* As you probably know, former appellate justice Gordon Maag sued the state over a new law that allows CMS to set public employee retiree health insurance premium rates, claiming the law is an “unconstitutional violation of the Illinois Constitution Pension Protection Clause.”
But Judge Steven Nardulli just tossed out the suit, ruling…
1) Health insurance benefits are not guaranteed pension benefits protected by the Pension Protection Clause;
2) Plaintiffs do not have a vested contractual interest in free health insurance;
…Adding… This would seem to strengthen Senate President Cullerton’s pension reform proposal, which would force folks to choose between a COLA and access to government health insurance.
If one were to accept the premise that health insurance benefits are vested rights that accrue upon retirement, one must accept the premise that those benefits cannot be reduced, regardless of changing medical technology or the willingness of insurance providers to make a particular policy of health insurance available. The fact that medical technology and contracts offered by insurance companies change, as opposed to the actuarial certainty of a pension payment, lead this court to the conclusion that health insurance benefits are not the same as a pension protected by the Pension Protection Clause. […]
This conclusion as applied to the Kanerva Plaintiffs requires special mention. The Kanerva Plaintiffs are all former Merit Compensation employees of the State, many of whom elected to take early retirement, allegedly in reliance upon promises made by the State that their medical benefits would be “sacrosanct” in retirement. Even accepting the allegation that promises by SERS and CMS were made to the effect that those retirees would not be charged premiums for health insurance, those representations cannot create a contract between the Kanerva Plaintiffs and the State.
*** UPDATE *** AFSCME responds…
“We are greatly disappointed by today’s decision,” AFSCME Council 31 executive director Henry Bayer said. “We continue to believe this law impairs the rights of men and women who retired after careers with state government or state universities to obtain health insurance coverage according to the terms in place when they retired. It also violates the constitutional clause that prevents the diminishment of retirement benefits earned by public employees. We intend to consult with the plaintiffs and our union partners about our options going forward.”
While AFSCME is not a party to the suit in question, it joined with other labor unions in support of a class action suit filed in August 2012, later consolidated along with other cases before Judge Steven Nardulli.
“If it doesn’t work out with the negotiations they have going on right now [in Chicago], Mayor Stephens wants the Cubs to know they have an option and Rosemont could be that option should they decide to look elsewhere,” Mack said.
“What he does is put deals together. That’s what Rosemont has always been known for: a place where a business could go and find a friendly environment. He sees a situation that hasn’t been working and it’s in his nature to say, ‘We could make that happen in Rosemont.’”
Mack acknowledged that Stephens has met with Cubs underlings, but never directly with Ricketts.
But, he said, “There are 25 acres of land that Rosemont is willing to give to the Ricketts family to build a stadium. It’s the last piece of land of any size at the intersection of Balmoral and the Tri-State Tollway.”
Dennis Culloton, a spokesman for the Ricketts family, said the Cubs remain focused on getting a deal done in Chicago.
“The family appreciates the expressions of interest from Rosemont and others, however, the current focus is to work toward an agreement with the city of Chicago,” Culloton said in a statement.
Asked whether Ricketts was prepared to follow the lead of the Bears and White Sox by threatening to leave Chicago, Culloton would only say, “Tom Ricketts has no intention of talking to the mayor of Rosemont before opening day. Right now, the answer is ‘no.’ I cannot predict the future.”
The reference to “others” applies to former DuPage County Board Chairman Robert Schillerstrom, who made a similar pitch to Ricketts last summer.
“I told him he should consider moving to DuPage County as an option. He’s got a tremendous fan base out there. We still have a variety of large vacant sites out here that would be able to meet their needs,” Schillerstrom said Monday.
* The Question: Do you care if the Cubs abandon Wrigley Field and move to the ‘burbs? Take the poll and then explain your answer in comments, please.
* An Internet survey hosted by the Illinois State Rifle Association showed almost unanimous opposition to pretty much any gun control measure and support public carrying of firearms. And if you wonder about why that is, well, this may be the reason…
Just over 80% of respondents feel that they could become the victim of violent crime while about half feel unsafe travelling outside their neighborhoods.
Wow. Half of the people who took that Internet survey don’t feel safe outside their own neighborhoods? And 80 percent think they’ll be the victim of a violent crime?
According to a Gallup poll, the percentage of Americans who feel crime is rising nationally has generally increased, from 53% in 2004, to 68% in 2006, to 74% in October 2009. Gallup found similar results for our perception of local crime, with the percentage of Americans who believe there’s increased crime in their area rising from 37% in 2005 to 51% in 2009.
Easier and faster access to crime news likely accounts for some of the misperception. And we’ve become all too aware of crimes that barely existed in the US 20 years ago, such as identity theft and terrorism. Yet overall, crime statistics show that the chances of actually becoming a crime victim are relatively low: the odds a person 12 or older will be a victim of a personal crime (including violent crimes, robbery, and pickpocketing/purse snatching) in a year are 1 in 46.61, and the odds of being a victim of a violent crime are 1 in 48.36. The odds a household will be a victim of a property crime (including burglary, theft, and car theft) in a year are 1 in 6.83.
Here’s the scoop on some commonly feared crimes and the real odds of being a victim. (All real-crime odds are for a one-year period, so, naturally, your lifetime odds of victimhood increase as you continue to walk the Earth.)
* Identity Theft:1 in 1.52 (66%) of us worry about this digital-age crime, and with good reason: the odds a household will be a victim of identity theft in a year are 1 in 18.22—over 5%.
* Car Crimes:1 in 2.13 of us worry about our car being stolen or broken into. The actual odds of car theft in a year? Nationwide, just 1 in 187.3.
* Sexual Assault:1 in 5.26 of us worry about this terrifying crime. 1 in 541.1 women actually become victims of rape or sexual assault in a year (1 in 1,008 people overall).
* Murder: For this most final of all crimes, our worry seems egregiously out of proportion. 1 in 5.26 of us worry about being murdered, but the odds a person will be murdered in a year are just 1 in 18,690.
The survey was accessible from the ISRA’s Internet page and was also distributed by way of the ISRA’s e-mail alert service. In all, more than 4,500 individuals responded to the 50-question survey over a two-day period. Of those 4,500 respondents, 97% reported that they owned at least one firearm.
The survey was accessible from the ISRA’s Internet page and was also distributed by way of the ISRA’s e-mail alert service. In all, more than 4,500 individuals responded to the 50-question survey over a two-day period. Of those 4,500 respondents, 97% reported that they owned at least one firearm.
Survey results indicate that recent gun control proposals are not very popular with gun owners. No less than 99% of respondents expressed opposition to banning AR-15 style rifles. Similar majorities oppose banning AK-47 style rifles and other semiautomatic rifles, pistols and shotguns.
Proposed regulation of ammunition also failed to garner support among those surveyed. A full 99% of respondents oppose limits on how much ammunition a person could buy. Similar numbers oppose registration of ammunition purchases, microstamping of cartridges, and ammunition taxes to pay for crime victim medical bills. Contrary to what is reported in the media, 98% of gun owners surveyed oppose limits on the capacity of rifle, pistol and shotgun magazines.
Background checks were also unpopular with those surveyed. Results show that two-thirds of respondents oppose background checks on private gun sales – even if the government was required to destroy all records of the background checks.
Much of the gun control movement’s standard wish list found little support among respondents. Gun owner licensing met with 95% opposition while both gun registration and mandatory liability insurance for gun owners are opposed by 98% of those who took the survey.
The ISRA survey results also revealed some significant credibility gaps as witnessed by the fact that less than 5% of respondents feel that the police could protect them from crime. Less than 8% feel that gun control effectively thwarts crime while less than 20% of respondents feel that gun control organizations are acting in good faith. About 90% of respondents feel that politicians who promote gun control are only doing so for political reasons. The credibility of the press took a hit as 97% of respondents feel that media is biased against private firearm ownership. Less than 1% of respondents identify with the policies of big name gun controllers like Rahm Emanuel, Chuck Schumer or Michael Bloomberg. [Emphasis added.]
* From an e-mail sent by Organizing for Action, formerly known as Obama For America…
If you care about marriage equality, here’s something really important you can do right now.
As early as this week, the Illinois State House could vote on a bill — already passed by the state Senate — that will give all couples the legal right to marry. If it passes, Governor Quinn says he’ll sign it into law. That’s huge for all of us in the OFA family who care about this issue.
Right now, reports say the bill is short of the votes it needs to pass, so these calls matter.
Take two minutes and look up your state representative right now — then give them a call to let them know that you want them to vote YES on the Religious Freedom and Marriage Fairness Act.
It’s really easy: Just use that website to look up your address, click “confirm your address,” then scroll down to find your state representative’s information.
Like President Obama said last year, he believes that marriage equality is a question of fairness — of treating others the way you want to be treated.
Right now, his home state is just one step away from becoming the 10th state in the nation to approve same-sex marriage — and making sure that gay and lesbian families in Illinois are treated equally in the eyes of the law.
We’ve heard from OFA supporters here in Illinois that this issue matters to you, and that’s why we’re teaming up with Illinois Unites for Marriage — a joint project of ACLU Illinois, Equality Illinois, and Lambda Legal — to add our voices to this fight.
This House vote is the final hurdle to making sure this historic legislation becomes the law of the land. Right now, a number of state representatives are still undecided, and we know this vote’s going to be close.
Take a few minutes to look up your state representative today and urge them to vote YES in allowing all loving couples to share in the freedom to marry:
Today, I announced that I am staying on as CEO of For The Good of Illinois and will not seek public office in 2014.
After consulting with supporters, donors, advisors, and my family, I have decided not to run for office in the 2014 election cycle.
Now, we are free to pursue transparency & accountability reforms on a non-partisan basis. We will continue to put “every dime, online, in real time” through the Open the Books platform; advocate for aggressive auditing of government agencies; and, when necessary, pursue legal action to expand transparency.
We have been effective at exposing corrupt practices. This will continue…
Our platform of real solutions - expanded transparency, forensic audits, and freezing property taxes - is robust. These policies, along with other necessary reforms, begin to solve the long-term problems of the state.
Together, we are a national leader in pioneering online transparency of Government spending. Our first-to-market mobile app which hyper-localizes twelve years of United States Government checkbook spending to your zip code- is a game changer with national implications. Stay tuned for more….
My Conclusion: Illinois requires aggressive reforms, and after balancing the pros and cons of each approach, I decided I will have a more positive impact outside of an elected position.
* Republican gubernatorial candidate Bruce Rauner spoke at the Cumberland County Lincoln Day Dinner last week and had something interesting to say about the AFSCME contract…
“I may have to take a strike and shut down the government for a few weeks [in order to] redo everybody’s contract.”
We urge every senator who is tired of watching Illinois tumble to fiscal ruin to vote yes.
We know critics question whether this bill, introduced in the Senate by Daniel Biss (D-Evanston), will hold up in court. But we also know that an alternative bill, promoted by Senate President John Cullerton, falls far short of solving this pension mess.
The Biss bill — also introduced in the House by Rep. Elaine Nekritz, a Democrat, and House Minority Leader Tom Cross, a Republican — would save the state $167 billion over 30 years. The Cullerton bill would save no more than $88 billion.
Um, Cullerton’s bill actually includes Biss’ language. His own proposal doesn’t kick in unless and/or until the Biss language is declared unconstitutional.
I went to dinner with some friends last night and we were marveling at how ill-informed some legislators are about this pension reform issue, even after years of debate. They ain’t alone.
Press Conference:
Tuesday, March 19 at 11am
University Club, 76 E. Monroe, Chicago, IL 60603
MEDIA ADVISORY
Andrzejewski to Make Major Announcement
Tomorrow, March 19th, Businessman and Civic Advocate, Adam Andrzejewski will make a major announcement regarding the future of Illinois…
Andrzejewski is Founder of For the Good of Illinois- a nonprofit nationally leading transparency organization. Andrzejewski sought the 2010 GOP nomination for Governor of Illinois.
WHERE: University Club of Chicago, Millennium Room, 76 E. Monroe St, Chicago, IL 60603
Note: The University Club requests that no jeans or tennis shoes be worn. Gentlemen need jackets.
Looking forward to seeing you!
Adam Andrzejewski
For The Good of Illinois | CEO
As subscribers have known for a while, Andrzejewski has been talking about running for state treasurer. If you’re going, gentlemen, don’t forget your jackets. Kind of a weird setting for a statewide announcement.
Andrzejewski, who founded and heads up the transparency group “For the Good of Illinois” was in Washington DC this week, but told Illinois Review that despite the DC meetings, he’s not contemplating a bid for Congress in 2014.
“I’ve been redistricted out of Judy Biggert’s old district, so I’m not running for Congress,” he said.
What about a statewide position then? “I’ve also already said that I’m not running for governor,” Andrzejewski said.
When asked about state comptroller or treasurer - something many speculate he would be interested in - he hesitated. “Well, there’s a problem there, neither Topinka nor Rutherford have officially announced their intentions for 2014,” he said.
Last week, Andrzejewski announced the formation of a federal version of “For the Good of Illinois” to pursue transparency in federal spending and the national budget. Whatever office Andrzejewski intends to pursue, it’s fairly certain open government will be a part of his campaign platform.
* Many of the existing casinos want this new online gaming provision stuck inside the gaming expansion bill. Yes, it’ll cost them each $20 million up front, but the profits could be huge…
The debate over gambling in Illinois is expanding, from the well-worn arguments over new casinos and slots at Arlington Park to now whether every of-age Illinoisan should be allowed to gamble over the Internet.
Internet gambling could bring blackjack and craps to anyone who wants it, taking advantage of smartphone apps and an increasingly connected culture to let people play at any time or place. […]
This time, Internet gambling has been added to Link’s legislation. Under the plan, Illinois casino or track owners could operate gambling websites in addition to their traditional operations, and the new money they’d produce for the state largely would go toward paying down Illinois’s massive pension debt.
Only Illinoisans over 21 years old could play on Illinois sites, and an online gambling license would cost a casino owner $20 million up front.
* Meanwhile, Illinois Lottery Superintendent Michael Jones is under fire again…
Then there’s Chicago-based Independent Gaming Research, which used to be named Independent Lottery Research and used to be co-run by Mr. Jones until he divested his interest when he became lottery chief.
Internal memos I’ve obtained from a source who does not want to be named indicate that Mr. Jones persuaded Northstar to hire ILR as a contractor just a month after he took the job. But the lottery reversed the decision amid concerns over the ethical appearance thereof. I’m also told—by Mr. Jones and others—that Northstar since has hired ILR/IGR for considerable work in Illinois.
Mr. Jones says the state was getting bad research from other vendors, so he pushed for a replacement he knew and trusted. When Northstar raised the ethical concerns, he says he backed off. And he cheerfully concedes to promoting “a local company” to other lottery directors around the world. “I want a Chicago company to do well.”
Mr. Jones charges that all of this dirty laundry is coming from Gtech, which declines to comment. He says Gtech is the real reason the state’s ballyhooed move to sell lottery tickets on the Internet has flopped, with sales only recently hitting $100,000 a week. “The Internet portal they had was not intuitive . . . (it was) too difficult for customers to maneuver.”
Steve McMichael got some help from his old coach when Mike Ditka endorsed him for mayor of Romeoville Friday night.
Ditka wasn’t the only Bears legend to give McMichael a boost. Dan Hampton, Gary Fencik and Matt Suhey were there too.
McMichael is challenging incumbent Romeoville Mayor John Noak in the April 9th election.
* The Question: Are you watching any other municipal races? Explain.
The reason I’m asking is that I may poll some local races this month and am curious to see if there are any hotspots beyond what I’m already looking at. Thanks.
* The SJ-R story, entitled “Legislature ignores proposal for photo on benefit cards,” begins…
Illinois this year again is unlikely to require photo identification on food-stamp cards.
State Sen. Chapin Rose, R-Mahomet, thinks that’s a mistake.
The blue, debit-like Link cards used in place of food stamps are issued to low-income families to buy food through a joint federal-state initiative called the Supplemental Nutrition Assistance Program. Chapin believes some people abuse those benefits.
“The going rate for Link card benefits in my neighborhood is 50 cents on the dollar. People are selling their Link cards for cash — or worse — drugs,” Rose said. “That’s my constituents’ tax dollars being wasted. Handing a drug addict a couple hundred bucks a week to buy smack doesn’t help them, either.”
If Link cards included photos, unauthorized users wouldn’t make it past the checkout line, Rose said.
* The story is 761 words long. During which, we see why the Illinois Retail Merchants Association is opposed (longer lines and federal requirements that everybody be carded, including debit card users, if they checked IDs for Link customers) and why the photo is no panacea (caregivers’ photos wouldn’t be on the cards, so that’d be a huge problem).
And then, at the very end, after the byline contact info, is this…
Illinois would be first
New York City, Minnesota, and most recently, Maine, have applied for waivers to allow for photos to be used on public-aid cards. All have been rejected by the U.S. Department of Agriculture. No states currently use photo IDs on Link cards.
In other words, even if Rose’s bill passed, the state would still not get permission from the federal government. Thanks for telling me after the end of the story.
* Hopefully, this appointment will get around the Senate’s notorious gridlock since it was a bipartisan pick…
Fox 32 News has learned tonight that the White House has decided to nominate former federal prosecutor Zachary Fardon to serve as the next U.S. Attorney in the Northern District of Illinois. Fardon was one of four finalists originally under consideration by the White House to replace Patrick Fitzgerald.
There’s been no public announcement yet from the White House.
Fardon is one of two finalists who the White House has been considering for several weeks. The other is Chicago attorney Lori Lightfoot.
The candidates’ names were submitted by Illinois Senators Dick Durbin and Mark Kirk to the White House.
Among other things, Fardon helped prosecute George Ryan.
Zach Fardon chairs Latham’s Litigation Department in Chicago. Mr. Fardon’s practice focuses on internal investigations, government investigations, white collar defense and complex business litigation. He is a trial lawyer who has tried numerous cases, both as a federal prosecutor and a defense lawyer, including cases involving charges of financial fraud, tax crimes, money laundering, corruption, racketeering and conspiracy. He has also briefed and argued appeals before the federal circuit courts.
Mr. Fardon routinely handles high-profile and sensitive matters for his clients. He has extensive experience helping clients navigate legal investigations and litigation that also require crisis management and media expertise. Mr. Fardon has conducted numerous internal investigations for private and public companies and has defended companies and individuals in connection with Justice Department and regulatory investigations.
Federal Election Commission records showed Fardon, an Evanston resident, donated $2,000 to the Democratic primary Senate campaign of attorney David Hoffman, who lost his 2010 primary bid to Alexi Giannoulias.
Quinn said $43 billion the state is spending on the Illinois Jobs Now! public-works program and the Move Illinois toll way construction project are “supporting more than half a million jobs.”
Anderson, his spokeswoman, said 439,000 jobs would be created over the next six years through the $31 billion Illinois Jobs Now! project, plus 130,000 construction jobs and 120,000 permanent jobs courtesy of the $12 billion toll way project. That’s a combined 689,000 jobs. […]
The state actually has 5.78 million non-farm jobs, according to the state Department of Employment Security. So 689,000 jobs actually would be more than 10 percent of all jobs in the state.
For comparison, Illinois’ construction sector currently employs 185,000
So, the Quinn administration is claiming that almost all the construction jobs in the state were created by some Tollway work?
* I kid you not. From today’s editorial about pension reform…
One caveat on Biss’ bill: It includes unfortunate language that would put the state on the hook for regular payments into the pension funds as a contractual obligation. That’s a worthy commitment, but also one stronger and more enforceable than what’s now in state law. Which makes it a precarious requirement that we hope the House will eliminate. Why so?
Just like the unpredictability of the markets, fluctuations in the economy or unanticipated but severe emergencies between now and 2045 may force the state to devote extra resources to priorities other than pensions. The state must keep the flexibility to make those choices — not tie its own hands.
We realize that lawmakers’ failure to make required contributions into the pension system is a big part of how we got here. But we also got here because the state overpromised what it could afford and routinely sweetened pension benefits. Going forward, lawmakers have to be relentlessly disciplined in making required, actuarially determined payments into the pension funds. They can do that without stripping themselves of authority and flexibility.
The pension sweeteners are just a tiny portion of the state’s current problems. As noted here many, many times, including earlier today, the real problem has been the deliberate funding neglect.
For the Tribune to now argue for funding flexibility is just insane, and shows how little that editorial board actually knows about how we got here.
“Pardon me,” said Ty Fahner to a nearby microphone that he accidentally bumped into during his testimony last week before the Illinois Senate Executive Committee.
Fahner could probably be excused for apologizing to an inanimate object. The president of the Civic Committee of the Commercial Club of Chicago and self-styled pension expert had been forced to wait for hours in the hearing room before testifying against Senate President John Cullerton’s pension reform bill.
Cullerton (D-Chicago) was obviously furious with Fahner for helping organize the opposition to his bill, and he grilled the former Illinois attorney general mercilessly — tag-teaming with Senate President Pro Tem Don Harmon (D-Oak Park), who picked apart the hostile witness piece by piece.
Fahner tried to remain calm during his appearance, but apologizing to the mic showed how much he was rattled.
A day earlier, word went around that business leaders had been calling and emailing Republicans to pressure them to vote against Cullerton’s proposal. Even an apparent Republican gubernatorial candidate, venture capitalist Bruce Rauner, got into the act.
As a result, Cullerton’s top priority for the legislative session, the passage of Senate Bill 1, was derailed when Republicans began jumping ship.
Cullerton’s bill combines the Nekritz/Cross pension reform plan with his own. The Nekritz/Cross measure, introduced by state Rep. Elaine Nekritz (D-Northbrook) and House Minority Leader Tom Cross (R-Oswego), allows annual cost-of-living adjustments for retirees only on the first $25,000 of pension income, caps the salary on which a pension can be based and provides for a funding guarantee by allowing the state’s five pension systems to sue the state for not making payments to their funds.
The other half of Cullerton’s bill includes his reform language, which Cullerton insists is the only constitutional way forward. That language would take effect only if the Nekritz/Cross provisions are struck down as unconstitutional.
Cullerton’s bill relies on a legal concept known as “consideration.” Essentially, it means that people have to be offered a choice before the state can get out of its constitutionally mandated contractual responsibilities.
Cullerton would force retirees to choose between receiving annual cost-of-living raises or having the state pay for their medical insurance.
The business types, including Fahner and Rauner, believe Cullerton’s bill does not save the state nearly enough money in pension costs over the long term. The Nekritz/Cross bill is expected to save several times more.
The business leaders also say that guaranteeing that retirees get government-paid health insurance in exchange for giving up their cost-of-living raises would declare that health insurance is a contractual pension obligation protected by the Illinois Constitution. And that, they say, would lead to much higher costs down the road.
“Bruce opposes SB 1 because while it fixes one small piece of the pension crisis, it takes away key future negotiating leverage by contractually guaranteeing future government contributions,” said a spokesperson for Rauner. “The bill, however well-intentioned, gives away too much while not getting enough in return.”
Rauner has become somewhat infamous in Springfield the last several months for his regular email harangues against Cross, Senate Minority Leader Christine Radogno (R-Lemont) and other Republicans. His vast fortune and potential run for governor next year have forced those leaders to pay attention.
There is more behind this opposition, however. Many in the business community believe that by putting both pension reform concepts into a single bill, the General Assembly would enable judges to declare the Nekritz/Cross plan as unconstitutional.
Even the most generous explanation of the Nekritz/Cross plan doesn’t come close to explaining how it complies with the state Constitution’s declaration that pension benefits are an “enforceable contractual relationship” and that benefits “shall not be diminished or impaired.”
The reasoning of the business groups is that giving judges a choice between a plan that makes almost no pretensions of being constitutional and one that at least tries to pass muster (Cullerton’s) would lead to Nekritz/Cross being struck down.
So, now what?
Fahner is the same guy who said in November that the pension crisis “has grown so severe that it is now unfixable.” He later backed away from that remark, explaining that he meant the issue had become politically unfixable.
But he and Rauner and their cohorts have now helped kill off what had been a politically viable plan, at least in the Senate.
In hindsight, the pension problems began during the Jim Edgar administration, when a 1994 law was approved to have pensions funded at the 90 percent level within 50 years.
They’re kidding, right? The pension problems “began” in 1994?
* Look, there’s no doubt that Edgar’s pension ramp plan was flawed. I’ve been saying so for years. It seriously backloaded payments and burdened future generations instead of tackling the issue head-on.
But can anyone say for certain that if Edgar’s ramp had not been passed that we would be better off today? Does anyone seriously believe that the unfunded liability would be lower today if not for the ramp?
Anyone?
Bueller?
* The state’s pension problems date back to at least the 1940s. The underfunding problem had gotten so bad that by the time the state constitutional convention convened in 1969, delegates decided to scare the pants off legislators by making pensions an unbreakable contract.
But even that didn’t work. It wasn’t until Edgar decided to force the issue that something was done. Yes, they kicked the can down the road, but they did do something.
* On that same topic, this claim in a column is nonsense…
On Monday, the U.S. Securities and Exchange Commission, or SEC, investigation charged the state of Illinois with fraud.
Here is what it had to say:
“… that Illinois failed to inform investors about the impact of problems with its pension funding schedule as the state offered and sold more than $2.2 billion worth of municipal bonds from 2005 to early 2009. Illinois failed to disclose that its statutory plan significantly underfunded the state’s pension obligations and increased the risk to its overall financial condition. The state also misled investors about the effect of changes to its statutory plan.”
That’s lawyer-speak for “the Edgar Ramp fell well short of the mark.”
Oh, please. It’s actually “lawyer-speak” for “Rod Blagojevich’s administration lied.”
The SEC report says the underfunding mess dates back to a protracted payback plan put forth in 1994 by then-Gov. Jim Edgar. It was compounded exponentially by pension holidays given under ex-Gov. Blagojevich. What [House Speaker Michael Madigan] didn’t say, is that he helped to lead the Legislatures which signed off on those pension holidays.
The first sentence is woefully inadequate, but the rest is spot on, including Madigan’s culpability.
That [Edgar pension payment ramp] legislation, which took effect in 1995, passed both chambers of the Legislature unanimously, drew no opposition from unions and had backing from business groups and newspaper editorial boards. It set out an escalating schedule that required gradual pension payments of as little as $500 million at first but a much steeper ramp-up after 15 years. By 2009, the state paid $2.4 billion toward its pension tab, and next year that obligation will reach a staggering $6.7 billion.
Yes, the ramp was flawed, but at least there was something on the books that hasn’t been totally ignored.
* This section of the recent SEC fraud report is the reason why the law was flawed, but also contains some information that is almost always conveniently ignored by newspaper editorial writers, particularly at the Tribune…
“Rather than controlling the state’s growing pension burden, [the law’s] contribution schedule increased the unfunded liability, underfunded the state’s pension obligations and deferred pension funding,” the SEC wrote. “This resulting underfunding of the pension systems … enabled the state to shift the burden associated with its pension costs to the future and, as a result, created significant financial stress and risks for the state.”
The contribution schedule purposely increased the unfunded liability.
So, when anybody bemoans the pension systems’ unfunded liability, they ought to remember that it was a feature, not a bug of the Edgar plan. It was, however, made far worse by Blagojevich and everybody else who backed the pension holidays.
“I’m sure if we’d have been opposed to it, maybe there would have been 10 or 20 votes against it,” said Henry Bayer, AFSCME Council 31’s executive director. “If it didn’t pass, it wasn’t like there was an alternative bill that would have made things better. If it didn’t pass, we’d still have what we had. There would have been no contribution or what they’d decide to put in every year, which would have been even less.”
