94 Comments - Keep Calm and Carry On - Monday, May 13, 13 @ 8:46 am: Unfortunately, our esteemed legislators have not resolved this issue despite many years of deliberation and public concern. Perhaps they will shed the label of a “do-nothing” caucus when they actually achieve something. Fascinating how that might finally occur just before the Speaker’s daughter runs for Governor. - wordslinger - Monday, May 13, 13 @ 8:48 am: Geez, Tim Beckman goes 2-9 in Year One and he’s the highest paid public employee in the state. Go figure. Why am I not surprised that in Nevada the highest paid public employee is a plastic surgeon> - Keep Calm and Carry On - Monday, May 13, 13 @ 8:50 am: === There’s a pretty stark difference in the savings of the one bill to the next === Promptly followed up with, “As far as the issue of Constitutionality goes: What, me worry?” - titan - Monday, May 13, 13 @ 8:53 am: COngrats to Rep. Lang. Hey, Trib, how much money would an unconstitutional “solution” save the state? Isn’t that relevant? If all the Trib needs is an Bill that “solves” the problem (until shortly after passage when it is struck down), why not pass a Bill that says all of the unfunded liability is funded and all of the state’s debts forgiven? We’d be even and flush with cash then (until reality sets in). - Marie - Monday, May 13, 13 @ 8:58 am: I would also suggest a review of all corporate tax breaks - with revisions and reductions - from the income tax to the TIF’s which hit the schools very hard - corporate pay might also be interesting - RNUG - Monday, May 13, 13 @ 9:01 am: Rep. Lang is on target with his op-ed piece. The Civic Federation is contributing nothing but more disent and confusion. Unfortunately, I don’t believe either of the bills that are advancing will pass constitutional muster. Cullerton’s comes closer but it is still diminishment. The constitutional options are re-set the ramp, dedicate one or more current revenue streams to future pension payments, shift the normal pension cost of tRS to the local districts, and raise the revenue needed to pay what is owed. The blunt truth is the 2% temp tax increase will be made permanent, probably at a higher rate than now … so just do it. - Fire Ron Guenther - Monday, May 13, 13 @ 9:08 am: wordslinger, it was actually 2-10. *sad trombone* - Will Caskey - Monday, May 13, 13 @ 9:12 am: Does Lang, like, have staff? Staff who can write op eds that aren’t whiney gibberish? “Don’t be so mean to me, you meanies” is not a rebuttal or a response. Lang didn’t mention any actual constitutional issues with the Madigan pension bill, he just kept repeating “Constitution!” as some sort of mystic ward against editorial cruelty. - Anon. - Monday, May 13, 13 @ 9:13 am: I believe we have the answer to the problem of why there is such a large pension deficit. Behold “… the Madigan bill would free up at least $1 billion more than the Cullerton plan for schools, health care and other needs in next year’s budget.” - Dirt Diver - Monday, May 13, 13 @ 9:23 am: Lawrence Msall has endorsed the pension reform proposal….hallelujah! How is this newsworthy? Way to go Leader Lang, the Tribune Editoral Board is as slanted and biased as they come, but imagine how even more slanted/biased they become if the Koch Brothers buy it. - cassandra - Monday, May 13, 13 @ 9:31 am: Msall might do pension reform’s prospects a favor by keeping quiet at this juncture. It’s early to be making rosy budget predictions. And something else will come up–probably, an expansion of Medicaid applications from those already eligible as the ACA moves toward implementation. Also, his predictions about freeing up cash for next year’s budget (which goes into effect in 6 weeks) might be overly optimistic. There will very likely be a stay if a bill makes it to Quinn’s desk, he signs it, and somebody sues. - Just Me - Monday, May 13, 13 @ 9:34 am: Congrats to the Tribune for publishing Lang’s editorial at least. - Anonymous 1 - Monday, May 13, 13 @ 9:41 am: That the Tribune would even publish this is amazing. Notice, there are no edicts issued, via editorial today to direct the legislature as to how they should be proceeding. - Wensicia - Monday, May 13, 13 @ 9:47 am: The Tribune’s had this slap-back coming for quite a while. When I sat before the board in a discussion about pensions, I asked if the reforms they demanded were constitutional…complete silence. - Captain Illini - Monday, May 13, 13 @ 9:49 am: I’m with RNUG on this and his opinion on the fix, but most of all, should a constitutional suit be filed and decided in the favor of retired and active employees, maybe the Trib and Civic Foundation and others will Shut the Hell Up and ditch their bullied opinions about fixing anything. - Cook County Commoner - Monday, May 13, 13 @ 9:49 am: If Rep. Lang constitutional fervor finds the state constitution’s pension non-impairment clause as “plain words” requiring his “No” vote, then I presume he’ll have no problem with the following “plain words” in the state constitution: “The State has the primary responsibility for financing the system of public education.” I await reduction of my property taxes. - Niles Township - Monday, May 13, 13 @ 9:51 am: Lang has become more of a bufoon with each passing year. Sutker, may he rest in peace, at least stood for something for his consitituents. Lang opens his pocket for gambling interests and unions, and does only their bidding. What has he done in years for his district? - retired and fed up - Monday, May 13, 13 @ 10:09 am: What does medical marijuana have to do with gambling interests and unions? - Anonymous 1 - Monday, May 13, 13 @ 10:10 am: That Constitution is a real funny thing. Talk about pension “reform” and we can just alter the damn thing…….easy. But “reform” our tax structure? NO! The Constitution says absolutely not! So depending on what issue you feel strongly about, the Constitution is a real flexible thing, apparently. As far as the state living up to the constitutional wording about funding public Education………..the only reason they don’t and haven’t is because our state refuses to raise taxes (and stop spending like drunken sailors) to keep up with needs. Other states have progressive tax rates. THey tax services. They don’t have our problems. But then again, they don’t have our politics either. - retired and fed up - Monday, May 13, 13 @ 10:12 am: At least his oath to uphold the Constitution means something to him. I used to live in his district. Out of all my State senators and reps for the 45 years I lived in Chicago he was the only one who actually talked to me and listened. - biased observer - Monday, May 13, 13 @ 10:18 am: just saying hello to all the friends of “biased observer” and reminding most of you that your views and opinions are not really reflective of most of the people in this state. I think you know this already and that is why your arguments against pension reform are always based solely upon the constitutionality issue and not what actually needs to be done to get the state out of this hole, in a way which is in the best interests of the state as a whole, rather than merely what is best for those who are expecting a certain level of pension. I know it makes you all feel better to read each other’s comments over and over again, but as I’ve said before, I think it is a miscalculation to be betting on constitutional arguments in the midst of this unprececented fiscal calamity. pensions must be attenuated, taxes must be raised and many other smaller things which make much less impact than the two I just mentioned need to be done. - Algonquin J. Calhoun - Monday, May 13, 13 @ 10:32 am: B.O. - you also like to hear yourself say the same thing over, and over, and over, again: significant diminishment of pensions; and raising taxes. What exactly will you do *when* any unconstitutional pension diminishment law gets thrown out by the court? Change the Constitution? Fine - doesn’t impact past obligations. Then what? Why is a debt made to a public employee less substantial and worthy of protection, in your view, to any other debt the state incurs? Why aren’t the bondholders, vendors, etc. asked to take a haircut - “for the good of all”? - kimocat - Monday, May 13, 13 @ 10:34 am: I would stil like to hear the Tribune Editorial Board explain to us in plain English why they feel the only possible solution to the State’s financial woes is cheating retired teachers and other public employees out of money that they are rightfully owed. Constitutionality aside, I would like to hear that explanation. - Soccertease - Monday, May 13, 13 @ 10:37 am: The Civic Federation report should be required reading for all legislators. With its 316 “footnotes”, it is more like a book of facts or civics lesson than anything. And, Mr Msall, Madigan’s bill provides $0 more funding when ruled unconstitutional. - biased observer - Monday, May 13, 13 @ 10:41 am: Al Calhoun, bondholders are unscathed at this point, and I agree, this is tough to stomach. you must know my now that vendors ARE taking a haircut, schools ARE taking a haircut, people ARE losing their jobs, disabled people ARE losing access to services due to late or decreased reimbursement from state of Illinois. - CIC - Monday, May 13, 13 @ 10:41 am: The highest paid state employee is responsible for ensuring the least qualifed students at the UIUC campus maintain a GPA high to keep them on the field. - JustMe_JMO - Monday, May 13, 13 @ 10:44 am: I am still waiting for someone to come up with a plan “B” for solving the pension debt. Plan “A” has been to propose legislation that reduces pension benefits and then hope the courts agree to the reductions. I would love to see a poll of all GA members and what sections of the legislation they feel the courts will allow. We will have to wait and see just how much this path will save or cost the State. - Decaf Coffee Party - Monday, May 13, 13 @ 10:46 am: …an”unprecedented fiscal calamity” caused by the very people who will be asking the courts for “police powers” to ignore the constitution because they skipped pension payments and spent the money on other things. That should be an interesting conversation. I don’t doubt for a minute that the Speaker does indeed have four Supreme Court votes in his pocket because, well, this is Illinois and they are politicians too. Guess the bigger issue is what good is having a constitution when politicians can just ignore it when they screw things up? - Bill - Monday, May 13, 13 @ 10:49 am: B.O., You always talk about the “most of the people in this state” that think like you do. In fact, several polls show that “most of the people” oppose cutting the retirement benefits of retired state employees and teachers. You can speak for yourself but you don’t speak for “most of the people”. Keep counting on the Supreme Court to ignore the constitution and their own precedents because of some imaginary fiscal “emergency”. We’ll all eventually see how that works for you and your small circle of reactionary friends. - Frenchie Mendoza - Monday, May 13, 13 @ 10:50 am: @BiasedObserver Come on. You say the same thing in every post. How can you possibly know that the views here don’t reflect those in the state? Or are these the “friends” you give a shout out to in each of your posts? Moreover, if we’re not (according to you) to rely on the constitution — then what, exactly, are we supposed to rely on? Your biased observations (which you repeat each time you post)? Your trick knee that sorta seizes up when you know there’s a thunderstorm coming across the cornfield? - steve schnorf - Monday, May 13, 13 @ 10:54 am: With all due recognition of the tremendous temptation that will exist to do what the Federation suggests, I believe it would be a terrible mistake for two reasons. One, the money doesn’t exist until there is s definitive ruling on constitutionality; to spend it on base spending before that would seem very dangerous, and could quickly lead to a terrible compounding of the problem we already face, base spending unsupported by revenue. And, two-guys, that’s how we got here; under paying to the pensions to divert money to program spending. - Algonquin J. Calhoun - Monday, May 13, 13 @ 10:55 am: B.O. - Is my future pension forcing all these horrible problems, that just now, in the past few years, have been miraculously been identified? How about the “drunken sailor” spending by the legislatures over the years? How about the inability of these legislatures to properly fund their debts? Why is this a crisis “now”, when not one pension payment has been missed, and the poor pension funding level (around 40% generally) is virtually the same as when the current constitution was adopted in 1970? And, you didn’t answer my main question - what exactly will you *do* when and if a unconstitutional diminishment law is adopted and is thrown out by the courts, despite what “the people want”? - steve schnorf - Monday, May 13, 13 @ 11:05 am: JMO, there are several Plan Bs out there, including ones from rep Mike Fortner, CTBA, and even one from me. - archimedes - Monday, May 13, 13 @ 11:11 am: When the choice between the two pension bills is framed and judged by “which saves more” - it is an easy choice. Biased Observer is stating the obvious, really. If we can reduce the earned pension, we don’t have to pay - and we can reduce the income tax. If we can get away with it - I’m sure most of the State (who hasn’t earned a pension) would prefer that. Of course, there is an element that might feel guilty - the same element that knows you shouldn’t keep moeny you found on the street if you can locate it’s owner. In a way - Senate Bill 1 (amended) is just making official (and, if it passes court muster, legal) what the State has been doing the past 50 years. Instead of underpaying the revenue needed to fund the pensions that have been earned (which is the history) - let’s just reduce the pensions to fit the revenue we want to pay. - cassandra - Monday, May 13, 13 @ 11:12 am: I think Bill makes an important point. It is not at all clear that a majority of Illinois voters ardently support pension reform. They may think that public employee unions are greedy, that some pensions are excessive, and that Illinois government is corrupt and badly run (they’re not wrong there). But when you sit somebody down and ask them if a mid-sized pension drawn by a teacher, a police officer or a prison guard should be cut (and both these plans make substantive cuts over time) many, if not most, say no, from what I’ve read.. Interesting that California, a far more modern state than Illinois, is moving towards more state involvement in ensuring retirement security for more citizens. California Secure Choice Retirement, recently signed by Gov Brown, will be a public-private partnershi0p to ensure that workers without access to defined contribution plans have an opportunity to save through payroll deductions. It’s not perfect, but it’s a start. Msall and Co would have a fit, no doubt. - walkinfool - Monday, May 13, 13 @ 11:15 am: Steve’s right to criticise Msall’s statement. There are much better reasons to support the Nekritz/Cross/Madigan approach then an ability to spend more next year. Nekritz, for one, as the creator of a mechanism to set a hard spending cap, wouldn’t support that idea. Is Lang starting the run for Speaker now? - Ghost - Monday, May 13, 13 @ 11:20 am: I have to say, I woulnt want to argue against Lou Lang in court. If they ever need a fund raiser they could do a mock trial with Madigan on one side and Lang on the other - MOON - Monday, May 13, 13 @ 11:21 am: Those of you that argue that Madigans plan is not constitutional may or may not be correct. Leave that question to the Supreme Court which will have the final say on this matter. The question that needs to be addressed is whether or not the existing benefit package is reasonable or unreasonable. My knowledge of the private sector benefits has led me to conclude that the current benefit programs for State employees and teachers is excessive and needs to be revised. Would others on this blog please comment with facts drawing some comparison between the public and private sector pension plans/benefits if you disagree with my conclusion. - Bill White - Monday, May 13, 13 @ 11:33 am: MOON, Perhaps the problem is that private plans have become too meager. Instead of reducing public employee pensions, perhaps remove the FICA cap on wages and increase the monthly social security payment. Hopefully Madigan’s successor (when he is ready to step down) will come from the Left rather than the Right. - RNUG - Monday, May 13, 13 @ 11:40 am: Moon, First, there have been multiple studies that show the pension funds would be between 80% and 104% funded today had the payments been made. Second, when you make comparisions, you have to (a) compare to equivalent size businesses and (b) also look back to when the terms were granted. By both those considerations, the pensions were either in line or even low. - biased observer - Monday, May 13, 13 @ 11:57 am: in a couple years over 30% of annual revenue for the state of Illinois will be going towards pension obligations? how does that number sound to everyone here? meanwhile, school funding is tanking, vendors are being paid 18 months late, services for disabled are being cut. nearly all of the money from recent tax increase going to pension obligations. so everyone else in the entire state EXCEPT those who receive pensions are supposed to experience pain to address this issue? rapidly, the state of Illinois is becoming nothing more than a tax supported pension system. - reformer - Monday, May 13, 13 @ 11:59 am: When it comes to freedom of the press, the Tribbies are strict constructionists. When it comes to rights they don’t value nearly so much as their own, by contrast, they favor loose construction, as with the Second Amendment and the contract and pension clauses. - Ghost - Monday, May 13, 13 @ 12:06 pm: Moon please define private sector. Do you mean a guy who mows lawns or large companies with 40k more employees or who process billions of dollars in sales etc? If so I would be curiosu for you to tell us what beenfit plans you find are less then the States in these buisness. Please keep all compensation forms including bonuses in your analysis. Micosoft, Google, Facebook, Goldman Sachs, CitiBANK, Oracle, Intell, Apple… and the list goes on and on, all provide much higher financial packages to their employees. Middlemangement bonuses for those companies start annualy around 15,000, and go up to the millions of dollars. Then they also provide free meals, laundry services, vehicles, transportation, free lodging, paid luxury vacations. For retirment they provide stock options, 401(k)’s and cash bonuses that can be invested in IRA’s, Bonds and mutual funds. Oh I forgot, benefits for management at Catapillar, SEARS, CBE and Ford far exceed the States packages as well. Actually the States retirment plan gets it off cheap as a orm of executive compenation compared to the the private sector. keep in mind that bankrupt Chicago Tribune paid millions in benefits (bonuses) to its managers, as did AEIG, Goldman etc. So in periods of fiscal problems large companies see a need to retain trained and knowledgeable staff will often inrease benefits, or at least fight to keep them at previous levels, so as not to lose people. That is how the private sector operates, large benfits to mak sure you keep instutional knowledge and reduce turnoer of key staff. - Soccertease - Monday, May 13, 13 @ 12:06 pm: Schnorf, do you know why everyone is on the actuarially required contribution bandwagon now? We were never 100% funded. Although it would be nice to fund the ARC, given IL dire financial condition, ramping up to a more respectable funded % seems prudent to me. - MOON - Monday, May 13, 13 @ 12:07 pm: BILL RNUG Where is your comparison between the private and public sector plans? What does the FICA Cap have to do with the requested analysis? By the way, those on Social Security have had to increase their payments to the plan over the years. - biased observer - Monday, May 13, 13 @ 12:08 pm: as for vendors being paid over a year and a half late….. would it the family operating budget of those who received pensions if you suddenly did not receive your pension check for 18 months? or if you received your pension check every 2 to three months? or what about your paycheck…..would it be tough to run your household if you received your paycheck from the company you work for 18 months late? or if on some paydays you got paid, and sometimes a few paydays would go by without receiving your paycheck. that is the predicament of the vendors of Illinois. many of these vendors employ hundreds of people. jobs are being lost because of this. small businesses are going under because of this. - MOON - Monday, May 13, 13 @ 12:12 pm: GHOST I suggest you start reading the newspapers. What you will learn is the fact that many corporations are stoping their pension plans. Most are going to a 401 k which requires the participants to contribute substantially more than the State employees. - Albert... - Monday, May 13, 13 @ 12:16 pm: Where were the Chicago Tribune’s editorials when, for four decades, the legislature claimed to have balanced the budget without funding the state’s pension obligations? - biased observer - Monday, May 13, 13 @ 12:16 pm: ghost, you’ve got to be kidding me…..your recent comment is so out of touch to what is happening out there in private industry i’m not even going to spend 2 hours typing out all the things that are wrong with it. let me just say that upper level management in private industry represents less than 1% of the private side work force. most people in private industry have an average of about $100,000 in their 401k. if you get an aggressive 8% per year interest on that you get $8,000 per year. plus your investment is at risk as opposed to guaranteed pension with COLA. average social security check at retirement is a bit over $1200 per month. - Decaf Coffee Party - Monday, May 13, 13 @ 12:19 pm: Not sure why anyone would waste their time responding to someone who so clearly lives up to their screen name, but… Perhaps corporate loopholes should be closed. And the pension ramp changed. And the income tax increase actually used to pay down the unfunded liability caused by everyone sharing in past programs and pork projects funded with money that was supposed to go into the pension systems. Why should the entire $100 billion pension problem (that was largely caused by legislators) be fixed on the backs of ONLY public employees and retirees? Cullerton’s plan takes $46 billion — or roughly half of the problem — from those people. Why shouldn’t others cover the other half? Percentage-wise public employees and retirees would be paying far more than their share of this problem even under the Cullerton plan. And public employees also pay taxes, so theirs is a double hit. I agree in the “shared pain” concept, but Madigan’s plan does no sharing of the pain. It takes money that legally belongs to retirees so legislators again can spend it on other programs. Perhaps we have a structural problem with revenues as well as the obvious inability of legislators to control their spending. Why should retirees bankroll the state’s obligations and responsibilities? - Robert the Bruce - Monday, May 13, 13 @ 12:26 pm: Even if all unions signed off completely on a new pension plan with reduced benefits (I know, a big if), would that prevent an individual retiree or group of retirees from suing the state for reducing his/her pension benefits? I hope so, but I’m not a lawyer. Hoping someone who is might be able to weigh in on this. - biased observer - Monday, May 13, 13 @ 12:28 pm: decaf, Madigan’s plan isn’t enough to solve problem. even with its passage, taxes will have to be raised and other things that have smaller impact (like your ramp) will need to be employed. - Anon. - Monday, May 13, 13 @ 12:28 pm: ==in a couple years over 30% of annual revenue for the state of Illinois will be going towards pension obligations? how does that number sound to everyone here?== It sounds very similar to “in a couple of years, 30% of annual revenue will be going towards paying off our credit cards.” The best solution is not to run up the credit card debt in the first place. Second best is to pay it down as fast as you can to minimize the hit that compounding interest causes. That is precisely the situation we are in now — the pension payments are high because underfunding caused compound interest to cause more underfunding, and the pain is the result of having to pay the debt down to avoid continued strangulation of our budget. But any solution based on “let’s not pay our debts” should be based on reneging on all debts, not just the ones owed to state employees. - illinifan - Monday, May 13, 13 @ 12:29 pm: What private industry offers is based on the company you choose to work for. I know people in income levels below $50,000 a year who have great benefit packages from the private employer making full contributions to the 401K to private pensions to help with tuition for college age kids. I also know people with 6 digit incomes in private industry who have lousy packages, just the 401K. How you view the world is based on what seat you take in the room. Some have better some worse, but when being hired this should all be part of the consideration, just like when I was hired by the state I knew I would get a salary lower than what I would earn in private industry but I opted for the benefits. I had friends who thought I was crazy, and they chose the higher salary for less benefits. The key is less about what the other business offers but rather what each company promised. Some companies did not live up to their promises, but the Pension Benefit Board was set up and took those over those obligations, government employees do not have that option since government pensions cannot be taken over by this. - archimedes - Monday, May 13, 13 @ 12:29 pm: Oh man - am I feeding? Pensions reach 30% of revenue only because revenue goes down (Income Tax sunset 2015) - not because future pension payments increase. In fact, if the revenue for the State increases at 2.2% per year (Civic Federation assumption) the % of GRF consumed by pension payments stays where it is now. Other budget expenses are being reduced - but the reductions have been for services not yet rendered. With the pension cut, we are proposing to not pay the bill after the work has been performed. All of the money from the tax increase has gone into pension payments - as long as you assume we had zero pension payments prior to the increase. The increase in pension payments is NOT equal to the increase in income taxes. Retirees and pension members have suffered to the same extent as everyone else in the State - same income tax, same reduction in services. They have not been spared the pain that others (that are not members of the pension system) have suffered. The question is, should they take on more pain (than those that are not members of the pension systems) in order to fix this mess. Based on all of the porposals - seems the answer is Yes. Many have been reasonable and compromising in nature - Fortner, Schnorf, CTBA, even SB2404. Others are more draconian and punitive. - wishbone - Monday, May 13, 13 @ 12:33 pm: $680,525 per year for the head of my alma mater. You would think they could find someone who knows how to hold his pinky finger at a faculty tea for somewhat less than that. - MOON - Monday, May 13, 13 @ 12:39 pm: illini The Pension Benefit Board in most instances only paid a fraction of the amount employees were entitled to before their bankruptcy. Ask the former employees of Enron,Republic Steel,etc. Even with the proposed cuts the amount of State/Teacher pensions will far exceed what the bankrupt company employees received. - Ghost - Monday, May 13, 13 @ 12:42 pm: MOON the private sector, as you would know from reading news(or print) does not consider 401k’s to be the entire benefits package for an employee. They look at everything they provide. So again what 30 billion dollar plus company has lower compensation packages then IL? from all your paper reading surly you can cite to one where top down everyone makes less. Biased, if you read as MOON would suggest we do to unerstand the problem, you would note that 401K’s were never supposed to replace defined benefit plans. They are an added benefit for highly paid executives to sock away more money. I am sure MOON found this in his reading as well. However the private sector started moving from defined benefit plans to only 401K’s. This has helped to create an increase in poverty for those at retirment age, or people who can not retire. If you can not aford to support yourself as a retiree you are not fueling the economy, do not spend money for services, and require government assitance for medical care, living etc. You become a drain on the economy and to the tax base. Where Govt swithed to 401k style plans it was a big fail see e.g. http://neatoday.org/2012/03/23/why-a-401k-is-no-replacement-for-a-pension/ Also defined benefit plans outperfomr 401Ks becuse the plan invesments continu through up an donw cycles. A retiree has o try and time there benefit risks wih their out dat and hope for the best. Fiscally speaking of course. This 401 argument is kicking the can down the road. Creating more govt expense in the future by ignoring the problem of having retiriees who are solvent. We caused the pension problem by kicking the can donw the road. Kicking retiress to social servies will sitll cost the State Billions, just from a different budget. But then again I read enough to know that penny wise solutions like esposuing 401ks as a sole source retirment plan are the pound foolish solutions of tomorrows GA. So your solution is to increase - MOON - Monday, May 13, 13 @ 12:52 pm: GHOST I agree 401 k plans are not the sole solution to a comfortable retirement. Did you ever hear of fiscal responsibility. In other words you must also save money from your wages and invest it wisely. - Paul Lyin - Monday, May 13, 13 @ 12:59 pm: I’m not an attorney but I will take the “plaintiff” side of Pension Reform violating the pension diminishment clause any day. Unless the lawfirm representing labor drops the ball (given the firm it is possible) or the court being politically influenced on this issue (in this State it is possible) Lang is simply siding with the winning/likeliest outcome. I think Lang would make a great Speaker IF Madigan retires before Lang. I’m not convinced Madigan retires anytime soon even when Lisa wins governor’s race. - Norseman - Monday, May 13, 13 @ 1:05 pm: Moon, if you want to know facts about private pensions read the book, “Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers” by Ellen E. Schultz. I understand that private sector workers got the shaft. My father was one of them. I wish I could be in a position to do something about it other than to vote against politicians who only serve to exacerbate the retirement woes of both private and public sector workers. One of the things that kept me in the public sector was the constitutional guarantee that was not available to my father. So you want to abrogate that constitutional guarantee because others have been shafted. I understand the compelling arguments made by folks that the current pension funding problem is crowding out funding for important programs (I support other options - labeled “plan b” by others in this post), but your “race to the bottom” attitude sickens me. You talk about reasonableness of the pension benefits provided to Illinois public sector workers. The truth is that our benefits are about the middle of the pack for all public plans in the nation. Take a look at public plan benefits in the “Public Plans Database” Produced by the Center for Retirement Research at Boston College, http://crr.bc.edu/data/public-plans-database/ What you and others so easily forget is that the General Assembly reduced pension benefits for new workers a few years ago. This action and the “plan b” options that should be considered will help reduce the crowding problem that is a concern to everyone. - hisgirlfriday - Monday, May 13, 13 @ 1:10 pm: I wonder how much of the tribune editorial boards position on public employee benefits is colored by the way they as employees of the trib were almost certainly screwed over by their employers bankruptcy. Of major industries in this country you would be hard pressed to find one that suffered more than print newspapers in the last 10 years or so and rather than that making editors of those newspapers more sympathetic to the suffering of others I think its just made most editorial writers more bitter and more desirous of seeing others suffering. Misery loves company after all. That’s why you get editorial after editorial calling for public austerity and shared sacrifice rather than them championing solutions to achieve shared prosperity. I just detect a certain degree of nihilism in the news biz which is really bad for our republic. - MOON - Monday, May 13, 13 @ 1:26 pm: NORSEMAN I agree that many in the private sector got the shaft.I do not abrogate the constitution so the public sector gets the shaft. In the event the Madigan Plan is used the public sector employees will have a substantial benefit package. A package that is equal to or better than the private sector. - wordslinger - Monday, May 13, 13 @ 1:31 pm: –I wonder how much of the tribune editorial boards position on public employee benefits is colored by the way they as employees of the trib were almost certainly screwed over by their employers bankruptcy.– Let’s see: Zell took $250 million of his employees’ retirement equity, used it as a tax dodge to borrow $7 billion, and was bankrupt in less than a year. The employees eventually clawed back $32 million out of $250 million. Why would the Tribbies be bitter, again, lol? But the lectures from Zell on fiscal responsibility….. that’s chutzpah. - Concerned Retiree - Monday, May 13, 13 @ 1:37 pm: All of these people who advocate converting to a 401k type plan conveniently forget that then the state would have to contribute to Social Security. The state would then have no choice but to make payments rather than failing to pay as in the past. - illinifan - Monday, May 13, 13 @ 1:48 pm: Moon…this should not be a race to the bottom. Why not try to have employees in private industry push back to get their private pensions. Yes the PBGC did result in reduced benefits. People lost benefits because of their company malfeasance. The CEO did not lose just the workers. Those who watched this happen were thankful we had worked for either ethical private industry or the government. In turn the government put in place some funding requirements for private industry to try and reduce the need for the government to take over private pensions. The workers affected still got their Social Security plus what was left of their pension. Don’t want to diminish this since any loss of income in later years is a blow. Please remember for 80% of government employees there is no fall back. No pension means no income since they are not eligible for Social Security. - steve schnorf - Monday, May 13, 13 @ 1:48 pm: soccer, I don’t know. It may be because the ratings agencies mention it frequently as a deficiency and we are one of the few (if not only) states to do it that way. - Keyser Soze - Monday, May 13, 13 @ 1:55 pm: There now appears some legislative discussion as to how the savings derrived from either of the pension bills, take your choice, will free up funds to be spent on various feel good programs. Nonsense. If there are “savings”, the money should be applied to the Illinois debt, and directed especially to those vendors who have been driven to near bankruptcy by our deadbeat state. - Cincinnatus - Monday, May 13, 13 @ 1:57 pm: RNUG, Cutting spending is also Constitutional and part of the mix, no? - Arthur Andersen - Monday, May 13, 13 @ 2:03 pm: 1) Who really cares what Larry Msall thinks? His lack of insight is demonstrated by the statement that “the Madigan bill frees up a billion..to spend..” Larry, the State is broke. We don’t need to talk about more spending. 2) Most of the people who critique “fat public pensions” are also the ones that moan about “lazy State workers.” They tend to have a relative who didn’t get hired or promoted. Ignore them. 3) Let’s see, who appointed the Board of Trustees over at the U of I that was going to clean house and stop all the excesses of the past? Righto! Instead, they hired and canned this dude Hogan before he could get his pencils unpacked, and added his name to an 8-figure severance payroll. No wonder tuition is high. - Jim - Monday, May 13, 13 @ 2:05 pm: Interesting to see that Lang is ripping the Tribune for supporting Madigan’s plan. Isn’t Lang one of Madigan’s top lieutenants? Has he taken his complaints about the Madigan plan’s assault on the Illinois Constitution to Madigan? If he’s sincere, he should do that. - Paul Lyin - Monday, May 13, 13 @ 2:23 pm: Jim - I’m sure in Lang has discussed his concerns in multiple leaders review. Madigan is not pleased that members of his caucus voted no on this, we will see what the retributions are. My guess is that won’t be receive as much pork as those who voted yes when it comes time to dole out pork (future budget or future capitol bill perhaps?). It’s not like Lang singled out Madigan, he just defended himself (and others) against the slanted media for voting against an unjust/unequitable/Un-Constitutional bill. You can’t blame Lang for being a pro-labor Democrat, which has become increasing rate in this state and especially within the House chamber. - pizzajohnny - Monday, May 13, 13 @ 2:25 pm: Lou, Lou, Lou - a hissy fit in the pages of the Chicago Tribune Commentary Section. How dare the editorial board take a strong stance against my position! What is going on here? I have always supported the Illinois constitution as I have interpreted it. Well, Lou - so is the Tribune editorial board. As you said in the piece - lawyers often disagree. So do people without a J.D. Get over it Lou. - Rich Miller - Monday, May 13, 13 @ 2:32 pm: ===lawyers often disagree. So do people without a J.D.=== Well, yeah, but he was saying the Tribune shouldn’t automatically call people who disagree with them the “do-nothing caucus.” That’s the point. Maybe try a reading comprehension class next time. - biased observer - Monday, May 13, 13 @ 2:39 pm: I actually am in favor of a rational program of “guaranteed” retirement benefits. I just don’t see where the money is going to come from given our current financial situation in the state of Illinois. I think the pension system can only be maintained by treating that portion of our state’s population with a special protection. When we look at our fiscal mess and solutions to solve it, to consider every option EXCEPT pension reform is not fair to the rest of the state. Do we really think we should cut funding to our school children so we can maintain the pensions of retired teachers? These are terrible choices that are needing to be made, but they need to made as equitably as possible across the entire state population. To exclude pension benefits from reform, which is the single biggest liability (regardless of whose fault it was, not the pensioners) is ludicrous. Cut pension benefits in the smallest way possible to get us out of this mess. Raise taxes in the same manner, smallest amount necessary to get us out. Do the math, get to work. - Anon. - Monday, May 13, 13 @ 2:47 pm: Moon @ ==Did you ever hear of fiscal responsibility. In other words you must also save money from your wages and invest it wisely.== Yup. And that is exactly what pension accounting is supposed to make the State do, and the State failed to do it. Now it is trying to weasel out of the consequences of its own fiscal negligence by defaulting on its obligations. To soccertease and Mr. Schnorf: Pension accounting tries to match the actual costs of a pension to the services performed to earn the pension. Simplistically, you take the pension earned by each employee this year, make your best guess about when the employee will start drawing the pension and how long he or she will draw it down, and come up with the total pension you’ll have to pay for this year’s work. Then you discount that amount back, which is to say, “How much would we have to put in a bank account earning the 6% (or whatever the assumed rate of return is) in order to make all of those pension payments?” Of course, you do this on an aggregate basis, not on an individual basis. If you don’t contribute that total amount earned this year into the fund, you have to make up the 6% earnings on the underfunded amount until you do catch up. This works like compounding of interest on a debt, which can skyrocket if you let it (as we have done). If your investments do better or worse than expected, and if your actuarial projections of when people will retire and how long they’ll live are off, you make adjustments up or down. This accounting reflects the fact that the unfunded pension balance is all debt the state to its employees for work they’ve already done. There is no way to simply reduce it without either paying it or diminishing the employees’ rights. BTW, the pension-for-health-insurance swap is legitimate if the State really does not owe employees the health insurance previously promised to them, but even that doesn’t really diminish the unfunded balance. All it does is reduce the amount of pension owed in exchange for taking on a liability to pay health insurance, which should also be accrued and funded to reflect reality. Otherwise, we’re just continuing the same underfunding problem. Of course the Lang bill just promises “access” to health insurance, which could mean the state pays zero premium, which would save money but is hardly honest dealing. - MOON - Monday, May 13, 13 @ 3:01 pm: ANON 2:47PM Its time to face the facts. The State is broke. Many people are out of a job. Many people currently employed are making less and their benefits have been cut. For many years State employees/teachers have had it good. Under the present economic situation it is time to re-calculate. Be thankful for what you will have if Madigans proposal becomes law.I am sure there are millions who would love to be in your place. - steve schnorf - Monday, May 13, 13 @ 3:13 pm: Anon 2:47; I think most on here know the meaning. The question was why is it now such a particular obsession, and I tried to answer that. - Anyone Remember? - Monday, May 13, 13 @ 3:40 pm: hisgirlfriday Your analysis also applies to Gatehouse, which owns the Springfield State Journal Register, the Peoria Journal Star, and the Rockford Register Star. That might explain why Doug Finke labels items obtained in collective bargaining as “perks” … . - retired and fed up - Monday, May 13, 13 @ 3:44 pm: Moon. It has been confirmed that government employees make less than their equivalents in the private sector and State employees have always met their pension contributions. You and everyone else in this State benefitted when pension payments were shorted to pay for other things without raising taxes. If you, the taxpayer, would have paid me a private sector equivalent wage I could have afforded to pay for my retirement without my pension, but you didn’t. I accepted lower wages to become a public servant because I was a child of the sixties and inspired by JFK. Lots of money was not as important to me as doing something worthwhile and knowing with the promised benefits I wouldn’t be destitute. I was an attorney with thirty years in with the State and when I retired last year I still didn’t make what a beginning associate in a law firm did in spite of being in the Union for the last eight years. There are currently many competent attorneys who have 20 years in with the State that still don’t make six figures. Now you want me to take a big hit on my pension and end up in poverty. I think I have a right to be angry. - kimocat - Monday, May 13, 13 @ 3:52 pm: Moon - It is “fair” to change benefits earned from this point on. Since the legislation last year, no state employee will ever earn the right to premium-free health insurance again unless they already have 20 years in before the law took effect. Current employees have the option to work longer, save more or find different retirement options. Current retirees do not have those options. To cheat these people out of the benefits they have already earned is morally bankrupt. And if Madigan and friends get away with it, why would they not do it again and again. Also remember that the same folks pushing hard to cheat Illinois public employees, are the same ones that are going to be pushing to cut your Social Security and Medicare — because, “gee, it is just not affordable.”. - Demoralized - Monday, May 13, 13 @ 4:18 pm: @Anon. 2:47: I’m pretty sure Steve Schnorf knows the idea behind “pension accounting.” - MOON - Monday, May 13, 13 @ 4:39 pm: RETIRED There are instances where private sector employees are paid more than the public sector employees. However, overall you have not convinced me that that it is an established fact that the private sector is paid more than the public sector. You state you are an attorney. Did you graduate from Harvard, Yale, U. of Chicago or Northwestern Law School? Were you in the top 5% of your graduating class? Maybe those questions if answered will shed a little light on your current economic state. - D - Monday, May 13, 13 @ 4:50 pm: It is always interesting to Msall’s posts about reforming Illinois’ pension system. I am surprised no one has ever asked whether Mr. Msall still has his contributions to SURS still in the system. So Mr. Msall have you pulled your money out? - retired and fed up - Monday, May 13, 13 @ 5:21 pm: Moon, Yes I graduated from one of the schools mentioned and in the top part of the class. I chose public service and turned down offers from 3 top firms to do that. I wanted to make a difference with my life and I did based on a promise of a pension protected by the Constitutions of the State and the US and making my payments for thirty years. If you had been on this site earlier there was a link to a study on salaries of public and private employees in Illinois done by one of the universities and there have been earlier ones. You find me one that disagrees. - Soccertease - Monday, May 13, 13 @ 5:40 pm: Anon, I understand the accounting vs funding of pension cost. I also understand the actuarially required contribution formula and the time value of money. I was simply asking why we need to go from pension holidays and funding less than 40% to 100% funding. If the budgetary (statutory) level of funding was reasonable compared to the ARC (e.g., 80%) the State’s pension liability would be manageable today. - Norseman - Monday, May 13, 13 @ 5:52 pm: Moon, How about doing a little research. Read the Center for State and Local Government Excellence’s Issue Brief, “Comparing Compensation: State-Local Versus Private Sector Workers,” http://slge.org/wp-content/uploads/2011/12/BC-brief_Comparing-Compensation_12-082.pdf The main point was: “(d)espite the variation by wage level, the message from the wage analysis is clear: state-local workers as a group are paid less than their private sector counterparts.” It goes on to point out that public sector benefits and employment security are equalizing factors. By the way, one of the authors, Alicia H. Munnell, wrote an book on public sector pensions that points to underfunding as the problem with our pension system. - retired and fed up - Monday, May 13, 13 @ 6:10 pm: Norseman. Thanks for the link. - Pacman - Monday, May 13, 13 @ 6:46 pm: @Soccertease at 5:40 pm We have to be at 100% because the bond houses and GASB say so. GASB has no legal authority to dictate anything yet everyone follows them as if they do. I don’t know why the state doesn’t treat this like a mortgage. Banks don’t make homeowners have 100% or any percentage of their home mortgage on hand. The bank isn’t going to demand that you pay your mortgage in full tomorrow, nor is everyone going to retire from the state of Illinois tomorow. As long as you make your monthly payments all is good - Just The Way It Is One - Monday, May 13, 13 @ 7:39 pm: Lou, Lou–take a chill pill. Do you really let what the Trbune says get under your skin THAT much? So, fine, to strongly disagree with them on many issues, or even overall, but it goes a bit too far, and weakens your argument when you try to label the ENTIRE Newspaper as altogether outright no longer engaging in “responsible…journalism”–even via the strident views of the Editorial Board at times–you’ve gone too far…! - Anon. - Monday, May 13, 13 @ 9:26 pm: == I was simply asking why we need to go from pension holidays and funding less than 40% to 100% funding.== You don’t have to be at 100%, any more than you have to be totally free of credit card debt. It’s just expensive, that’s all. If we work the unfunded liability from the current $100 billion to $20 billion, it’s still costing us something like $1.2 billion a year in lost earnings on investment. Is it worth the pain of kicking in an extra $1 billion per year on top of the lost investment return plus current normal cost in order to pay the unfunded amount down to zero? You tell me. Why bleed away $1.2 billion forever? - fake county chairman - Monday, May 13, 13 @ 9:42 pm: didnt mjm take a political contribution from the civic federation - foster brooks - Tuesday, May 14, 13 @ 6:46 am: Biased observer what was the outcome of the last constitutional amendment involving pensions???? - unbiased observer - Tuesday, May 14, 13 @ 8:20 am: foster, that vote was relatively under the radar….for average illinois citizens. it was thwarted by votes of a highly organized minority (unions, retirees,etc). with increased awareness of our fiscal calamity on the part of the general public rapidly evolving, i would not be very confident about future votes turning out similarly. the political tide is turning. Sorry, comments for this post are now closed.