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Friday, Dec 6, 2013 - Posted by Rich Miller
* Back in January of 1985, as part of a university class project, my best friend Brian Monahan and I started an anti-apartheid organization that attempted to educate people about South Africa and push for divestment.
Shortly after, the South African issue exploded across the country. We found ourselves right in the middle of one of the most important issues of our time, and the first real “cause” taken up by our own generation. Freeing Nelson Mandela looked impossible back then, but putting pressure on that disgusting government consumed many of us.
So you can imagine the delight of everyone who worked for a free South Africa when Steven Van Zandt and his friends released this song later that year…
It’s time for some justice it’s time for the truth
* And this one is in Brian’s memory. His favorite song about South Africa…
Well I hate it when the blood starts flowin’
but I’m glad to see resistance growin’
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Moody’s likes the new pension law
Friday, Dec 6, 2013 - Posted by Rich Miller
* For Bruce Rauner, the Wall St. Journal editorial page, the Illinois Policy Institute and everybody else who’s been loudly complaining that the pension reform bill doesn’t spill enough blood on the floor, Moody’s has some news for you…
* From the rating agency itself…
Illinois Pension Reform Legislation Is Credit Positive
Illinois Governor Pat Quinn yesterday signed a bill (Senate Bill 1) that, according to legislative documents, reduces the state’s unfunded pension liability by about 20%, a credit positive for Illinois (A3, negative), the lowest-rated US state.
The reforms face a legal challenge from organized labor but, if implemented, we believe they will substantially ease the pension funding pressure that has helped trigger five Illinois downgrades since early 2009.
Illinois’ unfunded pension liabilities – which totaled $100 billion in June 2013 on an as-reported basis, or $173 billion according to Moody’s adjusted net pension liability calculation – are the largest of any US state.
The state General Assembly’s passing of SB 1 on December 3 ended a multi-year impasse over how to reverse severe deterioration in the state’s pension funds.
Formal actuarial data on reforms’ effects still to be evaluated
We have yet to receive formal actuarial data detailing SB 1’s effects on accrued pension liabilities and future state contribution requirements, but we will evaluate them, when available. The preliminary estimates disclosed by the state legislature say the reforms will lower contributions during the next 30 years by $160 billion in nominal terms, to $214 billion, while putting the state pensions on a path to full funding over a closed, 30-year period. The state expects to reduce its contribution in the first year after implementation by $1.2 billion, or 20%, according to the legislative figures. The savings come from reforms affecting current members of the State Employees’ Retirement System (SERS), the State Teachers’ Retirement System (STRS), the State Universities Retirement System (SURS) and the General Assembly Retirement System (GARS), which account for the bulk of the state’s unfunded pension liability. SB 1’s reforms do not apply to the fifth statewide plan, for judges.
Supplemental contributions may help state reach full funding faster
Including the impact of supplemental funds provided for in the law, the legislature expects the public pensions to reach fully-funded status in about 25 years. Prior governing statute, by contrast, required annual state contributions based on a goal of achieving an actuarial assets-to- liability (“funded”) ratio of 90% over 50 years. Supplemental contributions would be derived from two sources: 10% of savings from cost of living adjustment (COLA) and other pension plan changes and the revenue currently being used to provide debt service on two pension funding bonds issued in 2010 and 2011. The last of those bonds mature during fiscal 2019, when debt service requirements total $900 million. These supplemental funds, which will total more than $1 billion annually starting in fiscal 2020, would be deposited into the Pension Stabilization Fund in the state treasury and transferred monthly to the systems. These supplemental payments will not be used to reduce the state’s base contributions, which under SB 1 must be enough to achieve full amortization of unfunded liabilities over a 30-year period.
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* University of Illinois President Robert Easter sent a “Dear colleague” e-mail this week outlining a possible new supplemental retirement program for university employees…
The changes made to reduce the cost of the pension systems to the state and fully fund them within 30 years falls, to a large extent, on employees and retirees, including those of us at the University of Illinois. We are keenly aware of the negative impact of these changes for all of us in the university community and are committed to maintaining a competitive retirement program.
To this end we are exploring potential options including a supplemental retirement plan offered by the University. We expect to be able to provide additional information in time for the Board of Trustees meeting in January.
* Meanwhile, let’s take a look at some other pension-related stuff. Bruce Rauner tweeted this after the governor signed the pension bill into law…
* Naperville Sun…
Did [Sen. Linda Holmes], a Democrat, believe that politics were at play to give Democrat Quinn a re-election bump?
“On the political end, I think this was done to give the governor a win,” she said. “And I don’t think that’s worth forsaking benefits for anybody.”
* Treasurer Dan Rutherford opposed the bill on constitutional grounds. The impact on Rutherford’s pocketbook is significant, however…
The Republican from Chenoa said he has not taken the time to calculate the effects of the landmark legislation on his own pocketbook.
“I’ve been busy looking at the constitutionality of it,” Rutherford said.
But, according to a database created by the Center for Tax and Budget Accountability, Rutherford could see a significant loss in buying power if the pension proposal goes into effect next year.
If he were to retire next year, Rutherford would receive a pension worth about $115,000, based on his current $135,600 salary. While that amount will grow on a yearly basis, the database shows the pension changes would decrease the amount of growth by $44,800 in the first five years.
After 15 years, the database shows Rutherford would see $392,000 less than he would under the current pension setup. Two decades from now the projected loss would be $719,000.
The online database — http://www.weareoneillinois.org/documents/COLA-cut-spreadsheet.xlsx — is designed to show current state employees and retirees how a reduction in the state’s current 3 percent cost-of-living adjustment would affect worker pensions over a period of years.
* As Eric Zorn points out, Arizona has been waiting a very long time for the courts to rule on a state pension reform law…
In February, 2012, Maricopa County Superior Court Judge Eileen Willett issued a stinging rebuke to the legislature, declaring a key reform element unconstitutional in an action that had been filed by a group of schoolteachers.
“When the plaintiffs were hired as teachers, they entered a contractual relationship with the state regarding the public retirement system of which they became members,” said Willett’s written opinion. “Their retirement benefits were a valuable part of the consideration offered by their employers upon which the teachers relied when accepting employment.” […]
In May 2012, the state lost again in court, this time when Maricopa County Superior Court Judge John Buttrick used a similar constitutional rationale when ruling if favor of judicial retirees who’d challenged changes in the cost-of-living formula that was part of the pension-reform effort.
That case was fast-tracked to the Arizona Supreme Court on appeal, and three other legal challenges to the reforms were put on hold pending the outcome. But despite the attempted hurry-up, the justices didn’t hear oral argument in the case until June of this year and have yet to issue their ruling.
More than two and a half years after Arizona took the step that Illinois took this week, the reforms remain in legal limbo.
* Illinois Supreme Court Chief Justice Rita Garman was asked this week about pension reform…
News conferences — let alone a media scrum — are rare for a Supreme Court justice.
Maybe that’s due to the tensions between a judge’s analytical nature, the fact that they typically don’t comment on pending or potential litigation and the answer-me-now inquiries reporters can feel compelled to ask — something that showed up in the third question Garman faced.
“You’re coming in at a time when a potential pension case could come up,” one of the reporters stated. “How is that going to — what kind of dynamic will that mean?”
Behind Garman, the court’s spokesman bristled. The question presumably is about how Illinois’ high court would rule on a legislative change to the state’s pension laws — should such a bill make its way through the legislature, be signed into law, be challenged with a lawsuit and, finally, make its way to the Supreme Court.
“We deal with all the difficult cases,” Garman said, her deep blue eyes remaining fixed on the questioner. “As I tell my law clerks, if the cases weren’t tough, they wouldn’t need us. So we’re used to dealing with very difficult issues and we know that we are the ultimate decision-maker as to the constitutionality of laws that are passed in the state of Illinois.”
Despite her willingness to outline the question, it was nearly impossible to answer.
* I’ve linked a couple of times now to Bruce Rauner’s WLS interview this week on pension reform. Here’s the candidate struggling to remember the state Constitution’s protections of government pensions…
“Reduced or impaired, or something like that.”
The actual language…
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.
* And the IEA’s spokesman was not happy at all with this Tribune editorial cartoon…
From the teachers’ union flak…
Oh, how the patrons of Chicago’s exclusive private clubs must have laughed at that cartoon.
I imagine men in very nice suits, surrounded by the aroma of expensive cigars, holding brandy snifters, elbowing each other in the ribs and pointing to the part of the dog that’s been “fixed,” chortling all the while.
Sickening.
The men and women of AFSCME provide services on which the people of our state rely. They work hard and have negotiated with their employer for compensation that is commensurate with the effort and skill involved in their jobs.
I’ll bet the original version of this cartoon had the dog tag reading “Unions,” but then someone probably pointed out that that would mean the paper would be taking a repugnant cheap shot at teachers, police officers and firefighters; people the paper would be less comfortable attacking.
As crack journalist Ron Burgundy likes to say, “stay classy.”
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Question of the day
Friday, Dec 6, 2013 - Posted by Rich Miller
* A photo from yesterday’s private signing ceremony of the pension reform bill…
* That pic was supplied by the governor’s office. The SJ-R used a different photo…
* The Question: Caption?
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* While the world mourns the loss of Nelson Mandela and celebrates his amazing and purposeful life, it’s important to remember that we still have some real racial problems right here at home. Take, for instance, eight-term Williamson County State’s Attorney Charles Garnati…
The top prosecutor in a southern Illinois county is facing a legal ethics case because of racial remarks he made that derailed a murder trial.
Williamson County State’s Attorney Charles Garnati violated four legal ethics rules and “tends to defeat the administration of justice or to bring the courts or legal profession into disrepute,” contends the the Illinois Attorney Registration and Disciplinary Commission in a Nov. 6 complaint that was made public on Wednesday. The defendant, who is black, was tried before an all-white jury in July 2011 and sentenced to 85 years before his conviction was reversed on appeal, reports the Chicago Tribune.
“Now in our white world, ladies and gentlemen,” said Garnati at one point during the trial, as he drew a distinction between the way the two races deal with police.
* The full ARDC complaint is here.
This is what Garnati told the all white jury in his opening statement about two black witnesses who had recanted their testimony…
“And you will see, ladies and gentlemen, that there are some, not all-there are many good people in the black community, but basically you will see that there are a few in the black community who refuse to cooperate with the police even when a murder happens right under their nose, and those people have a habit of intimidating, harassing, sometimes threatening anybody who they think is cooperating with the police. That’s what makes this case so difficult, ladies and gentlemen.”
* And this is what Garnati told the all white jury in his closing about those two black witnesses and the black defendant…
“But I think what is most crucial in deciding this case, in deciding the credibility of Jodie Lacy and Crystal Blye, and in deciding most of the other issues in this case, is to understand the culture of the black community here in Marion.
“Please, you have to keep in the back of your mind how many people in that community feel about law enforcement. You have to understand and keep in mind how they react to the police and to the prosecutors. Sometimes for people like us, that’s hard to understand. People were brought up to believe that the police were their friends; that when something happens, when we are in trouble, that the police are our friends. And that’s where we go to get help from is the police when bad things happen.
“But in the black community here in Marion, it’s just the opposite. Most-for whatever reasons, most of these people were raised to believe that the police and prosecutors are the enemy; that for some reason, we are always out to get them. In their mindset, the biggest sin that you could-that you can commit is to be a snitch in the community. The biggest sin that you could commit is to ever cooperate with the police on anything. It’s a sin to even cooperate when one of your own people gets brutally gunned down and is left to bleed to death.
“And I am not saying that the whole black community is like that, ladies and gentlemen. There are some very good law[-]abiding citizens in that community here in Marion. But the evidence has shown that again, for whatever reasons, there is an intense dislike and even hatred for the police. And this group of people who feel that way make it extremely hard on the people who are law-abiding and want to do what is right and who are willing to come forward and give information that they have when a crime has been committed . . .
“Now, in our white world, ladies and gentlemen, our automatic reaction in that type of situation, if somebody gives a statement to the police and then later on changes their story, the automatic response would be that that person is not trustful and that there is a problem with their credibility.
“But again, please look at their testimony and what they did and what they didn’t do through the eyes of the people who are raised, again, to feel that the police are always against them and that they cannot trust the police.”
* More…
“They both stated that the defendant — that (victim) LaQuinn Hudson was backing up. He kept saying, ‘I got nothing. I got nothing.’ He not only said that, but both of them said he raised his white T-shirt up to show his waist band that he had nothing. OK? And in the black community, that is where they keep their handguns is in their waistbands, ladies and gentlemen, with something covering it. They don’t just walk around with it in their hand or, you know, sticking out of their pocket.”
* Months after the Chicago Tribune made a big deal out of this, Garnati eventually back-tracked and agreed the defendant should receive a new trial.
* What happens next…
The Illinois Appellate Court… ordered [a] new trial in September.
The case against Garnati will go to a panel of the disciplinary commission’s hearing board, which will hear evidence and make recommendations for any discipline. The Illinois Supreme Court makes the final decision on attorney discipline cases.
Steve Greenberg, a Chicago attorney who handled Marshall’s appeal, said that he had made a complaint to the disciplinary commission.
“I think anyone who espouses those racist views is unfit to be the state’s attorney of a county,” Greenberg said Wednesday. “Imagine how many charging decisions over the years were racially motivated in the (time) he’s been state’s attorney.”
Ugh.
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* The Guardian got its hands on an internal document from the State Policy Network that includes grant proposals from several conservative state-level “think tanks.” The proposals represent, according to the Guardian, “a co-ordinated assault against public sector rights and services.”
According to the Guardian, the State Policy Network “has an annual warchest of $83m drawn from major donors like David Koch and food giant Kraft.” Local background here.
* Now, on to the Guardian’s story…
The proposal from the Illinois Policy Institute for a campaign to deal with Chicago’s government worker pensions crisis by switching to 401(k)-style retirement plans similarly focuses on a politician – in this case Mayor Rahm Emanuel. The proposal says that “Mayor Emanuel has privately expressed the need for 401(k)-style changes to truly achieve reform.”
The institute plans to “leverage the leadership potential of Mayor Emanuel … as the spark for wider pension changes in Illinois.” It adds that “friendly legislators would be welcome to draft legislation modelled on our policy work and work in tandem with Mayor Emanuel to move it forward in the legislative process.”
John Tillman, CEO of the Illinois Policy Institute, told the Guardian that Emanuel had been “an outspoken proponent of pension reform that includes moving to a 401(k)-style, defined contribution system.” He saw no problem with the lobbying that the think tank undertakes.
“We are not allowed to do any campaigning or electioneering, and we don’t. We are allowed to spend a significant percentage of our expenditures on lobbying and we are very proactive in lobbying for liberty-based policy, including the urgently needed pension reform. We report our activities accordingly.”
* A summary of the Illinois Policy Institute’s grant proposal…
* And here’s an excerpt of the full grant proposal posted by the Guardian…
* So far, Mayor Emanuel has not yet given the General Assembly a draft of his proposals. If he does, indeed, “privately” support replacing current pensions with 401(K) plans, he hasn’t yet put those ideas on paper.
Whatever the case, the Illinois Policy Institute obviously has no plans to drop its constant demands for a defined contribution “pension” system to replace defined benefits. The state lobbying was just the beginning.
*** UPDATE *** From a Mayor Emanuel spokesperson…
The administration has not been in touch with the Policy Institute on this issue. We support choice and optional defined contribution plan for new employees just like the state law signed by the governor.
So, somebody’s lying. And since the mayor’s office is pretty specific on both points, I don’t think it’s them.
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Re: Madigan and the courts
Friday, Dec 6, 2013 - Posted by Rich Miller
* So many commenters yesterday bemoaned their belief that House Speaker Michael Madigan “owns” the Illinois Supreme Court that prominent pension issue commenter RNUG finally weighed in…
I realize this is Illinois and a lot of you think the fix is in, but stop and think it through a bit.
Once you become an [Illinois Supreme Court] justice, the only place left to go up is the federal system and, unless you’re in the running for SCOTUS, it’s pretty much a step down in terms of power and prestige. The usual path is to reach ISC, hang around to get your turn at Chief Justice, then, if you’re ready to go, retire. Otherwise you hang around some more until the workload gets to be too much.
MJM may have helped put a judge on the ISC initially, and maybe the judge owes MJM, but MJM can’t directly remove a judge from the ISC. Once they are there, they are there for 10 years at a time, and their re-election is a simple “Shall x be retained?” question. It’s not the same as running a campaign for re-election. Effectively speaking, once you make it, you are there for life or until you choose to step down. For the first time in their political life, a judge on the ISC is pretty much answerable to no one.
Yes, a judge could harbor hopes of retiring from the ISC and be “of consul” to any number of prestigious law firms, and in that case, MJM’s backing might help. But there’s no guarantee that such help would be needed. Big law firms like to have people like former Governors, Senators and Supreme Court Justices on their letterhead, and pay big money for that privilege.
Practically speaking, once they reach that level, an ISC Justice is free to do whatever they want on court decisions.
The paranoia out there is really, truly intense. Some of y’all need to tone it down. Way down.
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* Bruce Rauner was asked this week how he would deal with the General Assembly. His response…
“We’re gonna raise a PAC, we’re gonna raise a fund dedicated to the state Legislature, members of both parties who take the tough votes. We’ve gotta protect the members who take tough votes.
“Right now, Madigan controls the Legislature from his little pot of cash. It isn’t that much money. And he runs the whole state government out of that pot.
“We need a pro-business, pro-growth, pro-limited government, pro-tax reduction PAC down there in Springfield working with the Legislature for those who take tough votes.”
Rod Blagojevich tried to do a similar thing with a new PAC (Move Illinois Forward) and failed. But Blagojevich was raising money from his fellow Democrats, who didn’t want to step on Madigan’s toes. The Republican Rauner won’t be facing a reticent crowd, and he’s so rich that he can always put lots money in himself.
Thoughts?
Full interview here…
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UNO chief steps down
Friday, Dec 6, 2013 - Posted by Rich Miller
* Sun-Times…
Juan Rangel, longtime leader of the politically powerful United Neighborhood Organization, has stepped aside from his $250,000-a-year post as UNO’s chief executive in the wake of a scandal that cost the group millions of dollars in state funding and led to a federal investigation of its bond dealings.
The influential Hispanic community group operates the largest charter-school network in Illinois.
Rangel’s departure “by mutual agreement” with the board of the not-for-profit group is effective immediately, UNO officials said Friday.
Rangel had three family members on the UNO payroll. Sources said two of the relatives quit recently, including deputy chief of staff Carlos Jaramillo, Rangel’s nephew.
Reached by phone, Rangel hung up on a reporter.
* More…
UNO has ties to some of the most powerful politicians in Illinois including Illinois House Speaker Michael Madigan, Ald. Ed Burke (14th) and Mayor Rahm Emanuel, whose 2011 campaign Rangel co-chaired. He currently sits on the Public Building Commission of Chicago’s board of commissioners and helped found the Metropolitan Leadership Institute (MLI), a group that prepares young Hispanic professionals for careers in politics and government, and corporate and nonprofit arenas.
Rangel became CEO of UNO in 1996 and spurred its aggressive growth into the largest charter school network in Illinois with 11 schools under its charge. An ongoing Sun-Times investigation into how it awarded contracts related to a $98 million grant to build three new schools revealed bids were won by companies owned by the brothers of former UNO executive Miguel D’Escoto. The two companies, Reflection Windows Co. and d’Escoto Inc., were paid $8.5 million from that grant. D’Escoto resigned in February but Reflection Windows continues to receive business from the group.
Part of the focus of the SEC’s investigation into UNO’s bond dealings focuses on one of the underwriters of the bonds. Cabrera Capital Markets is a company owned by Martin Cabrera Jr., who resigned as UNO board chairman in September. Cabrera was on the board for only 3-½ months. Gov. Quinn has twice suspended paying out the remainder of the grant to UNO.
Rangel previously stepped down as UNO chairman in May but retained his CEO role. He’ll now be replaced by interim chief of operations Jesse Estrada.
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More Golden Horseshoes
Friday, Dec 6, 2013 - Posted by Rich Miller
* This morning’s categories…
* The Beth Hamilton Golden Horseshoe Award for Best House Secretary/Admin. Assistant
* Best Senate Secretary/Admin. Assistant
Beth is no longer with the House, but I’m gonna keep her name on the award for this year at least.
Keep in mind that this is about intensity far more than it is about the number of votes, so please explain your vote or I won’t give it much thought. Also, please nominate in both categories. Thanks!
* I’ll announce yesterday’s winners later today. We had very few nominations for best bartender/wait staff, probably because of the pension reform bill signing, so please click here and make your nominations there as well.
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