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Poison pill?

Thursday, May 9, 2013

* It’s either a poison pill, as the Sun-Times says, or a way to make the Senate’s pension reform bill save more money. We will soon find out

The plan that advanced in the Senate coincides with possible movement on another pension issue in the House, where Madigan has scheduled a hearing Thursday to craft legislation to make downstate and suburban school districts shoulder the state’s cost of funding pensions for educators in their school systems.

The idea to end what Madigan has derided as a “free lunch” for those districts has faced resistance from Republicans and suburban and Downstate Democrats, who worry the pension cost shift from the state could result in higher property taxes.

On Wednesday, Madigan predicted that his chamber will “get the job done” on the cost shift.

Since Cullerton’s plan can be tweaked in the House, there is potential it could merely be a poison pill that could be added as an amendment to help quash the Senate president’s plan in Madigan’s chamber. A defeat like that would leave the Madigan pension-reform version as the only game in town as a scheduled May 31 legislative adjournment looms.

Asked if he intended to move the cost shift as its own piece of legislation or tack it on an existing bill like the Cullerton one, Madigan told the Chicago Sun-Times, “We’ll get to that later.”

Your thoughts on this?

- Posted by Rich Miller        


34 Comments
  1. - Pinker - Thursday, May 9, 13 @ 9:49 am:

    Way too much tinfoil for me.


  2. - Anon - Thursday, May 9, 13 @ 9:50 am:

    Either downstate/suburban districts start covering Chicago’s pension costs via the state, or they start paying their own way like Chicago does.

    I can’t see how that is an unfair statement in any way, and opposition to it is ridiculous.

    Unless I’m missing something?


  3. - Dirt Diver - Thursday, May 9, 13 @ 9:50 am:

    Madigan has wanted cost shift for years. Other than actually taxing retirement income, I believe the cost shift to be the only other Constitutional option that significantly reduces the State’s payment. I truly believe Madigan believes that benefit cuts are un-Constitutional as we was in attendance when the Pension clause was added to the Constitution. At the end of the day, Madigan cares most about shifting costs to the schools, he just chose another strategy this year in order to get it done.


  4. - Obamas Puppy - Thursday, May 9, 13 @ 9:52 am:

    He is telegraphing his move on purpose.


  5. - Anon. - Thursday, May 9, 13 @ 9:56 am:

    ==“We’ll get to that later.”==

    Should be on the State seal. But I do believe the Speaker is serious about shifting the costs, and using the proposal as a poison pill to kill alternatives to SB 1 would be a sacrifice of a long-term goal for a short-term advantage, which not how he got the job or has kept it so long.


  6. - Robert the Bruce - Thursday, May 9, 13 @ 10:05 am:

    If MJM thought cost shift could pass, I’d think that he’d have put it into his own pension reform bill in the first place.


  7. - Fred's Mustache - Thursday, May 9, 13 @ 10:23 am:

    === If MJM thought cost shift could pass, I’d think that he’d have put it into his own pension reform bill in the first place. ===

    Not necessarily. There are probably legislators that voted against SB 1 that would support the cost shift and vice versa. MJM was smart to separate the cost shift proposal into a separate bill.


  8. - Robert the Bruce - Thursday, May 9, 13 @ 10:28 am:

    Good point, ’stache. I’m skeptical of cost shift passing in any form, simply because downstate+suburban legislators outnumber city of Chicago legislators.


  9. - east central - Thursday, May 9, 13 @ 10:33 am:

    Not sure about it being used as a poison pill but obviously different sets of members would be voting in favor of the two measures. I have not seen a cost shift proposal that makes sense to me.

    At present districts and universities can enhance salaries while the State is generally responsible for the impact on pension costs. Shifting normal costs entirely to the districts and universities results in a similar inappropriate incentive but in reverse–if passed then the State can make changes in pensions that are passed to the districts and universities. It also makes the districts and universities responsible for normal cost changes due to recessions, other bad investment returns, and actuarial adjustments.

    Normal costs should be shared between the State and the districts and universities so that all parties have an incentive to consider the impact of salary and pension changes on normal costs and so that both share the other risks.


  10. - Plutocrat03 - Thursday, May 9, 13 @ 10:37 am:

    “Either downstate/suburban districts start covering Chicago’s pension costs via the state, or they start paying their own way like Chicago does.”

    You are missing something. The State has been subsidizing Chicago pensions for decades. If you want everyone else to pay their costs, then Chicago should as well. Since the salaries in Chicago are larger than most of the State and the number of pensioners is larger, who do you think will take the biggest hit?


  11. - Pot calling kettle - Thursday, May 9, 13 @ 10:44 am:

    Cost shift brings in the necessary revenue;however, if it comes from the education fund, districts will suffer. Any cost shift needs to come with authority to levy in the retirement fund. Not popular, but the root of this problem has always been revenue. No new revenue, no long term fix!


  12. - Sparky - Thursday, May 9, 13 @ 11:19 am:

    Some of you need to read this from Dale Righter:

    http://www.robdailynews.com/main.asp?SectionID=19&SubSectionID=120&ArticleID=11001


  13. - Keep Calm and Carry On - Thursday, May 9, 13 @ 11:30 am:

    Thoughts? Cullerton should do the same to Madigan via an alternate “tweak” to Madigan’s bill.

    If we’re having a gun fight, let’s make it fair and break out the guns on both sides.

    No sense letter the House have all the leverage, is there Mr. Cullerton?


  14. - Madison - Thursday, May 9, 13 @ 12:04 pm:

    If I were a Madigan, rather than a Madison, and my daughter had designs on electoral domination, why would I take on every state worker, teacher, public retiree and now downstate property taxpayer, as well as Cullerton?
    I believe there must be tea leaves to read here.


  15. - Norseman - Thursday, May 9, 13 @ 12:18 pm:

    Cullerton still controls the fate of SB 1 in the Senate. This is all coming down to who is willing to blink first. Cullerton has a history of being the first to blink. One of these days he and the Senate Democrats will get tired of being dictated to by the Speaker. Especially after Cullerton’s been so deferential to the Speaker and IMHO, it’s not been reciprocated.


  16. - Norseman - Thursday, May 9, 13 @ 12:30 pm:

    Madison, no tea leaves necessary; he knows that the choices are so horrible Lisa will still look better than the alternatives.

    Let’s go through the list:

    Quinn - he’ll sign whatever pension bill that is put before him so the victims (the employees and retirees affected by the reductions) will not be inclined to support him. In addition, he is rightfully viewed by most folks as being incompetent. Lisa has a rep as being quite competent.

    Brady - He couldn’t beat Quinn - nuff said.

    Dillard - He couldn’t beat Brady, plus he’s a big drumbeater of the Madigan plan. Yes, the victims will want to support him over Lisa.

    Rauner - If he can revive his disintegrating campaign, he’s put himself out there as a bigger threat to the victims.

    Rutherford - Another Republican drumbeater for pension reductions. Victims would not do any better here.


  17. - Ruby - Thursday, May 9, 13 @ 12:33 pm:

    Madigan has made it clear that the pension cost shift will be in a separate bill. But not to worry, there are already enough poison pills in Cullerton’s bill, SB2404.


  18. - Diogenes in DuPage - Thursday, May 9, 13 @ 1:01 pm:

    Chicago Public Schools gets a disproportionate share of State aid to schools, even after taking poverty into account. The suburban and downstate schools have the numbers to back this up.
    That said, the cost shift, if phased in over 10 years or so, would be doable and would give local school boards the 2×4 to the forehead that they need to stop pension sweeteners that others end up paying.


  19. - L.S. - Thursday, May 9, 13 @ 1:30 pm:

    Madison - It’s called clearing the deck. Taking on the tough stuff to make a cleaner pathway.


  20. - Ruby - Thursday, May 9, 13 @ 2:38 pm:

    SB2404 has passed in the Illinois Senate.


  21. - Madison - Thursday, May 9, 13 @ 2:45 pm:

    Portions of the points you make have merit regarding crummy opposition! Although I think Dillard is the ultimate GOP nominee. I havebeen in politics long enough to know that a voter will not go out of his or her way to reward good leadership unless he or she would have voted anyway; however, a voter will not miss a chance to stick it to a politician they feel has done them wrong.


  22. - Norseman - Thursday, May 9, 13 @ 2:59 pm:

    Hearing the debate on SB 2404 I’m ashamed of today’s Republican party and especially ashamed of the Senate Republicans. I’m happy that despite my opposition Linda Holmes was able to get re-elected to make such a fine speech today.

    To hear Radogno get up and say that one of the reasons for her opposition is that it will make it harder to take away health benefits in the future sickened me.

    I wonder how many members of the Senate Republican caucus can look their legislative aides and staff in the face and tell them they’re appreciated after making it clear that their financial interests are meaningless to them.


  23. - Original Rambler - Thursday, May 9, 13 @ 3:49 pm:

    That said, the cost shift, if phased in over 10 years or so, would be doable and would give local school boards the 2×4 to the forehead that they need to stop pension sweeteners that others end up paying.

    Amen to that!


  24. - RNUG Fan - Thursday, May 9, 13 @ 3:59 pm:

    Norseman 4 Senate republicans voted for 2404 and 3 did not vote. Only 2 Dems Biss and Steans against.
    This is equal to and 80 -32 vote in the house where all the momentum people that were saying 62 was such a huge win?
    What did Madigan hold his latest stunt against Cullertons big win?


  25. - Endangered Moderate Species - Thursday, May 9, 13 @ 4:01 pm:

    ===Unless I’m missing something?===

    Anon, You are missing the disbursement formula to school districts. The system is weighted for the CPS to receive more funds than other school districts.

    Without addressing the disbursement formulas, any downstate or suburban representative supporting a straight cost shift will be opening themselves up to heavy criticism and challenges in their home districts.


  26. - Dirt Diver - Thursday, May 9, 13 @ 4:52 pm:

    ====I wonder how many members of the Senate Republican caucus can look their legislative aides and staff in the face and tell them they’re appreciated after making it clear that their financial interests are meaningless to them.====

    Exactly. Yet you talk to members of the SGOP staff who remain to be all about sticking it to the public employees in regards to their pensions. They might change their tune if their bottom lines were impacted. Although I’m sure many SGOP staffers have the belief that they will depart to the private sector.


  27. - RNUG - Thursday, May 9, 13 @ 5:10 pm:

    So now we have each leader’s “preferred” plan passed by their chamber. Now we get to see if they will call the other plan for a vote … or if it will be a standoff until the last possible second.


  28. - Norseman - Thursday, May 9, 13 @ 5:12 pm:

    DD, there are some Kool-Aid drinkers, but most of the staff is upset.


  29. - Norseman - Thursday, May 9, 13 @ 5:13 pm:

    oops “are” upset.


  30. - RNUG - Thursday, May 9, 13 @ 5:20 pm:

    Rich,

    With the passage of SB2404, I think your next QOTD just wrote itself:.

    On the pension bill, which chamber leader will blink first?


  31. - foster brooks - Thursday, May 9, 13 @ 6:13 pm:

    Radogno: “Focus on the goal of pension reform and stop arguing about constitutionality”.

    Unless its the 2nd ammendment. No wonder i dont vote for republicans anymore


  32. - Norseman - Friday, May 10, 13 @ 12:01 am:

    RNUG or AA - Did you understand that the AAI under Madigan’s bill will only be a simple increase if your annuity is at or more than the (years of service * 3%) cap. Per SERS analysis a person whose benefits are coordinated with Social Security with 30 years of service would have a cap of $24,000. If that person’s annuity is $24,000 or greater, than he/she would only receive an AAI of $720 after meeting the 5 year or age 67 threshhold. So (assuming a base annuity of $24,000) this person will only get an annual annuity of $24,720 for the rest of his life. Pretty sick considering the expected increases in health care costs - presuming retirees will still get healthcare if the future.

    I stupidly read the description of the amendment to allow compounding of the “cap” amount, i.e. for the above example the AAI for the first eligible year would be $720, while the AAI for the next year would be based on $24,720 for an AAI of $741.60.


  33. - Pot calling kettle - Friday, May 10, 13 @ 12:24 am:

    Norseman: the Madigan bill would add another $720 each year.


  34. - Norseman - Friday, May 10, 13 @ 12:58 am:

    It would add it to the $24000. So you would never receive more than $24,720 per year for the rest of your life.


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