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Friday, Jul 1, 2011 - Posted by Rich Miller

* Chuck, Linda, Keef and the late, great Jonnie Johnson will play us out. Get up and dance, kids…

Did I miss the skyscrapers, did I miss the long freeway?

Go Sox.

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AFSCME: Quinn’s actions “Illegal and irresponsible”

Friday, Jul 1, 2011 - Posted by Rich Miller

* 3:04 pm - Statement of AFSCME Council 31 executive director Henry Bayer…

“With his illegal and irresponsible actions today, Governor Pat Quinn has trampled on the collective bargaining process and broken his contract with the men and women who do the real work of state government. These tens of thousands of Illinois state employees care for disabled veterans, risk their lives in state prisons, monitor paroled convicts, protect children from abuse and neglect, rush to assist in disasters, and much more.

“They fulfill their responsibilities to the citizens of this state, and they deserve to know that their employer, the governor, will honor the commitments made to them. Instead, Governor Quinn has shown that he lacks basic respect for the work they do. He has acted unilaterally and in clear contravention of union contracts to void modest, negotiated increases for frontline state employees, despite handing out 25 and 50 percent raises to his own inner circle.

“At the request of Governor Quinn, AFSCME members agreed to significant steps to help address the state’s budget woes. Under negotiated cost-savings agreements reached at the bargaining table, three times in the last 18 months they deferred scheduled increases, and thousands have taken unpaid furlough days.

“Today Pat Quinn has shown that his signature on such negotiated agreements is not worth the paper it’s printed on. Further, the governor defends his actions with the flimsiest of legal rationales. The General Assembly neither directed him to violate a collective bargaining agreement nor has the power to do so.

“Republican governors Scott Walker of Wisconsin, John Kasich of Ohio, Chris Christie of New Jersey and others have recently sought changes in law to eliminate the right of collective bargaining for public employees. By choosing to simply ignore a legally binding agreement, Pat Quinn has sunk even lower. Not only is Quinn’s assault on public employee collective bargaining unprecedented in the four decades of state employee bargaining in Illinois, given his repeated criticism of Walker and others, it is utterly hypocritical.

“AFSCME will aggressively pursue every available legal recourse to ensure that the collective bargaining agreement is honored and employees are paid according to their contract.”

Looks like the governor got the union’s attention. Quinn has “sunk even lower” than Walker, Kasich and Christie? Wow.

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This just in… CMS decrees no union pay raises at 14 agencies, boards, etc. - 29,905 workers, $77 million

Friday, Jul 1, 2011 - Posted by Rich Miller

* 12:36 pm - The Department of Central Management Services has just sent a memo to agency directors decreeing that pay raises mandated by union contracts in 14 state “departments, boards, authorities and commissions” cannot and should not be paid.

The CMS document can be read by clicking here.

* CMS’s logic is that the General Assembly has sole authority to make appropriations under the Illinois Constitution. As you already know, the GA did not adequately fund personnel line items in the budget which was sent to the governor’s desk.

The state’s Labor Relations Act also includes a provision about how union contracts are “subject to the appropriations power of the employer.”

The governor, therefore, “does not have the appropriations authority to implement cost of living adjustments, longevity enhancements, or step increases covered by a collective bargaining agreement,” according to the memo.

* The agencies impacted are…

Criminal Justice Information Authority
Corrections
Deaf and Hard of Hearing Commission
Historic Preservation
Human Rights Commission
Dept. of Human Rights
Human Services
Labor
Natural Resources
Public Health
Revenue

…Adding… The missing three…

Guardianship and Advocacy
Juvenile Justice
Prisoner Review Board

~~The CMS memo claims there are 14 entities, but only 11 are listed. Checking on that.~~

* The memo, signed by CMS’s Acting Director Malcom Weems, continues to say, “due to the absence of sufficient appropriations by the General Assembly, the above listed agencies cannot implement the FY 12 increases.”

Agencies not listed had sufficient appropriations to implement the increases.

* The CMS memo goes on to say that those workers who’ve already committed to retire by the end of December will continue to receive the raises.

* I’m awaiting a call-back from AFSCME at the moment. That oughtta be good.

* According to a top administration official, CMS believed it had no choice because of the budget sent to it by the General Assembly. “There simply isn’t enough appropriation,” the official said, adding “We pleaded with the House to work with us and the Senate to reallocate to cover the huge shortfalls in personal services lines at the affected agencies.”

Asked whether eliminating positions would’ve been an option, I was told that the action would’ve required going to court and getting the union involved.

* The memo also has this paragraph, and I’ve asked for clarification about what it means…

Additionally, employees covered by HR-001, RC-19, RC-20, NR-916, RC-45 and Prevailing Rate collective bargaining agreements are not impacted by this memo.”

* If this is a device to get AFSCME’s attention, it’ll probably work.

* This reportedly totals $77 million in savings.

* While I wait for more info and some call-backs, here are a few other news stories that have popped up in the past few minutes…

* Quinn names Petersburg woman acting IDOT director

* Treasurer suspends employee one week for Bright Start mistake

* Tammy Duckworth making calls about suburban congressional run

* AP…

People with direct knowledge of the governor’s plan said Friday that skipping the 2 percent raises would affect nearly 30,000 workers and save $77 million. They spoke to The Associated Press on condition of anonymity because they were not authorized to divulge the information.

The state promised in union contracts to provide the raises. But Quinn argues the promise is void because lawmakers passed a budget that lacks money for the raises.

The actual number is 29,905 workers out of about 41,000 union employees. Scheduled union wage increases beginning today…

7/1/11 — 2.0%
1/1/12 — 1.25%
2/1/12 — 2.0%

* From the governor’s office…

Today we notified the directors of 14 agencies and the impacted unions that approximately 30,000 state employees will not be receiving scheduled pay increases in the new fiscal year. These pay increases were part of the labor agreements that were agreed to by the previous administration.

The fiscal year 2012 budget does not provide the money for these pay raises. If the state paid these increases, the impacted agencies would not be able to make payroll for the entire fiscal year, preventing them from continuing operations and providing core services to the people of Illinois.

Implementing a budget is a year-round process. Today’s action marks the first of many steps required to manage the fiscal year 2012 budget.

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Judges in two states allow pension benefit cuts

Friday, Jul 1, 2011 - Posted by Rich Miller

* Two state judges, one in Colorado, the other in Minnesota, have ruled that certain cuts to pension benefits are constitutional in those states. First up, Colorado…

Under the legislation, employee/employer contributions were modified, new contributions for working retirees were created, the age and service requirements of certain groups of employees before they are eligible to receive retirement benefits was increased, and a cap was put on cost of living increases for retirees.

At issue in this case were Sections 19 and 20 of the bill, modifying the cost of living adjustments.

Depending on the sub class, the adjustments were modified from an annual increase of 3.25 percent or 3.5 percent to an annual increase to be calculated under a different formula and capped at 2 percent.

The plaintiffs in the case argued that the two sections of the bill were in violation of the Contract Clause of the Colorado Constitution and the Contract, Takings and Substantive Due Process Clauses of the U.S. Constitution.

“While Plaintiffs unarguably have a contractual right to their PERA pension itself, they do not have a contractual right to the specific COLA formula in place at their respective retirement, for life without change,” Denver District Court Judge Robert S. Hyatt wrote.

What that means is the judge ruled that COLAs could be cut, but not the actual pension benefits.

* Minnesota…

Statutes regulating benefit formulas do not constitute contracts that require negotiating, ruled Ramsey County District Court Judge Gregg Johnson. He said the benefit adjustments amounted to a reasonable response to a fiscal threat that jeopardized the long-term interests of retirees.

At issue were cost of living adjustments that occurred automatically for retired state employees drawing pensions. The changes affect the state’s three largest retirement funds. One is for teachers, another covers state employees and the third covers local municipal workers.

The pension funds differ, but under the changes, current employees and employers will have to pay more into the fund while retirees will receive smaller annual increases in their payouts. For retired teachers, payouts will be frozen for two years, starting next year.

* COLA cuts are picking up steam elsewhere as well…

Several states, including New Jersey in a move this week, have cut back on cost-of-living adjustments for retirees in an effort to shore up the finances of public-employee retirement systems. Cost-of-living adjustments are annual increases to retirement benefits that are essentially designed to keep pace with inflation.

The cases in Minnesota and Colorado have been closely watched by lawmakers across the country as they contemplate similar changes in their own states. Unlike changes to benefits for new workers, which can take decades to deliver savings to state and local governments, rolling back cost-of-living adjustments can yield immediate savings.

While each state has different legal protections for public-worker pension benefits, the rulings “will really have an impact on what other state legislatures choose to do,'’ said Amy Monahan, a professor at the University of Minnesota law school who has studied legal issues of public pensions. “Even if the rulings are not direct precedent, legislatures will now say, ‘We might as well try it.’ ”

Stephen Pincus, a Pittsburgh attorney representing the retirees who filed the lawsuits, said his clients were “contemplating filing an appeal.”

* However, Minnesota doesn’t even mention pensions in its constitution. And Colorado’s constitution has nothing that even comes close to Illinois’ language…

Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.

So, if you’re a state employee or a retiree here, don’t freak out yet.

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Budget action roundup

Friday, Jul 1, 2011 - Posted by Rich Miller

* I’m going to take the rest of the day off for the holiday, so I won’t be turning on comments. I’ll post a video later, but let’s do a quick news coverage roundup of last night’s action.

* First up, the Medicaid cuts…

Quinn proposes to reduce the general revenue budget approved by the legislature by $376 million. The largest reduction is a $276 million cut to Medicaid funding for hospitals. The legislature approved about $2.3 billion in such funding. Quinn Budget Director David Vaught said that the reduction is meant to bring hospitals to the table to negotiate cutting their rates. In his original proposal, Quinn called for cuts to Medicaid rates that he said would save the state an estimated $550 million in the first fiscal year.

Without a change to the rates, hospitals will continue to be paid the same amount, and Quinn’s reduction would mean that the money would run out before the end of the fiscal year. “We hope that it helps convince the interested parties on this, which would be hospitals, to come to the table,” Vaught said. “We have a rate system in Illinois that’s been in effect for many years. It’s not been changed for many years. …We’re dealing with a very fast-growing industry that is growing more quickly than we can afford.” He acknowledged that some hospitals and nursing homes felt they got the short end of the stick in recently approved nursing home legislation and a workers’ compensation reform package, and that may complicate negotiations.

During the budgeting process, hospital representatives said the industry would prefer waiting longer for payments than see a drastic reduction in the rates they are paid.

* More…

The governor failed to persuade lawmakers to cut Medicaid reimbursements rates during the spring, so his cut in Medicaid spending could have the effect of simply pushing those health-care bills off to the 2012-2013 budget year, meaning hospitals would have to wait to be paid even longer.

A spokesman for Quinn budget director David Vaught said the Medicaid spending reduction would not have an impact on Stroger Hospital, and he stressed that the cut would not cause any hospital in Illinois to close.

* Now, on to the school transportation cuts…

On school transportation — money districts use to pay for busing students — Quinn sliced the $294 million lawmakers wanted to spend by $89 million.

The move became an immediate flash point. Republican Rep. Roger Eddy, a school superintendent from Hutsonville, said the cuts will hurt the Chicago suburbs and rural districts where some children need to travel many miles to get to schools.

Eddy contended that Quinn’s actions made him appear to have a “vendetta against transporting kids.”

“If you don’t get kids to school, and transporting kids is obviously vital to get them there, you can’t teach them,” said Eddy, the Republican spokesman for the House committee dealing with elementary and high school spending.

* More…

Vaught said the purpose of that cut is to focus limited state resources on classrooms.

“That’s a local function, getting the kids to school,” Vaught said, referring to the transportation money as “excess” state funds.

Reducing state aid for transportation is likely to force schools to take money away from other educational services in order to keep buses running.

* Regional superintendents…

Vaught reiterated the administration’s position that local school districts can cough up the money if they want their own regional superintendent. “This is not a proposal to say get rid of their regional superintendents,” he said.

* More…

Vaught reiterated the administration’s position that local school districts can cough up the money if they want their own regional superintendent. “This is not a proposal to say get rid of their regional superintendents,” he said.

* More…

For now, the regional offices of education, which provide a number of education-related services to local school districts, will continue to operate until the Legislature decides whether to challenge Quinn’s move.

Yep, I screwed up in the subscriber edition.

* AFSCME is unhappy…

“This is a fundamentally broken budget, an unworkable plan that falls far short of the revenue needed to adequately support basic services,” said Anders Lindall, spokesman for the Illinois division of the American Federation of State, County and Municipal Employees.

Lindall urged Quinn to spend at the levels needed to maintain services and then work with lawmakers to come up with more money later in the year.

But Vaught said Quinn must assume no more money will be available. “You implement right away and you do the cuts,” he said.

* Last word…

The legislature must approve all of Quinn’s budget reductions. Quinn has been scarcely involved in the budgeting process this year, and he is pushing some of the original pieces of his proposal that did not go over well with the legislature the first time around. “In spite of the fact that he’s going to be governor for four years that he was elected, he certainly has not been able to assert the power within the office and his role in the process,” said Kent Redfield, an emeritus political science professor at the University of Illinois Springfield. Time will tell if legislators will warm to budget policy they have already rejected and welcome a governor into the process who has been a less than active player so far.

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Protected: SUBSCRIBERS ONLY - Supplement to today’s edition and a Statehouse roundup

Friday, Jul 1, 2011 - Posted by Rich Miller

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Protected: SUBSCRIBERS ONLY - Today’s edition of Capitol Fax (use all CAPS in password)

Friday, Jul 1, 2011 - Posted by Rich Miller

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