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* Gregory G. Katsas, Brian J. Murray and Anthony J. Dick are identified as “constitutional and appellate lawyers at Jones Day” for their Crain’s op-ed about the governor’s proposal to move all active state workers into a Tier 2 retirement plan…
Unlike the law just struck down, Rauner’s proposal operates entirely on a going-forward basis: It guarantees that workers will keep every cent of every pension benefit earned for past service under current law, and it thus leaves current retirees unaffected. At the same time, his proposal saves the state budget by slightly modifying the formula used to calculate benefits based on future service. […]
According to the critics of Rauner’s proposal, the pension “benefits” protected by the Illinois Constitution include not only earned pension benefits but every aspect of the pension formula used to calculate future benefits. On this reading, every employee who has drawn a public salary for even one day has a right to continue earning future benefits under the same formula for the entire course of his working life. If this view prevails, it will force the state to continue racking up staggering pension liabilities for decades to come.
We recognize that the Illinois Supreme Court’s recent decision contains language broadly stating that “benefit calculation formulas are entitled to constitutional protection.” Nonetheless, Illinois courts never have squarely addressed whether pension formulas can be modified only as to future years of service.
On the contrary, the court’s decision emphasized that pension benefits are not protected until the employee “complies with any qualifications imposed when the additional benefits were first offered.” This means that as long as the Legislature changes the pension formula to be applied to future years of service, employees will have a fair chance to decide whether to continue working for the state while earning new retirement benefits based on the new formula.
* I dunno. From last week’s Supreme Court ruling. Emphasis added…
Under article XIII, section 5, members of pension plans subject to its provisions have a legally enforceable right to receive the benefits they have been promised. People ex rel. Sklodowski v. State, 182 Ill. 2d 220, 229-32 (1998); McNamee v. State, 173 Ill. 2d 433, 444-46 (1996). The protections afforded to such benefits by article XIII, section 5 attach once an individual first embarks upon employment in a position covered by a public retirement system, not when the employee ultimately retires. See Di Falco v. Board of Trustees of the Firemen’s Pension Fund of the Wood Dale Fire Protection District No. One, 122 Ill. 2d 22, 26 (1988). Accordingly, once an individual begins work and becomes a member of a public retirement system, any subsequent changes to the Pension Code that would diminish the benefits conferred by membership in the retirement system cannot be applied to that individual. Buddell v. Board of Trustees, State University Retirement System, 118 Ill. 2d 99, 105-06 (1987) (pension protection clause barred statutory change in Pension Code which prevented current pension system member from purchasing service credit for time spent in military); Felt v. Board of Trustees of the Judges Retirement System, 107 Ill. 2d 158, 162-63 (1985) (amendment to Pension Code adversely affecting base salary used to compute annuity impermissibly reduced retirement benefits of existing retirement system members in violation of pension protection clause); Kraus v. Board of Trustees of the Police Pension Fund, 72 Ill. App. 3d 833, 844-48 (1979) (change in Pension Code’s method of computing a police officer’s pensionable salary in a way that would reduce the amount of the pension could not, under the pension protection clause, be applied to persons who were members of the retirement system prior to the amendment’s effective date); Miller v. Retirement Board of Policemen’s Annuity & Benefit Fund, 329 Ill. App. 3d 589 (2001) (amendments to Pension Code which reduced benefits of existing retirement system members with respect to eligibility for automatic annual increases unconstitutional under pension protection clause); Schroeder v. Morton Grove Police Pension Board, 219 Ill. App. 3d 697 (1991) (finding invalid, as violation of pension protection clause, amendment to Pension Code reducing pension benefits based on receipt of workers’ compensation benefits).
Your thoughts?
posted by Rich Miller
Tuesday, May 12, 15 @ 3:40 pm
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They’re still in denial.
Comment by slow down Tuesday, May 12, 15 @ 3:42 pm
What part of “no” don’t they understand?
Comment by Vote Quimby! Tuesday, May 12, 15 @ 3:45 pm
They seem to be translating ‘additional benefits’ as = to ‘new decreases in benefits’. They are just desirous of getting paid to take a new fight the ISC.
Comment by mythoughtis Tuesday, May 12, 15 @ 3:47 pm
Still in Stage One: Denial.
=== On the contrary, the court’s decision emphasized that pension benefits are not protected until the employee “complies with any qualifications imposed when the additional benefits were first offered.” ===
I guess we should not be surprised that the same people who didn’t understand “shall not be diminished or impaired” are struggling with the meaning of “additional benefits.”
There is no back-masking, no Morse Code, no secret signals.
The message, per Reboot Illinois, is clear and unequivocal: Pay Up.
Comment by Juvenal Tuesday, May 12, 15 @ 3:47 pm
Diminishment will always occur in the future — not the present or the past.
It can’t occur in the present because that would violate the constitution. And it can’t occur in the past because that would violate the constitution.
So a dimishment could occur in future because these are theoretical benefits and not yet earned? Great.
Diminish the future all you want. But as soon as the future stops and the present hits, the diminishment becomes unconstitutional. Am I wrong?
Comment by Frenchie Mendoza Tuesday, May 12, 15 @ 3:47 pm
I think what these opinions still fail to understand is that there is no such thing as benefits earned to date. In my reading of things there isn’t a cutoff that you can establish. Once you are in the system the rules that were in place at the time are the rules you operate under forever.
Comment by Demoralized Tuesday, May 12, 15 @ 3:48 pm
They must not have read the Felt or Peters decisions. From Felt,
“From these premises, the court observed Peters’ determination that annuities are based on length of service and salary, and any changes in those factors will affect the amount of the annuity and clearly effects a reduction or impairment in the retirement benefits to the plaintiffs.”
In Felt, judges were changed from annual salary at retirement (as the formula) to the average salary of their last year at retirement - found to be unconstitutional.
And Kraus:
Kraus both clarified the holding in Peters and concluded that the
Pension Clause “prohibits legislative action which directly diminishes the benefits to be received by those who became members of the pension system prior to the enactment of the legislation, though they are not yet eligible to retire.”
Comment by archimedes Tuesday, May 12, 15 @ 3:49 pm
OK I’ll bite. How are we going to pay for the liabilities we are now in arrears, even for the pension benefits you claim are valid?
Have fun with your legal arguments. The numbers don’t work.
Comment by walker Tuesday, May 12, 15 @ 3:50 pm
@Demoralized:
and any benefits added thereafter, from the moment they are added, whether or not you have yet qualified for them.
Comment by Juvenal Tuesday, May 12, 15 @ 3:50 pm
I’m in SURS. I can retire at 55 with 8 years of service or at any age with 30 years of service. How does one change the age provision without diminishing benefits I’ve already earned?
Comment by Anonymous Tuesday, May 12, 15 @ 3:51 pm
Sorry, hit send too early.
Demoralized, we do sometimes gain additional benefits along the way if the legislature says we can have them (things that increase our already earned benefits). None come to mind however.
Comment by mythoughtis Tuesday, May 12, 15 @ 3:51 pm
Gregory G. Katsas = former Thomas clerk (twice, actually, on the DC Circuit and SCOTUS); Brian J. Murray = former Scalia clerk; Anthony J. Dick = former Alito clerk. Just in case it wasn’t clear who’s buttering which side of whose bread.
Comment by Urbs In Horto Tuesday, May 12, 15 @ 3:53 pm
BTW — has this “future can be diminshed because these are benefits not yet earned” been applied to any contract anywhere?
You said you’d pay me 6 bucks an hour. We signed a contract. But for those hours I haven’t worked, you’re now saying you’ll pay me 3 bucks? What part of the “6 bucks an hour” don’t you understand?
I’d love to read the ISC opinion on this argument. The subtext of the recent pension argument seems to be: “You guys are playing games. We won’t be fooled. The constitution is clear.”
I mean, is there any chance this would render any differently?
“Oh wait, yeah, you’re saying in the future. Okay, I get it. Sure. That’s the future. There’s no guarantee of anything in the future — jobs or wages. So, yeah, you’re right. We can’t possibly contract for that.”
Then this seems like an argument that can be applied to paying off “future contracted work” by vendors, too.
Comment by Frenchie Mendoza Tuesday, May 12, 15 @ 3:53 pm
That’s not quite as clear of an indicator as Kanerva was to this proposal, but it should be enough to keep us from laboring on another, “What about this?” proposal that kicks the issue down the road. I am sure many will not see it that way, and demand a formal ruling nonetheless.
Comment by Dirty Red Tuesday, May 12, 15 @ 3:54 pm
Maybe they have moved on from denial to anger and bargaining. Give them some time to heal.
Comment by Enviro Tuesday, May 12, 15 @ 3:54 pm
It’s the old “Take the quote out of context” trick. Here’s the full sentence: “However, once the additional benefits are in place and the employee continues
to work, remains a member of a covered retirement system, and complies with any qualifications
imposed when the additional benefits were first offered, the additional benefits cannot be
unilaterally diminished or eliminated.” (Footnote #12, page 20.)
Comment by Skeptic Tuesday, May 12, 15 @ 3:56 pm
@walker
1. Appropriate the full amount of the required employer contribution.
2. Remit to the five state-funded pension systems.
3. Repeat annually.
Comment by Reality Check Tuesday, May 12, 15 @ 3:56 pm
Juvenal/mythoughtis
Thank you for adding to my statement.
Comment by Demoralized Tuesday, May 12, 15 @ 3:56 pm
We were once lobbying for a bill that we really, really wanted. We met with Leader Currie and COS Mapes and both of them threw cold water on the proposal, and President Fullerton also wasn’t very enthusiastic, and Quinn said he would veto the bill if passed. When we got home our CEO decided that we would have to change strategy from trying to pass a bill to instead learning to live with current law.
I wish the General Assembly would hear the message the Supreme Court gave them (just like we heard the message that Currie, Mapes, and Fullerton gave us) and try to find a way to live with the current pension responsibility instead of looking for ways to shirk it.
Comment by Just Me Tuesday, May 12, 15 @ 3:57 pm
Um, Walker, many possible solutions (albeit “painful”) have been listed here and even in the Court’s decree as well. Just because some people don’t like them, doesn’t make them impossible — just distasteful. The days of easy solutions and “kicking the can down the road” are over.
Comment by Diogenes in DuPage Tuesday, May 12, 15 @ 3:57 pm
“complies with any qualifications imposed when the additional benefits were first offered.” From Footnote 12, yesterday’s discussion about Cullerton’s Plan. Many saw the “additional benefits” were actually “cuts”. I think the ILSC language is pretty straight forward. As were their “suggestions”.
Comment by anonlurker Tuesday, May 12, 15 @ 3:57 pm
Ok. New state motto?
Welcome to Illinois where we always do the right thing, right after we have tried EVERYTHING else.
Comment by Mason born Tuesday, May 12, 15 @ 3:58 pm
Trying to play the word-shuffle. NO mean no period. Stop wasting your breathe, time, and money.
Comment by BlameBruceRauner Tuesday, May 12, 15 @ 3:58 pm
Frenchie:
The Tribune will always argue “you are free to stop working.”
Try this one:
I offer to build you half a house, if you pay me half the money up front.
I build you half a house, but then I get a better offer and walk.
No harm done, right?
Comment by Juvenal Tuesday, May 12, 15 @ 4:01 pm
The Governor’s proposal is a nonstarter. The Pension Protection Clause states that “Membership in any pension or retirement system of the State . . . shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” Although the argument about “earned” versus “future” has been around for many years - witness the cases quoted above - it’s never had any basis in the plain language of the Clause, which says that simply being in the system is a contractual relationship. The language leads inevitably to the Court’s conclusion which Rich quotes above - any change in the benefits rules which has the effect of diminishing benefits simply cannot be applied to current employees without violating the clause.
Comment by KirkCJenkins Tuesday, May 12, 15 @ 4:01 pm
If this is the route taken, I predict that “Capitol Fax” will remain the “Pension Fax” for the next couple of years.
Comment by Six Degrees of Separation Tuesday, May 12, 15 @ 4:05 pm
Regardless of the legality of the benefit changes for future work - preserving earned benefits also preserves the current level of unfunded liability. And it is paying off this debt which makes up 75% of the annual pension payment.
Comment by archimedes Tuesday, May 12, 15 @ 4:09 pm
You miss the point–writing the editorial was *billable hours* for Jones Day.
Comment by Ray del Camino Tuesday, May 12, 15 @ 4:09 pm
KirkCJenkins moves and it’s checkmate.
The op-ed authors are from the successful (/s) Sidley Austin school of pension law.
Comment by Norseman Tuesday, May 12, 15 @ 4:14 pm
The court made it clear that there’s no diminishing.
I can see Rauner making State employment noxious enough that Tier 1 employees leave in droves. That’s not much help now but fits his agenda.
Comment by Sir Reel Tuesday, May 12, 15 @ 4:16 pm
I think Diana Rickert taught these … “guys” how to read. Remind me not to hire these … “guys” for any legal work I may need. As an aside, the new vocabulary rules make it a lot tougher to express myself.
Comment by SAP Tuesday, May 12, 15 @ 4:17 pm
WE all knew this was coming.
If passed, and something like it stands a good chance, the the ISC will be kept busy.
As I read the IC and the Court’s decision, I think such plan will be rejected by the ISC.
I always wondered why this was was not attempted the first time rather than including those already retired. The only conclusion was that the State was greedy and gave it a go.
Comment by Federalist Tuesday, May 12, 15 @ 4:17 pm
Don’t forget about the 1994 contract that had workers accept lifetime medical instead of raises?
This is the real world. No do overs.
Comment by Blago's Luxurious Grey Mane Tuesday, May 12, 15 @ 4:17 pm
“So what part of. “…Shall not be diminished or impared” do you not get?
Call it a good deal or a bad one. Either way….everybody else knows: “A deal is a deal”.
Except in Illinois, where lawmakers think they are above the constitution.
Comment by A realistic citizen Tuesday, May 12, 15 @ 4:18 pm
Diogenes: Yes. You’re making my point. Sorry if it was hard to see.
Comment by walker Tuesday, May 12, 15 @ 4:20 pm
As Rich points out in quotes from Friday’s decision and from previous cases, the courts seem to be saying the opposite of what the authors of the Crain’s article are saying. It seem clear that the contractual protection of benefits begins at the point of hire, and continues through the employees working days and retirement. How could constitutional “experts” get such a different interpretation?
And even if the Governor were to be successful in changing the Illinois Constitution’s public pension protection clause, his plan would still come up against the Illinois and U.S. Constitution’s contract protection clauses that say that post de facto laws can not be passed that impair the obligation of contracts.
The Illinois Supreme Court Justices on Friday even cited from a U.S. Supreme Court case on the U.S. Constitution’s contract protection clause when they wrote in their opinion,”If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”
Comment by Joe M Tuesday, May 12, 15 @ 4:20 pm
For every hour that is billed by these attorney’s it should be paid from the person filing instead of taxpayers. They could have probably paid off this debt from the money wasted with all these lawsuits.
Comment by jazzy Tuesday, May 12, 15 @ 4:20 pm
On the other hand, the AFL-CIO should be thrilled that these guys are running around arguing that Rauner’s bill doesn’t require a Constitutional amendment.
With enemies like that, who needs friends?
Comment by Juvenal Tuesday, May 12, 15 @ 4:20 pm
I think they’re right that the question hasn’t been directly tested. It was not argued by the State in this case or any prior case.
That said, rich is right that the court seems to be suffer sing the argument would fail.
That’s not binding though. They could change their minds if it was actually a question before the court.
But the state is in trouble NOW and we can’t cash a maybe at the bank.
Comment by Political Animal Tuesday, May 12, 15 @ 4:22 pm
I am just worried how are we going to get these benefits when the cookie jar has no cookies?
I think I just read here 75% of the annual pension payment is to pay off the debt. Could we pass a law, forgive that debt, make the annual in full and in bad years just have the state make up short falls. 100 billion in the bank would be good but we cant put the state out of business.
Comment by rick Tuesday, May 12, 15 @ 4:23 pm
*suggesting the argument would fail.
I’m on mobile.
Comment by Political Animal Tuesday, May 12, 15 @ 4:24 pm
rick
The pension plans have been underfunded since 1917, yes 1917, and have yet to miss a payment. However, should the “cookie jar” go empty then pensioners would be first in line to sue the state for payment.
You seem to lack some knowledge about this as well as the scale and nature of the debt. Do yourself a favor and do a bit of research. I think you’ll find that this is a manageable “crisis” and not at all what the crazies are suggesting is the situation.
Comment by Old and In The Way Tuesday, May 12, 15 @ 4:31 pm
Dear Governor Rauner, et al:
Here is Moody’s response to your proposals:
http://chicago.suntimes.com/news-chicago/7/71/600585/moodys-downgrades-chicagos-debt-junk-level
Moody’s downgrades Chicago’s debt to junk level
Translation: Someone please send in the grown-ups.
Comment by Juvenal Tuesday, May 12, 15 @ 4:32 pm
In their state of denial, it seems they are hoping for police powers to accomplish their objectives. Didn’t someone already try that?
Comment by Austin Blvd. Tuesday, May 12, 15 @ 4:33 pm
- rick @ 4:23 pm:
== Could we pass a law, forgive that debt, make the annual in full and in bad years just have the state make up short falls. ==
According to the ISC This is why we can’t do this:
”If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”
Comment by Enviro Tuesday, May 12, 15 @ 4:34 pm
Let’s just say that I think this is a horrible idea but I think these guys do have a (small) point. First, they operate from a world in which the State can fire everyone without cause today (I’m not even certain that is the case). They are (mostly) correct in that the right to future employment is not a right guaranteed under the existing pension system (albeit, as others have posted, they may have claims for improper dismissal elsewhere). People on here are correct that a right under the current pension system is to have pension right continue when a new job is entered into but, as the Court has noted, changes to those can be bargained (potentially collectively but certain on a person-by-person basis).
Assuming that the State can fire everyone unilaterally, it is not required under the existing pension system to hire those persons back (at least I’m unaware of anything that would require the State to do so). If that is the case, it seems like, under the recent opinion, the State could say to all such employees, you can either (a) move on and get a job elsewhere or (b) agree to work for the State under new terms.
That seems workable (albeit a horrible idea). Certainly Rauner is used to this type of “everyone loses their job and most of them get re-hired” structure as it is what happens all the time when one company acquires the assets of another operating company (obviously the State is a huge company by this standard and the chances for disruption are enormous).
Or we could, you know, raise taxes a little bit.
Comment by Maybe? Tuesday, May 12, 15 @ 4:39 pm
Maybe these guys weren’t paying attention to the pension arguments made during the last three years. Maybe they haven’t read this blog. This idea has all been discussed before. It seems to me that the May 8 decision was pretty clear when the ISC said: “We held in that case that the [pension] clause means precisely what it says.”
Who these attorney’s clerked for speaks volumes. (Hat tip to Urbs In Horto.) It’s time to stop trying to find a magic trick face the pension funding issue head on.
Comment by Sangamo Sam Tuesday, May 12, 15 @ 4:42 pm
how to solve. it’s not just about how to fund pensions via state action. Illinois needs a massive restructuring of governments to find redundancies, savings and streamlining. it’s beyond the governor and the legislature. Illinois has too many separately elected jurisdictions. we have to simplify to find money to spend on what is actually needed. the pensions are an obligation, but going forward, how do we spend the money on what staff and what projects? somebody get “global” about this because the public does not understand that the status quo is unsustainable.
Comment by Amalia Tuesday, May 12, 15 @ 4:44 pm
These jamokes are parsing the SC decision. It seems as tho they are trying to tell the supremes what they meant when the judges wrote what they wrote.
That’s a hoot.
Comment by dupage dan Tuesday, May 12, 15 @ 4:46 pm
Diane, was that you commenting.
Comment by Norseman Tuesday, May 12, 15 @ 4:48 pm
Moody’s downgrade today is a stern reinforcement of the Supreme Court Ruling.
Pay Up, Now.
These public denials by Rauner and his crew are not acceptable to Moody’s nor should they be.
Quinn and the GA got credit from the ratings agencies for their willingness to work together and sense of urgency. Rauner is digging his heels in with a seven year plan. That ain’t gonna cut it. Forget about a capital plan, Fella. You aren’t gonna be able to borrow a cup of sugar.
Comment by Juvenal Tuesday, May 12, 15 @ 4:50 pm
” Illinois needs a massive restructuring of governments to find redundancies, savings and streamlining” That’s almost an argument for adding “Waste, Fraud and Abuse” to the banned word list.
Comment by Skeptic Tuesday, May 12, 15 @ 4:52 pm
In tier one I’m entitled to retire in 6 years but under tier two I have to work another 7 years to retire. So how have my tier one benefits not been diminished if I can’t collect them for another seven years?
Comment by Closing in on 60 Tuesday, May 12, 15 @ 4:57 pm
And in other news today, Moody’s downgraded Chicago bonds to junk status. Not good. Not good at all.
Comment by ChiTownSeven Tuesday, May 12, 15 @ 5:02 pm
What’s Jones Day’s interest? Good citizenship?
Rauner’s deputy general counsel, Dennis Murashko, came over from Jones Day “issues and appeals” practice.
Is Jones Day going on the payroll? Nothing for 2015 on a comptroller’s search.
Comment by Wordslinger Tuesday, May 12, 15 @ 5:04 pm
I’d sure like to see what it would cost to fire everyone. If many took a separation refund, it could get very, very expensive and the money would be required immediately.
Comment by PolPal56 Tuesday, May 12, 15 @ 5:05 pm
If this somehow gets to federal court its a new ballgame.
Comment by Poster Tuesday, May 12, 15 @ 5:07 pm
i really don’t understand this argument. From the time I sign a contract, everything in pertains to is in the future. I didn’t sign a contract for work done in the past. If we accept this argument that you can diminish future benefits, then what’s the starting date? Rauner’s election? Valentine’s Day? War of 1812? My kid’s birthday?
Comment by Johnny Pyle Driver Tuesday, May 12, 15 @ 5:09 pm
Jones Day has represented GTCR, according to Google.
Comment by Anonymous Tuesday, May 12, 15 @ 5:11 pm
For the Love of God won’t someone think of the children and give the teachers a raise and a bigger pension.
Comment by Buzz Phrase Tuesday, May 12, 15 @ 5:15 pm
ChiTownSeven:
I view the Moody’s downgrade as a positive development.
Rauner’s plans for a seven year unicorn hunt just got cancelled.
Comment by Juvenal Tuesday, May 12, 15 @ 5:16 pm
The “Pension and Retirement Rights” clause, Art. VIII, Sec. 5, (PRR) protects only pensions, not non-pension terms of the underlying employment. Those terms are subject to legislative change consistent with due process and collective bargaining obligations.
There are Constitutional conflicts which require a narrow construction of the PRR clause.
The way forward will depend upon whether the PRR clause is construed liberally or strictly. As I commented on 5/8, the decision on that date of the ISC is stated to be based upon a construction of the scope of the Legislative Power. The Legislative Power of the GA is intended to be plenary. It has the power to legislate on pension benefits, as other entitlements, both the power to add and to subtract. To the extent that the PRR Clause restricts that plenary Legislative Power, it must be narrowly and strictly construed. No where did the ISC acknowledge that necessity.
The PRR Clause does not appear in Article I of the Constitution, “Bill of Rights”, but with Art. VIII “General Provisions.” The PRR clause does not establish a fundamental right.
However in Art. I, “Bill of Rights” it is provided: “No ex post facto law, or law impairing the obligation of contracts or making an irrevocable grant of special privileges or immunities, shall be passed.” (Art. I, sec. 16) The purpose of the prohibition on “irrevocable grant(s) of special privilege” is to not tie the hands of the Legislatures with grants that cannot be revoked by subsequent legislation. Precisely what has happened with pension legislation and what the ISC has described in its opinion.
Comment by Anon III Tuesday, May 12, 15 @ 5:25 pm
In regard to Old and in the Way at 4:31 about this not being the crisis the crazies paint it……
Our situation today is NOT much different than decades ago. This is being used as a diversion for something else…….the more working people focus on this and turn on each other, it is to the benefit of………..? What is behing this?
Comment by AnonymousOne Tuesday, May 12, 15 @ 5:26 pm
behing …behind
Comment by AnonymousOne Tuesday, May 12, 15 @ 5:27 pm
As Old in the Way and others have pointed out, pensions have been in “crisis” in Illinois for nearly 100 years, yet no one has missed a payment.
For some reason, Ty, the Civvies and the Tribbies thought this was a good time to force the question and find out what they could get away with.
And they got an answer.
Comment by Wordslinger Tuesday, May 12, 15 @ 5:36 pm
Apparently, someone neglected to tell Moody’s that Mayor Emanuel has “gravitas.”
Comment by Wordslinger Tuesday, May 12, 15 @ 5:37 pm
Point of Information
As of June 30, 2014:
Total membership, active and retired, 5 state-funded retirement systems– 481,016.
Total membership, active and retired, State Employees Retirement Systems– 116,322.
SERS percentage of total membership– 24.2 percent.
SOURCE– Report on the Financial Condition of the State Retirement Systems FY 2014, Commission on Government Forecasting and Accountability, February 2015.
Comment by Charlie Wheeler Tuesday, May 12, 15 @ 5:56 pm
Haven’t read the comments first but my take is that going forward won’t work (a) if it makes any change that diminishes things and (b) it is not a completely voluntary choice. Making a person chose between reduced benefits and their job is pretty much a forced choice.
Comment by RNUG Tuesday, May 12, 15 @ 6:09 pm
The state needs fiscal help now, not an idea for fiscal help that might be enacted five years from now if the legislators support and if the voters approve it and if it is not struck down by the state supreme court. As a citizen of Illinois, I am insulted by an administration which only considers fiscal solutions which result in sacrifices for those in the pension programs and the lower and middle classes, and result in gains for big business and high income folks. Rauner continues his Don Quixotic personal campaign to protect the latter, as the clock ticks toward government shutdown. Maybe he should resign and make way for a governor that represents all Illinoisans.
Comment by illinoised Tuesday, May 12, 15 @ 6:11 pm
It’s hard to believe that the Jones Day lawyers argue that diminished benefits are “additional” benefits and do so with a straight face. Of course it was printed material and we couldn’t see their faces as they prepared it.
Comment by JackD Tuesday, May 12, 15 @ 6:14 pm
This constant effort by the GA to not repay a debt is shameful. Wonder how these geniuses would interpret the decision if the shoe was on the other foot.
Comment by Slick Willy Tuesday, May 12, 15 @ 6:16 pm
Anon iii, the pension is not a privilege or grant. It is contractual compensation that must be earned. It cannot be diminished for the duration of employment. Once retired, it is fully earned and due.
The State can change the contract, but only for those not yet employed and not covered by the existing contract.
Pretty straight forward, and no grant of special privilege.
Comment by Archimedes Tuesday, May 12, 15 @ 6:36 pm
@ Skeptic, while I certainly would not look the other way at waste, fraud and abuse, that’s not what I believe needs the focus. For example, in Cook County we elect a County Clerk, a Court Clerk, a Recorder of Deeds, Treasurer, Assessor, in addition to the County Board and State’s Attorney. there’s a Water Reclamation District, and townships. the transit system is CTA/RTA/PACE/Metra and in need of money. it’s structural change that needs to happen, and streamlining could mean clearer accountability and cost savings.
Comment by Amalia Tuesday, May 12, 15 @ 6:36 pm
The rauner plan has no chance. It has an air of fairness about it, but is illegal. I think rauner is trying to pivot on the issue.
Comment by Facts are stubborn things Tuesday, May 12, 15 @ 7:15 pm
Tier 2 is the answer if allowed to work along with a restructuring of the pension debt, which is the real problem not the pension system itself.
Comment by Facts are stubborn things Tuesday, May 12, 15 @ 7:18 pm
AnonIII –The “Pension and Retirement Rights” clause, Art. VIII, Sec. 5, (PRR) protects only pensions,–
Funny, that’s not what it says. And that’s not how the court read it in the health insurance premium case. So you must have dreamed it.
Comment by Anonymous Tuesday, May 12, 15 @ 7:25 pm
Nice of Urbs in Horto to note where these lawyers came from. SCOTUS and its clerks have their heads in the clouds as far as legal theories. The ISC writes in plain English with simple to understand language. Simple unless you spent too much time at Yale or Hahvard. Hopefully no tax dollars are going to these folks.
Comment by West Side the Best Side Tuesday, May 12, 15 @ 7:58 pm
Looks a little like blue silk stocking ambulance chasing doesn’t it?
Comment by JackD Tuesday, May 12, 15 @ 8:07 pm
Look, it is a fun intellectual exercise.
But Moody’s just screamed Pay Up NOW.
They don’t want another test case, they don’t want to wait seven years, and they certainly aren’t gonna stand silent while Rauner passes another measure that has even less of a prayer than SB1 AND spend the fictitious savings.
You all seem to forget that was the $2.2 billion linchpin of his plan. Not just SB 1, but an additional $2.2 billion in annual savings via a defined contribution plan that reduces the state contribution from $6.6 billion to $4.3 billion.
If you were wondering how he plans on pulling that off, I will give you a hint: I suspect Ron Sandack is gonna have a change of heart when it comes to the “cost shift” for pensions.
Comment by Juvenal Tuesday, May 12, 15 @ 8:12 pm
To Maybe
I cannot be fired without just cause.If you hire me back, then you obviously fired me without just cause . My pension ( if hired back) uses the same rules as in my first hire date. Good luck finding 70,000 other people to hire in a timely manner.
Comment by Mythoughtis Tuesday, May 12, 15 @ 8:19 pm
To Mythoughts
Do you know what portion of the existing state work force cannot be fired except for “just cause”? Aren’t there appeals procedures for employees fired for alleged just cause?
Comment by JackD Tuesday, May 12, 15 @ 8:33 pm
Moody’s may not be the best guage to use in determining bond ratings. Apparently not good at gauging constitutionality of pension laws.
Comment by lost in the weeds Tuesday, May 12, 15 @ 8:45 pm
Sine his GTCR lawyers said it was OK despite the clear wording of the ILSC any bets on him doing and exec order on it?
Comment by Illinois Manufacturer Tuesday, May 12, 15 @ 8:52 pm
Weeds: I think the Moody’s downgrade for the city had less to do with the Supreme Court ruling and more to do with the governor’s reaction to the long expected ISC ruling. The governor has been talking favorably about municipal bankruptcy for goodness sake. This is all his doing, in my view.
The analysts all were highly skeptical of SB 1, but were willing to accept it as a political first step to addressing the structural deficit. Kind of like we’re all willing to sit through a boring Scene 2 of a movie knowing it sets up the action for the rest
Of the film.
Comment by Juvenal Tuesday, May 12, 15 @ 8:55 pm
== Gregory G. Katsas, Brian J. Murray and Anthony J. Dick are identified as “constitutional and appellate lawyers at Jones Day”==
They are also the lawyers that filed an amicus brief for the Illinois Policy Institute regarding the just decided SB1 Pension Case
http://www.illinoiscourts.gov/SupremeCourt/SpecialMatters/2015/118585_Amicus_Mot_IL_Policy_Inst_011215.pdf
Comment by lost in the weeds Tuesday, May 12, 15 @ 9:01 pm
Jack d. Approximately 90 percent -I think that’s the latest estimate of unionized state employes. And, yes, there would be a process to go thru before you could fire any one of them. Besides the havoc you would cause for state services as you fire large groups of people.
Comment by Mythoughtis Tuesday, May 12, 15 @ 9:13 pm
Charlie W. points out at 5:56 p.m.that about half a million people in Illinois are directly affected by state-funded pensions (dependents would certainly increase that some). About 12.9 million people live in Illinois. I still say long term, and once the negative consequences become more apparent to the general public, the math will favor a pension change of some degree.
Comment by Anon Tuesday, May 12, 15 @ 9:15 pm
Jack d- also he can’t fire teachers, legislators, their staff, judges, employees of the other constitutional officers, and so forth.
Comment by Mythoughtis Tuesday, May 12, 15 @ 9:19 pm
My thoughts and Jack. When those union contracts expire, and no union contract remains, do those employees simply revert to the personnel code, which is layered under the union contract now anyway? If Rauner changed the personnel code to support large scale employee actions, when the union contracts expire then…
Comment by Madison Tuesday, May 12, 15 @ 9:27 pm
Madison,
Are you saying that potentially Rauner could set up a significant number of employees into at will status? How long do you think it would take to complete that?
Even if he could do it, can you imagine the chaos that would result? I doubt that dog can hunt.
Comment by JackD Tuesday, May 12, 15 @ 9:36 pm
lost in the weeds’ observation puts an end to any last possible thought that these guys were rendering an unbiased opinion.
Comment by Norseman Tuesday, May 12, 15 @ 9:42 pm
== If this somehow gets to federal court its a new ballgame. ==
Highly unlikely (I’d actually say virtually impossible) for the State to get a case there. The Feds take a very hands off approach to State’s dealing with their employees; it’s the whole State’s Rights issue.
On the other hand, there is a slim chance the employees / retirees could get a case there under Contract Law if they were to lose at the state level (which I can’t see happening given the recent ruling).
Comment by RNUG Tuesday, May 12, 15 @ 9:43 pm
== When those union contracts expire, and no union contract remains, do those employees simply revert to the personnel code, which is layered under the union contract now anyway? ==
Not only the Personnel Code. I suspect the vast majority would revert to being protected under the Illinois Civil Service Code … and it isn’t that easy to fire people under those rules because they were designed to prevent wholesale firings when political control changed from one party to the other.
Comment by RNUG Tuesday, May 12, 15 @ 9:55 pm
RNUG
Why are these people so hungry to harm us. It is like they really want to hurt us. It is very cruel.
Comment by Anonymous Tuesday, May 12, 15 @ 9:55 pm
By us, I mean State workers.
They are not our bosses. We are also taxpayers. They also insult us.
They put us in the “them” class and really want to hurt us.
Comment by Anonymous Tuesday, May 12, 15 @ 9:57 pm
- Anonymous -
I don’t know but I have a couple of theories.
For the general public, I see it as sour grapes / resentment because the average person has either had their pension stolen through bankruptcy / buyout or they have been switched to a 401K type plan that is not doing well. In other words, the public had their piece of the American Dream destroyed. So boil it down to envy. And this envy has been fed / driven by the constant Public Relations campaigns by certain groups.
In the case of the ruling class, while they are probably several factors in play, I think it comes down to the fact that the government unions still exist with good benefits as an example to the rest of the working public of what they used to have and could have again if enough people organized and pushed back hard enough. From the over class perspective, the easiest way to eliminate that push-back threat is to destroy the remaining examples of the way it used to be.
That’s my nickel take on it …
Comment by RNUG Tuesday, May 12, 15 @ 10:17 pm
Cullerton has a plan that would end collective bargaining but I don’t see how it could be imposed on schools …
Comment by Illinois Manufacturer Tuesday, May 12, 15 @ 10:17 pm
Anon 9:55: Bruce Rauner and his handlers believe that what little prosperity you have stands in the way of their own sense of prosperity. Perhaps we need a Constitutional Convention of our own to deal with such issues as progressive tax codes, a millionaire’s tax and limits on both terms and political contributions.
Comment by Madison Tuesday, May 12, 15 @ 10:31 pm
1. Pay the current retirees their pensions
2. Pay the bond holders the money they are owed
3. Re-amortize the funding at a fixed rate (no balloon payments) over a 30 year period.
Doing this alone would eliminate the mythical debt that is only owed to the pension system because the State says so. Do we need to cut programs…yes some programs need cut. Do we need to increase revenue…yes.
Of course the above is Logical and many times what comes from under the dome isn’t logical.
Comment by Kevin Highland Tuesday, May 12, 15 @ 10:32 pm
RNUG is right the irony is their wealth is being supported only by the Federal Reserves asset bubble because they have destroyed real demand in the economy through mass impoverishment and the China thing aint really working out long term for them as another market esp with the pollution and sickness it has caused
Comment by Illinois Manufacturer Tuesday, May 12, 15 @ 10:36 pm
Thanks RNUG
Comment by Anonymous Tuesday, May 12, 15 @ 10:38 pm
== 3. Re-amortize the funding at a fixed rate (no balloon payments) over a 30 year period. ==
You do realize that this would require a pension fund payment about $2B higher than today? If we can’t make the current payment without raising taxes, how are we going to make the higher payment?
Comment by RNUG Tuesday, May 12, 15 @ 10:39 pm
Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well-warmed, and well-fed. –Herman Melville
Comment by Madison Tuesday, May 12, 15 @ 10:46 pm
== 3. Re-amortize the funding at a fixed rate (no balloon payments) over a 30 year period. ==
Should have added, if it is still the State owing itself, then the assumed rate or return (interest owed) has to be about the same as the market long term, 7% - 8%. The only way to lower that interest number would be to float a massive ($110B?) pension bond to the public at a lower rate.
Comment by RNUG Tuesday, May 12, 15 @ 10:46 pm
Sell a one hundred year 100 billion eurobond @ negative 0.00001 percent Its a great deal compared to the negative Swiss rates
Comment by Illinois Manufacturer Tuesday, May 12, 15 @ 10:50 pm
/s on
Maybe Illinois could get a loan from the Saudi’s on Billy Carter terms: no interest and no repayment schedule.
/s off
Comment by RNUG Tuesday, May 12, 15 @ 10:55 pm
When the phone rings in Rhambo’s office and it’s the bond holders asking for their 2.2 billion ain’t none of this going to matter. Chicago cannot make an additional pension payment and the surely can’t pay the callable bonds. It’s all about to crash. MJM to thank for it.
Comment by Anon2U Tuesday, May 12, 15 @ 10:59 pm
Don’t worry, some of Rauner’s buddies will be there to make a loan. Just watch out for the vig.
Comment by RNUG Tuesday, May 12, 15 @ 11:17 pm
It’s truly shocking that three very accomplished attorneys who all clerked for Supreme Court Justices would stand by such a poor, feeble and inherently flawed argument. If this is the best they can come up with, they must know they’re whipped.
Either that, or this is proof that if you promise someone enough money, notoreity, etc., s/he will say whatever you want.
Comment by downstate Wednesday, May 13, 15 @ 3:14 am
RNUG you’re perspective on motivations is spot on.
Comment by Wordslinger Wednesday, May 13, 15 @ 7:15 am
Anon2U, curious that you dont mention Daley in your assignment of blame. He had dictatorial power and the full support of big money types like Rauner for more than 20 years. Yet he gets a pass?
Comment by Wordslinger Wednesday, May 13, 15 @ 7:21 am
The article in CRAIN’s argues that future benefits can be changed (diminished).
From IL Supreme Court opinion issued last week:
“The protections afforded to such benefits
by article XIII, section 5 attach once an individual first embarks upon employment in a
position covered by a public retirement system, not when the employee ultimately
retires.”
Everyone remember, the people who wrote that article get paid to write articles that other people will read. What they write does not have to be true; it is an opinion-editorial.
Comment by Late to the Party Wednesday, May 13, 15 @ 7:22 am
-word-
Thanks
Comment by RNUG Wednesday, May 13, 15 @ 7:40 am
RNUG:
I would add that Rauner and his allies believe that organized labor is the easiest of the three pillars of the Democratic Party left to destroy.
Secondly, remember that these guys so despise anything successful that they cannot take credit for that he already tried to sabotage the city finances once.
And finally their actions are so contrary to their long term best interests that one can only conclude they are totally irrational.
And so, ironically, just as it was a decade ago, we pray that the Speaker is somehow able to outmaneuver and rescue us from a governor who has put his own personal agenda ahead of the best interests of the state.
Comment by Yellow Dog Democrat Wednesday, May 13, 15 @ 8:08 am
If the State doesn’t have enough money to simultaneously pay current employees and retirees, perhaps any future pay increases (which are not protected by the constitution) should not go to current employees, but be paid to the pension system.
Has anybody run the numbers to see how healthy the system would be if the State had contributed exactly what was supposed to be paid into the system?
Comment by all politics aside Wednesday, May 13, 15 @ 8:37 am
== Has anybody run the numbers to see how healthy the system would be if the State had contributed exactly what was supposed to be paid into the system? ==
Some people have, and they contend it would be somewhere in the 70’s percentage wise.
Anecdotally, IMRF was funded and look where it is.
Comment by RNUG Wednesday, May 13, 15 @ 10:17 am
If IL legislators and governors had done their job: NY state funded at over 88% per Standard and Poors 2014 report.
Comment by Anonymous Wednesday, May 13, 15 @ 1:53 pm
8:08: yellow dog - very nicely stated.
Anytime: RNUG - you really are the MVP. Thank you
Comment by Property of IDOC Wednesday, May 13, 15 @ 11:30 pm