115 Comments - Pepe Silvio - Tuesday, Apr 14, 15 @ 10:10 am: “We need to make decisions on pension reform based on core principles of mathematics, law, and basic fairness” That takes just about every change in the plan design off the table unless the Constitution is amended to allow for it, particularly when the SCOIL invalidates SB 1. - Anon - Tuesday, Apr 14, 15 @ 10:12 am: Save “$2 million a year”? Surely that’s a typo in the original article… That’s a rounding error. - Reality Check - Tuesday, Apr 14, 15 @ 10:14 am: Cue response from Rauner admin that the TRS, SURS and IRS are corrupt special interests, and that the independent analysis should be performed by Citadel. - illinifan - Tuesday, Apr 14, 15 @ 10:20 am: Love the resolution but it also provides a big “huh” moment. The Tier 2 was done with a financial impact analysis which now obviously did not include whether it was on the right of Social Security rules. If that was included in the analysis up front it might have shown that there was not going to be a $64 million savings but rather cost the state more since the state would need to start making Social Security contributions for all Tier 2 employees. This is the problem when you have people spouting recommendations for changes when they fully do not understand what is being changed. I am glad this bill is moving forward since it is time a full analysis is done. - Makandadawg - Tuesday, Apr 14, 15 @ 10:21 am: Tier 2 is an embarasement and needs to be fixed. It is not the model for the future. - A guy - Tuesday, Apr 14, 15 @ 10:22 am: At least the conversation is advancing. - Jocko - Tuesday, Apr 14, 15 @ 10:24 am: ==”[I] have explained that to many government employees and teachers and they get that, they can support that?”== Which employees…the ones in your imagination or actual human beings? - facts are stubborn things - Tuesday, Apr 14, 15 @ 10:26 am: Based on the plain reading of the pension clause, the underlying intent and history of the clause, along with years of case law and decisions by this very court, would tell us that they will find SB1 unconstitutional. If that in fact is the case, then forcing even current workers into a lessor (may not diminish or impair) pension system would be a non starter. From strictly a basic fairness issue, I think most people would be more comfortable with this type of approach because it does not effect benefits already earned…retirees not effected etc. For this plan to even have a chance (stress any chance) it needs to have a component that would allow each current employee under tier 1 to decide whether to take the deal or not. It might be something where in exchange for job security or minimum raises etc. they could accept the tier 2 going forward or take the other option to stay in tier 1 and forgo some type of future guarantees while employed etc. I think you are going to have to adhere to contract principles and the option to keep what you have needs to be on the table. Something could be offered to retirees that might exchange the current 3% compounded annual increase for something tied to inflation along with a guaranteed to never have pensions taxed or an increase in survivor benefits for example. I might accept a 2% annual increase if my wife (assuming I preceded her) would get 65% of my pension and not 50% etc. etc. Once the ISC rules, everyone needs to say ok we all know what is legal and fair hear — now lets put our heads together and figure out legal and fair options for people that will help the system and allow people the OPTION of selecting something that might fit the better. The problem of course with all of this is everything, and I mean everything, has to play out through the lens of politics…perhaps the ISC ruling will start to help shape that. - NewWestSuburbanGOP'er - Tuesday, Apr 14, 15 @ 10:27 am: …and I have explained that to many government employees and teachers and they get that, they can support that,” said Governor Rauner. Who are these government employees? The ones Rauner just appointed to their positions? I don’t know one teacher, cop, firefighter, public works employee or any state employee who agrees with this nonsense. As a matter of fact, all the ones I know have made it a point to tell me how sorry they are for voting for this guy. They even said I could say..”I told you so” - archimedes - Tuesday, Apr 14, 15 @ 10:31 am: I’m guessing many don’t fully understand Rauner’s proposal. This would be a “hard freeze” for current pension credits and salary levels. So, if you are now 40 years old, your pension that you would get at age 60 (20 years from now) would be your current service credits times your 4 year average CURRENT salary - not the salary you would be earning at the END of your career (at age 60) as the current formula works. This action would reduce the unfunded liability because the actuarial accrued liability is current earned service credits multiplied against the PROJECTED 4 year average salary at the time you retire. Then any future service credits will be based on Tier 2, will be multiplied by average 4 year salary at the time your retire (at age 67). By the way - the Tier 2 pension for the General Assembly and the Judges systems includes annual 3% (or CPI, whichever is less) COMPOUNDED increases. The TRS, SURS, and SERS pension for Tier 2 includes annual increases of 1/2 of CPI NOT compounded - to a maximum of 3% (if CPI were 6%). - facts are stubborn things - Tuesday, Apr 14, 15 @ 10:35 am: I want to say that I suspect when all the dust settles, the fix will be to get rid of the pensions ramp and refinance the pension debt. There is nothing intrinsic within the pension system itself that is a problem — it is all about the pensions DEBT. I am guessing that a part of the contract negotiations might be able to include a higher contributions by employees into the pension system as part of an overall contract. Illinois has a structural deficit and all of this comes down to a revenue problem. Our economy is not being taxes in a way to grow revenue fast enough to stay up with the costs. For 50 years or so, the pension system has been the way we have gotten around this issue — don’t pay into the pension system and avoid higher taxes or cuts in services. This is not a pension problem it is a debt problem caused by a structural deficit. - illinifan - Tuesday, Apr 14, 15 @ 10:36 am: I know retired police who voted for him, that was because he promised not to touch their pensions, just everyone elses. I think we are seeing a pattern from Rauner….say what you have to so you get what you want and then not deliver what was promised. - Mr. B.A. - Tuesday, Apr 14, 15 @ 10:36 am: Wait, under my understanding, even if they change the constitution language, more than likely the courts still will say that the state will have to pay Tier 1 people their Tier 1 future benefits. Or am I wrong? - archimedes - Tuesday, Apr 14, 15 @ 10:41 am: As a follow up - I think it is disingenuous to say that the Rauner plan preserves benefits already earned. Under the Rauner plan, the service credits earned are not applied to ending career salary levels. This is a big deal. If he wants to preserve already earned benefits, his plan should freeze service credits under Tier 1, but apply those credits to end of career salary levels at the time of retirement (age 60 for Tier 1). After all, the normal cost (in TRS, employees are paying a little more than half of the normal cost) reflects this level of benefits as service credits are earned. New legislation could give employees the option of switching to Tier 2 or a defined contribution plan for all future service credits (with retirement for this portion being available at age 67). This selection would be voluntary. You could incentivize the selection to a lest costly plan by reducing health insurance subsidy for those employees that choose to stick to the Tier 1 plan. Since this is not retiree health insurance, a change in subsidy would not be covered under the pension clause. However, would still need an amendment to the pension clause since the current language protects earned benefits as well as the right to continue to earn that level of benefits for future work. - Nieva - Tuesday, Apr 14, 15 @ 10:42 am: If you are a employee that is a part of the 2.5 formula you have to make it to 20 years to get this benefit. Anything less that that and you get 1.67. So what will happen to a highway maintainer that has 19 years in his job if this passes? How about the teacher that only draws 2.2 and no social security? Put him or her to 1.67 I think would break the threshold and force the school system to pay into social security for this employee. What a mess if this is enacted. - JohnTwig - Tuesday, Apr 14, 15 @ 10:42 am: As a long-time retiree under SURS, I heartily agree with Senator Biss when he says “We need to make decisions on pension reform based on core principles of mathematics, law, and basic fairness.” I would also add one more characteristic – make it a good deal for both worker/retirees and taxpayers. I have even gone to the trouble of creating a model of how such a system could work. This model uses real mathematics – which I am sure Senator (Professor)Biss is well aquainted with. Try out this model yourself at: http://illinoispublicpensions.com/ John Terwilliger, Charleston, IL - Chicago Cynic - Tuesday, Apr 14, 15 @ 10:51 am: Pish Posh!! Math is for little people. The governor don’t need no stinkin math. Kudos to Daniel and Elaine for forcing this issue. He proposed a bogus budget and they would like to check his work on pensions before gutting our pension system. - relocated - Tuesday, Apr 14, 15 @ 10:52 am: Archimedes. We understand the Rauner proposal as you’ve explained. Its still a considerable diminishment of an employee’s pension benefit. Removing the end of career salary average means inflation will eat a good portion of the acried benefits value. A 40,year old employee may have 20 or more years of financial planning based on tjr promised pension benefit being in place. - VanillaMan - Tuesday, Apr 14, 15 @ 10:52 am: Because we have not made the legislators fund the pension, we are in a tougher point now that Boomers are retiring en masse. Had they kept up with their fiduciary responsibilities we would not be having a crisis this large. We always knew that when the Boomers retired, there would be a huge debt to pay them as they died off. In another twenty years or so, this crisis will abate as that generation dies off. What the GA did was make the State double-screwed by their irresponsibility. Then they irresponsibly passed a bill which was unconstitutional. This was above and beyond passing a Tier system which failed to pass minimum Social Security standards. The men and women who have ignored this slow-motion disaster from the GA floor never imagined time moving forward. They never considered a future beyond their own term in office. Now that it has arrived, we have discovered that they have squandered the money they took, squandered any deliberation time afforded them, and handling this issue with amazing incompetence. Finally, we got Governor Ebenezer who hates anything that costs a buck that isn’t located in an off-shore tax haven. What I say is keep this joke of a heartless governor out of this while the GA muddles through and refinances the pension debt for the next 30 years. When the last Boomer is buried, the crisis will be over. Lets not destroy our constitution and our communities because of the bad planning of a single generation. - Bobbysox - Tuesday, Apr 14, 15 @ 10:52 am: ============================================== Wait, under my understanding, even if they change the constitution language, more than likely the courts still will say that the state will have to pay Tier 1 people their Tier 1 future benefits. Or am I wrong? ============================================== I agree with Mr. B.A. Because the Illinois Constitution granted the right to protected pension benefits at the time of hire in the pension system, no change in the Constitution can deprive them of that right. What the change would allow is that employees hired after the Constitutional change could have their pension benefits reduced anytime during their career. Of course, that wouldn’t help because Tier 2 is already in place for them, which is not an economic problem. Others will disagree. But guess what. It means years of litigation regardless! - Wordslinger - Tuesday, Apr 14, 15 @ 10:59 am: Rauner needs to cut some testimonial spots with all those government employees and teachers who are on board with his “plan.” - Pepe Silvio - Tuesday, Apr 14, 15 @ 10:59 am: =By the way - the Tier 2 pension for the General Assembly and the Judges systems includes annual 3% (or CPI, whichever is less) COMPOUNDED increases.= Hey Archimedes, Tier 2 COLAs for Judges and GARS is actually with simple interest 40 ILCS 5/2-119.1(b-5) not compounding interest. - Norseman - Tuesday, Apr 14, 15 @ 11:02 am: === “… I have explained that to many government employees and teachers and they get that, they can support that,’ said Governor Rauner.” === Sure Sonny, they’re joining arms with you and singing Kumbaya. - He Makes Ryan Look Like a Saint - Tuesday, Apr 14, 15 @ 11:07 am: Here is the Major Impact: 15,000 people are at the rule of 85 currently (in SERS this does not count SURS). The potential of losing over 10,000 plus staff in the swipe of a pen is very high and it will impact all state operations for the next 7-10 years. - Sam - Tuesday, Apr 14, 15 @ 11:09 am: Facts@10:26 I assume you mean change the default from 50% to 65%.If not, currently there is a way to change what the surviving spouse will receive…of course is a cost involved. It is referred to as reversionary pension or something like that wherein, for a specified $ amount you can increase the spousal payout a specified % up to the max 100%. Of course the pension payout is reduced by the amount required for the reversionary election. I am sure I didn’t do a good job of explaining the reversionary election. - AnonymousOne - Tuesday, Apr 14, 15 @ 11:12 am: When people talk about the boomers retiring en masse it conjures up a vision of hoardes of seniors by the millions. Aren’t these people who retire replaced by employees now contributing to the funds? Pension is taken out but some of it replaced by the replacement? And if Rauner can get such appeasement from workers he’s spoken with, maybe he can get them to hand over their personal bank accounts and valuables to help the cause since they’re such servants, delighted to help in any way. possible. - Juice - Tuesday, Apr 14, 15 @ 11:12 am: Just to add to what archimedes has said, the impact of his proposal would actually be to reduce a worker’s initial annuity below what a tier two employee who works the same number of years with the same salary. Glad to see we now have an understanding of what the Governor considers fair. - walker - Tuesday, Apr 14, 15 @ 11:23 am: Elaine Nekritz and Daniel Biss are being very circumspect with their language. They know this proposal seems to require greater expenses for the near term, and Rauner is not being open about that. They just want to get the numbers on the table. Why should Rauner need a Resolution from the legislature to simply put his arithmetic on the table? If he’s got the numbers he can show them today. That’s beside any legal issues. - Six Degrees of Separation - Tuesday, Apr 14, 15 @ 11:25 am: That Biss and Nekritz would have applied the same due diligence to SB 1. LOL. - Outside the box - Tuesday, Apr 14, 15 @ 11:28 am: The state should simply pass a law for a one time $100 billion bond pension fund barter and amend the criminal statue for Fraud on a Government Entity. The historical average price of Illinois bonds could be used to determine the number of bonds printed. The state could simply print and register the bonds and place them in the pension fund with a flat guaranteed interest rate say 2.5% subjecting the governor and legislatures to forfeiture of office for failure to pay the pension payment. - Upon Further Review - Tuesday, Apr 14, 15 @ 11:29 am: Heaven forbid that legislation should be enacted without considering the consequences. Take for example, the adjunct lecturers at Oakton Community College who are being dumped because of the prior Biss law which penalizes colleges for hiring SURS annuitants who earn more than so much per year. Oakton looks to be dismissing fifty faculty compliments of State Senator Biss. The law was meant to curb the fat cats, but these are little people being punished. - Rod - Tuesday, Apr 14, 15 @ 11:31 am: The proposed resolution that Rich linked is thoughtful and I hope it is very rapidly adopted and a similar resolution passes the House. The idea that Governor Rauner is going to rapidly convince three-fifths of the General Assembly to approve his proposed resolution to the Illinois Constitution on ARTICLE XIII SECTION 5 is relatively absurd in itself. But add to that that the Constitution would not allow for a public vote on his amendment if it was passed by the Assembly today until October 2015. The Governor in the last couple of days has said repeatedly that his “Illinois Turnaround Plan” has to be enacted, including the pension aspects of it, before revenue is discussed. The Governor during an interview with Charles Thomas yesterday continued his demand for pro-business reforms before any discussion of taxes to help resolve the state’s budget deficit. This entire idea is absurd as a basis for getting a budget approved. Does Jack Franks think so too and will he vote to override a veto if the Assembly votes up a responsible budget with moderate tax increases? Or will Rep Franks just let the State go dysfunctional in that situation. - Name/Nickname/Anon - Tuesday, Apr 14, 15 @ 11:36 am: The Tier 2 federal compliance issue is an easy fix. The problem is that the SS maximum salary base is 117K and the Tier2 is 112K (and growing slower than the SS max). If they just align the Tier 2 maximum to the SS maximum, the compliance issue will go away. - forwhatitsworth - Tuesday, Apr 14, 15 @ 11:39 am: Some of the comments regarding pension “reform” (theft) are more sugar-coated than others, especially those from Rauner, Biss and Nekritz, but every statement is of the same nature. They all reflect the attempts of the politicians to probe the possibilities where they might be able to weasel out of their constitutional responsibilities and provide cover for their past indiscretions, deceitfulness and incompetence. There are many suggestions floating around in public view that offer realistic and honorable ways to fix the debt problem without having to destroy peoples’ lives under the guise of pension reform. - VanillaMan - Tuesday, Apr 14, 15 @ 11:50 am: Aren’t these people who retire replaced by employees now contributing to the funds? Wow. Where have you been? No. For the past twenty years, the State has been dramatically shrinking. Illinois has one of the very highest ratios of population to state workers in the United States. We no longer need paper pushers in the age of the smart phone. Boomers are the last of a breed of office worker who knows what a typewriter was. They’ve been replaced by apps. - Arthur Andersen - Tuesday, Apr 14, 15 @ 12:05 pm: Anon 11:36, Wrong. There is much more wrong with Tier 2 than a simple mismatch of salary caps with SS. If that was the case, the problem might have already been corrected. I’m not even sure that the salary caps issue is even relevant to the big problems with Tier 2. On another topic, if Tier 1 benefits were frozen without a very generous 401k replacement or reduced contribution rate, the Funds violate Federal law (IRC) which says in so many words that contributions collected must be proportional to benefits paid. - Shemp - Tuesday, Apr 14, 15 @ 12:11 pm: In any other world, I get this push of the Gov’s (not to say I completely back it), but until we all decide to completely ignore the State Constitution, I don’t understand why he wastes good energy chasing after something that couldn’t appear more unconstitutional. - Ghost - Tuesday, Apr 14, 15 @ 12:11 pm: The anti union people have controlled the media on this issue by getting everyone to accept that this is pension reform. It is not pension reform, it is pension robbery. He state has ripped off the pensions and now wants to get away with it. If the press called this enron style pension robbery cover up legilatuon people would look at it differently. Why is it illegal for enron to steal pension money and cover it up, but it it ok for the State? And why does the media support this concept by continuing to call this reform? - RNUG - Tuesday, Apr 14, 15 @ 12:13 pm: == facts are stubborn things == Before saying you would be for a survivor’s benefit increase, you might want to calculate the effect under the various pension offset rules that also kick in if Social Security is part of the survivor benefits. It can get tricky. Also, limiting future raises may well run afoul of some of the previous diminishment rulings; that item may not legally be on the table as consideration. - RNUG - Tuesday, Apr 14, 15 @ 12:14 pm: == I want to say that I suspect when all the dust settles, the fix will be to get rid of the pensions ramp and refinance the pension debt. == That, and some increased revenue DEDICATED to paying off the arrears. - RNUG - Tuesday, Apr 14, 15 @ 12:16 pm: == … more than likely the courts still will say that the state will have to pay Tier 1 people their Tier 1 future benefits.” That’s the way I understand it right now. - Andy S. - Tuesday, Apr 14, 15 @ 12:17 pm: Rauner’s plan has no impact on those already retired. Unless he also proposes to change the calculation of the effective rate of interest in SURS (as SB1 did in a way that will almost certainly be found unconstitutional), it will have very little impact on most SURS members because existing balances will compound at current rates. As for the other plans, it will have an impact based on freezing the final average 4-year salary, but again, given the current environment of - Andy S. - Tuesday, Apr 14, 15 @ 12:19 pm: My previous post got cut off. Here it is in full: Rauner’s plan has no impact on those already retired. Unless he also proposes to change the calculation of the effective rate of interest in SURS (as SB1 did in a way that will almost certainly be found unconstitutional), it will have very little impact on most SURS members because existing balances will compound at current rates. As for the other plans, it will have an impact based on freezing the final average 4-year salary, but again, given the current environment of - RNUG - Tuesday, Apr 14, 15 @ 12:26 pm: Rauner spent his entire life finding ways around existing law to perform bust-out schemes … and that’s what he is trying to do on the pensions. We (but not I!) thought we elected a businessman to try to solve Illinois’ problems … but what we actually got was a one trick pony. - CharlieKratos - Tuesday, Apr 14, 15 @ 12:28 pm: RNUG, maybe you’ve said something about it and I missed it, but what are your thoughts on the legality of a fire/re-hire? - Dirt Diver - Tuesday, Apr 14, 15 @ 12:34 pm: =Take for example, the adjunct lecturers at Oakton Community College who are being dumped because of the prior Biss law which penalizes colleges for hiring SURS annuitants who earn more than so much per year. Oakton looks to be dismissing fifty faculty compliments of State Senator Biss.= Biss amended that law once again to exempt those earning an annuity of less than $10K per year. Oakton should have enough latitude to keep those retirees employed. It’s hard for me to sympathize for retirees that return to work. If they wanted to continue to work, they should not have retired. Most retirement systems under the IL pension code prohibit a retiree from working one day for an employer covered under the system from which he or she is drawing an annuity. SURS stakeholders are the most spoiled of any system and have exploited SURS through out the years. - RNUG - Tuesday, Apr 14, 15 @ 12:35 pm: == what are your thoughts on the legality of a fire/re-hire? == Based on past practice, that won’t work. After Tier 2 was in effect, a friend was hired by the State. Because they had previously worked for the State many years ago (and not taken their contributions out), their pension eligibility date was set to the initial hire and they were placed on Tier 1. So fire them today and hire them back tomorrow, they are still under Tier 1. - Wensicia - Tuesday, Apr 14, 15 @ 12:36 pm: ==Rauner needs to cut some testimonial spots with all those government employees and teachers who are on board with his “plan.”== That would be the same three that gave Rauner standing with the fair share challenge. - Liberty - Tuesday, Apr 14, 15 @ 12:36 pm: CharlieKratpos. Members are vested into the pension systems upon hire according to the supreme court. If someone is fired, they are still a member of the pension system. - G'Kar - Tuesday, Apr 14, 15 @ 12:38 pm: If I understand Tier II correctly, there are severe penalties for retiring before 67. Under Rauner’s plan, if everyone is switched to Tier II would they then have to work until 67 to get their additional pension benefits? - Dirt Diver - Tuesday, Apr 14, 15 @ 12:41 pm: =what are your thoughts on the legality of a fire/re-hire?= In addition to what RNUG, the language that defines who the Tier 2 plan applies to states, “The provisions of this Section apply to a person who, on or after January 1, 2011, first becomes a member or a participant under any reciprocal retirement system or pension fund established under this Code.” RNUG - even those that took their refunds would retain Tier 1 status, at least that’s how the systems are currently administering it. - Dirt Diver - Tuesday, Apr 14, 15 @ 12:44 pm: =If I understand Tier II correctly, there are severe penalties for retiring before 67. Under Rauner’s plan, if everyone is switched to Tier II would they then have to work until 67 to get their additional pension benefits?= No one outside the administration has seen the language, but the assumption is those impacted by the proposal would be able to retire under the T1 requirements, but the Tier 2 portion would not be payable until age 67 (or as early as 62 with 6% reduction per year under age 67). - HangingOn - Tuesday, Apr 14, 15 @ 12:47 pm: ==Aren’t these people who retire replaced by employees now contributing to the funds?== I was a temp for 7 years, worker for almost 2. I have seen many people retire (2 in my office alone in the last 5 years) and their positions have not been filled. We were actually told 2 years ago there were no plans to fill them. One division has 2 people trying to cover 14 counties, plus sharing 4 other counties that were under someone else that retired in another office 2 years ago. So no, nobody is being put in those positions to contribute to the coffers. - Pepe Silvio - Tuesday, Apr 14, 15 @ 12:55 pm: =The potential of losing over 10,000 plus staff in the swipe of a pen is very high and it will impact all state operations for the next 7-10 years.= I fail to follow your logic. Because he’s freezing what’s already been earned, I don’t see a major incentive to retire before a certain date. Also, many of these that are eligible to retire need to retire. A good chunk are hanging around doing minimal work and skating by. I would argue that quite of few of these could be replaced by younger, cheaper, and more productive employees. There may be a short hiccup with a loss of institutional knowledge, but it certainly would not take 7-10 years to make up for that loss. Maybe 7-10 months, but not 7-10 years. - archimedes - Tuesday, Apr 14, 15 @ 12:59 pm: Pepe Silvo, @10:59AM. According to the COGFA annual report on pensions, for year ending 06-30-2014, page 4 of Section 1, JRS and GARS have compounded annual increases of full CPI or 3%, whichever is less. - RNUG - Tuesday, Apr 14, 15 @ 12:59 pm: - Pepe Silvio - You don’t have a clue … Look back to 2002 and 2004 when the State lost a similar amount of employees and institutional knowledge. They still haven’t recovered from that one. The people that could leave are about they only people who still understand have things are supposed to be done under the rules, regulations, statutes and consent decrees. - Demoralized - Tuesday, Apr 14, 15 @ 1:01 pm: ==There may be a short hiccup with a loss of institutional knowledge, but it certainly would not take 7-10 years to make up for that loss.== The state still hasn’t made up for the mass exodus of people with institutional knowledge from the ERI under George Ryan. - Pepe Silvio - Tuesday, Apr 14, 15 @ 1:07 pm: Archimedes, I’m sorry, I forgot that a COGFA publication trumps state law. According to 40 ILCS 5/2 119.1(b-5) clearly states that the GARS Tier 2 pension receives simple interest COLA. I was incorrect about Judges, they receive a compounded cola for T2. - Arthur Andersen - Tuesday, Apr 14, 15 @ 1:13 pm: Andy S., no one knows since we haven’t seen language, but I don’t think it’s safe at all to assume that the richest benefit in State Pensions, that being SURS TIer 1 Money Purchase, is going to be left untouched while everyone else gets whacked. - Arthur Andersen - Tuesday, Apr 14, 15 @ 1:18 pm: Pepe, while we’re slinging anecdotal evidence, mine is that a high percentage of those “doing minimal work and skating by” are the people hired by Rod, not the old timers with real institutional knowledge RNUG and Demoralized are correctly identifying. - Pepe Silvio - Tuesday, Apr 14, 15 @ 1:19 pm: RNUG, Anyone that has ever worked in a properly functioning state agency can tell you that institutional knowledge should not vanish with the loss of employees. Any agency managing its risks appropriately should have a solid succession plan in place for events like this. I’m not suggesting that the Ryan-era ERI did not cause issues. What I am suggesting is that given historical events, best practices, and modern management no-brainers, many of these state agencies should have taken the appropriate steps to implement a succession plan which includes the elimination of the “hording of institutional knowledge” by the retirement eligible employees. - VanillaMan - Tuesday, Apr 14, 15 @ 1:26 pm: I’ll try to say this carefully because it could come off as insulting, and I have nothing but respect for my elders. I’m really sorry to report that institutional knowledge isn’t valuable when it is rooted within an obsolete pre-21st century office process. We are secretly pleased when one of our senior employees retire. We love them and all, but over the past decade, many had to be constantly assisted in order to function with the office technologies that incoming employees instinctively know. - RNUG - Tuesday, Apr 14, 15 @ 1:32 pm: Pepe, Pepe … I can tell you from personal experience I left a ton of documented procedures, etc. … which the next person promptly threw out because the “knew better”. The state ended up hiring me back to recreate that institutional knowledge, not once, not twice, but three times …because whoever I trained ended up moving on and trashing the documentation and procedures. I’ve railed against this before, but the union bidding and seniority rules end up encouraging job hopping to earn more money and actively work against the retention of institutional knowledge. When seniority trumps knowledge, you just need to learn enough to get by until you bid on the next job. And as far as succession plans go, I and others who retired with me tried to set up such a plan for years. We all saw ourselves retiring in the 2002 - 2007 time frame before the ERI’s came along. There was never any money to do the proper staffing and training for a succession plan. That agency finally hired the succession staff 9 to 12 months after we all retired … and then had to try to hire us back to train them (see above as to how that worked out). The situation has not gotten any better since then, even fewer people doing more work. I still have friends and relatives in various agencies, and the stories they are telling me are not ones of improvement. - AnonymousOne - Tuesday, Apr 14, 15 @ 1:35 pm: Got it! That state workers are not being replaced and that numbers are at record low numbers. Shows the confusion when people talk about pension fund members. In Education (TRS) so far, mainly a retired teacher is replaced (unless you look at the future where people like Rauner would like to have 45 students/teacher and unless you are talking about declining enrollment). So for TRS at least, workers retire and the replacement is contributing. Many people out there think that “state pensions” are all the same thing. When accused of having free lifelong health insurance by a neighbor, I had to explain that this has never been nor will ever be the case for a teacher. Didn’t believe me. So there you have the willful ignorance of some out there, no matter how much information is provided. It suits some to believe the most egregious examples are the usual and customary. - archimedes - Tuesday, Apr 14, 15 @ 1:38 pm: Pepe Silvio @1:07PM. The GA bill you reference has P.A. 98-599, eff. 6-1-14, as its source. That is SB1, which is unconstitutional (per Judge Belz) and not in effect. PA 98-0889 (which created Tier 2) is effective and per that statute, Tier 2 GARS and JRS receive a compounded annual increase of 3% or CPI, whichever is less. - Aldyth - Tuesday, Apr 14, 15 @ 1:38 pm: With all due respect to those who say that younger, more efficient workers could be hired to replace the baby boomers, who in their right mind would go to work for the State of Illinois? Who wants to sign on to be a punching bag? - Rich Miller - Tuesday, Apr 14, 15 @ 1:45 pm: ===who in their right mind would go to work for the State of Illinois?=== I think you underestimate the desirability - even with all the problems - of a state job for young people not doing so well in the private sector. - Pepe Silvio - Tuesday, Apr 14, 15 @ 1:48 pm: Arthur and RNUG, According to wise all-knowing RNUG I’m clueless, so take my words with a grain of salt…. If these retirement eligible employees are as top-notch as we all hope, then they are actively participating in the distribution of their institutional knowledge so that the folks left can keep the agency running as smooth as possible. I understand that positions are not filled as quickly as we would all expect, and that is the bigger issue - lingering vacancies. I just don’t buy the loss of institutional knowledge argument, solid agencies and solid employees should have already taken the steps to ensure that distribution of institutional knowledge. - RNUG - Tuesday, Apr 14, 15 @ 1:48 pm: - VanillaMan - Procedures can be improved, they can be automated, work flow can be constantly revised. Ever heard of a job position about 80 years ago called a manual systems analyst? Insurance companies had them long before computers, so improving things is nothing new. They didn’t go away when computers came along, they just changed the tools they used. But someone has to know what is legal, both under the statutes and the consent decree requirements some of the agencies are operating under. Someone also has to know the in’s and out’s of the federal programs and how to design and optimize the state programs to maximize federal matches. The state gets a lot of money that way and that is not something you pickup overnight. Same thing for procurement. Yes, it is cumbersome, deliberately so and could probably be improved but it grew up into the mess it is as a result of scandals, cheating, etc. and all those rules / procedures are the result of ethical breaches. People that understand the system can get things through in a timely manner. But put some amateurs in charge and you have a mess. I remember sitting around a breakfast table with some retired friends when the first employee healthcare scandal of sorts under Rod made the papers. The running joke that morning was that the new guys were so dumb they didn’t know how to legally rig the bids. So instead of getting things done, there were headlines in the newspapers … which do not enhance careers. - Wordslinger - Tuesday, Apr 14, 15 @ 1:49 pm: VMan, “institutional knowledge” means quite a bit more than knowing how to unjam the copy machine. It’s a knowledge of the history and experience in actually accomplishing the goals of the agency, not a mastery of the office equipment. Anyone can learn that, it’s not “instinctual.” - Sangamo Sam - Tuesday, Apr 14, 15 @ 1:51 pm: == Pepe Silvio @ 1:19 pm: Anyone that has ever worked in a properly functioning state agency can tell you that institutional knowledge should not vanish with the loss of employees. Any agency managing its risks appropriately should have a solid succession plan in place for events like this. == RNUG @ 1:32pm said it best. I saw the same thing. I still get calls from my former agency for help. You need to look no further than The Governor, his staff and their proposals to see how a lack of institutional knowledge negatively affects an operation, even when Governor Rauner had two years to prepare and almost enough money to put RNUG on retainer explain to him how Illinois’ pensions work. - archimedes - Tuesday, Apr 14, 15 @ 1:55 pm: Archimedes @1:38PM. Correction - the PA creating Tier 2 is PA 96-0889, not 98-0889. - RNUG - Tuesday, Apr 14, 15 @ 1:57 pm: - Pepe - Here and there in state government, things do work the way you envision … but it unfortunately is not the norm in my experiences, and the problem is usually lack of staff. - facts are stubborn things - Tuesday, Apr 14, 15 @ 2:02 pm: Sam - Tuesday, Apr 14, 15 @ 11:09 am: You explained it well, and I was aware of the option upon retirement. I was mainly trying to come up with examples of proper contract principles that would be legal to offer folks. thanks - facts are stubborn things - Tuesday, Apr 14, 15 @ 2:08 pm: @RNUG - Tuesday, Apr 14, 15 @ 12:13 pm: =Before saying you would be for a survivor’s benefit increase, you might want to calculate the effect under the various pension offset rules that also kick in if Social Security is part of the survivor benefits. It can get tricky. Also, limiting future raises may well run afoul of some of the previous diminishment rulings; that item may not legally be on the table as consideration. = Totally agree. I was trying to give examples of contract principles that could be applied to those already retired. Offered something of value in exchange for giving up something. Was not trying to say that was a final proposal. As to the future raises, agreed and was thinking more in terms of tied to future contract negotiations where by a person might give up certain future guarentees of security or raises in exchange for less pension. Saying not would have to be a choice and if you took the deal it would not mean that you could never have a rais or that you would in fact be laid off. My perpouse was to illustrate my point that you can not just move someone into a different system….you have to give them a choice — those were just examples of such a trade off. thanks as always for your comments…they are great. - facts are stubborn things - Tuesday, Apr 14, 15 @ 2:11 pm: @ RNUG - Tuesday, Apr 14, 15 @ 12:14 pm: =That, and some increased revenue DEDICATED to paying off the arrears. = totally agree! The pension issue is a debt issue not a pension system issue. The debt was created by not dealing with a structural (using the pension funds) deficit which was caused by a taxing system that does not tax at a rate to keep up with expenses which was caused by a changing economy without changes to the tax system such as a tax on services etc. - Pepe Silvio - Tuesday, Apr 14, 15 @ 2:17 pm: RNUG, I would agree that for the very large agencies, succession planning is virtually impossible to execute in order to eliminate the issues you’ve raised (that are caused by the CBA and personnel code). However, the state government I envision is currently being administered by multiple state agencies. Many of which are smaller and are not as heavily influenced by the CBA and personnel code related issues. My point is, it can be done. I would also suggest this state government is more prepared for a mass retirement than it was during the Ryan era and would further suggest that Rauner’s proposal should not cause those that are eligible to retire to pull the cord given the freezing component of his proposal. I do admit that despite the lack of true incentive, that doesn’t mean that these employees will stay. - Arthur Andersen - Tuesday, Apr 14, 15 @ 2:18 pm: RNUG, the problem with that healthcare RFP was that there were two “bid processes” going on at the same time. One by CMS, and one by Rezko and Kelly. The problems arose when they didn’t agree on the uh, “most responsive bidder.” - AnonymousOne - Tuesday, Apr 14, 15 @ 2:32 pm: ==underestimate the desirability …..of a state job=== The desirability is waning. Used to be lower wages for stability and no food stamps in retirement. Government is working overtime to eliminate those alluring desirable aspects. - CharlieKratos - Tuesday, Apr 14, 15 @ 2:35 pm: Pepe: It seems like a lot of what you think should be happening with state retirements and passing along institutional knowledge is “best case scenario”. In reality, however, the state is so understaffed that there is little to no overlap between the person who’s retiring and the person who’s taking over the retiree’s responsibilities. Anyone else that is already working with the retiring person is already doing the job of several people and doesn’t have the time to learn yet another job. It hasn’t always been like that, but lately that’s been the norm. - VanillaMan - Tuesday, Apr 14, 15 @ 2:55 pm: VMan, “institutional knowledge” means quite a bit more than knowing how to unjam the copy machine. Copy machines? Really? Who has those anymore? You proved my point. Case closed, geezer. - Anon. - Tuesday, Apr 14, 15 @ 3:06 pm: ==Any agency managing its risks appropriately should have a solid succession plan in place for events like this.== And that’s where your train of logic falls off the tracks. What makes you even imagine that the agencies under the Blago/Quinn administrations had any succession plan at all? The way they treated merit comp employees, compared to bargaining unit employees, the senior professional and management levels have been seriously depleted because employees wouldn’t leave the union to take the jobs. - facts are stubborn things - Tuesday, Apr 14, 15 @ 3:13 pm: @ Anon. - Tuesday, Apr 14, 15 @ 3:06 pm: =And that’s where your train of logic falls off the tracks. What makes you even imagine that the agencies under the Blago/Quinn administrations had any succession plan at all? The way they treated merit comp employees, compared to bargaining unit employees, the senior professional and management levels have been seriously depleted because employees wouldn’t leave the union to take the jobs. = It use to be that in my department at IDOT, the management ranks would be filled by union folks when they came open, but that ended with Blogo because of how they were treated…no one dared leave the union. They then started hiring from outside folks that had no clue and became jealous and resentful when they got pay cuts and those in the union kept getting raises etc. They did not understand the contract nor care in many cases. I spent my last 7 years educating, fighting, etc. to make sure the contract and even the basic work policies and long standing practices (which in most cases came about because the were best practices)were kept. We filed and won every grievance but at such a high price of time and effort and of course each time management loss they kept doubling down so it became a vicious cycle. - Rusty618 - Tuesday, Apr 14, 15 @ 3:14 pm: =I think you underestimate the desirability - even with all the problems - of a state job for young people not doing so well in the private sector= Rich, in my agency, with all jobs requiring a minimum of a BS, and many employees with MS or PhD degrees, there are many new hires that will work for a few years to get the training and experience, then jump ship to higher paying federal and private sector jobs. - Demoralized - Tuesday, Apr 14, 15 @ 3:19 pm: ==and would further suggest that Rauner’s proposal should not cause those that are eligible to retire to pull the cord== It’s already happening. - Demoralized - Tuesday, Apr 14, 15 @ 3:23 pm: ==then they are actively participating in the distribution of their institutional knowledge so that the folks left can keep the agency running as smooth as possible== You have to have somebody to impart that knowledge on. In my experience that has been the problem. Nobody available to even be part of a succession. - HR employee - Tuesday, Apr 14, 15 @ 3:42 pm: =It’s already happening.= As someone involved in these matters, we are not seeing many employees giving their retirement notice citing this proposal. Sure, its being discussed among employees, but its just an idea at this point. No legislation has been filed, or even drafted for that matter. To echo what was said earlier, the proposal provides no real incentive to retire. People lacking education on the subject may use this as their excuse to leave. As history tells us, it’s foolish to make a retirement decision based upon a benefit reform law that violates the Constitution. - Federalist - Tuesday, Apr 14, 15 @ 3:55 pm: Rich Miller - Tuesday, Apr 14, 15 @ 1:45 pm: ===who in their right mind would go to work for the State of Illinois?=== I think you underestimate the desirability - even with all the problems - of a state job for young people not doing so well in the private sector. That pretty much sums it up! Yes, it really is not so good for young people out there. I thought is was bad in the early 1970’s, and it was> But it is even worse now. - Federalist - Tuesday, Apr 14, 15 @ 4:02 pm: Of course, Nekritz and Biss voted for dismantling the pension system last time. Funny how things change with a Republican Governor. - Federalist - Tuesday, Apr 14, 15 @ 4:08 pm: Not trying to please anyone but boy there are a lot of good comments and give and take in these responses. Hope are politicians are reading them. - Long Gone - Tuesday, Apr 14, 15 @ 4:09 pm: Years ago under Blago the pay for an ISP master sergeant (not in a union at the time) was frozen. Over time the sergeant pay (lower rank then master sergeant ) rose higher then master sergeant and no sergeant would take a promotion. Advancement stopped for everyone. When Blago staff learned of problem, that noone wanted the master sergeant job, rumor in the field was the staffer responded “We’ll just hire some”. Sorry, can’t be done that way. points to this story. Institutional knowledge matters, even in governors office, mistreating workers can push them to a union, not replacing workers has consequences. - Anonymous - Tuesday, Apr 14, 15 @ 4:21 pm: Rauner says that a worker “would get the benefit they’ve accrued through tier one”. That’s not exactly correct. The base salary is frozen. It’s as if your Social Security would be based on your 2015 salary, not the salary 20 or 30 years from now when you retire. “A 45-year-old Tier 1 member who has been on the job for ten years and has an average salary of $50,000 as of June 30, 2015 would be entitled to a Tier 1 pension of $11,000 upon retirement at age 60. If Tier 1 benefits had continued and the member’s final salary was $150,000, the teacher would have been entitled to $33,000.” says the Civic Federation in http://www.civicfed.org/iifs/blog/illinois-governor-proposes-%E2%80%98hard-freeze%E2%80%99-pension-benefits. - Emily Booth - Tuesday, Apr 14, 15 @ 5:14 pm: Lots of institutional knowledge walked out the door at my agency at the ERI. New administrators became a revolving door. Job knowledge wasn’t really valued; the new admins thought they knew better. We had a high error rate w/ the feds. Those $$ were paid out of the general revenue fund. That’s the real world, not the should world. - Anonymiss - Tuesday, Apr 14, 15 @ 5:28 pm: Interesting that Rauner wants to put this on the ballot. First, not his strong suit, if past success there is any indication. But secondly, since when does he care what voters want? 65% voted for the millionaire’s tax, but he doesn’t take that as a mandate? - Anonymous - Tuesday, Apr 14, 15 @ 5:30 pm: - Rich Miller - Tuesday, Apr 14, 15 @ 1:45 pm: ===who in their right mind would go to work for the State of Illinois?=== I think you underestimate the desirability - even with all the problems - of a state job for young people not doing so well in the private sector. Rich, please explain. They might take the job and then quit. - Anonymous - Tuesday, Apr 14, 15 @ 5:31 pm: - Aldyth - Tuesday, Apr 14, 15 @ 1:38 pm: With all due respect to those who say that younger, more efficient workers could be hired to replace the baby boomers, who in their right mind would go to work for the State of Illinois? Who wants to sign on to be a punching bag? Thank you Thank you Thank you and thanks again I am wondering if I should look for work somewhere else outside of the State of Illinois employment - Enviro - Tuesday, Apr 14, 15 @ 5:40 pm: The GA should just tax retirement income and be done with this. It would be constitutional and fair…end of problem. No one wants to pay higher taxes but this is what needs to be done in the interest of shared sacrifice. This is what we were told by candidate Rauner during the 2014 campaign, but it is not what is being proposed. - Enviro - Tuesday, Apr 14, 15 @ 5:42 pm: Shared sacrifice is what we were told would happen during the 2014 campaign, but it is not what is being proposed. - Arthur Andersen - Tuesday, Apr 14, 15 @ 5:53 pm: The common tone of many posters, expressed or implied, is that a number of State agencies went to heck in a handbasket during the BlagoQuinn years, in part because a lot of good people left and weren’t replaced. Sounds about right. - DuPage - Tuesday, Apr 14, 15 @ 6:52 pm: @Enviro 5:40 A new tax that just taxes retirement income would be anything but fair. - Gary from Chicagoland - Tuesday, Apr 14, 15 @ 7:33 pm: RNUG - please share your thoughts on the legality of moving Tier 1 TRS members into Tier 2 members if both Springfield and Voters pass a constitutional amendment negating that pensions cannot be reduced? - RNUG - Tuesday, Apr 14, 15 @ 7:51 pm: == A new tax that just taxes retirement income would be anything but fair. == Actually, extending the current income tax rate to all retirement income would be relatively fair, compared to a lot of schemes out there. But it would bring down major complaints from the senior citizens (of which I happen to be one), so there would probably be a movement to either exempt SS income (which would not be fair to those retirees who were not allowed to be part of SS) or, more likely, a specific level of exempt income for all retirees … most likely equal to an average SS benefit or average level of pension. The problem with exempting part of retirement income is it would leave a lot of potential tax revenue uncollected, so it becomes a political question if the smaller amount is worth the grief the politicians will receive. - RNUG - Tuesday, Apr 14, 15 @ 7:57 pm: AA, I’ll have to remember that “most responsive bidder” term. - RNUG - Tuesday, Apr 14, 15 @ 8:01 pm: == … legality of moving Tier 1 TRS members into Tier 2 members == Under the current body of pension law since 1970 as I understand it, if it is involuntary (forced), it won’t be legal. It would be legal to offer a voluntary choice … but why anyone choose to give up Tier 1 benefits, I don’t know. - Tornadoman - Tuesday, Apr 14, 15 @ 8:25 pm: AnonymousOne @ 1:35- All new hires in TRS are in Tier 2 so they are not ‘paying’ for the retirees that they are replacing. - Anonymous - Tuesday, Apr 14, 15 @ 8:32 pm: RUNG Do you think that it is worth it being a State Employee anymore? Should current employees start looking for something new outside State Employment? - AnonymousOne - Tuesday, Apr 14, 15 @ 8:35 pm: Tier 2 new hires aren’t paying into the TRS fund? The fund collects contributions from teachers. How it is paid out as benefits is determined by Tier 1 or 2. But it’s all the one and only same Teachers Retirement Fund as far as I know unless there’s some other Teacher’s fund. - nona - Tuesday, Apr 14, 15 @ 8:46 pm: == “With very real questions out there about Tier Two’s viability…” == Now Nektritz questions the viability of the tier she helped to create? Too bad she didn’t consider the consequences when she voted for it. - nona - Tuesday, Apr 14, 15 @ 9:05 pm: === All new hires in TRS are in Tier 2 so they are not ‘paying’ for the retirees that they are replacing.=== Where do the Tier 2 contributions go if not into the TRS??? - RNUG - Tuesday, Apr 14, 15 @ 10:18 pm: == Do you think that it is worth it being a State Employee anymore? == The answer is a qualified yes. All the following remarks are based on the assumption you are under SERS (”actual” state employee). . If you are Tier 1, it is definitely worth staying around; you won’t find the equivalent job & retirement security in most of the private sector. I’ll somewhat qualify this by saying if you are in a non-union / MC position, it’s not as clear cut. If you are Tier 2, it depends. Too many variables in most cases to say for sure one way or another. If you have a highly in demand skill set with the attendant high salary in the private sector and very few years in, I would be gone as soon as I could. If you aren’t a superstar, then staying probably makes sense … because the grass is not very green out there in the private sector right now ; you could end up working for a Rauner clone without the job security and a non-matched 401K for a pension. == Should current employees start looking for something new outside State Employment? == Again, it depends. Lots of years invested in Tier 1, most likely stay. Desperately need dependent insurance? Even with all the hits and co-pays, the State health insurance is still a pretty good deal for now. Need to stay in the area because of elderly parents? Then staying makes sense. Close to the 20 year mark for premium free health insurance in retirement? Definitely want to stay that long. Within a year or two of having at least 8 years in? Then you probably want to stay that long to guarantee your eligibility to purchase group health insurance in retirment. If you are in a high stress job and it is affecting your health and you can find a lower stress position elsewhere, then it’s most likely time to leave. If you are Tier 2, it starts to tilt toward leaving but the question is: where would you go? On an objective basis, once you get outside of Cook and the collar counties, the cost of living (including housing and taxes) is pretty low in Illinois; any other state you might go to (with only a couple of exceptions) would cost you more. And unless you truly are a superstar, you probably won’t get a better deal somewhere else. - Arthur Andersen - Tuesday, Apr 14, 15 @ 10:20 pm: My pleasure, RNUG. - Old and In The Way - Tuesday, Apr 14, 15 @ 11:04 pm: Biss and Nekritz are going to be the new arbitrators as to what is fair and reasonable diminishment of pensions? No doubt because their diminishment was somehow more fair and legal in SB1. Send in the clowns! Only in the shadow of a Scrooge like Raunner insulting the ISC would this be anything but laughable! You can’t make this stuff up! I miss Illinois political theatre! - Anonymous - Wednesday, Apr 15, 15 @ 6:43 am: Thank you RUNG - Anonymous - Wednesday, Apr 15, 15 @ 6:44 am: RNUG - facts are stubborn things - Wednesday, Apr 15, 15 @ 7:44 am: SB 1 based on the plain reading of the constitution, the intent of the framers, years of case law to include this very courts opinions as recently as Kanerva all point to the lower court decision that SB 1 is unconstitutional to be upheld. Those already retired could be taxed on pensions if a part of a broad based change in how Illinois taxes retirement income — currently they don’t. They could also be offered something like a COLA tied to the CPI instead of 3% compounded annual increases but not sure how many would take it and if the state would like that, but things like this would be legal. Those working under tier 1, could as part of a contract negotiations, agree to contributing more to their pensions in exchange for better work conditions pay etc. To make any further changes then that, I believe each individual would have to agree to changes following contract principles which needs to include staying or keeping what they have. Solution is to refinance the pension debt (debt is the issue not pensions) over a 30 or 40 year period with a fixed amount of dollars that will be easier to pay over time do to inflation. Change the tax system to a modern system to eliminate our structural deficit which is what led the pension system to be robbed for so many years. If Biss is seen as the guardian of what is fair and legal in pensions it shows how far over the top Rauner is. Sorry, comments for this post are now closed.