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University presidents, chancellors “profoundly” disappointed in pension bill

Monday, Dec 2, 2013

* Via an e-mail from Illinois State University President Timothy Flanagan…

Letter to Governor and Legislative Leaders from Illinois Public University Presidents/Chancellors

As presidents and chancellors of the state’s public universities, we write to express our profound disappointment in and our opposition to the proposed pension legislation scheduled to be discussed in the General Assembly Tuesday morning.

For the past three years we have strongly advocated for public pension reform. We have been active and thoughtful participants in pension reform discussions and proactively endorsed a plan to reform the State University Retirement System in fiscally sound and responsible ways. We continue to believe that sensible reform is essential.

However, certain features of the plan scheduled to be discussed on December 3rd in the General Assembly, particularly the approach to COLA and the cap on pensionable salaries, will have a severe impact on the retirement security of faculty and staff in the state’s public universities. It will adversely affect our collective ability to recruit and retain the people we need to educate the next generation of workers and entrepreneurs, provide health care for the state’s neediest citizens, and build new startup companies and create jobs through university research. The bill will be detrimental to higher education in Illinois and ultimately to the overall economy of the State of Illinois.

…Adding… U of I’s letter…

December 2, 2013 — U of I opposes pension legislation

Dear Colleagues,

Members of the Illinois General Assembly as soon as tomorrow are expected to consider, and approve, a major overhaul of the state’s public sector pension systems—changes that as proposed would adversely impact public university employees, place higher education in Illinois at a competitive disadvantage, and ultimately weaken the state’s economy.

For these reasons, the University of Illinois is officially opposing the legislation and we are profoundly disappointed that in nearly three years of engaging the legislative process on this crucial issue, the state’s nine public universities’ counterproposals will not be included.

Details of the final legislative proposal (http://capitolfax.com/DRAFTSB1PensionProposal.PDF) have only just emerged; if passed, the governor has said he will sign it into law, and it is virtually certain to face a constitutional challenge in the courts. The proposed effective date is July 1, 2014. A brief letter from the state’s public universities’ presidents and chancellors expressing their collective opposition went to the legislative leaders and governor today.

In a statement regarding the public pension funding crisis a year ago, the University of Illinois called for a pension system that would be reasonable, responsible, sustainable, and competitive with those offered by our peer institutions.

In our view, the legislation under consideration fails to meet those basic principles. The likely changes arguably lessen the retirement commitments made to employees and retirees, and their net effect also will harm the public higher education sector in Illinois. We will make our opposition heard and monitor the pending legislation, and will keep you informed of developments.

Sincerely,

Robert A. Easter, President, University of Illinois
Phyllis Wise, Chancellor, University of Illinois at Urbana-Champaign
Paula Allen-Meares, Chancellor, University of Illinois at Chicago
Susan Koch, Chancellor, University of Illinois at Springfield

- Posted by Rich Miller        


44 Comments
  1. - Norseman - Monday, Dec 2, 13 @ 6:53 pm:

    === It will adversely affect our collective ability to recruit and retain the people we need to educate the next generation of workers and entrepreneurs, provide health care for the state’s neediest citizens, and build new startup companies and create jobs through university research. The bill will be detrimental to higher education in Illinois and ultimately to the overall economy of the State of Illinois. ===

    I agree, but the powers that be don’t care. It’s only about immediate problems. Long-term ramifications are lost on them.


  2. - kimocat - Monday, Dec 2, 13 @ 7:01 pm:

    norseman - you are so right. And it certainly doesn’t end with just the universities. How many engineers, who graduated from top schools with Masters degrees like my husband, would even consider going to work for the State of Illinois after this? They would be fools to do so.


  3. - Earl Shumaker - Monday, Dec 2, 13 @ 7:07 pm:

    Norseman, as a retired university faculty member I agree. Apparently, the Democratic and Republican leaders have no concern about the future of quality higher education in this state

    While at my university, I was offered positions at three other universities. Besides good, competitive salaries, pensions and health insurance were Part of these universities recruitment package


  4. - cod - Monday, Dec 2, 13 @ 7:08 pm:

    The Universities have ways of rewarding sought-after talent with special perks, such as housing and car allowances, bonuses, extra money for activities and projects etc. No problem. They have plenty of relevant experience with sports recruitment.

    The U of I, who originated the COLA-CPI adjustment plan, says they have 2,000 faculty that earn over the proposed pension cap, but many are academics who would stick with it no matter what happens to their pensions. The backtracking on the plan they earlier endorsed is quite puzzling, and merits some analysis. Whats up here?


  5. - Anonymous - Monday, Dec 2, 13 @ 7:09 pm:

    My spouse was a professor at the University for 20 years, and accepted substantially lower pay than average in the field based, in part, on the retirement benefits. Yes, the pension will be higher than average — but that was part of the deal. (No Social Security was also part of the deal.)

    The University is correct that this will have long-term effects on the University’s competitiveness.


  6. - Earl Shumaker - Monday, Dec 2, 13 @ 7:11 pm:

    PS To say the least, I deeply regret that I did not accept any of the other universities’ offers
    Little did I know that the State of Illinois did not take seriously contract law


  7. - Anonymous - Monday, Dec 2, 13 @ 7:16 pm:

    This is so confusing and frustrating to me. How can such a plan pass with so little input and support from those directly affected by the plan.


  8. - aunt_petunia - Monday, Dec 2, 13 @ 7:30 pm:

    Too little, too late. The university presidents should be ashamed of their previous support for an unconstitutional reduction in their employees’ hard-earned pension benefits.


  9. - Kathy - Monday, Dec 2, 13 @ 7:31 pm:

    University Professionals, call your legislators, go tomorrow. Make it real for them, they don’t care about K-12, but maybe they care about you.


  10. - Archimedes - Monday, Dec 2, 13 @ 7:35 pm:

    Cod - this is not the plan the universities proposed. The COLA is substantially different. It is a big reduction from the 1/2 of CPI they proposed, especially since most of their employees are typically earning higher pay. Plus, if they bring in faculty from out of state, they are placed at a disadvantage since only years worked in the system count for the new COLA formula.


  11. - UIC Guy - Monday, Dec 2, 13 @ 7:35 pm:

    @ Petunia: you are absolutely right. Easter and the others accepted the principle that the state has the right to reduce pension rights unilaterally, and now he’s unhappy over the extent to which the state has done that. He should have stood on principle: a contract must be honored. It might not have worked, but at least he would not have made current university employees so mad at him.

    @ Kathy: it would be nice to think that legislators care more about university employees than K-12 employees, but I really doubt that it’s true. For one thing, there are more of the latter. For another, they don’t seem to care about any of us.


  12. - 47th Ward - Monday, Dec 2, 13 @ 7:37 pm:

    I think the university presidents previously supported shifting the pension costs. In return for paying the full cost of their employees pensions, the universities would be exempt from the state procurement code. Wait and see if that plan re-emerges down the road.

    The state needs to realize our public universities are one of the best assets we have. They are the goose that lays the golden eggs. They ought to be set free from the political micromanagement that has them on the brink of disaster. Just shut up and give them the money. Stop making enrollment decisions for them, stop telling them who to hire and what to teach and how to operate. Just say thank you from time to time and stay out of the way.


  13. - Budget Watcher - Monday, Dec 2, 13 @ 7:40 pm:

    I too returned to state government several years ago, taking a decent size pay cut to do so, in part because of the contractual promise of a long-term defined pension benefit. It was a value decision pure and simple. Of course it was a decision based upon the State fulfilling its side of the contractual agreement. So now I feel a little like Flounder in Animal House looking in disbelief at his brother’s car when Otter says to him, “You f’d up…you trusted us.”

    Nevertheless, I’m not too worried yet as it seems like the GA is intent on making the judicial system rule definitively on the constitutionality and contract issue. I suppose it’s the way this has to play out. I am, however, interested about what happens should the courts overturn this law…then what?


  14. - Just Me - Monday, Dec 2, 13 @ 7:48 pm:

    Perhaps before crying about this pension proposal, the University system should re-examine the multi-million dollar housing it provides to the UIC Chancellor that goes completely unused.


  15. - PublicServant - Monday, Dec 2, 13 @ 7:51 pm:

    US News & World Report should immediately issue a downgrade to U of I’s number 5 ranking in the Best Engineering Schools in the country with a negative outlook. Those Engineering profs are in high demand and they’ll shortly be leaving in droves.


  16. - Just The Way It Is One - Monday, Dec 2, 13 @ 7:53 pm:

    Whoa…I’m sure the Governor’ll be losin’ MAjor sleep over THIS development as it affects his obsession to pass Pension reform…!


  17. - John Boch - Monday, Dec 2, 13 @ 8:02 pm:

    There’s a lot of whining and moaning about reducing bloated pensions.

    Folks, you can intimidate politicians, but you can’t do that with mathematics.

    Math is going to win, folks. Someday in some of our lifetimes, the interest is going to consume all of the taxes paid.

    Failure to get control of pensions now may leave this state looking like Detroit where pensioners there are getting what - something like sixteen cents on the dollar?

    Yeah, the Illinois Constitution guarantees pensions will be paid. To which I ask: Is it easier to amend the Illinois Constitution or get $100k or more out of every man, woman, child and illegal alien in Illinois?

    John


  18. - Nearly Normal - Monday, Dec 2, 13 @ 8:05 pm:

    But Bill Brady says according to Kurt Erickson–

    “We’re not reducing anyone’s pension. We’re just altering the way in which that pension can grow,” Brady said.

    Stunted and unable to grow is his solution.


  19. - Anonymous - Monday, Dec 2, 13 @ 8:12 pm:

    “….but the powers that be don’t care. It’s only about immediate problems. Long-term ramifications are lost on them.”

    And short term as well. There appears to be no concern for the massive exodus of senior management & mid-level supervision across all state government. The pension cap will send anyone significantly over the cap who can out the door with little or no notice. I fear the coming vacuum of agency leadership.


  20. - iThink - Monday, Dec 2, 13 @ 8:14 pm:

    John - I always have a good laugh when I see a gun-nut so nonchalantly speak of amending a constitution. BTW, there has been no talk of actually doing that as far as I know. These changes will be deemed so form of unconstitutional that I am sure of.

    As for your math comment, even with this devastating pension grab, there still is vast fiscal pressures in the state that nothing short of more revenue will fix. But it must be all the those evil pensions.


  21. - Filmmaker Professor - Monday, Dec 2, 13 @ 8:15 pm:

    Recruiting (and maintaining) top faculty at the U of I, Champaign-Urbana is already incredibly difficult because 1) there are few professional job opportunities for faculty spouses outside of the university, and 2) well, it’s Champaign-Urbana. Like it or not, the fact is that a large majority of faculty prefer to live in big cities. The pension benefit was a helpful incentive.

    As for myself, I have already hit the pensionable salary ceiling in this bill. In 22 months, I will be old enough to retire with a (reduced) lifetime pension. My plan is to do that, and then take another faculty job elsewhere at approx. my same salary which, with my pension benefit, will instantly be 50% higher. Plus I will get into another hopefully better pension system.


  22. - Former Illini - Monday, Dec 2, 13 @ 8:25 pm:

    John Boch - so the constitution is only convenient when it serves your personal agenda i.e. gun ownership. Wouldn’t it just be easier to change the constitution to ban guns as well?


  23. - Archimedes - Monday, Dec 2, 13 @ 8:26 pm:

    John Boch. I don’t think you’ve done the math.


  24. - Silent Majority - Monday, Dec 2, 13 @ 8:44 pm:

    As a person in a high position in the public higher education system, I can understand the thinking behind the letter. However, every other entity that has state employees can make a similar argument. It gets down to ” cut everyone else but us.” The state cannot function without a substantial cut in pension costs. It needs to be done and, the longer the delay, the worse the ultimate solution will be. The bill needs to be passed and passed now,


  25. - Taser - Monday, Dec 2, 13 @ 8:52 pm:

    I hear where everyone is coming on this issue but at least maybe tuition can come down to more reasonable levels now for our debt ridden students? It’s bad when NIU in-state tuition costs just as much as Indiana University’s and the University of Wisconsin’s out-of state tuition. This is a death spiral… Illinois’ sky high tuition is another - and arguably more meaningful - brain drain.


  26. - Stuff happens - Monday, Dec 2, 13 @ 9:01 pm:

    They should’ve started taxing retirement benefits instead. At least then they’d share the pain.

    Instead they’ve taken the money from retirees and spent it on the rest of the State’s citizens. Now they can’t repay it, so they’ll legislate it away.

    It’s easier to demonize pensioners than to make an unpopular move across the board.


  27. - Buster - Monday, Dec 2, 13 @ 9:09 pm:

    I proudly graduated from UIUC in 1960 and 1968.
    I joined Illinois State government and worked hard for 27 years, proud to be a public servant in one of the country’s top natural resource agencies.

    Now our universities are losing their prestige
    The agency I worked for has lost 40% of its staff and is a ghost of its former self.
    The pension that I told the many people I hired was constitutionally guaranteed is about to be gutted

    What is happening to Illinois?
    It’s hard not to be very, very sad about our state.


  28. - catrike - Monday, Dec 2, 13 @ 9:11 pm:

    A bunch of overpaid twits.


  29. - Arthur Andersen - Monday, Dec 2, 13 @ 9:12 pm:

    As discussed elsewhere, the Unis are also likely concerned, but don’t want to make a public fuss over, the big blow to their money purchase benefit formula in SURS that provides larger pensions to most retirees than the formula benefit used by the other retirement systems.


  30. - Jorge - Monday, Dec 2, 13 @ 9:21 pm:

    “Math is going to win, folks. Someday in some of our lifetimes, the interest is going to consume all of the taxes paid.”

    Thanks for the laugh, John. You either crack me up or disgust me with your posts. This time it was the former.


  31. - Michelle Flaherty - Monday, Dec 2, 13 @ 9:23 pm:

    Perhaps the U of I brass can begin the cost savings by canning their lobbyists and simply re-upping their CapFax subscriptions. There’s probably at least a million dollar savings right there they can use for key faculty incentives.


  32. - Anon. - Monday, Dec 2, 13 @ 9:29 pm:

    ==Math is going to win, folks. Someday in some of our lifetimes, the interest is going to consume all of the taxes paid.==

    Only if we keep borrowing. But running up debt and then simply walking away is not a good solution. If they can walk away from the pension debt, they can walk away from any debt, and once that power is established, everyone will demand cash up front, and you’ll see real budget problems.


  33. - equivocator - Monday, Dec 2, 13 @ 9:39 pm:

    As a university professor I benefit from the money purchase formula. Yet, it now only applies to staff hired before 2005 and there are fewer and fewer of us. If they tinker with the MP formula too much, I will retire before the law becomes effective. This reform will severely hurt our hiring and retention of the best faculty and staff. But, I do believe we need to get this to the courts because our GA seems unable to develop a solution that is fair. When the going gets tough, the tough go fishing.


  34. - Anonymous - Monday, Dec 2, 13 @ 9:43 pm:

    I appreciate the efforts of the University Presidents and Chancellors, standing up for your employees is what you are suppose to do. The pension system is not as broken as we are lead to believe and none of this legislation makes it better. The Constitution is not broken either. Let’s all hope it stays that way.


  35. - Quinn is the Grinch - Monday, Dec 2, 13 @ 9:44 pm:

    Governor Quinn is the Grinch that stole Christmas for all State retirees and employees. He is heartless.


  36. - Say again - Monday, Dec 2, 13 @ 10:05 pm:

    @ cod..”The Universities have ways of rewarding sought-after talent with special perks, such as housing and car allowances, bonuses, extra money for activities and projects etc. No problem. They have plenty of relevant experience with sports recruitment.”
    That may be the case for U oI but certainly not most of the regionals. They are hanging on and that doesn’t bode well for the thousands of Illinois students who still chose/rely on state regional schools. These are the universities that are educating the most at need students in Illinois.


  37. - Norseman - Monday, Dec 2, 13 @ 10:40 pm:

    === As a person in a high position in the public higher education system, I can understand the thinking behind the letter. However, every other entity that has state employees can make a similar argument. It gets down to ” cut everyone else but us.” ===

    You forgot teachers; and yes, they can make the same argument and should. The quality of public services will continue to decline. Only the desperate and mediocre will tolerate years of frozen salaries - at least for merit comp employees, possible furloughs, incompetent politically appointed managers, and uncertain benefits.

    === The state cannot function without a substantial cut in pension costs. It needs to be done and, the longer the delay, the worse the ultimate solution will be. ===

    A little hyperbole here. The state can and will function without ADDITIONAL cuts in pension costs. You can fairly argue that high pension costs will affect the provision and quality of state services, but so does other factors caused by our undisciplined and politically driven legislature and chief executive, such as creating new programs while existing programs are starving for adequate funding.


  38. - wordslinger - Monday, Dec 2, 13 @ 10:43 pm:

    Here’s all you need to know about John Boch; his classy comment regarding the dude who got fired from the gun magazine.

    –Good riddance to Mr. Metcalf. He might be better off looking for work alongside Gabby Giffords after his ill-considered missive.

    Well stated, Mr. Vandermyde.=–

    John


  39. - Norseman - Monday, Dec 2, 13 @ 10:46 pm:

    === I hear where everyone is coming on this issue but at least maybe tuition can come down to more reasonable levels now for our debt ridden students? ===

    You can blame high tuition costs on years of underfunding of higher education by the Blago/Quinn administrations as well as legislative mandates like that which requires universities to freeze tuition throughout the academic career of incoming students.

    Passing this piece of garbage will not reduce university tuition costs.


  40. - wordslinger - Monday, Dec 2, 13 @ 10:59 pm:

    Once again, I’m with 47. The best and brightest from all over the world are looking to get a chance at Illinois public and private colleges and universities.

    Those that came before us built an amazing higher education infrastructure that is the envy of the world. It’s up to us to leave it better than we found it.

    It’s fashionable in some reactionary circles that are nostalgic for a world that never existed to wear ignorance and hostility to knowledge as badges of honor.

    Me, I’ll go with the smart kids.


  41. - HGW XX/7 - Monday, Dec 2, 13 @ 11:44 pm:

    – Anon @ 9:43 pm

    You are correct about the pension system not being broken. However a few steps should be done to shore up the current state that cannot be left unchecked. To correct this overstated manufactured crisis the following steps would fix this:

    •Amortize the current pension debt for a 50 year period.

    •Keep the 2 percent income tax increase solely for and until all the current debt attributed to the government’s shorting of the pension funds is paid. Better yet get with the program like 34 other states and institute a progressive income tax.

    •Create a REAL iron clad funding guaranty so there is no piling on the first step. Not the current sham in this latest proposal that will just end up violated over and over.

    •Index the COLA to the full CPI. In other words someone with a 30K pension would retain that 30k purchasing power for life. Someone with a 40K pension should also retain their same purchasing power. Since there is no diminishing of the benefit that could pass constitutional muster besides being reasonable and fair. The consideration for the retiree is this would provide a better safety net if periods of high inflation return. For the state costs would not increase much in very low inflation periods.


  42. - Retired UIUC - Tuesday, Dec 3, 13 @ 3:03 am:

    Robert Easter (along with the other university presidents)should have been ashamed of themselves for supporting the IGPA proposal. They basically were condemning their own lower paid former employees living in retirement as well as lower paid community college retirees to a life of near poverty in their final years. There are thousands of SURS retirees out there receiving monthly benefits of less than $1,600 a month (see http://www.surs.org/pdfs/ann_rep/content/PDFS/STATS.pdf). The IGPA proposal would provide these people with one-half the increase in the consumer price index-u.

    Fortunately I am not myself in that situation but I know people that are and I am appalled that university presidents earning hundreds of thousands of dollars a year would support such a proposal.

    Even the proposal that the pols are pushing as bad as it is at least offers more protection to these people


  43. - Current UIUC - Tuesday, Dec 3, 13 @ 10:29 am:

    I’m a current employee of UIUC. Every new hire knows that they should enroll in the self-managed plan (401K-like) option because the pensions are a wreck. You feel sorry for new hires that confess they enrolled in the traditional pension –– they’re stuck.

    Among the ranks, there is certainly less of an incentive to spend the entirety of one’s career here. And that is a huge, shameful problem.


  44. - G'Kar - Tuesday, Dec 3, 13 @ 3:48 pm:

    One thing that I did not see mentioned in the letter or in the comments is that pension theft taking place in S’field will not affect any new hires (unless they are already in a SURS)because they will be Tier II employees. That plan in and of itself already makes it difficult to recruit faculty.


Sorry, comments for this post are now closed.


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        * Klein re-elected Dem chair for Champaign County
        * LIVE Nike show at Krannert
        * Haine, Beiser describe state's budget quandary
        * County board move could be next step to consolidating jails
        * Study examines deaths of trout that eat alewife
        * Report of suspicious man approaching children spurs security sweep at SAFB
        * Granite City man charged in heroin overdose
        * Macoupin County Board blocks sheriff's hirings
        * Blotter 4/16


        * The 10th District money race
        * Aurora Democrat calls out IHSA
        * Lawyers: Ill. hazing law vague, unconstitutional
        * Ill. House OKs lower-cost hunting bill for seniors
        * Quinn’s running mate takes new consulting job

        * Inside Rep. Peter Roskam's Leadership PAC ...
        * In DC, Rep. Peter Roskam invokes Springfie...
        * Rep. Roskam: IRS' Lois Lerner 'Committed C...
        * Roskam: Helpful tips for preparing your ta...
        * Barrington business, Congressman Peter Ros...
        * When Punishment Is Torture: An Open Letter...
        * Jesse Jackson Jr. placed in solitary confi...
        * Jesse Jackson Jr. Transferred To Alabama P...
        * Jesse Jackson Jr. sent to solitary then tr...
        * Jesse Jackson Jr. Maneuvers Himself Into M...

        * Loading Koch Industries Website Too Many T......
        * Maryland and DC among worst for food aller......
        * Cleveland State University to reestablish ......
        * Convicted political boss Al Sanchez runnin......
        * Candidates make last filings for local, st......

        * Illinois Lt. Gov. Simon opposes pension le......
        * Dillard Odd Man Out on Pension Deal Reaction...
        * Sen. Mark Kirk sides with Rauner on pensio......
        * Governor's race infighting threatens pensi......
        * SCHOONERS - Home of Everyone's Favorite Be......

        * Weyermuller: Who will be the next Chicago Mayor?
        * Life-affirming messages challenge abortion business in Chicago
        * Chicago Activists To Demand A Stop To Deportations On May Day
        * Some Exempted From Minimum Wage, Increased Or Not
        * Dems Play Politics With Bogus 77-cent Differential in Male-Female Pay
        * Religious Freedom and the American Settlement
        * New Jersey Panel Could Call Christie To Testify
        * A Year After Background Check Defeat, Modest Goals
        * Ten minute drawing. Bob Fioretti.
        * Governor Quinn. Veto Rahm’s pension bill.


        * Governor Quinn Releases First-Ever Illinois Bike Transportation Plan - Plan Formally Makes Bicycles Part of Illinois’ Long-Range Transportation Vision
        * IEMA, American Lung Association Announce Winners in Student Video, Poster Contests - Winning entries unveiled during IEMA’s 11th Annual Radon Networking Day
        * Governor Quinn to Address Small Business Advocacy Council Annual Meeting - Will Discuss His Proposals to Drive Small Business Development and Expansion
        * Governor Quinn Honors Jackie Robinson - Barrier-Breaking Baseball Player Was American Icon
        * Governor Quinn Urges Homebuyers to Act Fast and Take Advantage of Welcome Home Illinois Program - Program Offers First-Time Homebuyers Down-Payment Assistance and a 3.75 Percent Interest Rate on a 30-Year Fixed Mortgage




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