Clock ticking on pension deal
Friday, Nov 18, 2016 - Posted by Rich Miller
* Sun-Times…
The clock is ticking for Gov. Bruce Rauner to sign or veto a teacher pension bill with the potential to blow a $215 million hole in the Chicago Public Schools budget and trigger devastating classroom cuts.
On Nov. 7, the teacher pension bill was quietly moved to the governor’s desk, giving the governor 60 days to make a decision on it.
That means Rauner has until Jan. 4 to either sign the bill, veto it or do nothing, in which case the legislation would take effect automatically. […]
When the governor signed off on the deal giving Chicago $215 million for teacher pensions, it was with the unwritten understanding that CPS would get the money — but only if there was an elusive deal to save state pensions. And that’s unlikely to happen until Illinois has a permanent budget.
They can make the pension deal separately. The agreement is the agreement: Pass a pension reform bill and the governor signs the CPS bill. It doesn’t need to get caught up in the rest of the impasse stuff.
The problem is that nobody talked to each other over the summer and fall about possible pension changes. And so here we are still at Square One with the clock ticking.
* More…
The political script is virtually identical to what happened last spring with legislation giving Chicago 15 more years to ramp up to a 90 percent funding level for police and fire pensions.
That one was different because nobody really knew what Rauner would do. There was no side deal involved. He vetoed it and the police and fire unions worked the heck out of it. Those two unions have more bipartisan support than just about any others, and they succeeded in picking up some Republicans.
The CTU isn’t as bipartisan, to say the least.
- DuPage - Friday, Nov 18, 16 @ 9:31 am:
I wonder what EXACTLY is Rauner demanding in his “elusive deal to save state pensions”.
- RNUG - Friday, Nov 18, 16 @ 9:40 am:
Looks like CPS is out of luck because the only “deal” to actually save State pensions is to properly fund them … and I’m guessing the Cubs will win 2 more World Series before that “deal” happens.
- Lucky Pierre - Friday, Nov 18, 16 @ 9:53 am:
Governor Rauner has said he would go along with Senator Cullerton’s proposal even through he doesn’t think it goes far enough.
Not sure I understand what they have to talk about. How can Rauner be any more reasonable?
There is no excuse for not calling this bill.
- Politically Speaking - Friday, Nov 18, 16 @ 9:59 am:
Rauner hasn’t shown a deft political touch, but if he’s learned anything he should just sign the bill and get back to the larger battle. As we saw in the summer, the prospect of devastating schools in order to leverage labor reforms is a political loser.
Maybe in the abstract it doesn’t seem like it, but when the draconian mid-year cuts come, he’ll pay a price, particularly given the racial dynamics. He will look very Trump-like.
- facts are stubborn things - Friday, Nov 18, 16 @ 10:04 am:
Why not just kick the can down the road and pass another illegal law so they can claim they did something, give CPS the money and then let the courts overturn it later? snark
RNUG nailed it, the solution to pensions is to continue to fund them correctly (PQ did that) and amortize or bond the pension debt. The current pension system is not the problem, it is the debt that was racked up by not making their payments.
- facts are stubborn things - Friday, Nov 18, 16 @ 10:07 am:
Just pass another illegal pension plan and claim victory, give CPS the money, and let the courts kick it out. snark.
- facts are stubborn things - Friday, Nov 18, 16 @ 10:11 am:
Not on topic, however, interested in RNUG’s thoughts on current health care negotiations and how quickly a court case would be filed (keeping cost in mind) by retirees for a “back door” increase in premiums by significantly reducing health care benefits. I realize this thing has a ong way to go — soon will be in court for months.
- Rich Miller - Friday, Nov 18, 16 @ 10:11 am:
===snark===
No snark. I think that’s the plan. lol
- Anonymous - Friday, Nov 18, 16 @ 10:12 am:
@ Rich Miller - Friday, Nov 18, 16 @ 10:11 am:
=No snark. I think that’s the plan. lol=
only in Illinois!
lol
- facts are stubborn things - Friday, Nov 18, 16 @ 10:13 am:
last post was mine.
- Hit or Miss - Friday, Nov 18, 16 @ 10:34 am:
The solution as I see it is for Rauner to veto the bill and ‘blow a $215 million hole’ in the CPS budget. The new contract with the CTU is unfair to taxpayers. The money is better spend on pension funding which, by the way, also ends up in the pockets of past and present CTU members.
The only ‘deal’ that appears workable when it comes to ‘pension reform’ is to fully fund the pension systems.
- wordslinger - Friday, Nov 18, 16 @ 10:44 am:
–Just pass another illegal pension plan and claim victory, give CPS the money, and let the courts kick it out. snark.–
Like Rich said, that’s the plan, not snark. Same game that’s been going on for decades.
But it would allow the governor and GA to pretend, once again, that they’ve done something, and probably bank a couple billion of “savings” before the courts knocked them down again.
After the Supremes rulings, you’d have to have been kicked in the head by a mule to think you can reduce the pension liability owed Tier One employees via legislation.
- Sir Reel - Friday, Nov 18, 16 @ 10:45 am:
“Nobody talked to each other” seems to apply to all of Illinois’ fiscal problems.
- RNUG - Friday, Nov 18, 16 @ 10:51 am:
== interested in RNUG’s thoughts on current health care negotiations and how quickly a court case would be filed (keeping cost in mind) by retirees for a “back door” increase in premiums by significantly reducing health care benefits. ==
Here’s my thoughts …
1) Only the Kanerva class retirees (basically SERS and some SURS) are somewhat protected, not all the retirees
2) 65+ retirees were already forced to a Medicare Advantage plan and no action was taken, so there is a precedent for the State imposing changes.
3) One you eliminate the MA class, you only have the under 65 retirees / dependents. Dependents aren’t protected. The under 65 bunch is relatively small.
4) Where is the money going to come from to pay for a suit? In Kanerva, it was all premium increase going directly to the State, so that money could be easily targeted and an escrow order requested. (A portion of that money paid the lawyers.) In what appears to be the current situation, the money is bigger deductibles and co-pays that goes to various health care providers.
My bottom line on it is there most likely won’t be a suit unless someone with deep pockets steps up, the retiree organizations decide to spend some money (they didn’t do much on Kanerva, did on SB-1), or a retired (or spouse of a retiree) lawyer decides they want to pretty much donate their time.
Sorry it isn’t good news, but that’s my take on it.
- RNUG - Friday, Nov 18, 16 @ 10:53 am:
== No snark. I think that’s the plan. lol ==
I agree. More kick the can.
- RNUG - Friday, Nov 18, 16 @ 11:01 am:
-facts-,
I answered you but don’t see it on my phone. Hopefully it’s just my phone messing up.
- Politically Speaking - Friday, Nov 18, 16 @ 11:19 am:
=The money is better spent on pension funding which, by the way, also ends up in the pockets of past and present CTU members.=
The $215 million IS for teacher pensions.
- facts are stubborn things - Friday, Nov 18, 16 @ 11:57 am:
RNUG,
= 2) 65+ retirees were already forced to a Medicare Advantage plan and no action was taken, so there is a precedent for the State imposing changes =
Understood, but sort of thinking change is not something one could easily sue and win on, however, change that involves huge decrease in coverage/ increase in cost would be. It was my understanding that the change to Medicare advantage was not a huge coverage lost or increase in cost to retirees? I think if you are in TRAIL then your premium to the state (assuming 20 plus years) is still zero. Yes, you must join and pay for Medicare, but that was always the case? We let dental insurance premiums happen, but that did not hurt us in Kanerva? Totally understand the issue of who is going to pay for the legal fees — good point.
Thanks for the excellent explanation - RNUG - Friday, Nov 18, 16 @ 10:51 am:
- facts are stubborn things - Friday, Nov 18, 16 @ 12:00 pm:
RNUG,
I got your excellent response and now I don’t see mine back to you. Hopefully it will appear soon. thanks again.
- facts are stubborn things - Friday, Nov 18, 16 @ 12:12 pm:
RNUG,
I wonder if the higher premiums a retiree might pay (if they elect to keep same coverage and wave zero premium) could be held back for attorneys?
I had commented to you (still hope it shows up) that the fact that we accepted the move to Medicare advantage (TRAIL) may not be an issue because we also accepted dental insurance premiums and the fact that TRAIL, as I understand it, did not significantly reduce coverage and increase cost…it was a change but not a diminishment?
- Ghost - Friday, Nov 18, 16 @ 12:15 pm:
Rich is falling into the same assumptiin as the rest of the media. Calling it a pension fix is a tupe of demagoguery; it creates the pregnant assumption that the pensions themselves, i.e the benfit schedules, are somehow broken.
The pensions are not broken and do not need fixed. Pension FUNDING has been neglected. The funding was not broken n either. had the payments been made all would be well. So what needs fixed is the funding raids on the pensions.
If we keep referring to the plans as broken then we are focused in the wrong issue. Its like saying the Enron employees needed their pension plan fixed when it came up short.
- RNUG - Friday, Nov 18, 16 @ 12:21 pm:
The change to MA hit a lot of people with smaller pensions because of now having co-pays plus larger deductibles.
- facts are stubborn things - Friday, Nov 18, 16 @ 12:29 pm:
- RNUG - Friday, Nov 18, 16 @ 12:21 pm:
=The change to MA hit a lot of people with smaller pensions because of now having co-pays plus larger deductibles.=
Good point, however, I don’t that changes or increases in copayment that are reasonable are reasons alone to go to court. I think it is huge changes that appear to be a back-door way around zero premiums that is the issue. I remember one the ISC justices asking that very question about what if we keep premiums free but the state increases other costs such as copays. Our attorney indicated that could be an issue if it went beyond normal increases we all expect over time.
- facts are stubborn things - Friday, Nov 18, 16 @ 12:32 pm:
RNUG, I keep responding to your points but they are not getting posted. Perhaps I am too far off topic? I don’t believe though that starting copays and deductibles itself rises to the level of diminishment (back door premium increase). I do think that the final offer on the table from Rauner would.
- facts are stubborn things - Friday, Nov 18, 16 @ 12:33 pm:
RNUG
The fact that we let dental premiums go did not hurt us in the Kanerva case.
- RNUG - Friday, Nov 18, 16 @ 12:46 pm:
Dental was never part of the “20 year” deal, so it had no relevance.
- RNUG - Friday, Nov 18, 16 @ 12:48 pm:
Rich, apologies … I think -facts- and I have kind of hijacked this post
- Anonymous - Friday, Nov 18, 16 @ 1:48 pm:
@- RNUG - Friday, Nov 18, 16 @ 12:48 pm:
=Rich, apologies … I think -facts- and I have kind of hijacked this post
=
thanks good points above. Rich, thanks for the leeway you allowed us.
- facts are stubborn thigns - Friday, Nov 18, 16 @ 1:48 pm:
Sorry, that last post was mine.
- Rod - Friday, Nov 18, 16 @ 1:52 pm:
Whether or not CPS gets the $215 million for pensions the district is nearing fiscal collapse. On November 9th Standard & Poor’s primarily citing a new contract with the Chicago Teachers Union among the reasons for downgrading the district’s credit yet again. S&P also had a negative outlook for the district’s finances going forward, giving the district one-in-three chance of another credit downgrade within a year. S&P is assuming at this point that CPS will never see the $215 million for pensions and that CPS will cut that amount from schools if that assistance doesn’t materialize. S&P is not in the business of worrying about what CPS will or will not cut in terms of support for schools.
The real killer for CPS continued reliance on costly short-term borrowing to cover daily expenses, plus $55 million in costs added to this year’s budget by the recent Chicago Teachers Union pact. Even if CPS gets the $215 million based on a bogus, and unconstitutional pension plan passed by the Assembly to fulfill the Democrat leadership’s deal with the Governor CPS still has the axe hanging over its head. Just last week CPS withdrew its attempt to borrow more money from the bond markets because the bids looked so bad.
CPS and the Mayor have to go back yet again to property owners for more money and the legislature will have to approve another waiver to the Property Tax Extension Limitation Law (PTELL). The $215 million while not irrelevant to the fiscal situation of CPS will not allow it to continue for very long, the chickens are coming home to roost.