116 Comments - Parnell - Wednesday, May 13, 15 @ 9:31 am: If one of the options is keep the status quo it might have a chance to become law. Otherwise it is unconstitutional. A forced choice that has been talked about is really just a Hobson’s choice in the end. - Anonymous - Wednesday, May 13, 15 @ 9:32 am: I understand how important it is to address the rising cost of the pensions. Given the Supreme Court interpretation of the Pension Clause, there is little that can be done that will have a quick effect. What I wish I would see at the GA and Gov office, is a focus on the upcoming budget including the revenue needs. That is a tough nut to crack and regardless of any pension reform, it will be a long time until passage and court testing. The responsible thing to do is to openly and seriously debate budget options for cuts and revenue. And finally, there is no “Christmas Tree” of revenue simply by giving slots to racetracks or a casino in Chicago. No “magic” solutions — only hard fiscal discipline going forward. I wish they would start on that. - Commander Norton - Wednesday, May 13, 15 @ 9:32 am: Something tells me those who are combing the footnotes for loopholes are barking up the wrong tree. I think the gist of the opinion was, “There are no loopholes. Restructure the debt, borrow, raise taxes - we don’t care what you do to get the money, but pay up.” - JoanP - Wednesday, May 13, 15 @ 9:34 am: I do not see any “consideration” in Cullerton’s plan. Right now, state employees under SERS are entitled to have salary increases included in determining pensions *and* a compounded annual increase. Cullerton’s plan seems to be “give up one”. How is that not a “diminishment” of benefits? - Cook County Commoner - Wednesday, May 13, 15 @ 9:36 am: Sen. Cullerton’s plan smacks of extortion, which would equate to an impairment or diminishment of pensions. Seems to me, according to the ISC ruling, everything stays the same unless the employees agree otherwise. - Aldous Huxley - Wednesday, May 13, 15 @ 9:39 am: The Constitution says that pensions cannot be diminished. Here’s what is being proposed: A state worker is given a choice between having a 3% increase to their pension once they retire or having all future pay raises be calculated into their pension payment, but have no increases in their pension payments once they retire. Is that a reasonable interpretation? If so, that is a worse diminishment for young workers than the previous plan that the ISC struck down. - Corporate Thug - Wednesday, May 13, 15 @ 9:40 am: I’d like to thank Eric Zorn for debunking the IPI/Diana Rickert story. Thank you, Eric. - Total Mayhem - Wednesday, May 13, 15 @ 9:41 am: I totally agree with JoanP. How can Cullerton’s plan ever be constitutional? He’s just talking about forcing employees to “choose” to give up one of two things that are both already guaranteed benefits under the plan. - walker - Wednesday, May 13, 15 @ 9:43 am: Kinda like the concealed carry legislation. After the court decision in their favor, less likelihood that the unions will go along even with Cullerton’s approach. - Quiet Sage - Wednesday, May 13, 15 @ 9:43 am: So, at the end of the day, it turns out to have been a colossal waste of time and State dollars to have insisted on passage of the Nekritz-Biss plan. - Johnnie F. - Wednesday, May 13, 15 @ 9:43 am: Thought I read that employees who opted to freeze their pensionsble salary at the current level would get a 3% salary (cola)raise every year they renained working. - Frenchie Mendoza - Wednesday, May 13, 15 @ 9:44 am: Cullerton’s plan would be constitutional if there is a “keep what you have now” option — no additions, no subtractions. Why isn’t this added? It’s a no-brainer. Any plan — including Rauner’s own Tier 2 shift would work — so long as current employees can’t stay where they are now. - Johnny Q. Suburban - Wednesday, May 13, 15 @ 9:50 am: Yes, but what does Smartest Man Alive ™ Dan Biss think of the plan? - JoanP - Wednesday, May 13, 15 @ 9:51 am: @ Johnnie F - The article states they would receive “a 3 percent compounded cost-of-living adjustment ONCE THEY RETIRE”. (emphasis added) - Norseman - Wednesday, May 13, 15 @ 9:55 am: MC workers are asking, what “future raises.” They haven’t had any raises since Blago’s run for a 2nd term. Does anyone think there will be raises this year? Next? … Let’s move on to real solutions. - Frenchie Mendoza - Wednesday, May 13, 15 @ 9:58 am: Wouldn’t a salary freeze at current level also mean that so long as you’re a state employee your salary can never, ever be decreased? No furlough days, for example. And wouldn’t current employees then seek different state jobs with lesser responsibility in order to get paid the same? In other words, why should I do state job X with 100 responsibilities when I could take state job Y with 10 and make the same salary? - Agricola - Wednesday, May 13, 15 @ 10:02 am: As I understand the mechanics of this idea: Give up something you are already entitled to receive, and in exchange we promise to do something we are already required to do. Unless I’m missing something, I don’t think that’s consideration. - RNUG - Wednesday, May 13, 15 @ 10:03 am: == Cullerton’s plan would be constitutional if there is a “keep what you have now” option — no additions, no subtractions. Why isn’t this added? == Because then very few, if any, people would take it … and that means it wouldn’t save any money. - D.P.Gumby - Wednesday, May 13, 15 @ 10:04 am: Don’t think this plan satisfies either the consideration or the no diminution. But keep thinkin’ Butch… - RNUG - Wednesday, May 13, 15 @ 10:05 am: Every pension idea I’ve heard from various politicians the last day or two is still an attempt to negate the debt. Ain’t going to fly. (banned word) - mythoughtis - Wednesday, May 13, 15 @ 10:07 am: Trying to decide on the actual constitutionality - practicality of this. I am already guaranteed 3% COLA (AAI) when I retire based upon my last 4 years average salary. I am not, however, guaranteed any actual raises in those last 4 years. In fact, the government can freeze a wage 1. by delaying a contract and then giving no COLA for one year when it is settled, 2 - by not promoting people in a timely and deserved manner so that they bump up against the pay scale for their title3, - by not giving raises for years to merit-comp employees. So, given that, I would pick option 2 and keep my 3 %AAI upon retirement. If Cullerton wants to freeze wages, why doesn’t he just do that since that doesn’t involve a constitutional argument? - anon. - Wednesday, May 13, 15 @ 10:08 am: Easy - no more raises for employees period. That will stop the growth in pension liability for all current employees. - The Dude Abides - Wednesday, May 13, 15 @ 10:08 am: The legislature needs to discard this notion of crafting new plans and then waiting to see if it survives court judgment, then if it’s thrown out by the court try something else. All they are doing is wasting time and continuing to kick the can down the road. The court has now given them some guidance and there is now no excuse for passing another pension plan that will eventually be thrown out by the court. As several posters have mentioned, there has to be an option that will allow workers to keep precisely what they have now. I remember when the Unions worked with Cullerton previously and reached agreement on a bill which eventually passed the Senate but wasn’t called for a vote in the House. They stated that this agreement wouldn’t be on the table indefinitely. After ISC ruling the Union has a stronger hand to play now. - Stones - Wednesday, May 13, 15 @ 10:12 am: I don’t see a path for the Governor / Legislature to take other than bucking up and accepting their debt responsibility. Anything less than that is a diminishment of benefits. They may be able to pass an amendment in time but a long term fix will likely take years. I also see employee raises being small / nonexistent for the next few years. - Skeptical - Wednesday, May 13, 15 @ 10:13 am: =“Time is of the essence, but working too fast and therefore getting it wrong is not good time management,” said state Sen. Daniel Biss, an Evanston Democrat and a leading negotiator of the original plan. “There are a lot of limitations placed on the legislature by this ruling. We need to think carefully about what the options are, what rules can be utilized and design something accordingly.”= I find this comment interesting. It seems to me if the “leading negotiators” would have taken the above approach the first time that is now being suggested here, that is, “thinking carefully about what the options are”, then perhaps all the time that is now “of the essence” would not have been wasted to begin with. I am reminded of the title of a book by a psychotherapist by the name of Sheldon Kopp that seems to sum up well the current plight of the “lead negotiators”: Here I am,Wasn’t I? - JackD - Wednesday, May 13, 15 @ 10:19 am: I don’t see how an agreement with the union on a plan will solve anything since any individual employee could challenge the deal in court and probably do it as a class action. - Caliente - Wednesday, May 13, 15 @ 10:26 am: That’s right, JackD. The union can’t negotiate for me. Since I am vested, *I* have an enforceable contract with the State. Consideration must give me the option of the status quo. I’m keeping my guaranteed, enforceable contract, thank you very much. - Juvenal - Wednesday, May 13, 15 @ 10:28 am: The unions cannot agree to a wage freeze when Rauner is paying his staff and consultants $20K to $30K a month. A deal that ties a wage cap to enactment of a graduated income tax would be sweet. - Langhorne - Wednesday, May 13, 15 @ 10:29 am: Thank you, eric, for a refreshing breeze of good judgement. IPI has their own outlets for rickerts views, it is sad to see the trib carry such material. Same w the crains piece from the three lawyers, little real analysis, and no dissent. Now back to the secret meetings. Tick tock. - ANON - Wednesday, May 13, 15 @ 10:30 am: Not all workers get a pension based on their salary on their last day (we should be so lucky). So if your pension is based on the average of the 4 highest years out of 10 and for whatever reason you haven’t been getting raises or promotions, you could pick the option of not having the future raises and keep the 3% COLA. It probably doesn’t make any difference if you are close to retirement. What it does is make the younger people look for another job and no one will want to replace them. If outsourcing is what Gov Rauner wants, this is a good start. - dupage dan - Wednesday, May 13, 15 @ 10:33 am: === - RNUG - Wednesday, May 13, 15 @ 10:05 am: Every pension idea I’ve heard from various politicians the last day or two is still an attempt to negate the debt. Ain’t going to fly. (banned word) === RNUG, so, what does this mean? Do these legislators NOT KNOW that what they propose is a diminishment? If Cullerton doesn’t get it, does that mean he is an idiot? Or, if he knows, then he is proposing another delay until the SC knocks his proposal down. It is all so baffling. Like horses with blinders on. I’m beginning to think you are right - even the democrats want to knock down the unions a peg or 2. Just to show them who’s the boss. Cullerton had union support the last time. I doubt he will see much of that now - don’t you think? - grumpy - Wednesday, May 13, 15 @ 10:35 am: A very worrisome idea, bad for attracting competent teachers, professors, doctors, lawyers, and other professional employees. Incentivizes corruption and bribery. Think India and Greece. But apparently there is no constitutional requirement for salary raises, and you individually choose to voluntarily give up the capped COLA on your pension if you prefer to get raises. But freezing must mean salary is not decreased by inflation, so CPI adjustments must be made to keep the real salary the same. - DuPage - Wednesday, May 13, 15 @ 10:39 am: Put the income tax back at 5%, and pay the pension systems in full each year. Then get on to governing the state. The Cullerton plan has no chance of being upheld any more then SB1. - CharlieKratos - Wednesday, May 13, 15 @ 10:41 am: The state seems to go through cycles where they outsource, then they get rid of the consultants and hire a few state workers, then they outsource, then they get rid of the consultants and hire a few state workers, etc… The problem is that the total headcount keeps getting smaller and the responsibilities for each state worker keep getting larger. Why anyone would want to go to work for the state at this point is beyond me. - Michelle Flaherty - Wednesday, May 13, 15 @ 10:43 am: Oh, NOW Rep. Nekritz has legal concerns. F-ing golden. - Frenchie Mendoza - Wednesday, May 13, 15 @ 10:45 am: — Cullerton had union support the last time. I doubt he will see much of that now - don’t you think? — The ISC’s language is as clear as the constitution. In fact, what we’re seeing from the ISC ruling and the constitution is remarkably clear language and a linguistic affirmation that, yes, language means what it means. I suspect this is one subtext of the ISC’s ruling. What I see legislators doing — Cullerton now, too — is an attempt to dilute plain language with semantic gymnastics. Rauner’s team is doing this with the past versus future nonsense. If I were a union honcho, I’d keep my language — and my desires — as linguistically simply and rhetorically elegant — as the ISC’s: a diminishment is a diminishment. What else is there to say? What else is there to argue? The next ISC ruling on this — and everybody knows this, including Rauner — will spell out — and affirm — the concept that the people did, indeed, spell out their simple, direct desires by ratifying a very simple, very straightforward pension clause. - Fire Marshall Bill - Wednesday, May 13, 15 @ 10:46 am: In my opinion, as Tier 1 employee with about 7 years to go, the only thing that would get me to agree to a reduction in benefits (from 3% compounded to 3% simple) would be the thing that is most important to everyone—the one thing you can’t get back once it’s lost—TIME. So, if you let me retire a 3-5 years sooner, I’ll gladly accept this “consideration.” - Frenchie Mendoza - Wednesday, May 13, 15 @ 10:49 am: BTW — it surprises me how simplicity can generate so much complexity. It’s as though Rauner and Cullerton refuse to acknowledge that a sentence can, indeed, be as direct as and straightforward as the single sentence pension clause. I guess this is the issue with all constitutional law — and the issue that makes it so fascinating. - 3rd Party Needed - Wednesday, May 13, 15 @ 10:50 am: Does anyone know if Fire Marshall Bill’s idea would save the state money? I do think that many state workers would be likely to trade an earlier retirement for benefit reductions, but would it help the debt problem or make it worse? - TrooperForLife - Wednesday, May 13, 15 @ 10:52 am: I agree with Fire Marshall Bill. The alernative formula current works this way: 26 years, 8 months, 80%, age 50 minimum. I too would take time in consideration for a reduction in benefits. How about 20 years, 70%, any age? I’d happily take 3% simple (which doesn’t kick in until age 55) over 3% compounded in exchange for 5 years of my life. - howard - Wednesday, May 13, 15 @ 10:54 am: Lets waste more time and money. Its time for real solutions. Goodnight John Boy - archimedes - Wednesday, May 13, 15 @ 10:57 am: You know - this theme of “before we actually pay the debt on pensions, let’s make sure it is as low as possible” has been around for at least 6 years now. You would think the latest ISC ruling would put it to bed. In 2010, Tier 2 was created. This pension system literally costs the State nothing (zero) for employees not coordinated with Social Security (80% of the 5 systems). The cost is completely borne by the employee (in fact - many pay more than it is worth). Pretty hard to make something up that would cost less. Now - the only thing left is existing employees and those already retired. Seems like most sane people have given up on the retirees - at least with this most recent ISC ruling. So - what can we do to current employees in light of the most recent ruling? Well - using police power is out. Only thing left is legitimate contract means. If the ISC says the term of the contract is from initial employment through retirement (or no longer an employee) - which past cases and this ruling say - then forget any involuntary change to the pension contract. Both for past service and future service. So - is the Cullerton plan voluntary? Or does it give a choice to reduce one factor versus another when both are part of the contractual pension formula? It would seem pretty easy to win the court battle against this plan if both sides of the “choice” have the direct effect of reducing the pension benefit. I still think any possible choice has to focus on benefits that are outside the scope of the pension contract. Such as vacation time, health insurance (employee, not retiree), sick time, etc. Even then it would be a battle - but more like 50/50 chance of winning. - Six Degrees of Separation - Wednesday, May 13, 15 @ 11:00 am: Maybe the idea is to tilt at this windmill for years and years until there are no Tier 1 employees left, and the intended “solution” will be “keep doing what you’re doing” by default. It sounds (banned word) but no more illogical than any other reason I can think of. - Six Degrees of Separation - Wednesday, May 13, 15 @ 11:07 am: Anything that freezes the obligations of Tier 1, and increases the number of Tier 2 employees, will help. That is the intent of the Rauner plan. If that doesn’t fly, anything that gets the Tier 1 employees off the books (thereby freezing the Tier 1 obligation) and presumably backfilling with Tier 2 employees (who pay for their pension and also help pay down the Tier 1 obligation) could be looked at by the whiz kids and geniuses. - Joe Blow - Wednesday, May 13, 15 @ 11:08 am: IMHO the only true way going forward is to change the pension laws for new hires only. All current retirees and current employees are protected. They can craft anything they want for new hires including not even offering a pension plan. - Langhorne - Wednesday, May 13, 15 @ 11:19 am: Nice commentary on the decision in 5/11 chgo daily law bulletin - Facts are stubborn things - Wednesday, May 13, 15 @ 11:27 am: The cullerton plan is clearly unconstitutional. Current pension benifit a are calculated on Salery, so to tie raises to keeping what the constitution already protects is extortion and not consideration. I guess there may be just a little more street available to kick the can down. This plan would be another huge waste of time and money. The court laid out the road ahead for the ga, but they just don’t like it — honor your pension promises and pay for them - Facts are stubborn things - Wednesday, May 13, 15 @ 11:30 am: The only way forward is to focus on tough contract negotiations where you might get an agreement on higher contributions in exchange for work rules , job security etc. - Wordslinger - Wednesday, May 13, 15 @ 11:33 am: Whatever spaghetti gets thrown against the fridge to see if it will stick, just don’t bank the “savings” by shorting the annual pension contribution, as the governor proposes in his “solution.” The short payments are what caused the mess to begin with. - A lawyer - Wednesday, May 13, 15 @ 11:33 am: Any truly voluntary modifications would pass constitutional muster. However, an imposed choice (soviet style) of choosing between option “a” and option “b” is unconstitutional, unless one of the choices is to remain “as is”. - Skeptical - Wednesday, May 13, 15 @ 11:37 am: =Oh, NOW Rep. Nekritz has legal concerns. F-ing golden.= Exactly right. - Anonymous - Wednesday, May 13, 15 @ 11:43 am: They are making the work rules so bad and trying to get Tier 1 employees to quit. - JS Mill - Wednesday, May 13, 15 @ 12:03 pm: Any of these “plans”do nothing to address the DEBT. They address the annual cost. That is $2 billion of $7 billion. Compounding COLA is the single biggest driver of annual costs. Addressing that issue, which I would favor but few if any retirees or future retirees would support, will NOT save $1 billion annual. It is not 50% of the annual cost. Period. Tier 2 is not an option for those in Tier 1, but all hires since 2011 are in Tier 2. The only issue there is that we will be getting another financial surprise in the future when it does not meet IRS standards for a pension. The bottom line: 1) pay the debt. No matter how bad the Governor wants to negate or ignore the debt it remains and always will. 2) re amortize the debt to bring the annual payment to a more manageable, constant number and pay it every year. 3) Fix Tier 2 During the discussion on the Biss-Nekritz plan they always made me chuckle when they would say the new plan would include a “stronger” guarantee from the state to fund the pension. I mean seriously, what is stronger than “guarantee”? They continue to float things out there and make things up, hoping that it will stick. If this was not so serious it would be laughable. - No Raises - Wednesday, May 13, 15 @ 12:05 pm: What future raises? I am Merit Comp and haven’t received a raise in years. - A guy - Wednesday, May 13, 15 @ 12:06 pm: Too busy today to read every comment, so apologies in advance if this ground has been covered. It is so outlandish or so unprecedented to ask a couple ISC members (or their clerks) to weigh in on this a bit more before going through a long time eating process of passing a bill, the inevitable lawsuits, and the ultimate hearing? I don’t know if that’s possible. - Wordslinger - Wednesday, May 13, 15 @ 12:24 pm: Guy, you’re not serious, are you? This three branches of government model has been in practice since 1789. - Arthur Andersen - Wednesday, May 13, 15 @ 12:27 pm: I concur with all who have opined that this latest version of “consideration” is not in line with the ILSC’s ruling, and should not be given serious, er, consideration. Someone suggested above that the compounded AAI could be traded off for a reduction in the years required to retire. Actuarial studies would be required to determined if this is a fair trade cost-wise; my guess is that a material reduction in years of required service, even with a lower formula multiplier, may be more expensive than the uncompounded AAI. I also think prevailing public sentiment does not favor lowering the retirement age for the public sector. To summarize: this dog won’t hunt. - Yossarian - Wednesday, May 13, 15 @ 12:38 pm: Joe Blow @11:08: if they offer no pension to new employees, then they have to put all new employee in Social Security. - Yossarian - Wednesday, May 13, 15 @ 12:38 pm: Joe Blow @11:08: if they offer no pension to new employees, then they have to put all new employee in Social Security. - Mouthy - Wednesday, May 13, 15 @ 1:08 pm: Got another unconstitutional plan? Great, by all means pass it. Meantime, keep the checks coming because I don’t care what foolishness you employ… - A guy - Wednesday, May 13, 15 @ 1:10 pm: === Wordslinger - Wednesday, May 13, 15 @ 12:24 pm: Guy, you’re not serious, are you? This three branches of government model has been in practice since 1789.==== Very serious. I’ve seen US Supreme Court Justices (outside of the court, of course) opine on any number of issues not currently before the court. You’ll also see that I’ve included the notion of clerks or former clerks who might have some insight. I don’t think it’s outlandish, and if asked, I don’t see it as a violation of the separation of powers that couldn’t be deftly worked with. - Flavurful - Wednesday, May 13, 15 @ 1:24 pm: The court has already spoken. Move on! Sheesh, this is getting ridiculous. - Enviro - Wednesday, May 13, 15 @ 1:48 pm: The Illinois Supreme Court has clearly ruled that the pensions of state retirees and current state employees can’t be diminished, reduced, taken to fund the government’s other programs, or used to correct the past mistakes of the IL GA. This is difficult for some people to understand but the only correct interpretation of the ISC decision. State pensions for those hired after January 1, 2011 have been reformed. This is the Tier 2 pension plan. It will save the state more than the 401k plan for new employees now being proposed. The only people who would benefit from the 401k type plan for new hires would be the 401k management companies. They would get more money for fees than they get for managing the current state pension plans. The Rauner and Cullerton pension plans could be called the “keep kicking the can down the road plans”, because they will only result in litigation that the state will lose. - Enviro - Wednesday, May 13, 15 @ 1:53 pm: The only people who would benefit from the 401k type plan for new hires would be the 401k management companies. They would get more money for fees than they get for managing the current state pension plans. The Rauner and Cullerton pension plans could be called the “keep kicking the can down the road plans”, because they will only result in litigation that the state will lose. (I would like to add that the lawyers will also benefit from more litigation.) - A guy - Wednesday, May 13, 15 @ 1:58 pm: === Flavurful - Wednesday, May 13, 15 @ 1:24 pm: The court has already spoken. Move on! Sheesh, this is getting ridiculous.=== This thread is about the Cullerton proposal. Did the court already speak on it and you’re the only one they told? What’s ridiculous is your silly comment. - Arsenal - Wednesday, May 13, 15 @ 2:07 pm: “It is so outlandish or so unprecedented to ask a couple ISC members (or their clerks) to weigh in on this a bit more before going through a long time eating process of passing a bill, the inevitable lawsuits, and the ultimate hearing?” “Outlandish”? I suppose not, depending on the definition of that. But unprecedented, yes. The Supreme Court is there to resolve cases, not provide advisory opinions, and it has expressly refused to do so on numerous occasions. Former clerks could certainly opine however they would like, but their word 1) wouldn’t necessarily reflect the Court’s ultimate decision; and 2) Would only constitute persuasive authority, and legislators would be under no obligation to listen. I’m not sure if any former clerks opined on SB1 (I’d think one MUST have somewhere?) but there were plenty of other people warning that it wouldn’t work, and no one listened. - TheHas59 - Wednesday, May 13, 15 @ 2:09 pm: This article demonstrates exactly why the pension problem exists in the first place. The article says, “Cullerton estimates his latest plan could save the state about $1 billion a year, a fraction of the pension system’s overall debt, but savings he says could be spent elsewhere.” Even after the ISP ruled that the pension debt comes before all other debts owed by the State, why isn’t Cullerton suggesting that ANY savings would be used to paydown the existing pension debt instead of “being spent elsewhere”? - Retiree - Wednesday, May 13, 15 @ 2:14 pm: The only thing left in terms of pension reform after the ISC decision is to deal with new employees. And that has been done with Tier 2. Need to deal with debt reform now. Not later. - RNUG - Wednesday, May 13, 15 @ 2:16 pm: == Easy - no more raises for employees period. That will stop the growth in pension liability for all current employees. == Not completely true. All it would do is slow it down some. If the employees have received raises the last several years, even after you freeze their salary their pension liability will continue to grow for two reasons: a) It would take 3 to 4 years at the same salary level to stop the Final Average Compensation from increasing since it is the average of the highest 48 months (4 years) in the last 120 months (10 years). b) The employees would still be increasing the number of service years that are part of the formula, so that would also increase the pension due by 1.67% to 2.5% (depending on the plan) every year. - Taxed Enough - Wednesday, May 13, 15 @ 2:19 pm: State agencies still have way too much fat. They are way too heavy in middle and upper management. They hire way too many consultants. CMS needs to be dismantled, etc. Steps need to be taken to reduce payroll that would reduce the future core liability. - RNUG - Wednesday, May 13, 15 @ 2:21 pm: - dupage dan - @ 10:33 am: From what I’m reading, I would say the various legislators don’t feel they have enough political cover from the SB-1 ruling to raise taxes. I hate to say this (because it’s going to waste more years), but I’m beginning to get the idea the GA won’t actually raise taxes until they irritate the ISC so much that the court orders specific payments into the pension funds. - RNUG - Wednesday, May 13, 15 @ 2:25 pm: == IMHO the only true way going forward is to change the pension laws for new hires only. == You DID read the part about the Tier 2 system (for new hires since 2011) costs the State NOTHING? How can you come up with a better plan than that? - dupage dan - Wednesday, May 13, 15 @ 2:41 pm: RNUG - as always, your knowledge and comments are much appreciated. I fear you may be right. The GA missed their opportunity to get off “easy” when it failed to make the temp tax permanent. I think the fall out there would have been minimal. As with conceal carry, the GA didn’t move until the court forced the issue. In the meantime, the debt mounts. Without the necessary revenue, there will be another pension “holiday” with much more dire repercussions. I wonder what MJM does about the “proposed” amendment? No way it passes without his imprimatur. I’m out in less than 6 months. Hard to see anything happening by then. Oh, wait - there are plans to pass legislation before 5/31/15. Giggle. - east central - Wednesday, May 13, 15 @ 2:43 pm: The GA might drag this out with another cycle or two through the courts, but…. If they fail to make the annual pension payments then I would expect more downgrades from the rating agencies. So the GA still needs to at least temporarily increase revenue to balance the budget with the payments included. OTOH if they stopped trying to diminish pensions and institute a permanent revenue fix, then I would expect an upgrade from the rating agencies. - Joe Blow - Wednesday, May 13, 15 @ 2:56 pm: I suppose they could start privatizing the prisons thereby eliminating those employees from the system going forward. - AnonymousOne - Wednesday, May 13, 15 @ 3:04 pm: Gee, why don’t they float another loser bill and start up the court fights again……..have a go at it for another few years and watch the debt soar to double, triple and more. Isn’t that exactly what everyone wants? Is this the brain trust we all have as elected officials? And yet, they paint this as urgent—–so much an emergency that police powers should take effect! I am ashamed of this debaucle. - Slippin' Jimmy - Wednesday, May 13, 15 @ 3:06 pm: Cullerton appears to be grasping at straws….. - RNUG - Wednesday, May 13, 15 @ 3:13 pm: Eric, please give your former boss a call and explain the SB-1 ruling … - Norseman - Wednesday, May 13, 15 @ 3:15 pm: === You DID read the part about the Tier 2 system (for new hires since 2011) costs the State NOTHING? How can you come up with a better plan than that? === Indentured servitude? - Facts are stubborn things - Wednesday, May 13, 15 @ 3:28 pm: Tier 1 is a legal ethical and effective solution. Rnug, Add Ralph to your list of people for cullerton to listen too. - Facts are stubborn things - Wednesday, May 13, 15 @ 3:32 pm: Should have typed tier 2 - Liberty - Wednesday, May 13, 15 @ 3:33 pm: “Although it is undisputed that many vendors face delays in payment, the terms of their contracts are unchanged, and under the State Prompt Payment Act, vendors are actually entitled to additional compensation in the form of statutory interest if their bills are not paid within specified periods. 30 ILCS 540/3-2 (West 2012). In no sense is this comparable to the situation confronted by members of public retirement systems under Public Act 98-599, which, if allowed to take effect, would actually negate substantive terms of their contractual relationships and reduce the benefits due and payable to them in a real and absolute way. Under all of these circumstances, it is clear that the State could prove no set of circumstances that would satisfy the contracts clause.” - Flavurful - Wednesday, May 13, 15 @ 3:36 pm: ===- A guy - Wednesday, May 13, 15 @ 1:58 pm: This thread is about the Cullerton proposal. Did the court already speak on it and you’re the only one they told? === Yes, again, the court has comprehensively addressed the matter. Spin yourself silly, but the court has clearly affirmed that the GA cannot [creatively re-write the rules and] diminish nor impair the pensions. I’m vested. It is an enforceable contract. I understand that you so desperately *want* to find a way out of the contract, but the ISC says “no, no, NO!” Calling my comments “silly” doesn’t help your case either; just reflects poorly on yourself. - JoanP - Wednesday, May 13, 15 @ 3:43 pm: @ a guy - “It is so outlandish or so unprecedented to ask a couple ISC members (or their clerks) to weigh in on this a bit more before going through a long time eating process of passing a bill, the inevitable lawsuits, and the ultimate hearing? I don’t know if that’s possible. ” Courts do not give advisory opinions. - Wordslinger - Wednesday, May 13, 15 @ 3:57 pm: Guy, I dont think you’ve thought it through. You might want to consult 225 years of American history to see if you could fine one example, and fhat would provide you an answer. - dupage dan - Wednesday, May 13, 15 @ 4:16 pm: Ok, Guy, talk to the clerks. Take them out for dinner. Ply them with Shirley Temples. Ask them your questions. Base an entire line of legislation based on these off the record musings. Then, when it’s challenged, you can tell the court, “but I talked to clerk Jones and he said it would be ok”. I think that WILL work! - RNUG - Wednesday, May 13, 15 @ 4:18 pm: [ facts - While Martire has somethign to contribute, I figured Cullerton would be more likely to trust Madiar’s advice … and I also figure Madiar would be a bit less restrained with his opinion now that he no longer works for Cullerton. - Bigtwich - Wednesday, May 13, 15 @ 4:22 pm: An offer of less than a pre-existing legal duty is not consideration that will support an enforceable contract. It could be if the debtor (read State) offers to do something different but that offer has to be accepted. Given the lack of an option to continue the current system, given the courts comments about requiring one group to pay an obligation owed by the entire population, the proposal would probably not pass the rational basis test of the equal protection clause. The basic question is are state workers overpaid. I have not looked lately but in 2009 there were reports that Illinois employees were paid almost identically with employees of large corporations including the value of pension benefits. We have passed through several years of a depressed labor market but seem to be returning to what we take as normal. If the state wants to compete for employees it will have to match the total compensation offered by the market. If the pension part of the formula goes down, the current pay will have to go up and projected savings will not be there. - John Parnell - Wednesday, May 13, 15 @ 4:28 pm: A Lawyer: Thanks for repeating what I already said. The Cullerton bill absent a choice of the status Quo is unconstitutional. - Flavurful - Wednesday, May 13, 15 @ 4:29 pm: No sense trying to reason with Guy. He doesn’t believe he’s right…he KNOWS he’s right. No authority (not a clerk, not a justice, not the entire ISC) will do. - The Whole Truth - Wednesday, May 13, 15 @ 4:37 pm: The notion of freezing existing state employee wages does have merit. As RNUG notes, effects are somewhat muted due to the highest 4 years out of ten rule and continuing accrual of service credit each year. But it would free up dollars for FY16 and beyond that could go toward pension funding while at the same time lessening the eventual pension payouts. It’s that kind of leveraging that’s needed. - Facts are stubborn things - Wednesday, May 13, 15 @ 4:39 pm: Rung, Understood, thanks - Facts are stubborn things - Wednesday, May 13, 15 @ 4:40 pm: Rung, sorry - Facts are stubborn things - Wednesday, May 13, 15 @ 4:41 pm: Rnug, spell check kept auto correcting - exasperated teacher - Wednesday, May 13, 15 @ 4:43 pm: None of this will really slow down the growth of pension debt. Only completely funding the normal cost and paying down the debt in a sound actuarial manner. These proposals only do what got us here in the first place– seek to avoid balancing a budget with sound revenue and spending cuts. Seems like the governor has realized the facts to some degree: slash and burn and real people with real needs get hurt (even though he won’t publicly admit it–only do “fund sweeps”). Here are more facts that should push us toward the revenue side– Illinois is 47th in the nation in the number of state employees per capita. And even though we do have a large number of units of local government, our state AND local per capita spending is just below the national average at $9,900–equal to Wisconsin and less than Iowa (both of which have healthy pension plans…because they’ve faithfully funded them). In addition, Illinois’ GDP per capita is 16th in the nation, indicating we can afford to pitch in more. Add to this that the vast majority of states have a progressive income tax (as does the federal government, and the vast majority are comfortable with that), and the political solution is out there as long as some leaders are willing start using common sense and facts rather than dried up talking points and fear. Why don’t our leaders start pointing toward the results Minnesota has had recently. Their billionaire governor had the guts to raise taxes and combine it with wise spending with positive outcomes. Would the Constitutional amendment required for this really be any less pragmatic than another lawsuit that ultimately overturns the extortion that Cullerton is suggesting? Martire has outlined how we could effectively simulate a more progressive income tax via higher exemptions in the meantime. What seems to me to be another political feasible suggestion that I have heard is taxing retirement income with a high exemption (well above SS max), which would give the “pound of flesh” that the public seems to want from “pension spikers” and the other .0001% (guessing) of pension abusers that are driving .0001% (guessing again) of the unfunded liability. I think the “time” consideration that “TrooperForLife” suggested. I think some close to retirement or even 15 years away, like me, might jump at a simple COLA, even for a modest exchange of time. For example, for every year that you accept a simple COLA, you can retire 3 months early. Accept simple COLA for first 4 years of retirement, retire a year early. COLA compounds every year after that. Here is another creative/idealistic/go-ahead-and-call-me-crazy idea for current retirees… 1. Tax all retirement income (with high exemption tied to inflation) 2. Allow those collecting a state pension to choose for their tax to be directly diverted back into the pension fund for the benefit of all retired and workers in the pipeline. 3. Give all retirement taxpayers the same option. 4. Give them a $100 tax credit for choosing this option, not to exceed their total tax liability. (I would love to call this the NOT-FALLING-OFF-THE-EDGE credit. still working on the acronym–too long, sure, but want to dig at corporate welfare in some way) - exasperated teacher - Wednesday, May 13, 15 @ 4:53 pm: – Facts are stubborn things - Tier 1 is a legal ethical and effective solution… Should have typed tier 2– Is this snark or do you really believe this, Facts? It is legal, for now. Eventually it will not qualify as a pension and the state and locals will be on the hook for paying SS. For this reason, I also don’t think it is effective–only in the short term, which is apparently the only kind of thinking a politician can do, particularly in Springfield. Is it ethical? I am not comfortable with Tier 2 employees subsidizing my retirement. And by its nature, that subsidy is effectively a special “tax” on Tier 2 employees who are being forced to do what the state has refused to do for decades–pay their share toward the pensions. In this way, it is more of the same: the pension system and its members are being used as a source of “revenue” because asking everyone in the state to pay for the services it expects is unpalatable. So much easier to take it out of pockets of children and future old people. Fortunately, there are 7 ethical people in the state who see this shell game for what it is. - The Whole Truth - Wednesday, May 13, 15 @ 5:01 pm: Teach- Appreciate your figures on GDP and per capita spending….had not seen those before. I would temper consideration of those figures though with Illinois’s ranking in terms of per capita tax paid….we are among the highest, if not the highest, in the nation. We also are already a leader in out-migration from the state, further eroding the tax base. Any additional taxes are going to excerbate that situation. The per capita spending you quote raises another question…if we compare that favorably with other states, what and where have we been spending to warrant our bond rating being the lowest in the nation, along with the highest pension deficit? - CapnCrunch - Wednesday, May 13, 15 @ 5:12 pm: “Cullerton estimates his latest plan could save the state about $1 billion a year, a fraction of the pension system’s overall debt, but savings he says could be spent elsewhere. ” There are two key words in that sentence, “save” and “savings”. Saving something means a reduction in the expenditure of something, - time, labor, material, or in this case, the amount of money spent on pensions. A reduction in something is a diminishment of something. The ISC said in sufficiently clear and simple language that even Mr. Fullerton should be able to understand that diminishment of pensions will not be permitted. Cullerton, Rainer, Brady, Biss, Nekritz all appear to not understand that a $1 “saved” in pension reform legislation applying to current employees is a $1 that would have ultimately gone into some retiree’s pocket under the terms of an existing contract. Mr. Cullerton should abandon this fool’s errand and start looking for new revenue or reduce spending, as he says, “elsewhere”. - Six Degrees of Separation - Wednesday, May 13, 15 @ 5:26 pm: savings he says could be spent elsewhere If there was a reamortization plan that saved money upfront so that it could be spent “elsewhere” in the present, and the retirees still get their due checks, that would accomplish what Mr. Cullerton is trying to achieve. I don’t think there is a constitutional reamortization that will achieve his purpose, though, unless more revenue is found…and we alreasy know what happens when we opt for the balloon funding scheme…it’s great till the balloon lands on your front porch. - ejpp - Wednesday, May 13, 15 @ 6:44 pm: Whats sad is the very people who caused this problem are not going to be held accountable. If you or I did this to our employees retirement accounts we would be in prison. Now the very people that stole this money/failed to fund from the pensions are the same who are going to solve the problem, right. - exasperated teacher - Wednesday, May 13, 15 @ 6:47 pm: Whole Truth= false? What is your source besides the IPI drivel? Here is mine: http://www.taxadmin.org/fta/rate/14taxbur.html Illinois rank as percent of personal income: State 23rd - exasperated teacher - Wednesday, May 13, 15 @ 6:47 pm: By the way, that took 2 minutes of research. - walker - Wednesday, May 13, 15 @ 7:10 pm: Exasperated: agree with a lot of what you say. But Tier 2 future risks SS have been way overblown and are fairly easily handled as they occur for the relatively few who might be impacted — provided of course that SS is not drastically changed in Washington. TRS is the best source on this. Your local union rep has been himself subject to a lot of smoke from above on this issue. Net: Tier 2 is a solid part of any legal solution. - Arthur Andersen - Wednesday, May 13, 15 @ 7:43 pm: -walk, are you a member of TRS? - The Whole Truth - Wednesday, May 13, 15 @ 8:00 pm: Teach- While many here disparage IPI seemingly as a matter of course, the info they sometimes present isn’t any less true or applicable. Nevertheless, here’s Pew on the out-migration: http://www.pewsocialtrends.org/2008/12/17/u-s-migration-flows/ And a separate source for the taxes: http://www.disclosurenewsonline.com/2015/04/17/wallethub-illinois-worst-state-to-be-a-taxpayer/#sthash.E2NiNEfD.dpbs - The Whole Truth - Wednesday, May 13, 15 @ 8:07 pm: Teach: Another one worth a look. The rankings have changed since 2010 with the sunset of the 5% rate, but even accounting for that, We’re among the most heavily taxed. http://taxfoundation.org/article/state-and-local-property-tax-collections-capita-state-2006-2010 - Norseman - Wednesday, May 13, 15 @ 8:31 pm: I don’t know whether to be sad or laugh at the delusional statements made by the Rauner team - hard to say superstaffers in this context. Following is an excerpt from a Trib piece by Kim Geiger and Monique Garcia. “In the unanimous ruling, justices also made clear that pension benefits promised to a public worker on the first day of employment cannot be reduced later. That distinction appeared to blow a hole in Rauner’s plan. But Wednesday, Rauner administration attorney Kim Fowler said the governor was not deterred. ‘We continue to believe that the governor’s proposal … is constitutional under the current constitution even after the Supreme Court’s ruling that came out Friday,’ Fowler said. The Rauner team’s view is that the court was unclear about whether future benefits have the same protections as those benefits already earned. ‘We don’t think the court clearly answered what benefits are protected,’ Fowler said. But in a nod to the questionable constitutionality of his plan, Rauner also wants lawmakers to put on the ballot a question asking voters to approve a constitutional amendment that would give the state explicit permission to reduce benefits accrued in future work. Such a vote couldn’t take place until November 2016, however, making it unclear how Rauner can count on $2.2 billion in savings from the pension idea in his spending plan for the budget that starts July 1.” “UNCLEAR?”(emphasis added) Maybe to the lackluster staff employed by IPI, but anyone who can read knows this is baloney. Even if it wasn’t, there is enough in the ISC opinion to get a judge to enjoin FY 16 implementation of the Gov’s (banned word) plan. Too bad Kim Fowler was the sacrificial lamb to present this ridiculous argument. - Norseman - Wednesday, May 13, 15 @ 8:31 pm: Oops, forgot to add the link to the above referenced story: http://www.chicagotribune.com/news/local/politics/ct-illinois-pensions-met-0514-20150513-story.html - AnonymousOne - Wednesday, May 13, 15 @ 8:39 pm: Are these people sane? Read article about how Cullerton admitted out loud in a WGN radio interview that there is no pension crisis. https://preaprez.wordpress.com/2015/05/13/ken-previti-cullerton-knows-no-shame/ - TIRED OF THIS - Wednesday, May 13, 15 @ 9:37 pm: Just stop and think about it. If it saves money for the state or the city, it cut’s the pension benefits. another law suit ..UNCONSTITUTIONAL!!! Stop wasting time and put in place your 401 plan with all the other changes that are needed for all new workers..today. Then at least there will be an end this in 60 or 70 years - Arthur Andersen - Wednesday, May 13, 15 @ 10:36 pm: Wow. Kim went under the bus before she barely had time to unpack. - RNUG - Wednesday, May 13, 15 @ 10:37 pm: - Norseman- Maybe this is the problem: http://www.newyorker.com/humor/borowitz-report/scientists-earth-endangered-by-new-strain-of-fact-resistant-humans - Norseman - Wednesday, May 13, 15 @ 11:15 pm: That is hilarious RNUG. - Property of IDOC - Thursday, May 14, 15 @ 12:04 am: Joe blow @ 2:56 Maybe we should privatize your psych nurse. - PublicServant - Thursday, May 14, 15 @ 6:53 am: ===Are these people sane? Read article about how Cullerton admitted out loud in a WGN radio interview that there is no pension crisis.=== Cullerton is quite sane my friend. It’s clearly not a pension crisis, even though I’m sure you’d like to label it as such. What it is is a debt crisis. The state borrowed…a lot, to keep our income taxes unsustainably low. They way they borrowed was foolish too, since they’re paying north of 7.5% on that debt. There’s a foolish plan put in place by a Republican governor to pay that debt back on a schedule that was heavily backloaded allowing the state to continue to short the pensions for years. Well we’re well into those backloaded years of the ramp now, and at a 5% interest rate not only were the state’s debt payments sustainable, the state was able to fund its programs, and begin to pay down its backlog of payments. Every taxpayer was paying, and that is the solution. Resume the reasonable 5% flat rate, until a constitutional amendment allowing a graduated income tax can be voted on, and then we can reduce the rates on the middle class and the poor. - AnonymousOne - Thursday, May 14, 15 @ 7:35 am: Public Servant……I’m on your side. Of course, this is a debt problem created by shorting the pension fund (real peoples’ retirement savings, mind you) and the only way anyone seems to want to fix it is to not only ignore what the Supreme Court rules (and the Illinois Constitution says) but also to punish the very workers who were hurt in the first place! There is no question that public workers and retirees are the official scapegoats in our state’s financial woes even though everyone else has benefitted from their loss. The fight against corruption continues. Sorry, comments for this post are now closed.