91 Comments - PublicServant - Monday, Aug 20, 12 @ 10:29 am: We Are One Illinois has put a proposal on the table that was dismissed out of hand by the politicians. Rep Fortner, a very smart guy, has come up with an alternative also. Wordslinger has correctly suggested that bonding out at least a certain amount per year, given that bond rates are so low, the rating agencies so weak, and the bond market showing such strong demand is yet another alternative, or component of a solution. Yellow Dog has stated that he feels the current crop of pension laws are unconstitutional, so we shouldn’t waste time, and begin discussions about reforming the Illinois tax code to make it more progressive. Soccermom, says we should all start over. I know I’m paraphrasing, and if I’ve misstated anyone’s overall position, please let me know. There ya go Rich. Those are my thoughts. - WazUp - Monday, Aug 20, 12 @ 10:37 am: It takes a village to raise and idiot. - WazUp - Monday, Aug 20, 12 @ 10:37 am: ..or an idiot.. See I told you so! - walkinfool - Monday, Aug 20, 12 @ 10:39 am: A strong, clear statement by Quinn. However, his calling for a “grassroots movement of taxpayers” based on the ideas of the original Tea Party, has my head spinning. Of course the Trib doesn’t even take the time to understand the issue. Their claim that because of no action “the state realized no immediate savings” is nonsense. There would be no immediate savings regardless of what passed or failed in the session. Both the Gov and Biss are correct. The GOP leadership said “no” to every compromise, even two ideas that they previously supported, in order to make those in power (mostly Dems) appear idiotic. Sounds like the national GOP legislative strategy. - wordslinger - Monday, Aug 20, 12 @ 10:46 am: Dems should have just passed the Senate bill. I understand the reasons for a structured roll call, but at least they wouldn’t look like idiots. You can’t count on the other guys to do any heavy lifting, even when it’s stuff that they claim to want. - Bill - Monday, Aug 20, 12 @ 10:46 am: The leaders have never sat with labor to negotiate a deal. They simply want to dictate and they came up with this stupid choice thingie all by themselves. If they ever get serious about making a deal they should probably leave Quinn out of it. Let the professionals handle it. The framework is there. The offer to negotiate is there. Reasonable people can usually arrive at an agreement that nobody likes but everybody can live with. And yes it will have to include revenue. If they can’t force themselves to act rationally, I like labor’s chances in court. Pay them now or pay them more later. - Rick - Monday, Aug 20, 12 @ 10:50 am: Cross and Madigan could put together a structured roll call on some meaniful pension reform — just as the Senate did in May. But it take two to tango, and Cross does not want to dance. The GOP leadership doesn’t want a solution prior to the election, they want chaos…hence Radogno’s flip on the SERS/GA reform bill. Some Republicans, like Fortner, do want roll up their sleaves and work something out right now…politics be damned. But they’re being told to shut up by leadership. - Bill - Monday, Aug 20, 12 @ 10:51 am: ==Dems should have just passed the Senate bill.== They didn’t have the votes. - Grandson of Man - Monday, Aug 20, 12 @ 10:53 am: I think PublicServant started this discussion in the right way. I hope now politicians will begin to consider other ideas to help with pension reform, such as lowering the funding ramp, and other ideas put forth by the likes of the CTBA and Ralph Martire. I hope that We Are One Illinois is invited to contribute ideas during the next reform push. - Shore - Monday, Aug 20, 12 @ 10:55 am: Biss is in the clear politically because the state gop is too incompetent to appeal to his constituents and because north shore voters generally care more about the knesset and city hall than springfield. As for this, I don’t think people outside of springfield really pay attention or care that much in presidential election years. - the Patriot - Monday, Aug 20, 12 @ 11:01 am: Both parties share how we got here, but the failure to fix it is all on the democrats. They sold the voters on on Quinn and the legislature 2 years ago because they had the better plan. Now the truth is that they did not. They raised taxes, spent more money on pork, and failed to fix the biggest problem we had 2 years ago. Now that the truth obvious they had not plan, lets blame the other guy. You have a majority in both houses and the Governor. If you can’t pass reform, it is all on the Democrats. - Re-elect No One - Monday, Aug 20, 12 @ 11:06 am: Nothing was ever going to get done with the current plot on pension reform. They tried to do the same thing 40 years ago and lost in the courts. This is all political posturing for the election in November. They have plenty of other ways to fix the pension but they don’t look as good in November. - Third Reading - Monday, Aug 20, 12 @ 11:08 am: But to keep it simple — to make it crystal clear — we’ll point the arrow here: It’s the incumbents, voters. — Chicago Tribune Awwwww, Mother Tribune. Ever myopic. By my manual count of candidates currently posted on the Illinois State Board of Elections website (someone please double check me): 48 of 118 state representative districts are contested. That’s 40.68%. 27 of 59 state senate districts are contested. That works out to 45.76%. In other words, over half of all General Assembly seats are uncontested this year. Kinda hard to throw the bums out, Tribbies, if most of what’s running is uncontested bums. I’m outta here. - Motambe - Monday, Aug 20, 12 @ 11:14 am: “We all look like idiots” = great headline. All local papers sold out on Saturday. - reformer - Monday, Aug 20, 12 @ 11:19 am: It’s a refreshing bipartisan change that Trib editors didn’t bash Democrats as usual, while giving GOP obstructionists a pass. Instead they hold all incumbents, Ds & Rs, responsible. It’s an old dodge to oppose change because it supposedly doesn’t go far enough. In making the perfect the enemy of the good, nothing gets done. - jake - Monday, Aug 20, 12 @ 11:34 am: It should be noted that the bill that did get voted on was a terrible bill. If you remove all pension benefits from future legislators, the only people to run will be those of independent means. Not the kind of legislature we should want, I think. Pension abolition is not pension reform. - Yellow Dog Democrat - Monday, Aug 20, 12 @ 11:41 am: I think this was the best line from the Sun-Times: “Here’s what we called for, as recently as Monday: Do the whole magilla. Reform all five state retirement systems in one fell swoop…But we were chumps, too. We admit it. We thought there was a remote chance — what, maybe 5 percent? — that this one-day special session might actually get something good done.” Emphasis added because the Sun-Times and Tribune editorial board were played for chumps by the Republicans. We DID have the opportunity to get “something” good done. HB 1447 would have reduced the state’s unfunded pension liabilities by a third. That would have been one small step for the General Assembly, but a giant leap for our state’s fiscal future. But the Tribune and Sun-Times editorial boards provided Republicans with more than enough political cover to continue their obstructionist strategy. Strike that. Republicans didn’t just continue their obstructionist strategy, it actually got worse, with Radogno withdrawing her previous support for as much as $30 billion in pension savings. - Sue - Monday, Aug 20, 12 @ 11:56 am: The SAD reality is given the current roster of politicos running(or not running)the State- No deal will be had- Assuming the November election leaves in place a Democratic Majority in the House and/or Senate- No Deal will be had-Quinn pushed through his tax increase last year promising the additional revenues would make a significant dent in the State’s fiscal condition-of course the added revenue did little to fix the pension issues which require either much more revenue, a reduction in benefits or a little of both- Why can’t they be aggressive and take their chances in Court- Given our near zero inflation economy it is almost criminal to keep throwing the 3 percent annual COLA’s at the annuitants- It is time for a drastic step but given the political realities little or nothing(certainly not enough) is going to get done until Quinn is gone and elected officials not controlled by the public sector Unions get themselves elected -in the meantime we will continue to rob the Schools (and every other recipient of State funding) of the needed support so that retirees can retain their generous benefit packages - east central - Monday, Aug 20, 12 @ 12:07 pm: Timing is a key element. A guess would be that many incumbents decided that it would be less damaging during this election to run with “We tried to reform pensions but failed due to the other party’s politics” than if they had to face angry pension system participants and to defend shifting normal costs to local districts. Challengers probably did not want any of the easier fractional measures to pass such that incumbents could issue inflated claims that pensions had been reformed. A further guess is that the Democrats did not want to take the chance that legislation reducing pensions would be ruled unconstitutional prior to the election this fall. When the time comes, the court case will be necessary to excuse the extension of the 2011 income tax increase, or some modified form of it. My money is on reasonably comprehensive pension legislation being passed within a few months after this election so that the court rulings come as soon after the election as possible. - Reality Check - Monday, Aug 20, 12 @ 12:10 pm: Given our near zero inflation economy it is almost criminal to keep throwing the 3 percent annual COLA’s at the annuitants Please come back to the United States of America, Planet Earth, 2012, where inflation was 3.2% last year, exceeded 3% in four of the last seven years, and has averaged 2.7% over the last decade despite two of the worst recessions in contemporary US history. - Yellow Dog Democrat - Monday, Aug 20, 12 @ 12:12 pm: @Public Servant - I wouldn’t say that passing an unconstitutional package is a “complete” waste of time. Many lawmakers and editorial boards won’t shut up about unconstitutional laws and move on to reality until the courts actually rule. Case in point: Malpractice caps. Republicans and editorial boards ranted about caps until they were passed in 2005. When they were inevitably declared unconstitutional, most people stopped discussing them, and those that have (as part of workers’ comp, for example) are not taken seriously by anyone any more. That’s why I’ve suggested we put the most extreme, GOP version of pension reform up for a vote. But tell Cross and Radogno quite publicly that since its their plan, they are gonna need to convince every single Republican to vote for it. Madigan pledges six votes, Cullerton pledges six votes, and if any Republican votes ‘No’, Republicans can wear the jacket for the bill’s failure. - PublicServant - Monday, Aug 20, 12 @ 12:13 pm: @One note Sue - Thanks for the rehash… again, of your litany of complaints. But, there’s one I’d like to take a shot at commenting on again. That being your assertion that elected officials are controlled by the public sector unions. Sue, if that were the case, Madigan and Quinn, among many other Democrats, would not be supporting pension reform at all. But, you go ahead and take comfort in your world where facts are just pesky nuisances to be ignored and avoided. - Yellow Dog Democrat - Monday, Aug 20, 12 @ 12:21 pm: Rich - I think its worth noting that the Daily Herald editorial board was somewhat more pragmatic on the issue: …That no solution was reached is not surprising. It’s a tough issue to solve, especially in advance of an election where Democrats can ill afford to buck their labor constituency and Republicans are unlikely to cross their taxpayer base… …The thing is, as necessary as a solution is, it is unlikely to make anyone happy. Labor will have to contribute more to the pensions and receive less. The state and local schools will have to cut more programs and reduce staff. And another sad truth is, taxpayers will in the end have to pay more… - Jechislo - Monday, Aug 20, 12 @ 12:23 pm: KICS. Keep It Constitutional Stupid. - Anon - amiss - Monday, Aug 20, 12 @ 12:33 pm: “it is almost criminal to keep throwing the 3 percent annual COLA’s at the annuitants” And what criminal statute is this practice close to violating? Its rhetorical nonsense like this that just polarizes the two sides and makes an agreement between the parties less likely. - Yellow Dog Democrat - Monday, Aug 20, 12 @ 12:33 pm: @Jechislo - Until the GOP package is actually declared unconstitutional or the bond houses start including statements in their ratings analysis that uses phrases like “constitutional” or “sound legal footing,” that’s not likely to happen. On a related note, I hope the bond houses do take the opportunity in their next statement that Illinois missed an opportunity on Friday to take “a significant step forward” by addressing the unfunded liability of 2 of the five systems. That might actually give editorial boards to hit the reset button and force Republicans out of their caves. - wordslinger - Monday, Aug 20, 12 @ 12:35 pm: –It is time for a drastic step but given the political realities little or nothing(certainly not enough) is going to get done until Quinn is gone and elected officials not controlled by the public sector Unions get themselves elected - Yeah, they’re great pals these days. You should have heard the riotous good time they had at the fair. Times change, Sue. Believe it or not, the Berlin Wall is down and the biggest laissez-faire capitalists in the world are Chinese Communists. - F.D. - Monday, Aug 20, 12 @ 12:38 pm: Yellow Dog at 11:41 and Rick at 10:50 are dead-on. Friday was about Republican obstructionism — with cover fire provided by the editorial boards and the Civic Committee. Cross and Radogno are doing the smart thing here politically — chaos and failure in Springfield is to their advantage. It would be nice, though, if the editorial boards and columnist would call them out for abandoning their principles for political gain. Does it get any more blatant than Radogno coming out against a bill she sponsored and helped pass two months ago! The Dems are guilty of politics, too…the GA reform bill they voted on Friday was laughable. But Madigan was rightfully criticized by the media…the GOP mostly got a pass. - RNUG - Monday, Aug 20, 12 @ 12:42 pm: Sue, Public Servant, et al, A while back I crunched the retiree numbers and the US Census population numbers. One of the items I was trying to figure out was just how big a voting block ’state’ retirees were. The bottom line is that the retirees make up a touch over 7% of potential IL voters (ages 18 to death; I ignored the Chicago cemetary population). Even if we assume the highly unlikely possibility that (a) all the ’state’ retirees vote the same and (b) their spouses also vote the same, that is only 14%. Yes, if they get their act together and vote as a block, they have some clout. Yes, they can swing elections. But there are another 86% of the voters that can out-vote them if they want to … so they can’t control elections except in a very few counties. And I suspect the truth is most the retiree votes also split in a normal year. - Billy - Monday, Aug 20, 12 @ 12:44 pm: The people of Illinois have no faith in there political leaders. They are a bunch of self servers. I feel sorry for the people of Illinois! - Bill - Monday, Aug 20, 12 @ 12:47 pm: == Labor will have to contribute more to the pensions and receive less. The state and local schools will have to cut more programs and reduce staff. And another sad truth is, taxpayers will in the end have to pay more… == That pretty much sums it up. The only question is how long do we fiddle before somebody does something. Most republicans will tell you that the state income tax is temporary and will expire while calling the expiration of the federal Bush tax cuts a tax increase. - AC - Monday, Aug 20, 12 @ 12:57 pm: Legislators need to start now, and bringing unions to the table but completely ignoring their ideas for pension reform isn’t going to work. The latest effort to solve the most complicated fiscal issue in Illinois in one day was doomed from the start. Everyone needs to sacrifice, but in ways that work for them without the immediate expectation of a lawsuit. - Yellow Dog Democrat - Monday, Aug 20, 12 @ 12:59 pm: Like I said Bill, the Daily Herald offers a fairly sober, pragmatic view. I say “fairly” because they go on to argue that the heart of the problem is that public labor agreements are not not “adversarial” because public unions influence the election of the public officials who negotiate the contracts. First off, even if you abolished public unions tomorrow or banned union contributions, police officers, firefighters, teachers and their families still vote, so this contradiction isn’t going away. But more importantly, it SHOULDN’T go away. That’s because sound labor negotiations are not and shouldn’t be “adversarial.” As the best-selling authors of “Getting to YES” point out, sound negotiations are not adversarial. The are based on sound principles that are recognized by both sides, bringing them together on the same side of the table to find a common solution to a common problem. Sound negotiations provide “Win-Win” results, where neither party likely gets every thing that they want, but both sides agree that the process was fair and produced results they can live with. That seems to be exactly what the Chicago public schools are moving toward right now, since CPS has realized it can’t force a solution down teachers’ throats and must work in partnership. - Yellow Dog Democrat - Monday, Aug 20, 12 @ 1:03 pm: @AC - I’m not sure a lawsuit is avoidable, since its been pretty well recognized that the unions cannot negotiate on behalf of non-union members, both current unionized employees and retirees. I don’t think there’s a proposal on the table right now from Democrats or Republicans that would escape a lawsuit from those folks. - Bill - Monday, Aug 20, 12 @ 1:08 pm: Quinn must not have read “Getting to Yes” or just skipped class that day. Asking state employees for a ten per cent pay cut while laying them off, closing their facilities, reneging on the promises to their retirees, and calling for massive, illegal cuts to their pensions is not exactly conducive to interest based bargaining. Maybe he should just stick to community organizing. I think sending tea bags to the governor would be an excellent strategy. Oh wait, never mind. - steve schnorf - Monday, Aug 20, 12 @ 1:17 pm: Folks, as you search for alternative solutions that might work, let me suggest a filter. At least at the start, forget about the normal cost and focus on the unfunded liability. The normal cost is minimal; the unfunded liability is the elephant in the room, and dealing with it far overshadows all else. To fund the liability over 30 years would cost $7.3B annually. At 40 years it is $6.925B. Now, add to that the normal cost (about $1.5B this year) and amortization of the various long and short term pension bonds issued in the past 10 years, and you very quickly get very close to $10B annually. See which number is very big in this mix? You can make the cost of funding the liability go down considerably if you bond the whole thing–probably to around $5.9B for 30 years, but I think we aren’t going to issue $83B in bonds, so my guess is most of that approach is off the table, though perhaps we could bond some of it. Anyway, any solution that actually works is going to have to address the very large elephant. - Sue - Monday, Aug 20, 12 @ 1:20 pm: Everyone needs to sacrafice- The taxpayers are already contributing 60 percent more in income taxes- what more does the public sector want out of the taxpayers- And for all of you claiming these comments are nothing more then rhetoric- what planet are you on?- this year for the first but not last time the state money going into public schools is almost equal to the dollars going into TRS- how can that continue- we are robbing the future education of illinois students depriving the classrooms of the monies needed to educate our kids- this equation only gets worse every year into the future meaning less state funding producing higher real estate tax bills on the part of suburban and downstate homeowners who will have to make up for the lost state subsidy- Now Quinn and Madigan want to make that situation worse by shifting the normal cost of the pensions onto the school districts- Four things need to happen- reduce the cost of retiree health care, increase the employee contributions into the pension funds and better supervise how the pensions are invested -the fourth thing -new revenue- already occurred The state already raised taxes and look what that accomplished - yinn - Monday, Aug 20, 12 @ 1:23 pm: Reality Check, no need to get snarky like that. You are talking headline inflation while Sue has presented the core inflation picture, which is indeed skimming deflation territory. - illilnifan - Monday, Aug 20, 12 @ 1:26 pm: “it is almost criminal to keep throwing the 3 percent annual COLA’s at the annuitants” Why do people resent the COLA for state retirees and they believe that persons on Social Security should still get one. How quickly people forget after 2 years where there were no COLA’s for SSA benefits but the data reflects the actual COLAs based on the CPI-W and granted to Social Security beneficiaries from 1984 to 2006 have averaged 3.02 percent annually. (After 2006 it has been an average of 2.3 with the following COLAs given: 2007 had a 2.3 COLA, 2008 5.8, 2009 0.0, 2010 0.0 and 2011 3,6) Illinois is ranked in the bottom fifth of the nation for benefits to state retirees, the average working person for Illinois is not the person who is getting over on the system. Quit blaming the majority for the abuses created by a few. As I have said before, if a person on Social Security is willing to stop getting their COLA then I will agree to stop getting my COLA. Until then realize that the state retiree is not getting more in benefit increases than what a Social Security retiree is getting, and in fact for most years the person on SSA got a larger COLA than a state worker. - Sue - Monday, Aug 20, 12 @ 1:27 pm: Question for Steve S- Have you heard anything about TRS annual returns for Fiscal 2012- the Board often gets the numbers out by now if they have some positive PR effect- if TRS has returns this year similar to CALPERS then things are going to get real ugly - wishbone - Monday, Aug 20, 12 @ 1:32 pm: Again, I will repeat my tired (and highly unpopular) refrain that it will ultimately come down to across the board cuts for all beneficiaries of state spending (including current pensioners). There is no way this or any imaginable cast of characters can reorder state priorities to produce enough savings to salvage the current pension system, or any other major spending program. The courts will be loath to substitute their judgement for that of the legislative and executive branches so that avenue of relief to pensioners is essentially a dead end, notwithstanding the seemingly iron clad constitutional assurances in place. Everyone is going to take a significant haircut. Welcome to Greece on the prairie. - Sue - Monday, Aug 20, 12 @ 1:32 pm: Illinoisfin- perhaps you haven’t heard that for a number of years the feds stopped giving out SS COLA’s because inflation was non-existent- I believe this past year a small increase (less then 3 percent was implemented- Since 2007 inflation has nose dived but Illinois kept up with the statutory increases so for the past few years retired employees are getting larger annual raises then active employees - steve schnorf - Monday, Aug 20, 12 @ 1:38 pm: No, Sue, I haven’t. I do know that over the lifetime of the fund they have exceeded their return assumptions, tho there certainly are short term (5-10) year exceptions to that. - illilnifan - Monday, Aug 20, 12 @ 1:42 pm: Sue, I have heard that about SSA which is why I clearly showed the COLA not given for 2 years in 2009 and 2010 Take a look at the SSA COLA history on line it is factual and eye opening http://www.ssa.gov/oact/cola/colaseries.html And yes retired workers are getting increases that some active workers do not get particulary MC employees, the union staff have not done badly on raises since many of them now earn more than MC. This is one of the reasons I retired, I saw MC staff not getting raises for years like it happened in the 80s and the 90s. - Anon - amiss - Monday, Aug 20, 12 @ 1:42 pm: “And for all of you claiming these comments are nothing more then rhetoric- what planet are you on?” Sue - you stated that it is almost criminal to keep throwing the 3 percent annual COLA’s at the annuitants. If thats not rhetoric, I dont know what is. By the way, your “four things that need to happen” are very general and do not provide details as to how to accomplish these things. The details are what make this process hard. With that said, by linking pension payments with criminality, you are alienating current and future pensioners, and not making this process any easier. - Sue - Monday, Aug 20, 12 @ 1:43 pm: Steve- CALPERS announced sub par returns of less then 2 percent two weeks ago blaming poor returns from their Hedge Fund investments- TRS has recently moved in a similar direction as CALPERS by substantially increasing the Hedge fund allocation- CALPERS returns are usually a good prognosticator for large public funds- If TRS comes in this year significantly below the 8.5 hurdle rate- the unfunded liability will explode - Yellow Dog Democrat - Monday, Aug 20, 12 @ 1:50 pm: @Sue - Sorry, but “the taxpayers” enjoyed the lowest income tax rate in the country for decades. Ignoring the relatively “free ride” the taxpayers enjoyed over the decades that created the unfunded pension liability is a farcical argument. Moreover, we STILL have one of the lowest combined local and state tax rates in the country. The temporary tax increase the General Assembly was just that: a temporary fix. It was not designed to be nor billed as a permanent solution or even part of the permanent solution. It was designed to prevent Doomsday cuts that basically would have shut down state government, so that a long-term solution with contributions from all parties could be enacted. Anyone who thinks the temporary tax increase should be made permanent and taxpayers will have “done their part” or worse yet can simply be allowed to expire and we’ll return to the old rates is delusional. The numbers simply don’t add up. - illilnifan - Monday, Aug 20, 12 @ 1:57 pm: Sue, Current data is showing the SSA COLA for 2013 may be 1.8% so this will bring the average down for SSA COLAs since their inception in 1975. SSA however will issue COLAs on compounded benefits, not the base. This is significant. Our legislators have proposed not only a reduction in the COLA but also alwasy issue the COLA on the base retiree benefit rather than the compounded, so this results in significant erosion of a retirees ability to maintain pace with inflation. I agree something needs to be done to ensure the solvency of the state retiree system, but the something has to be fair. I believe it should not be more than the private sector, so why not give the same COLA as given to Social Security retirees. The private sector retirees I believe would agree with this balanced approach. - steve schnorf - Monday, Aug 20, 12 @ 2:02 pm: Sue, no it won’t explode; a big part of the reason is that almost 60% of TRS “portfolio” is guaranteed to hit it’s assumption because it consists of their unfunded liability, in effect their largest allocation. If 40% of their assets perform at 50% of their assumption, it will cause a blip but not a catastrophe. - Sue - Monday, Aug 20, 12 @ 2:02 pm: Yellow Dog- see how that flies in November(or any November)- I can see it now- A campaign based on the taxpayers needing to increase rates above 5 percent- I for one always assumed the 5 was for keeps- at some future date- absent confronting reality-all of the recipients of the State’s largess will be in bankruptcy court arguing over the carcas of what used to be Illinois - anonymous45 - Monday, Aug 20, 12 @ 2:08 pm: Unfortunately, the Governor and the entire legislature have zero cred with union members at this point, after being insulted by the draconian solutions that have been offered up as “solutions”. Union members do not trust that any future revenues that will go towards shoring up the system based on the past neglect to do so. They also are more than willing to negotiate an agreement in which they have had input, and that takes into account the years that they put money into the system. So far the fixes have been grossly unfair to those that depended on the integrity of our duly elected leaders. Last i heard, the contract for AFSCME members expires September 1st. In light of the disrespectful way they have been treated, let’s all sit back and see how this plays out… - wishbone - Monday, Aug 20, 12 @ 2:13 pm: More on the Greek analogy. From today’s Wall Street Journal. “ATHENS—Details of Greece’s €11.5 billion ($14.2 billion) austerity plan are emerging as Prime Minister Antonis Samaras moves to demonstrate his government is serious about cost-cutting efforts ahead of meetings with European leaders later this week. Although the specifics of the cutbacks still remain a work-in-progress, senior government officials have made clear that the new measures will include across-the-board cuts in pension benefits—a politically sensitive issue—as well as wage reductions and layoffs in the broader public sector. … Among the details being discussed are a sliding scale of cutbacks, with low-income pensioners—those who survive on, say, an €800 a month pension—seeing their retirement checks trimmed by one or two percent. High-income retirees collecting more than, say, €2,000 a month, could see their income reduced by 15%.” I just don’t see how we can avoid a similar outcome. - Re-elect No One - Monday, Aug 20, 12 @ 2:14 pm: Sue - “Everyone needs to sacrifice- The taxpayers are already contributing 60 percent more in income taxes”…..state workers are taxpayers. We do not get a tax break. We are paying our share, how about making the big companies pay their share. - illilnifan - Monday, Aug 20, 12 @ 2:19 pm: Well said Yellow Dog….it would be interesting to go back the 30 years it took to create the pension mess, look at what the state should have contributed to the pension as they should have, then look at what the state budget deficits would have been and how much the taxes should have been to continue to fund the level of services that were provided. Steve Shnorf maybe you could pull this together and demonstrate how much the citizens of Illinois benefited in lower tax rates due to the constant “borrowing/IOUs” given to the employee pension system. This won’t solve the problem, but maybe it could lead to some level of communication as to why the employees are upset. - Sue - Monday, Aug 20, 12 @ 2:21 pm: Re-elect no-one- The corporate tax rate was increased- the notion that we can always sock it to large corporations is nonsense- if you want an employment base at all you have to make illinois competitive with other states- Corporations in illinois pay obscene workers comp rates and a host of other taxes- raising taxes again is a losing proposition - Rich Miller - Monday, Aug 20, 12 @ 2:21 pm: ===This won’t solve the problem=== The most important point you made. - Demoralized - Monday, Aug 20, 12 @ 2:27 pm: @wishbone: That’s pathetic. To suggest we take away retirement for CURRENT pensioners? And @Sue said the COLA was criminal. Taking a pension from a CURRENT pensioner is criminal. I’m sick and tired of these arguments and this movement to get out of a benefit that has been promised. Will I pay a little more? Sure. I’m guessing that is inevitable. But I’m not doing any of these looney trade off bills that are out there. Give me what I was promised or at least negotiate with me. If you don’t myself and others will keep Illinois in court until we die. And @wishbone, stop with the ridiculous Greece analogies. We aren’t Greece. More assinine retoric. - Re-elect No One - Monday, Aug 20, 12 @ 2:35 pm: Sue - there are other options than tax increase or sticking it to the state workers but those go against the people backing the incumbents. And some sort of pension reform can be done but it doesn’t have to so punitive. State workers didn’t cause the mess - the General Assembly did. Over 90% of state workers retire with less than 50% of their salary. Governor Quinn would like you to believe that all state workers take home a retirement pay of $60,000 a year. The average is somewhere in the mid $20,000 range. The very few that are taking home $60,000 a year were political hires. It is very misleading and intentional. - Oh please... - Monday, Aug 20, 12 @ 2:41 pm: I have heard from many on both sides of the aisle how disheartened they were after Friday’s pension vote…while we all understand how certain issues can and do get politicized, this must cease being one of them. I hope Repub and Dem leadership realize that continuing to make this a political football while our state is perceived to be (how close it is in reality I don’t know) on the brink of insolvency is a very very dangerous game. It’s different now than its ever been before, and we must recognize that. - Yellow Dog Democrat - Monday, Aug 20, 12 @ 2:44 pm: === See how that flies in November (or any November) === Sue - For atleast two decades, public policy has been driven by what “flies in November,” and that is pretty much why were are in this mess. For decades majorities of voters have supported increased spending on education, health care and human services while opposing any fiscally-responsible way to pay for it. Lawmakers from both parties responded in a bipartisan manner by increasing government spending, particularly for education, without raising taxes. 51 percent of all new dollars to education was George Ryan’s idea, remember? If you’re gonna spend more money without raising more revenue, you’re only option is to borrow, and that exactly what we did. We borrowed from state contractors by not paying our bills. We borrowed from the pension funds by skipping employer contributions. And we borrowed from future taxpayers by cutting funding for preventative programs that would have prevented much bigger and more expensive programs down the road. In other words, today’s pension “crisis” is exactly what you and broad majorities of Illinoisans chose. But instead of owning up to it, you want to blame it all on the unions. For their part, let me say this. Its true that public employees made their pension contributions. Its true that by any measure, most of the pension “solutions” are either totally one-sided or mostly one-sided, demanding sacrifices mainly from workers. And its also true that pension members have every right to demand that the law and the Constitution are honored. @IlliniFan - I’m pretty confident that if we’d enacted the 1.25 percent tax increase proposed by Netsch back in 1994, we would not be in this mess today. Thanks, Jim Edgar. - Yellow Dog Democrat - Monday, Aug 20, 12 @ 2:50 pm: @Rich - It won’t DIRECTLY solve the problem, but as long as Republicans and other continue to dig in to their position of blaming the unions for everything, unions will continue to dig into their position. Just as the constant attacks my The Mayor and editorial boards almost sabotaged any hope of averting a teacher strike (they were saved by a sober mediator), the constant attacks on unions are scuttling any hope of passing pension reform. Republicans and the editorial boards are overplaying their hands, and every week that passes the parties get further apart rather than closer to passing legislation. That might be just fine for republicans and unions, at least for now. But it is awful for our state. - wishbone - Monday, Aug 20, 12 @ 2:54 pm: I guess I don’t see why current pensioners should be any more exempt from cuts than current employees, or current Medicaid recipients, or current K-college students, or current veterans. As to Greece, you are right, we are different. They have a plan. We don’t. - Sue - Monday, Aug 20, 12 @ 2:55 pm: Re-elect no-one- The biggest unfunded liability sits with TRS and for sure the average teacher retiring in 2012 is getting a much larger benefit then 20K a year- the whole situation stinks in terms of the state having failed for umpteen years to make the recommended contributions but that is yesterday’s news- when you have administrators making 300 thousand a year-yes it happens- and they retire at 70 percent plus cola’s- the average taxpayer gets rightfully indignant especially when these folks play the end of career games and jack- up the average last year salaries-One thing Quinn with the legislature could do today without impairing benefits is to legislate the maximum salaries paid to teachers and administrators state wide so at least the 70 percent was predicated on a controlled number- who among the working class in illinois would object to a salary cap on administrators of lets say 200 thousand in the suburbs and 150 downstate and similar caps on teachers of perhaps 100k and 70k- how can we justify any school district paying a superintendant north of 200k to run a single school district which sometimes means one high school which also has a prinicpal and assistant principal? Administators are in TRS and they make a lot of money subject to the pension formula - illilnifan - Monday, Aug 20, 12 @ 3:19 pm: Sue, a law was passed capping the salary for pension at $106,??? so this solved the problem. An administrator going into the future could earn a million a year and still only get a pension based on $106,???, sort of how it works with Social Security. So there is no need to legislate salaries. We do need the school districts to take on more of their costs for salaries and benefits rather than being able to pass these onto the state as a whole, and maybe that would control some of the salaries. I agree some of the salaries of government employees are high. I used to find it strange that my salary in an urban high cost area was the same as a state employee in a rural area who had lower taxes and housing costs. But I recognized it was my choice to live where costs were higher. I also chose to work for the state and earn half of what someone in my same position would earn in the private sector (again my choice, since I knew I had traded salary for benefits). My private sector friends thought I was strange working for half of their wages, while they earned 6 digit incomes but they made this choice in lieu of being able to get a defined benefit pension. They liked the big paychecks and the big toys they could buy, I liked the future benefits and semi-security of a government position. Instead of pointing fingers and blaming each other we need to recognize we all made choices in our lives. It is time to move to solutions, based on fact, and resonableness. That is all retirees want. Employees want the same. Taking extreme positions often is a negotiating tactic to get the compromise in the middle. I hope we reach that compromise soon, since the cliff is not a desired option by anyone. - Demoralized - Monday, Aug 20, 12 @ 3:20 pm: @Sue: Also, Illinois is a local control state as far as education goes. If you have problems with how much people are getting paid talk to your school board. This is exactly why the idea of making school districts responsible for some of the pension costs is out there. If they are going to offer the salaries the need to pay the pensions as well. - Yellow Dog Democrat - Monday, Aug 20, 12 @ 3:21 pm: Sue - If you want schools to stop paying exorbitant administrator salaries, you should back Madigan’s proposal to make schools responsible for their pension costs. Mischief managed. YDD - Arthur Andersen - Monday, Aug 20, 12 @ 3:26 pm: Sue, TRS pensions, all of them, are higher than State employee pensions because TRS members don’t contribute to or receive Social Security. TRS’s data, IIRC, indicates the average teacher pension was around $40,000. They reported a very small number of pensioners receiving over $150,000. Caps on end-of-career pay increases were put in place for TRS several years ago. If a school district wants to pay a salary above the capped amount, they must pau the actuarial cost to TRS Federal law further restricts the dollar amount of compensation that may be considered for pension purposes. All this information is available at TRS’s website. You should check it out. - Obamas Puppy - Monday, Aug 20, 12 @ 3:27 pm: Good luck getting re-elected with all that support from the business community Gov. Quinn. - PublicServant - Monday, Aug 20, 12 @ 3:44 pm: Wishbone. Given your views on the pension issue, and I realize you see your position as pragmatic, the fact that you’re a contributing Obama Democrat, is probably one of the most disheartening things I’ve heard. You’ll have to forgive me calling you a right wing ideologue, but you have to admit that, on this issue, you’re hitting all their talking points … “greece” etc. I mean is it just your perceived pragmatism on this issue that is making you give up any semblance of a just solution for state employees and retirees, where everyone contributes equally, or as equal as possible? Your solution to make pensioners pay is especially onerous in that what makes them different from most current state employees is that they’ve retired. They, in most cases don’t have a job, or can’t get a job paying anywhere near what they made before retirement. Most current state employees, except those within oh say 5 years of retirement have at least some time to adapt to the new now that you wish to impose on them. Retirees don’t. They played their cards and cashed in their chips based on the realities in place at retirement. They don’t have time to start diverting income to a 401K. They’re living on it. Any money taken out of their pockets is a crime. I’d hate to be in a liftraft with you when you get hungry. - sal-says - Monday, Aug 20, 12 @ 3:52 pm: “We all look like idiots” Uhhhh …… I don’t suppose it could be because you ARE? Just askin’. - titan - Monday, Aug 20, 12 @ 4:02 pm: @Sue - you might keep in mind that teachers generally don’t get any Social Security payments (including survivor benefits from their spouses). And the amounts the state didn’t pay into TRS would have been similar to what the feds would have required them to pay into SS if they were covered. Pay caps on the pensionable salary are a reasonable proposal that might warrant discussion though. - Colossus - Monday, Aug 20, 12 @ 4:04 pm: FWIW, Ralph Martire had a great longform interview on NPR’s Illinois Edition today where he got to lay out his take on this issue. It was really insightful and seemed far more thought out than what I hear from any of the Leaders and lightyears ahead of what I see in most media accounts. I think everyone here would get something from listening to it. - Marty - Monday, Aug 20, 12 @ 5:23 pm: ililnifan–the $106,800 cap is only for those hired on or after 1-1-11, so yeah, it’ll take care of the problem of high-paid school administrators in about 30 years, give or take. - wordslinger - Monday, Aug 20, 12 @ 5:30 pm: –You can make the cost of funding the liability go down considerably if you bond the whole thing–probably to around $5.9B for 30 years, but I think we aren’t going to issue $83B in bonds, so my guess is most of that approach is off the table, though perhaps we could bond some of it.– You could bond, say, 10 years of liability, in these strange times, and make money. Interest rates. How many times in your lives, until now, have you see banks advertising — paying money trying to attract money — CD interest rates under 1%? You could bond even more, and make even more, if you secured the state’s GO obligation with a dedicated small percentage of the sales tax — a la Mac Place bonds — or income tax. You could take the bonds up to AAA, shoot them out a consertive 10 years, and laugh your ass off paying back negative interest loans. It’ begging to happen. You’ll never see a market like this begging for paper. Our children and grandchildren aren’t going to be happy when they figure out we could have borrowed a buck and paid pack 80 cents. - Rod - Monday, Aug 20, 12 @ 5:48 pm: As a Chicagoan I am exceedingly pleased that the Speaker, the Governor, and the President of the Senate have not as yet caved in on their cost shifting proposals for the teachers retirement system. The deeper the crisis gets the more likely part of the solution will include cost shifting and the more rapidly that cost shifting will have to take place. I do believe that Democrats who do not want to admit that the shift will drive up property taxes in areas outside of Chicago are not telling the truth, it will. In fact it should. Just like the Chicago Teachers Pension Fund used to receive directly of a cut of the property taxes in Chicago, prior to 1995 when Daley got the GA to a agree to shift the money to the Chicago Public Schools with a supposed promise to pay into the pensions if it went below 90%, it should be everywhere in Illinois. The direct payment of property taxes to the retirement system should be restored in Chicago and Chicagoans should be able to approve all increases by referendum. Effectively the amount of money in property taxes spent on teachers pensions should be a local decision based on referendum, the balance should be the responsibility of teachers themselves. What that balance should be, would in part be a decision of collective bargaining and in part based on votes of the property tax payers under a new system. The existing retirement system should be broken up into a district by district approach based on what each taxing district can afford and the benefit package the community wants to provide to its teachers. The money the State owes the TRS should be paid back over a very long period of time, but the ultimate responsibility for pensions for teachers should fall on tax payers of the district and teachers themselves. All the Illinois Constitution says on this issue is that pensions are “enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” Teachers should have to litigate against the property taxpayers of their school district for their democratic vote in referendums if there is a shortfall, let’s see a court force a property tax increase. If courts repeatedly order tax payers to poay up then the pressure will build for an amendment to the Constitution and that is good too. - wordslinger - Monday, Aug 20, 12 @ 6:28 pm: As long as the original AA and Schnorf are in the mix, we can have a rational and intelligent discussion. Sue, do everyone a favor and hit the return bar once in a while. If you want people to pay attention, it shouldn’t be a death march trying to read it. Glad to hear you’re concerned about pensions taking money from public education. Like it’s either or. But I’ll go all in for education, public or private, any day. The world rushes to receive an education in Illinois colleges and universities. It’s one of the many great things that beats the stuff out of everyone else. Can I suggest some reading material, Sue? It revolves around the giants of the American Empire who have to drag the rest of the country through the exercise. Here’s an example. The great state of Louisiana, led by the brilliant Bobby Jindal, is trying to walk away from their pension obligations while at the same time introducing public school textbooks that claims the Loch Ness Monster disproves the Theory of Natural Selection. The story takes place in 2012. - reformer - Monday, Aug 20, 12 @ 6:51 pm: YDD Rich reports that Toni Preckwinkle is considering a run for governor pledging to end the temporary income tax hike. If anything in politics is certain, it’s that every GOP candidate will pledge to do the same. In short, I’m not as confident as you that the temporary hike will necessarily become permanent. - Anonymice - Monday, Aug 20, 12 @ 6:58 pm: ==I guess I don’t see why current pensioners should be any more exempt from cuts than current employees, or current Medicaid recipients, or current K-college students, or current veterans.== Well, let’s see. Current pensioners have a contract and they have already fulfilled 100% of their side of the deal. Current employees have no right to continued employment at the same pay unless they have a contract, and then have no such right after the contract expires. College students, Medicaid recipients and veterans may have moral claims to taxpayer money, but no legal claims. Paying the retirees is legally mandatory, paying the others is not. - wishbone - Monday, Aug 20, 12 @ 7:36 pm: Public Servant: Thanks for toning down the rhetoric on this. I guess my position as a Democrat is that the more you spread the inevitable cuts, the less the impact on any one group. In general, in our society more children than elderly live in poverty. Cutting programs that affect children more than those that affect the elderly will add to that inequality. That is not what Democrats stand for. - RNUG - Monday, Aug 20, 12 @ 7:50 pm: Everyone, which includes both all IL taxpayers and State employee / now retired taxpayers, benefited from the artificially low income tax rates maintained by the State the last 30 - 40 years. As a simple matter of logic, all (still living) taxpayers should pay to cover the structual shortfall that resulted. Figure out how to extend the income tax to retirees at a given level x% while also increasing the existing tax level on workers by the same number. That way everyone will pay the same increased percentage from where they are now. It will probably take some fancy calculations on the IL-1040 where the retiree gets a tax credit equal to the current income tax rate before the new increase. Can’t get much fairer than taxing all the same people who benefited from the artifically low taxes. - RNUG - Monday, Aug 20, 12 @ 8:21 pm: Better yet, to get around the flat income tax provision and simplify the math, call it a ‘pension stablization tax’ of x% figured on the IL-1040 right next to the line that (is supposed to) captures internet sales tax. - RNUG - Monday, Aug 20, 12 @ 8:22 pm: Combine it as the revenue source with bonding out as much as you can of the pension shortfall, and you’ve got a better solution than the GA has come up with. - PublicServant - Monday, Aug 20, 12 @ 8:23 pm: Wishbone, what you’re advocating is the pitting of one underprivileged class, poor children, against another, retirees. I reject the premise as should any true democrat. There are other alternatives that are much more just. True democrats pursue just solutions regardless of what might seem undoable in the disarray of the present. - Anon - Monday, Aug 20, 12 @ 8:36 pm: I am a Republican and don’t want the Republicans to compromise with the Dems. Rather, I want real reform, real spending cuts, real cost savings, and no additional taxes. No more games or gimmicks. - wishbone - Monday, Aug 20, 12 @ 8:58 pm: “There are other alternatives that are much more just.” Spell them out and then explain how you get there politically. Across the board cuts don’t pit one under privileged class against another, all classes are affected equally. Look, I believe we should raise taxes on the 1% to solve our problems, but it ain’t gonna happen. Come up with something that will actually work that doesn’t require any sacrifice from current retirees, and I will sign on. - wordslinger - Monday, Aug 20, 12 @ 9:10 pm: I am a Republican and don’t want the Republicans to compromise with the Dems. Rather, I want real reform, real spending cuts, real cost savings, and no additional taxes. No more games or gimmicks.= You’re also the biggest part of the problem, a spoiled brat who says “I want, I want, I want,” and offers nothing in the form of solutions or substance. Another victim heard from. - Arthur Andersen - Monday, Aug 20, 12 @ 9:32 pm: Anon 8:36, plenty of Repubs want what you do. Fortunately, they are wise enough to realize that one can’t have the cake and eat it, too. Come back when you have something to contribute. - wordslinger - Monday, Aug 20, 12 @ 9:49 pm: –Come back when you have something to contribute.– Sound advice. No matter where you’re from, your party, your perspective or your agenda, AA has the goods, and you can bet your bottom dollar. Dudes with the big brains can do that. - mythoughtis - Monday, Aug 20, 12 @ 10:37 pm: wishbone Current retirees differ because many of them are either too old or too infirm to work at much of anything at all. Therefore they are limited to their fixed income. You can’t say they should have planned for themselves because they DID plan for themselves… they planned to have a pension. Current Medicaid recipients, K-12, and veterans are presumably able to work, if they (or in the case of children, their parents) could find work, that does of course, not apply to disabled people. If we take pensions away from retired people, we will just have to take care of them anyway because they will then be of limited income and will be taking part in the services provided to low income. - Not in the Know - Tuesday, Aug 21, 12 @ 5:40 am: “I asked them if they would lead by example, at the very least, and vote to reform the General Assembly pension system….Again, Republican leaders said no.” That’s a very interesting comment Mr. Gov., unfortuately SB2498(Republican sponsor bill - first reading 10/11/2011)has been stuck in assignments and most likely will never see the light of day, not by the hands of the Republican leaders. Of course you would never give credit to those on the opposite aisle with advancing this bill now, but thanks for the great talking point. - Yellow Dog Democrat - Tuesday, Aug 21, 12 @ 7:22 am: @Reformer - I’m absolutely confident that the temporary tax hike will NOT become permanent, for the simple reason that the math does not work in the long term. A sustainable state budget will require replacing the temporary tax increase with a restructured tax code that DOES work. That could be a graduated income tax, it might mean rebalancing the corporate income tax rate by closing loopholes (aka ‘tax expenditures’), and it might require broadening the sales tax base to include atleast some services. It could mean a lot of things. But it will certainly require bipartisanship and massive voter education. Because as long as 1 in 4 voters believe that the corporate income tax is our state’s primary source of revenue and 1 in 4 voters believe that transportation or higher education are our top spending items, you are never going to get sound fiscal policy. Sorry, comments for this post are now closed.