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*** UPDATED x1 *** Cook County pension reform bill coming soon

Wednesday, May 14, 2014

* No revenue stream is reportedly in this plan, but the Sun–Times reports that a new pension reform proposal by Cook County Board President Toni Preckwinkle will “likely” pay for the $144 million in new state-mandated contribution costs with a property and/or sales tax increase

(T)he bill would require all employees hired before 2010 to pay 10.5 percent of their salaries into their retirement, the source said.

That’s a 2-percent hike for most county employees, who currently pay 8.5 percent of their salary into the fund. The increase for sheriff’s office employees would be smaller because they already pay 9 percent.

Future retirees would have to wait two years after retirement to get a cost-of-living increase, the source said. And those cost-of-living increases — currently locked in at 3 percent — would fluctuate between 2 and 4 percent, depending on the rate of inflation

Additionally, all retirees would also have their cost-of-living increases frozen in 2016. And cost-of-living increases would be frozen in the future if the accounts dip below 59 percent funding, according to the source.

AFSCME is opposed, but SEIU Local 73 supports the bill’s “basic components,” the paper reports.

*** UPDATE *** From Crain’s

“The funding of health insurance for retirees is a major gain, especially for those who are close to retirement and not eligible for Medicare yet,” according to a post this month on the website of Service Employees International Union Local 73, which represents Cook County workers and other government employees in the Chicago area.

According to another summary on a Teamster website, pension cost of living benefits would be suspended if the fund dips below 50 percent funding and would be increased if funding exceeds 100 percent.

But the cost of living adjustment for workers hired before Jan. 1, 2011, would remain generous by recent standards for pension deals, if the funding level remains between 50.01 percent and 99.9 percent.

According to the Teamsters website, the COLA would be at least 2 percent a year and up to 4 percent a year, depending on the consumer price index, and it would be compounded each year. If the funding ratio exceeds 100 percent, the COLA goes back to three percent, compounded annually.

“Just on the surface, it’s very generous,” said Laurence Msall, president of the Civic Federation, a Chicago fiscal watchdog group that advocates for pension changes. “It calls into question whether they get enough savings” from the proposed reforms.

- Posted by Rich Miller        


36 Comments
  1. - Steve - Wednesday, May 14, 14 @ 9:29 am:

    It’s hard to know how much money would be saved here but: changing cost of living increases adds up to a whole lot of money in the long run.


  2. - Toure's Latte - Wednesday, May 14, 14 @ 9:36 am:

    ==cost-of-living increases would be frozen in the future if the accounts dip below 59 percent funding==

    Interesting twist that should have some appeal. Shared gain, shared pain. If this is true that shows Preckwinkle has some innovative ideas she could also bring to the Mayor’s office, bring to bear on the City pension problems. I could see other gov units following that kind of lead.


  3. - PMcP - Wednesday, May 14, 14 @ 9:38 am:

    When is the AFSCME going to get on board that something has to change? Id like to see the numbers on this one but the taxpayer protection when funding status falls is good and the increase when status exceeds 100% seems like a fair trade off really.


  4. - Almost the Weekend - Wednesday, May 14, 14 @ 9:42 am:

    You have to wonder what AFSCME’s strategy is going forward, they oppose every pension reform bill, and have been hit the hardest over the past 8 years. They have had multiple facilities closed downstate and with pension reform looming in Cook County, their workers will be taking a hit again. To make matters worse Rauner threatened to shut down the government to keep AFSCME’s wages stagnant. If I’m AFSCME, I get behind pension reform, with an agreement to extend current contract with governor or re-opening new facilities downstate. The idea of opposing every pension reform plan is inconceivable considering the alternative with Rauner is a nightmare. They say it gets worse before it gets better, but with AFSCME it just gets worse.


  5. - Just Trying to Survive - Wednesday, May 14, 14 @ 9:44 am:

    Seems like a pretty hard hit to pay an extra 2% of your income in addition to the 67% tax increase on top of a property tax increase.


  6. - Cold - Wednesday, May 14, 14 @ 9:49 am:

    I am an AFSCME member. Can’t you people read? 5 extra years of working, paying 2% more every year, skips in COLA and the wiggle room never to pay any? That adds up to a massive cut. What union would think that was a sweet deal? Not even a pretense of consideration either.


  7. - archimedes - Wednesday, May 14, 14 @ 9:50 am:

    There is some common theme of union (not unanimous) movement in all of the pension reform both local and the State (SB2404). Even AFSCME was talking (although do not support this current version) and might have agreed to some form with more time.

    The court case may have the effect of shifting the balance in these talks (to the employer if the State is upheld, to employees/retirees if all or some of SB1 is struck down) - but pension modifications will continue to be negotiated.

    I think public employees and retirees have lost political capitol due to the campaign launched over six years ago (Civic Committee, Civic Federation, IPI, Tribune, etc.). Public employees and retirees have been passive participants in the discussion, reacting and slow to respond - maybe confident that the constitutional protection was absolute and the public discourse didn’t matter.

    Even if the courts support the constitutional protection, the negotiation will continue and pensions will be modified. Too much has happened, too much credibility lost with individual greedy pension schemes, too much political influence lost.


  8. - PMcP - Wednesday, May 14, 14 @ 9:56 am:

    @Cold

    Dude, the retirement age is being moved to 55 or 60? In what world do you live in that that is unreasonable?


  9. - Walker - Wednesday, May 14, 14 @ 10:03 am:

    Preckwinkle often makes some serious sense.


  10. - Just Trying to Survive - Wednesday, May 14, 14 @ 10:13 am:

    =public employees slow to respond=

    Launching a counter attack against the extreme moneyed people making the attacks is a major factor in perceived public employees’ passivity. Not a prayer to work against that political clout and power. In addition, unions are damned if they do or damned if they don’t. To spend “taxpayer” money (when does it ever stop being theirs?) to fight against cuts makes them power hungry and greedy, doesn’t it? Even though the number says that public employees earn on average 13.5% less than comparable jobs in the private sector, any money spent makes them “greedy”. So unions and public employees are in a very touchy place.


  11. - Cold - Wednesday, May 14, 14 @ 10:15 am:

    How is her “we don’t have to pay if funding drops” any different than the lack of appropriation excuse thrown out by the court in the recent County Treasurer case? The unions should hold tight. The Civic Committee and class warfare rhetoric ain’t gonna fly in the courthouse.


  12. - Big Joe - Wednesday, May 14, 14 @ 10:15 am:

    Preckwinkle often makes sense because she is a former teacher and can see things in a way that is fair to all parties. If she decides to challenge Rahm, it will be an interesting race, considering the size of his political nest egg and clout. I believe a lot of people see her as a very good alternative for mayor of Chicago.


  13. - Almost the Weekend - Wednesday, May 14, 14 @ 10:19 am:

    Cold,

    I think you should drive to Decatur and talk to current and former union members and see what they have gone through. Being a part of a union, means making sacrifices for the betterment of the whole. SEIU is willing to make sacrifices to make sure their union is still going for the next generation. AFSCME has done the opposite. If you aren’t willing to compromise on anything now, imagine the repercussions in 15 years. And in imagining those 15 years when you are driving through Decatur, imagine what Decatur was like in 1999.


  14. - Wumpus - Wednesday, May 14, 14 @ 10:20 am:

    I hope the tax increase is on sales. That way, I can go to Dupage for my shopping. Best of both worlds


  15. - Wake Up! - Wednesday, May 14, 14 @ 10:21 am:

    All they have to do is change the asset valuation method or the actuarial assumptions and the funding level moves. That will happen-you watch. It is an artificial number subject to manipulation. Agree to this at your own peril.


  16. - wordslinger - Wednesday, May 14, 14 @ 10:24 am:

    –Preckwinkle often makes some serious sense.–

    She does.

    It’s going to be awfully tough for her to take a pass on Emanuel. If the poll in the Sun-Times last week even remotely reflects reality, he’s ripe for the picking, no matter how much money he’s banked.


  17. - Cold - Wednesday, May 14, 14 @ 10:32 am:

    I have made compromises which were reflected in my salary (or more accurately lack thereof). I have no problem with negotiating benefits going forward. But this would be retroactively taking away money already earned from older employees to theoretically boost the salaries of newer employees in the future. That is not fair representation and any union who agrees to these schemes is going to face internal dissension and unfair practice charges and lawsuits.


  18. - Cold - Wednesday, May 14, 14 @ 10:44 am:

    And, focusing on public sector unions only, I fail to see the logic of how the costs of the provision of current and future government services should not be paid by the taxpayers as a whole but should be subsidized by a taking from only those individuals who had previously worked for government. In essence, that is what diverting pension funds means.


  19. - DuPage - Wednesday, May 14, 14 @ 10:50 am:

    The Cook County Pensions are subject to the same protections in the Illinois Constitution as all other public pensions.


  20. - Lobo Y Olla - Wednesday, May 14, 14 @ 11:11 am:

    Her biggest problem is going to be the 900 non-union states attorney’s with reams of civil experience. She’s also gonna need to get outside counsel as the State’s Attorney’s who by law would have to defend this nonsense, would have an obvious conflict of interest.


  21. - truthteller - Wednesday, May 14, 14 @ 11:12 am:

    Lots missing here.1) Among those unions not supporting Preckwinkle’s cuts are the Nurses, FOP, PBPA, UFCW (pharmacists), Machinists, Communication Workers, and Carpenters.
    2) For active employees , the cuts are deeper than either the city or the state plans, thanks to a combination of COLA reductions, retirement age increases, COLA freezes, salary caps, and extending the pension calculation basis from a four year to an eight year average.
    3) How do supporters know they support something they have yet to see?
    4)AFSCME, the FOP, and the PBPA all supported 2404 which garnered 40 votes in the Senate. Not true that these organizations will never agree


  22. - A guy... - Wednesday, May 14, 14 @ 11:29 am:

    At least it advances the discussion.


  23. - Anonymous - Wednesday, May 14, 14 @ 11:59 am:

    Toni come out with a plan that has no dedicated funding source, yet she’s praised. When will people stop giving her a pass?


  24. - GA Watcher - Wednesday, May 14, 14 @ 1:34 pm:

    Greg Hinz reports today that the Governor plans to amend or veto the pension reform bill Chicago passed earlier this session. He also says police and fire pension reform will have to wait at least until the fall. This can’t bode well for Cook County’s pension reform legislation.


  25. - Anon - Wednesday, May 14, 14 @ 3:24 pm:

    The county of Cook has frozen its property tax levy for 20 years, which means county property taxes have steadily declined. Consequently, Toni has a little room for a slight hike after two decades.


  26. - Penny wise pound foolish - Wednesday, May 14, 14 @ 3:39 pm:

    I guess we can all welcome back the much maligned penny on the dollar sales tax…


  27. - Anon - Wednesday, May 14, 14 @ 4:56 pm:

    What is the difference between a cola being “frozen” or “suspended”?


  28. - RNUG - Wednesday, May 14, 14 @ 5:06 pm:

    Just caught a blurb on WICS 20 news that an “indefinite” stay for SB0001 has been granted “until the constitutionality is determined” (newscaster’s words) … need to find and read the order.


  29. - RNUG - Wednesday, May 14, 14 @ 5:17 pm:

    BREAKING: Court Grants Union Coalition’s Request to Stay Implementation of Pension Changes

    http://www.weareoneillinois.org/news/breaking-court-grants-union-coalitions-request-to-stay-implementation-of-pension-changes


  30. - anon - Wednesday, May 14, 14 @ 5:43 pm:

    This had the most info I found. “This stays the legislation, signed by Governor Pat Quinn, in its entirety so that the pension systems and other defendants are enjoined from implementing or administering any provisions of the act until further order of the court or the court issues a final ruling on the merits of the act’s constitutionality.” And “[t]he court found that plaintiffs have shown a likelihood of success on their contention that Public Act 98-599 violates the Pension Protection Clause of the Illinois Constitution.” http://www.illinoisobserver.net/2014/05/14/extra-judge-suspends-illinois-pension-reform-law/


  31. - Pacman - Wednesday, May 14, 14 @ 6:21 pm:

    In light of this stay union members need to hold their water and sit tight. Don’t bargain away your benefits. Nekritz comment was odd when she stated “I would have been shocked had there not been a stay,” the Northbrook Democrat said, adding that, “it should have been stayed and we should wait to see frankly what the Supreme Court tells us.” Makes me think she not too confident in her work.

    Read more: http://www.sj-r.com/article/20140514/News/140519681#ixzz31jcyF5XX


  32. - Pacman - Wednesday, May 14, 14 @ 6:28 pm:

    WICS also reporting that the stay makes the SURS issue a moot point.


  33. - Just Trying to Survive - Wednesday, May 14, 14 @ 6:55 pm:

    Can’t get real excited about this. I don’t think it forecasts the future of a court decision….seems to me that it’s just a way to control the mass exodus of workers who are choosing to retire immediately and cause brain drain. It’s encouraging to finally have someone treat us as human beings who do have to live and plan our lives just like private employees do. To date, we’ve been treated as game pieces moved around for budgetary reasons with no regard for our humanity. So, this is something not negative that’s happened in a few years. Other than that, damage has been done.


  34. - Cold - Wednesday, May 14, 14 @ 7:21 pm:

    It’s notable that the decision was not based solely on pragmatic factors (which Nekritz and others may well have anticipated). The finding that the employees are likely to win on the merits is significant. The fat lady may not have sung but a very real indicator that the courts are going to throw all the “reform” out.


  35. - RNUG - Wednesday, May 14, 14 @ 10:07 pm:

    A touch more detail here:

    http://www.dailyjournal.net/view/story/dc39fefce55c45959eb09195a049b75b/IL–Illinois-Pensions-Lawsuit/#.U3QuXXbHhvk

    IMO, Nekritz’s comments carries a lot more weight than Quinn’s.


  36. - Finally Out (formerly Ready to Get Out) - Wednesday, May 14, 14 @ 10:33 pm:

    The SJR now has an expanded article on it.

    http://www.sj-r.com/article/20140514/NEWS/140519681/10511/NEWS/?Start=1


Sorry, comments for this post are now closed.


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