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Finger-wagging and finger-pointing on pensions

Thursday, Mar 7, 2013

* Tribune editorial

“We all know that we must reform the Illinois public pension system. So, members of the General Assembly, what are you waiting for?” Quinn asked.

The governor should have turned and put that to the guy standing behind him in a navy blue suit. House Speaker Michael Madigan, more than anyone else in Illinois, is slow-walking pension reforms.

Senate President John Cullerton and Republicans in both the House and Senate have said they want not only to work on a pension bill, but to bring one up for a vote. The Senate may advance several pension bills next week. Members on that side of the dome voted on a scaled-down pension bill last spring.

Madigan’s contribution of late? He has introduced pension amendments that he knows have no support: Last week, the House voted on amendments that would have eliminated cost of living increases for retired employees, prohibited cost of living increases in years the pension funds weren’t 80 percent funded and required government employees to pay 5 percentage points more toward their retirement accounts.

Madigan called those amendments to the floor knowing they would have little, if any, support. Of course, the amendments failed. We don’t understand Madigan’s gamesmanship. But what a waste of time.

…Adding… It’s more than a little ironic that the Tribune now bashes ideas that it once supported, like forcing employees to pay lots more into the pension funds and raising the retirement age.

* Sun-Times editorial

Quinn once again made the powerful case for cutting public employee pension costs while also upbraiding legislators for failing to pass a comprehensive pension reform bill. There is little doubt his words were aimed mainly at the leaders who do the corralling, cajoling and strong-arming needed to get a bill passed.

They talk boldly about cutting pensions, but the Democratic leaders are not on the same page to make it happen. They need to get there, with Mike Madigan leading the way.

We don’t buy into the Magic Mike mythology, that Madigan can pass whatever bill he desires. But he wields unmatched influence, in part because no one ever knows where he stands.

It’s past time for Madigan to make his views crystal clear. And the stunt he has planned for Thursday doesn’t count. For the second time in a week he’ll ask legislators to vote for overly harsh pension cuts that will never become law.

* Well, actually, one of the proposals he’s recommending today isn’t anywhere near “overly harsh.” From his interview yesterday with Jak Tichenor

On Thursday, Madigan plans to hold a vote on an amendment that would cap the level of salary on which a pension could be earned at the Social Security wage base. What that means is that if an employee makes $200,000 a year, their pension still only would be based on the SSA wage base of $113,700, the maximum salary on which Social Security benefits can be earned.

Madigan indicated that more realistic amendments will be voted upon Thursday and that he will be working to pass them – an important point because up until this point, the people involved in crafting these pension bills say he hasn’t made much of a push.

“It’s an easy reform. It ought to be adopted. … I know we’re working with all the Democrats to get a ‘yes’ vote for the amendment. It’s a generally agreed amendment in all of these discussions,” Madigan said.

He also explained whey he held those votes last week…

“To better educate the members of the House and the Senate if they’re watching what we’re doing,” Madigan said when asked what the purpose of those votes was, “because my sense of the attitude of the members of the legislature is that they’re not yet ready to take this difficult step. So by presenting these proposals on the floor with the requirement that people vote will help them better understand how grave the situation is, the difficulty of the proposed changes, so we’ll continue that process over the next several weeks.”

* And as for Quinn’s finger-pointing

Sen. Bill Brady, R-Bloomington, who was Quinn’s opponent in the 2010 gubernatorial election, said the governor “has had five years to lead on a pension bill and he has failed to do so. He can’t seem to get that done.”

Brady insisted that Quinn hurt his cause with the speech.

“Here was a ‘Mr. Rogers’ style of lecturing the Illinois General Assembly that I don’t think is going to move the ball forward,” Brady said. “The support he heard during his exit (from the House chamber), from his own side of the aisle, was minimal. I think people here are tired of his style of politics and governing.”

Sen. Mike Frerichs, D-Champaign, did not disagree with Brady.

“I think there are a lot of people in the General Assembly who have been working on solutions to the pension problem, and for the governor to say that there has been a complete lack of action — when I think there has been limited action out of the governor’s office — might set back a solution,” Frerichs said. “If he’s really interested in getting something done rather than lecturing the General Assembly, it would be good to convene groups together and sit down for the hours it’s going to take to reach a solution.”

And

The governor, who has frequently changed what he backs in a pension bill, this time called for passage of a “comprehensive” measure that includes unspecified changes to the annual compounded interest cost-of-living adjustments that help drive up the pension debt and a suspension of the yearly increases for “those with higher pensions.” The administration declined to define a dollar amount, however. […]

“I think most of the work that has been done on pensions has come out of the General Assembly and not out of the governor’s office,” [said Senate GOP Leader Christine Radogno]. “The governor is the one that has been woefully absent.”

And

Lawrence Msall, president of the government finance watchdog Civic Federation, said Quinn’s budget lacked a specific plan to resolve the pension problem.

“There are no roads out of the fiscal crisis except through pension reform,” Msall said.

* Meanwhile, the governor made a point of saying yesterday during his budget address that he had met with the four leaders last week to discuss pension reform. But

Senate Minority Leader Christine Radogno said later that she thought “the purpose of the meeting was to say we had a meeting.”

House Minority Leader Tom Cross said the sit-down “lasted about 5 to 8 minutes, maybe.”

Quinn and three of the leaders waited more than an hour for Speaker of the House Michael Madigan to show, Cross said.

“It was a lot of waiting and then a lot of nothing after that,” Cross said.

- Posted by Rich Miller        

78 Comments
  1. - Precinct Captain - Thursday, Mar 7, 13 @ 9:39 am:

    We don’t understand Madigan’s gamesmanship. But what a waste of time.

    How can the Tribsters say Madigan’s pension amendments were a waste of time when they admit they don’t even understand what he was doing (or trying to do). Just because you don’t understand something doesn’t make it a waste Tribune editorial board members.


  2. - PublicServant - Thursday, Mar 7, 13 @ 9:46 am:

    Nothing is wrong with the pension. What is wrong is borrowing from the pensions to pay for programs over the last half century. So to correct the BORROWING problem:

    1) Stop using the pensions to pay for programs “going forward”.

    2) Adopt the sustainable CTBA (Martire) debt reamortization schedule to replace the unsustainable 1994 pension debt repayment schedule.

    3) Reform the regressive Illinois tax code that is the root cause of the BORROWING problem.

    4) Stop demonizing State Employees, and their benefits for your using state pension funds to fund state borrowing.

    5) Treat the pension borrowing exactly like you would state bondholders.


  3. - wordslinger - Thursday, Mar 7, 13 @ 9:47 am:

    –But he wields unmatched influence, in part because no one ever knows where he stands.–

    How do you wield influence when no one knows where you stand? Once you start attempting to influence, don’t you reveal your position?


  4. - mythoughtis - Thursday, Mar 7, 13 @ 9:48 am:

    I found it interesting that two of Madigans’ amendments last week had to do with suspending COLAs (one until pension funds fully funded, one until pension fund 80% funded), and Quinns’ budget address suggested suspending COLAs.

    So, I think Madigans’ amendments weren’t as far outlandish as we thought. I believe his point, for these two amendments, was to try to let Quinn know suspending COLAs was not going to fly so he could leave that out of the budget address. However, Quinn didn’t listen.


  5. - Liberty_First - Thursday, Mar 7, 13 @ 9:49 am:

    Maybe the reformers should take a new approach.


  6. - Blockhead - Thursday, Mar 7, 13 @ 9:49 am:

    Public Servant: WELL SAID!!!


  7. - 332bill - Thursday, Mar 7, 13 @ 9:58 am:

    I would support the social security limit (~$113,000) on Illinois pensions provided the limit adjusts when the SS limit goes up and pension contributions stop when the limit is reached, just like with social security witholding.


  8. - Anon. - Thursday, Mar 7, 13 @ 9:59 am:

    After reading the Trib’s words of wisdom, I think you should have included “finger pulling” in the headline.


  9. - ejhickey - Thursday, Mar 7, 13 @ 10:01 am:

    how do we pay off the $97 billion in unfunded liabilities plus the $9 billion in unpaid bills plus all of the other debts, without another large tax increase? the only realistic cages to the pension problems involve reductions to prevous committments and are probably unconstitutional ad will guarantee a court fight. maybe we should have a proressive income tax but that will require a contitutional change. we need more revenue , now, now , now! one area that is untaxed is retirement income. we have to start taxing all pensions, social security and IRA withdrawals.


  10. - Small Town Liberal - Thursday, Mar 7, 13 @ 10:01 am:

    - The administration declined to define a dollar amount -

    My goodness, does the Governor have to write the legislation now? He gave specific examples of what he’d like to see in the reform, most of which has already been proposed in one or more of the bills out there.

    As to Brady, put up or shut up, I haven’t seen you on the front lines for any pension reform.


  11. - Blockhead - Thursday, Mar 7, 13 @ 10:02 am:

    But best question of all is who does the Tribune speak for? Certainly not me or anyone I know, as most of our acquaintances have dropped their subscriptions after the hysterical rants. What makes them the authority on popular opinions? Who are they the mouthpieces of?


  12. - Skirmisher - Thursday, Mar 7, 13 @ 10:03 am:

    I second Blockhead- Public Servant hit the nail squarely on the head. If we had any sort of responsible governor and general assembly, Public Servant’s plan would have beeb implemented long ago, regardless of what else might have to follow.


  13. - James the Intolerant - Thursday, Mar 7, 13 @ 10:05 am:

    The situation gets worse as every session passes, come on, work together and adopt some changes. A little pain now is better than excruciating pain later for pension participants and taxpayers.


  14. - PublicServant - Thursday, Mar 7, 13 @ 10:21 am:

    I really don’t know what to say, some state employees have worked for the state for well over 30 years, three decades, have retired, and have planned for that retirement and for the financial security of their families based on the promises that were made over all those years. Now that they’re retired…now…after agreeing to provide their services to the state for those promised benefits…now…when they are unable to easily obtain any employment, much less employment at anywhere near what they had been making before retirement…now…you want to place the burden of reducing your borrowing from the pensions of not only current employees but those already retired, not by paying it back, like all of us would do, but instead by telling the people whose money you took that because you took SO much, well, we just can keep our promises…nice.

    Please do your worst, but don’t expect me to bend over and ask for another kick. We current and former state employees have no choice but to fight any immoral bills passed into law in state and federal court, where I predict we’ll win.


  15. - onceademocrat - Thursday, Mar 7, 13 @ 10:23 am:

    Well said PublicServant, our elected Leaders, or lack thereof created this mess YEARS ago…


  16. - Tobor - Thursday, Mar 7, 13 @ 10:24 am:

    Eliminate the impossible admendments and all thats left are the politically possible.


  17. - Anon - Thursday, Mar 7, 13 @ 10:28 am:

    Nice the State wants to cap payments at the social security amount but is collecting more than double what an employee contributes to social security.


  18. - Billy - Thursday, Mar 7, 13 @ 10:30 am:

    ejhickey Tax all retirement income and force those who can to move out of state! Then who will pay the states bills? The ones left behind? Yea right!


  19. - funny guy - Thursday, Mar 7, 13 @ 10:42 am:

    Hey–business community–you received the pension money by having it fund your pet capital projects all these years–now its time to pay it back.

    All new casino (including Chicago’s)and racetrack slot machine money should be used to pay for pensions. All TIFs should be amended with the money going to pensions. The proceeds from the sale of Midway should go to pensions. Then sell O’Hare, with that money going to pensions. Unlike parking meters, airport revenue cannot be used to fund city operations–its found money.


  20. - dupage dan - Thursday, Mar 7, 13 @ 10:45 am:

    PublicServant,

    As a state employee I, too, wonder why the Martire plan is getting virtually no time either in the GA or the press. Is it that the GA somehow wants to problem to disappear so that they can go back to using the pension fund in the same way they have been for years? Does the majority party in control want to avoid angering a major part of their consituency by doing what they know has to be done?

    It may be easy to give in to the conspiracy theories when there has been so little movement in the last year. Oh, the GA can point to all sorts of movement - amendments proposed, debated, voted down. Look, we’re doing SOMETHING. They want us to believe they are moving the debate forward but I am not convinced.

    The path to solvency will not require higher order quantum theory mathematics. It won’t require Edward Teller or ALbert Einstein to decypher the mysteries of pension reform. It is straightforward accounting. Addition and subtraction. All the rest is posturing and politics. Understandable given the players involved. Maddening to those who have to pay for the pension, and to those who rely on it.


  21. - cassandra - Thursday, Mar 7, 13 @ 10:58 am:

    State retirees should be very concerned about the combination of cola reduction and increased premium costs for health insurance; it really is a double whammy although the pernicious effects of loss of the cola will be felt more gradually. I’m surprised the AARP hasn’t jumped in here. After, say, 10 years, loss or reduction of cola is a big hit on purchasing power. So there are economic effects also. And even if the economy improves, getting it back would be tough.

    Criticizing the legislature is a no-brainer for a governor running for re-election. Is there any legislature, national or state, that is loved by the people it represents. And the Illinois legislature is hardly a Quinn fan club anyway. Easy button.


  22. - Six Degrees of Separation - Thursday, Mar 7, 13 @ 11:03 am:

    I think the end result of the pension mess…when all sorted out by legislation and then the courts…is that there will be a whopping bill to pay, IL’s taxpayers will mostly be stuck paying it, pensioners (maybe private as well as public sector) will be paying more in insurance and taxes, current state employees and teachers will be kicking in more now to get less in the future, it will be a great lesson on what “not to do” for other states and future generations of IL legislators and voters.


  23. - T.O. - Thursday, Mar 7, 13 @ 11:10 am:

    If they cap pensions at the SS limit every judge in the state will sign onto the lawsuit. There isn’t a senior judge in my circuit making less than 200k.


  24. - walkinfool - Thursday, Mar 7, 13 @ 11:15 am:

    Some Amendments put on the floor were actually recommended by Msall, by other GOP leaders and candidates, and by the Tribune editors. Now they complain about Madigan because they proved to be non-starters?

    I remain convinced that what Madigan did added to the process, by clarifying the realistic choices, rather than harming it. That he had other political reasons does not detract from that fact.


  25. - sam - Thursday, Mar 7, 13 @ 11:24 am:

    Public Servant

    Couldn’t have said better myself. Problem is the politicians, including PQ, with the help of print media have succeeded in making the general public believe that greedy pensioners are THE root cause of the problem. What you wrote should be made known by the so-called reporters who simply parrot the politicians and pass off what they write as the truth. Only in Illinois can the legislature wantonly and with impunity plunder the pension fund and then come back to those who were robbed and REQUIRE them to put the money back!


  26. - Small Town Liberal - Thursday, Mar 7, 13 @ 11:26 am:

    - that greedy pensioners are THE root cause of the problem. -

    Oh please, the governor has clearly placed the blame on previous administrations and legislators over and over, including yesterday. Stop playing the victim, and try to remember that Quinn is the only governor to fully fund the pension every year.


  27. - Sgtstu - Thursday, Mar 7, 13 @ 11:31 am:

    I see all of the ideas put forth by many on here but wonder do you not understand the math ?

    Things to do to a retiree :

    1. Start paying for insurance for themselves and dependents = less money at end of month for them.
    2. Start taxing retirement pay every month = less money at end of month for them.
    3. Take away the cola for retirees = less money at the end of the month for them.
    4. Increase the copays and deductables for healthcare = less money at the end of the month for retirees.

    Now if the State prevails in the Maag case do any of you think or care that the Legislature / Gov. will not ask for the reitees to pay more for healthcare every chance they get?

    Retirees can’t be the ones to correct all of this mess made by the Legislature. We are retired and now on a fixed income. How many of you would or could survive every month with all of this increase of expenses in your retirement ?


  28. - boat captain - Thursday, Mar 7, 13 @ 11:45 am:

    Pat Quinn was Lt Gov back when the state skipped the pension payments. Maybe I missed it but, I heard nothing from him then on skipping the payments that would cause trouble down the road. He was part of the Blago administration, whether they communicated or not he was a part of it and should share part of the blame also. As for him being the only Gov to fully fund the pensions, good, for that is what should be done.


  29. - Small Town Liberal - Thursday, Mar 7, 13 @ 12:02 pm:

    - I heard nothing from him then on skipping the payments -

    There’s a stretch. The Lt. Gov has zero control over the budget, nada.

    And if you think Rod was the only governor to short pensions, you need to brush up on your history.


  30. - Arthur Andersen - Thursday, Mar 7, 13 @ 12:22 pm:

    STL, fully funding the payments by borrowing the money twice in a row ain’t something to be all up on the high horse about,k?


  31. - Jeeper - Thursday, Mar 7, 13 @ 12:31 pm:

    STL:

    1. Nobody said the Lt. Gov has any control over the budget. They said they couldn’t recall him speaking up about it.
    2. Nobody said Blago was the ONLY one.

    Way to argue the secondary (or is it tertiary?) point.

    The -one- person in “leadership” for the most years building this mess is Madigan. Where was he during all this? He was “investing” the money in Public Aid recipients. Get it back from the “return on (that) investment.”


  32. - Small Town Liberal - Thursday, Mar 7, 13 @ 12:48 pm:

    - fully funding the payments by borrowing the money twice in a row -

    Maybe you forgot about the billions in structural deficit at the time. If you can describe another option besides skipping the payments I’d love to hear it.

    Jeeper - I’m just pointing out that insinuating Quinn is culpable for the pension problem because of his time as Lt. Governor is a pretty big stretch.


  33. - mokenavince - Thursday, Mar 7, 13 @ 1:17 pm:

    Madigan’s smoke and mirrors continues while the State burns.His hard guy act is tiresome and the people are weary,nothing ever gets done. What makes him think that his daughter using the name Madigan would win the Governors seat.The people are not that stupid,he is the Boss of Bosse’s. He and only he can get the job done.


  34. - unbiased observer - Thursday, Mar 7, 13 @ 2:07 pm:

    ok everyone pointing fingers….

    it doesn’t matter whose fault it is!!!!!!

    there is a problem of epic proportions looming. please stop arguing about whose fault this problem was. it doesnt matter at this point.

    focus on solutions. we might as well be honest about this and realize that some people are going to not get money that they thought they were going to get, either through decreased pension benefits or increased taxes.

    illinois is over the cliff and the ground is approaching rapidly. this is about trying to figure out a way to survive at this point rather than figuring out why we are “off the cliff.”

    there is no money. promises will not be fully kept. taxing schemes will become more pernicious across the entire population of our state.

    lets get some real leaders to come up with a plan that works. people are going to be angry regardless. get on with it and stop arguing as to whose fault it is. it does not matter at this point.


  35. - Ruby - Thursday, Mar 7, 13 @ 2:12 pm:

    Most citizens know that if state pension benefits are reduced, it won’t be long before the federal government goes after social security benefits and medicare. This could explain why the public has not joined in common cause with the Tribune and other conservative groups in support of punitive pension reform measures.


  36. - PublicServant - Thursday, Mar 7, 13 @ 2:22 pm:

    ===Maybe you forgot about the billions in structural deficit at the time.===

    It never ceases to amaze me when people so clearly realize the root cause of the problem, a structural deficit where revenues are insufficient to fund the state’s programs…for decades, and yet the proposed “solutions” have nothing to do with correcting the structural deficit…except for Martire’s plan, that is…which, except for one blog post in CapFax, thanks Rich, has had only a minute amount of coverage in the press. And when his ideas are presented, they are usually juxtaposed against IPI’s as two extremes on display, while Martire’s ideas (thanks Steve Schnorf) add up, are legal, and actually save the state 30 billion over their lifespan.


  37. - Jeeper - Thursday, Mar 7, 13 @ 2:24 pm:

    Unbiased: ==…some people are going to not get money that they thought they were going to get, either through decreased pension benefits or increased taxes==

    OK but how fair is that that same people:
    1. made their contributions on time for decades
    2. had no voice in how the money was invested
    3. had no voice in “loaning” it to legislature for general revenue fund purposes, apparently with NO HOPE of seeing it repaid by those who “borrowed” it
    4. will get reduced pensions
    5. will get health insurance “premiums” of a rising (but -eventually- fixed?) fraction of their income
    6. will get the increased taxes (to repay the money stolen) that is the cause of all the preceding

    Your “EITHER” has become “AND… AND… AND…”

    That doesn’t sound “fair” to me. How about you? Would you jump at that deal?


  38. - Jeeper - Thursday, Mar 7, 13 @ 2:26 pm:

    Ooops…

    #6, above, should look like:
    6. will get the increased taxes (to repay the money stolen that is the cause of all the preceding)

    Sorry; too much hurry…


  39. - Jeeper - Thursday, Mar 7, 13 @ 2:32 pm:

    Public Servant: What is -your- definition of “structural deficit?”

    Whatever it is, how does that let -any- of these clowns off the hook? Did not past legislatures pass the spending bills that created it? Sounds like a Mike Madigan problem to me.

    Quinn has been around for a -long- time, too though not in nearly as powerful positions. Even so, the earlier question was -not- “Why didn’t PQ stop it?” The question was “Why didn’t he SAY anything about it?” After all, most of the posters here want the GOP legislators to speak up and they are -possibly- even less powerful than a Lt. Gov…


  40. - Blockhead - Thursday, Mar 7, 13 @ 2:33 pm:

    But it does actually matter whose fault this is. How can the GA practically liquidate the pension funds, spending workers allocated money on the general public, keeping tax rates artifically low and then demand that those they stole from have to come up with more money? It’s the equivalent of jailing the victim instead of the criminal! It does matter if you have any moral fiber or ethics. I know that’s asking alot of our elected officials, but the public has to know they were unwittingly duped too. They were getting stuff they weren’t paying for. The Trib had a piece today comparing the state of ILlinois to Iowa and Wisconsin, saying that they don’t have a pension problem…………they also omit that in Iowa, the state income tax level at highest rate is almost 9%——Wisconsin, in the 7% range. Can you even imagine that in this state? People would burn buildings down in protest! They also tax services. Gee, the rest of the country doesn’t have these issues because:

    1. They have graduated tax structure and their revenue PAYS for their needs.
    2. They didn’t rip off their public pension funds.


  41. - Jeeper - Thursday, Mar 7, 13 @ 2:36 pm:

    PS: I should have address my last paragraph to STL but left that out. Sorry.


  42. - Small Town Liberal - Thursday, Mar 7, 13 @ 2:40 pm:

    - After all, most of the posters here want the GOP legislators to speak up and they are -possibly- even less powerful than a Lt. Gov… -

    What are you talking about? We want all of the legislators to do their job and pass legislation that fixes the problem. I’d rather they all stop talking until that’s done.


  43. - Anyone Remember? - Thursday, Mar 7, 13 @ 2:44 pm:

    Anyone see the irony in the comments from the Tribune editorial people, considering they endorsed two of the people who caused the most damage - Jim Thompson and Jim Edgar?


  44. - unbiased observer - Thursday, Mar 7, 13 @ 2:53 pm:

    jeeper:

    it isn’t fair. but it doesn’t matter at this point. i’m really sorry about that and i completely understand the associated emotions.

    but the money just isn’t there.

    it’s like a cancer diagnosis, no one wants it, but cancer is cancer. has to be treated aggressively or you die.

    i dont think it will come down to people losing their entire pensions, it will just be attenuated somewhat. and taxes will go up too.


  45. - Meaningless - Thursday, Mar 7, 13 @ 2:55 pm:

    To all of the supporters like myself of Ralph Martire’s brilliant plan to reamortize the pension debt ramp, I’d like to share Rep. Elaine Nekritz’s email response that I received. “The reamortization of the pension ramp as supported by Ralph Martire of the Center for Tax and Budget Accountability is not an actuarially sound approach. It violates actuarial principles that require unfunded liability to be paid off in 30 years. It is our failure to adhere to actuarial principles that got is in to this mess. I don’t want to be the one who hands this problem off to future generations because of my unwillingness to adhere to actuarial science.” Am I missing something here? I thought Ralph’s plan would help fix / stabilize the pension funding problem right now and not have to pass this problem on to future generations.


  46. - PublicServant - Thursday, Mar 7, 13 @ 2:58 pm:

    Jeep, I gave the definition above ===revenues are insufficient to fund the state’s programs=== even when the overall economy is strong.

    And it doesn’t let any of them off the hook, the bottom line being…

    “Don’t spend it, if you haven’t got the guts to levy enough taxes to pay for it.”

    And the problem with trying to get state pensioners and employees to pay for the GA’s lack of having done the real “heavy lifting” all these years is that we had the foresight to protect ourselves both constitutionally and contractually. So you’ll need to spread the pain of actually paying for your borrowing problem unfortunately and ultimately to those who you should have had the spine to charge before, the taxpayers. Although with Martire’s suggested tax plan, 94% of Illinois taxpayers would see no tax increase, and the pension borrowing would get paid back without impacting other state programs.


  47. - Small Town Liberal - Thursday, Mar 7, 13 @ 3:16 pm:

    - I thought Ralph’s plan would help fix / stabilize the pension funding problem right now and not have to pass this problem on to future generations. -

    Martire’s plan basically just extends the funding deadline and sets a fixed payment, which is about $900 million higher than this year according to him. Others have said it would need to be higher.

    Combined with other reforms, reamortization isn’t a bad idea, but alone it’s going to be very painful for a while. Additionally, it increases the unfunded liability, which won’t help our borrowing costs any.


  48. - Meaningless - Thursday, Mar 7, 13 @ 3:24 pm:

    In regard to Gov. Quinn’s brilliant idea of “suspension of the yearly (pension / COLA) increases for those with higher pensions …” I’d like to pose the following questions. What is considered a higher pension? Will a $50,000 pension provide for the cost of living expenses for someone living Winnetka, IL as it would for someone living in Cairo, IL? I’m a retired teacher that is currently trying to financially support my oldest son through college with a younger son two years away from his dream of going to college. I also have a home mortgage and pay hefty property taxes because I live in the Chicago suburbs. How different would it be for someone that earned the exact same pension as I did only they didn’t have college age children, didn’t have a home mortgage, and didn’t have the same property tax burden? I know someone might say that I should have thought about this earlier before I had children later in life, and refinanced my house 3 times, and decided to live where I do. My answer is that I DID think about all these things earlier and I DID PLAN ACCORDINGLY based upon the benefits I was guaranteed in my contract and the benefits I was told that were protected in our state constitution. It’s very depressing to think that there are politicians like Gov. Quinn that would like to change the rules in the middle of the game!


  49. - Ruby - Thursday, Mar 7, 13 @ 3:25 pm:

    “Three pension amendments to HB1154 were debated on the House floor this afternoon. Floor amendment #7 passed 65-7…Limits/freezes pensionable salary of employees to the greater of the Social Security base for the previous year (currently $113,700), or the annual salary of the member in the previous year - does not apply to salaries determined by contracts or collective bargaining agreements currently in place on the effective date of the bill. Amendment passed 65-7.

    http://www.ilga.gov/legislation/BillStatus.asp?DocNum=1154&GAID=12&DocTypeID=HB&LegID=71606&SessionID=85&SpecSess=&Session=&GA=98


  50. - wordslinger - Thursday, Mar 7, 13 @ 3:32 pm:

    –Amendment passed 65-7.–

    House GOP still on the milk carton, I take it?


  51. - Ruby - Thursday, Mar 7, 13 @ 3:35 pm:

    More on Pension Reform from the SunTimes:

    “…the Illinois House gave a thumbs-up Thursday to capping the salary upon which a retired state employee or teacher could have their pensions based.”

    http://blogs.suntimes.com/politics/2013/03/house_backs_pension_cap_in_test_vote_rejects_two_other_pension_cuts.html


  52. - Meaningless - Thursday, Mar 7, 13 @ 3:50 pm:

    I’d like to commend the extremely educational and insightful posts that were offered today, especially Blockhead (10:03 + 2:33), Public Servant (10:21 + 2:22), Anon (10:28), DuPage Dan (10:45), Sam (11:24) and Ruby (2:12). Thank you again!


  53. - Old and in the Way - Thursday, Mar 7, 13 @ 3:54 pm:

    HB1154 #7 Alone this is clearly not constitutional. There appears to be plenty of case law that undermines it. I would assume that there will be more to this.
    It also raises a lot of questions. Would there be no pension contributions by the employee once they surpass the SS cap? Surely they are not going to try and in effect confiscate the employee contributions in excess of the $113,XXX cap. That would surely set off even more litigation. Judges would be just one of many constituencies in the systems impacted by this. BTW leaving them out is also a point of litigation.

    I suspect that there is more coming on this……..I would hope!


  54. - Meaningless - Thursday, Mar 7, 13 @ 4:02 pm:

    Small Town Liberal - Even though Ralph Martire’s plan extends the payment plan, I thought the major selling point of his plan would be a “fixed payment” which would be less burdensome in the future as the yearly contributions to the plan would remain fixed while revenues increased over time.


  55. - Jeeper - Thursday, Mar 7, 13 @ 4:20 pm:

    PS: If ===revenues are insufficient to fund the state’s programs===, perhaps they should CUT SOME PROGRAMS/SERVICES that the recipients did -not- pay for and leave the -pensions- alone…


  56. - PublicServant - Thursday, Mar 7, 13 @ 4:43 pm:

    And might I say that what I said above is not reflected in the views of any of the pols, Pat Quinn, or the other “representatives” of the people touting bills that ask the middle class and the poor to take it on the chin first.


  57. - Blockhead - Thursday, Mar 7, 13 @ 4:56 pm:

    Anyone wanting something, anything to pass through the legislature so that we can move forward and have it set before the courts to decide should think again. Court battles are expensive and if legislation is overturned, we are back to square one. Nice use of more taxpayers’ dollars. Why Martire’s plan is a no deal is a mystery other than the fact that it doesn’t punish retirees and workers enough. Other than that, I can’t imagine an educated person not taking his plan under serious consideration. Because it actually works.


  58. - Nickypiii - Thursday, Mar 7, 13 @ 5:05 pm:

    Maybe Mike Madigan understands that all current proposals are non starters because the’re unconstitutional. It seems to me, and possibly to Mike, that all this pension “reform” is only posturing by politicians that they’re trying to do something to lessen the States burden that was created by previous State pension legislation.


  59. - PublicServant - Thursday, Mar 7, 13 @ 5:14 pm:

    The burden, Nicky, was created by BORROWING from the Pension. End of Story.


  60. - Arthur Andersen - Thursday, Mar 7, 13 @ 5:32 pm:

    HB 1154 A7 violates the Federal Tax Code IF contributions are required over the capped amount. Simply stated, a plan sponsor can not collect a contribution for which a benefit is not paid. No ifs, ands, or buts.

    Turning to a couple previous posts, Rep.Nekritz is flat wrong if she is saying “actuarial principles” prohibit the Martire plan. They recommend, but do not require, a 30 year level
    amortization. What she likely means to say is “accounting standards” as recently adopted by the Government Accounting Standards Board, which do mandate 30 year level but which are not binding on the State.
    Oh, and STL, aka Quinn shill, I thought you raised taxes to pay for pensions so why did you borrow money? I get so confused.


  61. - Blockhead - Thursday, Mar 7, 13 @ 5:41 pm:

    Someone needs to set Rep Nekritz straight. She seems to be totally sure of those facts she spouts. No logical solutions for her!


  62. - PublicServant - Thursday, Mar 7, 13 @ 5:53 pm:

    Nekritz represents Northbrook. Here’s the stat that I believe makes the difference in her willful ignorance of the pertinent issues:

    “According to a 2007 estimate, the median income for a household in the village was $115,842, and the median income for a family was $133,813.”

    I’d bet her household income is well above the median. It’s hard for her to understand the effects of her bill on the middle class.


  63. - Old and in the Way - Thursday, Mar 7, 13 @ 6:46 pm:

    Arthur Andersen - Thursday, Mar 7, 13 @ 5:32 pm:

    HB 1154 A7 violates the Federal Tax Code IF contributions are required over the capped amount. Simply stated, a plan sponsor can not collect a contribution for which a benefit is not paid. No ifs, ands, or buts.

    Thanks for the confirmation! I mentioned this earlier. As it stands the rest of the bill is also unconstitutional. There are at least two cases in which the court has found this type of action in fact a diminishment of benefits.

    This is all so stark and obvious that I cannot help but wonder if there is more coming………


  64. - RNUG - Thursday, Mar 7, 13 @ 7:55 pm:

    As Old and In the Way mentions, there have been previous IL SC cases trying to limit the amount of a government employee salary for purposes of the pension. The employees won those suits.


  65. - RNUG - Thursday, Mar 7, 13 @ 7:59 pm:

    I can only come up with 2 scenarios that make sense to me on why the GA won’t just consider the changes that do meet legal muster and, in effect, keeps stalling:

    1) Since the IL SC basically allowed this mess to develop as the result of their 1975 IFT ruling, the GA wants the IL SC to have to issue a decision forcing the GA to raise taxes … so the GA doesn’t get the blame.

    or

    2) The GA is hoping to stall long enough for the stock market recovery to increase the pension funds holdings enough the problem will go away by itself. Remember, during the dot com boom that is what happened …


  66. - Just The Way It Is One - Thursday, Mar 7, 13 @ 8:19 pm:

    They all just need to stop pointing fingers and with mutual respect work this thing out already! There’s just too much at stake!


  67. - Flan - Thursday, Mar 7, 13 @ 8:37 pm:

    Obviously one person’s version of “overly harsh” is not another person that was promised a pension for serving the public for 35 years.


  68. - Arthur Andersen - Thursday, Mar 7, 13 @ 8:39 pm:

    RNUG, can you elaborate about the IL Supreme Court cases in re: limiting salary for pension purposes?
    If that is settled Illinois law, depending on the dollar limits, it would be squarely opposed to Section 401 of the Federal IRC that established limits for persons hired after a date in the mid-2000’s. The dollar amount is indexed for inflation and is over $200,000. I think to date it has only impacted a few SURS and a couple of TRS administrators newly hired from out-of-state.


  69. - Old and in the Way - Thursday, Mar 7, 13 @ 9:19 pm:

    AA ……..the issue broadly is whether any changes may be made to the formula retroactively……….there are also other issues that raise questions about the viability of the ammendment.

    Kraus v. Board of Trustees of the Police Pension Fund of the Village of Niles

    Felt v. Board of Trustees of the Judges Retirement System

    The Felt ruling also throws cold water on the notion that the state’s police powers allow it to make unilateral changes to the pension formula retroactively because of its financial condition or impact…….


  70. - RNUG - Thursday, Mar 7, 13 @ 9:25 pm:

    AA,

    Just looked it up again. I was thinking about Kraus vs Niles Trustees, which is covered in Madiar’s report. In a partial rereading, it dealt with which salary level would be used, the salary at the time he went on disability or the salary he earned prior to disability. The GA changed the law on which salary the benefits would be calculated on before he could actually receive the pension. The issue was whether a change to the pension code could be retroactively applied to a current member and court found it could not be. Is it exactly the same as a cap? No, but it’s very close because we’re talking about telling people who either already make more than the cap or who might make more than the cap their pension would be retroactively reduced to the lower number.


  71. - RNUG - Thursday, Mar 7, 13 @ 9:28 pm:

    Old,

    Thanks. I’m traveling and using my laptop and a slow connection to re-look things up. And you did a better job of concisely summarizing it; I tend to get long winded.


  72. - Old and in the Way - Thursday, Mar 7, 13 @ 9:29 pm:

    RNUG

    I like #1 but the end game is still to try and push this load off on the school districts , community colleges, and universities even just a little bit at a time.


  73. - RNUG - Thursday, Mar 7, 13 @ 9:38 pm:

    Old and In the Way,

    The shift has to happen along with making the temp tax permanent. It’s simple math. The 2% income tax let the State stop borrowing and got it more or less “even” with the extra $6B+ it brings in. If we hope to keep up with the $1B annual increases in the “ramp” or go to one of the “flat” plans that costs another $1B or so, we need to get the close to $2B from the TRS pension cost shift.


  74. - Soccertease - Thursday, Mar 7, 13 @ 9:55 pm:

    There aren’t any magic answers. So why not propose a bill that (1) increases employer contributions to achieve say 80% funding (2) increase employee contributions for new hires only (constitutional) and (3) hope the investment earnings improve. Sure there will be pain in qt he short run but will correct the problem over time.


  75. - Old and in the Way - Thursday, Mar 7, 13 @ 9:56 pm:

    RNUG

    You got it. Wait till next week. In fact watch the media this weekend……no protests and very little noise from either the teachers or others impacted. Oh sure some, but Madigan is playing this low key….the death of a thousand little cuts. You drag it out over four or five weeks and then slip in the comprehensive bill when everyone is just tired of listening to all the noise. Wait and see……..he has done this before.


  76. - Old and in the Way - Thursday, Mar 7, 13 @ 10:03 pm:

    I though the speakers comments on funding the AFSCME contract were very revealing. Was anyone else listening?

    There was a reason the strike was settled when it was. Now we will see if Bayer has the legal cover to get the raises. PQ is right in the middle of nowhere in this……he is gong to get his lumps no matter what.


  77. - RNUG - Thursday, Mar 7, 13 @ 10:06 pm:

    Old,

    Sometimes I think the another part of the “plan” is to let all of us do the legal “research” for free and to also use Rich’s blog to educate the rest of the GA members …

    Anyway, always enjoy reading your comments. I’ll probably miss Rich’s cut-off tomorrow night so til next week …


  78. - RNUG - Thursday, Mar 7, 13 @ 10:07 pm:

    Old I caught it …


Sorry, comments for this post are now closed.


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