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A solution in search of a crisis
Tuesday, Sep 12, 2023 - Posted by Rich Miller * I hate to complain too much because the Better Government Association’s David Greising has finally come around to reality on a constitutional amendment for pension “reform”…
The Civic Committee’s plan relies on expanding the sales tax to services, which has gone nowhere in the past, but is still somewhat more realistic than changing the state constitution to reduce future pension benefits (which it may not be allowed to do anyway). They’ve also proposed jacking up the income tax by half a point on individuals and 0.7 percent on corporations, after having staunchly opposed a graduated income tax. Convincing Illinoisans to pay more money in taxes to fund public employee pension systems would be a very heavy lift. * The real problem is this continued belief that pensions are still a main driver of state spending…
Pension payments in Gov. Pritzker’s first budget (FY20) totaled $8.113 billion. The FY24 appropriations plan budgets $10.135 billion, a 25 percent increase - slightly below the rest of the state’s budget growth. It’s not some outsized burden. More importantly, pension payments represented 20.2 percent of base state expenditures in the FY20 budget as passed, and 20.1 percent of base state expenditures in the current budget. High? Yes. Manageable? Yes. Greising also mentions pension bonds. Pension obligation and acceleration bond payments have fallen from $1.6 billion in Fiscal Year 2017 to $1.024 billion in FY24. Adjusted for inflation, the $1.6 billion FY17 payment would be $1.998 billion today, so that particular spending item has dropped almost by half in real dollars.
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- Big Dipper - Tuesday, Sep 12, 23 @ 11:33 am:
Re cutting benefits owed, perhaps Greising became tired of serious people laughing at him.
- New Day - Tuesday, Sep 12, 23 @ 11:41 am:
Finally some reality. The pension obligations are painful but manageable. They will continue to be painful but manageable until 2045 when they will become barely a drop in the state budget. Oh, to be a lawmaker or governor when you suddenly have an extra 15 billion to spend.
- Davos - Tuesday, Sep 12, 23 @ 11:47 am:
He needs to read Article I, Section 10, Clause 1 of the United States Constitution, aka the contracts clause.
- It's always Sunny in Illinois - Tuesday, Sep 12, 23 @ 11:51 am:
Convincing Illinoisans to pay more money in taxes to fund public employee pension systems would be a very heavy lift.
Well said, and noted.
- Anotheretiree - Tuesday, Sep 12, 23 @ 11:51 am:
I’m no longer as certain that this 6 to 3, and possibly future 7 to 2 SCOTUS, won’t be able to find a way around the contracts clause for pensions.
- Grandson of Man - Tuesday, Sep 12, 23 @ 11:52 am:
Pension debt is manageable and no need to keep freaking out, oof. Not what the Illinois doomsayers want to hear.
- How Could Jerry Not Say Hello? - Tuesday, Sep 12, 23 @ 12:28 pm:
I always felt that a 5-4 SCOTUS that could conjure up a ruling like Bush v. Gore could find a public sector pension carve out to the contracts clause. So yes, I too agree that the current court would wholeheartedly embrace a police power argument or some such exotic theory. Put differently, when’s the last time SCOTUS handed down a major pro-union opinion?
- Rich Miller - Tuesday, Sep 12, 23 @ 12:29 pm:
===when’s the last time SCOTUS===
This is a state issue about the state constitution that doesn’t conflict with the US Constitution.
Move along.
- JS Mill - Tuesday, Sep 12, 23 @ 12:29 pm:
Pension reform is done and over with. Tier 2 save the state over $500 million and growing every year.
The good news is that the ever decreasing influence (if it can even be referred to in that manner anymore) of the ilgop means that it is dead legislatively. Plus the ilgop has moved on to more pressing matters of drag shows and litter boxes.
- Big Dipper - Tuesday, Sep 12, 23 @ 12:37 pm:
== Plus the ilgop has moved on to more pressing matters of drag shows and litter boxes==
If only. The IPI is recruiting GOP legislative candidates with the number one goal of amending the Pension Clause.
- Appears - Tuesday, Sep 12, 23 @ 12:44 pm:
And sadly, this is also a Tier 1 issue and the Tier 1’s are dying off. So the grand pension total, after the Tier 1’s leave this planet, won’t be anywhere what is calculated. It will be a lot less.
But on the flip side, a bad pension plan (Tier 2) and lower paying jobs than the private sector has does not equal a bright future for a State employee work force that the citizens will need.
As usual, you will get what you pay for.
- Honeybear - Tuesday, Sep 12, 23 @ 12:50 pm:
It just angers me to no end that there are those out there that would reduce or take away my pension that I worked faithfully for 23 years for. I will have contributed every paycheck for it. I’m tier II so I already will get a lot less than those folks just 3 years prior. But I’m so thankful for it.
Why do these folks want to hurt regular faithful employees of the state like me.
I know that some are giving up on it
But they’d return to it in a second if they thought they had a chance.
I don’t understand how they could be so heartless and cruel to public servants faithfully working to better the state.
- Grandson of Man - Tuesday, Sep 12, 23 @ 1:04 pm:
“The IPI is recruiting GOP legislative candidates”
Democrats can only wish for the super-minority party to push anti-worker positions, seeing how popular they are even in red districts that voted for the WRA.
- JS Mill - Tuesday, Sep 12, 23 @ 1:08 pm:
=The IPI is recruiting GOP legislative candidates=
I am not concerned in the least. The ilgop hasn’t had a statewide elected official in two election cycles now and nobody was even remotely close in the last cycle. On the legislative side, they are so far behind the Webb Space Telescope (or whatever it is) cannot find them. They continue to run on issues that are absolute losers. Not only do they not seem to care, they seem to celebrate the fact that they are running on these loser issues.
If this was a high school football game the ilgop would be operating with a perpetual running clock.
- thechampaignlife - Tuesday, Sep 12, 23 @ 1:19 pm:
===I worked faithfully for 23 years for. I will have contributed every paycheck for it. I’m tier II===
23 years of work seems to indicate that you started in the year 2000, but Tier 2 did not start until 2011. Does the 23 years include time in a different system? I have always wondered what happens if a Tier 1 employee gets a job under a different system after 2011 (e.g., Tier 1 SURS moves to TRS). Is that what happened in your case, and do you get some Tier 1 and some Tier 2 or does it all move to Tier 2?
- Honeybear - Tuesday, Sep 12, 23 @ 1:23 pm:
My bad. Poorly written, when I retire in 2037 I will have worked 23 years. I started in 2014
- Travel Guy - Tuesday, Sep 12, 23 @ 1:25 pm:
==Is that what happened in your case, and do you get some Tier 1 and some Tier 2 or does it all move to Tier 2?==
It should all be tier 1. If you start in tier 1, you are always in tier 1. I don’t understand this comment either.
- Big Dipper - Tuesday, Sep 12, 23 @ 1:45 pm:
Honeybear, they are not trying to reduce Tier II. They pretend it never happened. I’m sure if pressed they would admit that they love Tier II as it is worse than Social Security.
- Friendly Bob Adams - Tuesday, Sep 12, 23 @ 1:53 pm:
Appears- Please, don’t kill us Tier 1 people off just yet. I’m hoping to get a few more checks before I disappear for good.
- Scooter - Tuesday, Sep 12, 23 @ 1:58 pm:
=I have always wondered what happens if a Tier 1 employee gets a job under a different system after 2011 (e.g., Tier 1 SURS moves to TRS).=
There’s a Pension Reciprocity System that I believe covers ALL of the systems which were affected by the Tier 2 revisions. You need to be vested in at least one system to be eligible for any pension. If you started out under one system as Tier 1, and then moved to another system under Tier 2, you would need to go back to the first system and get vested in order to get a Tier 1 pension. If you stayed in the second system and got vested in Tier 2, the reciprocal agreement allows you to append those un-vested years (in only whole-year increments) to the Tier 2 pension you’ve become vested in.
In a former job under one of the affected systems, I was told by a couple of co-workers (who started employment there in the Tier 2 era) that they were safely in Tier 1 because they did a couple days of substitute teaching back in 2010, etc,. If my read on the rules is correct, however, they would need to have been vested in TRS in order to get Tier 1.
- supplied_demand - Tuesday, Sep 12, 23 @ 2:02 pm:
==And sadly, this is also a Tier 1 issue and the Tier 1’s are dying off. So the grand pension total, after the Tier 1’s leave this planet, won’t be anywhere what is calculated. It will be a lot less.==
Can someone explain this? Isn’t life expectancy calculated into the projected pension costs?
- Jane - Tuesday, Sep 12, 23 @ 2:13 pm:
Here’s the missing piece: the “savings” from the move to Tier 2 is at least partly fictional. Especially for the teachers, benefits were cut so much (backroom deal, no actuaries) that it is generally agreed that there will be boosts eventually, both to avoid lawsuits and because eventually those younger teachers will have more service and more clout. (To be sure, the biggest losers in the new system are those who only teach for a short time, who will never have political clout, so that will be more a matter of recruiting troubles. Best case is that the public school student population keeps dropping so that we need to hire fewer teachers to teach fewer kids.)
- Steve - Tuesday, Sep 12, 23 @ 2:14 pm:
-won’t be able to find a way around the contracts clause for pensions.-
No one should have standing in federal court for state pensions if you believe in federalism
- Hannibal Lecter - Tuesday, Sep 12, 23 @ 2:14 pm:
=== There’s a Pension Reciprocity System that I believe covers ALL of the systems which were affected by the Tier 2 revisions. ===
Except the judges system. All new judges are Tier 2 even if they were Tier 1 with a previous employer.
- Who else - Tuesday, Sep 12, 23 @ 2:16 pm:
The Civic Committee helped kill the 2020 tax proposal from the GA that lowered the tax rate on poor people because they were waiting for their chance to propose their own tax plan that raises rates on poor people? And that new revenue is supposed to go to…pensions?
Why?
- Ares - Tuesday, Sep 12, 23 @ 2:39 pm:
The problem is not just cutting the befits of current and soon-to-be-0retirees. The issue is also what will be done with the savings? If the State will use the saved money to shower more incentives on tech giants and EV manufacturers (who can pack up and leave on a moment’s notice and leave hulking abandoned warehouses and plants in their wake), it doesn’t sound like a good use of the money.
- supplied_demand - Tuesday, Sep 12, 23 @ 2:57 pm:
==shower more incentives on tech giants and EV manufacturers (who can pack up and leave on a moment’s notice and leave hulking abandoned warehouses and plants in their wake)==
If they do that, they don’t get the incentives.
- Payback - Tuesday, Sep 12, 23 @ 3:28 pm:
“…a bad pension plan (Tier 2) and lower paying jobs than the private sector has does not equal a bright future for a State employee work force that the citizens will need.” I believe that public employee salaries did not start exceeding private sector jobs until the 1970s, 200 years after the Declaration was signed in 1776. My father and I have no fixed pension. Most GenXers I know have no fixed pension, unless they were in the military.
“…you will get what you pay for.” I grew up with tons of Chicago Machine families and remember many conversations about how their father/uncle/cousin was a fireman and only had to work three days per week, so they could have a side job painting or laying carpet. The Daley Machine was never about working too hard.
- cermak_rd - Tuesday, Sep 12, 23 @ 3:46 pm:
Those firemen probably worked 3 days on a week on a 24 hours system. Which means they were at the station the entire time on the designated days. And ready to fight a fire at any moment in those 24 hours. Such schedules were chosen to minimize shift changes and reduce the chance for confusion during same.
Of course such a schedule will allow for a side gig. And I see nothing scurrilous in that.
- Marco Polo - Tuesday, Sep 12, 23 @ 3:49 pm:
=== A solution in search of a crisis ===
More like an organization in search of a reason for existing.
Or an executive director in search of a paycheck.
When did Chicagoland’s premiere public corruption fighter decide to start wading into partisan budget battles. Always landing on the side of wealthy Chicago corporate interests?
I think it was right around the time that Andy Shaw took the helm and gave himself a lavish compensation increase that included a gym membership at the East Bank Club.
The BGA should hang a sign around their neck that says “For Rent.”
- Huh? - Tuesday, Sep 12, 23 @ 4:05 pm:
Honey Bear - were you able to buy any of your military time?
- Telly - Tuesday, Sep 12, 23 @ 4:06 pm:
== pension payments represented 20.2 percent of base state expenditures in the FY20 budget as passed, and 20.1 percent of base state expenditures in the current budget. ==
Then let’s just lock that into law (or heck, into the constitution) until the debt is paid off. Tie the pension payment to a static portion of GRF, like 20 percent, rather than the somewhat arbitrary dollar figures in the ramp. That way pension payments will cause less of a crowding-out effect when revenue dips and we would automatically make higher payments when the state experiences a revenue boost.
- Proud Sucker - Tuesday, Sep 12, 23 @ 4:36 pm:
“Those firemen probably worked 3 days on a week on a 24 hours system.”
Still do, in suburban Depts as well. Red, Black, Gold shifts.