* Gonna see some spring training baseball so I’ll be back on Monday, April 4. I’ll have my laptop in case something huge happens, but other than that, I’m going to try and disconnect as much as possible. The late, great Levon Helm will play us out…
The expenses are all a dream
* But, wait, I’m not leaving you high and dry. I put together a comprehensive ScribbleLive feed to help you keep up on just about everything while I’m gone. Enjoy…
* As I told you the other day, I’m heading to Phoenix to watch some spring training baseball games and try to decompress. I’ll miss this little guy something fierce. When we’re not in session, I spend most of my day working out of my home, so he keeps me company and helpfully distracts me when I get too into work. I just don’t know what I’d do without him…
Clean Energy Trust just released their annual Clean Jobs Illinois survey and it shows a mixed bag. Illinois leads the Midwest in clean energy jobs, but is losing wind and solar positions to other states due to Illinois’ broken Renewable Portfolio Standard (RPS).
The Good News?
Clean energy jobs grew 9% overall in 2015, exceeding the previous year’s projection
At 113,918 jobs, clean energy employs more people in Illinois than the fossil fuel sector
The Bad News?
Wind and solar jobs were down 6.9% year over year because of Illinois policy headwinds
Fixing the Illinois RPS would solve this problem and help drive job creation in the state’s wind and solar sectors. Clean energy is a major job creator in Illinois, and smart policies can accelerate job growth in the state.
It’s time to act. To build Illinois jobs and keep pace with other states, let’s fix the RPS now. Don’t let Illinois fall further behind.
* Clawing out of this hole gets more difficult by the day…
Approaching a 10th month without a budget, Illinois has racked up a mound of unpaid claims, about $2.8 billion worth, in its state employee group insurance program.
Payment delays to health insurers and providers are now averaging 15 months, according to Meredith Krantz of Illinois Central Management Services. That’s due not only to the current budget impasse but years of under-funding in the group insurance program that has caused regular payment delays of eight months or longer, she said.
The current hold on claims is split nearly down the middle, with $1.4 billion owed for the state’s self-insured plans, and $1.5 billion for the fully insured plans, she said. Fully-funded plans are the HMOs and Medicare Advantage plans; the self-insured plans include Coventry Health Care Open Access Plan, Health Link OAP, Cigna (Quality Care) and Delta Dental.
As of today, the state owes one local carrier, Carle-owned Health Alliance Medical Plans, $720 million for 16 months’ worth of premiums at $45 million a month, according to Health Alliance spokeswoman Laura Mabry.
Rauner said revising the [K-12] funding formula “is a hard thing to do.
“I’m a moderately intelligent person and I’ve studied it and it’s hard to follow. It’s moving numbers and percentages and it’s a very complex thing. I think it’s broken. And I’m willing to work as hard as anybody to try to change it,” he said. “Speaker (Michael) Madigan has already said publicly that he really doesn’t want to tackle that himself. I’ll try. I’m wiling to do it if that’s what it takes to get a grand bargain done, I’ll do it.
“But what I’ve said is that if it takes longer than August to get it done, then let’s not hold up the rest of the budget and let’s not hold up school funding. What we can’t do is hold our kids and our teachers hostage in K-12 schools. That would be wrong.”
Um, Madigan has set up a bipartisan formula reform committee, so I’m not sure what the governor’s talking about.
“I have advised the governor that he is making the same mistake as his predecessors,” Manar said. “He thinks we can spend our way out of this problem. We spend $12 billion today on schools and we have the least equitable system in America. We can spend $12 billion better, to drive better results and bridge the inequity gap.”
* The Question: Do you think the funding formula will be reformed before August? Take the poll and then explain your answer in comments, please.
* SIU President Randy Dunn: “If we’re sitting in mid-summer, and we have no FY17 budget, and the current status continues, and the General Assembly is no longer in session - if they’ve adjourned - then this Board at that point is probably going to have to come back together and make some very, very tough decisions.”
* I didn’t realize DNAInfo Chicago paid per click…
The city’s top attorney, Corporation Counsel Stephen Patton, had tried to squeeze the city through a loophole. He contended that the [pension] funds themselves, and not the city, were solely responsible for paying out benefits to retirees.
But Justice Theis considered the argument — benefits would be severely diminished if the funds went broke — and concluded that scenario “would lead to an absurd and unjust result.”
“The General Assembly and the city have been on notice since the ratification of the 1970 constitution that the benefits of the membership must be paid in full, and that they must be paid without diminishing or impairing them,” she wrote.
Clint Krislov, who represented the retired workers that sued, called that part of the court opinion “perhaps the most significant.”
That “eliminates the city’s threat that we’ll just let the funds go bankrupt, and you’ll be stuck with a claim on a fund that has no money. This makes it clear that the city is going to be on the hook to make sure that these pensions are paid,” Krislov said.
“The city was essentially threatening and saying, ‘If you don’t go along with this, we’re going to walk away from the funds.’ The city can’t do that now. This puts a dagger in that argument,” Krislov said.
Asked by Elisabeth Miller, a senior from Paxton, about scholarship funding at public colleges and universities, Rauner said he hoped “to get more state support for universities but we also want to help them bring their costs down.
“One of the challenges in our university system is that a lot of the money that goes to the schools is going to the administrative costs, the pension costs, the layers of bureaucracy, and it’s not going into the classrooms with the kids. We’re trying to change the system so the money is going into the classroom so it brings down the costs and the tuition won’t have to go up.”
I don’t know if he understands what an appropriations veto does, but it doesn’t do that.
Seriously, though, that sounds like an interesting idea. So, how about we see some details? All we have so far is “Squeeze the beast.”
Rauner also said he hopes to meet soon with Madigan to start working on a series of budget and government reform compromises.
“I was told the speaker would be up for maybe working out compromises after the primary, that he was waiting for the primary election,” he said. “My office reached out to the speaker’s office last week after the primary and said, ‘OK, the election’s over; can you and I meet, Mister Speaker, and try to work out some reforms and to try to get a budget and get some compromises? We’re still waiting for the speaker’s office to give us any dates.”
“Somebody from his staff wanted to have a dinner meeting with somebody from our staff, not last week or this week but next week. And then there was talk that part of the topic of that dinner would be a meeting,” he said. “So that’s where we are.”
*** UPDATE *** From the governor’s office…
Hi, Rich -
Reaching out because of the below post.
What the Governor said is true.
The agency that probes shootings by Chicago police says it will no longer order investigators to change their findings.
Sharon Fairley, chief administrator of the city’s Independent Police Review Authority, said at a Wednesday news conference that investigators can stick to their findings even if superiors overturn them.
Fairley also promised a paper trail in the case file. “We would document that kind of conflict going forward,” she said.
WBEZ revealed that Scott Ando, Fairley’s predecessor, fired Supervising Investigator Lorenzo Davis last July after he resisted orders to change findings that officers were at fault in six shooting cases.
Gov. Bruce Rauner is touting a Senate plan to fix Chicago’s pension system after the Illinois Supreme Court rejected the city’s bailout plan.
The court ruled unanimously Thursday that the law reducing benefits and increasing employee contributions to fill an $8 billion hole in two retirement programs violated the state constitution’s protection of promised benefits. It ruled the same way on a state-pension overhaul last year.
According to audio released by his office, Rauner told reporters at a school visit in Paxton that benefits already accrued should be untouched. He backs a plan by Senate President John Cullerton — a Chicago Democrat — to offer employees a choice of less-expensive future retirement options.
Even taking as true the facts advanced to support the City’s claim, we hold that as a matter of law, members of the Funds did not bargain away their constitutional rights in this process. To be sure, ordinary contract principles allow for the modification of pension benefits in a bargained-for exchange for consideration. Buddell v. Board of Trustees, State University Retirement System, 118 Ill. 2d 99, 104-05 (1987) (pension rights can be modified “in accordance with usual contract principles”). As we explained in Heaton, the pension protection clause was not intended to prohibit the legislature from providing “additional benefits” and requiring additional employee contributions or other consideration in exchange. Heaton, 2015 IL 118585, ¶ 46 n.12. Likewise, nothing prohibits an employee from knowingly and voluntarily agreeing to modify pension benefits from an employer in exchange for valid consideration from the employer. Kraus v. Board of Trustees of the Police Pension Fund, 72 Ill. App. 3d 833, 849 (1979); see also York v. Central Illinois Mutual Relief Ass’n, 340 Ill. 595, 602 (1930) (“one party to a contract cannot by his own acts release or alter its obligations. The intention must be mutual.”).
* Now, here’s the Cullerton plan as described by Mike Schrimpf on Jan 22, 2016…
Pension Plan Summary
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.
· 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.
· 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.
Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
* From our resident pension expert RNUG, who has been proven right every time…
Let’s take a look at the legislation through the lens of the most recent decision that basically says you can’t change things except, MAYBE, by the consideration contract model.
A court would take up the issue of diminishment under the Pension Clause first, then look at contract law consideration.
First, there is no “keep what you have” option. The proposed choice is coerced, so it’s not going to be judged as voluntary under contract law and that is before we even look at any consideration or diminishment issue.
In Choice 1, the so-called consideration is that future salary increases will count as pensionable salary. How is that different from today? It isn’t; today any raise received will be part of the salary used in the pension calculation formula. So you get nothing new in exchange for giving up your 3% compounded AAI. Doesn’t sound like any kind of valid consideration and, in fact, diminishes your future pension payments.
In Choice 2, the so-called consideration is keeping your existing 3% compounded AAI in exchange for diminishing the salary basis used for calculating the pension. You get to keep what you are already entitled to in terms of pension payments, but we won’t let you have a higher Final Average Compensation than you have today. In other words, we will limit one of the factors used to calculate your pension. That is clearly diminishment, and there have been a number of prior rulings that, to paraphrase, say you don’t have to give raises, but if you do, it counts towards the pension.
Without citing the various cases, it’s clear to me that both Choice 1 and Choice 2 would likely be ruled unconstitutional.
Now if you added “keep what you have”, it might be legal enough to pass the constitutional test but it might still have issues as to whether or not is was “valid” consideration … although the IL SC did tend to imply if you were fool enough to voluntarily agree to a bad deal, it might be legal.
I can’t imagine anyone who understood it taking either choice voluntarily.
And if forced to make a choice, personally, I would refuse to choose - while undoing things after any court ruling - so I could later argue to the IRS that “irrevocability” did not apply because I never agreed to the change.