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Madigan summarizes leaders’ meeting

Thursday, Jun 29, 2017

* Speaker Madigan told reporters this afternoon, “We had a very good leaders’ meeting,” and then gave everybody a summary of what went on

* Education funding reform…

    “Sen. Cullerton and I reasserted our strong support for SB 1,” and said the governor should “sign the bill as-is.”

* Workers’ comp…

    Madigan restated the need for “real rate regulation” for the companies that sell workers’ comp insurance.

    “We indicated that if there were to be, if there were to be adjustments to the medical fee schedule, we would not relate them to the Medicare schedule.”

* Property taxes…

    The Republicans asked for adjustments to the property tax freeze bill that couldn’t pass the House yesterday. “We indicated that we would be open to other adjustments.”

* Government consolidation…

    The bill that passed the House and the Senate is the one they’re sticking with. “We ought not to go any further.” (The governor wants another bill on this topic).

* Pensions…

    “Sen. Cullerton indicated that we should delete the section of the bill that’s concerned with a voluntary consideration model and just proceed with the remaining elements of the bill, which I think would be satisfactory to the other leaders and the other caucuses.”

My translation after speaking with Democrats: Despite what he said, I think there’s still some movement possible on SB 1. I was told yesterday there are some important language issues on the workers’ comp insurance regulation stuff. Madigan seems to be moving a bit on his refusal to lower rates for workers’ comp medical providers, which is something the IMA wants. There’s more work to do on property taxes, but Madigan at least appears open to more movement (the big sticking point is still an exemption for pension costs).

Madigan also said the House will bring their spending plan to the floor tomorrow. Revenues are still being discussed.

- Posted by Rich Miller        

40 Comments
  1. - Trainin - Thursday, Jun 29, 17 @ 4:23 pm:

    So, where they at with pensions?


  2. - Texas Red - Thursday, Jun 29, 17 @ 4:27 pm:

    ” Revenues are still being discussed.” ….really at this late hour they don’t have the revenue plan hammered out. A shady tactical move, leading to a take it or leave it offer at the 11th hour. Classic political move to box in your opponent. MJM at his best.


  3. - winners and losers - Thursday, Jun 29, 17 @ 4:28 pm:

    ==I think there’s still some movement possible on SB 1==

    Rich, yes, and those changes are being negotiated.


  4. - HerdingCats - Thursday, Jun 29, 17 @ 4:29 pm:

    Any word from MJM about how the House Plan addresses the millions in unpaid FY16/FY17 bills? Even with a revenue redirect, there’s no appropriation authority to take care of those liabilities.


  5. - RNUG - Thursday, Jun 29, 17 @ 4:35 pm:

    == “Sen. Cullerton indicated that we should delete the section of the bill that’s concerned with a voluntary consideration model and just proceed with the remaining elements of the bill, ==

    == So, where they at with pensions? ==

    Won’t know until we see it. Sounds like they are removing the Tier 1 forced choice between raises and the AAI. (Guessing that is because they don’t plan to give raises anyway.)

    Tier 1 buyout, new Tier 3 Defined Contribution plan for new hires most likely still there. Probably still voluntary change from Tier 2 to Tier 3. Probably still has the normal cost shift to the school district for new TRS hires.

    Not much savings, if any, they can book into a budget right away. But it is most likely all legal and they can sell it as pension reform.


  6. - Three-Finger Brown - Thursday, Jun 29, 17 @ 4:37 pm:

    No comments from Durkin so far, and the Spruce Bruce hasn’t bombed it yet, so I guess that’s promising.


  7. - Trackin - Thursday, Jun 29, 17 @ 4:40 pm:

    Thanks RNUG. If you’re doing any consulting work for the Gov, you might mention how much he could save with an ERI!


  8. - Ratso Rizzo - Thursday, Jun 29, 17 @ 4:43 pm:

    RNUG, I watched the pension debate before the bill was voted on yesterday and they changed the consideration model. One option was to keep what you have OR in exchange for an upfront 10% payment of your total contribution you would forgo the compounded AAI. Martwick presented this before the vote, along with all the other Tier 2 and Tier 3 stuff.


  9. - RNUG - Thursday, Jun 29, 17 @ 4:44 pm:

    == If you’re doing any consulting work for the Gov ==

    I’m not.


  10. - Robert the Bruce - Thursday, Jun 29, 17 @ 4:44 pm:

    Quite cynical, I know, but why not pass some pension reform that they know will be struck down by the courts?

    At least all parties can claim progress, and the state will have a budget deal, even if part of it relies on sham savings. Better that than no budget.


  11. - Roman - Thursday, Jun 29, 17 @ 4:48 pm:

    All good signs, but all that matters is the roll call on the revenue bill.


  12. - Lech W - Thursday, Jun 29, 17 @ 4:50 pm:

    If Tier 3 Defined Contribution plan is approved that is huge. It took us 35 years to get into this mess and moving new hires to a fixed cost DC plan will slowly but surely lead to cost saving. Big things have small beginnings !!


  13. - RNUG - Thursday, Jun 29, 17 @ 4:51 pm:

    == Not much savings, if any, they can book into a budget right away. ==

    Adding, Rauner is still planning to get a lot savings out of the employee / retiree health insurance at some point. That has been on hold as the AFSCME case goes through the courts. I’ve heard they are ready to implement that at a moment’s notice once they get the green light.

    Be interesting to see how that plays out because, last I saw, the employee health budget proposal was to fully fund for a year. Won’t catch them up, will still be up to 2 years behind … but it shouldn’t get any worse.


  14. - wordslinger - Thursday, Jun 29, 17 @ 4:57 pm:

    –All good signs, but all that matters is the roll call on the revenue bill.–

    And that the governor will sign it. Been that way since Jan. 2015.

    Everything else has been sturm und drang.


  15. - Sue - Thursday, Jun 29, 17 @ 4:59 pm:

    As positive as a new 401k type of program would be for tier 3- TRS needs active employees to contribute into the fund or the unfunded liability will increase without those payments. Better to keep the tier 2 program for new people as unfair as it is


  16. - Downstate - Thursday, Jun 29, 17 @ 5:00 pm:

    Great! That business development guru, MJM, is offering nothing that will encourage businesses to move or expand here. Sad times…….


  17. - Dan Johnson - Thursday, Jun 29, 17 @ 5:02 pm:

    RNUG et al - For employee and retiree health care, I hope they look at the provider payment rates and tie them to Medicare rates in order to (a) save money and (b) provide more certainty to the entire health care billing / pricing system.

    The status quo is like the Wild West where they pay all sorts of random rates — much higher than Medicare — without much systemic thought. Medicare probably does the best job of anyone in creating a rational pricing system for health care. Always room to improve, but that’s probably the best standard out there.


  18. - RNUG - Thursday, Jun 29, 17 @ 5:03 pm:

    == they changed the consideration model. One option was to keep what you have OR in exchange for an upfront 10% payment of your total contribution you would forgo the compounded AAI. ==

    That should be legal. Last I saw they were offering the 10%, but it didn’t have “keep what you got and raises still count”.


  19. - Lech W - Thursday, Jun 29, 17 @ 5:05 pm:

    =Sue=

    You are right due to the past missed pension payments by the incompetent folks in Springfield, the statewide plans are not actuarially sound enough to be even close to self sustaining . But given a full set of options such as Early retirements, acelelrated payments and minimal pay hikes things might right themselves over time .


  20. - RNUG - Thursday, Jun 29, 17 @ 5:08 pm:

    == moving new hires to a fixed cost DC plan will slowly but surely lead to cost saving. ==

    It’s going to cost the taxpayers more than Tier 2. The only reason it saves any money at the State level is the included cost shift to the school districts.

    This will come back to haunt the taxpayers once they understand it, just like the 2002 ERI trading GRF savings for higher SERS expenses.


  21. - Sue - Thursday, Jun 29, 17 @ 5:10 pm:

    Given the current composition of S Ct the so called consideration model would probably not be upheld. The only legal way to reduce the pension liability is to impose strict salary caps. Actuarially if Buck were to see a statutory salary cap the actuaries could model lower future costs. Does anyone see that passing a Dem legislature? Not gonna happen


  22. - Sue - Thursday, Jun 29, 17 @ 5:25 pm:

    I tried for years to get Elaine Netkritz to push for an elimination of the employer pickup statewide but then require the Employers for a specified time 10 years) to continue payments at the same levels they made with the pick-up. 10 years of what would be essentially double employee contributions would have dramatically helped funding assuming the State continued the Ramp schedule. It wasn’t politically feasible to kill the pick-up. The IEA would never have agreed


  23. - RNUG - Thursday, Jun 29, 17 @ 5:35 pm:

    == But given a full set of options such as Early retirements ==

    Depends on how they structure an ERI. The 2002 one cost the State but was great for the employee; the 2004 was better for the State but worse for the employee. If the objective is overall cost saving, an ERI can’t be too generous.


  24. - Impasse Casualty - Thursday, Jun 29, 17 @ 5:48 pm:

    Remember all those times Rauner said they were close on a budget deal? What the heck was he talking about?


  25. - Anonymous - Thursday, Jun 29, 17 @ 5:52 pm:

    “…. which is something the IMA wants.”

    I’ve never seen that name on a ballot. Anywhere.


  26. - Lech W - Thursday, Jun 29, 17 @ 6:07 pm:

    IMA… never seen that name on the ballot. Yeah same goes for AFSCME and SEIU, but they sure have influence.


  27. - Trainin - Thursday, Jun 29, 17 @ 6:10 pm:

    If they want people gone, the 2002 ERI is the way to go. I’d put teachers and univ in Tier 3 to push costs to locals. State employees should be kept at Tier 2 to fund pension payments. hire newer people in at lower salaries. Turn
    Around will be so high they won’t have to worry about Tier 2 pensioners lasting long enough to collect.


  28. - Miguel - Thursday, Jun 29, 17 @ 6:28 pm:

    RNUG, are you reading/hearing that the shift of “normal costs” to school districts will apply only to new TRS hires? It’s a struggle to make sense of the bill filing language, but a couple sections (e.g., pp 253-258 of the PDF for HB 4045) seem to suggest districts would have to pick up significant costs for teachers/administrators whose salaries exceeded 140,000 (fairly reasonable, although disincentivizing for hiring administrative teachers in high performing districts, especially as this figure is eaten by future inflation) and, much less reasonably, for portions of teachers’ salaries exceeding their prior years’ pay by more than inflation, which would decimate districts’ ability to offer early-career teachers step-scale increases competitive with districts nationwide. Am I missing something more obvious than Koch-funded antipathy toward public school teachers?


  29. - RNUG - Thursday, Jun 29, 17 @ 6:55 pm:

    == are you reading/hearing that the shift of “normal costs” to school districts will apply only to new TRS hires? ==

    New hires, and over a certain salary level was the way I read it. They already have to cover pension costs for some excess salary; this cleans that up some.


  30. - My New Handle - Thursday, Jun 29, 17 @ 7:11 pm:

    The BIMP bill would make some interesting reading, but there will not be budget, nothing to implement.


  31. - DuPage Dave - Thursday, Jun 29, 17 @ 7:19 pm:

    Tier 3 is a definite victory for Rauner. If he can’t fire all AFSCME workers and abolish their pensions, he can at least be assured that nobody will want to work for the State of Illinois in the future.


  32. - walker - Thursday, Jun 29, 17 @ 7:34 pm:

    Any legal pension changes, would have minimal (if any) fiscal advantages for the state versus Tier 2, but would sure sound great as a political victory.


  33. - Anonymous - Thursday, Jun 29, 17 @ 7:53 pm:

    minimal fiscal advantages for the state==

    Wonder how Moody’s, et al will view this. Sounds like some massive movement (and punishing, to wit), but translated into actual cash? Will it move their needle?


  34. - RNUG - Thursday, Jun 29, 17 @ 9:14 pm:

    == Wonder how Moody’s, et al will view this. Sounds like some massive movement (and punishing, to wit), but translated into actual cash? Will it move their needle? ==

    What Moodys, et al, will he looking at is if a realistic budget exists and if there is a revenue bill to match.


  35. - Yellow Dog Democrat - Friday, Jun 30, 17 @ 12:54 am:

    @RNUG

    No one is going to be doing cartwheels over a revenue plan that expires in 2021.


  36. - RNUG - Friday, Jun 30, 17 @ 8:06 am:

    == No one is going to be doing cartwheels over a revenue plan that expires in 2021. ==

    True. But it’s better than what we have now.


  37. - Bankruptcy - Friday, Jun 30, 17 @ 8:07 am:

    There’s nothing extreme about common sense reforms to improve the business climate in a state and to create new jobs. Of course, it might seem extreme to someone that only wants to create gubmint jobs with hand chosen sock puppets to staff them.


  38. - RNUG - Friday, Jun 30, 17 @ 8:18 am:

    == There’s nothing extreme about common sense reforms to improve the business climate in a state and to create new jobs. ==

    I’m all for reforms IF you can show some correlation between said reform and either job creation or improved tax revenue. We already have plenty of examples of lower taxes not working.

    == Of course, it might seem extreme to someone that only wants to create gubmint jobs with hand chosen sock puppets to staff them. ==

    Are you talking about Rauner and his overpaid superstars?


  39. - ILGOV2018 - Friday, Jun 30, 17 @ 9:05 am:

    Sorry to go off topic a bit, but not really seeing this is about the ‘leaders’ meeting. Watch for Senator Mike Connelly to get a boost for Senator Radogno’s leadership position. Just my humble opinion.


  40. - A guy - Friday, Jun 30, 17 @ 9:25 am:

    Good thing it’s “humble”. That’s going nowhere.


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