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Pension proposals on the move

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* From Crain’s

Abbott Laboratories chief Miles White had a pointed message for the Democratic and Republican leaders of the Illinois House when he met with them recently: “We have options.”

The statement, confirmed by reliable sources, was an unmistakable reference to the fact that the huge biotech firm owns a ton of property in southern Wisconsin, property that it could use to expand, rather than adding to its Illinois workforce.

Mr. White’s message was the latest sign that business is getting serious about its drive to get the Illinois General Assembly to reform the state’s crumbling employee pension plans, preferably in the fall veto session. And, in fact, the biz guys may be as close to winning as they’ve ever been. […]

They’re prepared to spend $1 million on media ads and have stepped up direct contacts with state workers and teachers covered by the Illinois pension funds, going around union leaders.

* React from the Illinois Federation of Teachers…

The millionaires group has received a million dollars worth of free media over the past couple of years each time they say they’re going to spend $1 million on media ads. It’s the equivalent of rock star millionaires getting all that free swag.

The IFT is right. The biz guys have threatened to run that million dollar ad buy in the past, and it never materialized.

* Abbott Labs has also contributed $75,000 to legislators since the middle of September.

And I’m hearing there’s some polling being done on the issue.

* From a press release…

In a speech at the City Club of Chicago this afternoon, Illinois House Republican Leader Tom Cross announced that he filed a bill today that will help give more accountability to taxpayers by reconstituting the City of Chicago and Cook County pension boards. The bill, which will be sponsored by Senator Matt Murphy (R-Palatine) in the Senate, will also require pension boards statewide to refer any suspected fraud to the local authorities.

“Recent media reports have unveiled abuses in the Chicago Pension Funds that were not reported to the proper authorities for punishment or investigation. We believe these matters should have and still should be reported to law enforcement. We mandate that in our bill,” said Cross. “We also believe the pension boards in the City of Chicago and Cook County need a fresh start—that’s why we are seeking reconstitution.”

The bill is here.

As you already know, Leader Cross has sponsored another bill which prevents union leaders from drawing pensions years after they were on the city payroll. The pensions weren’t based on their city salaries, but on their union wages.

But while Cross’ bill applies to the Chicago Teachers Pension Fund, which is not directly funded by the state, it doesn’t include a provision for the Teachers Retirement System, which covers Downstate and suburban teachers and has a union leader provisions as the city pension laws

[”Teacher” is defined as] Any officer or employee of a statewide teacher organization or officer of a national teacher organization who is certified under the law governing certification of teachers, provided: (i) the individual had previously established creditable service under this Article, (ii) the individual files with the system an irrevocable election to become a member, and (iii) the individual does not receive credit for such service under any other Article of this Code;

Asked why Cross left out the TRS, a spokesperson replied…

We were just dealing with the City of Chicago which was the reported problem.

I’m sure it had nothing whatsoever to do with the fact that the Illinois Education Association has backed so many Republican legislative candidates over the years.

* Ummm

Following his recent failed bid for governor, Republican Adam Andrzejewski is making pension reform his next mission.

Andrzejewski says he doesn’t have any specific proposals, but he stresses that the pension system is bloated because not enough state workers are paying into the system and union leaders are raking in big bucks at the expense of rank and file state workers.

Not enough state workers are paying into the system? Unless they’re on contract, they’re all paying in, aren’t they?

…Adding… Andrzejewski just called to say he was misquoted. What he said was that a majority of teachers aren’t paying enough into the pension fund. That’s still not accurate, of course, since those teachers negotiated with their districts to pick up their share of the pension payments. If you made those teachers pay their share again, they’d just negotiate to retrieve their foregone wage hikes.

* Related…

* Pension issues likely to resurface in veto session: NIU’s State Pension and Budget Update website once again will provide up-to-the minute information on these topics as they develop.

* Civic Committee calls on General Assembly to address pension crisis

posted by Rich Miller
Wednesday, Oct 5, 11 @ 2:31 pm


  1. “…will also require pension boards statewide to refer any suspected fraud to the local authorities.”

    Shouldn’t that already be happening? Do we need a new law for that?

    But my favorite is, “Andrzejewski says he doesn’t have any specific proposals…”

    Of course not but he does want credit for anything good that might pass. No news there.

    Comment by just sayin' Wednesday, Oct 5, 11 @ 2:43 pm

  2. For his sake, I hope Hinz “reliable sources” are better than the ones that gave him Indiana’s phantom $150 million incentive package for CME.

    I don’t know how much the Civic Committee spent earlier on media, but they were on the radio a ton with their pension message when the GA was in session.

    Comment by wordslinger Wednesday, Oct 5, 11 @ 2:51 pm

  3. I All the State workers I know are paying into the pension system. Adam must be referring to the State itself, who wasn’t paying into the pension system, hence the problem with the pension debt.

    Comment by Irish Wednesday, Oct 5, 11 @ 2:55 pm

  4. If your Ritalin dose has been properly adhered to, this somehwhat rambling story about this same issue in California is well worth the read:

    Comment by Quinn T. Sential Wednesday, Oct 5, 11 @ 3:05 pm

  5. I’m absolutely schocked, SHOCKED, that “Leader” Cross would only address the ills of the Chicago system while leaving intact the downstate system, of which all of his constituent-teachers, constituent-labor leaders, and his constituent-unions (IEA) are part.

    Shocked, I say, shocked. I’m sure it was an oversight.

    Comment by Thoughts... Wednesday, Oct 5, 11 @ 3:06 pm

  6. Even the six month temps they hire at IDOT pay into the system. If they never get enough time to draw then they can get what they paid in back with no interest. This state has wasted enough money in the past to more than cover pension costs. It will continue to waste money on everything but it’s obligations to the employees who more that pay their part!

    Comment by Nieva Wednesday, Oct 5, 11 @ 3:13 pm

  7. Instead of asking why Cross is trying to fix the Chicago teacher’s pension system, why aren’t we asking why Madigan is trying to fix the Chicago teacher’s pension system. I’m sure it has nothing to do whatsoever with the fact that the IFT has backed so many Democratic legislative candidates over the years.

    Comment by Just Me Wednesday, Oct 5, 11 @ 3:24 pm

  8. Is Rep. Cross going to fund that mandate?

    Comment by Michelle Flaherty Wednesday, Oct 5, 11 @ 3:27 pm

  9. FWIW, even susbsitute teachers pay into the retirement and healthcare systems downstate. Not that they get to partake in either of those systems, but they still contribute 1-5% (I forget what I paid a few years ago).

    Comment by Colossus Wednesday, Oct 5, 11 @ 3:39 pm

  10. Maybe Miles White could donate some of his bloated salary to help the state out of it’s pension crisis. These blowhard business leaders should worry about creating jobs instead of piling on people who actually have to work for a living.

    Comment by Demoralized Wednesday, Oct 5, 11 @ 3:43 pm

  11. The biggest distortion of the issues surrounding pension funding is that state workers, police and fire, and teachers are somehow to blame for the situation. They are paying into the system and have been paying into the system. It’s required. The problem is that the state has not paid its share into the system. Skipping payments for years has finally come to roost and union members are getting the heat for it. They are not to blame, the state is.

    Comment by Seriously??? Wednesday, Oct 5, 11 @ 3:47 pm

  12. The business leaders just want to deflect talk about changing the business tax by using the hot button of the year, public pensions. They’re afraid they might have to pay more in taxes.

    All the employee pension abuse by union leaders and double-dippers is the proverbial drop in the bucket compared top the long term and continuous underfunding by the State, who spent the money on other programs instead of performing their fiduciary duty and funding the pensions systems.

    Comment by Retired Non-Union Guy Wednesday, Oct 5, 11 @ 3:51 pm

  13. I agree with all the posts that the state underfunding is mainly to blame. However, people retiring at 55 with full pensions is not a sustainable retirement system. Besides the fact that no one here has invented a time machine, we have to fix the problem moving forward, not backward. We either need to extend the tax increase that is set to expire at the end of 2014 or we need some modest pension reform. Those are the two options.

    Additionally, on the local level, it’s not entirely the local governments fault on the pensions, I don’t see any of the firefighters unions or police unions taking their share of blame for the pension sweeteners they lobbied for through the past 10 years.

    I will say this, for all of the above, the legislators are to blame. They should just make a modest fix and take the heat they deserve.

    Comment by Ahoy Wednesday, Oct 5, 11 @ 4:03 pm

  14. I think Adam may have meant/said “state workers are not paying enough into the system,” rather than the quoted, “not enough workers are paying into the system.” You did take the quote from a news story so it is quite possible that it got garbled by the reporter.

    I think Adam knows the difference.

    Comment by Adam Smith Wednesday, Oct 5, 11 @ 4:54 pm

  15. I get tired of mis-informed people saying State employees get a full pension at age 55. Other than the “2.2 / safety / hazardous duty” people like police & prison guards, even under the “old” rules none of us get to retire at 55 with a “full” pension. Taking the SERS system (normal state employees) as an example, the formula is 1.67% per year and a maximum of 75% = 44 years and 10 months. Assuming you start straight out of high school at age 18, you are 63 when you can retire with a “full” pension. If you were to start after college at age 23, then you would be 67 at retirement. Any less and you get a pension based on the years of service, which is then less than “full”.

    Even with the pension sweeteners offered under some of the early retirement programs such as the 2002 ERI when you could buy 5 years of service, you couldn’t end up with 75% at age 55. The best you could theoretically do was about 70%.

    State employees don’t get to retire at 55 with full pensions; only the elected officials get those kind of deals … and they actually pay more into their retirement system in exchange for it.

    Comment by Retired Non-Union Guy Wednesday, Oct 5, 11 @ 5:01 pm

  16. Ahoy,
    You might want to check out the new tier of reduced pension benefits for new employees that was approved in 2009.
    It might be the “modest” (and more importantly constitutional) fix you’re seeking.

    Comment by Michelle Flaherty Wednesday, Oct 5, 11 @ 6:00 pm

  17. I do not think the 2009 law was modest and believe it was too far the other way.

    Constitutional is an interpretation.

    Comment by Anonymous Wednesday, Oct 5, 11 @ 6:10 pm

  18. I hope they have some direct contact with us. I personally would like to punch that millionaire in the nose.

    Comment by Non-retired guy Wednesday, Oct 5, 11 @ 8:20 pm

  19. ASCFME or someone like that has to educate the public on what these pensions really are. They’re not the Chicago/Union pensions, they’re not the police/fire pensions, they’re not the School Superintendent pensions. They’re pretty cruddy for most State employees, but at least something.

    Comment by park Wednesday, Oct 5, 11 @ 8:33 pm

  20. I’ve been saying on here for a year that the unions need to spend some money on TV advertising and get out in front of the pension story, telling the facts about it as opposed to the distorted stories hitting the press. Heck, even some of the readers here don’t get the facts straight. The unions finally did get their act together a bit this spring … but too little, too late. They need to do it again.

    What the union leaders don’t seem to understand is if they lose the pension fight where they have the facts on their side (underfunding by the State is a major reason for the shortfall), they’re going to lose the rest of it also …

    Comment by Retired Non-Union Guy Wednesday, Oct 5, 11 @ 8:38 pm

  21. I’m hoping the General Assembly is planning to include themselves in any “fix” that they come up with……

    Comment by The Steamer Wednesday, Oct 5, 11 @ 8:55 pm

  22. Not all retired state employees have it as good as you think. I had enough time to retiree but could have stayed longer but chose not to. I get 62% of my final salary- I’m not starving- but not going to be a world traveler either!

    Comment by Retired state employee 34-29 Wednesday, Oct 5, 11 @ 11:32 pm

  23. The cash value of Miles White’s pension, according to the Tribune is $25 million. And his job as CEO at Abbott is only part-time. He also serves on the boards of McDonald’s and Caterpillar for which he receives several hundred thousands of dollars a year on top of the $20 million he pulled in from Abbott last year.
    Compare that to the salary and pensions of teachers, firefighters, nurses and other public servants whose average pension in Illinois is $32k, and 80% of them, unlike White, have no social security to supplement their pensions.

    And if you think that taxpayers are not underwriting White’s bloated pay and pension, guess again. About one-half of every dollar spent on medical care comes from government programs-Medicare, Medicaid, Vet’s health care, and healthcare for public employees. That means we’re all kicking in for White’s compensation package.

    Comment by truthteller Thursday, Oct 6, 11 @ 5:35 am

  24. So the millionaires that caused the Great Recession, and who are still increasing their wealth at the expense of the middle class, are trying to double down on the recession that, along with state-underfunding is the cause of the pension’s unfunded liabilities by calling the pension bloated and unsustainable? Wow! The pension ramp up law that was an attempt to force the state to get back on track with their missed payments is being used as proof that the pensions are bloated. When the pension ramp was passed, we weren’t in a recession. Modifying it’s payment structure, so that the ramp up doesn’t occur until we come out of the recession is where the legislature should be focusing its efforts. That, and telling Ty Faynor and the other plutocrats to take a hike.

    Comment by PublicServant Thursday, Oct 6, 11 @ 6:35 am

  25. State workers should boycott Abbott Labs products and any products sold by Miles White’s buddies, who are trying to rape the State Pension system. All these millionaires care about is keeping their taxes low, so they can make even more money. Take away their sales and they won’t have to worry about paying taxes. This is a capitalist country, we can take our purchases elsewhere. If Abbott Labs loses enough sales, the Board can replace Mr. White. Thousands of State workers, teachers, police, and firefighters can show these millionaires that their actions can have negative results to their companies.

    Comment by Working hard in Southern IL Thursday, Oct 6, 11 @ 8:39 am

  26. Posts like the above are exactly why we are in this mess in the first place. The “me first” and “gotta get mine” and jealousy and demonizing of others, as if its a zero sum game and the rich are “stealing” from you is just ridiculous and gets people like Quinn, Madigan and Cullerton elected over and over again.

    Comment by Chris Thursday, Oct 6, 11 @ 9:14 am

  27. The commercial club(millionaires ) is going to ramp up thier divide and conquer campaign

    Comment by foster brooks Thursday, Oct 6, 11 @ 9:21 am

  28. –I think Adam may have meant/said “state workers are not paying enough into the system,” rather than the quoted, “not enough workers are paying into the system.” You did take the quote from a news story so it is quite possible that it got garbled by the reporter–

    Perhaps a forensic audit is in order to get to the bottom of this.

    Doesn’t Joe Walsh already have that job, anyway? Do we need another one?

    Comment by wordslinger Thursday, Oct 6, 11 @ 10:28 am

  29. Me first? Gotta get mine? If your talking about union leader abuses and the extreme outliers in the pension systems, then create a bill that addresses the abuses in the system. But that’s not what we’re talking about here.

    The attitude producing “Me first” and “Gotta get mine” statements that allegedly represent the typical state employee outlook is what gets me angry. It has no basis in reality.

    I’m a non-union state employee. I provided my services to the state (you, through your elected reps) in a contractual relationship. In exchange for the services provided, I was given a current salary and access to a pension that I paid into each paycheck I received. Far from “Me too”, it’s a simple contract, and I expect to be paid that very modest pension after I retire. Doesn’t get any plainer than that.

    And it’s the attitude of Joey and their ilk spewing falsehoods and using outliers to support their contention that the pension is “bloated” and “unsustainable”, that is causing the current uproar.

    Furthermore, the members of the Civic Committee are rich by any standard, and they want to “reform” my middle class pension before they’re asked to pay there fair share, so yeah, I think it’s class warfare, being perpatrated by the rich against the middle class. They cause the recession, Illinois revenues, and the value of people’s homes tank, the middle class loses their jobs and they try to turn it into a private vs public sector middle class war. I, for one, am going to fight to make sure that doesn’t happen.

    Comment by PublicServant Thursday, Oct 6, 11 @ 11:50 am

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