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What now?

Monday, Jul 7, 2014 - Posted by Rich Miller

* After the Illinois Supreme Court took a retiree health insurance case and all but guaranteed that pension reform is dead, Greg Hinz and I are on the same page about what happens next…

Some still see hope in a negotiated approach in which labor groups, for instance, agree to pay more for their pensions in exchange for pay hikes. That’s the “consideration” approach pushed by Mr. Cullerton.

But Mr. Cullerton’s pension bill counted on the state continuing “voluntary” health benefits as part of the consideration. That’s now gone, because the court essentially ruled that health benefits are part of the same bucket as pension themselves.

Yep.

* And yep…

I wouldn’t be at all surprised if House Speaker Michael Madigan revives his campaign to force local units of government, particularly school districts, to pick up pension costs that the state now pays.

Others point to a legally unexplored possibility: letting one or more of the pension funds go bankrupt to see what the courts order.

TRS and SURS are big, big problems for the state. Almost no other state picks up the tab for local teacher pensions. Shifting that cost would save a ton of state dollars.

Also, the state cannot declare bankruptcy. Illinois forbids municipalities from declaring bankruptcy. So this pension fund bankruptcy idea may be the only option for Chicago, Cook County and local first responder funds. Try it with a smaller pension fund first and work your way up, perhaps.

…Adding… Here’s my syndicated newspaper column on the Supreme Court’s ruling…

In a sweeping 6-1 decision, the Illinois Supreme Court last week struck down an attempt to force government retirees to pay more for their subsidized state health insurance. And while nothing is ever certain when it comes to the judiciary, the Court made it pretty darned clear that Illinois’ new pension reform law is going to have real trouble passing constitutional review.

The Court, led by Justice Charles Freeman, did not specifically rule on the pension reform law, but declared “it is clear” that all pension benefits, including health insurance, cannot be, as the Illinois Constitution mandates, “diminished or impaired,” which the ruling called the “plain and ordinary” meaning of the state’s Constitution.

“We may not rewrite the pension protection clause to include restrictions and limitations that the drafters did not express and the citizens of Illinois did not approve,” the Court ruled.

If that isn’t a direct enough message to lawmakers, the governor and everybody else, I don’t know what is. Pension benefits “shall not be diminished or impaired,” is what the Constitution says, and the Court used the “plain meaning” angle to say they can’t be cut.

For good measure the Court added that the state Constitution’s language on pension benefit protections, “was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.”

That last line is perhaps the most important part of the ruling, because it more than just suggests the state’s new pension reform laws - which rely on a “police powers” argument because the state allegedly can’t afford to make the promised pension benefit payments - could very well be going right out the window.

The justices also sent a powerful message when they wrote that a “fundamental principle” they relied on in this ruling was that if there are any questions about legislative intent and the clarity of the language of a pension law, “it must be liberally construed in favor of the rights of the pensioner.”

Therefore, the Court ruled, it is “obliged” to resolve any doubts “in favor of the members of the State’s public retirement systems.”

Boom.

Looks like it’s back to the ol’ drawing board, fellas.

Attorney General Lisa Madigan’s office pointed out that the pension reform case and the health insurance case have significant differences. The main difference is the emergency “police powers” argument. But as the Supremes essentially ruled last week, the state’s financial problems are not the Constitution’s concern.

The state pension reform legislation passed last year was projected to save taxpayers about $200 billion over 30 years. The health insurance reforms, which were specifically struck down last week, were projected to save up to around $80 million a year.

If the pension reform law is the next to be struck down, there are few easy ways out of this fiscal nightmare.

Amending the state Constitution to remove that pension protection language would take more than two years because we’d have to wait until the 2016 election to hold the plebiscite.

And even then, deleting the Constitution’s pension protection clause would almost surely only apply to new hires. In other words, all of the billions built up in the state’s massive unfunded pension liability can’t be touched.

Republican gubernatorial candidate Bruce Rauner’s pension reform plan involves freezing annual pension benefit cost of living increases going forward and taking existing employees out of the pension fund altogether going forward. But last week’s ruling was so sweeping and so all-encompassing that it’s pretty tough to see how that would pass constitutional muster, either.

Senate President John Cullerton warned this very thing would happen years ago. He eventually negotiated a pension reform deal with the unions. But that deal was quickly rejected by House Speaker Michael Madigan, conservative newspaper editorial boards and much of the business community.

Cullerton then attempted to graft his pension reform proposal onto the business-backed plan. If the business-backed plan was rejected by the Illinois Supreme Court, Cullerton’s compromise would then automatically become law.

But that idea, too, was rejected out of hand.

So instead of having a union-approved plan in place, we could very well be stuck with no plan at all. Why would the unions go back to the bargaining table if they have the Supreme Court on their side?

The bottom line is it’s going to take some radical, out of the box thinking to resolve this issue or the state will assuredly face even higher taxes and lots more budget cuts to pay this tab.

       

235 Comments

  1. - Steve - Monday, Jul 7, 14 @ 10:29 am:

    Rich:

    Maybe you could expound on how Illinois doesn’t let municipalities declare Chapter 9 of the federal bankruptcy code?


  2. - Stones - Monday, Jul 7, 14 @ 10:30 am:

    I’m not sure if layoffs are on the radar now or if some form of buyout may be offered to Tier I employees? Would love to hear from those knowledgeable about the numbers.


  3. - Res Melius - Monday, Jul 7, 14 @ 10:33 am:

    IMHO - TRS and SURS as a planned, phased cost shift is politically justifiable and publicly palatable. If starting small to assess pension fund bankruptcy options, GARS may generate the best public support(tongue firmly in cheek).


  4. - PublicServant - Monday, Jul 7, 14 @ 10:35 am:

    Allowing a fund to go bankrupt is not a good idea. The courts have already ruled that pensions must be paid when they come due. They’ve just strongly backed benefits associated with membership in a pension. If you allow a fund to become bankrupt, you remove any saving obtained via investment returns, thus increasing the cost that must be born by the employer. What possible reasoning can anyone who advocates this latest dodge use to justify the likelihood that the courts, who have always backed pensions to the hilt, would allow the employer to selectively avoid that particular debt unless all other debts are reneged upon too?

    Just plain dumb.


  5. - Bourbonrich - Monday, Jul 7, 14 @ 10:36 am:

    It may not be good for every school district or the district tax payers, but having districts pay for the complete cost of their employee pensions may be the only way out for the State. That does seem to be like kicking the can back to the locals instead of down the road but other that catastrophic staff or service cuts, I have yet to hear a viable solution.


  6. - wordslinger - Monday, Jul 7, 14 @ 10:40 am:

    If locals allows one of their pension funds to go bankrupt, their credit ratings and access to capital will be whacked just as badly as if they had filed themselves.


  7. - City Gal - Monday, Jul 7, 14 @ 10:42 am:

    Why doesn’t the State just start collecting the taxes due that it has given away as tax breaks? Here’s $8 BILLION a year in “tax expenditures”:
    http://igpa.uillinois.edu/sites/igpa.uillinois.edu/files/toolbox-budget/files/Brown-Retirement-Income-web.pdf


  8. - Rich Miller - Monday, Jul 7, 14 @ 10:43 am:

    ===Why doesn’t the State just start===

    If it was so easy, it would’ve already been done.


  9. - Six Degrees of Separation - Monday, Jul 7, 14 @ 10:44 am:

    Stones- what would a buyout of Tier One employees solve? It would get more employees on the pension rolls quicker, which to quote Donald Rumsfeld, is “the opposite of helpful”.

    I am also tossing around what kind of optional “consideration” trade could be offered employees or retirees that would reduce the immediate burden on the state’s payroll and/or budget. One Idea I have is to offer Tier 1 employees and retirees the option to trade the 3% AAI for a CPI-indexed COLA; for the foreseeable future it would save the state some money, and offer retirees inflation protection, and probably pass the Constitutional consideration test. But it would be a crusher if interest rates were to zoom to 1980 levels again in the future.

    This trial balloon of letting one of the small pension funds go deliberately insolvent is another kick the can solution that is similar to the dinking around that our leaders have been doing for the last 4 years, losing time and creating more backlog in finding a real solution.


  10. - Mason born - Monday, Jul 7, 14 @ 10:47 am:

    The local districts are going to have to foot the bill. It should have always been that way.


  11. - A guy... - Monday, Jul 7, 14 @ 10:47 am:

    Municipalities will let those funds file bankruptcy before they let the state garnish their taxes instead of distributing them. That remedy is only a couple years away. Ironically, the state makes the munis make their payments but doesn’t place that discipline upon themselves. The munis often are stuck with agreements the state made.

    The more you think about this decision, the more it makes sense for the unions to enter negotiations to solve the math problem from a stronger position than a week ago. This is an opportunity for them. They’d be wise to take advantage of it. All in, could mean all out.


  12. - Mittuns - Monday, Jul 7, 14 @ 10:48 am:

    It’s going to painful to most people when they realize their already exorbitant property tax bill is set to rise even further and does not already include funds to these pensions.

    We need a solution and an end to these games.


  13. - east central - Monday, Jul 7, 14 @ 10:50 am:

    Rather than attempt to dodge the obligation, which is likely to be futile, it would be best to minimize overall costs for funding the State pensions.

    Step 1 is to remove the incentive for members to retire early because they believe it is the best way to protect their pensions. The longer they delay retirement, the more the funds will be built up from investment growth and from Tier 2 savings.

    Step 2 is in the short term to infuse as much money as possible into the funds so that these funds have longer to grow. For example, from the sale of gambling licenses.

    I know it ain’t easy, but isn’t it time to face reality?


  14. - VanillaMan - Monday, Jul 7, 14 @ 10:54 am:

    We have a huge retirement generation driving us into a fiscal hole. Perhaps the way out would be to do in Illinois, what many other states and the Feds do - tax retirement income.


  15. - Six Degrees of Separation - Monday, Jul 7, 14 @ 10:54 am:

    A guy…and what about the already retired. They are not represented by any union, some never were represented by a union, and they now have an extremely strong position to hold on to what they’ve got. I agree that the unions might be able to convince their members to trade a little bit of their leverage for security, but after the state broke one promise (from their persprective on the health insurance) there would seem to be a lack of trust and an incentive to get what you can while you can, with the ISC’s blessing.


  16. - forwhatitsworth - Monday, Jul 7, 14 @ 10:55 am:

    Why doesn’t anybody want to listen to Ralph Martire for a major portion of the solution?


  17. - Ghost - Monday, Jul 7, 14 @ 10:56 am:

    Antecdotally a number of union State employee’s have mentioned that they are willing to contribute more to help out, the just request that the increase contributuions be staged instead of all at once.

    Many would grumble but to help make sure pensions were funded, you might even be able to get agreement for employees kicking in 9% and the State 6%, if the State was required to make the payment.

    Also you could divert the current 10billion pension bond payments to the pension when the bonds are paid off. We put 10b in bonds into the pensions, then redirected the employeer contribution for several years after wiping out the benefit.


  18. - Steve - Monday, Jul 7, 14 @ 10:57 am:

    Is Chapter 9 bankruptcy coming to some municipalities in Illinois. Here’s Dennis Byrne’s take from 2010:

    Federal and Illinois laws make possible bankruptcy for local governments. Chapter 9 of the Federal Bankruptcy Code was created during the Great Depression, when hundreds of cities and towns were going broke, to allow local units of government to fall under the protection of federal bankruptcy courts. In Illinois, the Local Government Financial Planning and Supervision Act sets out the details for local governments.

    http://www.chicagonow.com/dennis-byrnes-barbershop/2010/12/can-chicago-and-illinois-declare-bankruptcy/


  19. - illlinifan - Monday, Jul 7, 14 @ 10:59 am:

    University presidents a couple of years ago agreed to the phase out. They had proposed the state pay SURS what it owes it and then going forward the universities would fully cover the employer share of the pension. It is time for the state to take them up on the offer.


  20. - Robo - Monday, Jul 7, 14 @ 11:00 am:

    It’s a no-brainer with the make up of the GA. The downstate districts, or more accurately downstate taxpayers, will have to foot the bill for their teachers’ pensions. The suburbs will receive some sort of partial offset.


  21. - Frenchie Mendoza - Monday, Jul 7, 14 @ 11:01 am:

    I suspect one way forward is to simply ask current employees to voluntarily contribute more. Not a lot more - maybe an additional 1 or 2 percent. Ask nicely. Don’t force anyone.

    In return, give those employees a simple short-term benefit: an additional two vacation days, for example. If you don’t contribute more — fine, no worries. But if you do, you’ll get something small in return.

    I’m guessing that most current employees would do this — give more for something relatively small in return. The “asking nicely” part is important, BTW.


  22. - PublicServant - Monday, Jul 7, 14 @ 11:03 am:

    I think it’s time to look more closely at the CTBA ideas of (1) replacing the ridiculous pension ramp law with a new debt repayment law specifying a level annual debt repayment amount that will become an increasingly lower percentage of the budget in the future as state GSP and, therefore, state revenues grow. (2) Tax reform.

    Also, a 3% flat tax was never enough to fund our representative’s public program priorities. Thus the pension raiding that has occurred for over 6 decades. Implement an income tax consistent with the vast majority of states that surround us. Do workmen’s comp reform. Close those corporate tax loopholes.

    The courts have just said…again…pay your bills. It’s about time these politicians found the backbone they need to, finally, do the right, but politically unpopular things here.


  23. - PublicServant - Monday, Jul 7, 14 @ 11:03 am:

    I think it’s time to look more closely at the CTBA ideas of (1) replacing the ridiculous pension ramp law with a new debt repayment law specifying a level annual debt repayment amount that will become an increasingly lower percentage of the budget in the future as state GSP and, therefore, state revenues grow. (2) Tax reform.

    Also, a 3% flat tax was never enough to fund our representative’s public program priorities. Thus the pension raiding that has occurred for over 6 decades. Implement an income tax consistent with the vast majority of states that surround us. Do workmen’s comp reform. Close those corporate tax loopholes.

    The courts have just said…again…pay your bills. It’s about time these politicians found the backbone they need to, finally, do the right, but politically unpopular things here.


  24. - Chicago Publius - Monday, Jul 7, 14 @ 11:03 am:

    Team - The feds give the states the authority to decide whether municipal bodies can declare bankruptcy. A local governmental body in Illinois may not declare bankruptcy under the federal law unless the state first authorizes that body to do so, via statute. Hope this clears things up.


  25. - Filmmaker Professor - Monday, Jul 7, 14 @ 11:04 am:

    Perhaps it is finally time to accept that there is no magic solution that doesn’t require more revenue. Taxing retirement income is a very sensible part of the solution.


  26. - steve schnorf - Monday, Jul 7, 14 @ 11:04 am:

    In the last round of pension negotiations the unions’ offer of an additional 2% contribution was deemed inconsequential. In the next round it’s going to be crucial, and they have far less incentive now to cooperate. Moving TRS and SURS normal costs to the employers is reasonable, and my understanding is that the SURS types are already pretty much on board and have been for a couple of years. There are solutions out there that get us 80-90% or more funded by 2045 and do so constitutionally. Pick one, get it done, and move on.


  27. - VanillaMan - Monday, Jul 7, 14 @ 11:06 am:

    The way I see it, a union has no right to barter away or alter, a constitutional right. I believe AFSCME’s hands are as tied as everyone else’s. It is a constitutional right, alterable only by a constitutional amendment.

    That right was created in order to protect citizens who have worked for Illinois governments from discovering their pensions and benefits from becoming political pawns - much like we are seeing today.


  28. - A guy... - Monday, Jul 7, 14 @ 11:06 am:

    ===Six Degrees of Separation - Monday, Jul 7, 14 @ 10:54 am:

    A guy…and what about the already retired. They are not represented by any union, some never were represented by a union, and they now have an extremely strong position to hold on to what they’ve got. I agree that the unions might be able to convince their members to trade a little bit of their leverage for security, but after the state broke one promise (from their persprective on the health insurance) there would seem to be a lack of trust and an incentive to get what you can while you can, with the ISC’s blessing.====

    Six D, With the exception of compounding COLAs, I’ve always believed those retirees should be left alone. You’re right to say no one is negotiating for them. In the IEA’s case, they tossed retirees under the bus before the fight even started. The current retirees are living with far more modest pensions than what’s about to bust this system. Perhaps even shockingly, I mostly agree with you, compounding COLAs excepted.


  29. - Sue - Monday, Jul 7, 14 @ 11:06 am:

    Based on the Supreme Court decision- why does anyone believe a negotiated solution with Unions is still on the table? The Constitution doesn’t say membership in any pension program may not be diminished or impaired(unless negotiated by employee representatives). Any negotiated reform can be challenged by any retiree who doesn’t go along- The Supreme Court’s decision on health care is totally out of left field and not consistent with any other State Court which has looked at healthcare retiree benefits in the last 20 years- We are screwed in terms of trying to fix the state’s fiscal mess since even continuing the income tax at 5 percent is insufficient to resolve the unfunded liabilities. Passing the buck onto the local districts may be fine for the wealthier suburbs but it is laughable to think this will simply not create greater disparities then exist today in terms of school funding- The retirees and unions may be happy today but when layoff notices start going out through out the state along with increases in property taxes I can see an Illinois Tea Party movement gaining traction and we will have Illinois Democrats to blame


  30. - Anonymous - Monday, Jul 7, 14 @ 11:06 am:

    I think Vanilla Man hit it on the head. Look for the state to start taxing pension income.


  31. - Grandson of Man - Monday, Jul 7, 14 @ 11:10 am:

    “Antecdotally a number of union State employee’s have mentioned that they are willing to contribute more to help out”

    I’m willing to give more, but I can’t speak for others.

    The CTBA’s Ralph Martire mentions debt reamortization, taking the growing debt service and flattening it out over x amount of years. Could that be part of any solution? No one listened to Martire, and if I remember correctly, he was criticized by the IPI guy because reamortization would cost the state more money.

    If we can get a handle on the debt through reamortization, even if it costs more money in the long run, wouldn’t it be better than other doomsday scenarios? If I remember correctly, the annual cost of pensions is not the biggest problem; it’s the debt.


  32. - He Makes Ryan Look Like a Saint - Monday, Jul 7, 14 @ 11:10 am:

    Keep in mind, even though you shift the pension payments to the Local School Districts, it does not forgive the debt that the state owes. Also, does it say in the constitution the state pays for the Teachers Retirement? If it does, I see another issue for the Legislature.


  33. - walker - Monday, Jul 7, 14 @ 11:11 am:

    Local public employers should pay for local employee benefits. Simple idea. Put accountability for dollars spent where it belongs. Difficult for fiscal or small-government Conservatives, to clearly argue against.

    Very hard to get from here to there.

    This has been seriously considered as one of many required ways out of our fiscal mess, for over five years by some key leadership in Springfield. That was why it was initially proposed and pushed as part of the pension “reform” package. Both were then needed then to meet the Illinois Budget Arithmetic Challenge.

    The resistance by most of the legislators, including self-described Conservatives, has been massive. One of any legislator’s biggest dilemmas involves local versus state-level needs.


  34. - Rich Miller - Monday, Jul 7, 14 @ 11:11 am:

    ===even if it costs more money in the long run===

    Ralph’s plan upped payments by a billion dollars a year - over the Edgar ramp. Non-starter.


  35. - wordslinger - Monday, Jul 7, 14 @ 11:12 am:

    Steve, in general, Dennis Byrne has no idea what he’s talking about.


  36. - Filmmaker Professor - Monday, Jul 7, 14 @ 11:13 am:

    I’m curious: how does the “local district” picking up the pension payments apply to the University of Illinois? It is not local.


  37. - Rich Miller - Monday, Jul 7, 14 @ 11:14 am:

    === Also, does it say in the constitution the state pays for the Teachers Retirement?===

    First, read the Constitution. It’s not that long. You can even search it.

    But just this once, I’ll answer: No.

    Now stop posting stuff like that.


  38. - PublicServant - Monday, Jul 7, 14 @ 11:15 am:

    ===Ralph’s plan upped payments by a billion dollars a year - over the Edgar ramp. Non-starter.===

    So then everything’s on the table except for those non-starters then huh?


  39. - facts are stubborn things - Monday, Jul 7, 14 @ 11:17 am:

    The supreme Court may have left a slight crack in the door for current workers to have their health care premiums changed in retirement. If and a big if that is true and the lower court later backed up by the supreme court allows, then the cullerton consideration idea may not be dead yet. Younger workers might exchange a less generous pension for guaranteed free health care premiums in retirement? I do believe this ruling and the eventual pension ruling will provide the needed political cover/will to work something out. When it was thought possible to just stick it to the lazy greedy state worker/retiree that was just to tempting to pass up. When and we are getting much closer to that time, it becomes clear that this scapegoat is not available the compromises needed may start to come together. I think those have been well documented and some combination of them quite likely except for the bankruptcy ideas at least as it relates to the state of Illinois.


  40. - Sue - Monday, Jul 7, 14 @ 11:17 am:

    For those with long memories- it is ironic that Justice Burke is the only judge to have reached the appropriate conclusion that the constitution pension clause doesn’t extend to health care benefits-As an appellate judge, Burke wrote the decision in 94 or 95 ruling that the State had an obligation to fund the pension plans which ruling was overturned by the Supremes- Decisions like the one last week underscore the need to appoint Supreme Court Judges


  41. - Precinct Captain - Monday, Jul 7, 14 @ 11:18 am:

    We do not want any federal court control of any pensions systems. The next step would be seizing parts of municipal budgets in order to fund the systems, probably through tax increases, somewhat in the vein of Missouri v. Jenkins. Rather, now is the time for negotiation with retirees and unions because it is probably better to negotiate, even from a position of weakness, rather than not have a position at all. Of course, if the bankruptcy option comes to fruition and there are court-ordered tax increases, the municipalities could also gamble that the current makeup of SCOTUS will strike down any such federal court control.


  42. - Facts are Stubborn Things - Monday, Jul 7, 14 @ 11:19 am:

    We will need to see how the lower court rules on premium free health care as it relates to current workers. The Cullerton consideration model may not be dead yet as it relates to current workers.


  43. - Illiana - Monday, Jul 7, 14 @ 11:20 am:

    Filmmaker Professor,

    People just use the word “local” to refer to the various school districts whose teachers are TRS members. The universities’ staff are part of SURS & since the universities are separate entities, the cost of university staff pensions can be shifted onto the universities just the same as teachers pensions could be shifted onto the school district each teacher works for.


  44. - Formerly Known As... - Monday, Jul 7, 14 @ 11:22 am:

    == Others point to a legally unexplored possibility: letting one or more of the pension funds go bankrupt to see what the courts order. ==

    That is an intriguing possibility, but in such case state leaders must be absolutely certain there is no extraneous spending as there is in this budget.

    The court will not likely look fondly upon a situation where the state simply stops paying their contributions and drives the fund into bankruptcy while still paying for things like $10 million towards the privately owned Uptown Theatre. Regardless of differences between capital budgets and operating budgets, the money to pay for it eventually all comes from the same source - taxpayer dollars.


  45. - Just Trying to Survive - Monday, Jul 7, 14 @ 11:23 am:

    To be clear…..taxing retirement income to include all retirement income? Social security, IRAs, any and every form of retirement income? So that all elderly people are hit fairly? It’s hard to imagine taking money away from those who are unable to work to replace it at a time in life when they are most likely to experience higher medical bills than other age groups, infirmity……age related issues! It’s amazing that our state clings to the lowest state income tax rate but is willing to look at a specific targeted demographic as a solution.


  46. - Madison - Monday, Jul 7, 14 @ 11:23 am:

    It seems as though everybody involved in this debate has taken to smoke and mirrors. Well if we just went BK…
    The people have spoken through their constitution.
    The legislature has spoken through their actions in the past.
    The judiciary has spoken through its ruling last week.
    If the money was’nt there, it would be one thing, but its there. I think JBT put out a report a coupla months ago stating that the cost of pensions was less than ten percent of the budget.
    We have the money. We wish it spent elsewhere.

    What we are missing most is leadership. Yeah the leadership to talent ratio far outstrips the debt to equity in Illinois.

    Do yourselves and everybody else a favor and bond this thing at the lowest interest rates in our lifetimes, while its still possibl
    There is no chapter of the bankruptcy set aside for states as the framers designed states to have the taxing powers to generate revenue in and of themselves.

    Grow up. Pay the freight. Yes you may have to raise taxes. Thats what leaders do when they don’t wish to cut spending. If you don,’t wanna fund pensions going forward, change the rules going forward. Please do not make the rules for you different than for everybody else. That’s not leadership either. For the sake of everybody involved,pay the bills and move on.


  47. - Apocolypse Now - Monday, Jul 7, 14 @ 11:23 am:

    =I think Vanilla Man hit it on the head. Look for the state to start taxing pension income=
    LOL really hard. Watch retirees leave Illinois in droves, if you tax their retirement income. One of the few, if only, incentives for retirees to stay in Illinois.


  48. - Fred R. - Monday, Jul 7, 14 @ 11:27 am:

    I agree with Rich and Hinz. Assuming the courts strike down all the previously passed reform laws, I think the General Assembly may eventually move to “localize” pensions as much as possible. And not just TRS an SURS, but also the suburban and downstate public safety funds, and Chicago, Cook County, etc.

    I would think any public entity that makes the employer contribution to a fund can statutorily be placed in charge of setting all benefits and rule making. The locals would, of course, still face the same constitutional obstacles the state has confronted. But the General Assembly could say “hey locals, we tried to fix this mess and we lost. From now on, we’ll deal with only state employee pension funding and rule-making, the rest is up to you.”


  49. - Illiana - Monday, Jul 7, 14 @ 11:27 am:

    I have to agree with the person who mentioned going after reducing workman’s comp costs for business again. I would also add going after local housing regulations that limit the supply of housing in an area. Part of how an area becomes expensive to live in in the first place is when there are more people who would like to live there than the local supply of housing. There are people who would live in Chicagoland if it were more affordable & that population increase could broaden the base of taxpayers paying into the system.


  50. - Black Ivy - Monday, Jul 7, 14 @ 11:32 am:

    With what they had to work with, the Illinois Supreme Court came out on the right side of this contested issue. My prediuction is that a negotiated compromise with labor will not be reached and ultimately, the courts, will decide this matter.


  51. - Mama - Monday, Jul 7, 14 @ 11:42 am:

    If teachers pensions go back to the local school district, all taxpayers should expect to pay more property taxes. Property taxes is how the local school districts get their money. The local schools districts have no extra money to pay teachers pensions. Therefore, the only way to finance pensions at the local level is to raise property taxes. I can not see this happening before the election.


  52. - Facts are Stubborn Things - Monday, Jul 7, 14 @ 11:42 am:

    The supreme court ruling was huge and more then I could have hoped for. I believe they really made it about as clear as they could, however, the lower court must still rule on health care premiums based on the arguments and the pension reform bill will not even be decided until probably next year — even further out until the ILC rules. Still time for much posturing and gnashing of teeth. I have always said and still feel we are seeing a legal and ethical issue play out in the political world. As each new reality becomes ever clearer the political calculations change. Finally through a sloppy ugly process compromises will emerge.


  53. - Facts are Stubborn Things - Monday, Jul 7, 14 @ 11:45 am:

    I would argue that the best way forward is to fund the pensions as is under current ramp and get the tax rate back to 5%. Transfer pension costs over time to local districts along with some dedicated revenue to help finance the pension payments such as gambling or service tax. These funds would transfer back to general revenue once the pension system reached a certain set funding level etc.


  54. - illlinifan - Monday, Jul 7, 14 @ 11:49 am:

    Illinois is supposed to pay the majority for local education….they have paid less but did contribute to the pension through IOUs so in a way this counted as part of their funding for local education costs then we picked up the rest through property taxes. It is time to restructure the Illinois tax and funding system. If the local areas have to pay the pension, then the state needs to come up with actual dollars (not IOUs) to help cover their share of education costs. It really comes down to moving the dollars around. We also need to figure out how to not fund education through property taxes since if these costs go up all the seniors will no longer be able to afford being property owners.


  55. - Cook County Commoner - Monday, Jul 7, 14 @ 11:50 am:

    Considering the breadth of the ISC opinion, it wouldn’t surprise me that it would be unconstitutional for the state to shift any pension responsibilities onto local districts, whose ability to pay is questionable.

    At minimum, if I were a government pensioner, I would insist that any such transfer include a reversion of the debt back to the state in the event the local district proves unable to pay or it is allowed to declare bankruptcy by the state.

    Why would I let the state, with its more expansive borrowing and taxing abilities, off the hook in exchange for a local government unit?


  56. - Facts are Stubborn Things - Monday, Jul 7, 14 @ 11:54 am:

    Does the union file a motion to stay the July increase in health care premiums?


  57. - Mama - Monday, Jul 7, 14 @ 11:54 am:

    Some people in the TRS system never worked for a school district - - they worked for the State. Some people are in more than one pension system such as SERS, TRS and SS. Pensions are far more complex than people know.


  58. - Been There - Monday, Jul 7, 14 @ 11:55 am:

    ===We will need to see how the lower court rules on premium free health care as it relates to current workers. The Cullerton consideration model may not be dead yet as it relates to current workers. ====
    This may still be on the table but as Schnorf says there are still other options. Raise taxes, tax retirement income (with a big personal deduction first), shift cost to the locals, expand gaming, negotiate increase from employees. A combination of changes will help mitigate the pain.


  59. - Grandson of Man - Monday, Jul 7, 14 @ 11:58 am:

    “Allowing a fund to go bankrupt is not a good idea.”

    I agree, also from the political standpoint and the negative press that state workers and Illinois already get.

    It is my hope that we can all sit down and somehow work this out, even though it seems to be a long-shot hope. Taxing retirement income seems to be a possibility, as well as shifting some of the state costs to local school districts. State workers can pay more into their pensions.

    There are of course the ideas put forth by public unions, such as a financial transaction tax, but the opposition to that seems to be too much to overcome, and there is the threat that CME would leave Illinois. It still seems like a modest request, to tax stock sales at something like $.50 for every $100 dollars in sales.


  60. - Norseman - Monday, Jul 7, 14 @ 12:00 pm:

    === Others point to a legally unexplored possibility: letting one or more of the pension funds go bankrupt to see what the courts order. ===

    Talking about cutting off your nose to spite your face. If these folks think that the courts will allow the “bankruptcy” of these funds to cut off annuities to retirees, they’re on drugs. Maintaining the funds allow for investments that provide some additional revenue. Let them bleed dry still leaves the debt, doesn’t stop benefit payments to system members and eliminates a revenue source.


  61. - zatoichi - Monday, Jul 7, 14 @ 12:02 pm:

    This whole thing sounds like moving from ‘kick the can’ to ‘pass the bucks’. The GA gets relief from their self created problem by passing a big piece back to the munis. Munis get to ask the locals for increased taxes. Locals will:
    1. Vote happily for higher property taxes.
    2. Vote them down.

    The entire problem grows from a state problem to 150-200 municipal copies having the same problem with increased chance for screw-ups. When the munis go back to the GA for help, the GA will go ‘Not our problem’. So what actually changes? The locals still have to pay the costs. The GA needs to stop trying to find a non-existant nice way out of a very bad problem that saves them face. Be the leaders the job they accepted requires. State or local solution is the same, some taxes are going up or SNAFU is setting in. Moving responsibility does not change the outcome.


  62. - Anonymous - Monday, Jul 7, 14 @ 12:02 pm:

    As has been stated, any plan to tax retirement income, will be the reason I move out of Illinois. There will be no reason then for my staying! I imagine those retirees who can, will also leave!


  63. - Anonymous - Monday, Jul 7, 14 @ 12:03 pm:

    @ Grandson of Man - Monday, Jul 7, 14 @ 11:58 am:
    = State workers can pay more into their pensions. =

    Yes, but probably not constitutional unless agreed to by workers in exchange for something else of value. Could this as part of a collective bargaining agreement reached with salary job security etc. being a part of the mix.


  64. - east central - Monday, Jul 7, 14 @ 12:11 pm:

    Transferring TRS normal costs to the local districts is likely to reduce funds for their salary pools, thereby resulting in lower salary increases. It will not necessarily raise taxes.

    At the level of the school district may be where unions can compromise to the long-term benefit of their members. It may be better for the TRS members to contribute more toward their pension costs in return for higher salary raises than they would otherwise receive.


  65. - Sue - Monday, Jul 7, 14 @ 12:13 pm:

    In terms of premiums and/or co-pays- it would have been nice if the Supreme munchkins had offered some guidance- historically, courts that required employers subject to the old “vested rights” healthcare benefits for retirees rule( a rule no longer in vogue)could impose regular changes to premiums and or co-pays provided such changes also impacted active employees- unfortunately we are probably in for more litigation on this and other healthcare benefit issues- The person who mentioned moving the obligation to the local school districts being a problem is on to something- transferring the payment obligation is very much an impairment absent a state guarantee to make up any deficiency-My guess is even the lawyers representing the pension plans weren’t expecting last week’s decision


  66. - JustMe_JMO - Monday, Jul 7, 14 @ 12:14 pm:

    I would not like it but would support a sliding scale tax on retirement income like many other states and the Feds do.
    That would effect all citizens just as the diverted pension payments did.

    The legislature needs to start working on a new system where the terms, conditions, benefits and provisions are the same for all that are employed by the State. Retirement should have be based upon time of service and salary Not job title or office/agency of employment.

    One which cannot be modified/enhanced at the whim of the legislature.


  67. - DuPage - Monday, Jul 7, 14 @ 12:14 pm:

    @Apocalypse Now 11:23am =Watch retirees leave Illinois in droves, if you tax their retirement income.=

    That’s right, exactly right!

    It is easier for a retiree to relocate. Many things like having to live near a job, or kids still in school not wanting to move are factors that retirees usually don’t have to deal with.

    When a retiree moves out of state, the pension that is spent in Illinois is then spent in another state. Pensions spent in Illinois ($billions) contribute to overall economic activity, creates jobs, and adds to sales tax revenues. All that is lost as the pension is sent out of state.

    Having lots of people leaving creates a lot of vacant properties for sale. Lowers property values, less business for builders, less employment for building trades and suppliers.

    Overall a bad idea.


  68. - Jack Handy - Monday, Jul 7, 14 @ 12:15 pm:

    So the Court said healthcare is in the pension code of the constitution. What would be considered a dimishment of healthcare? Raising deductibles? Increasing co-pays? Stopping coverage of a particular ailment?

    Also, does the enforceable contractual relationship start at the beginning of employment or at the time of retirement?

    Lots of worms in this can.


  69. - DuPage - Monday, Jul 7, 14 @ 12:20 pm:

    That should have been 11:23am.


  70. - Judgment Day - Monday, Jul 7, 14 @ 12:21 pm:

    “If teachers pensions go back to the local school district, all taxpayers should expect to pay more property taxes. Property taxes is how the local school districts get their money. The local schools districts have no extra money to pay teachers pensions. Therefore, the only way to finance pensions at the local level is to raise property taxes. I can not see this happening before the election.”
    ———————-

    Going to have to happen. The interesting part is that it appears School Districts are also eligible to file for bankruptcy under Chapter 9, except you run up against that same situation as currently exists in Illinois - the legislature has to enact legislation giving school districts the right to file for bankruptcy.

    So, even if the Speaker gets his way and starts dumping the local school teachers retirement costs back onto the locals (and it’s not going to be that 2% deal anymore), put money (or maybe, IOU’s might be more appropriate) on the fact that some school districts are either going to say “we’re filing for federal bankruptcy under Chapter 9″ to push the legislature to do something, or they’re just going to say, “we’re busted and not going to open the doors”.

    Any way you look at it, the issue will be right back front and center before the legislature. And if the legislature enacts legislation giving school districts the right to file for Chapter 9, why not the municipalities? Then you just opened up the door. Looking forward to seeing CTU’s Karen Lewis’s antics in federal bankruptcy court…..

    Think about it: If you have a school district with a $4.50 per $100 tax rate, and with pension obligations added (assuming the statutes are modified allowing the schools to do that), they could easily see that tax rate jump to $7.00 per $100 tax rate. In the example, there’s no way that’s going to happen. The entire school board would resign, or be recalled. Nobody will be willing to vote for such a budget.

    School doesn’t open, and then we’re off and running.

    And if they do raise the tax rates that high, property values in that particular school district just died. Stick the fork in, they’re done.


  71. - Rich Miller - Monday, Jul 7, 14 @ 12:23 pm:

    Judgment Day, the idea is to do it over time, not all at once. Take a breath.


  72. - Nieva - Monday, Jul 7, 14 @ 12:26 pm:

    First cut spending to the bone. Then no hiring unless it effects life or safety. 5% state income tax for all with no deductions or money doled out for earned income credit. We need to live like a poor state and tax like a rich one until this mess is manageable. Maybe sending the house and senate leaders to a Dave Ramsey seminar would help.


  73. - toobad - Monday, Jul 7, 14 @ 12:27 pm:

    === Others point to a legally unexplored possibility: letting one or more of the pension funds go bankrupt to see what the courts order. ===

    This is not “legally unexplored.” The question of what would happen if a municipality let a pension fund run dry was answered in the recent Appellate Court case about the County Treasurer stipend. If the account to pay out a constitutionally mandated payment is insufficiently funded, the courts have the power to issue an order requiring payment out of the general fund.


  74. - Anonymous - Monday, Jul 7, 14 @ 12:28 pm:

    I think this supreme court ruling takes any changes to those retired off the table. The next group are new hires and current employees. the state does have a lot they can do with both groups. I suspect future bargaining agreements may have higher contribution rates towards pensions in exchange for higher pay, health care coverage, job security etc. also, the state could always offer retirees a choice of the actual CPI or the 3% compounded COLA? Life time inflation protection could be attractive rather then a set figure such as 3%.

    The state could also push hard (risk a strike) and bargain for lower wages for current workers…this would improve the budget and help the pension costs….lower pay equals lower pensions.


  75. - facts are stubborn things - Monday, Jul 7, 14 @ 12:28 pm:

    Sorry my nickname was missing.

    I think this supreme court ruling takes any changes to those retired off the table. The next group are new hires and current employees. the state does have a lot they can do with both groups. I suspect future bargaining agreements may have higher contribution rates towards pensions in exchange for higher pay, health care coverage, job security etc. also, the state could always offer retirees a choice of the actual CPI or the 3% compounded COLA? Life time inflation protection could be attractive rather then a set figure such as 3%.

    The state could also push hard (risk a strike) and bargain for lower wages for current workers…this would improve the budget and help the pension costs….lower pay equals lower pensions.


  76. - PublicServant - Monday, Jul 7, 14 @ 12:29 pm:

    Cook County Commoner said it. If you think that a transfer of the pension debt to an entity that can declare federal bankruptcy isn’t a diminishment of pensions, well, good luck with that given the way the ISC just ruled.


  77. - Pacman - Monday, Jul 7, 14 @ 12:36 pm:

    I am with other retires on this blog, tax my pension and as some suggest shift school pensions to locals resulting in higher property taxes, I’m outta here. After last winter FL. Sounds good.


  78. - Judgment Day - Monday, Jul 7, 14 @ 12:37 pm:

    Rich, might not have that choice.

    First off, there’s currently no statutory authority for local school districts to fund retirement benefits for teachers. Fund 005 is all IMRF specific. And if we want to get retirement funding on next year’s real estate 2014 pay 2015 tax bills (and have bills anywhere near on time), there’s got to be a reasonably well thought out process in place by December of this year. Otherwise we’re going to start screwing up the entire tax extension process.

    There’s a lot of moving parts here, and we can’t just say, well, we’ll get them legislative guidance in January, 2015 and all will be good with the world. IMO, not sufficient turnaround time for May, 2015 tax bills.

    And does anybody really think we can put it off for 2 more years (2015 pay 2016 RE tax bills)? After this court decision?


  79. - Just Trying to Survive - Monday, Jul 7, 14 @ 12:40 pm:

    This is what was seen in the crystal ball before 1970. Workers’ retirement money thrown to the wind and retirees left penniless. Funny, the amendment to our constitution was actually voted on and the citizens voted to protect the pension systems. Of course, it was all ignored and spent anyway, but interesting how sentiment toward the workers they wanted to protect has changed.


  80. - Rich Miller - Monday, Jul 7, 14 @ 12:52 pm:

    === does anybody really think we can put it off for 2 more years ===

    The cliff is big, but it isn’t fatal. It can be delayed a bit.


  81. - forwhatitsworth - Monday, Jul 7, 14 @ 12:54 pm:

    Why do many people believe the solution to more state revenue is to tax retirement income instead of other ways to generate more revenue? Most state pensions are very modest and retirees contribute most of their pension checks right back into the local and state economies. As a retiree living in the Chicago suburbs, the major incentive for me to live in Illinois is the state income tax exemption. Whatever happened to the “ability to pay” principle that our federal government uses?


  82. - Rich Miller - Monday, Jul 7, 14 @ 12:55 pm:

    ===Whatever happened to the “ability to pay” principle that our federal government uses?===

    Why should you get a pass when people who earn less than you have to pay?


  83. - Anonymous - Monday, Jul 7, 14 @ 1:04 pm:

    @ Just Trying to Survive - Monday, Jul 7, 14 @ 12:40 pm
    =Funny, the amendment to our constitution was actually voted on and the citizens voted to protect the pension systems. Of course, it was all ignored and spent anyway, but interesting how sentiment toward the workers they wanted to protect has changed.=

    It really depends on how the pension issue is framed as to how people tend to react. If you frame the issue as one of “should a promise be kept and the constitution upheld” you get a large number saying yes. If you frame the question as “is it too much to ask those with pensions to take a little less while we all pay a little more to solve the pension issue” you get a large number of people saying yes. If you take the emotion and envy out of the equation (pit one group against another) most people, I believe, still fill that a deal made should be kept and that it is very important to be a land of laws and uphold the constitution.


  84. - Grandson of Man - Monday, Jul 7, 14 @ 1:04 pm:

    “Why do many people believe the solution to more state revenue is to tax retirement income instead of other ways to generate more revenue?”

    I agree, but someone is going to have to eat a particular type of sandwich (rhymes with “bit”). If the retirees don’t eat it, it will fall on other taxpayers. Both retirees and other taxpayers may ultimately wind up eating the sandwich.

    If we propose raising taxes, some threaten to leave the state. If we propose taxing pensions, some threaten to leave the state. The choices are very tough.


  85. - facts are stubborn things - Monday, Jul 7, 14 @ 1:04 pm:

    sorry did it again, my computer is not holding my nickname.

    @ Just Trying to Survive - Monday, Jul 7, 14 @ 12:40 pm
    =Funny, the amendment to our constitution was actually voted on and the citizens voted to protect the pension systems. Of course, it was all ignored and spent anyway, but interesting how sentiment toward the workers they wanted to protect has changed.=

    It really depends on how the pension issue is framed as to how people tend to react. If you frame the issue as one of “should a promise be kept and the constitution upheld” you get a large number saying yes. If you frame the question as “is it too much to ask those with pensions to take a little less while we all pay a little more to solve the pension issue” you get a large number of people saying yes. If you take the emotion and envy out of the equation (pit one group against another) most people, I believe, still fill that a deal made should be kept and that it is very important to be a land of laws and uphold the constitution.


  86. - mythoughtis - Monday, Jul 7, 14 @ 1:06 pm:

    Based upon our current tax philosophy, I doubt if retirees would end up paying that much in taxes. They would get the same exemptions, and base taxable income as everyone else… or even more exemptions as we probably wouldn’t tax social security income (publicity reasons).

    I have no objection to it, and my family would have SS, railroad retirement, pension, and 401k/IRA money when the time comes. So I am sure I would be paying said taxes if there were any to pay.

    If you move for tax reasons, that must mean you have no real emotional ties to the area, such as family. If enough of you move for that reason, then the state you move to may also decide to tax retirement income. We may also notice a drop in state services needed here because the average age of state citizens may be lower. So, go ahead, move.


  87. - forwhatitsworth - Monday, Jul 7, 14 @ 1:08 pm:

    ===Why should you get a pass when people who earn less than you have to pay?===
    Because I contribute my pension check right back into the local and state economies, but … as a retiree I probably have more options as to where I live than others who are more tied to their jobs. As I stated earlier, the retirement income exemption is the major factor that keeps me (and most likely thousands of retirees) in Illinois.


  88. - Just Trying to Survive - Monday, Jul 7, 14 @ 1:09 pm:

    There is no incentive to stay in Illinois should retirement income start being taxed. Virtually all of our income goes right back into goods and services purchased in this state. We would have even less to spend here, so we’d need to look for a much cheaper place to live. It would not be our choice to leave Illinois, but finances would require it. Property taxes have exploded in our area and have become a challenge without a reduced income. People have no way of imagining what the impact would be on retirees because they are not living on a retirement income themselves. As long as no one’s eying their pocket, they’re happy to have someone else pick up the tab.


  89. - Big Joe - Monday, Jul 7, 14 @ 1:11 pm:

    Many state retirees I’ve talked to would consider taxing their retirement income if all the taxes go to directly to their respective pension funds. Just a thought


  90. - Retired and fed up - Monday, Jul 7, 14 @ 1:12 pm:

    If retirement income is taxed and you choose to move your options will be limited as the majority of states already tax pensions, but may not tax Social Security payouts. Indiana where I moved to when I retired to be closer to my 90 year old mother taxes my pension. It did not figure into my decision to move back after 45 years in Chicago.


  91. - DuPage Dave - Monday, Jul 7, 14 @ 1:13 pm:

    Amen to Steve Schnorf. He for sure knows what he’s talking about. Pick a plan that pays the bills and get on with it.


  92. - toobad - Monday, Jul 7, 14 @ 1:14 pm:

    It is really priceless that people here are whining that their own retirement income might be taxed at 5% but the very same people were supporting laws which would steal 30 to 40% of a public employee’s retirement income. CRY ME A RIVER!


  93. - Howard - Monday, Jul 7, 14 @ 1:14 pm:

    Dumb question - how can Illinois tax my pension when I live in Missouri and already pay taxes on it?


  94. - Judgment Day - Monday, Jul 7, 14 @ 1:15 pm:

    The other reason I am concerned about the timing is the effect on the bond market for the units of local government, especially schools. The majority of local government bonding (more then 50%) is from school districts.

    If the bond market knows that there’s “something coming” for local RE taxes, but they’re not sure of the actual impact, anybody going for a long term bond issue on a school district during the interim is going to find it’s getting really shaky. Short term stuff (


  95. - Ghost - Monday, Jul 7, 14 @ 1:16 pm:

    2 interesting ideas today from commenters in my opinion that go with the employee choice to change idea.

    First trade some days off for an in tease in contributions. The days off cost the state some productivity, but by comparison now additional out of pocket.

    Change the 3% increase to an actual cost of living increase. Still compounded. Provides greater protection if cost of living soars.

    I think state employees are generally willing to kick in.


  96. - facts are stubborn things - Monday, Jul 7, 14 @ 1:17 pm:

    once the GA and Gov. come to grips with what bills have to paid for (current ISC ruling making it clearer) they will. We still have the lower court to rule on the arguments on health care premiums and the pension case will not be decided at the lower court until next year. They still have some time to kick this can a little further down the road and let the rulings/reality force and adjust the political calculation — its not quite stew yet. :)


  97. - Retired and fed up - Monday, Jul 7, 14 @ 1:18 pm:

    I disagree with those who say changes can be made for current employees. The ISC talked about membership in a system, not a retiree. With SERS you become a member after 6 months when they start taking pension contributions out of the pay.


  98. - Judgment Day - Monday, Jul 7, 14 @ 1:18 pm:

    The other reason I am concerned about the timing is the effect on the bond market for the units of local government, especially schools. The majority of local government bonding (more then 50%) is from school districts.

    If the bond market knows that there’s “something coming” for local RE taxes, but they’re not sure of the actual impact, anybody going for a long term bond issue on a school district during the interim is going to find it’s getting really shaky. Short term stuff (less than 4 years) will probably be ok, but longer term - those issues are going to be really, really interesting.

    That means all the school districts are going to have to drop everything and put their outside auditors to work on figuring out what their retirement obligations are going to be going forward, because that’s going to be something that will have to be disclosed in all bond issue prospectus documents going forward. Talk about mind numbing reading.

    There’s going to have to be a lot of re-thinking of school district spending/projects real soon now….


  99. - facts are stubborn things - Monday, Jul 7, 14 @ 1:20 pm:

    we look at how to find solutions and fix the problems, the leaders look at how do we keep a majority while the individual politicians look at how do I get reelected. We get way ahead of the others but eventually our paths will cross.


  100. - Apocolypse Now - Monday, Jul 7, 14 @ 1:20 pm:

    =I wouldn’t be at all surprised if House Speaker Michael Madigan revives his campaign to force local units of government, particularly school districts, to pick up pension costs that the state now pays.= Excellent idea. Look for this to happen, after the election is over. Rauner will agree to it.


  101. - Just Trying to Survive - Monday, Jul 7, 14 @ 1:21 pm:

    ==I doubt if retirees would end up paying that much in taxes==

    If true, why tax? What benefit would that be for our revenue problem? I’ll say it again. We would have to leave not out of spite but because any reduction would make a difficult retirement even more so. Have to move to somewhere affordable. Many teachers have one source of retirement income. Their pension. No 401k, no railroad retirement, no social security ……We never made enough to have investments other than money put aside to help our kids with college. We just didn’t make it, not that we have yachts, multiple homes and drive Bentleys. That is a simple fact. We have depended on that pension as our income plain and simple and it is what was understood almost 40 years ago when we took the job. So will we leave if taxed? Have to survive, you know. The people of Illinois wouldn’t care. They got what they needed from us.


  102. - Rich Miller - Monday, Jul 7, 14 @ 1:22 pm:

    === What benefit would that be for our revenue problem?===

    It’s a couple bil a year at least.


  103. - facts are stubborn things - Monday, Jul 7, 14 @ 1:23 pm:

    @- Retired and fed up - Monday, Jul 7, 14 @ 1:18 pm:

    =I disagree with those who say changes can be made for current employees. The ISC talked about membership in a system, not a retiree. With SERS you become a member after 6 months when they start taking pension contributions out of the pay. =

    I think you are probably correct, but RNUG and myself along with others feel the ISC may have ever so slightly cracked the door open on that issue. In the past, would love educated on this point better, we did go from 8 years of service for premium free health care in retirement to 20 years to qualify. I believe, please help me, that when that happened it did effect current employees but not retirees. I believe the ISC sighted that issue in their opinion.


  104. - Rich Miller - Monday, Jul 7, 14 @ 1:24 pm:

    Yep. It’s $2 billion a year but is gonna grow in a big, big way when more people retire. http://www.civicfed.org/iifs/blog/cost-illinois-retirement-income-tax-exemption


  105. - Retired and fed up - Monday, Jul 7, 14 @ 1:29 pm:

    I believe the change from 8 to 20 years was negotiated and also did not effect people close to retirement. Based on the ruling there is no incentive on the part of employees, i.e. future retirees, to negotiate changes detrimental to themselves.


  106. - toobad - Monday, Jul 7, 14 @ 1:34 pm:

    As a public employee, I am fine with a general, across-the-board tax to pay for pensions such as a tax on all retirement income for all residents. The irresponsibility of our politicians has been enabled by every citizen of this State and the bill must be paid by all. What is completely unacceptable is the notion that my earned retirement benefits are your piggybank. You’re going to have to find a new welfare queen scapegoat. May I suggest some of our corporations who have pocketed TIF and similar funds?


  107. - foster brooks - Monday, Jul 7, 14 @ 1:35 pm:

    Doesn’t California tax pensions whether they live in state or not? I cant remember the name of the GA legislator that introduced a bill several years ago that did this


  108. - Obamas Puppy - Monday, Jul 7, 14 @ 1:37 pm:

    Lets all find new and exciting ways to rip people off who worked for government and actually believed that these commitments would be kept. If one way does not work lets try every conceivable scheme like bankruptcy and constitutional amendments to get steal their cash.


  109. - Both Sides Now - Monday, Jul 7, 14 @ 1:52 pm:

    A couple of thoughts on pensions -
    1) The basis for pensions should NOT include overtime. Base it on a standard work week. OT is a premium for working additional hours but is not part of their regular pay and should not be treated as such when it comes to pensions. This change alone would reduce the state’s future pension obligations.
    2) If you are the governing body that makes decisions on the salary then you should be obligated to take care of the pension - whether it’s for your teachers, your firemen, or the dog catcher.
    3) Ultimately, the Unions have contributed greatly to this mess with the out-of-sight salaries for mid-level management positions. We hear the public talk about the overpaid state workers - frankly, I don’t understand why the average pay for a PSA is more than $100,000 while the Director for the whole agency is making $130,000. And the merit comp Senior Public Service Administrators in-between haven’t had a raise in 5 years and are making less than the people they supervise. The WHOLE SYSTEM is out of wack!


  110. - Anotherretiree - Monday, Jul 7, 14 @ 1:53 pm:

    Taxing pensions also means taxing Social Security. Instead of running to the state borders in their walkers, they’ll be running to the polls so fast the tennis balls will come off. We’ll probably have to do it combined with a graduated income tax…poor Bruce will have to pay more


  111. - Kerfuffle - Monday, Jul 7, 14 @ 1:55 pm:

    If per the constitution pensions benefits cannot be diminished and we were to let a state pension system go bankrupt wouldn’t the state just have to pay more of those benefits out of general revenue? The whole idea of letting any government retirement system intentionally go broke is a juvenile approach to the problem. Let us hope that we have elected adults to the legislature.


  112. - Rich Miller - Monday, Jul 7, 14 @ 1:56 pm:

    ===Taxing pensions also means taxing Social Security===

    Says who?


  113. - Kerfuffle - Monday, Jul 7, 14 @ 2:00 pm:

    ====Both Sides Now - 1) The basis for pensions should NOT include overtime. Base it on a standard work week. OT is a premium for working additional hours but is not part of their regular pay and should not be treated as such when it comes to pensions. This change alone would reduce the state’s future pension obligations ====

    This is an excellent suggestion and I have never understood why it should not be so.


  114. - toobad - Monday, Jul 7, 14 @ 2:01 pm:

    I am a government worker who is not in Social Security. Why should that portion of your retirement income escape taxation while 100% of my retirement income should be taxed?


  115. - Just Trying to Survive - Monday, Jul 7, 14 @ 2:02 pm:

    Is Social Security no retirement income? When people are talking about taxing retirement income, what are they thinking retirement income is?


  116. - Norseman - Monday, Jul 7, 14 @ 2:03 pm:

    === And the merit comp Senior Public Service Administrators in-between haven’t had a raise in 5 years and are making less than the people they supervise. ===

    I think you’re a little off on the number of years MC folks have not had a raise. The last raise for the MCs in my old department took effect when Blago ran for election 8 years ago.


  117. - Kerfuffle - Monday, Jul 7, 14 @ 2:04 pm:

    ====Both Sides Now - 2) If you are the governing body that makes decisions on the salary then you should be obligated to take care of the pension - whether it’s for your teachers, your firemen, or the dog catcher.===

    I would agree if that body also got to make decisions on the actual retirement benefits as well – but they don’t, and the legislature has cut many a deal with unions in the past to impact the cost of that pension and there is nothing stopping them from doing so in the future.


  118. - Rich Miller - Monday, Jul 7, 14 @ 2:05 pm:

    ===if that body also got to make decisions on the actual retirement benefits===

    Pensions are based on salaries and school boards set those salaries.


  119. - JS Mill - Monday, Jul 7, 14 @ 2:06 pm:

    I am just a bit curious about the concept of “cost shift”. What makes everyone so sure it has not already happened for local school districts? If you look at the calculations for he so called funding “proration” taking place, the numbers for many districts are about the same as the cost shift. Therefore, the cost shift is already happening. Local school districts will be forced to pay a benefit that they had no voice in determining. I see that as problematic and that may be the next legal frontier. Martire has been correct for more than a decade, the public received a benefit from the shifted dollars, artificially low tax rates and public works projects. We are all going to pay the piper one way or another.


  120. - Retired and fed up - Monday, Jul 7, 14 @ 2:06 pm:

    People who make overtime pay contribute to their pension systems on that amount also.


  121. - Anon. - Monday, Jul 7, 14 @ 2:07 pm:

    ==Dumb question - how can Illinois tax my pension when I live in Missouri and already pay taxes on it?==

    Congress has already answered that — Illinois can’t tax retirement income of nonresidents. 4 USC Section 114. That was enacted about 20 years ago. Before that, some states did tax retirement income of nonresidents if they earned the income from working in the state.


  122. - JS Mill - Monday, Jul 7, 14 @ 2:10 pm:

    ====Pensions are based on salaries and school boards set those salaries.=====

    Rich, they do not “set” the salaries, they negotiate salaries and benefits with the local union (unless, their staff is not represented by one which is unusual in Illinois). The pension benefit was outside their authority and was established by the state not the locally elected school board.


  123. - Kerfuffle - Monday, Jul 7, 14 @ 2:11 pm:

    Wow so the legislature didn’t pass any of the pension laws or amend them in any way that negatively impacted the system? News to me Rich, thanks for enlightening me.


  124. - Kerfuffle - Monday, Jul 7, 14 @ 2:14 pm:

    === Retired and fed up - People who make overtime pay contribute to their pension systems on that amount also.===

    This is true but when your pension is based upon an average of your last “x” number of years and you inflate your pay at the end of your career by taking on additional overtime it is gaming the system and costs the system a lot more than what you paid in.


  125. - Retired and fed up - Monday, Jul 7, 14 @ 2:21 pm:

    Illinois has the lowest per capita ratio of state employees in the nation. Thus, there is often a real need for overtime and employees can not often not refuse. Since 2002 the number of State employees in Illinois has declined about 20,00-. As someone who recently retired from State service I can tell you that working conditions are terrible and put in many extra required hours for which I was only allowed comp time.


  126. - Just Trying to Survive - Monday, Jul 7, 14 @ 2:22 pm:

    toobad

    Apparently that is the solution for us.


  127. - Rich Miller - Monday, Jul 7, 14 @ 2:22 pm:

    ===Wow so the legislature didn’t pass any of the pension laws===

    I’m not sure where I ever said that. Methinks your blood pressure is way too high.


  128. - Six Degrees of Separation - Monday, Jul 7, 14 @ 2:27 pm:

    ====Both Sides Now - 1) The basis for pensions should NOT include overtime. Base it on a standard work week. OT is a premium for working additional hours but is not part of their regular pay and should not be treated as such when it comes to pensions. This change alone would reduce the state’s future pension obligations ====

    Probably OK with new hires, would be an unconstitutiona diminishment for retirees and current employees; OT is taxed and employee pension contributions deducted from it as well as straight time pay. The other way it could be constitutionally controlled is for the state to use less of it, thus keeping both payroll and future retirement liabilities down. On a side note, we will hear it from the state employees who are doing the jobs once performed by 2 or 3 people.


  129. - mythoughtis - Monday, Jul 7, 14 @ 2:27 pm:

    ==I am a government worker who is not in Social Security. Why should that portion of your retirement income escape taxation while 100% of my retirement income should be taxed? ==

    Sorry, my mistake. How about if I say that we should exempt a portion of a retiree’s income (not matter the source) from taxes? I said ’social security’ because I was referring to the fact that we wouldn’t want to tax people of very limited means. So, let’s say we exempt the first 20,000 of retirment income for each taxpayer/dependent over 65 years of age.


  130. - State Worker - Monday, Jul 7, 14 @ 2:28 pm:

    “- Frenchie Mendoza - Monday, Jul 7, 14 @ 11:01 am:

    I suspect one way forward is to simply ask current employees to voluntarily contribute more. Not a lot more - maybe an additional 1 or 2 percent. Ask nicely. Don’t force anyone.

    In return, give those employees a simple short-term benefit: an additional two vacation days, for example. If you don’t contribute more — fine, no worries. But if you do, you’ll get something small in return.

    I’m guessing that most current employees would do this — give more for something relatively small in return. The “asking nicely” part is important, BTW.”

    I love this idea. The best idea that I have heard. I would contribute more for extra days off. My blood pressure could use it.


  131. - Sue - Monday, Jul 7, 14 @ 2:31 pm:

    With regard to “Too Bad’s” comment that the taxpayers have enabled our politicians’ failure to deal with these problems- maybe he didn’t understand the recent decision rejecting the constitutional amendments on term limits and redistricting- Illinois residents are no better then feudal serfs living under the Madigan/Cullerton monarchy- absent the ability to challenge the way the legislative map is drawn and absent term limits, The Dems who run the legislature don’t need to worry about voters- The Dems are running the Titanic and even control who gets appointed or elected to the majority of judicial positions- voters don’t deserve any of this but we are paying for it in terms of the state’s financial standing and dismal employment environment


  132. - Jen - Monday, Jul 7, 14 @ 2:31 pm:

    Retired and fed up - some of us don’t get comp time either - last raise under Ryan


  133. - Sue - Monday, Jul 7, 14 @ 2:35 pm:

    Stateworker- unbelievable- between vacation and state and federal holidays- how many days do you already get paid for when not working- and now you think adding to time off is a good approach- try a job in the private sector


  134. - steve schnorf - Monday, Jul 7, 14 @ 2:38 pm:

    Have half the people on here lost their minds and/or memories in the last 2 months? There was never any discussion of transferring pension “debt” to local school districts, and to my knowledge the state has no “muni” pension responsibilities it could transfer. Those are already local responsibilities. Jesus!


  135. - Kerfuffle - Monday, Jul 7, 14 @ 2:41 pm:

    === Rich Miller - Pensions are based on salaries and school boards set those salaries.===
    ===Rich Miller - I’m not sure where I ever said that. Methinks your blood pressure is way too high===
    Sorry, I think your initial response was a bit simplistic. Certainly the legislature has the power to impact pension costs and have actively availed themselves of that power - both for good and evil - over the years. My point is and was that it is not an area of control for local units of government.

    ;) I appreciate your concern and apologize for my perceived tone. Thanks for the reminder to take my meds!


  136. - Andrew Szakmary - Monday, Jul 7, 14 @ 2:42 pm:

    If it chooses to tax retirement income, Illinois may be able to get away with exempting Social Security, because many states do that. However, I don’t think taxing only Illinois government pensions, and continuing to exempt private defined benefit pensions, 401k’s, IRA’s, etc. would pass constitutional muster, as it would be an obvious back-door way of diminishing government pensions.


  137. - kimocat - Monday, Jul 7, 14 @ 2:44 pm:

    I’m a Illinois retiree living out of state. Our state does not tax Social Security or Railroad Retirement income. However state income tax is applied to all other retirement income (including deferred comp) after the first $6500 ramping up quickly to 7.2% I knew that when I moved here. However property taxes are lower. It’s a lot more fair way to do things.


  138. - Archimedes - Monday, Jul 7, 14 @ 2:47 pm:

    The savings from SB1 pension reform was revised to $145 billion over 30 years. This was recalculated after the investment earnings from the pension funds exceeded their discount rate for 2012-2013.

    The first ten years, the savings was $1.2 billion a year. Keep the 5% income tax and the loss of SB1 savings can be made up in the budget.

    The bulk of the savings occurs in the last ten years of the 30 years.

    Almost 1/2 of the savings was due to accounting changes and using freed up pension bond payments to augment payments to the pension funds.

    Time for a financial solution if the ISC throws out the political solution of SB1.


  139. - JS Mill - Monday, Jul 7, 14 @ 2:56 pm:

    =====Steve Schnorf-Have half the people on here lost their minds and/or memories in the last 2 months? There was never any discussion of transferring pension “debt” to local school districts, and to my knowledge the state has no “muni” pension responsibilities it could transfer. Those are already local responsibilities. Jesus!====

    There is well documented discussion (foreboding) by Madigan with regard to shifting the annual cost of suburban and downstate pension costs to the local districts. You are correct, the long term debt was not a part of that plan only the annual costs. you are also correct with regard to IMRF, there is no state responsibility there. How long before that conversation changes with regard to TRS long term debt?


  140. - toobad - Monday, Jul 7, 14 @ 3:03 pm:

    Have half the people on here lost their minds and/or memories in the last 2 months? Yes, everyone who is suggesting that public employees will voluntarily accept higher pension contributions/greater workloads just to spare other people from paying their fair share of taxes if “asked nicely” is having amnesia about the barrage of demonizing which has gone on over the past few years and is continuing even today on this page. Why don’t I just ask you nicely to pay your fair share of the general tax burden?


  141. - BigBob - Monday, Jul 7, 14 @ 3:04 pm:

    Is the 1998 change in retiree health care subsidy now in jeopardy? It did not change the subsidy for current retirees, but it did for current employees with less than 20 years service. If not, then what does this mean for allowable health subsidy or annuity changes which would impact only current employees, but not current retirees?


  142. - Rich Miller - Monday, Jul 7, 14 @ 3:04 pm:

    ===and is continuing even today on this page===

    Poor thing. You won.


  143. - PublicServant - Monday, Jul 7, 14 @ 3:13 pm:

    You won too Rich. The ISC did the right thing, and proved Madigan doesn’t have them in his pocket. So, we all won. And the biggest winner…justice.


  144. - steve schnorf - Monday, Jul 7, 14 @ 3:15 pm:

    JSM, Frequently when I am correct it’s because I read, think, and understand before I post


  145. - Grandson of Man - Monday, Jul 7, 14 @ 3:19 pm:

    “Stateworker- unbelievable- between vacation and state and federal holidays- how many days do you already get paid for when not working”

    I get 20 vacation days a year after working 16 years, not including state holidays. My wife in the private sector gets more vacation days than I do.

    “try a job in the private sector”

    The private sector workforce needs to have more benefits, in my opinion. Productivity has grown while wages have remained stagnant. One way to reward increased productivity is to offer more time off. Wealthy corporations, some CEO’s and certain folks invested in the stock market are amomg those who are raking in the money these days. It’s time for those folks to either offer something up to workers or be compelled to do so by law.

    We can take note of what happened in Florida, where small government conservatives passed a state law that overrides local governments’ ability to compel employers to offer paid sick leave.

    http://www.cnn.com/2013/06/18/us/florida-sick-leave-law/index.html

    I’m willing to pay more into my pension or be taxed, because I want defined pensions to survive and be there for workers in the future. I don’t want the public sector to go the way of the private sector, with the 401(k)’s and their uncertainty.


  146. - Anonymous - Monday, Jul 7, 14 @ 3:19 pm:

    I am with you State Worker. I am not real young but I would rather enjoy my time off now while I can than die while working. Which may happen before I am allowed to retire. I have seen diminishment of many good people’s retirement. Public and Private. Most end up on Medicaid anyway because the nursing care took all they worked for.


  147. - Current Univ. Employee - Monday, Jul 7, 14 @ 3:25 pm:

    - Retired and fed up - Monday, Jul 7, 14 @ 1:18pm:

    ~~I disagree with those who say changes can be made for current employees.~~

    I’m not buying that view either. If ever there was any doubt, the Constitution’s ‘diminished/impaired clause’ is ironclad (”BOOM” says the ISC), w/ pension system “membership” the intentionally recurring keyword. Regrettably, all bets are off for new hires, making IL less competitive for talent, resulting in our students (and our State) losing in the long term. Steve S. is right — pick one, get it done, and move on!


  148. - toobad - Monday, Jul 7, 14 @ 3:25 pm:

    Damn straight we won! A win not just for public employees but for the rule of law in a civilized society. My point is that in politics what goes around comes around. I am happy to give the demonizers a taste of their own medicine back by calling them out as tax shirkers and freeloaders and flatly rejecting any offer to modify my pension which is not accompanied by substantial and equivalent consideration.


  149. - steve schnorf - Monday, Jul 7, 14 @ 3:26 pm:

    Oh, Sue, for crying out loud. They didn’t seize nor do they hold power thru military action, they win elections! You don’t like it, organize, carry petitions, contribute, walk precincts, elect someone else. Jesus. Whiners, victims, and losers abound today. Must be a full moon or something.


  150. - jrkac4 - Monday, Jul 7, 14 @ 3:37 pm:

    My predictions:
    There will be a lot of “positioning” now through November as ‘I am the one who can fix the Pension problem’.
    In the Spring session, a Bill will be passed that funds the pensions, but not completely.
    As soon as the Bill is passed, everyone will start blaming the ISC to allow him or her some Political cover.
    By the next election cycle, there will be a new problem for everyone to focus on.


  151. - Kerfuffle - Monday, Jul 7, 14 @ 3:39 pm:

    Steve - Do you need me to share my blood pressure meds?


  152. - RNUG - Monday, Jul 7, 14 @ 3:41 pm:

    - Jack Handy - Monday, Jul 7, 14 @ 12:15 pm:

    Previous rulings have said the pension contract starts at time of hiring.


  153. - RNUG - Monday, Jul 7, 14 @ 3:42 pm:

    - facts are stubborn things - Monday, Jul 7, 14 @ 12:28 pm:

    I would say any pension / AAI changes are off the table for current employees. About the only crack is, maybe, changing the rules on free health insurance upon retirement.

    New hires have always been fair game for changes.


  154. - RNUG - Monday, Jul 7, 14 @ 3:42 pm:

    - mythoughtis - Monday, Jul 7, 14 @ 1:06 pm:

    If you taxed retirement income but not Social Security , you would have both a big public relations problem and, possibly, another court case. Some of the retirees, specifically teachers but there were other categories, were not alloed to participate in SS but instead provided a bit bigger pension. The only fair way would be to tax all retirment income with a specific level of deduction provided to everyone. And if you set the deduction equal to the average SS benefit or the average pension (somewhere in the %16K - 25K range), then you won’t generate that much revenue. At one time, I calculated the additional revenue (under the soon to expire 5% rate) as being between $0.8B and $1.5B. If it is taxed at the new, lower rate with the type of deduction I’m suggesting to make it politically palatable, then you would be lucky to see $0.5B to $1.2B in “new” revenue the first year.


  155. - RNUG - Monday, Jul 7, 14 @ 3:43 pm:

    - facts are stubborn things - Monday, Jul 7, 14 @ 1:23 pm:

    On the 8 -> 20 yr change, the people in the system but not yet retired were given a choice under which set of rules they wished to retire. I didn’t look it up and my memory is hazy at the moment, but I think there was a difference in the pension formula based on which health insurance option you picked.


  156. - steve schnorf - Monday, Jul 7, 14 @ 3:43 pm:

    K, how about some corn in a jar from Kentucky. I do seem a little impatient, huh?


  157. - RNUG - Monday, Jul 7, 14 @ 3:43 pm:

    - Rich Miller - Monday, Jul 7, 14 @ 1:24 pm:

    Yes, it’s $2B is you assume there are no pension specific deductions. Toss that assumption in, and the numbers go lower real fast … even though the numbers will grow in the future.


  158. - redleg - Monday, Jul 7, 14 @ 3:43 pm:

    Taxing state retirees has been kicked around behind the scenes for no less than a decade…..maybe more. Around ten years was the first I heard about it.

    It was rejected for practically all reasons already mentioned and continues to be.

    I’m willing to put more skin in the game, inspire of the fact that most of what I paid into social security starting in 1963 has been eliminated.


  159. - Jimbo - Monday, Jul 7, 14 @ 3:44 pm:

    Sue, my my you are certainly jealous. Perhaps you should try to get a state job. Seriously though, Frenchie was proposing something that would not cost the State anything really, a couple days off won’t sink an agency, and in return the State could CONSTITUTIONALLY get increased contributions. If you want “take” there has to be a give. BTW, when I worked in the private sector, I got four weeks of vacation after five years service, and we got most Bank Holidays except Columbus Day. With the State, you get three weeks after five years. Settle down and try to negotiate for more days off with your employer, rather than whining about other people having a benefit you’d like.


  160. - wordslinger - Monday, Jul 7, 14 @ 3:44 pm:

    –Whiners, victims, and losers–

    oh my!

    I am one of those who is alternately amused and appalled by those who think they got the s-end of the stick living in 21st Century United States.

    On the Monday after the 4th, I’m more appalled.

    Problems, yes. But everyones’ always had problems. A quick look around the world and at history and you come to a quick conclusion as to what a sweet deal it is, compared to others.

    Thank your neighborhood progressive.


  161. - redleg - Monday, Jul 7, 14 @ 3:45 pm:

    Inspite, instead of inspire.


  162. - When will it be over - Monday, Jul 7, 14 @ 3:46 pm:

    Ideas that have previously been floated around are now off the table. This land mark ISC decision has change the landscape of what will be discussed and who will be sitting at the table. Will there be negotiations? Absolutely. Will there be the same proposals as before….probably not. Will the state just give up….raise taxes…cut services and leave the employees/retirees alone? Only in your dreams. Just because we won a battle…..don’t think the war is over.


  163. - steve schnorf - Monday, Jul 7, 14 @ 3:47 pm:

    do pension protections start when you first participate in the system, or when you are vested?


  164. - Formerly Known As... - Monday, Jul 7, 14 @ 3:48 pm:

    It will be interesting to see how far we can push new hires before it bears upon the quality of those new hires.

    We significantly reduced benefits for new hires just a few years ago https://capitolfax.com/2010/03/24/this-just-in-madigan-moves-pension-reform-bill/

    == A precise savings from the changes has not been determined, but a top Madigan aide said it should save “well over $100 billion” over several decades. ==


  165. - illlinifan - Monday, Jul 7, 14 @ 3:49 pm:

    “thank your neighborhood progressive” Huh….not sure what this means…since I sit in the middle I hear a lot of yelling from both sides so in my opinion “thank your neighborhood conservative and progressive”


  166. - Sue - Monday, Jul 7, 14 @ 3:54 pm:

    Steve-when you say they win elections-are you overlooking that the Democratic drawn legislative map is done in a manner to make voting a total waste of time. Circulating petitions as did the folks who obtained several hundred thousand signatures to put the amendments on the ballot worked out real well didn’t it . Yet Quinn and Madigan are able to put a birth control and minimum wage referendum on the November ballot to engage deems to go vote.. What are you smoking.. The fix is in to quash any reforms which would undermine Democratic control of the legislature as well as madigans speakership. You are usually more objective


  167. - Jimbo - Monday, Jul 7, 14 @ 3:54 pm:

    illinifan, progressive does not equal liberal. It means someone seeking progress. Life’s more interesting when you don’t think in black and white.


  168. - Jimbo - Monday, Jul 7, 14 @ 3:55 pm:

    Sue, I remember twenty years ago the Rs drew the map. Why didn’t they maintain their stranglehold? And yes, their map was just as partisan.


  169. - RNUG - Monday, Jul 7, 14 @ 3:56 pm:

    For those proposing the school cost shift, I wouldn’t count on any large savings there. First, for it to happen at all, it still needs to be phased in. Secondly, I just see the schools making the case for more funding and what is currently going into the TRS pension fund instead being mostly doled out to the schools and relabeled “new school funding”.

    Slightly tongue in cheek, that would be one way that Rauner could keep his promise to increase school funding!


  170. - RNUG - Monday, Jul 7, 14 @ 4:01 pm:

    - steve schnorf - Monday, Jul 7, 14 @ 3:47 pm:

    I’ve always heard the ISC rulings said time of hiring. It’s been so long since I was hired as full time (42 yrs), but I think back then you had to wait 6 months or a year before you started paying into the pension system.

    Today, I think you start paying in from day 1. (I’ll know for sure because a friend just got hired and they should get their first check in a week or so.) About the only thing I know that still has the 6 month timing on it is the probationary period for a new hire.


  171. - Just Trying to Survive - Monday, Jul 7, 14 @ 4:01 pm:

    Wordslinger, you are absolutely correct. we have much to be thankful for in this country-however……you have to admit things are a-changing and not for the better for most working people.


  172. - redleg - Monday, Jul 7, 14 @ 4:09 pm:

    RNUG -

    It was a year of pension free when I hired into SURS in the 70’s. It changed to day one in the early 80’s there.

    Seems to me like there was a option to not pay into pension prior to that. There was alot of SURS participants who worked 40 - 50+ years because it wasn’t mandatory before they hired in during the 50’s and 60’s. Could be wrong though.


  173. - Cook County Commoner - Monday, Jul 7, 14 @ 4:14 pm:

    Maybe now it’s time to give a close look at cannabis legalization. It’s not a cure-all, but it may take a little bite out of what’s coming. Would the surrounding states forego legalization for a few years to give Illinois time to recover some ground? A secondary benefit would be that taxpayers would have a legal and more relaxing avenue to endure the inevitable tax increases.


  174. - toobad - Monday, Jul 7, 14 @ 4:21 pm:

    “Will the state just give up….raise taxes…cut services and leave the employees/retirees alone? Only in your dreams. Just because we won a battle…..don’t think the war is over” Go read Marbury v. Madison. When the Supreme Court rules, the war IS over.


  175. - PublicServant - Monday, Jul 7, 14 @ 4:28 pm:

    Well before we start taxing old people on fixed incomes, or allow everyone to get pot high so they are less likely to complain about their stagnant wages and salaries, I’d say we ought to reconsider the millionaire’s surtax.


  176. - Norseman - Monday, Jul 7, 14 @ 4:29 pm:

    A little marijuana will make the angriest among us forget about the financial pain of taxes.


  177. - facts are stubborn things - Monday, Jul 7, 14 @ 4:31 pm:

    RNUG,

    thanks for explanation on the 8 year vs. 20 year.

    How do you see current employees being treated, or perhaps anyone that did not retire before the law went into effect on July 1. 2013?


  178. - Sue - Monday, Jul 7, 14 @ 4:33 pm:

    The day you go on the state payroll is the date from which your pension rights may not be impaired


  179. - facts are stubborn things - Monday, Jul 7, 14 @ 4:35 pm:

    RNUG,

    I am speaking of course on the health care premium not the pensions. Totally agree current and retired are protected on pensions. Where do you think the cut off is that the small crack may be? Current employee ? Anyone not retired until after july 2013 etc. etc.


  180. - facts are stubborn things - Monday, Jul 7, 14 @ 4:38 pm:

    30 years ago we had to wait for 6 months before we started to pay into the system, but you could purchase that 6 months back as soon as completed probation…6 months.


  181. - Grandson of Man - Monday, Jul 7, 14 @ 4:43 pm:

    “Maybe now it’s time to give a close look at cannabis legalization. It’s not a cure-all, but it may take a little bite out of what’s coming.”

    I was just in Denver, Colorado, admittedly for a short time, observing what was happening there. Marijuana legalization seems to be working out very well for that state.

    We drove a lot in the short period of time we were there and didn’t see anything unusual, as far as impaired driving. We hung out in downtown Denver on a weekend, and again, nothing was seen that indicates legalization is failing.

    I was in Amsterdam a bunch of times and never saw a marijuana problem there.

    I’m hoping that politicians in Illinois are watching what’s happening in Colorado. It could offer promise for this state.

    “A little marijuana will make the angriest among us forget about the financial pain of taxes.”

    It’s better than popping pills that can kill. I had to take painkillers last year that were strong and addictive. I stopped taking those as soon as the pain subsided enough and resorted to plain old OTC pain relievers.


  182. - BigBob - Monday, Jul 7, 14 @ 4:45 pm:

    I would like some of you more knowledgeable than I commenter’s to address the question I asked about the 1998 Act that changed the health insurance subsidy for many future retirees. Current retirees cent their current annuity and health benefits, though many had to retire earlier than planned to keep the health benefit. Future retirees with less than 20 years got a diminished health benefit and a higher annuity formula as a trade-off. If both are protected and cannot be diminished, is this law now in jeopardy? Can I expect to see reimbursement checks?


  183. - thechampaignlife - Monday, Jul 7, 14 @ 4:48 pm:

    I like the idea of increasing employee contribution in exchange for vacation days. A few other options I didn’t see mentioned above that should also be on the table:

    1. Modify Martire’s reamortization plan to adjust the level payment for inflation - takes away most of the $1B bump.

    2. Cost-shift for new hires to give locals more control when the base salary is being set.

    3. Tax retirement income when it is earned (Roth style). That provides more cash now, heads off retirees from leaving, and captures tax revenue from those that retire elsewhere before they leave.


  184. - Norseman - Monday, Jul 7, 14 @ 4:52 pm:

    Correct me if I’m wrong, but if you don’t vest you’re not entitled to any annuity benefits and therefore are not subject to any impairment. With respect to the health insurance, as a fairly new employee you would be subject to higher premiums.


  185. - Jake From Elwood - Monday, Jul 7, 14 @ 4:57 pm:

    Hmm. A lot of angst here today. Sunburn, heartburn, back to work blues or pension blues? I’ll come back tomorrow when the water is less choppy.


  186. - RNUG - Monday, Jul 7, 14 @ 5:19 pm:

    - facts are stubborn things - Monday, Jul 7, 14 @ 4:38 pm:

    Actually, I’m thinking that the crack on health insurance for future retirees (current employees) could be exploited by a future bill since it dodn’t sound like the ISC was in the mood to slice and dice the various claims by the different groups.


  187. - Jack Handy - Monday, Jul 7, 14 @ 5:21 pm:

    So if someone was hired when there was an 8-year vesting in retirement healthcare (prior to 1998?), would people revert back to that?

    And if you don’t revert back to when you were hired and get that healthcare benefit package, wouldn’t that open the door for changes in the pension annuity benefit?

    Is it possible for the court to interpret the Pension Code to say you get the healthcare benefit based on this date but you get the annuity benefit based on a different date?


  188. - RNUG - Monday, Jul 7, 14 @ 5:23 pm:

    - BigBob - Monday, Jul 7, 14 @ 4:45 pm:

    Admittedly the trail court now has to rule after having the ISC kick out the trial court’s dismissal of all the suits as basically ungrounded and effectively reinstating the cases. But it’s pretty obvious the ISC expects the trial court to find for the retirees. Assuming that happens, then the funds the retirees have been paying into an escrow account since July 1, 2013 (1% if pension if on Medicare, 2% if younger than Medicare) will have to eventually be refunded to the retirees.


  189. - RNUG - Monday, Jul 7, 14 @ 5:28 pm:

    Jack Handy - Monday, Jul 7, 14 @ 5:21 pm:

    If the ISC is to be consistent with previous rulings, then (to paraphrase with emphasis added) the pension contract is the rules in place at time of hiring PLUS any ENHANCEMENTS granted by the General Assembly. I would expect that same logic to be applied to the health insurance.

    As to the 8/20 specifically, there was a choice offered to keep 8 yrs with this set of rules or 20 yrs with that set of rules. My memory is fuzzy on the exact details but it seems to me it was one of those “irrevokable” choices under federal IRS rules.


  190. - Ilinnoyed - Monday, Jul 7, 14 @ 5:49 pm:

    I’m probably arriving too late for this Q to be answered, but do Rich’s comments that “IL forbids municipalities from declaring bankruptcy. So this pension fund bankruptcy idea may be the only option for Chicago, Cook County and local first responder funds” suggest that a bankruptcy option is or is not viable for (1) municipally curated funds (since I’m too thick-headed to decipher what may be obvious logic within these sentences) and (2) TRS and SURS (down the road, depending on court rulings)?

    In light of RNUG’s rejoinders to all other possible TRS/SURS diminishment approaches, that seems the only remaining vulnerability still alive in this discussion, right?


  191. - Jack Handy - Monday, Jul 7, 14 @ 5:49 pm:

    I’m beginning to think this inclusion of the healthcare might not be as rosy as people are thinking. So it’s part of the Pension Code but what is a diminishment in healthcare?

    The Court will have to give some leeway in the diminishment clause interpretation with regards to healthcare because an increase in co-pay or dropping coverage for a specific ailment or changing the maximum lifetime payout for example can be argued as a diminishment. I think the court will have to allow healthcare coverage to change in some aspects.

    Then the logic extends to if one aspect of the pension benefit can be diminished, then why not the other? The COLA for example?


  192. - Precinct Captain - Monday, Jul 7, 14 @ 6:04 pm:

    ==- Sue - Monday, Jul 7, 14 @ 2:31 pm:==

    Please look up monarchy in the dictionary.


  193. - Mister M - Monday, Jul 7, 14 @ 6:05 pm:

    Whatever gets done, it will be a combination of many things. One of them should be a reversal of some of the state’s expensive outsourcing and reversal of the associated illusion of “reduced headcount”. For appropriate work, restore REAL state employees, with real skills - people who will make real contributions and will be paying into the pension systems for a long time. Reduce the headcount of patronage hacks instead.


  194. - RNUG - Monday, Jul 7, 14 @ 6:42 pm:

    - Ilinnoyed - Monday, Jul 7, 14 @ 5:49 pm:

    re Bankruptcy, to sum it up is a short sentence, Illinois effectively says that the various governmental units can’t declare bankruptcy without prior approval by the State General Assembly.

    The question some court would have to answer is whether or not a pension fund is a governmental unit as defined under that rule. I would say it is, since it was created by a governmental unit for a required function of that unit or, in some cases, actually created by the General Assembly for a governmental purpose. But I’m sure, if soemthing like that were to happen, the lawyers will make a bunch of money regardless of the outcome.


  195. - RNUG - Monday, Jul 7, 14 @ 6:43 pm:

    - Mister M - Monday, Jul 7, 14 @ 6:05 pm:

    But if that happened, how could the politicans “extort” campaign contributions?

    /snark off


  196. - Pacman - Monday, Jul 7, 14 @ 6:48 pm:

    RNUG I am a new hire with the state. My first check had deductions for SS and pension


  197. - Six Degrees of Separation - Monday, Jul 7, 14 @ 7:05 pm:

    Someone was asking if the collection of the recent increase of retiree health insurance premiums would be affected by the ruling. Found this as part of a news item.

    “In a statement issued to university workers Monday, officials at the State Universities Retirement System said they would continue collecting the money pending a final resolution of the case.

    “SURS will continue to deduct the health insurance premiums from annuitants’ checks each month until otherwise advised by the state,” the SURS statement said.”


  198. - Arthur Andersen - Monday, Jul 7, 14 @ 7:09 pm:

    RNUG, I would agree that the State pension funds can’t declare bankruptcy for a couple reasons. First, they are considered “bodies sovereign and politic created by the State” or something close to that in legalese. Secondly, how do they get around the previous (Sklodowski?) decision obligating the State to pay benefits.when due? Seems like they could God forbid run the till dry and send the State the tab. Then the real fun begins.


  199. - Six Degrees of Separation - Monday, Jul 7, 14 @ 7:10 pm:

    The article didn’t explicitly state it, but could be inferred that the July 1 increase in employee premium would be deducted as planned.


  200. - wordslinger - Monday, Jul 7, 14 @ 7:17 pm:

    –The question some court would have to answer is whether or not a pension fund is a governmental unit as defined under that rule.–

    I can’t see how they wouldn’t be. Otherwise, it would be too easy a dodge.

    The pension boards have no sovereign authority. They’re wholly dependent on the municipal entity.

    Anyone seriously thinking about getting around these problems by looking for a bankruptcy dodge, I would disabuse yourself of that notion.

    All your assets go into play then and a judge decides. Things like park districts, water systems, airports…. in Chicago’s case, whatever Daley didn’t hock to kick the can down the road and chase the Olympics pipe dream.


  201. - RNUG - Monday, Jul 7, 14 @ 7:50 pm:

    Until specifically voided by court action, Judge Nardulli’s order to collect and escrow the retiree health insurance fees is the law.


  202. - east central - Monday, Jul 7, 14 @ 8:07 pm:

    If normal pension costs are to be transferred to local districts and universities, it should be partial.

    The State should continue to be responsible for a portion because this keeps the State on the hook for any increased costs from changing benefits.

    The districts/universities should be responsible for a portion because they set the salaries.

    If you have influence on the costs, then you should have responsibility for the costs.


  203. - ejhickey - Monday, Jul 7, 14 @ 9:15 pm:

    Taxing retirement income seems fair to me. Besides raising much needed revenue, a lot of retirees voted for the politicians who created our pension problems.


  204. - Just Trying to Survive - Monday, Jul 7, 14 @ 9:49 pm:

    ej—-Which ones? Which ones should pay because they voted for the bad politicians? How will we figure out which ones didn’t vote that way and have them not pay taxes? DO you know which ones? I’ve never seen a more illogical, childish comment on this blog. I’m guessing you always blame the rape victim over the rapist too.


  205. - WestEndGirl - Monday, Jul 7, 14 @ 9:59 pm:

    Bankruptcy of funds makes no difference. There was a case back around 1992 McAMEE? Didnt the Supreme Court basically said in that case that if the funds run out of money because employers don’t make their payment the benefits would have to be paid to the beneficiaries directly from the employer (presumably out of their general fund)?


  206. - Anonymous - Monday, Jul 7, 14 @ 10:00 pm:

    - Pacman - Monday, Jul 7, 14 @ 6:48 pm:
    RNUG I am a new hire with the state. My first check had deductions for SS and pension.
    PXMan, you are obviously not a teacher or professor. Some state rectirement systems have positions that pay into SS. Consider your self lucky.


  207. - Been there - Monday, Jul 7, 14 @ 10:02 pm:

    I guess it is time to discuss a graduated income tax.


  208. - RNUG - Monday, Jul 7, 14 @ 10:08 pm:

    - WestEndGirl - Monday, Jul 7, 14 @ 9:59 pm:

    Yes, they did.

    As I said the other day, with the phrasing of the latest ISC ruling, there is zero doubt the State is on the hook for the pension funds shortage and the health insurance, period, end of discussion. Time for the politicians to quit trying to wish away the debt and figure out where and how the State is going to find the roughly $150B (pensions and insurance).


  209. - facts are stubborn things - Monday, Jul 7, 14 @ 10:17 pm:

    @
    RNUG - Monday, Jul 7, 14 @ 5:19 pm:

    =Actually, I’m thinking that the crack on health insurance for future retirees (current employees) could be exploited by a future bill since it dodn’t sound like the ISC was in the mood to slice and dice the various claims by the different groups. =

    How would a future bill be found legal based on what you so properly pointed out earlier which I pasted below………..

    If the ISC is to be consistent with previous rulings, then (to paraphrase with emphasis added) the pension contract is the rules in place at time of hiring PLUS any ENHANCEMENTS granted by the General Assembly. I would expect that same logic to be applied to the health insurance

    Has there ever been a time when health insurance premiums for retirees been diminished and applied only to those current employees and not to those already retired — other then the 8 vs 20 year which involved a choice of sorts. What do you make of the fact that the justices indicated that the public act did not distinguish between classes of people . Does that imply that if the state had exempted retirees, for example, they may have allowed? If health insurance is protected in the pension clause then how can health insurance be treated any differently then pensions?


  210. - facts are stubborn things - Monday, Jul 7, 14 @ 10:19 pm:

    RNUG,

    Do you think a “stay” may be issued to prevent the July premium increase to take effect?


  211. - steve schnorf - Monday, Jul 7, 14 @ 10:31 pm:

    I doubt the courts would bother to take notice of de minimus diminishments in the health care arena, such as reasonable increases in deductibles, co-pays, etc.

    “The maxim de minimis non curat lex retains force in Illinois and is wholly applicable in this case. This maxim applies even to constitutional claims, and its function is to place outside the scope of legal relief the sorts of injuries that are so small that they must be accepted as the price of living in society rather than made a federal case out of.” Justice Robert Steigman


  212. - Six Degrees of Separation - Monday, Jul 7, 14 @ 10:49 pm:

    @facts 10:19 - I think the retirees are stuck having the increase deducted at this point. They have been paying for a year, so there is no immediate “injury” here since the funds are going to escrow. I guess the state could retract the increase if it wanted. The bright side of it is that the retirees will get a bigger check, the longer it drags out in Nardulli’s court.

    @Steve Schnorf 10:31 pm - I agree, with the stipulation that the retiree premiums, deductibles and coverage will be reasonably similar between current employees and retirees. If the state were to try to tier it to stick it to the retirees (or the appearance thereof), a basis for another lawsuit I would think.


  213. - RNUG - Monday, Jul 7, 14 @ 10:59 pm:

    - facts are stubborn things - Monday, Jul 7, 14 @ 10:19 pm:

    Re the July increase, first, someone would have file a request to ask for a stay. Even then, I’m not sure it would automatically be granted given the existing escrow arrangement. We’ll just have to keep our eyes on Judge Nardulli’s court for requests to be filed and orders to be issued. Unless Nardulli issues a summary judgement for the plaintiffs on his own, this could drag out for a while with hearings to (re-)evaluate the claims and evidence in front of the court before any ruling gets issued. I think I said yesterday that, assuming the trail court now rules in the retirees’ favor, we might get our money back in time to do Christmas shopping.


  214. - RNUG - Monday, Jul 7, 14 @ 11:03 pm:

    - steve schnorf - Monday, Jul 7, 14 @ 10:31 pm:

    I fully agree with you with one qualification … that the changes in deductibles, co-pays, etc. are consistent with changes made to the employee health insurance. Think the ISC implied that was their thinking from some of the questions during oral arguments.


  215. - steve schnorf - Monday, Jul 7, 14 @ 11:11 pm:

    RNUG, so then is forcing all 65+ retirees into Medicare Advantage plans a diminishment, since it’s not what employees get?


  216. - steve schnorf - Monday, Jul 7, 14 @ 11:13 pm:

    even over 65 employees


  217. - DuPage - Tuesday, Jul 8, 14 @ 12:01 am:

    @Mama 11:42am =The local school districts have no extra money to pay teachers pensions.=

    Several thoughts,

    It would be phased in over a number of years.

    The school boards would give less in raises.

    The state could lower the percent of income tax money they allocate to municipalities and increase the schools the same amount.

    The “spend it all before July 1 so they don’t think we can cut back next year” attitude might need to change. Many times if a budget is ordered trimmed, teachers end up having to bring in soap, paper towels, and TP for the kids. Meanwhile large amounts are spent on things like new furniture for the principals office when the existing furniture is perfectly useable.

    Some places don’t stop with unneeded furniture, (College of DuPage), they seem to build buildings whether they need them or not, just to use up the money.

    I think they could find enough “extra” to cover 1 or 2 percent, and tax increases that would happen due to increased property values could be partly applied to cover the pensions.


  218. - Arthur Andersen - Tuesday, Jul 8, 14 @ 12:22 am:

    Schnorf, that Medicare Advantage question is a good one. Will be interesting to see if that one ends up in litigation. Our former agency has I suspect banked a lot of savings from that program.


  219. - facts are stubborn things - Tuesday, Jul 8, 14 @ 7:27 am:

    During oral arguments on the health care premiums, justices asked questions about changing copayments and deductibles etc. My interpretation was that the attorney for the plaintiffs conceded that some adjustments over time are reasonable and have always been a part of any health care package. he did, however, state to the justices that if copays and deductibles were used in a way as to diminish in a “back-door” type of manor then we may very well find ourselves back in front of the court.


  220. - facts are stubborn things - Tuesday, Jul 8, 14 @ 7:46 am:

    Sometimes in situations like this it is best to ask what do we know for sure. We do know that the supreme court in a 6-1 ruling clearly stated that health care premiums (each year being 5% of premiums in retirement) are a pension benefit and therefore covered under the pension clause of the IL constitution and afforded the protections of that clause. The justices in their ruling made it clear that the protection of the pension clause means exactly what it says and that in situations where there is doubt it will be ruled liberally in favor of the pensioner. Also, in their opinion they indicated that the purpose of the pension clause was to protect pensioners because the state was not funding the pension system and under the rules in 1970 the statute could be changed and the state might not pay the benefits owed. The justices made it clear in their ruling that the state’s duty to meet their pension obligation was the key issue and not the adequacy of the funding. We also know that the ISC has ruled that “benefits” derived from membership in a pension system are protected and not just the annuity earned based on a given formula. We also know that the ISC returned the case to the lower court to hear the arguments and that court now knows the law of the land is that health care premiums are protected by the pension clause. We know the pension law is on hold and the lower court will rule on that case probably early next year. I think the police powers argument is about all the state has left — perhaps in both the health care and the pension issue — and we will have to wait and see if the courts throw them any bones in that regard. Based on the recent ISC ruling, it is clear the state is going to have a really really hard time overcoming the pension clause of the constitution with pension underfunding issue much of their own making. The court has ruled/spoke to the funding issue on at least two occasions and both times they essentially said we are not going to get into the legislative branches business and tell them how to fund the pensions, just know you have to pay for them. A huge battle has been one, but the war is not yet over. It may very well be a huge turning point, but no one should count their chickens before they are hatched. I do however feel it is time to know how many eggs you currently have. :)


  221. - steve schnorf - Tuesday, Jul 8, 14 @ 7:49 am:

    AA, I haven’t had any problems with the Medicare Advantage program, so I mainly ask out of curiosity, not particular desire for change


  222. - Howard - Tuesday, Jul 8, 14 @ 7:52 am:

    Renug, I retired downstate from teaching and belong to the TRS. Will I get a refund for my health insurance primium? I am certain the amount was raised last year.


  223. - Howard - Tuesday, Jul 8, 14 @ 7:57 am:

    In addition, I have always paid around $200 a month for my insurance. Was it unconstitutional for me to pay this primium? Now thats alot of money.


  224. - facts are stubborn things - Tuesday, Jul 8, 14 @ 8:02 am:

    @ steve schnorf - Monday, Jul 7, 14 @ 11:11 pm:

    =RNUG, so then is forcing all 65+ retirees into Medicare Advantage plans a diminishment, since it’s not what employees get? =

    I love the logic and a very good question. I would offer that in the case of Medicare Advantage plans it might not be so much that employees don’t have the same plan, but rather is the plan qualifying and ample meeting coverage requirements and essentially equaling the Medicare plus state supplemental arrangement that we use to have. I think RUNUG was pointing out that retiree health care is basically tied to the same coverage (certainly true if under age 65). I believe for a long time when a retiree turned 65 they use to go on the federal Medicare system and use to use the states programs as their supplemental. The current advantage plan is, as I understand it, a way to do essentially the same thing but only fully under the states umbrella but that umbrella must meet minimum standards (at least I think so) to qualify or to take the place of the old arrangement of medicare as primary and state as supplemental.

    Always enjoy your posts along with RUNUG and many others.


  225. - RNUG - Tuesday, Jul 8, 14 @ 8:24 am:

    - steve schnorf - Monday, Jul 7, 14 @ 11:11 pm:

    I kind of think so, but no one (that I know of) has filed suit on it. If the State manages to offer a Medicare supplement to original Medicare, then it might be okay. Even if the state doesn’t, it could be argued that the Medicare class are different. Right now the under 65 retirees are being treated the same as employees.


  226. - RNUG - Tuesday, Jul 8, 14 @ 8:26 am:

    Howarrd,

    Teachers are in a different category. There were never promised free health insurance on retirement. That is why you have the TRIPS program.


  227. - kimocat - Tuesday, Jul 8, 14 @ 8:47 am:

    A little off-topic, but can anyone on Medicare Advantage tell me how quickly their bills have been paid?


  228. - facts are stubborn things - Tuesday, Jul 8, 14 @ 8:59 am:

    RNUG,

    Since the ISC has ruled that health care premiums - 20 years free premiums - are protected under the pension clause and that the clause means exactly what it says, how would the state be able to treat the health care premiums in retirement any differently then pensions? I am focusing on current employees since I choose to believe that the ruling has taken those retired off the table. If we don’t think a current tier 1 employee can have their pensions diminished for their retirement, why wouldn’t the same logic hold for health care? I read two things in the ISC opinions that made me think there might be a very small crack or opening for the state in regards to current employees, but I am now thinking not?


  229. - facts are stubborn things - Tuesday, Jul 8, 14 @ 9:04 am:

    RNUG,

    to follow up on what I posted above, do you believe that a tier 1 employee could have the pension that they have been a member in changed going forward. For example, 20 years under current system and the next 10 years under the pension law passed December 2012? If not, what makes health care any different? I am struggling with this and am asking the questions to help form a logic flow for myself. If health care has been handled differently in the past did the recent ISC ruling trump that?


  230. - Interested - Tuesday, Jul 8, 14 @ 2:02 pm:

    - facts are stubborn things - Monday, Jul 7, 14 @ 10:17 pm:
    - facts are stubborn things - Tuesday, Jul 8, 14 @ 8:59 am:
    - facts are stubborn things - Tuesday, Jul 8, 14 @ 9:04 am:

    We need you RNUG! Whaddaya think?


  231. - RNUG - Tuesday, Jul 8, 14 @ 9:02 pm:

    Sorry. hope you’re still tracking responses. I took the grand kids to the ST Louis Transportation Museum and the St Louis Zoo today. Just got home.

    OK. It’s been made clear by previous ISC rulings that the pensions can’t be diminished by rule changes. My take on that is the pension contract is in effect, more or less, from day 1.

    On the premium free health insurance, that is covered by a state statute that reads like a contract, but it has multiple parts. To “earn” the premium free health insurance, you have to fulfill two parts: (a) work 20 years and (b) retire (implied under the existing rules). Until you retire, you have only fulfilled one of the two requirements; that part ‘b’ is where I see a crack existing.

    Remember, this is the first time the ISC has really ruled the health insurance is covered. Plus the ISC has as precedent the 8 yr / 20 yr change which did incorporate a choice, something contract modification requires. If you were already retired, it did not affect you (presumably because you had met both requirements). If you were not yet retired, you had to choose (kind of after the fact when they clarified the change in additional legislation) but you did have a voluntary choice of 8 or 20, depending on what else you wanted. The justices asked a number of questions about that change during the arguments.


  232. - facts are stubborn things - Wednesday, Jul 9, 14 @ 8:08 am:

    RNUG,

    That is so nice of you to check back to the old blog and answer my questions. Building on that very logical answer, do you believe that any change - if allowed for current workers - would have to involve a choice or consideration? Does the fact that the ISC found that health care is protected by the pension clause mean that any choice would have to include the current 20 years free premiums? I totally get the two part logic, but am struggling with how it can be diminished once the ISC said it is protected by the pension clause and not under contract law or other legal principles? Would you say the cut off for any “crack” be current workers vs retied or current workers vs those that retired prior to the law going into effect on July 2013? Thanks again

    Hope you had fun at the Zoo with the grandkids…I bet they loved it!


  233. - facts are stubborn things - Wednesday, Jul 9, 14 @ 8:13 am:

    RNUG

    Just to follow up, couldn’t one argue that pensions take two parts also. Part 1 being the years of service and age requirements and part 2 being to retire. If health care is protected as part of the pensions clause then it was because health care is a benefit that flows from being in the pension system — seems like the health care benefit would start from day 1 as well. Will be very interesting to we how the judge handles this case in light of the strong ISC ruling. As always thanks for staying so on top of the proceedings.


  234. - RNUG - Wednesday, Jul 9, 14 @ 9:21 am:

    - facts are stubborn things - Wednesday, Jul 9, 14 @ 8:13 am:

    Yes, Like Eric Madiar on the pensions, I believe any change would require a voluntary choice and some kind of consideration. I don’t believe Cullerton’s former SB-2424 (think that was the number) offered a voluntary choice.

    As to comparing the pension rules and the health insurance rules, I thought about that parallel while I was writing the previous response. It pretty much comes down to the body of previous actions and rulings; we have a lot to guide us on the pensions being protected from involuntary actions by the government employer but the only real example we have on the insurance did allow the voluntary change. Until there are some clarifying rulings, that is the best we have.


  235. - Interested - Wednesday, Jul 9, 14 @ 11:57 am:

    Dear RNUG, Thanks so very much for returning to these questions!! Your, ‘2 points’ explanation really helps me understand. I appreciate your sound reflections and perspectives. Thanks also to Public Servant for asking good questions, too!
    Best, Interested


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