Thursday, Mar 24, 2016
* Mark Brown…
The Supreme Court made clear Thursday that one of the mayor’s fallback positions is not going to work.
Lawyers for the administration had contended that if the Municipal Employees and Laborers pension funds are allowed to continue on their present trajectory and run out of money in another decade or so, it won’t be the city’s responsibility to make good on the liabilities because the pension funds are separate legal entities.
The Supreme Court clarified that even if the pension funds become insolvent, and arguably they already are, it’s the city that is ultimately obligated to come up with the money to pay the benefits owed to its retirees.
The court doesn’t say how the city should pay these benefits, only that it is responsible for doing so.
And that leads us back to where we started.
Which is nowhere.
- Posted by Rich Miller
* Remember this from December?…
Late Comptroller Judy Baar Topinka’s son Joseph Baar Topinka alleges in a lawsuit filed Tuesday that Nancy Kimme, the comptroller’s chief of staff, wrongly converted nearly $89,000 from the Topinka campaign fund to personal use.
Kimme called the allegations “reckless,” “dishonest,” “sad and pathetic.”
Topinka died Dec. 10, 2014, after winning another four-year term as comptroller that would have started in January. Her campaign fund had $993,834 on hand as of Jan. 1, and had $841,204 on hand as of Sept. 30.
Kimme told The State Journal-Register Tuesday evening that while the lawsuit, filed in Cook County Circuit Court, alleges she took $63,807 from the fund in August and the fund’s next quarterly report didn’t list the expenditure, that amount was merely moved from a bank that handled a now-canceled Topinka credit card to the Topinka fund’s main account at another bank.
The lawsuit was filed by Tony Peraica.
* Well, a Cook County judge dismissed the suit today. From Scott Burnham, spokesperson for Citizens for Judy Baar Topinka…
We’re very pleased with Judge Demacopoulos’ ruling today and we were confident all along that the facts of this case were never in dispute. There is no evidence whatsoever that Comptroller Topinka’s son is entitled to money from his mother’s political committee.
Comptroller Topinka never attempted to use any of the committee’s funds for her or her family’s use even though she had the option to do so for more than 15 years prior to her death. In fact, she gave specific instructions to the contrary upon the committee’s dissolution.
The ruling is here. Take a look and you’ll see he was asking for a big pile of cash.
- Posted by Rich Miller
* The Illinois Mathematics and Science Academy owes millions to its vendors, including…
$777,837 for food service
$1,040,450 for facility operations
$224,565 for IMSA telephone and computing network
$22,910 for student transportation
* IMSA’s president says $1.3 million is more than 120 days past due…
A large portion, almost 80%, of IMSA’s budget is employee salaries [which are being paid under court orders], but what about the rest? Our remaining budget expenses include food services, maintenance, telecommunications, student transportation, utilities, supplies and resources (think IRC, science lab equipment and specimens, etc.). How are we paying for these important services? Well, the short answer is that we’re not. Our vendors realize that IMSA, as a state agency, has not received a budget. For the most part, they continue to be patient with us and our lack of payment.
* But he’s optimistic…
Will IMSA remain open through June 2016 and open next year in August 2016? There, I stated what many of you have been thinking and asking yourselves. Is IMSA still viable for the remainder of this year and into next year and into future years? My answer is “yes.” Why do I say this? I believe that IMSA is too important to too many people. We’re too important to Illinois and the world to “fail.” While we’re not “too big to fail,” we’re “too important to too many people to fail.”
I wouldn’t bet the house on that, or the Senate.
- Posted by Rich Miller
Illinois’ unemployment rate slightly increased in February to 6.4 percent. It was the fourth straight monthly increase.
The Illinois Department of Employment Security said Thursday that the number of people employed across the state increased by 18,100 people. But state officials said that as more people seek jobs Illinois’ economy is not creating enough positions. Unemployment was up from 6.3 percent in January.
* The last administration always tried to put the best possible spin on these monthly reports, often to the extreme. Rauner’s guys do just the opposite…
The Illinois Department of Employment Security (IDES) announced today that Illinois’ unemployment rate in February rose 0.1 percentage points to 6.4 percent and nonfarm payrolls increased by +18,100 jobs, based on preliminary data released by the U.S. Bureau of Labor Statistics (BLS) and IDES. Nonfarm payrolls recovered from the 2007-2009 recession in February; however Illinois’ average job growth since employment recovery began in January 2010 remains well below the national average.
“Illinois remains one of only three states that have not recovered jobs lost from the 2001 recession,” IDES Director Jeff Mays said. “While Illinois grew in jobs it took us twice as long compared to the rest of the country. When determining the overall growth, it is also important to take into account the volatility of the monthly employment numbers.”
The state’s unemployment rate is higher than the national unemployment rate reported for February 2016, which held at 4.9 percent. The unemployment rate stood 0.4 percentage points above the unemployment rate a year ago when it was 6.0 percent. Illinois surpassed the January 2008 payroll peak by +1,300 jobs, but remains 61,300 jobs short of its peak employment level reached in September 2000 while the nation currently stands 3.7 percent above its prior peak level of employment.
“As improvements in the national economy motivate more people to seek employment, Illinois’ lagging job creation rate continues to be a cause for concern,” Illinois Department of Commerce Director Jim Schultz said. “We are not creating enough jobs, we continue to lose critical middle-class manufacturing jobs, and unemployment in Illinois continues to rise, keeping our state from achieving full economic recovery. Illinois needs structural reforms that will stimulate growth and create jobs for hardworking Illinois families.”
The number of unemployed workers increased +1.9 percent from the prior month to 420,300 and was up +8.7 percent over the same month for the prior year. The labor force grew by 1.8 percent in February over the prior year. The unemployment rate identifies those individuals who are out of work and are seeking employment. An individual who exhausts or is ineligible for benefits is still reflected in the unemployment rate if they actively seek work.
The unemployment rate is increasing in Illinois primarily because more workers are entering the labor force and are not immediately able to find work. In February, the two industry sectors with the largest gains in employment were: Professional and Business Services (+6,600); Trade, Transportation and Utilities (+4,500) and Leisure and Hospitality (+4,200). The two industry sectors with the largest declines in employment were: Construction (-2,400); and Education and Health Services (-2,000).
Over the year, nonfarm payroll employment increased by +65,700 jobs with the largest gains in Leisure and Hospitality (+21,100); Educational and Health Services (+17,800); and Trade, Transportation and Utilities (+14,100). Industry sectors with over-the-year declines in February include: Manufacturing (-2,700) and Information (-1,700).
- Posted by Rich Miller
|Our sorry state
Thursday, Mar 24, 2016
The Chicago region in 2015 saw its first population decline since at least 1990, marking the greatest loss of any metropolitan area in the country, according to census data released Thursday.
In 2015 the region lost an estimated 6,263 people, according to the U.S. Census Bureau data. The reason for the decline is clear: The number of residents leaving the region in 2015 was so large — about 80,000 in all — that it couldn’t be offset by new residents and births, according to census data. […]
Overall, Illinois in 2015 had a population drop of about 22,194 people, and saw about 105,217 more people moving out of the state than moving in, according to census data.
But some of the Chicago region saw growth, too. Eight Illinois counties that saw growth included Will, Kane, McHenry and Kendall counties, according to census data.
Cook County’s population, on the other hand, dropped by about 10,488 people from 2014 — a decrease of about 0.24 percent — leaving the county with a population of about 5.2 million.
Chicago, the city that had once been home to the most prominent African-Americans, from Joe Louis and Mahalia Jackson to Michael Jordan and Oprah, lost 181,000 black residents just between 2000 and 2010, according to the U.S. Census Bureau. […]
There are troubling signs that more well-to-do blacks have forsaken the city. Last fall, a Tribune article detailed how Chicago had fallen out of the top 10, from seventh place to 21st, in the percentage of black households earning at least $100,000. Many of the cities on the list are now in the South, as affluent blacks from northern cities have relocated.
Demographer William Frey calls it a “reverse migration.”
- Posted by Rich Miller
* The Illinois Institute of Technology is tired of waiting for the General Assembly an the governor to approve MAP grants for kids in poor families, so the school’s honchos have issued an ultimatum…
Though Illinois Tech had not received any funding for MAP grants last September, the school decided to issue a credit to any students who qualified for a MAP grant in hopes that the budget impasse would pass and they would receive the funding to cover the MAP grants before the end of the year. But as the budget impasse continued, it became less likely that this would be the case. In December the school announced they could not offer MAP grants (or credits) for the spring semester.
On Wednesday, students received word that their MAP grant credit from the fall semester would be taken off their account. This leaves students with three options: pay back the MAP credit in full, pay back the amount through a 12 month loan with 6.8 percent interest (though they can pay back the loan interest-free until September), or have a hold on their account which would prevent them from registering for summer and fall classes (registration begins April 4). Certain scholarships at the university will cover the fall grant cost.
738 students receive MAP grant funding at Illinois Tech, which is private university that enrolls about 7,700 students. Tuition (before room, board, and other fees) is $42,000.
Illinois Tech added that if the budget passes and the school receives funds, students will be refunded what they paid.
The letter is here.
- Posted by Rich Miller
* The Illinois Policy Institute finally discovers a need for public employee unions…
The city [of Chicago] argued that there was bargained-for consideration in this [pension reform] case because workers received a new benefit in the form of a funding guarantee. The “bargain” supposedly occurred when representatives of city-worker unions allegedly met and 28 of the 31 representatives voted to approve the changes.
The [Illinois Supreme Court] correctly rejected that argument because the unions could not bind their members through that vote, which was not part of collective bargaining with the city. […]
The decision also leaves open the possibility that unions could agree to such changes on their members’ behalf if they did it through a collective-bargaining agreement. That could make large-scale changes easier. And it should be permissible because workers represented by a union give the union the right to make a contract on their behalf through collective bargaining.
* Maybe the governor will take the highlighted part out of his pension reform bill…
Prohibited subjects of bargaining.
(a) A public employer and a labor organization may not bargain over, and no collective bargaining agreement entered into, renewed, or extended on or after the effective date of
this amendatory Act of the 99th General Assembly may include,
provisions related to the following prohibited subjects of collective bargaining:
(1) Employee pensions, including the impact or
implementation of changes to employee pensions, including
the Employee Consideration Pension Transition Program as
set forth in Section 30 of the Personnel Code.
(2) Wages, including any form of compensation including salaries, overtime compensation, vacations,
holidays, and any fringe benefits, including the impact or
implementation of changes to the same; except nothing in
this Section 7.6 will prohibit the employer from electing
to bargain collectively over employer-provided health insurance.
(3) Hours of work, including work schedules, shift
schedules, overtime hours, compensatory time, and lunch periods, including the impact or implementation of changes
to the same.
(4) Matters of employee tenure, including the impact of
employee tenure or time in service on the employer’s
exercise of authority including, but not limited to, any
consideration the employer must give to the tenure of
employees adversely affected by the employer’s exercise of management’s right to conduct a layoff.
- Posted by Rich Miller
* Tammy Duckworth won all but two wards in Chicago this month, and she only lost those (Ald. Michelle Harris’ 8th and Ald. Ed Burke’s 14th) by a combined 1100 votes or so (mostly in Burke’s ward). She lost just one Cook County township, Cicero, but by less than 100 votes.
Duckworth didn’t campaign as much as some would’ve liked her to, but she did far more campaigning than Sen. Mark Kirk. And her massive win last Tuesday probably made her feel pretty comfortable setting up an African-American “unity” breakfast, particularly after Cook County Board President Toni Preckwinkle, Secretary of State Jesse White and US Reps. Bobby Rush, Robin Kelly and Danny Davis all agreed to attend.
* But some folks still felt left out, and they aren’t happy about it. Sneed…
Sneed has learned a major boycott of a black unity breakfast in Chicago on Monday for U.S. Senate Dem primary winner Tammy Duckworth is being hatched by City Council and state legislative black caucuses.
“Why would we want to express unity with Tammy Duckworth, who was selected for that spot by the Washington insiders at the Democratic National Campaign Committee?” said a powerful member of the City Council’s 18-member black caucus who asked to remain off-the-record.
Sneed is told a hush-hush meeting of aldermanic and state caucus members, who had endorsed Andrea Zopp for the U.S. Senate seat, met recently in Hyde Park to discuss the boycott of the Duckworth event, which sources claim was organized by U.S. Rep. Robin Kelly and Secretary of State Jesse White, who supported Duckworth’s primary candidacy.
Word is the boycott support group includes powerful State Sen. Kwame Raoul, State Sen. Kim Lightford, State Sen. Toi Hutchinson, State Sen. Patricia Van Pelt, Ald. Howard Brookins (21st), Ald. Roderick Sawyer (6th) and Ald. Leslie Hairston (5th).
“It was taken for granted we would suck it all up — her candidacy — and it was patently unfair,” the source added.
Duckworth also met with Zopp on Monday to discuss moving beyond the primary, the official said.
Still, Alderman Roderick Sawyer said Duckworth scheduled the unity event before many members of the City Council and Legislative Black Caucuses were invited.
“I think that’s evidence of how there is a disconnect between the Duckworth campaign and communities of color. I think that’s incorrect and disrespectful,” Sawyer told POLITICO Illinois. “My understanding is that we had agreed that we were not going to attend the event. We were going to try to find (another) time, if she’s willing, to give her the opportunity to talk about what her plans are and to ask for our endorsement.” […]
Sawyer complained that Duckworth spent too little time campaigning in Chicago and the metropolitan area during the primary at a time when the city’s black population is battling Mayor Rahm Emanuel over policing issues. The city’s black leaders may also be treading more carefully after strongly supporting Emanuel in the 2015 mayoral contest only to have it backfire on them, with issues of race and social injustice dominating the city since his re-election.
“Often times in elections like this, our vote makes a difference. I think that it should not be taken for granted,” Sawyer said.
Duckworth defeated two African-American candidates, so it’s understandable that their former high-profile supporters would want the courtesy of a sitdown before a unity event. This race could be close, and she’ll obviously need all the support she can get.
Even so, there’s zero danger of Duckworth losing any African-American wards and townships, and it’s even highly unlikely that all that many voters can be convinced to stay home during a presidential year or skip over a high-level ballot spot like Senator.
- Posted by Rich Miller
|Unclear on the concept
Thursday, Mar 24, 2016
* From the twitters…
* Continental Tire is thriving. From a 2013 press release…
Continental Tire the Americas, plans to invest $129 million in its Mt. Vernon, Illinois tire facility and create more than 100 new full-time jobs over the next three years.
The company said driving forces behind this investment are an increased demand for Continental and General brand tires, the need for better complexity management in the plant and emerging technologies in tire production. The investment supports Continental’s comprehensive growth strategy for its tire operations worldwide.
“Continental Tire the Americas continues to grow our business in the U.S. and across the Americas,” said Jochen Etzel, CEO, Continental Tire the Americas. “This investment will support our efforts to provide an outstanding line-up of passenger, light truck and commercial vehicle tires for our customers.”
With a volume of almost $95 million, the largest portion of this investment will encompass the expansion of the Commercial Vehicle Tire production area, which will increase production to an annual volume of more than 3 million truck tires when completed. Included in this investment is a new mixer to support the additional tire production and the introduction of equipment for emerging tire technologies, including wide base truck tires. The CVT investment supports the addition of more than 80 new full-time positions and is expected to be completed in mid-2015.
“This investment will help us continue to produce some of the most technologically advanced commercial vehicle tires on the market, and also addresses our growth in the region,” said Paul Williams, executive vice president, Truck Tires for the Americas. “Our research and development engineers for the Americas, working at our Truck Tire Technology Center in Mt. Vernon, have developed tires and technologies for a complete lifecycle solution that begins with excellence in new tire production. In turn, our customers have responded with increased demand for our tires.”
Instead of whining all the time, what the government ought to be doing is finding out how that Downstate company is doing so well and then help other companies do the same.
This is not to say that pro-business reforms aren’t needed. They most definitely are, as I’m sure the folks at Continental Tire will eagerly tell you. I’m just saying that a visit to a successful corporation is probably not the time or place to make your case that Illinois can’t compete. It most certainly can.
- Posted by Rich Miller
|CTU “showdown” roundup
Thursday, Mar 24, 2016
* Despite all the screaming you hear in the media right now, the buried truth of the matter is that Chicago Public Schools made a unilateral decision to shut down for one day this week and then the Chicago Teachers Union essentially voted to do the same next week…
The walkout would mean CPS schools would be shut down for the second Friday in row after schools will close March 25 as part of three unpaid furlough days for teachers.
This isn’t meant to excuse the union for its actions, but CPS’ unilateral shutdown is glossed over by the media because CPS claims it’s trying to save money. OK, but the end result is still the same. CPS has known for a long time about the April 1st day of action, so it probably should’ve imposed the furlough day on April 1 in the first place and steal some of CTU’s thunder.
* WLS TV…
Chicago Public Schools and the Chicago Teachers Union will head back to the bargaining table Thursday, a day after union members approved a one-day walkout.
Teachers are protesting unfair labor practices, though their contract is also under negotiation. An overwhelming majority, 486 union delegates, voted in favor of the April 1 walkout. Only 124 voted against it.
* WBBM TV…
“We’re particularly disappointed that the CTU leadership has given Governor Rauner more ammunition in his misguided attempt to bankrupt and take over Chicago Public Schools,” said CPS CEO Forrest Claypool in a statement.
Lewis doesn’t see it that way.
“We will not be cowed by Governor Rauner and his crazy agenda because you know what I think about that and you know what most people think about it,” Lewis said.
“For us to continue to be submissive to somebody who has an agenda and that has always been about getting rid of us is ridiculous,” Lewis said [of Rauner]. “We will not be submissive. We will stand up.” […]
“April 1 would be an unfair labor day of action,” Lewis said in announcing the proposed strike earlier this month. “It’s a showdown.”
Initially, Lewis and the union were reacting to Claypool’s threat to halt a 7 percent pension payment CPS had been making for teachers and other CTU staffers since the ’80s. After Claypool agreed to leave the pension benefit in place, the union accused CPS of an unfair labor practice for stopping raises given for experience and ongoing education last year.
This thing has been basically set in stone for a very long time, which is why I say again that CPS should’ve stolen the union’s thunder by scheduling a furlough day for next Friday, instead of tomorrow.
Lewis has acknowledged the proposed walkout has been met with skepticism from some union members. During a conference call with members Monday, CTU’s leaders faced questions from those opposed to the plan, though other members voiced support.
CTU Vice President Jesse Sharkey told members during the call that the legality of the union’s walkout will probably be decided in court.
Lewis sought to reassure members worried about the consequences of not showing up for work.
“What are they going to do, arrest us all? Put us all in jail? There’s not 27,000 spaces in the Cook County Jail right now,” Lewis told members Monday. “The whole key is, we all go out together, we go back in together. It is united, it is union, it is as one. That is what’s really important.”
The punitive fines could be dramatic, however. We’ll see, but it’ll be up to a board dominated by Gov. Rauner’s appointments (although one was a Quinn reappointment).
* A huge downtown rally is planned, and others are joining in, according to WMAQ TV…
A union representing thousands of teachers from several Illinois universities has announced it would join the Chicago Teachers Union in an April 1 walkout.
John Miller from the University of Professionals of Illinois Local 4100 made the announcement during a Thursday press conference, one day after Chicago Teachers Union delegates voted to approve a one-day school walkout.
The group represents more than 3,000 faculty and academic staff at universities including Western Illinois University, Eastern Illinois University, University of Illinois-Springfield, Northern Illinois University, Chicago State University, Governor’s State University and Northeastern Illinois University.
Also joining in the walkout are a number of community activists, labor groups, and students. The groups include Grassroots Collaborative, Brighton Park Neighborhood Council, Fight for $15, SEIU Healthcare Illinois, Chicago State University faculty and students, Black Youth Project 100, Assatas Daughters, Chicago ACTS Local 4343, Pilsen Alliance, UIC United Faculty, Almalgamated Transit Union Local 308.
Lots of those groups have been heavily involved in police protests, and were in force at the recent anti-Trump rally.
- Posted by Rich Miller
[The following is a paid advertisement.]
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.
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- Posted by Advertising Department
* From today’s back pay decision…
For all the reasons discussed above, we hold that section 21 of the Act, when considered in light of the appropriations clause, evinces a well-defined and dominant public policy under which multiyear collective bargaining agreements are subject to the appropriation power of the State, a power which may only be exercised by the General Assembly.
I could be wrong and I’m not a lawyer, but since there are currently no appropriations for any state employee wages, it sure looks on its face like the lower-court rulings which ordered (first unionized, then all) employees to be paid anyway are not going to be looked upon favorably by the Supremes if any of those cases ever reach its doorway.
- Posted by Rich Miller
* From today’s pension ruling…
Notwithstanding our holding in Heaton, that the annuity reducing provisions plainly violated the pension protection clause, and that exigent circumstances cannot serve as a basis for the General Assembly to unilaterally override those constitutional protections, defendants contend that Public Act 98-641 survives constitutional infirmity for two reasons: (1) the Act, when read as a whole, does not diminish or impair pension benefits but, instead, saves them in a manner that confers a “net benefit” or “offsetting benefit” to members; and (2) the Act was the result of a bargained-for exchange supported by consideration.
* The Supremes flatly rejected both arguments, but did leave one tiny door open on the second point…
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.”).
So, now the big brains have to figure out how they can use the concept of consideration in a way that is voluntary and doesn’t involuntarily diminish benefits. Not gonna be easy.
- Posted by Rich Miller
* Today’s pension ruling was not really a surprise to anyone who pays much attention to this stuff.
But the biggest development may well turn out to be embedded in Justice Kilbride’s dissent on the Supreme Court’s other ruling today. The Supremes decreed that the lack of an enacting appropriation meant unionized state employees were not legally entitled to back pay, even though the pay was in their contract. Kilbride specifically warned that state vendors could very well suffer as a result…
I would reverse the judgment of the appellate court and affirm the judgment of the circuit court. I would hold that the state employees’ contractual rights to raises continues under the contract clause of the Illinois Constitution (Ill. Const. 1970, art. I, §16), even if that obligation cannot immediately be enforced because of lack of appropriations, and that public policy strongly favors holding the State to its contractual obligations.
The State seeks to extinguish completely state employees’ contractual rights to their raises and not merely to establish that the contractual rights may only be enforced with sufficient legislative appropriation. I do not believe the appropriations clause of the Illinois Constitution (Ill. Const. 1970, art. VIII, § 2(b)) may be used by the State to frustrate its contractual obligations. […]
Similarly, when the State of Illinois does not fulfill its contracts, both employees and vendors suffer. There are sound fiscal reasons for holding the State to its contractual obligations. Stability in fulfilling state contracts benefits the citizens of this state. Indeed, allowing the State to extinguish contractual obligations by failing to appropriate funds is fiscally dangerous. I do not believe the majority does the State any favor in exonerating it from contractual liability by simply failing to appropriate sufficient funds. This is especially true given the current budget crisis.
Today’s decision may, in fact, further impair the State’s ability to function. The State of Illinois must finance its affairs, purchase products and supplies, contract for public improvements, infrastructure and various services but, apparently, under the majority’s approach, the State has no obligation to pay for those products, improvements, and services. Unfortunately, I believe the majority opinion interjects uncertainty into the State’s responsibility for its contracts and will likely impair its ability to secure future contracts with its employees and vendors. Ultimately, the citizens, businesses, and taxpayers of the State will suffer the consequences.
Emphasis added, and a big hat tip to an eagle-eyed commenter.
…Adding… There is a bit of good news for vendors in the majority opinion, however…
The appellate court expressed concern that recognizing the appropriation contingency in this case “would allow the General Assembly in every appropriation bill to impair the State’s obligations under its contracts,” in violation of the contracts clause of the Illinois Constitution (Ill. Const. 1970, art. I, § 16). 2014 IL App (1st) 130262, ¶ 39. The partial concurrence and partial dissent (dissent) shares the appellate court’s concern, suggesting that under today’s decision, the State may now avoid its contractual obligations simply by not making the necessary appropriations. Infra ¶ 69. This case, however, does not involve every species of contract with the State. Rather, this case involves a multiyear collective bargaining agreement that is, by statute, “[s]ubject to the appropriation power of the employer.” 5 ILCS 315/21 (West 2014). Accordingly, the pay raises in the CBA were always contingent on legislative funding, and the failure of that contingency to occur cannot “impair” AFSCME’s agreement with the State. […]
Finally, we disagree with the dissent that our decision creates uncertainty as to the State’s obligations, generally, under its contracts. We reiterate that this case involves a particular contract: a multiyear collective bargaining agreement. Whether other state contracts with different provisions and different controlling law could also be subject to legislative appropriation without offending the contracts clause is not before us. The dissent’s attempt to address those issues is ill-advised. See People v. White, 2011 IL 109689, ¶ 153 (courts of review should exercise judicial restraint, particularly when constitutional issues are involved, and not make unnecessary law).
- Posted by Rich Miller
* Press release…
In a ruling issued today, the Illinois Supreme Court reversed earlier circuit and appellate court decisions regarding back wages owed to state employees, ruling that the wages are not owed in the absence of a legislative appropriation.
The back pay issue arose in July 2011 when then-Governor Pat Quinn refused to pay wage increases that the union had previously agreed to temporarily defer in light of the state’s fiscal challenges at the time. From that date to 2013, some 24,000 employees of five state agencies—the Illinois Department of Corrections, Department of Human Services, Department of Juvenile Justice, Department of Natural Resources and Department of Public Health—were not paid an average of $2,500 each that was required in their collective bargaining agreement. The case was brought by the American Federation of State, County and Municipal Employees (AFSCME) Council 31, the largest union representing public-service workers in state government.
AFSCME Council 31 Executive Director Roberta Lynch issued this statement:
“Today’s ruling is very disappointing. This was a case about the principle that someone who works for a living—in this instance, to protect public health, ensure safe prisons or care for the disabled—should be paid what they are owed for the work they have done. It was also about the integrity of state government—that when it enters into a contract, it must live up to its terms.
“Some 24,000 public-service workers in state government are owed an average of $2,500 each dating back to 2011. These are by far state government’s oldest unpaid bills, owed to working families that face medical bills, school costs, rent or mortgage and car payments or other expenses.
“The Court’s decision today raises the troubling prospect that government could benefit from a contractual agreement—in this case, the public services provided by many thousands of men and women—but refuse to fulfill its own obligations under that agreement if lawmakers and the governor do not enact a bill to fund them.
“Our union will keep working to see that every employee is paid in full. We urge lawmakers of both parties, the Governor and the Comptroller to support an appropriation that pays workers what they are owed for work they performed nearly five years ago.”
The full ruling is here.
- Posted by Rich Miller
* The decision is here. This was totally expected…
* Press release…
Affirming a lower court ruling, the Illinois Supreme Court today struck down Public Act 98-0641, legislation that cut the modest pensions of retired City of Chicago employees and required active employees to pay more only to receive a diminished benefit when they retire.
The successful challenge was brought by several active and retired City of Chicago employees and their four unions—the American Federation of State, County and Municipal Employees (AFSCME) Council 31, the Chicago Teachers Union, the Illinois Nurses Association and Teamsters Local 700.
The four unions issued this joint statement:
“Today’s ruling strengthens the promise of dignity in retirement for those who serve our communities, and reinforces the Illinois Constitution, our state’s highest law.
“Politicians caused the pension debt by failing to set aside adequate contributions, in effect borrowing from future retirees to avoid raising revenue or cutting spending instead. At the same time, city workers such as librarians and truck drivers, school social workers and nurses were faithfully paying their share. They earned, contributed to and counted on a modest pension—just $32,000 on average—instead of Social Security, for which city employees are not eligible.
“Like last year’s decision that prevented pension cuts to teachers, state employees and university employees in state pension systems, this ruling makes clear again that the politicians who ran up the debt cannot run out on the bill or dump the burden on public-service workers and retirees instead.
“It’s long past time for elected officials to stop trying to end-run the constitution and shirk their duty. Pension funding challenges require funding solutions that must be constitutional and fair to all. Our unions are committed to working with anyone of good faith toward that goal.”
* Background from the opinion…
Defendants argued that the Act does not diminish or impair benefits because it results in a “net benefit” for the Funds’ participants and will save the Funds from an otherwise inevitable insolvency. The City additionally maintained that any payment of benefits owed prior to the Act was not the obligation of any government entity but, rather, was the obligation solely of the Funds themselves, and that under the Pension Code “participants’ benefits [were] limited to sums on hand in the funds.” Therefore, under the Act, the pension funds will be saved from insolvency and put on a path to full actuarial funding, making the Funds’ participants “better off” than without the Act. Additionally, defendants argued that the modification of benefits under the Act is permissible as the product of a bargained-for exchange between the City and the labor unions.
* From the opinion…
These modifications to pension benefits unquestionably diminish the value of the retirement annuities the members of MEABF and LABF were promised when they joined the pension system. Accordingly, based on the plain language of the Act, these annuity reducing provisions contravene the pension protection clause’s absolute prohibition against diminishment of pension benefits, and exceed the General Assembly’s authority
In other words, the various ideas floated by Gov. Rauner and others to change pension benefits going forward for current employees ain’t gonna hold up.
Defendants argue that the Act provides an offsetting benefit to members because it rescues the Funds from insolvency and guarantees that the pensions will be paid, by imposing an enhanced statutory funding obligation on the City, by moving to a new method of actuarial based funding, and by providing statutory enforcement mechanisms. Distilled to its essence, defendants’ argument is that the Act’s new promise of financial stability offsets the diminishment of benefits, thereby conferring a benefit when viewed as a whole.
The argument starts from the flawed premise that the provisions of the Act that enhance the City’s funding obligation or change the method of funding to fully fund the pensions are “benefits” entitled to constitutional protection. This notion conflicts with settled precedent. As we explained in Kanerva, the benefits protected by the pension protection clause include those benefits that are “attendant to membership in the State’s retirement systems” (2014 IL 115811, ¶ 41), including “subsidized health care, disability and life insurance coverage, eligibility to receive a retirement annuity and survivor benefits.” Id. ¶ 39. Legislative funding choices, however, remain outside the protections of article XIII, section 5, as consistently explained by this court over the past 40 years […]
Thus, consistent with Lindberg, McNamee and Sklodowski, passing a funding statute that aims to provide full funding by increasing the multiplier used to determine the City’s contribution, or by changing the method of funding to an actuarially based funding requirement to ensure the Funds reach 90% funding by 2055 and beyond does not create a “benefit” protected by the pension protection clause.
The City’s contention [that the funding provisions in the Act must be regarded as a “benefit” because they replace an illusory set of unfunded statutory promises], if adopted by this court, would be inconsistent with the plain meaning of the pension protection clause, would undermine our holding in Heaton, and would lead to an absurd and unjust result. Rather, as we have explained, the Illinois Constitution mandates that members of the Funds have “a legally enforceable right to receive the benefits they have been promised”—not merely to receive whatever happens to remain in the Funds. […]
To put it simply, in 10 years, the members of the Funds will be no less entitled to the benefits they were promised. Thus, the “guaranty” that the benefits due will be paid is merely an offer to do something already constitutionally mandated by the pension protection clause. Since participants already enjoy that legal protection, we reject the notion that the promise of solvency can be “netted” against the unconstitutional diminishment of benefits.
This thing is air tight.
* Support for the reform by union leaders makes no difference, either…
In this case, it is undisputed that the unions were not acting as authorized agents within a collective bargaining process. Thus, we need not resolve whether the vote taken by union representatives as expressed in the Brandon affidavit bound members of the Funds in a collective bargaining process. Rather, we agree with the trial court that “these negotiations were no different than legislative advocacy on behalf of any interest group supporting collective interests to a lawmaking body.” The individual members of the Funds have done nothing that could be said to have unequivocally assented to the new terms or to have “bargained away” their constitutional rights. Accordingly, nothing in the legislative process that led to the enactment of the Act constituted a waiver of the Funds members’ constitutional rights under the pension protection clause.
* And the whole statute is declared void…
The parties do not dispute the circuit court’s conclusion, and we agree with the circuit court’s assessment that the Act is unenforceable in its entirety.
*** UPDATE *** The Sun-Times has the mayor’s next moves…
(T)he mayor will have no choice but to find a way to pay the added costs… he’ll try to negotiate work-rule changes, lower break-in pay for new employees, another round of health care reforms, and other cost-saving concessions, and dedicate those savings to pensions, City Hall sources said.
The remaining shortfall could come from raising the telephone tax. Chicago is legally authorized to raise its telephone tax to the highest rate charged by any municipality in the state. That means there’s room to grow.
More property tax increases are unlikely, considering the fact that Emanuel just raised property taxes by $588 million for police and fire pensions and school construction and has promised to raise them by another $170 million for teacher pensions, whether or not the state does its part to help a nearly bankrupt Chicago Public School System.
- Posted by Rich Miller
* And yet, all we get is finger-pointing and whining from the big boys and their chief enablers…
The Leyden Family Service and Mental Health Center is reeling from a combined total of nearly $470,000 in recent grant cuts and is waiting on roughly $630,000 worth of grant payments held up by the absence of a state budget, according Leyden CEO Donna Chiariello Santoro and documents provided by the 66-year-old agency.
The cuts and the missing funding have contributed to increasingly long wait lists for patients and larger case loads for employees as the center continues to provide a host of services, including substance abuse treatment, psychiatric care, crisis intervention and subsidized housing to clients ranging in age from children to senior citizens, Santoro said.
“We’re dying on the vine here,” said Bruce Sewick, who manages adult mental health at the agency. “The big case loads, the long wait lists — it’s a disaster waiting to happen.”
The agency served approximately 10,000 clients last fiscal year out of its three locations, Santoro said. She said they’ve experienced an increase in demand for its services at least in part because similar agencies have had to shut their doors. […]
Sewick said Leyden’s programs save taxpayers money by keeping people out of prison, the emergency room and nursing homes.
- Posted by Rich Miller
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