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*** UPDATED x2 *** Rauner pension plan offer not fully rejected by Emanuel

Thursday, Mar 16, 2017

* Tribune

Gov. Bruce Rauner’s administration tried another approach in the battle over Chicago Public Schools finances, urging lawmakers to back an effort from two Senate Republicans to both overhaul state pensions and send CPS $215 million that officials say is needed to avert an early end to the school year. […]

Rauner took to Facebook on Tuesday to say he would sign a bill that combines an effort to curb public sector pension benefits — legislation that recently fell four votes short of winning Senate approval — and a one-year CPS funding measure the governor vetoed in December.

Rauner later acknowledged he was “a little emotional” when he announced the veto not long after Democratic Senate President John Cullerton publicly suggested there had never been a deal linking the $215 million in CPS pension aid to broader statewide pension reforms.

CPS moved to cut costs after the veto by furloughing employees, freezing school budgets and saying it could be forced to cut summer school and shorten the school year by about three weeks — for a savings of about $96 million — if the state or the courts don’t intervene.

* Mayor Emanuel gently responded yesterday and offered up his own demands

“I will compliment the governor. This is an acknowledgment that, in fact, there’s pension inequity in the system,” the mayor said. “But, if I’m not mistaken, it’s only one year of pension funding while the pension reform is permanent. That doesn’t sound to me like a full agreement.”

Emanuel urged Rauner to take the first step toward a larger agreement by signing a bill he has threatened to veto, saving two of four city employee pension funds.

“The Laborers and Municipal Fund pension reform is on his desk. And the first step on the road to ensuring and securing our pensions and our fiscal stability would be to sign that bill,” Emanuel said.

Rauner spokesperson Eleni Demertzis countered that the state “already provides a special block grant for CPS as a substitute for the state not picking up its normal cost of pensions.”

“The bipartisan agreement reached last summer was to give Chicago one year support for its pensions of $215 million on top of its special block grant,” she wrote in an email.

* Senate President John Cullerton’s spokesman agrees.

The proposals that Senators Tracy and Connelly mentioned in their press conference were filed [yesterday]. A quick read reveals that while the pension changes would be permanent, the associated funding for CPS is for FY 17 only.

“That legislation forces permanent pension changes for thousands of teachers, university employees and state workers, and the tradeoff is one-time funding assistance for Chicago schools.

“That’s a bad deal.”

Thoughts?

*** UPDATE *** 1  ILGOP press release

“Illinois Democrats have said no to real reforms with a truly balanced budget. First, they refused to consider a long-term property tax freeze and reduced spending. Now they’re rejecting a plan to help Chicago Public Schools while providing statewide pension reform. They’re even blocking Governor Rauner from cutting on his own to balance the budget. While Governor Rauner does his job, they’re back to being the party of no.” – Illinois Republican Party Spokesman Steven Yaffe

*** UPDATE *** 2 Press release…

Governor Rauner released a video message Thursday encouraging the General Assembly to take swift action on legislation that would enact statewide pension reform while delivering Chicago Public Schools the $215 million it has requested from the state.

The Governor has pledged to sign the legislation when it reaches his desk. The video can be viewed on his Facebook page.

“The people of Illinois want to see their leaders get good things done in Springfield and right now, we have the opportunity to make that happen. Comprehensive pension reform for the entire state would save taxpayers billions, and allow us to meet a request for assistance from the city of Chicago,” Rauner said. “Illinois has been asking for a compromise, and this is a compromise we can all get behind. Let’s get it done.”

Senators Michael Connelly and Jil Tracy this week introduced legislation taking the pension bill (SB 16) from the “Grand Bargain” and combining it with a bill delivering $215 million to CPS for its teacher pensions. The package would be expected to win bipartisan support given that the pension proposal came within four votes of passage and the CPS funding passed both chambers of the General Assembly last summer.

Last June, Governor Rauner and the four legislative leaders agreed the state would pay for one year of CPS’ teacher pensions as long as lawmakers provided the necessary funding by passing statewide pension reform. The agreement was broken when the Illinois Senate did not follow-through with the pension reform component and sent only the CPS bill to the Governor’s desk.

Recently, the Rauner Administration offered two paths to help CPS fill its multi-million dollar budget hole: the legislative proposal or through city TIF funds.

“We urge the General Assembly to move forward quickly with the deal on pensions that helps our state save billions of dollars,” Rauner said. “By honoring the agreement we worked out last summer, Democrats could jumpstart momentum to break the budget impasse in Springfield.”

- Posted by Rich Miller        

49 Comments
  1. - Demoralized - Thursday, Mar 16, 17 @ 9:49 am:

    It’s called negotiating and the Governor is once again demonstrating that unless he gets everything he wants he isn’t interested in doing anything.


  2. - PublicServant - Thursday, Mar 16, 17 @ 9:49 am:

    Rahm is throwing Rauner’s terms for his supporting a tax increase back at him. I’d just pass the pension pickup bill again, and dare him to veto it again.


  3. - Not Rich - Thursday, Mar 16, 17 @ 9:49 am:

    all white noise.. the opportunity to pass the grand bargain is long gone..


  4. - Sue - Thursday, Mar 16, 17 @ 9:50 am:

    Will someone who is an expert on the pension code and case law please tell Rauner that there is no pension reform that will survive S Ct review for tier 1 employees unless Madigan has an ex parte conversation with a couple of Justices. Find some other trade off like getting agreement to implement the AFCSME contract in exchange for revenue


  5. - Cassandra - Thursday, Mar 16, 17 @ 9:54 am:

    Seems like it could be a good deal for politicians. Chicago gets cash it says it desperately needs and can only get from the state (I’d question that, but it’s another topic) and our state politicians get to pretend they fixed the pensions again, a la Pat Quinn. When the pension changes are found to be unconstitutional again, well, that’s later. When you are an Illinois state politician, it’s best to just enjoy the day.


  6. - lake county democrat - Thursday, Mar 16, 17 @ 9:54 am:

    It’s only a bad deal if you believe the current level of benefits is a “good deal.” But fine: have the pension reform sunset in 10 years if CPS has a balanced budget, have the funding to CPS guaranteed for 5 years unless replaced in a “grander” deal.


  7. - Steward As Well - Thursday, Mar 16, 17 @ 10:04 am:

    Sue…. The governor knows this quite well. That is why he wants unfettered authority to change the rules as it applies to subcontracting and bringing in private services for state work.

    He can get rid of those Tier 1 employees and not have to deal with constitutional roadblock legalities when it comes to pensions.


  8. - Gruntled University Employee - Thursday, Mar 16, 17 @ 10:07 am:

    ===Find some other trade off like getting agreement to implement the AFCSME contract in exchange for revenue===

    Sue,

    The Governor’s plan REQUIRES ADDITIONAL REVENUE his budget director told us that just yesterday! Please try to keep up.


  9. - Arsenal - Thursday, Mar 16, 17 @ 10:07 am:

    Oh, Yaffe picks up the “do your job” line. That one’s getting to Team Superstar.


  10. - Ducky LaMoore - Thursday, Mar 16, 17 @ 10:13 am:

    ===While Governor Rauner does his job, they’re back to being the party of no.===

    Yaffe is almost as entertaining and almost has as much credibility as this guy… https://www.youtube.com/watch?v=CXl1GkWWGmA


  11. - @MisterJayEm - Thursday, Mar 16, 17 @ 10:20 am:

    “Illinois Democrats have said no to real reforms with a truly balanced budget.”

    “Working together on ‘grand bargain’”: $4.6 billion.

    Clowns.

    – MrJM


  12. - A Jack - Thursday, Mar 16, 17 @ 10:30 am:

    The party of “No,” as opposed to the ILGOP party of “Present?”


  13. - TominChicago - Thursday, Mar 16, 17 @ 10:30 am:

    Didn’t the Governor’s Budget Director just admit yesterday that they had no plan for cuts?


  14. - RIJ - Thursday, Mar 16, 17 @ 10:33 am:

    Children who are breaking things need to be told NO.


  15. - RNUG - Thursday, Mar 16, 17 @ 10:34 am:

    Notice that Rauner is using one of the few things he cares about, K-12 schools, as leverage to try to get what he wants … and this time he’s spinning this failure to fund CPS as the fault of the Democrats not giving him what he wants.

    This guy has more versions of his position than a kid caught with his hand in the Cooke jar.


  16. - Echo The Bunnyman - Thursday, Mar 16, 17 @ 10:36 am:

    Isn’t the real winner in this idea the CPS teachers union? Will they still take a one day walkout? This seems like just another band aid…Agree the grand bargain is doomed… Just like our state.


  17. - Free Set of Steak Knives - Thursday, Mar 16, 17 @ 10:41 am:

    === Thoughts? ===

    It is the exact same argument Rauner makes regarding the income tax hike and property tax freeze.

    So, yes, the Mayor has a point. Maybe even a better one.

    Rauner could make a continuing approp for Chicago pension part of the pension bill.

    Five years ago, that would have softened union opposition. But since the GOP and Chicago Tribune insisted on ramming through SB 1, the unions have a recent Supreme Court decision that makes the funding guarantee someone else’s problem.

    Terrible, terrible decision by GOP and the Chicago Tribune editorial board.


  18. - Michelle Flaherty - Thursday, Mar 16, 17 @ 10:42 am:

    Talk about moving the goal posts.
    SB 5 is the bipartisan CPS pension equity deal. It got 36 votes. Radogno voted for it. It establishes permanent funding.

    Connelly and Rauner are trying to undo and renegotiate its terms.

    Meanwhile, SB 16 is the pension reform that Connelly and Tracy and Rauner want. Does the gov have 22 GOP votes for that?


  19. - 47th Ward - Thursday, Mar 16, 17 @ 10:43 am:

    ===They’re even blocking Governor Rauner from cutting on his own to balance the budget. While Governor Rauner does his job,===

    It’s almost like Yaffe is auditioning for Sean Spicer’s job.


  20. - Lucky Pierre - Thursday, Mar 16, 17 @ 10:45 am:

    Democrats moving goal posts again

    Made a deal in June for 215 million in pension money for CPS contingent on pension reform. Agree to kick can past the next election.

    Don’t pass pension reform but still expect the money for not keeping their end of the bargain

    Now they want 215 million every year for CPS pensions, accuse Rauner of obstruction while failing to look in the mirror.

    Pretty typical


  21. - Fixer - Thursday, Mar 16, 17 @ 10:48 am:

    Why is Yaffe still flapping his gums? Are there really people out there who take anything out of this guy’s mouth seriously?


  22. - wordslinger - Thursday, Mar 16, 17 @ 10:49 am:

    Right now, Rauner wears the jacket for the schools closing early because he admittedly had a tantrum and made a rash veto.

    He doesn’t have a lot of room to negotiate, given the facts.


  23. - Lucky Pierre - Thursday, Mar 16, 17 @ 10:56 am:

    Rauner owns CPS budget mess?

    Of course Forest Claypool, CPS Board of Education, CTU, Speaker Madigan, Senator Cullerton, every City of Chicago State Rep and Senator, 50 aldermen, Mayor Emmanuel and Mayor Daley as well as Arnie Duncan, and Barbara Byrd Bennett all have no role in CPS budget mess.

    Everything was running like a Swiss watch until Rauner showed up apparently


  24. - Demoralized - Thursday, Mar 16, 17 @ 11:01 am:

    Lucky:

    When you want to join the rest of us in the real world let us know.

    It’s called negotiating. Rauner gets everything he wants in exchange for permanent funding for CPS. See how that works? You get something and I get something.

    You and the Governor apparently don’t understand the concept.

    ==Everything was running like a Swiss watch until Rauner showed up apparently==

    Different day, same victim.


  25. - PDJT - Thursday, Mar 16, 17 @ 11:06 am:

    “While Governor Rauner does his job,” – Illinois Republican Party Spokesman Steven Yaffe

    He could only make this statement in writing, because there is no way an honest person could keep a straight face saying this.

    Gov. Rauner hasn’t even shown that he understands what his job is, let alone any interest in actually doing it.


  26. - Lucky Pierre - Thursday, Mar 16, 17 @ 11:06 am:

    Could you sign Speaker Madigan up for your negotiating tutorial?

    I don’t think he knows how it works


  27. - Demoralized - Thursday, Mar 16, 17 @ 11:33 am:

    Lucky:

    When you want to engage in honest conversation let me know. I’ll be glad to have one.


  28. - Rabid - Thursday, Mar 16, 17 @ 11:42 am:

    In the aftermath of chance, memo makes good on do your job. Using chance to back the governor’s plan?


  29. - Annonin' - Thursday, Mar 16, 17 @ 12:07 pm:

    The Yaffe Yodel gets funnier by the day…sometimes hours..six misstatements of facts in four sentences…a record Kelly Anne Conway would drool over


  30. - Last Bull Moose - Thursday, Mar 16, 17 @ 12:13 pm:

    Everybody is trying to shift costs to somebody else. Madigan wants to shift from the State to local school boards. Rahm wants to shift costs from Chicago to the State. Cullerton wants to shift costs back to pensioners.

    None of these efforts will work. Everyone has enough political power to block change. No one has enough power to create change.


  31. - Arthur Andersen - Thursday, Mar 16, 17 @ 1:18 pm:

    Hey, wrap it all up in one bill. That way, when the Supreme Court finally euthanizes our unique version of “consideration,” the $215 million “pension equity” goes down the crapper as well.


  32. - RNUG - Thursday, Mar 16, 17 @ 1:32 pm:

    == Everybody is trying to shift costs to somebody else. Madigan wants to shift from the State to local school boards. Rahm wants to shift costs from Chicago to the State. Cullerton wants to shift costs back to pensioners.

    None of these efforts will work. ==

    Unless the State does a massive income tax hike that provides more school funding in exchange for a property tax freeze, I actually expect that the pension payments WILL gradually get shifted to the local school districts.

    In fact, I could see that pension cost shift plus additional oversight of that pension fund being the trade-off for the CPS $215M this year (and no so called pension reform). CPS gets the money this year, the State starts the pension cost shift next year, and CPS gets $215M minus whatever percentage is shifted to the downstate districts. It would be a CPS ramp-down from $215M and a downstate school district ramp-up. That way, in the future CPS could not claim they were getting a different deal than the rest of the State. I’m undecided whether part of that deal should also include merging the CPS pension fund into TRS, or whether it should remain separate but require either TRS or IMRF to administer it.

    Any State Senator or Representative who wants to steal the above idea and introduce it as legislation, feel free to do so.


  33. - Miss Marie - Thursday, Mar 16, 17 @ 1:41 pm:

    “They’re even blocking Governor Rauner from cutting on his own to balance the budget”

    But last week, didn’t all the agency heads basically testify there was nothing they could cut further from their budgets?

    And didn’t the OMB director testify yesterday that they didn’t have a plan for cuts?

    And does anyone else have a headache from hitting their head against the wall from this ridiculousness?


  34. - TinyDancer(FKASue) - Thursday, Mar 16, 17 @ 2:44 pm:

    “Rauner pension plan not fully rejected by Emmanuel”

    Because they BOTH want to bust the unions.
    Cue the orchestra.
    This is a pas de deux.


  35. - Sue - Thursday, Mar 16, 17 @ 2:58 pm:

    AA is absolutely correct- Cullertons pension reform concept will be struck down but unfortunately we will waste 18 months nths to learn the consideration scheme is unconstitutional


  36. - Sense of a Goose - Thursday, Mar 16, 17 @ 3:27 pm:

    An legal resolution is to get more revenue from employees. The Supremes said as much the last time. Legislate an increase to the pension system every time an employee gets a raise (maybe only Tier 1s). Non-negotiable. The problem arose due to lack of payments being made. Revenue is needed and the state is broke. Better to help than to continue having a choice be pension payments or close a college, don’t help the elderly and disabled, etc.


  37. - Thoughts Matter - Thursday, Mar 16, 17 @ 3:35 pm:

    Update 2 - the governor supports it….

    Right up until it’s time to vote.

    I would prefer that my legislators follow their oaths to support the constitution. Voting for bills that you are pretty sure are unconstitutional follows your oath - how?


  38. - Last Bull Moose - Thursday, Mar 16, 17 @ 3:47 pm:

    RNUG,
    You may be right. The school boards may be the political weaklings in this fight.


  39. - Anonymous - Thursday, Mar 16, 17 @ 4:13 pm:

    Or Democrats could jumpstart momentum to break the budget impasse in Springfield by passing a tax on income over $1 million. That is also not going to happen.


  40. - Pundent - Thursday, Mar 16, 17 @ 4:31 pm:

    I think we all now how this story ends. We’ve substituted the “kick the can” approach to funding with “kick the law”. The states obligations are its obligations. Pretending that we can somehow make them go away through “pension reform” will only exacerbate the problem.


  41. - RNUG - Thursday, Mar 16, 17 @ 4:35 pm:

    == An legal resolution is to get more revenue from employees. The Supremes said as much the last time. Legislate an increase to the pension system every time an employee gets a raise (maybe only Tier 1s). ==

    Since the employee pension contribution is a flat percentage of the employee salary, it DOES increase every time an employee gets a raise. The court has been clear about rules at time of hire plus granted enhancements being the basis. Don’t think they would view that as an enhancement. You’d have to throw something in to make it fly.

    Here are some things I think the court might OK in exchange for a higher contribution rate (I’m using SERS regular formula for these examples):

    * upping the formula from 1.67% per year to a higher number

    * cutting the Rule of 85 back to a lower number

    * changing the AAI to an actual uncapped CPI-U based COLA

    * lifting the 75% cap on the maximum pension (but would only affect a few employees)

    * lowering the no penalty (without Rule of 84) retirement age from 60 to 55

    * premium free health insurance for one dependent of a 20+ retiree

    There are probably some others, but that is just off the top of my head. Note that all of these are enhancements, not reductions, bit there could be an extra cost / contribution level associated with them.

    The consideration model that I am using, and what I think the court hinted at with SB-1, is the same as what was done when the State moved from State-only to State & Social Security coordinated, and when the State added the fixed 3% AAI. In both cases, the current employee was offered a choice between current and the new benefit. No one challenged those actions in court because they were voluntary.

    Note: none of these are like the proposed pick diminishment A or diminishment B bill. Depending on the terms, they probably will not be a good deal for the employee, but you may be able to come up with some savings for the State.


  42. - RNUG - Thursday, Mar 16, 17 @ 4:40 pm:

    == Or Democrats could jumpstart momentum to break the budget impasse in Springfield by passing a tax on income over $1 million. That is also not going to happen. ==

    If it is just a bill, it would be ruled unconstitutional. It would have to be a Constitutional Amendment to present to the voters, which doesn’t require the Governor’s signature … and probably be approved by the voters in a New York Minute.

    Or do the same with a graduated income tax and specify starting rates that give most taxpayers a reduction.


  43. - blue dog dem - Thursday, Mar 16, 17 @ 5:01 pm:

    How about 1/4% Chicago city earnings tax? Proceeds to CPS and fire and police pensions. Maybe we are afraid people might leave? That doesn’t happen in real life we are told. But at least the Windy City steps up to the plate as an example to us downstaters.


  44. - Wordslinger - Thursday, Mar 16, 17 @ 5:09 pm:

    BDD, Downstate and suburban school district pension contributions are already 100% paid by the state.

    Would you like to step up and be an example with residents in your district covering your pension costs on your own? Think everyone would stick around to cover the checks they wrote with other people’s money?


  45. - blue dog dem - Thursday, Mar 16, 17 @ 5:47 pm:

    Word. How did CPS ever allow this to happen. I know this blog has covered it, but my mind has slipped a bit.


  46. - blue dog dem - Thursday, Mar 16, 17 @ 9:20 pm:

    Word. Since we last talked, I have been using this google thing trying to answer my own question. I am not sure I got it right, but everything I can read points to the fact that CPS and the state worked out a financial agreement some years ago. am I reading this right? Somebody help me. I don’t want to be to hard on the poor Chicago folks and their school district if its unwarrented.


  47. - Whatever - Thursday, Mar 16, 17 @ 9:27 pm:

    == Revenue is needed and the state is broke. Better to help than to continue having a choice be pension payments or close a college, don’t help the elderly and disabled, etc.==

    How about we start by telling all the bondholders that we aren’t going to pay them?


  48. - RNUG - Thursday, Mar 16, 17 @ 9:44 pm:

    -bdd-

    To oversimplify things a bit, Chicago/ CPS asked to have their own separate teacher’s pension fund / local control. The State (or at least enough Chicago Legislators) agreed to it, and part of the deal was an extra school fund payment amount from the State that was supposed to represent what the State would have had to pay into TRS. But that extra payment came without strings, so Chicago didn’t have to put it into the CPS pension fund. CPS did a lot of the same shorting of the pension fund the State did, and used the money for other stuff, including teacher’s raises and avoiding property tax hikes. Fast forward and now it is in crisis just like the State pension funds.

    I left out a whole lot of details, and glossed over a bunch of stuff, and didn’t name names, but that is the general gist of what happened.


  49. - blue dog dem - Friday, Mar 17, 17 @ 6:33 am:

    RNUG. thanks. I would feel bad disparaging the folks from Chicago for causing their own crisis unless it was in order. So how come no one talks about a city earnings tax? Other cities have it. The payroll size is in incredible, and knowing the progressive nature of Chicagoans they would gladly pay a bit more. Wouldn’t they? I read here almost daily that we have been receiving services in Illinois for decades without paying for them and now its time to buck up….well…looks like CPS has been providing services for decades and its time for Chicago to buck up……are do progressives only talk a good game with other peoples money?


Sorry, comments for this post are now closed.


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* The Moto Z’s Alexa Smart Speaker is mostly useless
* [TA Deals] The Treblab X11 headphones are discounted more than 80%
* [Deal] Pick up some cheap SD cards from Amazon’s Black Friday sales
* Verizon quietly launches $30 and up Ellipsis 10 HD, offers free ZenFone V with new lines
* Pixel phones get instant access to Google Lens through Google Assistant

* Terrerobytes: Hall of Fame letter obscures Hall of Fame ballot
* Sox team with Chicago comedian vs. cancer
* MLB clears two offseason obstacles
* Black Friday sale: Take 25 percent off in Shop
* Take 25 percent off Shop orders $25 or more
* Climb machine: Eloy working way up to MLB
* First year of White Sox rebuild closing with 40-man maneuvering


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