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A major first: Rauner kinda admits a mistake

Friday, Jan 22, 2016

* Mike Schrimpf sent this out at around 5:30 yesterday…

Reporters –

To clarify a lot of misinformation that has been circulated today, below is a summary of President Cullerton’s consideration model for pension reform, which the governor is supporting. If President Cullerton has specific concerns with legislative language, we are confident those can be worked out. What is imperative now is for President Cullerton to make clear whether or not he stands in support of the below consideration model, developed by his office.

Pension Plan Summary
Benefits

    Tier 1 members (hired before January 1, 2011) in SERS, SURS, TRS, and GARS are provided two choices and must make an election between the two choices.

Choice 1

    · COLA is the lessor of 3% OR ½ CPI, simple interest on the originally granted annuity.
    In Exchange For
    · Future increases in salary will count as pensionable salary.

Choice 2

    · No changes to current level of pension benefits; COLA remains at 3% annually, compounded.
    In Exchange For
    · Future salary increases will not count as pensionable salary.​

Best,

Mike

* Any “misinformation” was solely created by Gov. Rauner himself when he told reporters

“In order for President Cullerton’s bill to be constitutional, salary increases have to be taken out of collective bargaining. This is a key point. Salary increases come out of collective bargaining. So the union has nothing to do with it in the future.”

That’s just not true. It’s so untrue as to be ridiculous.

So, I asked Schrimpf why he didn’t just admit the governor made a mistake, which would instantly clear everything up.

Somebody else from the office called and we had a bit of a shouting match. Friendly, to be sure, but quite loud and extended.

* And then Schrimpf sent an e-mail labeled “Important Update” at 8:19 pm…

Please attribute to governor’s office:

“Perhaps the governor was not as precise in his word selection as the Democrats would have liked. To be clear, the governor agrees with the Senate President that the only labor law revisions that are necessary are those modest ones that ensure that employers shall not be required to bargain over compensation or benefits affected by President Cullerton’s changes, the impact of those changes, or the implementation of those changes. This is what the governor was trying to say. We agree. Let’s move forward to get pension reform done.”

* Natasha Korecki

Reporters immediately raised suspicions in tweets and initial stories, wondering why Cullerton wasn’t standing next to Rauner. Plus, Rauner’s language was incendiary, sounding anything like someone who was trying to build bridges. He blasted Madigan, he blasted unions. Above all though, he said something Cullerton, who has courted unions, said he never would have agreed to: “Salary increases come out of collective bargaining so the union has nothing to do with it in the future. That is necessary and a requirement for this to be constitutional.” Adding that his and Cullerton’s lawyers agreed on this point. But, according to Cullerton, they hadn’t.

Take-away: Rauner’s credibility is on the line after this one. Illinois Playbook flagged earlier this week that Rauner was expected to make a series of announcements in the leadup to next week’s State of the State address. If his intentions weren’t questioned before. They will scrutinized closely, if not dismissed.

That said: Late Thursday, Cullerton’s office seemed open to moving forward with Rauner if indeed he was not demanding a poison pill. But the whole episode reflected the deep-seated distrust among the parties. The media was not kind.

This isn’t DC. But she makes a good point.

- Posted by Rich Miller        

77 Comments
  1. - Politix - Friday, Jan 22, 16 @ 9:15 am:

    “They will scrutinized closely, if not dismissed.”

    Nice of them to start scrutinizing and dismissing after a solid year of lies and half-truths.


  2. - 360 Degree TurnAround - Friday, Jan 22, 16 @ 9:17 am:

    I agree with the point. Every Governor deserves some trust in the beginning, but with this week…everything that comes out of the Governor’s office needs to be scrutinized. They have proven they can’t be trusted. They don’t have it all together.


  3. - Kinda - Friday, Jan 22, 16 @ 9:17 am:

    “Perhaps the governor was not as precise in his word selection as the Democrats would have liked” sounds like a passive-aggressive, non-apology apology.


  4. - Saluki - Friday, Jan 22, 16 @ 9:18 am:

    “To be clear, the governor agrees with the Senate President that the only labor law revisions that are necessary are those modest ones”

    This is the first time I remember since this whole trail of tears began that the words “agree” and “modest” have appeared. It is not much, but it is a tiny, microscopic, light at the end of this tunnel…..maybe…..might still be an on coming train……


  5. - cdog - Friday, Jan 22, 16 @ 9:18 am:

    As reported elsewhere,
    If your opponent isn’t standing next to you,
    while you claim you have reached agreement and compromise with said opponent,
    move on with your day;
    it’s just more garbage.


  6. - Joe M - Friday, Jan 22, 16 @ 9:18 am:

    Todays statements from the Governors Office don’t make any more sense than yesterdays statements did. Why doesn’t the Governor just own up and say it, “I want to bust unions, period, and will try to do so with every piece of legislation I promote. I dont’ care about budgets and pensions or any of that. I just want to bust unions!”


  7. - Joe M - Friday, Jan 22, 16 @ 9:21 am:

    == …the only labor law revisions that are necessary are those modest ones” ==

    I would not call taking wages out of collective bargaining a modest proposal.


  8. - LINK - Friday, Jan 22, 16 @ 9:21 am:

    Rich.

    I just hope you were not the only press to contact the governors office on this issue. I would love to have been a fly on the wall for that phone call…


  9. - Dee Lay - Friday, Jan 22, 16 @ 9:22 am:

    “Perhaps the governor was not as precise in his word selection as the Democrats would have liked.”
    ::Every eyeroll gif ever::

    These guys are absolute clown shoes.

    How does choice two pass constitutional muster again?


  10. - Casual observer - Friday, Jan 22, 16 @ 9:24 am:

    Does this mean the Governor has finally had his AHA moment where he realizes he has overplayed his hand?


  11. - LizPhairTax - Friday, Jan 22, 16 @ 9:24 am:

    Joe M +1 and if we had that upvote doohickey I’d use my bitcoins or whatever to promote


  12. - Anon221 - Friday, Jan 22, 16 @ 9:24 am:

    Quite a lot of “foisting” going on with President Cullerton this and President Cullerton that. The audio was pretty clear yesterday that Rauner is gaming and then is surprised when he’s left alone after the game of “Red Rover”. Misunderstanding of a situation is not a first for him- http://www.wbez.org/news/hear-what-happened-when-bruce-rauner-met-rahm-emanuel-first-time-114563 .


  13. - Anonymous - Friday, Jan 22, 16 @ 9:26 am:

    Very clumsy! A cow in a china shop.

    Current pension law does tie salery to pension benefit, to remove that would be a diminishment. Where is the choice to keep what I have or the choice where you gain something because you gave up something.


  14. - DeKalb Guy - Friday, Jan 22, 16 @ 9:26 am:

    How will they force people to make a choice? Fire you if you don’t choose? Make a default choice which wouldn’t be a choice? Lawsuits to follow in any case.


  15. - DeKalb Guy - Friday, Jan 22, 16 @ 9:27 am:

    As for Rauner, it is despairing that he hasn’t already been scrutinized more in the mainstream media.


  16. - Anonymous - Friday, Jan 22, 16 @ 9:29 am:

    Just to follow up with a legal example of consideration. Keep what you have or accept 3% slmple interest again in exchange for a one time $10,000 raise.


  17. - Oswego Willy - Friday, Jan 22, 16 @ 9:32 am:

    “He said it, it was wrong, here’s what was suppose to be sai”

    Mistakes happen every day.

    How you decide to address them is how the mistake is usually framed long after the mistake is forgotten.


  18. - Henry Francis - Friday, Jan 22, 16 @ 9:33 am:

    The combination of arrogance and ignorance consistently exhibited by this administration is astounding.


  19. - Honeybear - Friday, Jan 22, 16 @ 9:34 am:

    The elephant I see in the room is the fact that Madigan will most likely betray labor the second it becomes advantageous. I don’t know if Cullerton would do the same but it seems likely now.
    It just so saddens me that our politicians would plot, scheme, and engage in perfidy against public servants like me who are devoted to making this state better. Why is it that I deserve to be treated like this? Good people like me and those I work with put it on the line every day and we are abused, denigrated, and taken advantage of. You say our union buys politicians at the same time that corporate and billionaire money outpaces AFSCME PEOPLE contributions by five to one (I’ll be honest I think that was the ratio, but I don’t have the stat.) Don’t get me wrong so many people on this blog are supportive of me and public servants and yet keep quite when they are going after us. Please support and defend those who have chosen to work on behalf of the State of Illinois. Please


  20. - The Dude Abides - Friday, Jan 22, 16 @ 9:34 am:

    @DeKalb Guy, agree with you on both counts.


  21. - Tumbleweed lines - Friday, Jan 22, 16 @ 9:36 am:

    Damage control after release of his new high (above 50%) negatives. HR’s will slowly be pushing away from him as the inner circles are now calling Rauner “toxic” to their campaigns.


  22. - Centennial - Friday, Jan 22, 16 @ 9:37 am:

    Would this apply to already retired members of Tier 1? The language doesn’t make that clear to me.


  23. - A Jack - Friday, Jan 22, 16 @ 9:38 am:

    Well I suppose the Governor would have to actually offer future salary increases for choice 1 to even be viable.

    Either choice still seems like diminishment to me. I thought Cullerton’s bill contained some additional consideration as well, otherwise I doubt if it’s constitutional.


  24. - Boone's is Back - Friday, Jan 22, 16 @ 9:39 am:

    Kind of hard to build the bridge if you’re lighting the wood behind you on fire…


  25. - burbanite - Friday, Jan 22, 16 @ 9:40 am:

    ” that the only labor law revisions that are necessary are those modest ones that ensure that employers shall not be required to bargain over compensation ” umm, doesn’t that mean they would be barring collective bargaining on wages? Just not using the word collective bargaining?


  26. - RNUG - Friday, Jan 22, 16 @ 9:40 am:

    This Cullerton proposal, to rephrase it, is capping the pensionable salary. The IL SC said in the SB-1 decision (as a footnote, I think) that you can’t impose a salary cap. They’ve also said it previously. Don’t think this will fly but we’ll have to wait for the court to say so.

    To the other part of the post, I think I suggested yesterday that Rauner was making a poor choice of words in some of his answers.


  27. - Boss Tweed - Friday, Jan 22, 16 @ 9:44 am:

    It’s just pathological. The Turnaround Agenda, the local government reform plan, now this. This one takes the cake, ’cause now it actually appears that the plan *doesn’t* necessarily involve whacking unions, he just personally wants to do it so badly that he can’t help but bring it up. He can’t help himself.


  28. - Cubs in '16 - Friday, Jan 22, 16 @ 9:47 am:

    “Perhaps the governor was not as precise in his word selection as the Democrats would have liked.”

    Why does it always have to be about D or R? I’d wager there are a lot of non-Dems who felt the gov. was not “precise”. I myself don’t ascribe to either party and believe the gov. was entirely imprecise. How does Schrimpf account for that?


  29. - ILPundit - Friday, Jan 22, 16 @ 9:48 am:

    “This isn’t DC”

    Did I miss something in the clip from Natasha Korecki? I don’t understand the context of that comment. Could someone enlighten me?


  30. - RNUG - Friday, Jan 22, 16 @ 9:49 am:

    -Centennial-

    It only applies to employees. Rauner has pretty much conceeded he can’t go after the retirees until he gets the Feds to approve states taking bankruptcy.


  31. - Crispy Critter - Friday, Jan 22, 16 @ 9:49 am:

    If they put as much effort in figuring out how to fund the pensions as they do trying to figure a way to weasel out of it, they could solve this. The politicians are living the circus life, always another show.


  32. - Anonymous - Friday, Jan 22, 16 @ 9:55 am:

    This is “facts” on a loner device.

    Rung,

    I can hear the union attorney in oral arguments with the isc say, ” justices, if all the state has to do is not tie future raises to pension benefits then what good is the constitution ….such an easy end run around the limits that citizens placed on their government”.


  33. - Shark Sandwich - Friday, Jan 22, 16 @ 9:55 am:

    “I would not call taking wages out of collective bargaining a modest proposal.”

    It is, though, in the Jonathan Swift sense. Not nearly as drastic as suggesting using poor Irish babies as a food source, but then they aren’t writing a satire.


  34. - Anonymous - Friday, Jan 22, 16 @ 9:56 am:

    Tried to type rung…sorry


  35. - RNUG - Friday, Jan 22, 16 @ 10:02 am:

    -Anonymous-

    No apology necessary. I fight auto-correct on my phone all the time.


  36. - The Muse - Friday, Jan 22, 16 @ 10:04 am:

    He came into office with everyone giving him the benefit of the doubt - as it should be. But the honeymoon has been long over.

    I’m glad she made those points.


  37. - drew - Friday, Jan 22, 16 @ 10:07 am:

    Is there a bill number with the legislative language for us to look at?


  38. - The Muse - Friday, Jan 22, 16 @ 10:08 am:

    @ILPundit = this isn’t DC =

    It stems from the worry that we (Springfield) are becoming DC (e.g. constant gridlock and almost zero bi-partisanship).


  39. - Norseman - Friday, Jan 22, 16 @ 10:08 am:

    C’mon folks! We’ve known for a long time that Rauner can’t talk his way out of a paper bag without a script. A reporter noted in a tweet yesterday that Rauner took more questions than usual. The result - disaster for the Rauner people. Let the boss out without a leash and he’ll ramble on about his favorite topic - kill unions.

    As for the proposal. I’m dubious of the constitutionality, but like RNUG said we’ll just see what the court says.

    Finally, I’m curious as to what Cullerton wants for this effort. Is Rauner going to let a budget pass now? No. Is Rauner going to help CPS? No. Is it a chance to throw sand in Madigan’s face in retaliation for the times Madigan has done it to him? Maybe. Will this help us get nearer to ending the impasse? Not in my opinion. Cullerton will get some tidbits here and there from Rauner for making the effort, but tidbits does not a budget make.

    Sigh. No end in sight for this trench warfare. I wish folks could cash the OODA Loops being thrown around for things they need.


  40. - archimedes - Friday, Jan 22, 16 @ 10:10 am:

    In the ILSC decision for SB1, paragraph 34 summarizes the plaintiff claim of diminishment - spelling out five specific claims of reduced benefits. In paragraph 47, the ILSC says if the law is allowed to take effect “it will clearly result in a diminishment in retirement annuities..As described earlier in this opinion, the new legislation directly reduces
    the value of retirement annuities for those members in no fewer than five different
    ways.”

    Cullerton plan appears to be a choice between two diminishments (of the five noted) specifically found to violate the constitution.


  41. - Ghost - Friday, Jan 22, 16 @ 10:20 am:

    two quick points

    1. Rauner has ended negotiations and is refusing wage increases to afscme employees. so if this passed why would anyone agree to choice 1? i mean if wages are frozen anyway the ability to count raises aint really a incentive/choice…. you switch systems but get nothing with choice 1.

    2 this is not a consideration proposal. you cant reduce the benefit, then offer to undo the illegal reduction and call it consideration. current vested employees are in a plan that pays benefits on 100% of wages. there is no freeze on wages or limitation on wage amounts in the vested benefits. if you change the law capping or freezing wages, you are reducing the benefit. not unlike when they froze judicial wages, and the court held the freeze was a reduction in benefits. its illegal to change vested memeber benefits. self inflicting financial harm by reducing taxes to exacerbate the problem is not the way to get the court to support an illegal change.

    instead of calling the system broken, what if we just funded it. The State took the money like a gleeful Enron. the benefit plans are not flawed, they have just been raided for close to 100 years. so put the money bakc and be done.

    lastly, the gov needs to stop comparing a large state like il to snall states or small companies for pay and benefit comparison. We are the 5th largest State. compare us to NY, CA, Texas etc or google, state farm etc for work foce size. turns out il workers are paid less the. their true comporables. same for our benefits. lower package then our prvt and public comporables. comparing us to small states because we share a border is straw man rhetoric.


  42. - 360 Degree TurnAround - Friday, Jan 22, 16 @ 10:23 am:

    This is how I view “consideration”, which seems to clash with how Raunerton’s plan works out. Consideration IS NOT choosing between two benefits you already have. Consideration is asking an employee to move to the second tier, but giving them another benefit of equal or greater value for doing so.


  43. - ILPundit - Friday, Jan 22, 16 @ 10:33 am:

    @The Muse — Thanks!


  44. - Oswego Willy - Friday, Jan 22, 16 @ 10:33 am:

    Well said, - Norseman -, very well done


  45. - Old McDonald - Friday, Jan 22, 16 @ 10:34 am:

    I always wondered what the chit chat was like over mixed drinks in Winnetka Country Club bars? Thank you Governor Rauner, now I know.

    Rauner needs to step it up. He’s very publicly displaying his lack of public sector/governing knowledge and making himself look like a rank amateur. When it comes to pension negotiations, Rauner needs to understand that he won’t be given many Mulligans.


  46. - Old and In the Way - Friday, Jan 22, 16 @ 10:36 am:

    I cannot imagine how any lawyer who has read ANY of the case law and decisions on this thinks this will pass as constitutional. It’s really simple contract law. Both parties must first agree to a contract modification and then consideration. Just because the state wants to renegotiate or change the terms of the contract does not obligate the employees to agree to ANY change. They have the legal contractual right to the status quo should they wish to. Simple. As for the terms, the choice between two diminishments is not a choice. When I taught contract law I called this the “heads I win tails you lose” choice. No matter what you choose you lose! Their only hope would be a consideration of value in return for making one of these choices and even then the employee could choose to not modify the contract.
    Think of it this way. Interest rates go up to 10%. Your mortgage is at 2%. The bank says hey we need to renegotiate your mortgage and you can choose either 10% for 15 years or 7% for 30 years. No. The bank cannot unilaterally force you to renegotiate ANY modification unless both parties agree. Folks this isn’t hard or in a grey area!


  47. - oldman - Friday, Jan 22, 16 @ 10:43 am:

    I view yesterday’s Rauner performance as a temper tantrum. How can anyone trust him at any level? This isn’t the first time he’s pulled a stunt like that.


  48. - Honeybear - Friday, Jan 22, 16 @ 10:43 am:

    –instead of calling the system broken, what if we just funded it. The State took the money like a gleeful Enron. the benefit plans are not flawed, they have just been raided for close to 100 years. so put the money bakc and be done.—

    Ghost YES YES YES YES YES YES YES!!!!!!!!!!!


  49. - RNUG - Friday, Jan 22, 16 @ 10:58 am:

    -Old and In the Way-

    Should have said this yesterday. Glad to see you.

    Also, thanks for the very good example.


  50. - muon - Friday, Jan 22, 16 @ 11:00 am:

    RNUG, The salary cap issue probably will focus on the Felt decision, “adversely
    affecting base salary used to compute annuity impermissibly reduced retirement benefits of
    existing retirement system members in violation of pension protection clause.” I think the idea here is to redefine future raises in a way that doesn’t affect the base salary. Then the consideration is about how to apply those future raises.


  51. - thechampaignlife - Friday, Jan 22, 16 @ 11:01 am:

    Rather than focus on pensionable vs nonpensionable raises, why aren’t they focusing on raise vs no raise (or even a pay cut)?

    Would that not be an easier, constitutional approach since one’s future wage rate is not a right?


  52. - Mama - Friday, Jan 22, 16 @ 11:04 am:

    “Consideration is asking an employee to move to the second tier, but giving them another benefit of equal or greater value for doing so.”
    Hello 360 @ 10:23A, there is no greater value being offered to union members in Tier I.


  53. - AnonymousOne - Friday, Jan 22, 16 @ 11:05 am:

    Our government would much rather spend every dime it has trying to wiggle out of paying back the money diverted (stolen from employees) from the pension funds. I have to assume the taxpayers (minus the public employee taxpayers) would much rather see court costs and legal battles over this rather than a logical payment plan to replace the diverted (stolen from employees) money. Time is ticking, debt is mounting and money is being blown on trying not to pay that debt. Yeah, real sound financial principles. A state we can all be proud of. /s


  54. - Mama - Friday, Jan 22, 16 @ 11:14 am:

    ++- Old and In the Way - Friday, Jan 22, 16 @ 10:36 am: I cannot imagine how any lawyer who has read ANY of the case law and decisions on this thinks this will pass as constitutional. It’s really simple contract law. Both parties must first agree to a contract modification and then consideration. Just because the state wants to renegotiate or change the terms of the contract does not obligate the employees to agree to ANY change. They have the legal contractual right to the status quo should they wish to. Simple. As for the terms, the choice between two diminishments is not a choice. When I taught contract law I called this the “heads I win tails you lose” choice. No matter what you choose you lose! Their only hope would be a consideration of value in return for making one of these choices and even then the employee could choose to not modify the contract.++
    This makes me feel better. Thank you


  55. - 360 Degree TurnAround - Friday, Jan 22, 16 @ 11:18 am:

    Mama, that may be why no pension deal has been legally found. People don’t seem to understand what “consideration” truly is.


  56. - NumbersPlz - Friday, Jan 22, 16 @ 11:22 am:

    The plans are way too abstract. I’d like to see a numerical example of how the two choices would work and would compare to the status quo- I”m having trouble visualizing the options. Can someone take a theoretical employee making $50,000 a year who is 10 years out from retirement and show the differences with numbers?


  57. - X-prof - Friday, Jan 22, 16 @ 11:29 am:

    I borrowed your cell phone. Sorry for not asking permission, but I don’t have to.
    Want it back? Sure, just pay me $300.
    No? OK, you don’t have to pay. But I’ll keep the phone.
    Square deal, ISC, right?

    Good luck. If this ever passed both houses of the GA (it won’t), how would Lisa M’s office handle it?

    Rauner is just being Rauner. But what is Cullerton up to? After the court’s decision on SB-1, he must know this would never pass judicial review. Is it a head fake to take away Rauner’s talking point that the Dem GA won’t cooperate? Is he trying to cover his derrière with his constituents?


  58. - Independent retired lawyer, journalist - Friday, Jan 22, 16 @ 11:35 am:

    The liar, liar pants on fire stuff aside, the bottom line still is that a choice is not a choice if a person is required to make a choice between two choices that are bad choices for the person being required to make a choice…just sayin’


  59. - Sue - Friday, Jan 22, 16 @ 11:37 am:

    Cas someone with more then passing knowledge of the pension code, I don’t see how you change the definitions of creditable salary and not run into the impairment clause. The legislature could CAP salaries but it can’t deny pension credits on any and all compensation paid to the participants. What should be done like yesterday is to amend the pension code to prohibit employer pick-ups state-wide but then force all participating employers to continue paying into the applicable systems every dollar they save by not paying he pick-up for some agreed “sunset” period. You would increase pension funding by billions of dollars every year f this were to be done across the board.


  60. - Big Joe - Friday, Jan 22, 16 @ 11:41 am:

    Old and In the Way-

    Agree with RNUG. Your example is spot on and I thank you for making it easy to understand. Hope Rauner is reading this today, or at least one of his robots on the payroll can tell him about it.


  61. - RNUG - Friday, Jan 22, 16 @ 11:43 am:

    -NumbersPlz-

    It’s not quite that simple. With what assumptions?

    Assumed annual rate of pay increase, if any, over those 10 years?

    Assumed years of service at retirement?

    Assumed annual CPI?

    Assumed life expectancy?

    Coordinated or non-coordinated?

    With or without survivor’s benefit? (Note: survivor’s is the default for most people)

    For anyone to take a shot at comparing existing to choice 1 and choice 2, you have to also guess those items first.


  62. - Pip - Friday, Jan 22, 16 @ 11:55 am:

    This is a camel nose under the tent issue.

    If this is held constitutional then they can make any changes on a go forward basis, like increased employee contributions.


  63. - Sue - Friday, Jan 22, 16 @ 12:17 pm:

    Pip- they already can increase employ contributions and it’s been upheld


  64. - RNUG - Friday, Jan 22, 16 @ 12:26 pm:

    -Sue-

    But only for ADDITIONAL / ENHANCED benefits, not for what has already been put in place.


  65. - Cubs Win - Friday, Jan 22, 16 @ 12:42 pm:

    As a public university/SURS employee I’ve already been presented with three options offering “consideration” and chose one which offered lower benefits upon retirement in exchange for that consideration. I entered the SURS system with the same package as everyone else at that time but in the late ’90s (’98 or so???) all employees were required to choose between traditional, portable or self-managed plans. The traditional option offered status quo/no changes but only limited funds could not be removed if you separated from your employer before retirement. As this was early in my career I chose the portable option which would allow me withdraw the funds if I changed employers. The self-managed option is simply a 401k with a State match (no guaranteed pension payment and your retirement benefits depend on how well your personal investment choices perform). The biggest difference in the first two is that portable plan participants (try saying that quickly three times!) will have to accept a significant pension reduction to provide a survivor benefit for a spouse while traditional participants receive their full pensions and survivor benefits. Since we didn’t anticipate being here this long I chose portable and my spouse opted for self-managed. Our retirement benefits will already be significantly lower - and save the State money - since we didn’t choose traditional so the thought of having my benefits reduced further is not very appealing. When these choices were made, all public university employees were told our decisions were final and no further changes could be made. With all that being shared…1) there is a consideration model that worked since employees were given the option to maintain the existing plan and 2) employees who chose the portable plan - which already provides savings to SURS - would have a second significant benefit decrease so that could be problematic on multiple fronts, including additional legal challenges. As I understand, SURS is the only system which offers these options to all employees so maybe that’s a consideration plan which could be applied to all systems, offer long-term savings to the State, pass constitutional muster and be passed quickly since it’s already in use.


  66. - efudd - Friday, Jan 22, 16 @ 1:06 pm:

    For those commenters on this site who are truly in the know, I have an honest question.
    Aside from a complete reversal on his Turnaround Agenda, is there anything Rauner can do, not say, but do, that will earn a modicum of trust with the Dems in the GA?


  67. - RNUG - Friday, Jan 22, 16 @ 1:29 pm:

    -NumbersPlz-

    I picked some assumptions under the SERS plan. 2% annual raises for all cases. 35 years of service at retirement. Coordinated 1.67% member. Survivor’s option chosen but any survivor payout not figure in. 3% future CPI (for apples to apples) which means choice 1 gets 1.5% non-compounded CPI. Year 26 salary of $50K. Life to age 84. Taking pension at age 60.

    Disclaimer: I’ve only done minor checking on the spreadsheet I threw together. There may be errors I’m not seeing at the moment.

    Quick and dirty calculations show total pension payout (25 year period) is about $372K / 29% less under Choice 1 and about $196K / 15% less under Choice 2. This is on a simple cash basis.

    Note: comparisons will and do change based on different assumptions. Assume zero raises for everyone over the same period and C1 is $314K / 29% less and C2 is identical to today.

    Change other assumptions and you will get different results.

    WARNING: your mileage will vary!


  68. - RNUG - Friday, Jan 22, 16 @ 1:38 pm:

    -efudd-

    I’m not in the know but a good start would be a actual budget proposal with real numbers including the needed tax hike(s) specified, minus any poison pill, and commit to put a majority of his owned GOP votes on it. Get that done and he might, repeat might, have restored a bit of credibility.


  69. - Arthur Andersen - Friday, Jan 22, 16 @ 1:56 pm:

    RNUG, that’s an interesting set of numbers. They demonstrate clearly the value of the compounded AAI.


  70. - RNUG - Friday, Jan 22, 16 @ 2:41 pm:

    -AA-

    I ran something similar when I was trying to decide whether to take the 2002 ERI and again when I was trying to decide on what age the Mrs and myself should take SS. I’ve also done like numbers for others. The answers, as I’m sure you know, are very situation specific.


  71. - muon - Friday, Jan 22, 16 @ 2:53 pm:

    Sue @ 11:37, I think that the question of a redefinition of creditable salary is the key to this proposal. For example, I could imagine that one might describe future raises as bonuses not on the base salary. There’s no constitutional guarantee to a raise of one’s base salary. Then the employee could be given a choice of converting the bonus to a creditable raise of base salary or leaving it as a non-creditable bonus as part of the consideration. What I don’t know is whether the courts would recognize the initial bonus as non-creditable.


  72. - Liberty - Friday, Jan 22, 16 @ 3:23 pm:

    From the ISC pension decision page 20 footnote: 12Additional benefits may always be added, of course (see Kraus v. Board of Trustees of the Police Pension Fund, 72 Ill. App. 3d at 849), and the State may require additional employee contributions or other consideration in exchange (see Gualano v. City of Des Plaines, 139 Ill. App. 3d 456, 459 (1985). However, once the additional benefits are in place and the employee continues to work, remains a member of a covered retirement system, and complies with any qualifications imposed when the additional benefits were first offered, the additional benefits cannot be unilaterally diminished or eliminated. See, e.g., Taft v. Board of Trustees of the Police Pension Fund, 133 Ill. App. 3d 566, 572 (1985); Carr v. Board of Trustees of the Police Pension Fund, 158 Ill. App. 3d 7, 9-10 (1987); cf. Kuhlmann v. Board of Trustees of the Police Pension Fund, 106 Ill. App. 3d 603, 609 (1982) (member not eligible for increase in benefits where he had ceased contributing to the pension fund prior to the change in the law).


  73. - Old and In the Way - Friday, Jan 22, 16 @ 4:00 pm:

    muon
    Changing the name or title of compensation is an old tactic and between the courts and the IRS it simply will not pass muster. The state may want to call a raise a bonus but if is a “permanent” or ongoing payment or bonus it is a salary by statute. Period. The IRS has very specific guidelines and trying to name a duck anything other than a duck if it quacks and walks like a duck simply will not work. Same goes for pensionable pay. Not a a very successful or creative dodge in my experience. The ISC will throw stuff like this out in a heartbeat.


  74. - Sue - Friday, Jan 22, 16 @ 4:24 pm:

    All compensate income is creditable


  75. - Sue - Friday, Jan 22, 16 @ 4:27 pm:

    Sorry- compensable. If it is taxed, it goes into the formula. What Cullerton proposed is not gonna fly


  76. - oldhp - Friday, Jan 22, 16 @ 5:05 pm:

    IDOC staff was told today that from now on all “banked” holidays would NOT count towards retirement pension. Anybody else hear this?


  77. - Old and In the Way - Friday, Jan 22, 16 @ 5:08 pm:

    From the detail that I have seen thus far this proposal in going to fail to meet contract law (Federal contract law) and constitutional (Illinois) restrictions. This is not even close to passing constitutional muster!

    Which leads me to ask why it is even being proposed. Surely Cullerton’s legal advisors see this. Rauner’s people are pretty clueless from my experience but Cullerton still has at least two pretty good legal advisors. (His best left.) I suspect something is cooking.


Sorry, comments for this post are now closed.


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