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*** UPDATED x3 - Nekritz files bill *** Quinn: Madigan agrees to drop cost shift
Friday, Jan 4, 2013 * Gov. Pat Quinn said today that House Speaker Michael Madigan has agreed to defer the pension cost shift idea to a later date so that the rest of pension reform can be dealt with. That’s some major movement. But a pension reform bill is still not gonna be easy. Quinn appeared with legislators from DuPage County and DuPage County Board Chairman Dan Cronin (a former legislator) today to announce that they were working toward an agreement. Here’s the list of the other attendees…
Quinn said he was “real optimistic” that a pension reform bill can be passed by Tuesday. Details to come. *** UPDATE *** You can watch Quinn’s press conference by clicking here. *** UPDATE 2 *** Tribune…
*** UPDATE 3 *** Rep. Elaine Nekritz has filed a pension reform proposal. Click here to read it.
- Posted by Rich Miller
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- Because I said so... - Friday, Jan 4, 13 @ 12:02 pm:
Does this mean the House is going to vote on the bill the Senate already passed, not covering all the systems?
- walkinfool - Friday, Jan 4, 13 @ 12:05 pm:
This smells like smoke. Quinn speaking for the Speaker? A regional group of Republicans? With whom are they working toward an agreement? Themselves?
I hope it’s not just adding confusion.
- Crime Fighter - Friday, Jan 4, 13 @ 12:07 pm:
=the rest of pension reform can be dealt with=
That’s scary. It seems that this would all be much simpler if the state stopped trying to come up with tricky ways to evade its pension obligation and just honor it. The employee benefits part was already addressed with earlier legislation. All that legitimately remains is the repayment of what was borrowed from the employees and move on.
- Cutler Fan - Friday, Jan 4, 13 @ 12:14 pm:
If its the “Fortner Plan” they’d better be able to show it stacks up well against Nekritz Biss. So far that hasn’t been the case.
- soccermom - Friday, Jan 4, 13 @ 12:15 pm:
The cost shift is fair. It makes sense. Otherwise we put this fix on the backs of employees and taxpayers in areas that have not gamed the pension system. Dang.
- Old and In The Way - Friday, Jan 4, 13 @ 12:16 pm:
I hope it’s not just adding confusion.
When has Quinn ever added anything but confusion to any issue? Details? We don’t need no stinking details? Plan? Who cares, just pick one says Guv Dufus! Trust me….we’ll work it out later………
- RNUG - Friday, Jan 4, 13 @ 12:21 pm:
They’re going to drop the one part of the proposal that everyone agrees IS constitutional … they can’t get anything right.
- Anon. - Friday, Jan 4, 13 @ 12:35 pm:
Did the Speaker tape a “Kick me” sign to the Governor’s back, too?
I don’t see any judges in that list of conferees - not that there should be any, but nothing they pass will matter if the judges aren’t on board.
- Fight for the Chicago - Friday, Jan 4, 13 @ 12:36 pm:
I will not stand for not sticking the pension problem on downstate and suburban taxpayers. Those people are tax leeches that are a cancer upon the state. If we aren’t going to do a liability shift, then I suggest we enact a 2% income tax hike for anyone not living in the City of Chicago.
- RNUG - Friday, Jan 4, 13 @ 12:50 pm:
Fight for the Chicago
You might start your eduction on this issue by reading the Trib pensionmess article Rich linked to yeaterday. Even the Tribbies acknowledge it is the entire State’s responsibility.
- nickypiii - Friday, Jan 4, 13 @ 12:50 pm:
Once again the only real pension reform is being kicked down the road. Quinn can’t find his way out of a paper bag. Quinn speaking for Madigan doesn’t seem legitimate. No legislation is better than everything proposed wiith out a cost shift to where it belongs. Local costs should stay local.
- Cook County Commoner - Friday, Jan 4, 13 @ 12:50 pm:
Wealth redistribution from the private sector to the government employees via struggling homeowners was political poison. This state already is over reliant on property taxes to fund public education. Glad to see that homeowners got their displeasure across, at least temporarily.
No one wants to see state and local gov employees go into retirement poverty. However, some rationality has to come into play to recognize that some of the promises made were outrageous and unaffordable. Retirement age, COLAs, maximum benefits and early retirement healthcare at least need to be discussed.
Sooner or later the private sector workers are going to wake and look at what they have for retirement (especially how pensions disappeared in the private sector) and then compare it the grand give-away at the state and local government level at their expense. I suspect that both Dem and Repub pols understand that that realization will awaken a lot of sleep-walking voters.
- foster brooks - Friday, Jan 4, 13 @ 12:51 pm:
Let’s drop the only thing that will pass constitutional muster. Amazing
- Ahoy! - Friday, Jan 4, 13 @ 12:57 pm:
I actually thought a partial cost shift had a lot of merit while disagreeing entirely with the full cost shift. A 50/50 split or some kind of baseline payment from the State would have been reasonable. I’m surprised they went from 100% to zero, seems a little odd to me unless they could not peel off any votes on a compromise. Let’s face it, the schools (in particular the burbs) need a little incentive on keeping their payroll costs down, especially end of career raises.
- Crime Fighter - Friday, Jan 4, 13 @ 1:02 pm:
“how pensions disappeared in the private sector” - And how is this proved to be a good model?
- Small Town Liberal - Friday, Jan 4, 13 @ 1:06 pm:
To everyone complaining about the cost shift being dropped, try reading the first sentence again, especially these words:
“…defer the pension cost shift idea to a later date…”
- Irish - Friday, Jan 4, 13 @ 1:15 pm:
The Gov speaking for the Speaker backed by a group of Republicans. Really???
- Because I said so... - Friday, Jan 4, 13 @ 1:18 pm:
Deferring the cost shift puts this on the backs of state workers so didn’t cause this problem. Everyone involved must have some skin in the game.
- mythoughtis - Friday, Jan 4, 13 @ 1:19 pm:
A gradual cost shift along with higher pension contributions by remaining state employees were the only pension reforms I felt was consitutional or fair.
- Sgtstu - Friday, Jan 4, 13 @ 1:19 pm:
As the song goes, Oh when we get behind closed doors. When Madigan lets his hair lay down.
- mythoughtis - Friday, Jan 4, 13 @ 1:20 pm:
I’m sorry, I misspelled constitutional.
- dupage dan - Friday, Jan 4, 13 @ 1:26 pm:
=Madigan said, ‘I told him to pass whatever he can pass=
Therein lies the core of this current push.
Dead. On. Arrival.
- Langhorne - Friday, Jan 4, 13 @ 1:36 pm:
Good. That’s movement on Madigans part. It calls the bluff of repubs who now have to get in the game for real. Unfortunately, the existing proposal are seriously flawed. No matter. Pass something, anything, and lets go to court.
- Dirt Diver - Friday, Jan 4, 13 @ 1:37 pm:
The Speaker won’t twist arms to get the necessary votes like he did for the income tax increase. He would twist arms to get the votes if the cost shift was in, that is why this will not pass before January 9th.
- Schelookalikaman - Friday, Jan 4, 13 @ 1:41 pm:
Wow, a press conference with the 3th and 4th most relevant political groups under the dome. I really believe something will get done this time.
- anon for a reason - Friday, Jan 4, 13 @ 1:51 pm:
LOL Shelookalikaman
Exactly my thought.
- Roadiepig - Friday, Jan 4, 13 @ 1:53 pm:
Cook County Commoner- A recent poll (by the Chicago Tribune no less) proved that the general public knows who is actually to blame for the underfunding of the pension system (the government at 51% , not the employees who were blamed by only 2% of those polled), even though the CCC and the Tribbies have spent the last few years trying to define the issue as greedy government employees ripping off the taxpayers. I guess they were able to convince you , but you are in a small minority…
- Arthur Andersen - Friday, Jan 4, 13 @ 2:05 pm:
ZZZZZZZ…….
- Scott Herr - Friday, Jan 4, 13 @ 2:10 pm:
As I mentioned yesterday in Rich’s “Arguing for the cost shift” post, the pension cost shift should be addressed in a full discussion of school funding.
Suburban and downstate taxpayers are providing a large subsidy to Chicago property taxpayers. More about this in “Chicago receives too much school funding from Illinois” at http://www.scottherr.org/2013-01/chicago-school-funding/
- Judgment Day - Friday, Jan 4, 13 @ 2:11 pm:
Might just be more to this one. Methinks there’s a reason for the following comments:
“Madigan said, ‘I told him to pass whatever he can pass,’ ’’ Brown said Madigan told Quinn. “If that means we defer the cost shift for some other day, to get other things passed, we’ll try to get other things passed.”
The credit rating agencies aren’t going to wait around for movement here in IL forever. They were already unhappy about the lack of ‘results’ from the last session, and right about now the State of Illinois has a whole lot of ‘nothin’ in their hand.
Might have something to do with it.
Sure hope we don’t see a downturn anytime soon in our revenue collections.
- RNUG - Friday, Jan 4, 13 @ 2:14 pm:
What a waste of time.
Cullerton and Madigan know the pensions are protected; they know the courts have already said the pensions have to be paid regardless of the status of the pension funds. Both also know the COLAs are protected; Madigan even said if they passed the bill he would choose the COLA (implied since he’s over 65 he has Medicare and he can afford private Medigap health insurance).
They’ve already changed benefits going forward by creating Tier 2, so the problem will be solved in 30 or 40 years if the reduced Tier 2 benefits don’t end up running afoul of IRS rules and require additinal payments.
The only thing possibly on the table is the premium free health insurance after 20 years which doesn’t even apply to TRS and most of SURS, so it’s a minority of total retirees. There’s a real question about whether it is protected or not, and that’s in court right now as a result of enacting SB-1313 last year.
What’s even more ironic is the health insurance is paid by the State out of current year funds, not the pension funds, so in and of itself it does ABSOLUTELY NOTHING to directly protect or shore up the pension funds. Yes, it could be argued the freed up money could be sent to the pensions … but when’s the last time someone at the State really did what they said they would with freed up or additional funds?
Her’s some free advice: save the State some legal fees, wait until the Health insurance lawsuit is ruled on.
If you have to do something today, pass a cost shift for TRS and the community college part of SURS … and while you are at it, equalize the CPS portion of the school formula back to the same as downstate since there is no longer any logic to the argument that Chicago had to pay for both their own and downstate teacher pensions. That’s both fair and constitutional.
And if you want to direct that the money currently being used for pension bond payments be redirected to the pension funds once the bonds are paid off, do that also. But I’m not sure how you can actually obligate a future General Assembly to do so since that’s the same logic that got the State into this whloe pension mess.
Anything else is just wasting time and money.
- Frank - Friday, Jan 4, 13 @ 2:28 pm:
One of the most significant — and most underreported — details of the Nekritz-Biss bill is the fact that the long term savings built into the plan reduce the cost shift to .5 percent of payroll for the school districts. That is a fraction of the amount previous pension proposal contemplated shifting to the schools (most had the cost pegged at about 6.5 percent of payroll.)
If the state agrees to pay that .5 percent for a handful of years, then the Nekritz-Biss bill suddenly becomes very appealing to suburban GOPers — many of whom like the bill but have held off endorsing it until Cross releases them.
- Bill - Friday, Jan 4, 13 @ 2:50 pm:
==ZZZZZZZ…….==
Wake up, Art. That’s your money they’re talking about.
- Demoralized - Friday, Jan 4, 13 @ 2:53 pm:
I just wish they would pass something so that the courts can say one way or the other what, if anything, is permissible. The way this has played out is intolerable. There is absolutely no certainty in planning your future.
- Demoralized - Friday, Jan 4, 13 @ 2:56 pm:
==and then compare it the grand give-away at the state and local government level at their expense==
Somebody is going to have to show me someday exactly what this means. With a few exceptions, which are always those that make it into the news and are the ones taxpayers grab hold of, the average person is not part of any “grand giveaway.”
Also, I laugh at the notion that somehow private sector workers have it so bad. I don’t have a single friend in the private sector that has not made out much better than I have in the public sector in terms of net salary and benefits.
- Duh - Friday, Jan 4, 13 @ 2:57 pm:
Frank
Of course the cost shift is more generous in HB 6258 than it is with SB 1673, becase HB 6258 also inflicts more pain (State’s financial gain) on the employees. The trick is to find the equilibrium, I don’t believe a balance was found with HB 6258.
- Scott Herr - Friday, Jan 4, 13 @ 2:59 pm:
Frank, they didn’t release the details of the analysis that showed the 0.5 percent calculation so the long term impact of this isn’t clear to me.
In any case, this doesn’t take into account the new 6.2% employer payment for participants of the cash balance plan. This will add up pretty quickly as new employees are hired.
- Jaded - Friday, Jan 4, 13 @ 3:10 pm:
=I don’t have a single friend in the private sector that has not made out much better than I have in the public sector in terms of net salary and benefits.=
Then go work for the private sector.
- double whammy - Friday, Jan 4, 13 @ 3:13 pm:
to summarize; the lottery didn’t help, pensions won’t drop; IL workers & homeowners will BOTH end up paying more; state workers & teachers won’t suffer. with the main focus being RAISES why isn’t the teachers union firing their top brass for allowing this to happen?
- soccermom - Friday, Jan 4, 13 @ 3:14 pm:
STL — my fear is that there will be no leverage to pass the cost shift if the other reforms are in place.
- RNUG - Friday, Jan 4, 13 @ 3:18 pm:
Just skimmed the Nekritz bill. Really need to take the time to read it in depth and digest it … so I may have some of the details wrong.
Re already retired SERS (prior to 1/1/2011) Tier 1 - pretty much left alone other than some small tinkering with the COLA. Biggest thing there seems to be limiting the COLA to the lesser of 3% or ($600 coordinated, $750 noncordinated) of the annual annuity. This is effectively a cut in the COLA percentage. Also has age 67 or 5 years after retirement before COLA starts.
Also is a provision about retirees after 1/1/2011 who have the COLA non-compounded and limited to 3% or 1/2 of the CPI-U. There’s also an age 67 item about the COLA.
Currently employed Tier 1 SERS would have their contributions increase 1% in 2013 and another 1% in 2014 (2% total increase). There’s some phase-in language based on age, and some language limiting the contribution to the same salary level as SS contributions.
Lots of language about the “cash balance” plan for TRS and SURS. Since I’m not real familiar with that system, someone else will have to analyze it.
The enforcement mechanism is the State is “contractually obligated” to make the specified payments and the pension systems can sue the State in court if the payments are not made.
First impression: most of it is legal but the COLA cuts aren’t.
- RNUG - Friday, Jan 4, 13 @ 3:24 pm:
The $600 (coordinated) annual limit effectively means everyone who gets a annual pension over $20,000 ($1,667 monthly) is having their COLA cut.
- Rusty618 - Friday, Jan 4, 13 @ 3:25 pm:
Did Quinn forget that the capital of Illinois is Springfield again? And the discussions are just with Chicago suburb reps? What about the rest of the state? Oh, yah, Quinn is closing it down!
Any reduction in COLA would be unconstitutional, and would be lost in a court battle, costing the taxpayers even more money. So would state employees have a “rule of 86, 87, 88, etc”? They still need to look at fixing the corporate tax breaks.
- steve schnorf - Friday, Jan 4, 13 @ 3:26 pm:
IMHO, Rep Nekritz deserves a lot of credit for her continuing efforts to find a way to make this work
- RNUG - Friday, Jan 4, 13 @ 3:30 pm:
Steve,
I’ll give her a lot of credit for at least trying to find a way through the mess. She and her staff have obviously put a lot of thought in to it. But I don’t think the COLA changes on current retirees will pass the constitutionality test.
- anon for a reason - Friday, Jan 4, 13 @ 3:37 pm:
The beat goes on.
I do not think they have the votes.
- Farker - Friday, Jan 4, 13 @ 3:38 pm:
“Madigan said, ‘I told him to pass whatever he can pass,’ ’’ Brown said Madigan told Quinn.
Lulz. That’s the funniest thing I’ve read in 2013. Quinn passing pension reform by himself, on his own, without Mike’s help?
If the speaker is telling Quinn that then as Dan stated this is all DOA folks. Nothing to see here but smoke and mirrors.
And further more, if you want to steal from me and other citizens we will see ya in court. You will lose eventually and you will owe not only all employees an apology but all taxpayers for wasting even more precious time and money.
- A simple problem to fix - Friday, Jan 4, 13 @ 3:50 pm:
EXAMPLE —– So a state employee who makes 55000 a year; but makes another 45000 in overtime for their final year before retirement… Say retires at age 50… They will have their retirement payed to them for the next 25-30 yrs… Based on a salary of 100,000 dollars. There is no discussion to correct this. This is not an extreme example, but quite common.
- RNUG - Friday, Jan 4, 13 @ 3:57 pm:
IMO they should remove the COLA cuts and pass it. It’s a good downpayment on the problem.
Mix in the cost shift and there would be a real solution.
- titan - Friday, Jan 4, 13 @ 4:06 pm:
If they’re cutting back the COLA as it related to years already worked, then it would appear to have a Consititutional problem from impairing the contract for pension creidts already earned (not to mention perhaps for future years for current employees).
- Robert the Bruce - Friday, Jan 4, 13 @ 4:07 pm:
What Madigan said: “I told him to pass whatever he can pass”
What Quinn heard: “Yippee! Me and Squeezy can pass whatever we want!”
What Madigan meant: “The votes aren’t there, and I’m not sticking my neck out. I’m going to continue to do absolutely nothing to help this pass.”
- Arthur Andersen - Friday, Jan 4, 13 @ 4:15 pm:
Bill, I’m awake now that there is something else to read. Rep. Nekritz is nothing if not diligent.
Having said that, this is just more of the same mish-mash. COLA cuts are a dog that won’t hunt. Cash balance-answer to the question no one asked. The “ironclad guarantee” looks more like tin to me. Write it like debt service.
- Six Degrees of Separation - Friday, Jan 4, 13 @ 4:16 pm:
RNUG - In agreement with your constitutional solution - without the tax shift, this won’t save much dinero, though.
Simple Problem - due to the constitutionality issue of benefits earned, the real “simple solution” is for the state to reduce its overtime expenditures.
- jericho - Friday, Jan 4, 13 @ 4:18 pm:
if it has anything to do with reducing benefits for those already in the system, its still unconstitutional. and choosing between options that are both unconstitutional is still unconstitutional. and if the results give new employees less retirement benefits than they would get through social security, its is illegal. I know some of these legislators are lawyers. why don’t they understand that.
- RNUG - Friday, Jan 4, 13 @ 4:24 pm:
Six Degrees,
Unfortunately, from the GA’s and taxpayers perspective, nothing that is constitutional will save all that much money.
- walkinfool - Friday, Jan 4, 13 @ 4:28 pm:
I’m with Schnorf on this. Nekritz deserves major credit for her continuing efforts.
Backing off from fixing the pension mess on the basis of opposing this modest, partial, future cost-shifting to local school districts, is irresponsible political pandering by weak legislators. They are listed above and should be held accountable.
- Ready To Get Out - Friday, Jan 4, 13 @ 8:56 pm:
A simple problem to fix @ 3:50 pm
It’s clear by your comments that you don’t have a clue about how retirement calculations are done. Clues: It’s an average, not the last year’s income. A regular formula state employee would have had to start work at the age of 15 to be eligible to retire at age 50.
This has been repeated over and over on this blog. Please do some research!
Finally, it’s paid, not payed.