What we have in Springfield right now is an epic legislative stalemate over an issue of absolute importance.
On one side we have the Senate president, John Cullerton, who says he wants to make sure that any pension reform legislation has a chance of being constitutional. On the other side, we have pretty much everybody else.
And I’m not sure why.
Cullerton came up with a plan that makes a whole lot of sense. His legal team was dubious at first that any public worker pension benefit could be reduced because our state constitution expressly forbids it:
“Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
The transcripts of the constitutional convention clearly show that the language was concocted to make sure that the General Assembly adequately funded the state pension systems or risk certain calamity when the whole thing crashed and burned. Like now.
Eventually, Cullerton’s lawyer applied a legal theory known as “consideration.” The pensions are contracts, so to alter those contracts you have to offer something of value in exchange for taking something else away. Offering continued access to government-subsidized health insurance premiums in exchange for taking away annual cost-of-living adjustments was what they came up with.
Almost immediately, though, the super-duper elite Civic Committee claimed that the idea would “lock in” billions of dollars in retiree health-care obligations. It would actually do no such thing. Illinois law allows the government to raise or lower retiree premiums based on the state’s fiscal condition, and a judge recently threw out a constitutional challenge to the statute.
The Civic Committee, a group of wealthy business executives headed up by former Republican Attorney General Ty Fahner, also has claimed that Cullerton’s proposal wouldn’t save enough money. But last year, Fahner supported a bill that actually would have increased state costs in the short term and saved the state just a few billion dollars over the long term.
Fahner has been all over the place. He supported a pension bill sponsored by House Speaker Michael Madigan last year, then claimed a few months later that the pension problem was “unfixable.” He demanded that cost-of-living increases be eliminated altogether, but now backs a plan that allows COLAs on the first $30,000 of pension income.
Cullerton took the plan endorsed by Fahner and grafted his own pension reform language onto it. Cullerton’s “consideration” proposal wouldn’t take effect unless and/or until the courts ruled that the Fahner-backed proposal was unconstitutional.
Fahner didn’t like that idea, either. And he and lots of big-business types lobbied hard against it, along with a certain editorial board down the street, and forced Republicans off the bill. That killed the proposal, and the Fahner-backed bill was defeated as well.
Meanwhile, the House has passed a few bills that will save some significant money, including a proposal approved Thursday that caps COLAs at $750 a year or 3 percent, whichever is less. The House has already approved legislation increasing the retirement age and capping pensionable income at $113,000.
What the House hasn’t done is take up Cullerton’s “consideration” idea, but the Senate president adamantly refuses to back off what he considers to be the only constitutional way forward.
And that, in essence, is what’s behind this doozy of a stalemate.
Somehow, this problem has to be resolved. I expect we’ll see lots of public bashing of Cullerton over the next several weeks to force him to back down. He doesn’t deserve it.
- just sayin' - Friday, Mar 22, 13 @ 9:47 am:
Ty Fahner’s been almost as effective on this as he was for the Romney campaign.
Good column.
- Pot calling kettle - Friday, Mar 22, 13 @ 9:54 am:
Another constitutional way to address the pension issue that has not made it into a bill: taxing retirement benefits. It’s a perfectly legal way to recapture some of the pension funds that are going out. The money could be put right back into the pension fund or used to pay for retiree health insurance.
Obviously, there are issues with who pays and how much, but it seems odd to me that this has not been a significant part of the discussion and I haven’t seen it in a bill.
- foster brooks - Friday, Mar 22, 13 @ 10:02 am:
You would have to tax all pensions .good luck on that.
- mythoughtis - Friday, Mar 22, 13 @ 10:03 am:
I’m okay with taxing retirement benefits… but it must be for all retirement benefits, not just those where the source is a government pension.
- RNUG - Friday, Mar 22, 13 @ 10:05 am:
1) we haven’t heard the final word on the Maag case
2) I don’t agree with Cullerton’s choice but he is trying to work within the constitutional constraints with his own proposal. All the House proposals don’t. Even though I don’t like it, Cullerton should stick with his plan regardless of the flak he gets,unless someone can clearly show it to not be constitutional.
- fairR - Friday, Mar 22, 13 @ 10:07 am:
Rich…a very column…thanks…
- StayFree75 - Friday, Mar 22, 13 @ 10:10 am:
Cullerton is the only one at least trying to honor their oath to uphold the U.S. and Illinois Constitutions.
- Cook County Commoner - Friday, Mar 22, 13 @ 10:11 am:
While the pension numbers and plans have had center stage, the numbers on state and local government retiree healthcare have not received much discussion.
Is the state self-insured for employee and retiree healthcare? If so, how much of the cost was picked up by premiums paid? What are the projections out say 20 years? Is there a separate investment fund to cover future costs? Is it “pay as you go”?
With the state allowed to increase healthcare premiums, why would a retiree give up a compounding 3% COLA to accept a benefit that could be priced out of reach?
- Billy - Friday, Mar 22, 13 @ 10:13 am:
Any tax on retirement benefits will cause those retirees who can to flee the state, so they do not have to pay the state tax. You can not tax people’s retirement benefits who do not live in the state. Wake up! Less retirees living in the state, less tax money!
- Illiniforlife - Friday, Mar 22, 13 @ 10:14 am:
Great column Rich. I hope Senator Cullerton hangs in there. I would love to see a court decision on his proposal.
An idea that I have not yet seen in print would be to tie a compounded COLA percentage to the Social Security COLA. It would kill the argument that the current 3% COLA exceeds the inflation rate and would get the decision making out of the state’s hands. It would, however, subject some uncertainty into the formula for both parties. Perhaps a “middle ground”?
- mid-level - Friday, Mar 22, 13 @ 10:27 am:
Social Security specifically has a Cost of Living Adjustment (COLA). State retires do NOT have a COLA. They have an automatic annual increase (AAI). Since this is spelled out in the Pension Code, any reduction in that % would be a reduction in pension benefits which would probably be considered a breach of contract.
- east central - Friday, Mar 22, 13 @ 10:29 am:
Good column, Rich. Cullerton has the more sensible approach.
Do not the Civic Committee and its allies realize that by pushing legislation with a high likelihood of being declared unconstitutional, they may end up with no pension savings whatsoever? Especially if the initial Maag decision is modified on appeal so that the State’s leverage disappears for many of the persons in the retirement systems.
- Elise - Friday, Mar 22, 13 @ 10:29 am:
I would also like to see the local school districts pay their own pension costs. They should not be paying less then 1% and leaving the state to pick up the tab. This would reduce the states liabilities greatly and take the heat off the 1.67% per year state employees
- Tsavo - Friday, Mar 22, 13 @ 10:30 am:
Rich,
Excellent article, well done.
- Frenchie Mendoza - Friday, Mar 22, 13 @ 10:30 am:
Cullerton’s “choice” is garbage. It’s a choice where there’s no value in choosing one over the other. It’s choosing between two diminished options.
I’ve yet to see a plan - or read about a plan — that offers a true choice. Why not choose between working longer hours and getting full benefits or working fewer hours and getting fewer benefits? Instead of a 37.5 hour work week, you work 30 hours. Pay remains the same, but your pension benefits decrease.
That’s a true choice. Folks might choose the gain in the short term in order to have less in the long term. Others would choose the long term over the short.
Options must be real options — two things worth real value. “Access to health care” versus a diminished COLA? Neither of those are actually worth anything — especially because current retirees — are getting both. So the choice is meaningless.
I’ve not seen anything like true choices being explored. The state has to pay for these options — and I suspect that’s the problem. If the state’s not offering anything of value — and forcing folks to choose — isn’t that diminishment?
- Lucky than Good - Friday, Mar 22, 13 @ 10:34 am:
You could make the tax politically palatable by crafting it to only apply to people below a certain age… Say 65 or 62.
I would have to pay this tax for about a decade but would be ok with it if they left the cola alone. Heck, I’d be ok with a cola tied to inflation but trying to change it just wouldn’t survive the inevitable court challenge.
- Themistocles - Friday, Mar 22, 13 @ 10:38 am:
I’m not sure why Capitol Fax continues to ignore the fact that Judge Nardulli is only one trial judge–and another trial judge in Will County found the exact opposite from Judge Nardulli–that medical benefits are protected by the Pensions Claus of the Constitution. That case is on appeal .
- facts are stubborn things - Friday, Mar 22, 13 @ 10:40 am:
The truth never changes and yes facts are stubborn things. Only Cullerton as RUNUG points out is trying to work within the contraints of the rule of law. I think one way or the other we end up more or less where Cullerton is. It will either be at the start or after the courts shoot down the unilateral diminishment such as in a Nekritz/Cross style of plan.
- Themistocles - Friday, Mar 22, 13 @ 10:41 am:
I might add that Cullerton’s lawyers aren’t so brilliant–the Alaska Supreme Court, in ruling that medical benefits are constitutionally protected, observed that if the benefits were impaired, there would have to be a corresponding increase in some other benefits. Maybe Cullerton’s lawyers read the briefs in the Maag case, in which this topic was discussed? Or did they read the decision in the Joliet case I mentioned in my last comment?
- Rich Miller - Friday, Mar 22, 13 @ 10:42 am:
===It’s choosing between two diminished options.===
Yep, but one of those options isn’t constitutionally protected.
- facts are stubborn things - Friday, Mar 22, 13 @ 10:43 am:
I also was not surprised that Maag was not covered by the pension clause, but was surprised that in no case the judge found there to be an existance of an offer and acceptance…..seems clearly to me that there was a meeting of the minds and for many they acted based on information to their detriment.
- facts are stubborn things - Friday, Mar 22, 13 @ 10:50 am:
@Frenchie Mendoza
You have stated very well the argument that will certainly be presentd to the SC if the Cullerton reaches them. Of course, the GA could just refuse after the current contract expires to subsidise health care. That would leave us with the 3% COLA and no access to subsidized health care.
- Grandson of Man - Friday, Mar 22, 13 @ 10:54 am:
Excellent article, Rich. Thanks for helping educate people about the inner workings of our government and laws.
“What the House hasn’t done is take up Cullerton’s “consideration” idea, but the Senate president adamantly refuses to back off what he considers to be the only constitutional way forward.”
This reminds me of what happened to Quinn with the deferred raises and the court decision he appealed. If he would have stuck with the appeal, it could have cost the state a lot of money in the future, if our victory was to be upheld. Cullerton is thinking ahead and wants to save the state the cost of having to redo this and paying out damages.
“super-duper elite Civic Committee”
Nice one.
- redleg - Friday, Mar 22, 13 @ 10:55 am:
Some years ago, can’t remember when, about 10 or 12 years back, a credible member of the SUAA who was prominent in the association’s activities, told me that the idea of taxing pensions had been brought forward to several legislators.
It fell on deaf ears.
I could live with a pension tax as long as the tax went towards subsidizing the pension funds. But like others here, I doubt the idea would ever fly.
I don’t like what Cullerton is doing, but after putting in 31 years with the state on top of 15 years in the private sector, I never went into retirement figuring my pension was etched in stone. I just never thought it would reach the point where court decisions would either save or destroy it.
- mythoughtis - Friday, Mar 22, 13 @ 11:17 am:
–Any tax on retirement benefits will cause those retirees who can to flee the state, so they do not have to pay the state tax. You can not tax people’s retirement benefits who do not live in the state–
And we also can’t tax the current paychecks of people who don’t live in the state. Why? Well, because taxes are to pay for current expenses and services…. which are provided to people THAT CURRENTLY live in the state.
So, therefore we have no need to worry about losing taxes from people who move out of the state. Your argument is all about penalizing people who somehow manage to get a pension, and not about raising tax revenue from residents to pay for services to residents.
If I choose to live in Illinois after I retire, and we have a retirement benefits income tax, then so be it. After all, if I move to another state, I will be paying something there whether it is their state income tax or their state sales tax or their state property tax.
- titan - Friday, Mar 22, 13 @ 11:21 am:
Given the value of a 3% compounding AAI (COLA) and the fact that “access to healthcare” appears to simply be the ability to pay (whatever the state says you have to pay) to be in the state group program, I have to wonder how many people will choose the “access to healthcare”
- Retire2014SURS - Friday, Mar 22, 13 @ 11:38 am:
Doesn’t the Cullerton plan, in addition to offering the choice, still diminish the COLAs? Even if the “choice” is determined (again) to be legal, don’t different parts of the bill reduce COLAs—like without 20 years you get no COLA? I mean, does the bill actually leave all of the existing rules governing retirement and pensions alone, as long as you “choose” not to take the health care?
I’m just not clear on this.
- Six Degrees of Separation - Friday, Mar 22, 13 @ 12:15 pm:
Given the value of a 3% compounding AAI (COLA) and the fact that “access to healthcare” appears to simply be the ability to pay (whatever the state says you have to pay) to be in the state group program, I have to wonder how many people will choose the “access to healthcare”
If the COLA is somewhere found to be constitutionally protected along this torturous path, one would seemingly be wiser to take it rather than a “we promise you (snark)” healthcare access if healthcare access (free or not) is not found to be constitutionally protected along that same tortuous path. Even Madigan tipped his hand on that one awhile back.
However, even then, the COLA is not completely a bird in the hand. Constitutions can be amended, although not as easily as just changing laws as is being done here.
- Billy - Friday, Mar 22, 13 @ 12:15 pm:
Mythoughtis, If you want to live in a state that taxes retirement benefits be my guest. It is all about freedom of choice. I say there are states where you can live a lot cheaper in retirement, than you can in Illinois, and the taxes are a lot less, and state income taxes do not exist. I have done my research on this matter. A tax on retirement income will send me to the exit!
- titan - Friday, Mar 22, 13 @ 12:18 pm:
@ Six Degrees - while constitutions can be amended, they can’t be amended to take away vested contractual rights (absent a vast change in the law as previously interpreted through US history).
That would be akin to the government taking over a company, screwing the bondholders and giving it to the unions…oh, wait, never mind.
- poo senior - Friday, Mar 22, 13 @ 12:19 pm:
When your pension is only $20,000 a COLA elimination or paying for insurance choice is a lose/lose either way. A 3% COLA won’t pay for private insurance. If I give up the COLA they might eliminate insurance in the future and then I would have lost it all.
- pensioner - Friday, Mar 22, 13 @ 12:19 pm:
Thanks for article clearly defining battle lines of Trib, House, and CC marriage, vs. more reality orientation of Senate and Sun times. I have suspected the Trib has been bought by the CCCCC. As a Dem I am amazed at the elected Dems bought by the CCCCC and ultimately I suspect the Koch bros.
- pensioner - Friday, Mar 22, 13 @ 12:38 pm:
GA Repubs have been the more reasonable ppl in this battle, a position I’m not used to admitting.
- reformer - Friday, Mar 22, 13 @ 12:45 pm:
Pot calling
When it comes to taxing pensions, that would require Republicans to vote for an income tax hike. Not too likely.
- Billy - Friday, Mar 22, 13 @ 12:46 pm:
Almost makes me think Madigan passed the house bill to get more consessions in future talks with the unions about solving the pension mess. However the anger this has produced may limit any talks.
- RNUG - Friday, Mar 22, 13 @ 1:00 pm:
Retire2014SURS @ 11:38 am:
On Cullerton’s bill,
If you choose the health insurance access, then the COLA is reduced.
If you choose to keep the existing COLA, you can’t get the right the buy health insurance at whatever cost the State decides.
Note: above is the choice as spelled out in the bill; not sure it will hold up in court, especially for TRS/SURS that pay for both the COLA and THIS/TRIP/CIP
- RNUG - Friday, Mar 22, 13 @ 1:02 pm:
redleg,
n the current climate, it is impossible for a State politician to hear the word ‘tax’
- fedup - Friday, Mar 22, 13 @ 1:11 pm:
I really don’t get it why a “choice” between 2 options, both of which diminish benefits, can be adequate consideration for a unilateral modification of a contract. Maybe Cullerton’s trick is fooling the press but I’m sure the Illinois Supreme Court is aware that mere “choice” is not synonymous with “legal consideration.”
- Retire2014SURS - Friday, Mar 22, 13 @ 1:29 pm:
RNUG
“If you choose the health insurance access, then the COLA is reduced. If you choose to keep the existing COLA, you can’t get the right the buy health insurance at whatever cost the State decides.”
Thanks for the reply. I understand what you say, but I’m still under the impression that beyond this choice, even if one chooses not to partake of the health insurance, their COLA will still be curtailed/dimished.
In other words, does the bill actually leave all of the existing rules governing retirement and pensions alone, as long as you “choose” not to take the health care?
- iThink - Friday, Mar 22, 13 @ 1:40 pm:
===I would also like to see the local school districts pay their own pension costs. … This would reduce the states liabilities greatly===
No, it would not.
The liabilities are for what is owed, not the yearly normal cost. Due to the Tier II benefits, some time in the next few decades the normal cost is actually projected to go DOWN as tier II employees become a larger portion of the workforce.
The normal cost of TRS is around $1.5B. The rest of the huge payment is the liability. Putting the payment of the normal costs to local districts won’t reduce what the state already owes.
- titan - Friday, Mar 22, 13 @ 1:41 pm:
Retire2014SURS - If you choose the existing COLA, then future raises don’t count to increase your pension (your salary level would be “frozen” for purposes of calculating your annual pension).
- iThink - Friday, Mar 22, 13 @ 1:45 pm:
===If you choose to keep the existing COLA, you can’t get the right the buy health insurance at whatever cost the State decides.===
Don’t forget that your retirement wage gets frozen to whatever amount it is right now. Tier I employees more than just a couple of years from retirement will be forced to take the ‘healthcare option’ to get their raises counted into their pensionable earnings.
- Anon. - Friday, Mar 22, 13 @ 1:48 pm:
==I really don’t get it why a “choice” between 2 options, both of which diminish benefits, can be adequate consideration for a unilateral modification of a contract.==
It is a choice if the state has the right to deny you one of the benefits. If the health insurance case gets to a judge who knows how to read, however, we will learn that the state doesn’t have the right to deny free health insurance and there is no consideration.
- archimedes - Friday, Mar 22, 13 @ 1:51 pm:
With the Cullerton SB0001, if existing employees elect to keep their automatic increase (and give up retirement health insurance access) any future salary increases are not included in the credible earnings for computing their pension when they retire.
That is the overiding morivation to give up the Auto Increase. If you are 7 or more years away from retirement - you are probably better off counting the salary increases (even with no longer receiving the annual increase in the pension).
- facts are stubborn things - Friday, Mar 22, 13 @ 2:02 pm:
Assuming a bill finaly passes the GA (we know Quinn will sign anything) and the SC finds it unconstitutional, then to save money the state will go where it can…..reducing the subsidy on retiree health care during the next AFSCME contract. If the state offers AFSCME a good contract for current workers, but ends or greatly reduces health care subsidy for retirees I doubt whether current employees would strike. Eventualy the needs of the current workforce — even though they will eventualy become retirees works against subsidized health care for retirees.
- Norseman - Friday, Mar 22, 13 @ 2:13 pm:
I have to agree that this was a very good column.
- fedup - Friday, Mar 22, 13 @ 2:13 pm:
“If you choose the existing COLA, then future raises don’t count to increase your pension (your salary level would be “frozen” for purposes of calculating your annual pension).” This is exactly why Cullerton’s plan is unconstitutional no matter how many times he and his supporters blather about choice. That freeze diminishes benefits and means the “choice” is not supported by legally adequate consideration..
- Bigtwich - Friday, Mar 22, 13 @ 2:16 pm:
–If the health insurance case gets to a judge who knows how to read–
I am retired from the state and get free health insurance. I also tried a number of cases before Judge Nardulli. Not only does he know how to read but he is a good Judge. I would not bet that his decision will be reversed.
- facts are stubborn things - Friday, Mar 22, 13 @ 2:17 pm:
@fedup
you make a strong argument. I beleive the counter to that excellent point will be that raises on not constitutionaly protected and neither is healh care, however both are very valuable. If the individual wishes to keep these to valuable elements (that are not protected) then they can but must volunteraly give up (choose)to accept the reduced COLA.
- facts are stubborn things - Friday, Mar 22, 13 @ 2:21 pm:
@Bigtwich
You make a strong point based on having experience with this judge. I am forced to listen and have. I do, however, feel that an appeal may find that some of the parties may have had a contract or at least may have acted to their detrement because of what they were told. I do not think his ruling about health care subsidies not being protected by the pension clause will be overturned. Health care is not mentioned and only sort of by way of reference intersects with the pension clause.
- facts are stubborn things - Friday, Mar 22, 13 @ 2:29 pm:
@Bigtwich
I know you know this, but I do want to point out that you do not receive free health care but rather premium free health care. I realize you know this and I know what you ment;however, I feel it is an important distiction.
- pensioner - Friday, Mar 22, 13 @ 2:48 pm:
My take on the Nardulli decision didnt adequately dismiss BU contracts. He merely said the parties in the suit were not union members (in his opinion)so that was not considered. First App District Justice Quinn order 2012 IL App (1st) 102977-U suggested retirees ARE part of the BU agreements. So at least one justice albeit a diff App districts feels other than Nardulli.
- fedup - Friday, Mar 22, 13 @ 2:50 pm:
The State would have the right to never raise a salary but once it raises a salary it cannot diminish the previously-agreed-upon right to a pension for the increase. The caselaw clearly holds that the pension terms you are entitled to are the terms which were in effect on the day you started your employment.
- facts are stubborn things - Friday, Mar 22, 13 @ 3:06 pm:
@fedup
A very solid argument! Cullerton will have to rely on the fact that he is trying to solve a crisis and is being “reasonable” and his solution is “neccesary” to solve the problem — going no further then he must under the police powers. He will get a “A” for effort.
- titan - Friday, Mar 22, 13 @ 3:07 pm:
@facts are stubborn things - the pension amount calculation is based upon the average of the highest X years’ salraries within the last Y years worked (I recall teh Tier I people being highest 4 in last 10). So the use of the higher slalaries is built into the formula, and a good arguement is thee that it is constitutionally protected. Now, it isn’t a given that a particular person will be continually promoted or get raises (absent union agreements), but if granted raises, the pension calculation should use them.
- facts are stubborn things - Friday, Mar 22, 13 @ 3:11 pm:
@fedup
You and I both know that the law is clear and if the courts follow the law the state must honor it’s commitments. I still contend that Cullerton is trying to find a way that the courts might be able to hold their nose and give a nod to the legislative branch.
- facts are stubborn things - Friday, Mar 22, 13 @ 3:12 pm:
@titan
I beleive you also make the ultimate argument against the Cullerton case as it relates to current employees.
- Anon. - Friday, Mar 22, 13 @ 3:22 pm:
Bigtwitch, if Judge Narduli knows how to read, why does his opinion refer to “pension benefits” protected by the constitution? That really is the key to his holding, and the constitution doesn’t say that.
- Harry - Friday, Mar 22, 13 @ 3:22 pm:
- Rich Miller - Friday, Mar 22, 13 @ 10:42 am:
===It’s choosing between two diminished options.===
Yep, but one of those options isn’t constitutionally protected.
+++++++++++++++
On health care, yes, but he also wants to take away the pensionability of future raises and THAT rrequires amending the Pension Code and IS protected. He trashes not just the pension code but IL contract law, so one party can unilaterally diminish the other party, as long as the other party can choose between two diminishments. Frenchie Mendoza is correct, just not about health care, but about pensionability of raises.
- Ruby - Friday, Mar 22, 13 @ 3:36 pm:
There will be a large number of retired teachers, their dependents, and other state workers who will find a less expensive and more reliable health care plan than the state insurance plan. Many of us are or will be Medicare eligible, which gives us more flexibility with insurance options. But personally I see no reason to stay in the state plan for another year. But I realize that everyone’s health or financial situation is different.
- wordslinger - Friday, Mar 22, 13 @ 3:47 pm:
Do Ty and the Tribbies have any sort of plan, besides complaining?
I do a lot of work among the the Grand Poohbahs of the Civic Committee. I never, ever, hear any moaning about Illinois pensions. It’s not an issue in that crowd.
Most of that crew pays little or nothing in state taxes, anyway. Check out the lineup. They don’t care.
When did Ty get to be “the man,” anyway? When has he ever had any game?
As far as the Tribbie editorial board goes, those guys remind me of people constantly looking for their car keys. Flustered. Confused. Overwhelmed.
Maybe they should bring Paul Lis back to straighten them out. He sure was a hammer with them, back in the day.
- Arthur Andersen - Friday, Mar 22, 13 @ 4:08 pm:
Word, well stated. As Rich has noted, Ty is a legend in his own mind who is given more credibility than he deserves.
Rich, great column.
- Frustrated - Friday, Mar 22, 13 @ 4:15 pm:
What will happen in the interim while the SC hears the inevitable appeal. If there is an injunction, will retires receive their annual increase and will retroactive increases be allowed?
- RNUG - Friday, Mar 22, 13 @ 4:37 pm:
Retire2014SURS @ 1:29 pm,
Had to review my read-through of the bill I posted last Wed night after it passed the Senate to be sure …
As it stands now, you get to keep the 3% compounded COLA, BUT it will only be calculated on the amount of salary you have at the time of making the choice. I still see that as a diminishment because it lessens the amount the pension will be calculated on … and previous court decisions support that conclusion. The section of SB0001 that makes that change can be found in the changes to 40 ILCS 5/16-121
Here’s part of what I wrote late Wednesday night in a second post when I was analyzing impact, not legality:
If I was only a few years from retirement and was going to be Medicare age at retirement, then it seems keeping the existing COLA and foregoing the “raises” being applied to the pension could be the best choice, depending on dependent insurance needs. Can’t really form an opinion about any other situation at the moment.
—
Adding the personal thoughts behind that comment, where the irrevocable choice deals with pension amounts that could be affected by the IRS tax code and something that is within the State’s control (health insurance), I’ll give up the stuff under State control because it could be restored easier. If you give up something under Fed rules, you may not be able to get it restored … when the Feds say irrevocable, they actually mean it.
- RNUG - Friday, Mar 22, 13 @ 4:40 pm:
Bigtwich
I keep rereading that decision. Seems to me he twisted thorough some pretty tight alleys to get to his conclusion.
- mid-level - Friday, Mar 22, 13 @ 4:45 pm:
The part of the bill about freezing your current salary for use in calculating your pension annuity might be considered a breach of contract. The method of calculating the annuity amount is specifically spelled out in the Pension Code.
Of course for merit comp employees, they could just stop giving raises.
- Just The Way It Is One - Friday, Mar 22, 13 @ 5:59 pm:
Well-said. In many ways you are serving an important purpose in helping to educate the Illinois Public about this critical issue and all of its’ practical, political, and Constitutional complexities. It IS a shame, though, that, as you put it, the “super-duper elite Civic Committee” and Ty Fahner, in particular, are having SO much to do with what’s being crafted behind the scenes, really probably TOO much influence or at least more than is needed–that reality could really turn off the average Joe and sour Legislators who NEED those average Joes and Sues to be re-elected…!
- RNUG Fan - Friday, Mar 22, 13 @ 6:21 pm:
http://www.latimes.com/news/opinion/commentary/la-oe-page-wealth-and-politics-20130322,0,3575694.story
If you want some details of whos views are being represented in all this …..
i just finished the whole paper and here is what the super duper elete think of the rest of us ..and I will admit to being pretty far from poverty
- Palos Park Bob - Monday, Mar 25, 13 @ 8:31 am:
Norseman, I read the study and I seriously question how they calculated that “salary effect” number.
Between 1998 and 2012, the average Teacher salary in Illinois rose from $43.8K to $66.6K, an increase of 52%. The inflator over that period was only 40%. The “end of career spiking” in TRS schools adds about 16% to the fully vested pension, a cost not “earned” through lifetime contributions. The ERO cost to the employee and employer is currently only 37% of the salary of the employee for each ERO year. The rest is from the 0.4% charged to those not yet taking ERO, and is refundable if the ERO is no longer available. I’d love to see how this has employees paying 90% of the ERO cost. IMHO, FUTURE potential ERO employees shouldn’t be footing this bill. It should be all on the ERO and district beneficiary.
It should also be noted that the report gave no breakdown by fund, so if salaries for state employees’ salaries in the aggregate are included (which I’m sure they are) their mistreatment covers up a real problem regarding salaries in the TRS, CPS, and SURS funds.
Have you found anything regarding their detailed methodology for these computations elsewhere?