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Drama queens strike again

Tuesday, Jun 18, 2013 - Posted by Rich Miller

* Do you ever get the feeling that the Chicago Tribune editorial board has been taken over by drama queens? Check out today’s editorial on pension reform, which includes a shout-out to their new bestest buddy, Democratic gubernatorial candidate Bill Daley

Former White House chief of staff Bill Daley, who’s exploring a run for governor, took a stab at Illinois’ pension stalemate Monday. He had some good ideas for how Gov. Pat Quinn could force the issue — starting with a promise to veto any faux pension reform that doesn’t get the job done. […]

Daley endorsed Michael Madigan’s pension bill, which this page also strongly supports. We wish only that Daley had taken advantage of his news conference to do a dramatic reading of the names of the dozens of members of the House and Senate who have obstructed the Madigan bill. It’s a long list, we know. We wish Daley had read it twice, with feeling.

Oh, yeah, that would’ve made for great TV. A “dramatic reading” of a long list of names. Also, kicking off your campaign by making enemies with a hostile name-check would serve no useful purpose, especially since the pension issue is still evolving (subscribe for more info).

* Anyway, the Trib also made this point

Daley had some pointed advice for another potential Democratic rival for governor, Attorney General Lisa Madigan. Daley said Madigan should weigh in with a legal opinion on the constitutionality of the rival pension bills, including the bill sponsored by her father, House Speaker Michael Madigan. Enough with standing on the sidelines while the state implodes.

* I asked for a response yesterday from the attorney general’s office to Daley’s demand that she issue a formal opinion on the constitutional prospects of the various pension proposals. Here’s what I got…

The Attorney General is already aggressively defending the state in multiple cases that will significantly impact what the legislature can do to solve this crisis, and for over a year, she has been providing the legislature with legal advice and analysis on the constitutional issues.

As everyone is aware, the constitutional questions involved will ultimately be resolved by a court opinion, not the Attorney General’s opinion. As a result, the Attorney General is doing her job to keep the state’s legal options open while building the strongest legal arguments to ensure that the legislature’s final plan survives an inevitable court challenge.

I asked for clarification in a follow-up call. The AG has apparently been helping legislative legal staff to formulate constitutional justifications for their respective bills. Does that mean she believes that the bills are constitutional? They wouldn’t say.

* This is what they told a Tribune reporter

[AG Madigan spokesperson Natalie Bauer] noted that under a policy in place for more than 50 years, “the office doesn’t issue opinions on matters that will end up in court.”

Um, I’m pretty sure they do.

I don’t think issuing a legal opinion would be all that difficult. And since she’s been helping to construct justifications for the plans, it might not take all that long, either.

* But there is a new game in town. I gave this development short shrift on the blog yesterday, but that was a mistake.

Senate President John Cullerton now supports a pension reform idea that isn’t solely based on his demand that pension system members be given a choice before their benefits can be cut. The proposal, which is backed by the state’s university presidents, only currently applies to SURS, but it looks like a model for the other systems

The plan would reduce the unfunded liability in the State Universities Retirement System by 28 percent, from $20.2 billion, and could be a model for a comprehensive solution. It would mean a paid-up SURS system by 2044 and, during that time, reduce state contributions by 47 percent, from $76 billion to $40 billion.

Although Cullerton supports the idea, Phelon said it’s uncertain whether he’ll sponsor the legislation. A version was introduced May 31 by Democratic Sen. Michael Hastings of Orland Hills.

* Highlights

• Change the annual Cost Of Living Adjustment (COLA) for future retirees from a guaranteed compounded rate of 3 percent annually to a yield that is linked to the actual inflation rate – which would deliver higher yields in periods of high inflation, lower yields in periods of low inflation. “The COLA is the biggest driving force in the state’s inability to solve the pension problem,” Poshard said.

• Shift the state’s 11 percent share of SURS pension contribution to the state’s public universities and colleges over 12 years. If used as a model for all the state’s public pension plans, the cost shift to local governments would be softened by guarantees of stable funding that would minimize or eliminate property tax hikes. “If you guarantee them at least level funding, not cutting their funding every year, why do you need a property tax increase?” Poshard said.

• Require employees to contribute an additional .05 percent towards pension cost each year over four years, increasing the annual contribution from 8 percent to 10 percent.

• Obligate the state by written contract to make full pension contributions annually or the pension system of any of its members would be able to take legal action to compel the state to make the specified payment.

• Allow new employees to participate in a hybrid pension plan comprising a defined benefit and an individual defined contribution portion that resembles the 401 (k) plans common to the private sector. Poshard said employees would be able to decide if they wanted to take on greater risk for the potential of greater reward.

* Related…

* Ives, Morrison, Oberweis and Tillman push pension overhaul


  1. - Dewey Dilligent - Tuesday, Jun 18, 13 @ 9:22 am:

    Under highlights I believe the 3rd bullet point should be .5%, not .05%.

  2. - CircularFiringSquad - Tuesday, Jun 18, 13 @ 9:25 am:

    We know some drama queens and we still think the vision of the hallway at junior high with a lot of finer wagging and schreeching is the better image.

    Drama queen comps offends the legacy of Liberace!

  3. - wordslinger - Tuesday, Jun 18, 13 @ 9:38 am:

    The drama queens are fickle. I thought they were in love with MJM now for SB 1 (except when they’re not).

  4. - Small Town Taxpayer - Tuesday, Jun 18, 13 @ 9:42 am:

    A long article in todays Wall Street Journal titled “Behind Illinois’s Pension Saga” notes

    “without action it [the bond rating of Illinois] could fall to triple-B category that only three states have reached in the past 50 years”

    And in todays Bond Buyer I read

    “Illinois has set the last week of June to sell $1.25 billion of new-money under its battered general obligation credit and demand for project funding is too great to pull the sale even if negative headwinds from downgrades and an unsolved pension crisis drive up interest rates”

    As I personally see little chance of the GA passing a meaningful pension solution at the special session, there are two questions in my mind. First, how many days will it be before the states bond rating is cut? Second, how much more will Illinois need to pay for its forthcoming $1.25B bond sale (how many millions of tax dollars to the “negative headwinds”)?

  5. - Empty Suit - Tuesday, Jun 18, 13 @ 9:46 am:

    [AG Madigan spokesperson Natalie Bauer] noted that under a policy in place for more than 50 years, “the office doesn’t issue opinions on matters that will end up in court.”

    Correct me if I’m wrong but didn’t Attorney General Lisa Madigan decide not to defend the state’s ban on same-sex marriage and agree with the lawsuit that the ban is unconstitutional.

  6. - Stones - Tuesday, Jun 18, 13 @ 9:47 am:

    Just curious…how much is that “written contract” thing worth? Does that trump the State Constitution? Sheesh!

  7. - Bill White - Tuesday, Jun 18, 13 @ 9:55 am:

    The Tribune now wants to shame those who obstruct Michael Madigan from having his way?


  8. - Bill White - Tuesday, Jun 18, 13 @ 10:01 am:

    If Bill Daley ends up being a Mitt Romney clone and if Lisa Madigan declines to run and if the GOP nominates either Bruce Rauner or maybe Joe Walsh,


    I think Pat Quinn gets re-elected!

    Holy Smokes!

  9. - Roadiepig - Tuesday, Jun 18, 13 @ 10:06 am:

    I know this is only partially related, but this downstate retiree has been receiving the Chicago Tribune home delivered since the season the Mosters of the Midway WON the Super Bowl. I even added the extra charge to be able to access their unlimited online content when they added that a while back. Recently, I had to change my credit card number due to someone trying to make unauthorized charges to my account. Short story long- I am not giving them my new numbers, effectively ending my subscription of almost 30 years. Was keeping it just to read what crazy stuff their editorial board was propagating ( and the papers were passed on to a local animal rescue site to line cages, so they were at least good for one thing), but they last couple of months have been so over the top and vindictive towards government employees and retirees I just don’t want them to have another penny of my retirement income.

  10. - Skirmisher - Tuesday, Jun 18, 13 @ 10:09 am:

    I really like Poshard’s proposal and I am fascinated that it has not received more play. Then again, I worked a lot with Mr. Poshard, thought him a great legislator, and always thought Illinois would have been far better off if he had won the governor’s mansion.

  11. - Anon - Tuesday, Jun 18, 13 @ 10:11 am:

    The timing of these recent events bodes well for bill Daley. There was gridlock before Daley entered the race. Then he proposes a solution, and its followed by compromise on all sides of the current pension impasse. If I were bill Daley, I would capitalize on the chain of events. If this is resolved before July 4th, does Lisa get in? If its not, does she stay out? Des the outcome of this very big issue weigh on her decision at all?

  12. - Been There - Tuesday, Jun 18, 13 @ 10:14 am:

    ===enemies with a hostile name-check would serve no useful purpose===
    And these are legislators that are actually bucking the speaker? Yeah, you really want to tick off those that might actually back you over his daughter (probably not, but the ones on the list might have a higher possibility)

  13. - Jack - Tuesday, Jun 18, 13 @ 10:17 am:

    Poshard’s COLA seems fair and reasonable compared to Madigan’s bill and less complicated than SB 2404.

  14. - dupage dan - Tuesday, Jun 18, 13 @ 10:25 am:

    What is the REAL liklihood that the GA/GOV would meet the obligations of paying the “required” pension payment regularly AND keeping their mitts off the fund when they need some quick cash? Isn’t that one of the big issues here? As I have read here and elsehwere, there is good evidence that past actions of non-payment and dipping are the major reasons for the crisis, not the COLA, not double dipping, like the Trib would have the uninformed believe. If there were REAL teeth in a bill preventing such actions, what is the liklihood it would pass? What is the liklihood it could be enforced?

  15. - Been There - Tuesday, Jun 18, 13 @ 10:34 am:

    ===Poshard’s COLA seems fair and reasonable compared to Madigan’s bill and less complicated than SB 2404.===
    I’m not sure the unions will see it as reasonable. And how do you put a cost savings figure on this? In theory it could end up costing more money.

  16. - zatoichi - Tuesday, Jun 18, 13 @ 10:37 am:

    They can rationalize any details and COLA effects they want, but that phrase: “unfunded liability in the State Universities Retirement System” hits the point. Pension holidays and simply not paying the planned pension payments are the single biggest factors in the self created problem. Skip the payments, using any reason you like, and you eventually get a far bigger problem. And here we are.

  17. - Just DO IT! - Tuesday, Jun 18, 13 @ 10:46 am:

    Ives, Morrison, Oberweis and Tilman get out of the way! You’re irrelevance is so evident!

    From the Daily Herald: In an unfortunate sideshow Monday, several lawmakers — many of them suburban — conducted a news conference to advance yet another direction for pension reform. But the plan they promote, essentially converting the pension system entirely into a 401(k)-style program, has no hope of success and can only distract support from the one viable approach now on the table. The plan embodied in legislation proposed by Republican Rep. Tom Morrison of Palatine is not without merit, but it has had its moment in the spotlight and now can serve only to complicate an already fragile debate.

  18. - Chris - Tuesday, Jun 18, 13 @ 10:51 am:

    “Does that mean she believes that the bills are constitutional? They wouldn’t say.

    I don’t think issuing a legal opinion would be all that difficult.”

    Consider the possibility that the reason the AG’s office wouldn’t answer the question is that Lisa *actually* believes both bills would be UNconstitutional. And that her, well-considered and honest, ‘legal opinion’ would reflect that.

    Then know that her client is the state/citizens, and that if the legislature/guv enact one of the bills into law, it would be her job to defend the bill (ignore the questionable ethics on the same sex marriage ban–also note that the US AG has different marching orders) and that publicly stating an opinion contrary to that goal would jeopardize her ‘clients'’ interest.

    It’s a defensible step; hard to jibe with how she handled (correctly, imo) the same sex marriage law, tho.

  19. - Arthur Andersen - Tuesday, Jun 18, 13 @ 11:00 am:

    The devil is in the details, and there area lot of details in the universities’ proposal that either haven’t been disclosed or aren’t going to be well-received when they come out.

    Right off the top, no actuarial support for their generous estimate. Troubling because two of the elements, the COLA change and the Hybrid benefit, could have uge cost swings depending on inflation and the plan design respectively.

    Risk and reward calcs are fine fo professors-do we want building service workers and the prof’s secretary doing them,too?

    Also a nice backdoor way for the colleges and unis to guarantee no State funding cuts for the next 12 years, too.

    This should either be ashcanned or given to SURS Academics only.

  20. - Wensicia - Tuesday, Jun 18, 13 @ 11:00 am:

    It amazes me the Tribune editorial board is cheer leading Daley. Who do they think he is, Mighty Mouse? “Here he comes to save the day”?

    It’s easy to criticize and brag you would force a conclusion when you’re not part of the process. I don’t think the Tribune should pander to Daley while insulting the real players.

    Who’s next? If Joe Walsh steps up and yells he’ll clean up the pension mess, will he become the Tribune’s BFF?

  21. - wordslinger - Tuesday, Jun 18, 13 @ 11:01 am:

    –What is the REAL liklihood that the GA/GOV would meet the obligations of paying the “required” pension payment regularly AND keeping their mitts off the fund when they need some quick cash?–

    The state cannot tap any of the pension funds. They can short their payments, put once a contribution is made, it’s gone.

  22. - Andrew Szakmary - Tuesday, Jun 18, 13 @ 11:01 am:

    SB 2591, the one applicable to the universities, proposes replacing the 3% AAI with ONE HALF of the increase in the CPI-U each year. For this and other reasons it is a huge diminishment for tier 1 SURS members. A fuller analysis follows below.

    As a Finance professor I have done a fairly thorough analysis. SB 2591 (the so-called SURS pension reform) contains massive benefit cuts to Tier 1 retirees, and even more draconian cuts for those 5-15 years from retirement. The diminishments in the bill are even more extreme for many SURS members than those in Madigan’s Bill.

    The relatively easy part to understand is that SB 2591 drastically reduces the 3% automatic annual increase for retirees - based on the current 2.12% breakeven inflation rate between ordinary 30-year U.S. Treasury Bonds and 30-year TIPS bonds that are indexed to the CPI-U, and given that the legislation calls for an AAI equal to 1/2 of the increase in the CPI-U, the expected AAI going forward would be reduced to 1.06% annually. In my case, this provision reduces the present value of my expected future pension benefits (making standard actuarial assumptions used by SURS) by 16.7%.

    Another provision in the bill that is far more complex is its reduction of the effective rate of interest (ERI) under the money purchase formula going forward, from 6.75% currently (as certified by the State Comptroller for FY2014) to 4.03% for FY 2014 (3.28% yield on 30-year Treasury Bonds currently + 0.75%). Under the current pension code, the ERI is loosely determined by historical and expected future returns on SURS investments. If reductions in the ERI in future years are similar (and there is every reason to believe they will be because 70% of SURS investments are in stocks, and historically stocks have earned returns at least 3-4% per year higher, on average, than bonds) then for each year a SURS member delays retirement beyond July 1, 2013, his/her starting pension annuity under the money purchase formula will be around 2.5% lower. Compound this out 10-15 years and you easily get diminishments in the 20-30% range for many SURS members, on top of the diminishments caused by the reduction in the AAI.

  23. - Small Town Liberal - Tuesday, Jun 18, 13 @ 11:03 am:

    - Daley seems to be filling the ‘lack of leadership’ gap right -

    Yeah, it’s a real heavy lift to criticize a process you have absolutely no part in.

    What’s Daley going to talk about if reform happens before a primary? Highlights of his illustrious career at JP Morgan, everyone’s favorite mom and pop bank?

  24. - Small Town Liberal - Tuesday, Jun 18, 13 @ 11:17 am:

    - What is the REAL liklihood that the GA/GOV would meet the obligations of paying the “required” pension payment regularly -

    I know a Gov. that’s done this every year in office.

  25. - anon - Tuesday, Jun 18, 13 @ 11:28 am:

    Yep, it’s the “linked to” CPI which is always the glossed over poison pill which means a diminishment. Trade 3% for full CPI? Maybe that’s consideration. Trade 3% for a fraction of CPI? Huge diminishment.

  26. - Hy - Tuesday, Jun 18, 13 @ 11:51 am:

    How is adding a hybrid option to the SURS progress? They already have a defined contribution, self-managed plan that racks up no unfunded liability.

  27. - Anonymous - Tuesday, Jun 18, 13 @ 12:02 pm:

    =Drama queen comps offends the legacy of Liberace!=

    lol Truer words–in many contexts, have never been spoken, CFS.

  28. - Anonymous - Tuesday, Jun 18, 13 @ 12:04 pm:

    =I think Pat Quinn gets re-elected!=

    There ya go!

  29. - Grandson of Man - Tuesday, Jun 18, 13 @ 12:29 pm:

    “Enough with standing on the sidelines while the state implodes”

    The Trib should follow its own advice and put some skin in the game, like supporting closure of some corporate tax loopholes and using its resources to identify how the wealthiest Illinoisans can contribute a little more to help solve the problem. The operative word is “help,” because it will take effort and sacrifice from different groups of people to bring about our recovery. One group of people can’t and shouldn’t have to do it alone.

  30. - Norseman - Tuesday, Jun 18, 13 @ 12:49 pm:

    I’m with AA. I’m afraid that the details will be written by the devil. This needs to be opposed by the We are One coalition.

  31. - steve schnorf - Tuesday, Jun 18, 13 @ 12:50 pm:

    I think the AG’s office got real gunshy under Rod on opinions where there might be litigation. If I recall correctly, he would seek an opinion, go the other way, and argue that the AG should be disqualified from representing the state since she had already taken the opposite position in an opinion.

  32. - JM - Tuesday, Jun 18, 13 @ 12:58 pm:

    I have also recently cancelled my subscription to the Tribune. time for all of us retirees to make a statement.

  33. - Chuck - Tuesday, Jun 18, 13 @ 2:06 pm:

    For Arthur Anderson at 11:00 s.m. First of all, I am against any changes to retiree pensions, That being said, my Buddy and I were both Building Service Workers who were self-managed and we did quite well thank you. Just because we pushed a broom does not mean we were all stupid.

  34. - Arthur Andersen - Tuesday, Jun 18, 13 @ 2:38 pm:

    Chuck, no offense intended. However, you had a choice and made a good one. This bill provides no choice. That’s my concern.

  35. - Chuck - Tuesday, Jun 18, 13 @ 4:24 pm:

    Thank you Arthur, no offense taken.

  36. - Formerly Known As... - Tuesday, Jun 18, 13 @ 4:40 pm:

    === the constitutional questions involved will ultimately be resolved by a court opinion, not the Attorney General’s opinion ===

    It’s funny how she’ll issue an unsoliticted opinion on issues that are easy and one-sided for the sake of gaining media attention (like the Roland Burris situation, among others, where she even did a round of interviews and press releases).

    But when the question at hand won’t politically benefit her?

    Oh, well, then we have no opinion. Never mind our past behavior and the precedents we set.

    And we’re really, REALLY hoping no one formally asks us for an opinion either, cuz then we’d have to provide one per Illinois statute.

  37. - Formerly Known As... - Tuesday, Jun 18, 13 @ 4:47 pm:

    === that will significantly impact what the legislature can do to solve this crisis, and for over a year, she has been providing the legislature with legal advice and analysis on the constitutional issues ===


    We now have our solution right there in that sentence.

    According to the A.G.’s office, she has already been providing active feedback and guidance on these various proposals and pension issues to the GA for over a year.

    That means her stance on these issues has already been determined, thoroughly vetted and shared with the GA.

    All she needs to do is share with us what she has shared with them.

    What did she tell the legislature about these two pension proposals?

  38. - Demoralized - Tuesday, Jun 18, 13 @ 8:02 pm:


    Why in the world would you publish an opinion on a law that you are undoubtedly going to have to defend in court. This is a major issue. Why anybody thinks its a good idea for her to say anything publicly that can be used in any argument against the pension proposal is beyond me. Some of you need to get a clue and understand the legal conundrum that is at play here.

  39. - Formerly Known As... - Tuesday, Jun 18, 13 @ 8:08 pm:


    Have you been paying attention at all in recent weeks?

    She has previously done exactly that - issue a formal opinion - on issues that she would likely have to defend in court. Some of them involving constitutional issues as well. The difference is that in most of those cases she was able to garner positive media coverage.

    Never mind the fact that she is also required to issue such an opinion if requested to do so, per Illinois statutes.

    Some of you need to get a clue and understand the corner our Attorney General has boxed herself into based upon her past actions.

Sorry, comments for this post are now closed.

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