* We’ve talked about some of this here and in the subscriber section, but I thought the public at large should know more about it as well. My Sun-Times column…

There are a couple of stories the media isn’t telling you. Both are pretty important to understanding what’s happening in Springfield these days.

Let’s start with Gov. Pat Quinn.

The governor called a special legislative session last week that failed miserably. Quinn wanted pension reform addressed, but the House couldn’t even pass a bill, at Quinn’s request, to eliminate future legislative pensions and reform the system that legislators have. The Senate adjourned before the House even voted, strongly signaling that it wasn’t interested in the bill, either.

To avoid looking like a weak and unfocused leader, Quinn has loudly blamed the Republicans for the failure of that bill and claimed that he plans to “activate” the grass roots come September to put pressure on those Republicans to vote for a reform bill.

So we’ll probably see the governor doing news conferences next month assailing Republican House members for voting against reforming their own pension system.

Up until now, however, nobody has really reported details about that House roll call.

Yes, most House Republicans voted against reforming the General Assembly’s pension fund, but so did a whole bunch of Democrats.

The proposal received 54 votes, which is six short of a majority. Several Chicago area Democrats who are allied with Quinn voted “No,” including some liberals and almost the entire House Black Caucus. If the governor had flipped just half of those Democratic “No” votes, the legislative pension reform proposal would’ve received a majority.

About the only place where Quinn still has support in Illinois is in Chicago and in heavily African-American suburban townships.

“Activating the grass roots” in rock-ribbed Republican DuPage County will be fruitless. Almost nobody there cares what he thinks. If Quinn really wants to pass this bill, he’ll focus on his own party members.

Don’t ever expect that to happen, though. This “grass-roots” effort almost surely won’t be about passing a bill. It’s more about political cover for the fall elections.

And that brings us to the other story you’re not being told.

The Republicans say they want reform, and that’s dutifully reported by the media. But the Republicans also won’t compromise to get something done.

There are some serious public policy reasons for this GOP intransigence, but there are also some very sound political reasons as well that nobody really talks about.

Any success at ending the pension stalemate would mean that the ruling Democrats would finally look like they’re getting something accomplished in Springfield. That would be bad for Republicans because their road to victory this year is painted with claims that the majority Democrats are clueless incompetents. Governmental chaos and voter fury is the order of the day, and solving problems won’t help that aim.

And that’s why the Republicans wanted the governor to call more special sessions on pension reform. The GOP knew that nothing would be accomplished on pensions because the Democrats don’t want to upset the teachers and other public employees with harsh pension reforms before the election.

Several Republicans would rather avoid that scenario as well, by the way. They aren’t stupid.

A long round of do-nothing special sessions would’ve made the Democrats look like idiots.

The Democrats aren’t stupid, either. They bolted town after voting on a mostly symbolic legislative pension proposal that they can use in their re-election campaigns.

Almost nobody is being straight with the public on this pension issue. But now I hope you understand a little more about why they’re not.

* Last night, after the column was posted online, I received an e-mail from the governor’s press office…

The governor blamed Republican leaders because Republican leaders told him no on 4 different proposals. Not the Speaker, not the Senate President. Republican leaders wouldn’t agree to support ANY proposal that was on the table, including one their own leader proposed. It wasn’t the governor’s proposal to abolish pensions for legislators- it was Cross’- the governor just agreed and said, “ok let’s do that too.”

Cross did propose abolishing legislative pensions, but according to the governor, Cross didn’t agree to run the bill on its own last Friday. Basically what happened is that the governor and the Democrats advanced Cross’ idea to prevent him from using that against them in the coming elections.

* I also received a text message from a legislator heavily involved in the pension reform issue…

Finally! Your column today is refreshingly accurate on the reason for inaction. Thank you.

* Meanwhile…

Illinois is edging closer to having its credit rating lowered because officials have failed to address the state’s massive pension problem.

Moody’s Investors Service called the failure a “credit negative” Thursday. That could lead to a reduction in Illinois’ credit rating, which is already the lowest of any state. That would make it more expensive to borrow money.

Standard & Poor’s Ratings Services also says it is evaluating the state’s rating.

* And the finger pointing continues by both sides…

The governor still blames inaction on pension reform on obstructionist Republican lawmakers in the General Assembly.

“The Republican legislators and the leaders last Friday, they refused to do anything,” said Quinn. “They wouldn’t even reform their own pension system.”

“So the minority party in this state are the obstructionists? No, I don’t agree with that,” said Rutherford. “Stop that! Its time for people to stop being politicians and stand up and be statesmen.”

Um, Dan? Yes, they are.

* The full Moody’s statement…

Illinois Fails to Enact Pension Reform, a Credit Negative for the State

Last Friday, the Illinois General Assembly in a special session failed to approve any of several potential state pension reforms, a credit negative for the State of Illinois (A2 stable), which faces material pension funding challenges. Inaction on the state’s pension liabilities will further strain this lowest-rated US state’s finances.

Illinois Governor Pat Quinn, a Democrat who called the special session after lawmakers failed to pass pension reform1 this spring, blamed Republicans for the impasse. Democrats control both General Assembly chambers, but Democrats sought bipartisan support.2 All legislators except those retiring from office face reelection this year, making many wary of action before 6 November elections.

Under current law, the state provides most employer contributions for the Teachers’ Retirement System and State Universities Retirement System, statewide plans covering non-state employees. One of Governor Quinn’s proposed reforms that appeared to polarize the legislature was shifting some of the responsibility for funding teacher and university benefits to school districts and universities from the state itself.
Both sides of the political aisle advocate addressing the state’s pension liabilities, which have become the largest among states, both in absolute dollars and relative to state revenue. Illinois’ reported pension liabilities amounted to $146.5 billion, or $82.9 billion net of assets on a smoothed basis as of 30 June 2011. These figures are calculated using elevated discount rates,3 thus understating the liabilities’ present value.

Without pension reforms or revenue increases, state officials expect the share of operating revenue needed for retiree benefits to keep growing. In the current fiscal year, the state has budgeted for the combination of general fund pension contributions and pension obligation bond debt service to rise to $6.65 billion, or 20% of total general fund expenditures and transfers out. These figures compare with $4.03 billion, or 13% of expenditures and transfers out, three years earlier, as shown in the exhibit.

Rising employee benefits will erode the state’s ability to deliver core services. The governor has warned that as the state struggles to cover Teachers’ Retirement System and State Universities Retirement System normal costs (the value of future benefits accrued by employees in a year), it will need to scale back university and school funding. A consequence of this budget strain in the past has been the growth of a large backlog of unpaid bills. The state’s enacted fiscal 2013 budget provides for a 20% decrease in accounts payable from state general funds. There are six legislative session days in late November and early December, but Illinois may not agree on an approach to pension funding until early 2013. In the meantime, the funding challenge will keep growing.

* In other news, this lede is really misleading…

Illinois’ biggest pension fund is being urged by its own consultant to lower its expected return on investments — a step that, if accepted, could force the fund to cut benefits or raise taxpayer contributions even more than lawmakers have been considering.

The pension fund cannot “cut benefits” nor can it “raise taxpayer contributions.” Only the General Assembly can do that. And you have to read well more than half way through the piece to see that the consultant also says this…

“The most significant of the recommended changes are that the post-retirement mortality assumption is revised to reflect improved longevity, future salary increases are expected to be lower and lower investment returns are assumed,” Buck said of its report.

The article also focuses on a reduction in the expected rate of return to 7.75 percent from the current 8.5 percent. But the consultant provided a range of choices ranging from 8.25 percent down to 7.75 percent.