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Another new pension bill floated

Wednesday, Feb 20, 2013

* Rep. Lou Lang (D-Skokie) has a new pension reform bill that he says is constitutional. But there are some pretty darned controversial aspects to this bill, like making the income tax hike permanent, with some conditions. It also includes the so-called cost-shift language. While it doesn’t decrease retiree benefits, it does require a three percentage point increase in what employees put into the retirement fund.

From the synopsis

Provides that, beginning in State fiscal year 2014, a member who is eligible for medicare shall pay the full premium amount for his or her healthcare coverage under the Act. Amends the Illinois Pension Code.

For the 5 State-funded retirement systems, incrementally increases employee contributions by a total of 3% of salary, imposes a minimum retirement age of 67 (or 62 with a discounted annuity), changes the funding goal from 90% to 80%, and changes the funding formula (beginning in FY2014, applies a 50-year amortization formula to reach an 80% funding ratio).

In the State Universities and Downstate Teacher Articles, shifts costs to local employers.

Amends the Illinois Income Tax Act. Makes the current tax rates permanent.

In any fiscal year in which the total State contribution to the State-funded retirement systems is less than the proceeds from the income tax increase and the debt service savings from the retirement of the 2010 and 2011 Pension Obligation Notes, grants a refundable income tax credit equal to the difference.

* BlueRoomStream.com is covering the press conference. From its Twitter feed


- Posted by Rich Miller        


70 Comments
  1. - Cassiopeia - Wednesday, Feb 20, 13 @ 10:06 am:

    This is the most sensible proposal thus far and it actually may take care of the problem while insuring that retirees are not screwed.

    The only aspect that may be problematic is raising the retirement age to 67. I don’t think that many of the potential retirees should stay in their jobs that long.


  2. - Nickypiii - Wednesday, Feb 20, 13 @ 10:12 am:

    This is the bill we’ve all been waiting for. A sensible, common sense approach that includes concessions from employees (3%). The shift of pension liabilities back to local employers is the big savings here. The 80% funding goal over 50 years takes the strangle hold off the States finances. My only problem is the retirement age change. How old do you have to be now in order not to be effected by this change?


  3. - lincolnlover - Wednesday, Feb 20, 13 @ 10:12 am:

    Actually, I think the objection from most AFSCME people will be raising the contribution by 3%. We already pay 4% plus %6.5 to social security. The addition of 3% brings our total to 13.5% of your gross check! Is that reasonable for people who, on average, make less than $40,000?
    Raising the age to 67, but leaving early retirement open is fine.


  4. - ExPress - Wednesday, Feb 20, 13 @ 10:14 am:

    By raising the retirement age to 67, it absolutely decreases pension benefits for current employees who are now eligible to retire earlier.


  5. - Ryan - Wednesday, Feb 20, 13 @ 10:18 am:

    This isn’t going to fly. Notice the part about shifting costs to the universities and local school districts. By the way, what exactly do they mean by “downstate?” Is that anything outside of Cook county? Anyway, shifting those costs will immediately hike up property taxes and further increase tuition at every university. Glad I’m looking for a job at another university outside of Illinois. Time to get out while the gettin’s good!


  6. - retired and fed up - Wednesday, Feb 20, 13 @ 10:19 am:

    Can anyone explain how making a medicare eligible retiree pay the entire health insurance premimum not unconsitutional in that it impairs a contractual obligation that the state would pay 5% of the premium for each year of employment up to 20 years? This was not only in employment contracts,but also codified in statute. It may also violate equal protection and age discrimination laws in that it would treat older retirees less favorable.


  7. - Nickypiii - Wednesday, Feb 20, 13 @ 10:21 am:

    AFSCME won’t agree to this unless raises in the new contract pay for this. 3% in raises over the next three years and increasing employee pension contributions by 3% over the next three years.


  8. - retired and fed up - Wednesday, Feb 20, 13 @ 10:24 am:

    How much will firing the refundable income tax credits cost? Probably too much.


  9. - retired and fed up - Wednesday, Feb 20, 13 @ 10:24 am:

    That was cost to figure out and process.


  10. - retired and fed up - Wednesday, Feb 20, 13 @ 10:25 am:

    I think I need my cafein. That is figuring the ampounts not firing them.


  11. - Irish - Wednesday, Feb 20, 13 @ 10:29 am:

    Choosing between diminished benefits says both options are diminished benefits. How is that constitutional?

    And why do these deep thinkers keep trying to up the retirement age? They put in place a system where new hires cost them less. They are trying to cut costs. A 35 year employee at the top of their step is costing them more in future pension benefits and in salary than a new hire. So these geniuses pass rules that keep the more expensive employee in favor of a cheaper employee.


  12. - Meaningless - Wednesday, Feb 20, 13 @ 10:30 am:

    Off the top, this proposal by Lou Lang seems to be the most reasonable politically so far. Light years better than Nekritz-Biss! As far as making the recent income tax permanent, I think Lou hit the nail on the head when he said … “If the people of Illinois want to continue to receive the services the state provides, they’re going to have to pay for them.” This might be difficult for many to accept at first because they’ve been receiving plentiful state services over the last few decades at a discount rate.


  13. - anon for a reason - Wednesday, Feb 20, 13 @ 10:31 am:

    Irish

    A large percentage of workers become unable to work after 60. They will leave or die anyway.


  14. - Irish - Wednesday, Feb 20, 13 @ 10:31 am:

    Okay i know they didn’t pass anything. Let me rephrase. …they attempt to pass rules…..


  15. - Fed up - Wednesday, Feb 20, 13 @ 10:31 am:

    Hmm. I remember stating the tax increase would be permanent the day it was passed Rich didn’t believe so.


  16. - cassandra - Wednesday, Feb 20, 13 @ 10:32 am:

    I don’t see how changing the retirement age could meet the constitutional requirements. The sponsors of this bill surely know this. Are they counting on the judges getting them off the hook–the we tried approach to policy-making? Illinois residents really deserve better than more Kabuki from the Democrats who run the state.


  17. - Nickypiii - Wednesday, Feb 20, 13 @ 10:38 am:

    If the retirement age is increased for future hires it wouldn’t be a constitutional issue. Phasing it in for current employees, as well as the 3% increase in employee contribution, would make an incentive for those close to retirement to retire.


  18. - Robert the Bruce - Wednesday, Feb 20, 13 @ 10:38 am:

    Seems like a sensible solution to me as well. I’m surprised Lou Lang didn’t add a provision to mandate that 10% of all pension funds be invested on betting on black in roulette in new casinos.


  19. - Irish - Wednesday, Feb 20, 13 @ 10:39 am:

    anon for a reason - Uhhh…. I am 61 and have a lot of coworkers at that age. I hope none of us are going anywhere. LOL


  20. - Fed up - Wednesday, Feb 20, 13 @ 10:40 am:

    Seems like Rahm was able to get bigger concessions from the Chicago police than Lang wants.


  21. - Bill - Wednesday, Feb 20, 13 @ 10:42 am:

    This bill is the best one yet. It has actually has enough revenue attached and does solve the crisis. Everybody gets a haircut no one gets scalped. It has a better chance in court than SB1 or 35 or any of that other junk in the House.


  22. - Illiniforlife - Wednesday, Feb 20, 13 @ 10:45 am:

    Retired and Fed Up is right. This is a terrible bill for retirees eligible for Medicare, particularly those with dependents. It is even worse than 1313. That bill at least gave retirees a prayer that they would pay less than full cost for insurance. Interesting that Rep. Lang did not mention this tidbit during his press conference. In fact, he stated something to the effect that this bill…does not take away benefits for any state workers or retirees. Right.


  23. - Joe M - Wednesday, Feb 20, 13 @ 10:45 am:

    The retirement age of 67 may cause some unfair situations for those who have maxed out on their pension percentage. For example in SURS, one’s pension is 2.2% of their salary - with the maximum pension one can receive being 80% of the average of their last four years salary.

    So someone working around 36.3 years at 2.2% for each year, would max out at the 80%. Thus, someone who for example started at age 20, would basically max out on their pension amount then at age 56.3. They would then still have to work almost another 11 years, paying 11% of their salary into the pension system — without increasing their pension much, unless they were eligible for some very big raises during those last 11 years. If I was in that situation, I wouldn’t be too happy about contributing 11% of my salary into the pension system each year for 11 years, even though it might not be increasing the pension I would eventually receive.


  24. - Joe M - Wednesday, Feb 20, 13 @ 10:47 am:

    I meant: For example in SURS, one’s pension is 2.2% of their salary FOR EACH YEAR WORKED


  25. - Bill - Wednesday, Feb 20, 13 @ 10:48 am:

    Joe,
    Excess contributions to SURS are refunded upon retirement.


  26. - Irish - Wednesday, Feb 20, 13 @ 10:49 am:

    Fed up @ 10:40 am: But Rahm gave 9% raise for the life of the contract. I don’t see those numbers in this offer.


  27. - cover - Wednesday, Feb 20, 13 @ 10:49 am:

    I don’t understand Rep. Lang’s logic. If “SB1 is unconstitutional because it gives workers the option to choose between diminshed benefits”, then how could his HB2375 - which forces workers to take diminished benefits - possibly be constitutional?

    If SB1 is indeed unconstitutional, then I think the only remaining step that would be constitutional and still reduce state cost is the cost-shift option to push a portion of contributions to local school and community college districts. (Shifting contributions to state universities merely changes which state entity pays, not the overall state cost.) Lang’s idea of making the current income tax rates permanent at least provides a source of cash that the state would need to continue making its pension contributions without having to further slash state services in 2015.


  28. - Ready To Get Out - Wednesday, Feb 20, 13 @ 10:57 am:

    Illiniforlife - Interesting that Rep. Lang did not mention this tidbit during his press conference.

    I noticed that too. Conveniently left out???


  29. - Fed up - Wednesday, Feb 20, 13 @ 10:59 am:

    Irish,
    You need to seperate the collective bargaining contract from the pension plan. They were announced at same time but are not the same thing. Pension plan would be passed by state contract by city council.


  30. - Raising Kane - Wednesday, Feb 20, 13 @ 11:02 am:

    I appreciate what Lou is trying to do here but the problem is that the “temporary” tax increase is paying bills now and the backlog is as big or slightly larger than it was when the increased tax went into effect. So the moment you divert that money into the pension fund, the 8Billion dollar stack of unpaid bills becomes a 13 B stack, and then an 18B stack….and so on.

    Lou’s plan would have made sense if the bill backlog was paid and the money was freed up…but it’s not.


  31. - Meaningless - Wednesday, Feb 20, 13 @ 11:05 am:

    There seems to be alot of concern about the retirement age, and rightfully so, but I’d like some help figuring this out. I’m a retired teacher (TRS) who retired at age 60 with 36.8 years of service credit. When I first started teaching I was told that I would need 38 years of service credit for retirement, which was the furthest thing on my mind at that time. Many years later there a 5+5 retirement option that I was not eligible for, but then came 2.2 which changed the tiered service credit. I paid $18,000 for my 2.2 benefit. Somewhere in there was ERO that made retirement possible with 34 years of service and a minimun age requirement. When that ERO legislation was ready to sunset, I was old enough but was .2 of a year (33.8) short of elgibility for the pipeline. The new ERO legislation raised the service requirement to 35 years, which extended my career unless I wanted to pay major penalties. When I retired 3 years ago I still enjoyed teaching and probably could have continued a couple more years, especially with the top of the scale paycheck, but I don’t think I could have made it to 67. I will say that with all the uncertainty, insecurity, and stress related to “pension reform” there are many times I wish I was still teaching full-time.


  32. - Jechislo - Wednesday, Feb 20, 13 @ 11:15 am:

    I was contractually promised “free” health insurance for me after I retired if I put in at least 20 years as a State Employee. I put in over 35. My health insurance, and my supplemental health insurance after I’m on Medicare, are free for me for life. Sorry if you all don’t like it but it’s the law. See you in court.

    Now as far as my dependent (spouse) is concerned, they can probably hit me hard there. But, they had better hit the current State Employees dependents’ just as hard as me and make them pay the full cost of their insurance as well. Otherwise, just because I’m 65 I get hit with higher dependent insurance costs? Sounds like age discrimination to me. See you in court - again.


  33. - Darren - Wednesday, Feb 20, 13 @ 11:32 am:

    I am 33 years old. I am currently off of work with a hurt back from wrestling a inmate who was 6′10. I am 5′7. I cannot imagine being able to do my job at 67 years old. Get Real. Just another way to lure people into retiring earlier so their benefits will be greatly diminished. I say all of the lawmakers should revert back to minimum wage until they can come up with some real, meaningful legislation.


  34. - Irish - Wednesday, Feb 20, 13 @ 11:37 am:

    Fed up - @ 10:59 am: And you don’t believe it was all a package? I think AFSCME could come to some sort of an agreement if a 9% increase was on the table for contractual raises. In the state case the Administration is offering NO increases and was originally demanding a 10% cut.

    Please understand I am not suggesting the 9% increase for the AFSCME contract but one has to believe that discussions about the contract went hand in hand with discussions about the pension. Just as they are in the state contract/pension talks. the only differnece is the state is not offering any increases in anything.


  35. - Question? - Wednesday, Feb 20, 13 @ 11:49 am:

    What is the percentage today, that non-union employees contribute into their retirement?


  36. - Bill - Wednesday, Feb 20, 13 @ 11:55 am:

    I, me,mine, I, me, mine, I, me, mine


  37. - Bobbysox - Wednesday, Feb 20, 13 @ 11:56 am:

    It is a plan that can be worked with. It addresses revenue, which is important. It sets a more realistic goal. Even raising the retirement age to match what Social Security will go to makes some sense, but it does so way to abruptly. It seems to end the ERO so that current year retirees planning to go out this last year of it won’t be able to, depending on when it would become law. The age increase part though is severable and can be declared unconstitutional and rest of the bill would remain intact. This and Senate Bill 2404 filed by State Senators Linda Holmes (D-Aurora) and Pam Althoff (R-McHenry) are the first pieces of legislation we’ve seen that aren’t downright punitive.


  38. - mythoughtis - Wednesday, Feb 20, 13 @ 12:23 pm:

    to Question…. non-union people pay the same preimums and retirement contributions as union people and get the same benefit.

    Here are some changes to Lang’s bill I would like to suggest:

    Tax retirement income for both public and private sector retirees.

    Remove the proposed penalty for retiring at 62. It is a diminishment. Instead, remove the 75% cap for service between age 62 and 67. It is only 5 years, it can’t really financially hurt the retirement system that much…. but that will not be a diminishment and should stand up in court. In other words, encourage older workers to stay with a carrot instead of a stick.

    Require younger retirees to pay more for medical instead of medicare eligible retiress paying more. That is where the expense is. Change the retirement health care benefit so that the current ability to retire with 100% of your health insurance premium paid only kicks in once you hit age 65 and are on medicare. Make younger retirees pay double the current employee and dependent employee contribution until they hit age 65.


  39. - Grandpa cop - Wednesday, Feb 20, 13 @ 12:38 pm:

    Lou Lang’s Butterfly Effect: 67 year-old-police state police officers (not all state police officers has age limits) REALLY serving and protecting the public. Imagine virtually blind cops, popping nitro-glycerin, forgetting to take their cumidin, insulin and blood pressure medications carrying a walker or a cane because they forgot their badge, gun and cuffs at home. I’m certain they’ll enforce the law provided they can remember their computer password log on or where they put their keys. This is how we honor our heroes that protect us from bad guys and terrorists. Shame on anyone who is so money-centered or greedy to dishonor law enforcement when we need our heroes (many of whom are veteran military heroes also) more than ever with all the shooting violence in Chicago and some other Illinois cities. In Detroit police dispatchers tell residents to barricade themselves in a room and let home invasions robbers take what they want. Sometimes there simply are no police available to respond. I don’t want to hear that when I call 911. Do you?


  40. - Billy - Wednesday, Feb 20, 13 @ 1:05 pm:

    Mythoughtis, taxing retirement income will force retired people from Illinois, to leave the state. We do not stay here for the weather! Illinois has the second highest exodus rate, next to New Jersey now. Tax retirement income and we can become number one, in people leaving a state!


  41. - mythoughtis - Wednesday, Feb 20, 13 @ 1:12 pm:

    Really, Billy? what state would you move to, and have you done any cost/benefit analysis towards doing so?

    Make sure you include state sales tax, health insurance costs based upon the state you reside in, vehicle licensure cost, personal property taxes, etc.


  42. - retired and fed up - Wednesday, Feb 20, 13 @ 1:12 pm:

    The majority of states tax pension income so not taxing it doesn’t seem to keep people here if what you are saying is true. I actually moved to a statee that does tax my pension.


  43. - MCROMAN - Wednesday, Feb 20, 13 @ 1:19 pm:

    Cullerton/Senate President said/Believes raising the age is Unconstitutional How does Lang even come out of his mouth with that one? Hello People CANNOT Impair Or Diminish Benefits, Raising the age Impairs the ability to Retire!!!!


  44. - Billy - Wednesday, Feb 20, 13 @ 1:25 pm:

    Mythoughtis, FLORIDA. Low sales tax, low property tax, no state income tax. 72 is the temperature here right now! A retirement tax in Illinois, and Florida here I come full time.


  45. - steve schnorf - Wednesday, Feb 20, 13 @ 1:44 pm:

    My thought_not happening, unless you believe the income tax started to expire in a gubernatorial election year by coincidence.


  46. - Meaningless - Wednesday, Feb 20, 13 @ 1:54 pm:

    One issue that has become very clear is that each of the 5 pension systems have some very distinct differences, especially in the earned benefits. Can there be any legislation that would be reasonable for all? I don’t see how there could be any legislation that would be constitutional and morally proper that changed any of the benefits that current retirees receive. Is there any legislation that would be constitutional and fair to current employees if it involved changing current contributions and future benefits? What about a pipeline? I’ve always held to the belief that “a promise is a promise” and if this is what I agreed to when I accepted employment then this is my contract. I knew what I was getting myself into. Is it reasonable to “change the rules” in the middle of the game? From a teacher’s perspective, I know that it would be almost impossible to change jobs (different school) midway through a career with tenure laws and such. I heard a prediction years ago that held the average worker will change careers at least 5 times in their life, but not for teachers. Is it reasonable to change the rules if an employee would still have a realistic chance to change careers if he/she didn’t like the new changes? I definately don’t know the answers to all of these questions.


  47. - foster brooks - Wednesday, Feb 20, 13 @ 2:15 pm:

    Anyone who thinks raising the retirement age is not an impairment needs to seek help.


  48. - huggybunny - Wednesday, Feb 20, 13 @ 2:18 pm:

    Any news yet on SB1313, weren’t we suppose to hear something on it today?


  49. - RNUG - Wednesday, Feb 20, 13 @ 2:20 pm:

    huggybunny

    The bench trial was scheduled to start at 1:30 PM today.


  50. - RNUG - Wednesday, Feb 20, 13 @ 2:25 pm:

    Been busy today so I haven’t been able to read Lang’s bill yet. I’ll probably take the time tonight. But from the summary Rich posted, I see two constitutionally questionable issues and one maybe issue.

    1) age increase for existing workers, been previous rulings on that

    2) 3% contribution increase if no off setting benefit, been previous rulings on that

    Maybe - health insurance, depends on outcome of Maag

    And as far as the revenue from making the temporary increase permanent, I don’t think it is enough but at least it is on the table now.


  51. - RNUG - Wednesday, Feb 20, 13 @ 2:27 pm:

    huggybunny

    If you want to check on the status later:

    “Maag” - Sangamon County case 2012-L-000162


  52. - capncrunch - Wednesday, Feb 20, 13 @ 2:35 pm:

    Lang’s bill says that “…a member who is eligible for Medicare shall pay the full premium amount for his or her healthcare coverage….”

    He better be careful of the language in the legislation. All Americans over the age of 65 are eligible for Medicare Part B.


  53. - capncrunch - Wednesday, Feb 20, 13 @ 2:36 pm:

    Should read age 65 and over.


  54. - Under Paid - Wednesday, Feb 20, 13 @ 2:45 pm:

    The proposed increase in employee contributions will cover a portion unfunded liability. The change in retirement to age 67 will cut the liability of the State but not for many years. Both are fine ideas but will only cover a small portion of debt we have today and then only over many years.

    The change of the funding goal from 90% to 80% I see only as another smoke and mirrors type of operation. Like those used by past administrations they only obscure the true problem and do not solve it.

    “The shift of pension liabilities back to local employers is the big savings here.”

    The shift proposed will work. The problem is that it is no savings to the state (lower case ’s’) it is only a savings to the State (upper case ‘S’). It effectively is way to increases taxes across the state by having local taxing units increase taxes rather than have a single statewide tax increase. In the end the taxpayers will pay more to solve the pension problem.

    The need to make the current tax rates permanent was clear to me the day they were passed. If the current income tax rate drops the pensions only have effectively a larger unfunded liability.

    In summary it appears to me that the plan from Rep. Lou Lang is: 1) a little money from the employees, 2) a large tax increase to pay most of the pension debt, and 3) no spending cuts.


  55. - Chris - Wednesday, Feb 20, 13 @ 2:46 pm:

    “Really, Billy? what state would you move to, and have you done any cost/benefit analysis towards doing so?”

    Also, Illinois is *perfectly* entitled to tax income ‘earned’ in Illinois (as any state pension would be) regardless of one’s state of residence. Get a credit for tax paid in state of residence, sure, but going to Florida (1) doesn’t necessarily help and (2) *ensures* that the legislature doesnt care that youre mad about it–can’t vote here anymore.


  56. - huggybunny - Wednesday, Feb 20, 13 @ 2:48 pm:

    RNUG

    Thanks for the SB1313 info. Wondered what your summary would be on this Lang bill. How he can say it doesn’t take away benefits from any state workers or retirees, when those on Medicare would have to pay the entire premium (close to 400 a month) instead of a percentage, sounds like a take away to me.


  57. - Earnest - Wednesday, Feb 20, 13 @ 3:43 pm:

    Credit where credit is due: Representative Lang put his name on a proposal with specifics in it. We’ve heard a lot from people who have vague or incredibly unrealistic solutions. It seems like an honest effort and not designed to appeal only to a narrow segment of the public or make a good sound bite. I don’t mean to ignore the thoughtful comments discussing constitutionality or likelihood of things being passed.


  58. - My take - Wednesday, Feb 20, 13 @ 3:59 pm:

    My biggest problem with the cost shift is:

    A. The legislature has bargained with teachers’ unions for increased benefits without increased funding mechanisms and now want to shift these bargains to the local level
    B. The state mismanaged their end of pension funding to the point that other state services that we have been able to traditionally rely on are being cut, thus causing this problem in the first place
    C. Their solution is to shift the cost of state bargained wages and benefits into school districts (local property taxpayers) while at the same time underfunding GSA at levels where schools are already cutting services and personnel
    D. Not giving districts the tools they need to legally capture property tax funds (PTELL anyone?). When was the last time CPS went to referendum?
    E. Despite historical increases in funding and wages for those in the field, Illinois Schools’ performance levels are stagnant and/or declining (I understand parenting is just as important in these cases)

    My conclusion is that the legislators filled their campaign coffers and maintained power while hiding the problem for as long as possible. Now that it is time to pay the piper, the only solution that is viable is a property tax increase.

    That say something about our state when our legislators are more fearful of facing the unions than they are raising our taxes. Although, when was the last time that your downstate neighbor GOTV for you in droves.


  59. - Mary - Wednesday, Feb 20, 13 @ 4:29 pm:

    I am 50 years old and have 28 years in the system. My plan was to retire with 30 years. If this bill passes, I will have to work an additional 15 years to retire. This would not be fair for existing employees or those within 5- 10 years from retirement.


  60. - Rudy - Wednesday, Feb 20, 13 @ 6:05 pm:

    A thoughtful approach by Rep. Lang: The Speaker needs the cost shift, labor needs past promises honored, and the Democrats need to mend fences with labor.


  61. - Just The Way It Is One - Wednesday, Feb 20, 13 @ 6:36 pm:

    Sorry, Lou. A 3% contribution increase is too MUCH. Most folks could probably live with letting the Income Tax Increase slide into a permanent state–shucks, we all pay more now already, and Illinois surely needs the money. But a 2% employee contribution increase for pensions is plenty–and already asking a lot from Govt. employees down in the trenches when it was the Pols in the Legislature and ex-Govs. who knowingly permitted this Pension “problem” many years ago grow into the ugly Pension “crisis” it’s become today!


  62. - No-raise - Wednesday, Feb 20, 13 @ 7:52 pm:

    Are you kidding me? Raising the retirement age for current employees is a classic reduction of benefits. If anyone thinks that is constitutional, then why not raise the age to 75 or 80? The rest of the bill is at least reasonable, but it’s not going anywhere with the age increase!


  63. - foster brooks - Wednesday, Feb 20, 13 @ 9:13 pm:

    here’sthe feds take on this

    http://www.nasra.org/resources/CRS state and local legal framework 1104.pdf


  64. - foster brooks - Wednesday, Feb 20, 13 @ 9:17 pm:

    here’s the feds take on this

    http://www.nasra.org/resources/CRS%20state%20and%20local%20legal%20framework%201104.pdf


  65. - Arthur Andersen - Wednesday, Feb 20, 13 @ 9:43 pm:

    FYI, Foster, the article you link, although a good one, is the not the work of any Federal entity. It was written by or for NASRA, the Nat’l Ass’n of State Retirement Administrators, the “trade group for folks like SERS and their counterparts across the country. Interesting reading nonetheless.


  66. - Chicago Dave - Wednesday, Feb 20, 13 @ 9:53 pm:

    I don’t understand the part about making those eligible for Medicare pay the full premium.

    I thought a main reason to raise the retirement age was so the State didn’t have to pay healthcare costs for retirees prior to them being eligible for medicare.

    Once someone reaches Medicare eligibility, healthcare costs to the State are significantly less due to the State insurance being secondary.

    Is there some loophole they are trying to close here?


  67. - RNUG - Wednesday, Feb 20, 13 @ 10:27 pm:

    Read the bill tonight. It looks like my initial comments based on the summary were pretty much on target. Found a few other items so here’s a bit more in depth response with a bit of commentary.

    Paying for health insurance - First off, a lot of the current retirees (TRS, some SURS) already have to pay for it. So only selected classes, primarily SERS and some SURS, are being targeted. Classic divide and conquer strategy. May or may not be legal depending on the outcome of the Maag lawsuit.

    Making the temporary 2% increase permanent - I and a few others have been saying this for some time, so no surprise. Perfectly legal. The “refund” via “credit” of unneeded funds from the 2% is an interesting twist. Also, the language about not having to certify payments in any year the income tax rate goes down for the entire year makes me question what is up with that language.

    Dropping the 90% funding goal - pretty much expected also. 80% goal is not unreasonable given the fact the State can not fold up and go out of business.

    Change to mandatory age 67 for existing employees is a diminishment and probably not legal.

    The additional 3% for existing employees is a diminishment (no new consideration). I will admit the phase-in of 0.5% per year over 6 years is a reasonable approach but it ends up with a probably unconstitutional result. And this, or most of it, can probably be (more or less legally) achieved at the bargaining table although there are some issues if done that way.

    Other than health insurance, not retroactive on any retiree. It is still changing the game for existing employees which has been previously found to be a diminishment and illegal.

    With all the talk of the change taking effect immedately on the effective date of this legislation, it sounds like someone wants to scare out all the remaining long term State employees who are eligible to leave. Is this an attempt to get some open jobs that can be filled by patronage workers before the next election? Do they think the GOP can actually regain the Gov’s office next time? Or is it just an attempt to gin up some personnel line budget savings through scare tactics?

    I may have missed it, and I went back and looked for it a second time, but I did’t see any actual enforcement language to force the State to make the payments as specified. In other words, no guarentee. There is enforcement language for non-State entities such as the community colleges.

    It removes the teacher’s early retirement option, even though they’ve been paying in for such an option. Should have previously noted the SERS ‘rule of 85′ is gone with this bill. Both these actions are most likely diminishments when imposed on existing employees.

    Bottom line from my viewpoint - this bill has the bones for a solution but it’s going to need some surgery to trim out the unconstitutional fat. Kind of makes me wonder if some of that was tossed in there as sacrificial items.


  68. - RNUG - Wednesday, Feb 20, 13 @ 10:42 pm:

    Chicago Dave

    What a lot of people don’t understand is the State does not (and did not) plan for or pre-fund the health insurance premiums. It does not get paid out of the pension fund. That expense gets paid out of current GRF funds every year and is another huge unfunded liability the State is facing.

    The whole health insurance for early retirees issue was, mostly, an artifically created problem due to the 2002 ERI and people bailing as young as age 50. The youngest of those are 60 now. For a SERS retiree, the under 65 state cited “cost” is about $600 a month and for the 65 and up crowd it is about $350. (Your mileage will vary based on the plan selected; Quality Care is the most expensive and the HMOs are the cheapest.)

    In a maximum of 5 years, those 2002 ERI people will be on Medicare, so that “spike” becomes a non-issue.

    Yes, right now there are still people taking early retirement via either age 60, SERS ‘rule of 85′ or the “life/safety” early outs between age 50 and 60. Note: TRS teachers don’t apply to this discussion because they already pay for their insurance.

    This bill bumps everyone up to age 67 with no early out. So once it is in effect, there are NO non-Medicare retirees getting health insurance. The only way the State can get any relief from rising health care costs is to try to make the retirees pay for the “insurance”. Note: I put the term insurance in quotes in the previous sentence because one of the State plans, Quality Care, is not really insurance the way most of us think of insurance because the State self insures that plan.

    Sorry it took a long answer to what you thought was a simple question.


  69. - RNUG - Thursday, Feb 21, 13 @ 8:21 am:

    According to the SJ-R story this morning, we have at least 3 more weeks to wait while the lawyers file additional paperwork on the arguments.

    http://www.sj-r.com/thedome/x930802945/Lawyers-debate-premium-free-state-retiree-health-insurance


  70. - capncrunch - Thursday, Feb 21, 13 @ 8:24 am:

    “Once someone reaches Medicare eligibility, healthcare costs to the State are significantly less due to the State insurance being secondary.”

    Right, so why doesn’t the State require all retirees to purchase Medicare Part B upon reaching age 65? Currently, if a retiree is not eligible for free Part A, he or she is not required to enroll in Part B. While the State would still be responsible for coverage for hospital care, it would be become the supplemental insurer for physician care. Seems like medical insurance costs for retirees would go down.


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