* The Chicago Tribune editorial board is not impressed with House Speaker Michael Madigan’s pension plan…
Madigan’s plan, which incorporates some but not enough of Quinn’s plan, keeps the reduced COLA. But it doesn’t ask employees to contribute more or raise the retirement age. Those are huge pluses for the unions, which on Tuesday were opposing Madigan’s plan through what struck us as crocodile tears. More crucial to this discussion, eliminating those demands depresses the state’s predictable savings: Quinn’s proposal to exact higher contributions from workers and reduce the number of years they will collect pensions creates definite, knowable savings for the pension system.
Translation: The unions didn’t cry hard enough so workers should definitely be forced to endure more pain.
* The Trib also contradicted itself…
Madigan’s plan also creates a big risk for property taxpayers statewide. We share his belief that school boards irresponsibly have sweetened educators’ pensions and blithely passed along those huge costs to Springfield. But the gradual shift of all educator pension costs from state government to school districts is more central to Madigan’s plan than it is to Quinn’s original proposal. As a result, the districts essentially would have three options: They could slash expenditures (not likely), they could force teachers to forgo raises or otherwise chip in (more likely), or they could do what school districts historically have done in tight times, namely, raise property taxes (most likely by far).
Translation: We agree that school districts should be more responsible for jacking up pension costs, but a gradual phase-in over several years will cause property taxes to spiral upward, even with tax caps.
From the Daily Herald…
The reform would require school districts to pay an additional 1 percent of their payrolls into the pension system that year and each year after for the next six years. After that, the annual increase would be 0.5 percent for an undetermined number of years.
School officials say it’s premature to say what the consequences of this added cost would be on property taxes, class sizes and teacher contract negotiations.
But there will be consequences, District 300’s Chief Financial Officer Cheryl Crates said.
“The 1 percent increase will cost the district about $800,000 in the first year, alone,” she said, and it will compound after that.
* There is, however, a good reason to worry about the Madigan proposal. From the Senate Republicans…
Schools, universities, colleges are also on the hook for increases in unfunded liability. Those increases from market fluctuation, rate of return changes, investment decisions etc — are not capped or phased. We believe the costs will be more than the normal costs.