* From a a CTPF communique to its members…
This morning the Chicago Teachers’ Pension Fund (CTPF) Board of Trustees met in a special meeting where representatives of the Chicago Public Schools (CPS) presented a proposal to create a short-term employer payment plan. At the meeting, CPS Interim Chief Executive Officer Jesse Ruiz, Chief Administrative Officer Tim Cawley, and the City of Chicago’s Chief Financial Officer Carole Brown outlined a proposal which would not reduce pension funding, but would help CPS close a $500 million budget gap for 2016.
Under the terms of the proposal, CPS would discontinue its practice of making a single annual pension payment on the last business day of the year and would instead make monthly payments to CTPF, beginning in January 2016 and continuing for the next 10 years.
This new funding schedule would defer approximately $500 million of the FY 2016 payment into the FY 2017 fiscal year. The proposal requires CPS to pay interest at 7.75% on the deferred amount and requires $750 million in collateral to secure the agreement.
Following a period of discussion and debate, the board voted to communicate its general support for the proposal, and authorized a subcommittee of the Board of Trustees to continue negotiations and discussions with CPS. The subcommittee is expected to meet in July and will make a recommendation to the full board later this month.
“We were encouraged to see representatives of CPS at our meeting this morning and appreciate the opportunity to openly discuss payment security for the Fund,” said CTPF Board of Trustees President Jay C. Rehak. “While we still have concerns about this proposal, we look forward to working through these issues so that our members’ interests are protected and our Fund receives all the revenue necessary to meet the pension commitments made by CPS.”
“Under the current statute, CTPF receives revenue once a year, on the last business day,” said CTPF Executive Director Charles A. Burbridge. “This proposal revises the payment schedule, but ensures that we have a monthly revenue stream and provides security and interest on a deferred amount, which is reassuring for our members.”
The subcommittee is expected to make a recommendation in advance of the full board meeting on July 16, 2015.
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House comes up short on temp budget
Wednesday, Jul 1, 2015 - Posted by Rich Miller
* The House came four votes shy of passing the “essential services” one-month budget today. I didn’t see the Big Board and the roll call isn’t posted online yet, but Madigan’s spokesman said all Democrats in the building voted for the bill, so it may have been an attendance issue. Attendance issues are common, even during May. Getting everybody into Springfield during July is very difficult.
The bill wasn’t placed on “Postponed Consideration” because the Senate passed an identical bill earlier today. Today’s House failure, in that context, didn’t matter because for parliamentary reasons the chamber couldn’t have voted on the Senate’s bill today anyway.
Press release…
Madigan: Rauner Shutdown Looking More Certain with No Budget Agreement
SPRINGFIELD, Ill. - House Speaker Michael J. Madigan issued the following statement Wednesday on the House’s plans to pass an essential services budget aimed at preventing or minimizing a service shutdown that would disrupt the lives of many middle-class families.
“The number one issue facing the state of Illinois right now is the budget. In the days ahead, I will work to pass a short-term spending plan to see that the lives of struggling and middle-class families are not disrupted.
“In light of the governor’s unwillingness to work with the Legislature to pass a budget that adequately funds important state services, today the House tried to pass an essential services budget to avoid a shutdown of state government. My goal is to avoid a shutdown of core, critical services. I believe that should be the top priority of the governor and the Legislature at this moment.
“Since January, I have said a budget that protects the middle class and vulnerable residents would require a balanced approach that includes spending cuts and revenue. Rejecting a balanced approach in favor of a budget that focuses on cuts alone will negatively impact middle-class families and severely harm the medical care services of the elderly, the disabled and struggling families, services for victims of child abuse, and nursing home care for thousands of frail elderly residents.
“Despite the governor’s lack of cooperation on the budget, in the spirit of compromise, the House has debated several non-budget issues and given each a fair hearing. The property tax freeze, including the governor’s own proposal, received five chances to pass. Each time, the issue received little support from House Republicans. The House passed a compromise bill to help employers save on workers’ compensation costs and we passed a bill to privatize a portion of the Department of Commerce and Economic Opportunity at the governor’s request.
“My focus remains on passing a budget that takes a balanced approach and includes spending reductions and revenue to preserve the services that the people of Illinois expect the state to deliver.”
* By the way, the House just announced that it will be in session next Wednesday and Thursday. The Senate’s not coming back for two weeks.
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* Sun-Times…
Also being curtailed: elementary school sports and 5,300 coaching stipends. And $18 million will be saved by cutting network offices and teacher development programs.
Teachers also could take another financial hit by paying more toward their pensions. They are supposed to contribute 9 percent of their salary, but for some time now, under a deal negotiated in past contract talks, they have paid just 2 percent; CPS picked up the rest. Emanuel wants teachers to make their full contribution once again — but that will have to be negotiated.
Also taking hits: $11.1 million will be saved by cutting the repair and maintenance budget by 25 percent. And $15.8 million will be saved from startup funding for new charter development.
Emanuel told reporters that class size will not go up, but schools will be impacted. And he again complained that CPS had a larger pension burden than other school districts — and that Springfield had done nothing to fix that situation.
* Greg Hinz…
Even with such cuts, which amount to about $200 million a year, more cuts are on the way unless help arrives from Springfield, Emanuel said. […]
Emanuel offered two [pension] options, which he said would work. The first is to merge the Chicago teachers pension fund with the fund that covers the rest of the state—a most unlikely alternative given political realities.
His Plan B is for the state to pick up the annual “normal costs” of pensions. (Normal costs are what’s needed excluding payment of old debts.) Also part of Plan B is requiring teachers to pay the 7 percent of salary for pensions themselves that now is covered by CPS under an old contract agreement.
Also in Plan B, a huge concern to city taxpayers—more revenue: “$175 million to $200 million,” the mayor said.
Speaker Madigan has said he doesn’t like that “normal cost” pickup because he goes the opposite direction of making school districts pick up those normal costs.
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Rauner, Teamsters agree to new contract
Wednesday, Jul 1, 2015 - Posted by Rich Miller
* It’s a small bargaining unit, but, still…
After several productive rounds of good faith negotiations, the Illinois Governor’s Office and Teamsters Local 700 have agreed to terms on a new four-year collective bargaining agreement. The current agreement expired June 30, 2015.
The new contract covers nearly 350 workers at IDOT, CMS, IDES, and DHS in Cook County. The employees work as highway maintainers, heavy equipment operators, and building service and maintenance workers. Negotiations are ongoing for employees represented by Teamsters locals at locations covering the rest of Illinois.
The terms of the tentative agreement include:
Maintenance of the current level of health care benefits for employees and their dependents as part of the State’s continued contributions to the independent Teamsters Local 727 Health & Welfare Fund.
A four-year wage freeze, continuing the 75% in-hire rate.
Continuation of a 40-hour work week.
A new performance incentive program to reward employees with bonuses for cost-saving measures and meeting or exceeding performance metrics.
A collaborative program that allows management and the Teamsters to work together to provide low-cost alternatives to outsourcing.
A reduction in the payout for accumulated unused vacation from 75 to 45 days for employees hired after January 1, 2016.
The tentative agreement will be submitted to the membership of Teamsters Local 700 for a ratification vote.
As a continuation of the productive negotiating sessions, the Teamsters and the Governor’s Office also pledged to form a long-term relationship to improve employer-labor relations in state government.
Discuss.
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Chicago-style accounting
Wednesday, Jul 1, 2015 - Posted by Rich Miller
* Have you been wondering where CPS got the money to make its $634 million pension payment yesterday? I’m told they took out some more loans based on future revenues, like this fall’s property taxes. And now they want another one…
One day after using borrowed money and savings generated by 1,400 layoffs to make a $634 million payment to the teachers pension fund, Mayor Rahm Emanuel’s administration is asking the pension fund for a $500 million loan.
At a pension fund meeting Wednesday, Chicago’s newly-appointed Chief Financial Officer Carole Brown said she’s well aware it’s a “big ask,” particularly after the history of pension holidays and partial payments that created the $9.5 billion pension crisis at the Chicago Public Schools. […]
Although pension fund trustees expressed their “general overall support,” it wasn’t without a heavy degree of hand-wringing.
One trustee questioned the idea of “hoping Springfield can come through for us” in the toxic atmosphere of a state budget stalemate between Democratic legislative leaders and Republican Gov. Bruce Rauner over Rauner’s demand for pro-business, anti-union reforms.
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Always read the fine print
Wednesday, Jul 1, 2015 - Posted by Rich Miller
* The undoubtedly crowd-pleasing headline…
Budget impasse grounds state air fleet
* Red meat for sure…
Although a handful of GOP lawmakers have used the shuttle in the past year, a passenger manifest obtained through the Freedom of Information Act found the seats are largely dominated by the same Chicago Democrats who say Rauner’s agenda for workers’ compensation laws, limits on civil lawsuits and a revamp of local prevailing wage laws would harm the middle class.
* Fine print…
But, despite grounding the shuttle, which cuts travel times between Springfield and Chicago, the Illinois Department of Transportation says there are no layoffs planned at the division that oversees the service.
“There are five pilots employed by the Division of Aeronautics. No layoff notices have been issued at this time,” said IDOT spokesman Guy Tridgell. […]
Before the grounding, pilots earning between $94,000 and $105,000 annually typically made 500 flights annually. Now, they will be available for emergency uses, such as when an agency head needs quick access to one of the state’s far-flung facilities… Tridgell also said no layoffs are planned among the rest of the division’s workforce.
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*** UPDATED x1 *** An independent mind
Wednesday, Jul 1, 2015 - Posted by Rich Miller
* Rep. David Harris (R-Arlington Heights) is one of my favorite legislators because, whether you agree with him or not, he has an independent mind and is not afraid to calmly speak it…
“In my view, they are at an absolute impasse,” Harris said. “Both sides are kind of right.”
He said Democrats’ criticism of Rauner’s push to tie other non-budget related items to the budget, such as term limits and redistricting reform, is fair, but he disagreed with criticism from Democrats of Rauner’s inclusion of other reform items that could have budget implications. Those items include collective bargaining, workers compensation reform, prevailing wage reform and a proposed two-year property tax freeze.
Again, you may not agree that collective bargaining and whatever should be on the table, but he’s right that they’ll all impact the budget one way or another (maybe negatively in some cases, like a property tax freeze).
* And speaking of Rep. Harris…
Earlier today I submitted a letter to the Comptroller asking her to move my salary from a direct deposit arrangement to a paper check. I understand that this is the procedure that former Gov. Quinn used when he refused to accept his salary during the disagreement with the General Assembly regarding his veto of legislators’ salaries.
By moving to a paper check, I am asking the Comptroller to withhold my paycheck in the event that the current budget disagreement continues through July and that other State employees are not paid when paychecks are due.
Because of PA 98-682, it is my understanding that legislators’ salaries are on a continuing appropriation and thus would be paid notwithstanding the lack of a budget agreement.
I have stated many times that I believe it is inappropriate for legislators to be paid on time if other State employees are not paid on time.
Unlike Quinn, Harris is not a grandstander. I see this more as a leading by example thing.
*** UPDATE *** From a press release…
State Rep. David McSweeney (R-Barrington Hills) today sent Illinois Comptroller Leslie Munger a letter asking to be removed from the state’s direct deposit payroll until further notice saying he does not want to accept his legislative salary if state employees are not getting paid.
State law allows legislators to receive pay even if a state budget agreement is not in place. However, if a state budget deal is not reached before July 15th, state employees might not be able to receive their pay.
McSweeney said by opting out of the state’s direct deposit system he is following the lead of State Rep. David Harris (R-Arlington Heights) who has also sent the Comptroller a letter opting out of his legislative pay.
“I do not think it is right for legislators to receive a paycheck when state employees might not receive the pay they have rightfully earned. We should do our job and quickly adopt a permanent budget without any tax increases.”
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* Rewrite to do right…
To the Honorable Members of
The Illinois Senate,
99th General Assembly:
Today I return Senate Bill 1354, one of several budget implementation bills, with a specific recommendation for change.
After a decade of mismanagement, the State of Illinois is facing an unprecedented fiscal crisis. The State is suffering from a debt burden well in excess of $100 billion.
Instead of acknowledging this reality, the General Assembly passed an unbalanced and unconstitutional budget for Fiscal Year 2016. Last week I vetoed 19 of those appropriation bills and have asked the General Assembly to work with me to craft a balanced budget.
A balanced budget requires shared sacrifice. My Administration has reduced State personnel costs among agencies under my jurisdiction by $4 million during the first four full months (February through May) of this year, compared to the same period last year.
Under these circumstances, the State cannot afford to give legislators a raise. Illinois legislators are already among the highest paid in the United States, earning $68,000 to $95,000 per year for part-time service, plus per diem payments and mileage reimbursement. Without the change recommended below, legislators would receive raises ranging from $1,356 to $1,905 for Fiscal Year 2016 and increases in both the per diem amount and mileage reimbursement rate.
I recommend that Senate Bill 1354 be changed to eliminate raises for legislators, elected officers of the Executive Branch, and agency directors and other highly compensated State officials, and to freeze the per diem amount and mileage reimbursement rate. Budget implementation bills must give us the tools to implement a balanced and realistic budget, and this change is an important step in closing our budget deficit. A similar provision has been enacted for each of the past six fiscal years.
Therefore, pursuant to Section 9(e) of Article IV of the Illinois Constitution of 1970, I hereby return Senate Bill 1354, entitled “AN ACT concerning State government”, with the following specific recommendation for change:
I’ll get a link or a file so you can read the whole thing in a bit.
If the GA refuses to act, as is often the case with these, the whole BIMP goes down.
…Adding… The full veto message is here.
…Adding More… Wasn’t it sweet of the Tribune editorial page to provide a conveniently timed framing of this issue for the governor today?…
Office of the Governor
Bruce Rauner
Wednesday, July 01, 2015
ICYMI: If there’s a shutdown, guess who won’t feel it?
The following is an excerpt of an Op-Ed that was published by the Chicago Tribune:
Remarkably, while workers face layoffs, state legislators won’t feel the pinch, thanks to a bill passed last year. It classifies legislator pay as a continuing appropriation — a budget item that state law mandates be funded even in the event of a government shutdown. The bill puts compensating part-time legislators on par with the state’s big-ticket items such as debt and pension payments and retiree health benefits.
This bill was pushed through the General Assembly on the last day of the 2014 spring session, with full support from Democratic supermajorities in both chambers. Supermajorities who owe their place in the debacle that is Springfield to the millions of dollars they receive to fund their campaigns from state worker unions. The same state workers who are jeopardized by the budget impasse.
But, hey, no skin off Rep. Kate Cloonen’s back. The Kankakee Democrat’s paycheck will arrive right on time, thanks to her vote on the bill. Same with Reps. Deb Conroy, D-Villa Park; Mike Smiddy, D-Hillsdale; Marty Moylan, D-Des Plaines; Michelle Mussman, D-Schaumburg; Carol Sente, D-Vernon Hills; and John Bradley, D-Marion. Why run the state and deliver necessary services efficiently when you can win an election? Why protect the lives that people are trying to build when you can make the new Republican governor look like a villain?
Lovely.
*** UPDATE *** From the governor’s office…
Under a longstanding resolution, the GA gets an automatic COLA increase unless they vote to stop it. They have done so often, including each of the past six years.
Here are the bills that denied the COLA in recent years: FY10 (P.A. 96-800), FY11 (P.A. 96-958), FY12 (P.A. 97-71), FY13 (P.A. 97-718), FY14 (P.A. 98-30), and FY15 (P.A.98-682)
Some of these are stand alone bills (eg 98-30). Others are BIMPs or coupled with other fiscal changes (eg 98-682).
The GA normally acts before July 1. But there is nothing to stop them from accepting our amendment now, before the first paycheck. If they do, it would difficult for them to assert a constitutional challenge, in particular because it is a change by their own acceptance.
This is different than what Quinn tried to do when he stopped paying them and tried to line item veto their salaries. We are asking only that the GA take the same vote they have repeatedly done.
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Um… Huh?
Wednesday, Jul 1, 2015 - Posted by Rich Miller
* Erickson…
“I am for a temporary budget to make sure essential services are taken care of,” said state Rep. Mike Smiddy, D-Hillsdale.
But, Republican lawmakers said they oppose the idea. And, they rejected accusations they were playing a game of political chicken designed to see which side would blink first.
“I hope that’s not the case because these are people’s lives we’re dealing with,” said state Rep. Bill Mitchell, R-Forsyth. “The General Assembly should do what it is supposed to do… and that is pass a balanced budget.”
State Rep. Adam Brown, a Champaign Republican who last week supported a temporary budget, changed his opinion Tuesday after the governor’s staff weighed in on the issue.
“I think listening to the administration today you’re hearing that essential services will continue to be funded and I think that’s extremely important and that’s the right path,” Brown said.
* The synopsis of HB 4235, introduced June 29th by Rep. Bill Mitchell and joined as co-sponsor on Tuesday by Rep. Adam Brown and several other Republicans…
Expands current continuing appropriations provisions to cover executive branch operations and all State universities (currently, the provisions cover only judges and the legislative branch).
Defines “executive branch operations” to include all State agencies, the office of any constitutional officer, including any agency or entity reporting to a constitutional officer, and any agency, board, commission, or other entity of the executive branch. Effective immediately.
Signing onto that bill would mean support for spending way more money than the state is projected to bring in next fiscal year.
…Adding… SJ-R…
Springfield Republican representatives Raymond Poe and Tim Butler did not rule out supporting the temporary budget.
“This isn’t the answer, but I’m going to take a hard look at it,” Butler said. “I’m someone who wants to see government keep running, but I continue to feel this is just one more kicking the can down the road instead of getting to the table and talking about things.”
Rep. Butler is also listed as a co-sponsor.
…Adding… From Rep. Mitchell in comments…
The bill I filed wouldn’t increase spending. It would pay currently employed state and university employees what they are entitled to. They are reporting to work. They should be paid.
OK, but compare that to the logic used by Gov. Rauner’s budget director earlier today. Under that framing, you could conceivably “extrapolate” higher costs in FY 16.
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* From December 12, 2014…
On a preliminary trip to Springfield after winning the November election, Governor-elect Bruce Rauner held a press conference to draw attention to some of the gimmicks included in the current State budget, including interfund borrowing.
Mr. Rauner called the plan to use $650 million borrowed from Special State Funds for FY2015 General Funds operations “fundamentally wrong.” The Governor-elect critiqued the practice, known as interfund borrowing, due to the requirement to pay back the funds over the next 18 months and the gap it creates in the FY2016 budget.
* Well, the governor has reversed course…
Gov. Bruce Rauner has borrowed $454 million from special state funds to help manage cash flow as Illinois begins a new fiscal year without a budget.
The Republican borrowed the money from more than two dozen funds designated for other purposes. The largest amounts came from an account for school infrastructure and a fund to help low-income people pay utility bills.
Rauner, you will recall, refused to tap into that borrowing authority during the spring, demanding instead that lawmakers permanently sweep special funds.
* An e-mail from Mike Schrimpf…
Gives us greater flexibility to manage cash flow without a budget and helps reduce the specter of prompt payment penalties, which the state has routinely faced.
The School Infrastructure Fund is hit for $179 million, LIHEAP will take a $75 million hit, etc.
This is actually not a bad idea on both the governing and political sides of the equation. It will most definitely help the administration keep its head above water for a while as it struggles to pin the blame for the budget crisis on Democratic intransigence.
…Adding… A commenter asks…
Ok. Pardon my ignorance but if the AG says money can’t be spent without an appropriation how can the gov spend this?
They can use this money to pay FY 15 bills, which will help keep some not for profits, etc. afloat.
…Adding More… A valid complaint registered in comments…
(T)hat’s a nice little $450 million hole we’re starting off with in FY ‘17 without even wrapping up FY ‘16, isn’t it?
The governor loves to use the phrase “kicking the can,” and he did just that today.
Again, this is I believe a prudent move, but it’s not anywhere near consistent with even his recent remarks.
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Ounce joins budget coalition statement
Wednesday, Jul 1, 2015 - Posted by Rich Miller
* This is, of course, Mrs. Rauner’s group, which makes it newsworthy. From a June 30th press release…
The Ounce of Prevention Fund announced that it has joined a coalition of more than 300 nonprofit organizations across Illinois in calling on Governor Rauner and the General Assembly to work together to pass a fair, adequate and fully funded Fiscal Year 2016 budget before the new fiscal year begins on July 1st. A letter from the nonprofits—representing a cross-section of education, health and human service organizations—was hand delivered today to Governor Rauner, Speaker Madigan, President Cullerton, Leader Durkin, and Leader Radogno, along with many other legislative and administrative leaders. The letter highlights the devastating impact budgetary inaction has and will continue to have on the nonprofits and the children and adults who rely on their programs and support, as well as those services provided directly by the state.
Nonprofit organizations are the backbone of the delivery of state services to families who rely on childcare assistance; individuals with physical, developmental, and/or intellectual disabilities; senior citizens; children and adults with mental illnesses; individuals with HIV; and many more. In addition to the services nonprofits provide on behalf of the state, community-based organizations are significant contributors to the local economy, employing thousands as well as buying goods and services from other local businesses. With July 1st quickly approaching and no state budget in place, nonprofits across the state have no choice but to contemplate and, in some cases execute, plans to terminate services, lay off staff and close service sites.
“When the state government is in a stalemate, it is our most vulnerable citizens and the organizations who serve them that pay the highest price. But these children and families, and these organizations, are our friends, our families, our neighbors, our communities. When they suffer, we all pay the price in the short- and long-term,” said Elliot Regenstein, senior vice president of advocacy and policy, Ounce of Prevention Fund. “Already we are seeing the consequences of not having a fair, fully-funded budget, with partners like Family Focus and Easter Seals Central Illinois reducing or making plans to reduce staff and services. They are just two organizations of the hundreds being forced to make these difficult, devastating decisions.”
Family Focus offers a wide range of family support programs for children and families, plus outreach, referral and crisis services at 7 direct service centers in low-income communities throughout the Chicago metropolitan area.
“If the state does not have an approved budget on July 1, we will have to immediately suspend services to more than 3,600 people and lay off 50 staff. Working families cannot afford continued cuts—they need these critical supports to effectively contribute to our economy,” said Mariana Osoria, center director of Family Focus - Nuestra Familia.
The impact of the budget impasse will be felt throughout the state. For example, Easter Seals Central Illinois will have to suspend its Child and Family Connections-Early Intervention service coordination if there is no budget in place by July 1. According to Jim Runyon, executive vice president of strategic initiatives, governmental affairs, & grants, the organization will have to furlough 37 staff and 1,600 families and their children will see their Early Intervention support services suspended until a resolution is reached.
To learn more about the urgency to pass a budget that serves all of Illinois, including the sustainable revenue needed to fund the programs families need, and to view the complete letter, please visit theOunce.org.
Discuss.
…Adding… From an e-mail…
Rich,
In addition to my role as Voices’ Policy and Advocacy Director, I also run the Responsible Budget Coalition (along with Dan Lesser at Shriver.)
I want to let you know that the Ounce has been a part of the RBC since its inception. They have been a major player in all of our work, and there has never been a departure from our pro-responsible budget, anti-cut position. The Ounce has always stood strong with the entire RBC in our belief that families and communities do not function in silos, and cannot be bifurcated into line items that can be eliminated or reduced.
That’s why the Ounce, along with Action for Children, Voices and the Latino Policy Forum, officially testified against all of governor’s proposed budgets, including the K-12 budget—taken as a whole, cuts it hurts families and communities.
To see the Ounce’s position on revenue, one only has to look at everything the RBC has said. They are an active member of the group, and their knowledge base is vital to our success.
Just want to make sure that’s clear—this is not a new development.
Thanks.
Emily
Emily Miller
Policy and Advocacy Director, Voices for Illinois Children
Co-Coordinator, Responsible Budget Coalition
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