121 Comments - Team Sleep - Thursday, Mar 12, 15 @ 10:19 am: I listened to the whole thing. Aaron Madugg came across as a goof. He relied too much on hyperbole and potshots. Ms. Shapiro and Mr. DiVito were worthy sparring partners. Ms. Shapiro had good points but her delivery was shaky. Mr. DiVito mostly reiterated his points but his delivery was strong and his words were forceful. I have a feeling this will be a 4-3 decision only because of the bond rating concerns (and what that would mean for Chicago). - Pfc - Thursday, Mar 12, 15 @ 10:23 am: State’s argument seems to be that the people of illinois did not have power through their constitution to limit the sovereign power of the state (which evidently must not be vested in the people of illinois but, I guess, the land itself?) - NewWestSuburbanGOP'er - Thursday, Mar 12, 15 @ 10:24 am: It appeared to me that Justice Thomas split the uprights on his questions. - Norseman - Thursday, Mar 12, 15 @ 10:29 am: === In a signal of how important the case is, not only to the state but to all Illinois municipalities, Chicago Corporation Counsel Stephen Patton sat front and center in the Supreme Court chambers. […] All that really matters, though, is what those four silent Democrats — Anne Burke, Charles Freeman, Thomas Kilbride and Mary Jane Theis — were thinking. === I will not put on my tinfoil hat! I will not put on my tinfoil hat! … - Oswego Willy - Thursday, Mar 12, 15 @ 10:31 am: ===At one point, he asked her why the state claimed it wanted an expedited hearing so that the court could rule before lawmakers’ scheduled May 31 adjournment deadline, then asked for the case to be sent back to Belz where it would face months of hearings and another likely appeal.=== “If you gave an order that Santiago wasn’t to be touched, and your orders are always followed, then why would Santiago be in danger? Why would it be necessary to transfer him off the base?” Logic - 1, Excuse - 0. - Demise - Thursday, Mar 12, 15 @ 10:33 am: Justice Freeman wrote Kanerva. I doubt you will see a vote change there. Burke is the only possible dissent I see, but her dissent in Kanerva suggests she won’t do so in this case. - Diogenes in DuPage - Thursday, Mar 12, 15 @ 10:33 am: The early lead goes to Oswego Willy. He can handle the truth. - VanillaMan - Thursday, Mar 12, 15 @ 10:36 am: The State of Illinois is a trapped rat, too fat by eating up our state’s pension fund, to fit through the constitutional hole, and now wants us to spare them the need to pay the fund back by threatening to give rabies to taxpayers. After generations of pretending that actuary numbers don’t mean what they say, balancing budget with numbers that don’t mean what they say, they want the Supreme Court to tell them that the constitution they all swore to uphold, doesn’t mean what it says. These people are pathetic. - regular democrat - Thursday, Mar 12, 15 @ 10:36 am: I thought it was strange 4 years ago when Rahm supported Mary Jane The is when he wasn’t even mayor yet I believe his support was intended for this moment to be a possible deciding vote on pensions call me crazy but…. - Arizona Bob - Thursday, Mar 12, 15 @ 10:41 am: It seems it’s all over but the shouting. Now the question is whether the Dems created SB1 with a “poison pill” to ensure its defeat to have it killed by the courts while giving them “something” to kill the issue going into elections. Just about every other GA in the nation would be appalled if leadership did something like this, and voters would be outraged and take their anger out on election day. But this is Illinois where dysfunction is accepted, subsidized and endorsed by the voters…. Seriously, folks, has anyone here heard of ANYTHING as sleazy and incompetent as this being done in another state? OW, Wordslinger, Demoralized, you keep on slamming me for asking why Illinoisans shouldn’t expect responsibility and competence in their GA on a par with that provided in just about any state. YOu keep telling me that I’m “missing the point. Completely” whenever I suggest that the GA leadership act responsibly. What basis do you have for believing ANY solution is possible in Illinois having seen what total Dem control in Illinois has wrought over the last decade plus? - anonymouse - Thursday, Mar 12, 15 @ 10:41 am: As RNUG pointed out weeks ago, the Illinois Supremes have two options. Police powers do not exist and ruling in favor of the pensioners or if their is any factual issue over whether police powers apply in certain circumstances, remand for a hearing. Pensioners win now, or they win later. But the decision on whether to remand or not is not clear cut. Every question that is factual, IE: reduction in taxes affecting pensions, underfunding by legislature, etc. present facts that a trial court must resolve to determine if an emergency exists. A remand is not a win for the state. It is just a delay to the inevitable. - Shoedoctor - Thursday, Mar 12, 15 @ 10:43 am: looks like Justice Thomas went wide left - SAP - Thursday, Mar 12, 15 @ 10:45 am: Ten points to V-Man for creative use of rat metaphor. - Wordslinger - Thursday, Mar 12, 15 @ 10:47 am: It would be helpful if the Tribbies would make the case for the relationship between the pension systems and the economy. Because this “crisis” has been going on since at least the last time the Cubs were in the World Series. Yet there have been plenty of boom times since then (how about those goo-goo, go-go Blago years!). And the pension systems have never missed a payment, nor have they become “insolvent” in all that time. They dont want to pay back the money that was borrowed. I get it, that’s the Tribbie business model. But the anti-intellectual rationalization is embarrassing. - A guy - Thursday, Mar 12, 15 @ 10:48 am: This plot is thickening. It is to say the least very interesting. The ISC cannot force the IL Leg to raise taxes. The IL Leg cannot force the ISC to recognize it’s view of economic conditions. The ball is in the court of the ISC. One question is; after this ruling, how badly do they want the ball back? Don’t know the answer. - Shoedoctor - Thursday, Mar 12, 15 @ 10:49 am: In the words of the Great Senator Cullerton, the budget is “unconscionable”. Not the all the ones he has voted for since 1979 that now leave every taxpayer in Illinois with $43,000 in debt, just Rauner’s - Oswego Willy - Thursday, Mar 12, 15 @ 10:49 am: ===…you keep on slamming me for asking why Illinoisans shouldn’t expect responsibility and competence in their GA on a par with that provided in just about any state.=== No. I question your lack of understanding of the running of majority Caucuses of a different party than the Executive. You lack that understanding. You don’t even know what you’re responding to. I wanted to let you know, even your hyperbole’s aim is as off as your understanding. - Arizona Bob -, enjoy Arizona. None of us here in Illinois are on your lawn there, it’s the other kids. - Oswego Willy - Thursday, Mar 12, 15 @ 10:54 am: - Shoedoctor -, We have “Fire Madigan” stuff in the back room, but the “Fire Cullerton” is still on back order. 1979? Thompson, Edgar, Ryan… Blagojevich, Quinn… They signed those budgets. You’re welcome. - Shoedoctor - Thursday, Mar 12, 15 @ 10:57 am: A little humility would be nice instead of constant deflection. Can’t you admit Madigan and Cullerton are also responsible? Blamining others when they have 80 years in Springfield is really too much - dupage dan - Thursday, Mar 12, 15 @ 10:59 am: wordslinger remains consistent in claiming that there really isn’t a crisis. As a state employee very near retirement, I hope he is right. - Oswego Willy - Thursday, Mar 12, 15 @ 11:01 am: === Blamining others when they have 80 years in Springfield is really too much=== lol, next time, add the “corrupt”. All the Govs, all the legislators are to blame. Your Dopiness tries to make it hyper-partisan. Your Raunerite talking points also reflects your honesty in this discussion is missing. - Archimedes - Thursday, Mar 12, 15 @ 11:05 am: As far as solutions. Along with cost shift provide the option to go to tier 2 or a defined contribution in pension code. The school districts can negotiate a voluntary shift to less costly pension. Ex. A bronze health insurance if you change. Or eliminate subsidized dependent coverage for those that stay in tier 1. With two or three pension options the employer can balance total compensation Does nothing for the unfunded liability. Nothing you can do about that since it is all earned benefits - facts are stubborn things - Thursday, Mar 12, 15 @ 11:06 am: The ISC court told the teachers that when they (the state) do not pay you come back and see us. Well yesterday they and others were back. The ISC has refused to force the state to pay their required share, and now expects the SC to rule that now you want to diminish benefits because of the large pension underfunding? Wow, that is one pig that will not fly. - Shoedoctor - Thursday, Mar 12, 15 @ 11:06 am: Willy- Pot meet Kettle- Hyperpartisan. Your balance weighing all sides of the issue is really noticeable - Anonymous - Thursday, Mar 12, 15 @ 11:07 am: Bob: You cannot argue with somebody who already has come to a conclusion. You conclude first and then attempt to back into your conclusions. Arguing with such twisted logic is futile so I won’t even try. But I will say you can bite all of us in Illinois because I’m frankly tired of all of the hate you spew about the state. You don’t even live here. Good. As OW said, then we don’t have to listen to you telling all of us to get off of your lawn. - Demoralized - Thursday, Mar 12, 15 @ 11:08 am: Anonymous 11:07 was me - Demoralized - Thursday, Mar 12, 15 @ 11:09 am: How’s all of this blame game working out for some of you? Getting tired of it yet? Or do you like playing the victim all the time? Grow up already and stop with the blaming. - Oswego Willy - Thursday, Mar 12, 15 @ 11:12 am: - Shoedoctor -, I tried enough with you. Good luck. - VanillaMan - Thursday, Mar 12, 15 @ 11:15 am: Seriously, folks, has anyone here heard of ANYTHING as sleazy and incompetent as this being done in another state? You keep consoling yourself by saying this wouldn’t have happened in Kansas or Idaho, as though Illinois could just fix its problems similarly. You are familiar with the Land of Lincoln, aren’t you? Illinois isn’t going to fix its problems by pretending it is Texas. We never had slavery, humidity, or hurricanes to keep up from leading the US during the 19th and 20th Centuries. It took air conditioning and the GOP to finally filter down to overturn the old Jim Crow states to launch them into the 21st. So, instead of sitting on the top of the heap with NY, CA, Ohio and Pennsylvania, we have competition from the old slave and desert states. Don’t forget that water you are drinking is courtesy of the states where it rains and where our grandparents worked and provided taxes for your damn dams. Sorry, we aren’t Wyoming! Give Illinois a break. We have a huge population of Boomers who are retiring, watching QVC, and driving Japanese cars. They aren’t investing, they are consuming their investment. Believe it or not, in a short time, economically-wise, they will be fodder for one of Rauner’s old venture capital sodden nursing establishments, or perhaps “Raunerized” - his new cremation service yet to be launched. Sorry, we aren’t Utah! What made Illinois successful, won’t be instantly dissolved with a click of fingers. Unions, industrial zones, manufacturing plants, brownfields, giant universities, and a plethora of people who built them, can’t be carted off and junked without consequences. Sorry, we aren’t North Dakota! The states you keep comparing Illinois to don’t have these same conditions. Shaking us up without killing us seems to be something this new governor doesn’t understand or care about. Why should he with all those other homes of his? We are a rich state. We are located perfectly. We have an immense infrastructure. It rains here. We have black gold for top soil. We have Chicago. Yet, guys like you and the new governor want to cut us down into bite size bits of effluent political fodder. Chicago is more like New York City and Los Angeles, than it is like Paducah, Sioux City or Branson. Comparing Illinois to Wisconsin, Indiana or Kentucky is like comparing Europe to Disney’s Epcot. We are Illinois. We aren’t Arkansas. So can the questions as to why we’re not seeing politics like we see in New Mexico. We’re not them. Without Illinois, they wouldn’t be so great either. Check your “golden politicos” biographies and you’ll discover they got where they are thanks to the states you are now complaining about. - Shoedoctor - Thursday, Mar 12, 15 @ 11:17 am: I am not sure of the rules here, only blame Rauner or everyone? He has been in office two months now - AnonymousOne - Thursday, Mar 12, 15 @ 11:17 am: There is no more crisis today than 40 years ago. Some might point to economic issues of 2008 but check out the markets today. Not only bounced back, but then again some. No one ever mentions how well those investments are doing now. It is not 2008 anymore. - Oswego Willy - Thursday, Mar 12, 15 @ 11:18 am: Do. Not. Feed. Trolls. - Shoedoctor - Thursday, Mar 12, 15 @ 11:19 am: Only blame Rauner, let everyone else off the hook Willy! - Jocko - Thursday, Mar 12, 15 @ 11:20 am: Kudos to OW and Vman! I’m waiting for Trover’s response of “We always expected the conniving lawyers to fight to keep their stranglehold over Illinois taxpayers in place, as part of the broken status quo.” - anon - Thursday, Mar 12, 15 @ 11:25 am: Appellate attorney here. The Illinois Supreme Court has never been known as vigorous in oral argument. So not necessarily drawing a conclusion from silence that the justices will dissent. Usually the Justice leading the charge at argument is the Justice who is writing the opinion. Sometimes a Justice will ask questions to poke at another Justice who is disagreeing. I didn’t pick that up here. I thought the questions were directed mostly at poking the State. Perhaps they are considering the remand issue, though. But I don’t see this as all or nothing. They could hold that the pension clause is subject to the police powers and also hold that allegations of underfunding and cuts to just one specific contract do not as a matter of law rise to the level of invoking the police powers. - illinifan - Thursday, Mar 12, 15 @ 11:26 am: Based on Thomas questions it appears saying police powers needed may not fly as the state created this, aggravated with tax increase expiring, and then asked for case to be remanded delaying the decision and tangentially saying it really is not urgent since we need more time to argue the issue. - facts are stubborn things - Thursday, Mar 12, 15 @ 11:27 am: If the state were to prevail, (send this back to lower court for further findings on the police powers argument) then each time the state wants to evoke an emergency the courts are going to have to have a lengthy finding if there is really a CRISES and the state does not have other alternatives. ISC is not about to create that path. I believe they will rule on what is really before them - can the state do to fiscal trouble renege on a constitutional provision. - Arizona Bob - Thursday, Mar 12, 15 @ 11:28 am: @Dem No surprise there. The post was lacking in logical argument, context or reason, and high in insults and very demeaning. When things are a major fail, like Illinois state government, you look for better models elsewhere to find ways to reform. You guys are so set in the slimey culture of Illinois politics that you’ve become myopic about what has to happen to fix things. I understand how working with caucuses works in Illinois to move legislation forward. This system ,and the people in charge, have produced the worst results for its citizens of any state of the union. My opinion is because its based upon the self serving greed of too many in the GA, and too little responsibility to the citizens and state of Illinois. JFK once paraphrased to say, “Others see how things are and ask “Why?”. I see how things COULD be and ask “why not?” Everything coming from your buddies in Springfield will be poisoned fruit. If you don’t see that by now, perhaps you’re not as smart as you think you are. BTW, I still pay some Illinois taxes, so I have some skin in the game. I don’t have a “lawn” in Arizona. I have a long needle cactus garden. You, Word and OW are free to sit on them anytime you wish! - ZC - Thursday, Mar 12, 15 @ 11:29 am: At this point I expect them to reject the state of IL’s appeal, I just hope they keep the “emergency police powers” option open for the future (aka -this- isn’t an emergency; we reserve the right to revisit this issue again). Despite some of the sunnier commentators’ projections, we might need that emergency police powers argument one of these days. - Anonymous - Thursday, Mar 12, 15 @ 11:33 am: People here keep saying that pensions are an individual contract and the unions can’t negotiate changes. But they have in the past. For instance, if someone started state service in 1995 and left in 2005 they had 10 years of service. If there wasn’t a negotiated change in benefits within that timeframe that individual should have 100% of their healthcare paid for. 8 years of service. After the union negotiated changes they only receive 50% coverage. 10 years times 5%. I would argue their benefits were reduced without their consent. - Wordslinger - Thursday, Mar 12, 15 @ 11:34 am: RFK, not JFK, AB. Another one of your political heroes, like FDR? - walker - Thursday, Mar 12, 15 @ 11:34 am: The question now appears to be: How will the powers that be spin this rejection of SB1? Dem Leaders: “See, even they agree we need a tax increase to avoid emergency.” Rauner: “Just as I have been saying, the only way out is to defang the unions, now and forever.” - gopower - Thursday, Mar 12, 15 @ 11:34 am: Assuming that the Court rules that pensions cannot be changed, is not the obvious course of action to reduce the *wages* of state employees? There is no constitutional guarantee there. After privatizing every possible state department and firing those workers, that is. - The Dude Abides - Thursday, Mar 12, 15 @ 11:35 am: I would like to know percentage wise how well the pension fund is funded today as opposed to 30-40 years ago. - A guy - Thursday, Mar 12, 15 @ 11:37 am: === Demoralized - Thursday, Mar 12, 15 @ 11:08 am: Anonymous 11:07 was me ==== I had more than a hunch - LIberty - Thursday, Mar 12, 15 @ 11:37 am: Trib==We hope the justices appreciate the distinctions between the two cases.== Seems like a condescending comment towards the justices… - Shoedoctor - Thursday, Mar 12, 15 @ 11:39 am: here is a summary of the pension history since 2000 http://www.rebootillinois.com/2013/09/13/editors-picks/mattdietrich/perfect-storm-illinois-pension-disaster/2505/ - A guy - Thursday, Mar 12, 15 @ 11:41 am: ====AnonymousOne - Thursday, Mar 12, 15 @ 11:17 am: There is no more crisis today than 40 years ago. Some might point to economic issues of 2008 but check out the markets today. Not only bounced back, but then again some. No one ever mentions how well those investments are doing now. It is not 2008 anymore.=== Thanks Mr. President, you better get back to the Senate Chamber now. No crisis. Because he said so. Oy. - Shoedoctor - Thursday, Mar 12, 15 @ 11:44 am: Pensions were 75 % funded in 2000, last data from 2011 is 43%. Sound like the blame is more on the past 12 years and not Governors Thompson, Edgar and Ryan, right Willy? I know you are not partisan - Demoralized - Thursday, Mar 12, 15 @ 11:45 am: ==You guys are so set in the slimey culture of Illinois politics that you’ve become myopic about what has to happen to fix things.== Wrong. I just don’t happen to agree with your solutions. ==Everything coming from your buddies in Springfield== I have no “buddies” in Springfield, nor apparently in Arizona. You can continue to rant and rave about how bad Illinois sucks and I will continue to fight back. I happen to like living here Bob. I don’t view the state as the cesspool you do. I’m happy to raise my family here. Happy with my life. Make a good living. Of course things can change. Nobody here (no matter how many times you say it) says that it can’t. Disagreeing with you Bob doesn’t mean that we disagree with change. - Demoralized - Thursday, Mar 12, 15 @ 11:46 am: Still playing the victim I see Shoedoctor - RNUG - Thursday, Mar 12, 15 @ 11:49 am: - Anonymous - I’ve covered this before but I’ll do it one more time. The State initially put the 8 yrs / paid health insurance upon retirement in place. There were two conditions: (1) 8 years service and (2) actual retirement under the SERS rules. This was implemented at one of the times the State was suffering a “brain drain” due to low wages and it was hoped adding the retirement health insurance would stop some of that. (Typical State pattern: we’ll pay you later for doing something now.) Later the State changed that to 20 yrs but kept the vesting in the right at 8 yrs and pro-rated a payment between 8 and 20 yrs. The State only applied the change to people retiring in the future; they did not retroactively go back on the already retired. The change was made for a specific reason: private sector employees (Illinois Bell for example) were retiring in their early 50’s (yes, that really was the case years ago) and then came to work for the State for eight years to get the health insurance since they didn’t have any. In other words, the State viewed those people as “double-dippers” and wanted to close that “loophole”. Was that change illegal as we now know the rules after Kanerva? Maybe / maybe not … but nobody brought a court case over it, so we’ll never know. - Six Degrees of Separation - Thursday, Mar 12, 15 @ 11:49 am: I would argue that the stock market drop after 9/11 had an equally devastating effect to the pension investments as the Great Recession. Still, the investments have averaged somewhere north of 7.5% over the last few years, weathering a lot of downs, and last year SERS gained a little bit of “reserves minus annual payout” on the ledger as compared to 2013. - Juvenal - Thursday, Mar 12, 15 @ 11:51 am: === Three of those justices are from Chicago. An adverse ruling could easily drop Chicago’s bond rating into junk status. === I disagree, but I will see what RNUG says. I believe the rating agencies have already incorporated the likelihood the law will be tossed into their calculations. Regarding Justice Thomas, never forget that he is a former professional football player. This justice in particular understands the importance of a contract. - Oswego Willy - Thursday, Mar 12, 15 @ 11:51 am: - Demoralized -, If they can’t understand the institutional knowledge and history and that the GOP, Dems, President Phillip, Speaker Daniels, and GA after GA are to blame, the only card left is the victim card. Pretty sad, eh? - kcjenkins - Thursday, Mar 12, 15 @ 11:52 am: I’ve seen a couple hundred arguments at the Court from the past seven years. I would consider the Illinois Supreme Court a fairly “hot bench,” at least compared to appellate courts around the country. The Justices’ questions typically indicate their inclinations. Comparing the questioning patterns to their ultimate votes doesn’t support the hypothesis that they’re generally hiding the ball, playing Devil’s Advocate, really talking to colleagues, or any of the things that happen at other courts. For many of them, questioning one side significantly more heavily suggests that the Justice is inclined, at least as of oral argument, to vote against that side (of course, things can change in conference between the argument and the publication of the opinion). There are always “outliers” to the statistical trends, but the comparative number of questions, and the tone and content of the questions to the State, suggested to me that the Court is very likely to affirm in an opinion written by the Chief Justice. A bit of data: Since 2008, losing appellants have received an average of 20.68 questions in civil cases to 15.58 for winning appellants. Losing appellees have averaged 15.96 questions during argument to 9.85 for winning appellees. In 2014, Chief Justice Garman and Justices Burke, Freeman and Theis each asked more questions of the appellants (in other words, the losing party) when they ultimately voted to affirm. Justices Burke, Thomas and Theis all averaged more questions to appellees whom they ultimately voted against. - RNUG - Thursday, Mar 12, 15 @ 11:54 am: == they keep the “emergency police powers” option open == If the court rules that police powers do not apply to the pension clause, that still allows the use of police powers for everything else in the state unless the Constitution says it is off limits. Having said that (and I know the court most likely won’t go there in it’s written opinion), wouldn’t it be a hoot if the court noted that police powers would still apply to other types of debt, such as bonds? - ASAP - Thursday, Mar 12, 15 @ 11:56 am: Beside the pension issue, what was last time that the state used its police powers? - Juvenal - Thursday, Mar 12, 15 @ 12:02 pm: This will be a unanimous decision. - chi - Thursday, Mar 12, 15 @ 12:04 pm: RNUG- Can you explain the state exemption from paying Social Security, and how or if they could foreseeably lose that exemption if their retirement plan is less than what SS would pay? Anyone? - Kerfuffle - Thursday, Mar 12, 15 @ 12:05 pm: === Counsel [for the state] concluded by once again arguing that if the delegates to the Constitutional Convention intended that the clause be absolute in its protection for employee pensions, then the clause violated the Federal constitution === So if the state is unsuccessful are they going to run to SCOTUS to try to make that case? A state arguing against the validity its own constitution would be quite interesting! - Six Degrees of Separation - Thursday, Mar 12, 15 @ 12:10 pm: So if the state is unsuccessful are they going to run to SCOTUS to try to make that case? My guess is in the unlikely event the state files an appeal with SCOTUS, they would decline to hear the case. - VanillaMan - Thursday, Mar 12, 15 @ 12:12 pm: You guys are so set in the slimey culture of Illinois politics that you’ve become myopic about what has to happen to fix things. Yeah - no one here ever gets out or understands any other state, country or culture. - RNUG - Thursday, Mar 12, 15 @ 12:15 pm: == is not the obvious course of action to reduce the *wages* of state employees? == We’ll have to see. In the past, a number of cases were brought on various issues that limited the amount of time that could be earned (which was assumed to indirectly limit the salary and, hence, the pension). As I remember, the employees won most of those cases. Again, the devil is going to be in the details of exactly HOW any salary gets reduced. Plus, at least in the case of SERS, people rally haven’t thought through the whole salary reduction issue very well. Remember, under the current ‘Tier 1′ formula, the pension is based on Final Average Compensation. FAC is defined as the average of the highest 48 consecutive months in the last 120 months (10 yrs) of service. So let’s say you cut the salary today. The employee pension contribution is based on salary, so you’ve just cut the employee contribution into the SERS fund. But if the employee retires anytime in the next 10 years from now, they will receive the same pension they would receive today (if they retired with the same number of years of service) BUT they will have paid LESS for the extra (up to) 10 years of service. I will concede I have somewhat oversimplified this since normally there would be salary increases with correspondingly higher contributions resulting in a larger pension … but the point is the salary reduction (relatively speaking) only slightly affects the pension until you get out beyond that 10 year mark and the lower salary starts to affect the current FAC value. This is also a long way of saying that the most important element of any pension change is waiting for the time required for it to take effect. And now were’ back to ‘Tier 2′ … which is the long range solution. - anon - Thursday, Mar 12, 15 @ 12:16 pm: === is not the obvious course of action to reduce the *wages* of state employees? === Except for the ones hired by Gov. Bruce. They get higher wages than their predecessors. - RNUG - Thursday, Mar 12, 15 @ 12:19 pm: == An adverse ruling could easily drop Chicago’s bond rating into junk status. == The bond raters already got their bad news a week or two ago when the 7th kicked the Chicago pension case back to the State courts. They’ve been expecting that SB-1 will be kicked out also but what is going to matter is what action the State takes in response to that happening. Remember, even some of the bond raters have either called for more revenue or hinted that the 5% income tax should have been made permanent. - RNUG - Thursday, Mar 12, 15 @ 12:21 pm: == Beside the pension issue, what was last time that the state used its police powers? == Illinois - Never - Rod - Thursday, Mar 12, 15 @ 12:23 pm: I have been reading these comments now for two days and I have to say anon’s analysis seems the strongest of all the posts I have read. In any case I suspect the decision will be issued as rapidly as possible. Amanda Vinicky last night seemed to believe the issuance of the decision could take a good while, I am totally unclear why she seemed to believe that. - Anonymous - Thursday, Mar 12, 15 @ 12:24 pm: - Seriously, folks, has anyone here heard of ANYTHING as sleazy and incompetent as this being done in another state? - Well, if you’re talking about shorting the pension payment, which is what Rauner is proposing, Christie has done it every year out in the Garden State. Quinn never shorted it. - Keyser Soze - Thursday, Mar 12, 15 @ 12:25 pm: The fix is in……4-3 THE state. Thomas gets the extra point. - Long time listener - Thursday, Mar 12, 15 @ 12:25 pm: Just going to throw something out here - maybe we can afford pensions. With a 2013 GDP of $720B isn’t this akin to a person making $60,000 a year not being able to afford an $8000 home because over 30 years his loan will cost twice that much. And as a side note, buying that $8000 home will save most high income people a lot in their overly high property taxes! - kcjenkins - Thursday, Mar 12, 15 @ 12:25 pm: Another point re the questioning - the Court has heard 18 public employee benefits/pension cases since 2000. Three Justices - Freeman, Thomas and Karmeier - split their votes in those cases right down the middle. Thus the significance of the questions from Justices Thomas and Karmeier suggesting serious qualms with the State. - dupage dan - Thursday, Mar 12, 15 @ 12:37 pm: === Shoedoctor - Thursday, Mar 12, 15 @ 11:44 am: Pensions were 75 % funded in 2000, last data from 2011 is 43%. Sound like the blame is more on the past 12 years and not Governors Thompson, Edgar and Ryan, right Willy? I know you are not partisan === Tell us what happened in 2003, shoe. Gov Ryan instituted an early retirement scheme that devastated the pension fund bottom line. The estimated number of folks who took him up on it was something like three times the number planned for. Ryan made the budget look good by getting folks off the payroll but it had a major effect on the percentage of the pension funded. - Robert the Bruce - Thursday, Mar 12, 15 @ 12:37 pm: @kcjenkins - any idea on how court rules when 4 justices don’t ask any questions while the other 3 hammer one side? I’m not trying to be snarky, just honestly wondering. - Norseman - Thursday, Mar 12, 15 @ 12:38 pm: Dude, read the report that can be found on this link: http://illinoissenatedemocrats.com/images/PDFS/2014/il_public_pension_reform.pdf - the Patriot - Thursday, Mar 12, 15 @ 12:39 pm: Don’t overlook how big this case is for all of your rights. If they can claim the police power creates an emergency at a time when the let income taxes go back down, education spending is up(according to Quinn) and revenues are at an all time high, there is little they can’t do with the police power. - Rich Miller - Thursday, Mar 12, 15 @ 12:39 pm: ===Tell us what happened in 2003=== In addition, there were the stock market/economic nosedives after 9/11/2001 and 2008. Plus, two pension holiday years under Blagojevich. It’s not at all unfair to blame the Dems for those holidays. - RNUG - Thursday, Mar 12, 15 @ 12:45 pm: == Can you explain the state exemption from paying Social Security, and how or if they could foreseeably lose that exemption if their retirement plan is less than what SS would pay? == You want ANYONE to manage to explain SS rules? Seriously, the IRS has a whole bunch of regulations about exactly how pension systems must be run. Government entities get some latitude compared to the private sector. To avoid being part of SS, the more or less bottom line is a state plan has to provide equivalent benefits to SS. It takes a bunch of CPAs to figure that out. The non-coordinated ‘Tier 1′ plan (everybody other than most SERS) has been judged to do that; the coordinated ‘Tier 1′ plan (most SERS) also does that because that group contributes to both the state plan and SS. Moving to ‘Tier 2′, the non-coordinated members (everybody other than most SERS) MAY someday end up with a plan that doesn’t meet IRS rules. Then we’ll see a whole bunch of CPAs exchanging spreadsheets to try to determine that. Coordinated ‘Tier 2′ members (most SERS) won’t be part of this discussion because they are already paying into SS. I know this doesn’t really answer your question but that would require a whole bunch of math and, to be honest, the only assumptions / opinions that matter are what the IRS eventually decides. - Last Bull Moose - Thursday, Mar 12, 15 @ 1:14 pm: Having the State of Illinois use its police powers to violate the takings clause of the Federal Constitution does not sound like a good plan. - kcjenkins - Thursday, Mar 12, 15 @ 1:15 pm: ==@kcjenkins - any idea on how court rules when 4 justices don’t ask any questions while the other 3 hammer one side?== Like SCOTUS, each of the Justices has different patterns as to how active they tend to be at oral argument. For 2014 in civil cases, Justice Thomas asked 238 questions, Justice Burke 147, Justice Theis 145. The Chief Justice and Justice Karmeier are next at 86 and 73, with Justices Freeman and Kilbride being the least active questioners. Of course every case is different - this one especially so - but for several of the Justices, active questioning can suggest that the Justice either is writing the majority, or is writing a dissent. For the usually more active questioners, having no questions may suggest that they’re joining another Justice’s opinion, and/or had no issues they wanted to raise with the attorneys. - Shoedoctor - Thursday, Mar 12, 15 @ 1:21 pm: Blago was took office in January 2003. Ryan can share the blame for anything before that I know there is plenty to go around - Oswego Willy - Thursday, Mar 12, 15 @ 1:26 pm: ===Can’t you admit Madigan and Cullerton are also responsible? Blamining others when they have 80 years in Springfield is really too much=== ===Blago was took office in January 2003. Ryan can share the blame for anything before that I know there is plenty to go around=== You sure there’s plenty of blame to go around? lol Trolls… - dupage dan - Thursday, Mar 12, 15 @ 1:45 pm: === - Rich Miller - Thursday, Mar 12, 15 @ 12:39 pm: ===Tell us what happened in 2003=== In addition, there were the stock market/economic nosedives after 9/11/2001 and 2008. Plus, two pension holiday years under Blagojevich. It’s not at all unfair to blame the Dems for those holidays. There is plenty of blame to go around. Afix the blame as you will - that don’t pay the piper. What should be done now? Isn’t that what we should be about? All we have going on now is a likely failed attempt at diminishing pensions unconstitutionally and some vague plan to “negotiate” (with who?) after the decision is published. The math is known. A plan exists. There is no political will to look at reality and deal with it rationally. Rauner still hasn’t detailed a logical plan. Folks trying to get Chuy to reveal his plan end up with “creative solutions”. Right - that’ll do it. But, since we have never missed a payment, we can just sit back and relax. I’m taking the word of the word. - Demoralized - Thursday, Mar 12, 15 @ 2:02 pm: DD: Nobody is saying sit back and relax. NOBODY. What people are saying is do something that is Constitutional. There are options. - Anonymous - Thursday, Mar 12, 15 @ 2:05 pm: RNUG 11:49 — Thanks - SAP - Thursday, Mar 12, 15 @ 2:11 pm: I think that a decision that the State could use police powers to get out of a financial obligation by intoning the magic word “fiscal emergency” would upset the ratings agencies and bond houses a lot more than a decision upholding the pension protection clause. - Anonymous - Thursday, Mar 12, 15 @ 2:20 pm: Kcjenkins - any stats on cases where the ratio is 10:1? - Six Degrees of Separation - Thursday, Mar 12, 15 @ 2:38 pm: DuPage Dan 1:45 Gov. Rauner’s plan has not had a constitutional test case yet, and RNUG has his doubts that it would survive ISC scrutiny….but he did throw out a plan to lock in the accrued benefits (including the 3% AAI) for all current retirees forever, and current Tier 1 employees up to a cutoff date, then switch the current Tier 1 employees to Tier 2 (so that they would have a mixed benefit of Tier 1 with 3% AAI and Tier 2 with a lower AAI when they started collecting). There would be many on both sides of the aisle who’d think it would be worth it to pass such a law as a test case…after all, if ISC soon throws out SB1 in its entirety, the state doesn’t have anything more to lose at that point and everything to gain in the faint hope that a “going forward” switch of Tier 1 employees to Tier 2 is not viewed as a diminishment by the court. - ChiTownSeven - Thursday, Mar 12, 15 @ 2:51 pm: Posting here because I’m interested in what this team has to say. There are at least 2 other areas that could be developed and fleshed out to help solve the pension problems created by the State. First, statutes could be revised to give some public workers (especially Tier 1s) some consideration in return for some concessions. One form of consideration could be some revisions to current work terms and conditions — such as more personal time off or greater healthcare benefits for TODAY’s workers who make pension concessions. Another strategy would be to transfer some State assets to the pension funds, who could then utlize them to gain additional money or revenue. This isn’t as far-fetched as it seems — for instance, one of the Canadian public pension funds has ownership interest in several public airports. Now, while it might not be politically popular to transfer the Chicago Tollway, for instance, to the pension funds, this is one other strategy available to the State. Maybe tranfer the Lottery to TRS and CTPF — at least then the Lottery will be funding educators (if not education as originally promised by General Assembly). - ChiTownSeven - Thursday, Mar 12, 15 @ 3:02 pm: We noted this yesterday but it’s worth repeating. The argument that the pension-protection clause is not subject to a police powers exception is strengthened by its parallels to the “takings clause” of the federal and state constitutions. Even in time of war (arguable a true emergency), the courts held that the federal government could not “take” private property without compensation, as required in the Constitution. In other words, an absolute prohibition, not subject to emergency or policy powers. - Skeptic - Thursday, Mar 12, 15 @ 3:25 pm: “the state doesn’t have anything more to lose at that point” Sure they do. If your premise correct (that even that law would get thrown out) then the State would be even further behind in making up the shortfall. - kcjenkins - Thursday, Mar 12, 15 @ 3:38 pm: ==Anonymous - Thursday, Mar 12, 15 @ 2:20 pm: ==Kcjenkins - any stats on cases where the ratio is 10:1? In civil cases argued since 2008 where the appellant was asked ten times or more the questions appellee was asked: 7 affirmances; 1 affirmed in part, reversed in part; 0 reversals. - Anonymous - Thursday, Mar 12, 15 @ 3:39 pm: I have to agree with anon and respectfully disagree, in part, with kcjenkins. The Illinois Supreme Court is not a particularly “hot bench.” If you listen to a U.S. Supreme Court or 7th Circuit argument, you will hear hot benches. The parties yesterday would ‘t have gone 30 seconds without getting questions (from all directions) in those courts. I think that part of the reason for the relative passivity of the Ill. Supreme Court is its practice of assigning justices to opinions in advance. That can lead one justice to really prepare for each argument–and cause others to coast. And yes, I’ve argued a bunch of appeals, and sat in my on many others, in Illinois and elsewhere. - Anonymous - Thursday, Mar 12, 15 @ 3:42 pm: I study pensions for a living. The state doesn’t realize how good they have it right now. With the exception of the medical insurance bone that was thrown to the retirees, the current defined benefit system is the cheapest option. - anon - Thursday, Mar 12, 15 @ 4:05 pm: Also, the illinois Supreme Court tends to be less active at argument in cases it receives by appeal as a matter of right than those it chooses to hear by exercise of discretion. It was notorious for lack of questions in death penalty cases which were automatic review. Here, a finding of unconstitutionality by the ocurt below is automatic review as well. - Bulldog 58 - Thursday, Mar 12, 15 @ 4:30 pm: ==“going forward” switch of Tier 1 employees to Tier 2 is not viewed as a diminishment by the court== Unless the court rules that the pension clause goes into full effect upon an employees date of hire. - Six Degrees of Separation - Thursday, Mar 12, 15 @ 4:39 pm: the State would be even further behind in making up the shortfall. How so? The state is taking out the full 3% AAI for everyone right now. If they successfully passed such a law and it survived challenge, they would be taking out a lesser amount for some retirees (granted it would be a trickle the first year it went into effect, and wouldn’t yield substantial results until a few years down the road). The 500 lb gorilla of accumulated pension debt (whichever multiplier is used)is gonna be there either way. - Six Degrees of Separation - Thursday, Mar 12, 15 @ 4:45 pm: Bulldog- We may not get enough clues from the SB 1 ruling as to whether Rauner’s proposal would pass the diminishment test…many are hoping their elaboration will give us some clue as to what if any, benefits could be changed going forward, if the previously acquired benefits are left intact going backward and fully paid going forward. SB 1 unfortunately was not constructed in a way that we will know for sure. - Archiesmom - Thursday, Mar 12, 15 @ 4:46 pm: Anonymous 3:39 – I have to say that I was shocked at the fact no questions were asked fairly deep into the solicitor General’s presentation. I really expected them to be jumping in much sooner. And I have to say I was very surprised at how few questions there were in total. It makes me wonder, especially in light of Kanerva’s 6-1 decision, whether there is any real discussion of the ultimate outcome in this case. - Iron Duke - Thursday, Mar 12, 15 @ 4:47 pm: I cannot imagine how this would not be considered a fiscal emergency requiring police powers. In 2011 the pensions were underfunded 83 billion. The state temporarily raised the income tax from 3 percent to 5 percent effectively taking one weeks more pay from every worker. 90 percent of those taxes were used to pay the pensions which now consume 1/4 of our taxes. What did that get us? The latest figures are $110 billion unfunded. The Dow was at 11,600 in January 2011 and is now over 17,000 and our pension funds are worse off. - RNUG - Thursday, Mar 12, 15 @ 5:03 pm: == Unless the court rules that the pension clause goes into full effect upon an employees date of hire. == From 1970 to now, the court has held the rules at the date of hire plus granted enhancements are covered by the pension clause. - RNUG - Thursday, Mar 12, 15 @ 5:07 pm: == - Six Degrees of Separation - Thursday, Mar 12, 15 @ 4:39 pm: == You are misconstruing things. The State is paying out the 3% annual increase (AAI) every year. The State in the FY16 proposed budget is planning to make a less than “required” level of payment into the pension funding systems. So the state will be digging a deeper hole by whatever amount it does not pay in FY16. - RNUG - Thursday, Mar 12, 15 @ 5:13 pm: == I cannot imagine how this would not be considered a fiscal emergency requiring police powers. == Go read the briefs. The short version is: 1) it was a foreseeable problem (see 1970 Con-Con debate) 2) the State created the problem by not doing proper funding 3) the State has the tools (budget cuts, tax increases) to fix the problem but lacks the political will 4) it’s not an emergency if you both foresaw it and created it 5) finally (or maybe first), the pension clause did not allow for a police powers escape clause - Iron Duke - Thursday, Mar 12, 15 @ 5:25 pm: How can our contributions go up for at least the past 4 years, the stock market almost triple and the pension funds be more unfunded? There is a hole in the ship. What is the tax rate needed to fund this properly if 5 percent did not do the trick. Good luck getting a tax increase. They can’t even agree to extend the 5 percent and Madigan wants the Millionaire tax to just go to Education. I try to follow the news but this Illinois budget makes absolutely no sense. - Rich Miller - Thursday, Mar 12, 15 @ 5:28 pm: ===What is the tax rate needed to fund this properly if 5 percent did not do the trick.=== It actually did, mostly. The reason the budget is in such fiscal trouble now is that the tax hike mostly expired. Perhaps you didn’t notice that, or can’t do simple math. - Anonymous - Thursday, Mar 12, 15 @ 5:28 pm: Archiesmom: While many of the Justices are fine people and competent lawyers, our elective system usually does not operate to put the first string on the Supreme Court. Merit selection systems, while not perfect, usually put more accomplished judges on the bench. The Illinois Supreme Court hasn’t had a nationally-recognized judicial star since Walter Schaefer- who was appointed, under a different system, to fill a vacancy by then- Gov. Stevenson in 1951. - Iron Duke - Thursday, Mar 12, 15 @ 5:32 pm: Rich explain the simple math where we make the required contributions for 4 years and the unfunded goes up from 83 to 110 billion? The tax hike expired two and a half months ago - RNUG - Thursday, Mar 12, 15 @ 5:33 pm: - Iron Duke - What you need to understand is the “required” payments are NOT the full amount that needs to be paid every year. The 1995 ramp is gradually going up to the full level and it is back-end loaded in terms of it’s payment schedule … the last 5 years or so are really big balloon payments. - Rich Miller - Thursday, Mar 12, 15 @ 5:33 pm: ===explain the simple math where we make the required contributions for 4 years === The key word in your sentence is “required.” The answer to your question is required did not equal actuarially full. - Rich Miller - Thursday, Mar 12, 15 @ 5:39 pm: ===The tax hike expired two and a half months ago=== Yes it did. And you are aware what that did to this year’s budget and next year’s right? But since you don’t comprehend the difference between required and full, I think you may need to go read up a bit. The tax rate had nothing to do with causing the amount of the pension payment. The payment was set many years ago. The tax rate was a way to make said pre-scheduled pension payments. A lower tax rate makes that impossible without huge cuts. Do you think you can wrap your brain around those concepts? Or are you more interested in throwing out ridiculous talking points that sound good to an ingrate? - Six Degrees of Separation - Thursday, Mar 12, 15 @ 5:40 pm: In the immediate sense, there is no emergency. For SERS, the fund improved its fiduciary position from FY 2013 to FY 2014 by $741 million, and gained $4.138 billion in assets while paying out only $1.957 billion mostly in benefits and refunds. It had $14.6 billion in assets, enough to pay several years of pensions even if it never collected another dime. Like many others have said, the long term debt doesn’t have to be paid anytime soon, and so there are ways to deal with the issue on a long term basis if it is not kicked down the road and the political will exists. - Archiesmom - Thursday, Mar 12, 15 @ 5:41 pm: Anonymous – I find that very interesting perspective. I moved here from a state that appoints it’s Supreme Court justices, and I have found the Illinois bench to be much more intelligent and involved then the bench in my previous state. There may be no superstars on it, but I’ve seen the quality of their work to be fairly consistently good. Appointing judges may be a better system, and I think it probably is, but I’ve seen some pretty questionable appointments to the bench as well. - Six Degrees of Separation - Thursday, Mar 12, 15 @ 5:47 pm: A few really good years of pension investment returns could improve the short term prognosis even further. That’s how the systems went from 40% funded in the 70’s to nearly 80% funded in 2000, a lot of it gained during the Clinton years stock market boom. - Andy S. - Thursday, Mar 12, 15 @ 6:38 pm: explain the simple math where we make the required contributions for 4 years and the unfunded goes up from 83 to 110 billion? Iron Duke, a large part of the explanation is that the retirement systems have all drastically reduced their assumed future rates of investment returns, and increased the assumed life expectancies of the pension recipients. The former has by far the largest effect; for example, SURS in 2010 was assuming 8.5% returns and it is now assuming 7.25%. Given the inverse relation between the present value of expected future cash payouts and assumed return, these return reductions by themselves likely account for tens of billions of dollars in increased unfunded liability. The only good news is that the retirement systems are now making fairly conservative assumptions, so it is unlikely that we will see further increases in unfunded liabilities unless markets tank or the State fails to make its required contributions. - Wordslinger - Thursday, Mar 12, 15 @ 6:39 pm: Iron Duke, I think Iron Head is a better fit. Ciphering is not your thing, Jethro. Maybe a Double-Ought spy. - Mitch59 - Thursday, Mar 12, 15 @ 6:42 pm: I was promised in 2001 a pension plan! I have paid in for 14 years thinking of my return! I will retire at age 62 unless they diminish my retirement! This should change only with new hires as they can accept the job as is, or reject the job as is! - CapFax Reader - Thursday, Mar 12, 15 @ 8:41 pm: @AZ Bob 10:41 ==Seriously, folks, has anyone here heard of ANYTHING as sleazy and incompetent as this being done in another state?== I think I remember hearing about one other state that tried to reneg on its Pension obligations. It was Arizona. And the AZ SC threw it out! - Anonymous - Thursday, Mar 12, 15 @ 8:50 pm: Archiesmom - While every justice, of course, need not be from a national law school, it likely makes a difference to the tone of the court that none of the current justices are from the national schools. (One is from Illinois, and one from Iowa.) In the past 35 years, if my count is correct, two Justices had gone to Northwestern Law, one to Vanderbilt, 2 to Illinois, and 3 to Wash U. There were none from the top tier of law schools (into which Northwestern has more recently been climbing). New York’s highest court has a Columbia grad, 2 NYU grads, and a University of Chicago (!) grad. California has 3 Yale Law alums. Massachusetts has 4 Harvard grads (and a Wisconsin grad). Michigan has one each from Harvard, NYU, Michigan, and Northwestern. Even Texas has a Duke Law alum along with a Texas grad. Again, great lawyers and judge come from every school. But the absence of any justices (or, indeed, almost any judges anywhere in the state) from the top law schools makes a difference to the perspective and quality of the judiciary. - RNUG - Thursday, Mar 12, 15 @ 9:14 pm: - Mitch59 - Stay calm. You should be fine. - West Side the Best Side - Thursday, Mar 12, 15 @ 9:48 pm: Anonymous - As a criminal law practitioner, I kind of prefer appellate level justices who have spent time as trial judges. (And of course trail judges who have been trial attorneys.) Many of the top tier justices - all the way up to SCOTUS - have spent their careers as clerks to top tier judges and in law schools, never trying cases, which sometimes really doesn’t inspire much confidence in common sense/street smart decisions us criminal law types like. (I will for today avoid the topic of the quality of some judges who make the bench for of political connection/race/gender/etc. reasons. See the For What It’s Worth blog regarding that.) And we probably shouldn’t be surprised NY has NYU and Columbia, Mass. has Harvard and Mich. has Michigan. Some people want to stay close to home. California … it’s California. - Anonymous - Thursday, Mar 12, 15 @ 10:10 pm: West Side- I absolutely agree we want many appellate judges with trial experience. And we certainly don’t want courts filled only with law professors. But there are plenty of lawyers in Illinois from Chicago, Northwestern, and the other national law schools with lots of trial court experience — and street smarts. Those shouldn’t be the only people on the Supreme Court. It would be nice to have some of them. Sorry, comments for this post are now closed.