiscal year 2006 and 2007 decreases have no longterm effect on contributions.”


  11. - mark walker - Thursday, May 31, 12 @ 10:09 am:

    This says a lot more about Radogno’s current willingness to move forward with reform, than it does about the unions back then.


  12. - western illinois - Thursday, May 31, 12 @ 10:11 am:

    Yes members never got a holiday(unlike Soc Security currently)
    I think it was AFSCME taht did sue maybe more than once, The courst said they Constitution requires payment out not payment in.
    Legally correct. Financially foolish but courts rule on law,mostly


  13. - Freeman - Thursday, May 31, 12 @ 10:23 am:

    My regard for Topinka only increases. Continue finding that true more and more with the passage of time.


  14. - Rich Miller - Thursday, May 31, 12 @ 10:23 am:

    ===members never got a holiday===

    Actually, you did. Edgar negotiated a deal that included the state picking up the employees’ share of the pension payment.


  15. - sal-says - Thursday, May 31, 12 @ 10:24 am:

    Apparently, according the the legislature, “it’s always somebody else’s fault”?

    Now, it’s the WITNESSES fault !!!

    How about that for spin? Sorry. The WITNESSES didn’t pass the bill; the LEGISLATURE did.


  16. - Anyone Remember - Thursday, May 31, 12 @ 10:37 am:

    Rich -

    The pension pickup was in lieu of a raise. Yes, employees got an increase in take home pay, but don’t really consider that a “holiday” … just a raise.


  17. - Ahoy! - Thursday, May 31, 12 @ 10:51 am:

    Can’t we just agree that the unions and the GA were both not thinking about long term consequences of their actions because in the end, their all dependent on elections?


  18. - Yellow Dog Democrat - Thursday, May 31, 12 @ 10:53 am:

    @Ahoy! -

    Can’t we agree the voters weren’t thinking of long-term consequences either?


  19. - One of the 35 - Thursday, May 31, 12 @ 11:16 am:

    I asked the question in another thread yesterday. When is Madigan going to be held accountable for the decision to skip two years of pension contributions making an already bad situation much worse?


  20. - Panopticon - Thursday, May 31, 12 @ 11:58 am:

    AFSCME does not allow the members to vote on anything other than the contract. Unless you are a Local Union President or one of AFSCME ’s Council, it doesn’t matter what the members think. If this were the IEA then it should just pertain to TRS, but in Illinois anything is possible. The pension systems have been raided by the GA for over fifty years, Ragdono wants to place blame on something that happened in 2005? Governor Edgar understood the problem, inherited a deficit, and in less than 5 years turned it around, leaving Ryan and the GA a surplus of money. Ryan is in prison, Blagojevich is is in Prison, the real question is why the GA is not serving time with them.


  21. - Robert - Thursday, May 31, 12 @ 12:03 pm:

    ==When is Madigan going to be held accountable for the decision to skip two years of pension contributions making an already bad situation much worse?==
    Certainly never for that. He does quite well in elections in his district, and he controls any districting. Only chance to hold him accountable for anything would probably be a politically motivated republican prosecutor going after him for accepting campaign contributions via his property tax apppeal firm, but Madigan is no dummy, so that won’t be easy.


  22. - Cal Skinner - Thursday, May 31, 12 @ 1:16 pm:

    The teachers’ unions consistently pushed for more State Aid to Education using the money that Governors’ budgets set aside for pension payment.

    Current employees (and dues payers) vs. retired teachers.

    No contest for the unions in that decision.


  23. - Anyone Remember? - Thursday, May 31, 12 @ 4:51 pm:

    Robert -

    See Pension Junkie’s post at 10:00 am.


  24. - public policy person and lawyer - Thursday, May 31, 12 @ 6:07 pm:

    @western illinois. I am so glad that I found you on this blog. You seemed so sad the other night. Did a little research. Not hardcore, but this should make you feel a little better.

    Like Cook County employees, TRS employees make contributions to pension colas and get them by statute. 40 ILCS 5/16-133.1, 40 ILCS 5/16-152. Judges makes contributions to pension colas and get them by statute. 40 ILCS 40 ILCS 5/18-133, 40 ILCS 5/18-125.1

    While SURS and SERS by statute are due pension colas, I could not find a statute saying that you actively pay for them now. 40 ILCS 5/14-114, 40 ILCS 5/15-136. Maybe it is written into your contracts.

    In a article, I saw one legislator say that your retirement health care benefits were granted in 1997, but I did not find that in the pension code. Sorry.


  25. - jake - Thursday, May 31, 12 @ 6:12 pm:

    Just for the record, the Pension Bonds were issued, but under a separate bill. They have turned out to be a good deal for the state, since the funds that they enabled putting into the pension systems’ investment portfolio have outpaced the interest on the bonds. It would be a good time now to issue pension bonds, with interest rates so low. But while it would be good policy, it would be bad politics. People would scream the “B” word, and obscure the fact that this would be borrowing to invest, rather than borrowing to spend.


  26. - ZC - Thursday, May 31, 12 @ 6:44 pm:

    In fairness and re YDD’s point, nobody - absolutely nobody, including we the people - seems very good at anticipating and preventing these slow-moving train wrecks.

    See: the current challenges facing Medicare, global warming, etc.

    There is an interesting question here however and it’s why Illinois among the 50 states seems unusually bad at it.


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