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A wasted opportunity, an infuriating obstinance and a confusing double standard

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* Former Illinois Attorney General Ty Fahner has penned an op-ed for the State Journal-Register on pension reform that is completely devoid of any specifics whatsoever. Instead, he spends most of his time dismissing Eric Madiar, the chief legal counsel to Senate President John Cullerton who penned a well-researched 76-page report on why it would be unconstitutionally illegal for the state to reduce pension benefits for current public workers. Most of Fahner’s piece is rhetoric, and here’s the heart of his argument…

It is our opinion, legally and politically, that it is possible to amend the retirement benefits for current public employees on a prospective basis that honors what already has been earned while reducing future costs. What is not an option is for Madiar and those he represents to be in denial and say there is simply nothing the legislature can do to resolve the state’s financial crisis. The legislature certainly can address this issue and, more importantly, they must address it for the good of everyone in Illinois. It is a great excuse for the faint of heart to say they would do something about the state’s financial crisis — but they could not vote for something constitutionally barred.

Translation: Trust us. This is constitutional. Don’t ask us why because the last time that happened, we took a serious beatdown.

* Meanwhile, I regularly see this exact same comment posted here whenever pension reforms are mentioned…

They have stolen from our pension system and owe it billions of dollars. they need to pay back the state pension system.

As I’ve made abundantly clear, I abhor the escalating national attacks on teachers and other public employees as ignorant and needlessly vengeful nonsense. A frightened, aging, underwater middle class is at war with a subset of itself in the wake of a global economic meltdown caused by a handful of fantastically corrupt financial institutions. The widespread fear and loathing is wholly understandable. The target of that scary ire isn’t.

But comments like the one posted above drive me more than a little crazy.

* It’s a given that the General Assembly and the governor have shorted the pension systems almost since the systems were created. From the Senate Democratic pension funding analysis…

At the time of the [1970 Illinois Constitutional] Convention… The five State pension systems had an aggregate funding ratio of 41.8%… the five systems currently have a combined funding ratio of 39%.

The new Constitution was supposed to remedy this problem by sternly warning legislators and governors that they couldn’t both over-promise and underfund. They did it anyway.

But while there’s no disputing that the funds were shorted, the inflammatory rhetoric about “theft” is just that: Inflammatory rhetoric.

Do you think they just pocketed all those billions? C’mon. The reality is that almost all that diverted pension money went where almost all state government money almost always goes: Education, health care and public safety

* But aside from the gross and willful historical ignorance, this constant selfish refrain about past grievances completely ignores the problem of what we need to do now. Frankly, their approach is downright childish. “Just pay what you promised!” they scream, as if there’s some magic money pot that’s been deliberately hidden by the powers that be, which, if found, would instantly solve all problems without any sort of pain.

I got a news flash for you people: That magic money pot doesn’t exist.

* This pervasive and churlish attitude also completely ignores what happened in January. Just about every dime from January’s personal income tax increase will be spent next fiscal year on pensions and pension debt service. (By FY 2014, every dime of the personal and corporate tax hikes will be eaten up by pensions and pension debt service, plus some.)

In other words, every working person in Illinois has been ordered to hand over the equivalent of a week’s pay so that the state can satisfy its pension obligations next year. But attempts to deal with this painful, overwhelming burden are met with a firewall of self-centered hostility.

What would you have the state do? Should school funding be slashed, grandmas kicked out of nursing homes and hospital doors locked just so we can make pension payments? Or perhaps we should enact yet another income tax hike?

* Please, spare us the grotesque fits of whining and crying. Quit petulantly stomping your feet, grow up and get in the game. The taxpayers of Illinois have just been forced into a major concession in this decades-long battle. It’s your turn now. Participate.

* And then there’s this…

A bill that would have abolished the 50 percent tuition waivers that go to the children of public university employees is on hold after opponents included what the sponsor called “a poison pill.”

Senate Minority Leader Christine Radogno, R-Lemont, decided to avoid a full Senate Executive Committee vote on the legislation (SB 1318) Wednesday evening after committee members voted down an amendment that would have allowed current employees to continue to enjoy the benefit.

But the committee then voted to adopt a second Radogno-requested amendment to ban the long-controversial General Assembly scholarships.

The result left Radogno with a bill guaranteed to get plenty of “no” votes; she opted not to call it for a vote in committee.

“The way they would not allow the amendment on the bill that would make it prospective, I don’t think it’s fair to pull the rug out from people who were counting on it,” she said after the committee meeting. “But as a policy, going forward, these (employee tuition) waivers don’t make sense. Wisconsin doesn’t offer them. Iowa doesn’t offer them. Only four states even offer them in statute.”

So, it’s not fair to “pull the rug out from people” when it comes to tuition waivers, but it’s A-OK to do that with pension benefits for current government employees? The Senate Republican budget proposal wants to save $1.35 billion by doing just that. Odd.

posted by Rich Miller
Friday, Mar 18, 11 @ 4:35 am

Comments

Rich– the state of IL has been in perpetual crisis since the Reagan tax cuts and budget killed revenue sharing and other grants and made the AGI that state income tax uses much smaller for most people. The statewide pension funds are much less funded than CTPF in Chicago, because there has been borrowing and other temptations (Blago tried to scam the TRS) You can’t treat TRS and SURS as piggy banks and then throw a tantrum when you have to kick back in. Trust me, teachers all over have made concessions, which were won through negotiation and discussion, not Walker/Brady style tactics.

Comment by Brian Meyers Friday, Mar 18, 11 @ 5:23 am
How much of a “magic money pot” would this be: selling every piece of state-owned piece of land, naming rights, etc. I’m not recommending this — just the opposite, I fear it’s coming.

Comment by lake county democrat Friday, Mar 18, 11 @ 5:41 am
If it is “constitutionally barred ” then it is “constitutionally barred. Political attempts to circumvent the prohibition demonstrate exactly why constitutions are critical to our form of government.

To say we screwed up and need to violate the constitution to fix the problem is completely contrary to the basic concept of our form of government. The Constitution rules.

Comment by x ace Friday, Mar 18, 11 @ 6:08 am
If selling the naming rights to something is going to solve this problem, I support it. Citibank State Park? Big whoop. Unfortunately, it would not be that easy.

Comment by Nice kid Friday, Mar 18, 11 @ 6:26 am
Great analysis of the pension issues, Rich.

Comment by waitress practicing politics. . Friday, Mar 18, 11 @ 6:42 am
Only one legal opinion as to the constitutional protection of pension rights will have any merit- an opinion of the Illinois Supreme Court- until the dispute is resolved through the adudicatory process, arguing over the merits of Cullerton’s, Fahner’s, Sidley’s or any other opinion issued on the subject may be fun but it is also a waste of time

Comment by Sue Friday, Mar 18, 11 @ 7:01 am
Great comment on pensions. As I have told my co-workers in the district I work in, something has to change, or by the time most of us retire the system will have completely run out of funds.

I also thank you for your comment against teacher bashing, enough is enough.

Comment by Wensicia Friday, Mar 18, 11 @ 7:12 am
There is one legal, moral way to alter the pension benefits of current state employees going forward. Amend the constitution through referendum. That’s right. Pass it through the chambers and put it on the ballot for the public to vote on. If the constitution is amended then the GA could pass legitimate pension cut legislation. Anything else would be held up in court and ultimately overturned. The pension cutters had their shot at a con con and even though, at the time, they swore that pensions would be protected everyone knew what they were after. They lost that referendum and they would probably lose this one.
You’re right. Nobody stole any money. The GA and governors simply didn’t put in the required amount. This allowed them to keep the tax rate one of the lowest in the country while providing quality health care, education, etc,.far beyond their ability to pay for it. The taxpayers got and used those services. Maybe they didn’t realize while they were enjoying them that they would have to pay for them eventually. Thompson knew. Edgar knew. Schnorf knew. Ryan knew. Even Rod knew. If today’s taxpayers have to pay for services their grandparents enjoyed so be it. Somebody has to pay the tab and the constitution says it won’t be current participants or retirees.

Comment by Bill Friday, Mar 18, 11 @ 7:14 am
Deep breaths, please.

This problem is our own making. Springfield has ignored the constitution time and time again (isn’t the job of the Illinois Attorney General to protect the citizens of Illinois? Another person asleep at the switch) and look what resulted.

We have to cut something, and we can’t cut pensions, education, or health care. By making that statement, you have already painted yourself into a losing corner. Your only solution if these are your premises is to kick the can down the road further.

I disagree with Rich’s premise “A frightened, aging, underwater middle class is at war with a subset of itself in the wake of a global economic meltdown caused by a handful of fantastically corrupt financial institutions” Illinois’ problems have been building for over over two decades. This isn’t something that was dropped in our laps all of a sudden. Everyone knew it was coming.

Comment by Anonymous Friday, Mar 18, 11 @ 7:21 am
Change the constitution? Oh, Bill… if only it were that easy. Rich, I agree that nothing was stolen, but it is tantamount to theft. If you work for me in exchange for my promise to do something in return, and I don’t keep my end, we have a breached contract. If you work for me for 20 years and I continuously fail to keep my end and exhibit no present intention of keeping my end but allow you to continue working for me on the assumption that I will keep my end, well.., it may not be stealing in the strict and ordinary sense, but it is fraud at a minimum.

Comment by the Dark Horse Friday, Mar 18, 11 @ 7:27 am
Something must be done. The average pay for a high school teacher in my district is well over 100k and the kids test scores don’t indicate we’re getting a better education for this. War with the teachers GAME ON!

Comment by Tom Smith Friday, Mar 18, 11 @ 7:27 am
The below chart shows how two-thirds of all teachers in the bottom-perfoming districts pay zero to little into their pensions.

The teacher salaries shown in the below chart are from each individual school district’s 2010 Report Card. As are the years of teaching experience and percentage of teachers with a Masters Degree. The average composite ACT score for Illinois is 20.5. Illinois’ three largest districts are in bold.
Pension Contributions by Teachers in Some Bottom-Half-Performing School Districts

District ACT Score % of
Pension Paid
Number
Teachers % with
Masters Degree Average
Salary/ Yrs. Experience

Cahokia 16.0 0.4 % 298 44 % $ 66,098 / 12
Thornton Twp 205 16.6 Zero 428 62 79,868 / 12
Waukegan 60 16.8 Zero 1,098 54 55,749 / 11
Morton 201 16.9 Zero 455 62 69,826 / 11
Chicago 17.3 2 % 23,219 60 68,679 / 13
Kankakee 111 17.5 Zero 348 65 60,671 / 15
Joliet 204 18.0 Zero 340 65 68,553 / 12
Round Lake 116 18.2 Zero 387 58 64,133 / 13
Rockford 18.4 Zero 1,843 70 66,771 / 15
Decatur 61 18.4 Zero 454 33 50,332 / 12
Peoria 150 18.4 0.4 % 988 53 55,736 / 14
Crete Monee 18.4 Zero 340 42 58,350 / 10
Danville 118 18.7 Zero 382 48 59,694 / 13
Valley View 365 19.0 Zero 1,068 63 64,217 / 10
Springfield 19.1 0.4 % 1,105 46 58,369 / 12
Aurora West 129 19.1 Zero 706 76 77,089 / 13
East Peoria 309 19.2 Zero 69 33 58,589 / 14
Galesburg 19.2 Zero 281 49 54,016 / 14
Bremen 228 19.2 Zero 313 68 $ 83,963 / 12
Freeport 19.4 Zero 317 45 50,802 / 12
Elgin U-46 19.6 Zero 2,332 68 69,551 / 13
Rock Island 19.6 Zero 388 67 69,608 / 15
Mattoon 19.7 Zero 225 55 49,186 / 12
Collinsville 19.8 Zero 394 53 53,295 / 12
Massac 1 19.9 Zero 143 33 46,065 / 12
Sterling 19.9 Zero 219 49 54,789 / 12
Belvidere 20.1 Zero 531 56 61,263 / 12
Moline 40 20.3 0.4 % 461 69 71,644 / 16
Quincy 20.4 Zero 436 54 47,161 / 14
Harvard 20.4 0.87 % 149 56 52,859 / 12
Dixon 20.4 Zero 179 70 60,172 / 15
West Chicago Below
Average Elem. & Middle Schools Zero 248 60 70,701 / 14
Cook County 130 Zero 289 52 52,836 / 13
Dolton 148 1.4 % 236 44 53,284 / 10
Cicero 99 Zero 738 42 59,086 / 10
Joliet 86 Zero 617 34 53,659 / 11

Total Teachers Above 42,024 $ 65,920
Total Public School Teachers in Illinois 132,502 Salary Avg. Weighted for No. Teachers

Percent of Above Teachers to Total in Illinois
32 %

Crystal Lake is served by two, above-average-performing districts, 155 and 47 with about a thousand (976) teachers. None contribute a penny for their pensions. You can add more districts such as this one to easily count over a third of all teachers in Illinois paying little to nothing.
For example, Wheeling 21 has slightly better than state average test scores and its 489 teachers also don’t contribute a penny toward their pensions. Same holds true for Champaign 4’s 717 teachers and Plainfield’s 1,695 teachers. This brings it up to 45,901 teachers and 35 percent of all Illinois teachers who pay none to very little into their pensions. If you started looking at all of the better performing districts, and all of the small ones, the percentage would keep on climbing.

Comment by Larry Snow Friday, Mar 18, 11 @ 7:32 am
If you want to more easily read the above chart, it is contained in an article posted at http://www.championnews.net/article.php?sid=3229

Comment by Larry Snow Friday, Mar 18, 11 @ 7:35 am
==What would you have the state do? Should school funding be slashed, grandmas kicked out of nursing homes and hospital doors locked just so we can make pension payments? Or perhaps we should enact yet another income tax hike?==

I don’t advocate any of those things, however, those cuts would at least be legal. Diminishing or impairing pension benefits is not. The Edgar ramp of ‘95 steepened by the Filan re-ramp in ‘03 has to be either flattened through more long term borrowing or more taxes have to be imposed. Extending the sales tax to services and the income tax to retirement income along with closing the corporate tax give aways would go a long way toward leveling the ramp and making payments doable. So would closing DNR and CMS and DCEO, etc., etc., etc..

Comment by Bill Friday, Mar 18, 11 @ 7:35 am
Good analysis, slightly marred by an inelegant-sounding construction, seeming like a double-negative, in the phrase: “Unconstitutionally illegal”.

I’ll allow it, seeing as how you were sick yesterday:-)

Comment by Newsclown Friday, Mar 18, 11 @ 7:43 am
Governor Pat is acting like there is a magic money pot down the road, witness his fondness for borrowing very large sums of money at high interest rates. Somebody is going to have to pay that back–perhaps he thinks that a combination of a permanent extension of his “temporary” tax increase and that greatly improved economy he keeps talking about will provide the magic.

As to the aging frightened middle class, I’d say
they have far less to worry about (even those in the private sector still have defined benefit pensions in many cases, and Medicare isn’t going under just yet) than the younger middle class (20’s, 30′x and 40’s) who have to deal with a volatile job market, global competition from the minute they enter the work force, funding their own retirements, and, if they stay in Ill., paying off Governor Pat’s massive loans.

Comment by cassandra Friday, Mar 18, 11 @ 7:46 am
“At the time of the [1970 Illinois Constitutional] Convention… The five State pension systems had an aggregate funding ratio of 41.8%… the five systems currently have a combined funding ratio of 39%.”

So, after 41 years the state is at about the same level of funding without any retirees missing a check. If after another 41 years the state is in the same position, how is this a major problem?

I understand how you would want private pension plans and lesser taxing bodies to be fully funded since there is always the specter of bankruptcy, but I don’t believe there are provisions for the state to go this route.

I see merit in the concern over pensions but not at the level it seems in today’s political discourse. Perhaps I’m wrong.

Comment by MikeMacD Friday, Mar 18, 11 @ 7:51 am
Rich,

I personally chose to work for the state because of the pension, and flex time offered. Over the years, the state has lurched from crisis to crisis, and when that happened, there were hiring freezes, salary freezes, and lately furloughs. You say the taxpayers have been forced, via a recent tax increase to do their part. Well, I’m a taxpayer too, so I took that hit too. Recently too, in the news has been the FICA deal where the tax increase dink has overall been softened for some people’s paychecks. I’m not eligible for Social Security due to the state pension, so no help there for me. Studies looking into wages and benefits for state employees show that they, even when benefits are taken into consideration, make about 5% less on average than their private sector counterparts, so contrary to the opinion of many, we’re not overpaid, and our pensions aren’t “bloated”, nor are they “Cadillac”-like.

I’m not in a union, but overall, if their members make 5% less than their private sector counterparts, far from the cozy relationship that some believe occurs between politicians and union leaders at the negotiating table, the results prove otherwise. I chose to accept the salary freezes, and meager raises when they did occur these last thirty years with an eye on the pension. Relying on that pension, I took care of my wife and three children, safe, I thought, in the belief that my wife and I wouldn’t be a burden on our children in our later years. When I needed more money, I got side jobs. Many of them over the years have paid for some extras, but I wasn’t at home as much as I would have liked. I saw what happened to private sector auto worker pensions, but working for the state, I felt would provide some extra protection regarding the pensions. I made long term financial decisions because of that contractual promise.

Now people tell me “it’s ‘unsustainable’”, we can’t afford it.” Maybe you and they are right. Whatever happens, I’ll deal with, as all of us do every day, but I’m not going to give up without a fight. Why is my contract any less valid than that of doctors who treat state medicaid patients and expect to get reimbursed. While the state is months behind in paying, those doctors are getting interest, and their’s nary a mention of defaulting on their contracts. If the state ever said to any individual or business doing business with them, “You know, we’re broke, and we decided that the contract we signed with you, pledged bloated and cadillac-like payment levels that we have recently decided are just unsustainable, so we’re abrogating those agreements and paying you only 80% of what we promised. You should be OK with that, because we all have to do our part.”

What results would occur, if that scenario played itself out? Lawsuits? You bet. Contract law being what it is, a judge would say “pay up”. And, if the state said, well Doc, proactively going forward, while the money you have earned is safe, that 8% interest is now only 1/2 of the CPI going forward, and we’ll only be paying you 80% of what you earned before, the docs would say “cya!”. Well, so will many state employees. I know many think we’re otherwise unemployable, but, I can assure you that’s not the case for most, and even in this economic climate. I’m sure there are many that will be willing to do my job. No one is irreplaceable, but if you think whoever is left will be able to train them, well, all I can say is good luck with that.

I’m under no illusions about whether the money will be there, or not. It’s a risk I’ll have to take. I’ve got little time to avail myself of any alternatives for retirement having been here for 30 years. And I’ll do my best to mitigate it going forward, as would anyone. I’ve got one in college now, and two going within a few years.

Don’t think state employees haven’t sacrificed for that pension promise over the years, we get both the tax increases and salary freezes, and, now, it increasingly looks like the reason we accepted those freezes over the years won’t be there anyway. And we’re supposed to believe the pols when they say “Well yeah, we know we’re breaking our promises to you up to now, but proactively, going forward, (as Eden Martin and his ilk like to say), we ‘promise’ you’ll get what you earned up to this point.” Uh-huh.

Comment by PublicServant Friday, Mar 18, 11 @ 7:52 am
Watch it General. Don’t mess with the Master.

Comment by Bill Friday, Mar 18, 11 @ 7:56 am
I wonder if a trade could be made on pensions. Maybe guarantee state backing of an insolvent pension system in exchange for a cut in benefits? Or a conversion to a 401k in exchange for not having the employee contribution increase? I’m sure there are other compromises that could be made.

Comment by thechampaignlife Friday, Mar 18, 11 @ 8:07 am
Any chance the state will/could start paying pensioners late like they are doing for vendor payments? That could be another form of “savings” in the budget proposals or a bargaining chip in pension concessions. I say this only partially tongue in cheek.

Comment by thechampaignlife Friday, Mar 18, 11 @ 8:11 am
Sure, will they give the pensioners, or their survivors 8% interest on those late payments? I say that only partially tongue in check also. I also love the “bargaining chip” euphemism for what would, in reality, be blackmail.

Comment by PublicServant Friday, Mar 18, 11 @ 8:17 am
IF you accept the position that benefits for current workers can be amended going forward,but they would keep what they have earned, how would that work? if someone started working for the state at 22 and now has 40 years in, they might want to retire at 62 and start collecting soc sec also. but if the law is changed to require a retirement age of 67 what happens to this guy? retire now w benefits as promised? must work til 67? retire now but no benefits til 67?

Comment by Langhorne Friday, Mar 18, 11 @ 8:18 am
When George Ryan left at the end of 2002, lots of public employees left with him; thanks to the passage of the Early Retirement plan. This ability to get out early and before you would otherwise be eligible, saddled the State’s pension system with an emense amount of unplanned obligation. Add to that the underfunfing and you have the situation we have now. The best way to fix this, and many other injustices, the State needs to get to a graduated income tax. Those who can afford to pay more, should.

Comment by Dead Head Friday, Mar 18, 11 @ 8:29 am
Elimination of GA scholarships is a poison pill? Is it any wonder bigger problems can’t get solved? The GA has absolutely no business being involved in university admissions in any capacity. Clinging to these scholarships is an outrage; OK, it’s one of the outrages…get in line, grumble, grump. Still.

Comment by Excessively Rabid Friday, Mar 18, 11 @ 8:31 am
My wife is a retired teacher and her pension is her only income. Teachers pay no social security because their pension is supposed to take care of them. The Federal Goverment is not going to allow Illinois to cut the pension of teachers. This money may have not been paid into the system but it is owed to the system. Just the money Illinois pays to feed,house, and hospital,illegals would go along way to solving this prolbem. I believe teacher pay is excessive in alot of districts. The more teachers make the higher their final pay will be and the more their pensions will cost.

Comment by nieva Friday, Mar 18, 11 @ 8:34 am
Every year the various Universities raduate plenty of qualified teachers that can not find jobs. Allowing the wage rates to fall to market value would allow these teachers to find jobs and at the same time allow financial security to the districts by lowering costs. why can’t we implement these savings? Oh, I forgot; state employee unions

Comment by Bond_player Friday, Mar 18, 11 @ 8:35 am
For a supposed LaSalle Street legal bigfoot, Fahner’s column is curiously bereft of analysis of the constitution or the law. It’s just filled with insults and provocative language.

It appears to be a variation on the old adage, “When the law’s on your side, pound the law. When it’s not, pound the table.” I don’t understand his purpose for writing it.

Let’s get a ruling from the Supremes to remove all doubt so we can plan with all the facts in hand. As a layman, my guess is the Illinois and U.S. Constitution favor the union’s position.

But the state always has the ultimate hammer of layoffs.

Comment by wordslinger Friday, Mar 18, 11 @ 8:42 am
State employees have stepped up, even if it was against their will. In the early part of Blago’s 1st term, State employees were required to start making the 4% pension contribution that used to be covered by the State. That is equal to about 2 weeks pay, if my math is right and is on top of the weeks pay they lose to the income tax increase and the furloughs which, in some years equalled slightly over 2 more weeks pay. You can argue that this sacrifice is not enough, but it should not be ignored.

Comment by SAP Friday, Mar 18, 11 @ 8:47 am
1970 to date, the funding ratio slipped from 41.8 to 39… in the most impressive recession in the systems’ history.
None of the systems have ever missed a payment.
Constitution says pay… it doesn’t say fund at some particular level.
Perhaps the elites who hate public employees making a decent wage and having a decent benefit package are whipping up a manufactured public anxiety rooted in the very real uneasiness that is a normal part of the current conditions, to destroy what they have wanted to destroy, but didn’t have the public’s support prior…

Comment by countryboy Friday, Mar 18, 11 @ 8:54 am
“People have relied on our representations that we did a deal, the governor signed it and they invested money in this state,” said Senate Minority Leader Christine Radogno, R-Lemont. “Here we are again, yanking the rug out from under people.”

Of course she wasn’t referring to the pensions, but I thought it appropriate to post here. This is her comment in response to Cullerton’s coming out against Video poker…

Some might say that’s hypocritical, but it’s really a consistant republican position. Both cutting pension benefits, and parting the poor and working class families from their paychecks both work in favor of her constituency.

Comment by PublicServant Friday, Mar 18, 11 @ 8:59 am
===Something must be done. The average pay for a high school teacher in my district is well over 100k and the kids test scores don’t indicate we’re getting a better education for this. War with the teachers GAME ON!===

How does anyone think this is a good point? The fact is that in every school, a percentage of the students DO score very high on standardized achievement tests and other score well above average. Happens every year at every school. How is this possible if the teaching is so bad? The better question is, if given the same learning conditions, what’s wrong with the low achievers? Perhaps we should consider factors outside the classroom.

Comment by Deep South Friday, Mar 18, 11 @ 9:07 am
so let me get this straight, they underfunded it but you want the teachers and public employees to take the brunt of it. We also pay the tax increase. raise the tax on everyone again if that is what it takes to get the state back on track. Then do term limits!!

Comment by hilltopper Friday, Mar 18, 11 @ 9:09 am
I agree that there’s no magical pot o’ money, nor is there the stomach for large spending cuts or more tax increases.

I can understand public employees fighting for their pensions, but am wondering, what do public employees think will happen to pensions that are underfunded? If in fantasyland the state could promise you 75 cents for every dollar you’ve earned, a check would arrive right now in exchange for its pension obligation, would you take it? I think I’d say yes.

Comment by Robert Friday, Mar 18, 11 @ 9:13 am
–Just the money Illinois pays to feed,house, and hospital,illegals would go along way to solving this prolbem.–

How much is that?

Comment by wordslinger Friday, Mar 18, 11 @ 9:16 am
The SDEM pension analysis relies on one point, the unearned pension credits are a “benefit”. Philosophically, that seems absurd (and the contribution rate to their pensions is not a benefit either so that can be modified real time). The pension benefit is the check you get in retirement… what it takes to get that check is a political question which is why mandatory funding was specifically not put into the Constitution. They wanted to leave the specifics up to the General Assembly.

As far as union contracts, you could just as easily codify a new pension benefit system in a new contract.

To be absolutely sure that you have a legal airtight case, you could terminate employees on Day X and rehire them on Day X + 1 under a new pension system.

Comment by John Bambenek Friday, Mar 18, 11 @ 9:18 am
Nobody’s mentioned the long-standing “corruption tax” in Illinois consisting of fat contracts for insiders, high-paying state jobs for the well-connected, and the numerous “member initiatives” that allowed legisators to brag to their constituents about “bringing home the bacon.” (Here I’m sure someone will point out that these “initiatives have been a very small part of the budget, but money is money.) How about all of the unnecessary 9,000 local units of government that serve as a “farm system” for upcoming political hacks while eating up tax dollars? I agree that just shouting “theft” is not productive, but just looking for more money without trying to fix the system isn’t very helpful either. Ryan’s defense team was right. He may have been a crook, but he was only following the unwritten rules.

Comment by preservationist Friday, Mar 18, 11 @ 9:23 am
==Please, spare us the grotesque fits of whining and crying. Quit petulantly stomping your feet, grow up and get in the game. The taxpayers of Illinois have just been forced into a major concession in this decades-long battle. It’s your turn now. Participate.==

Rich, I have been MORE than participating in this debacle. I am not in the union. I have had no raises in years, have had to take furlough days, have seen my healthcare contributions rise, AND have been subject to the income tax increase just like everyone else - all while watching my union friends eat at the money trough with their obscene raises. My pay has effectively decreased over the years. Don’t tell me to stop whining. My pension is strictly mine and they need to keep their hands off of it. You and I and others will eventually have to pay for what was promised to me and others. That is just a fact. I didn’t create the problem, but I have done my share to help solve some of it.

Comment by Anonymous Friday, Mar 18, 11 @ 9:24 am
Well said countryboy

Comment by foster brooks Friday, Mar 18, 11 @ 9:25 am
Sorry . . . that was me above

Comment by Demoralized Friday, Mar 18, 11 @ 9:25 am
Re: Stolen Money from Pensions…
It was the Senate and House Republicans who coined this phrase during the 2006 elections. Fresh off of a victory on med-mal, the Senate GOPs in particular needed a new mantra.
So they proceeded to scare the daylights out of retired school teachers and retired state employees…making them believe they MAY NEVER see their pension checks.
You can trace this right back to the GOP…AFSCME just happened to like the mantra too.

Comment by Is He Still Hiding Under His Desk? Friday, Mar 18, 11 @ 9:33 am
A generational change away from fixed benefit to fixed contribution retirement programs allows for easier state financial management while taking the slush fund away from the politicians and then puts the responsibility and the asset into the employees hands. I see this as the only long term solution.

Comment by Cincinnatus Friday, Mar 18, 11 @ 9:34 am
Wordslinger, I went on a web search to get you a number but there was not a whole lot of imfo on it. Add up what it takes to fund all of the people that are in Illinois without legal status and the money it takes to house,feed and take care of their medical needs has to be huge. And let’s not forget the ones that have been placed in our prison system. I read that about one third of the inmates in prison are illegals. And while we are at it how about the billions that is spent on welfare in Illinois. Should we not pay our retirees and continue to pay welfare.

Comment by nieva Friday, Mar 18, 11 @ 9:36 am
I find it interesting that Fahner never provides a refutation of Madiar’s legal analysis. He just asserts that the General Assembly is capable of making a change and asserts that the Sidley Austin legal analysis is correct.

The General Assembly is certainly capable of passing laws that will purport to change the pension rights of current employees. However, as we know the General Assembly has never been averse to passing blantently unconstitutional laws - see the legislation restricting “violent” video games of a few years ago that was passed virtually unanymously in the face of caselaw from other states that made clear that the law would never be upheld.

The problem with enacting legislation that purports to change vested pension rights of current employees is that the General Assembly will do so and then spend the “savings” without waiting for the Supreme Court to rule on the constitutionality of the change. When the Supreme Court rules, as I suspect it will, that there is no authority to modify the vested rights of current employees, there will be an ever greater cost to unwind things and restore the pension benefits improperly taken away.

Now, if the state truly wants to determine whether the constitution permits changing pension rights of current employees, why not enact legislation modifying only one of the smaller pension systems - for example, the General Assembly retirement system, or better yet the judges retirement system. Do a test case based on changes to the General Assembly retirement system. If the Supreme Court issues a ruling upholding that change, then go forward.

I’m sure, especially in the case of a change to the judges retirement system, there could be an expedited review.

Comment by Just the Facts Friday, Mar 18, 11 @ 9:47 am
Over a thirty year career approximately how much money does the average teacher pay in union dues here in Illinois? While this seems relevant to the bigger economic picture of income and benefits I am not going after or making any sort of point. I am just curious and would appreciate if anybody here knows and would be willing to share this information.

Comment by Responsa Friday, Mar 18, 11 @ 10:04 am
- Just the Facts - Friday, Mar 18, 11 @ 9:47 am:

“Now, if the state truly wants to determine whether the constitution permits changing pension rights of current employees, why not enact legislation modifying only one of the smaller pension systems - for example, the General Assembly retirement system, or better yet the judges retirement system.”

I am a firm believer that a contract is a contract and that the state government MUST live up to its obligations. (This says nothing about my believe that the current system must change immediately. A SS/401k system also eliminates double dipping.) But oh, boy, do I love this idea.

Comment by Cincinnatus Friday, Mar 18, 11 @ 10:05 am
As a governmental potential pnsioneer, I hate the fact my employer didn’t match, however the story that isn’t told is that the funds were spent on other needs for the residents, so in a way the residents are responsible. But our soon to be leaving supreme leader has chosen to rant about how he refuses to “have to raise taxes 90%” to address the pension problem instead of taking a second to honestly explain how it got that way. Don’t let the door hit you in the arse.

Comment by Jim Friday, Mar 18, 11 @ 10:06 am
It’s not just the absolute amount of your pension, it’s -when- you get to retire, too. A pension that pays a modest amount but begins after 20 years of service, say, and thus could kick in before the age of 50, is still pretty darn generous. CTA workers of a certain age in Chicago have that. I’d love to see a chart of just when different state and local pensions begin (I know we’re talking state here but local is important, too, it’s all connected fiscally to me).

On the flip side, don’t we have too many hospitals in this state as is? I’m not talking in rural areas. But in Chicago, you drive a couple of blocks and hit another one. It looks to me like gross overcapacity. It’s nice to be able to walk to your local hospital, but if we shut =some= of them down, we’d probably all have more money, with no actual decline in overall health care, to pay for pensions. School district consolidation is all the budget rage; let’s talk hospital consolidation too, and more (and cheaper) local clinics.

Comment by ZC Friday, Mar 18, 11 @ 10:08 am
I guess I expect the money to come out of the same magic money pot that the pols used to promise shiny things to voters without ever needing to raise taxes to pay for them. Say, how much money would it save if you zeroed out the pensions of the legislators? I think Ty Fahner could afford it.

Comment by anon Friday, Mar 18, 11 @ 10:10 am
Governments break promises all the time. So what. Don’t rely on them. Social Security will not be there for most of us. Deal with it. Government will have to shrink dramatically.

Comment by formerpolitico Friday, Mar 18, 11 @ 10:11 am
It is time to ramp up the casino bill. Obviously even quinns lying and doubling what tax increase was needed isn’t getting the job done. The state should increase gaming positions and put gaming at ohare and midway. Some cuts will be needed the GOP finally outlined some which will hurt but are required. Now as good as time as any to pass the cig tax and then do a separate tax on booze if the original Is not going to be constitutional. The failure of the house and senate to cut even the little perks they enjoy like scholarships is just bad leadership and who can blame the unions when the state leaders want to vilify the unions but not accept the blame. Any union that is not paying into the pension fund needs to wake up and realize that they had a deal that was to good to be true and be ready to kick in 8-10%. Teachers need to realize that a 170 day school year and 5.2 hour school day are to short. Maybe a cap on pension payouts can be worked out start at 110k a year and adjust for inflation yearly. The cap won’t affect 95% of pensions but is symbolic. That being said I am no real fan of most unions but you don’t just screw over people who have based their financial plans and future plans because well the state didn’t hold up it’s end of the bargin.

Comment by Fed up Friday, Mar 18, 11 @ 10:17 am
Amen to Public Servant!!!!

Okay I understand you don’t want to hear anymore about “theft”. “stolen money”, etc. And I appreciate your support against the employee bashing that goes on regularly.

However the statements that now the employees should do their part, ignores the fact that we employees are also taxpayers.

We have worked for less wages than our counterparts in the private sector.

We have had raises denied because politicians did not want to upset the taxpaying public.

We have seen our promised pension fund being used for political games.

We routinely work at staff levels that in some cases violate OSHA law. With equipment that private sector workers would refuse to use.
And in situations that violate our job descriptions.

We participate in EVERY tax increase that is imposed.

We have to jump through the hoops of Administrative rules and Administration edicts forced upon us by a myriad of legislators and Administrations. Rules that any rational, logical, person would classify as the product of the mentally incompetent. And rules that actually cost more to follow.

We have to fight for OT, mostly comp time, to provide the services that are mandated by our superiors in spite of the fact that we have no staff, because our superiors do not want to admit that there is a fiscal problem. That might cost a couple votes.

We have to take furlough days and then if we want
to prevent a loss on our pension because of those days we have to buy them back with our money at a 6.5 % interest rate. Furlough days the the GA apparently does not think are important because they schemed to make sure theirs was at the very minimum. Not a luxury offered to the regular worker.

Then when discussions turn to State employee pay and “cadillac” benefits, the politicians and others trot out the exhorbitant salaries and benefits that are enjoyed by a very small percentage of workers. They then throw that example out to get the “anti state employee” forces all riled up. The ironic part is that most of those people who enjoy those salaries in State government are the political hacks who were put there by the Governor or GA members to pay back past favors. Has anyone wondered why we don’t ever see a breakdown of all the GA members and their annual compensation and benefits? Benefits they get for putting in a fraction of the time a regular workers has to contribute.

And now we have to listen to the call for us to contribute more to our pensions because money that was taken out of our checks, earned money, and placed in a State run savings account for our retirement was taken out and spent so politicians could be elected. They don’t want to pay it back, that might cost votes. So we need to contribute more of our earned money to make up the money that they spent.

So the next time the call goes out for State employees to do their part, look in front of you. I am already there!

Cassandra - In regards to the massive loans and your comments against borrowing more. We are already “borrowing” the money we are not paying vendors service providers etc. at a very high interest rate. Borrowing enough to pay these folks off at a rate that is one half less would save money. It is the same amount at half the interest. I do not undestand anyone who would not be for that.

Comment by Irish Friday, Mar 18, 11 @ 10:21 am
I believe past promises should be kept, but to tell your employer contract is binding forever seems crazy. Payouts based on previous employment should be made. You don’t like the new deal going forward you can leave.

Cullertons position to me reads that we need massive layoffs now to avoid underfunding, which I assume no one really wants.

Comment by jeff Friday, Mar 18, 11 @ 10:22 am
The light at the end of the tunnel is a freight train headed our way. I followed the thread yesterday as to what could or could not be done to fill a 5-6 billion dollar hole in this years budget. your guess is as good as mine on that one. I may be wrong but what I am understanding the pension issue is of a far greater magnitude as relates to percentage of yearly budget.Rich will correct me if I am wrong but I think what he is saying is yelling “I’ve been robbed” is not a solution that will be acceptable to the public. If the State Folks think they are unpopular now wait til it comes down to raise my taxes or put grandma on the street corner in a blanket. Being right is not always an impenetrable defense.

Comment by Bemused Friday, Mar 18, 11 @ 10:29 am
@Bemused,

Even the Republican ideas on pension “reform” will only raise 1.3 billion out of the 5-6 billion budget deficit, and that’s according to their figures. You say “wait until it comes down to raise my taxes, or put grandma on the street corner in a blanket.” Newsflash: They’ve already raised our taxes, and my wife hopes to be a grandma some day soon. But at least she’ll be out there on the corner with grandpa.

Comment by PublicServant Friday, Mar 18, 11 @ 10:41 am
I agree with you about an “economic meltdown caused by a handful of fantastically corrupt financial institutions.”

But doesn’t change the fact that the public employee unions have too sweet of a deal at our expense that was always unsustainable. The financial meltdown maybe brought the reality to a head sooner in the minds of more people, but using the financial meltdown as a shield or excuse for not addressing another big problem would be too clever by half. A bit of turning logic on its head.

Comment by just sayin' Friday, Mar 18, 11 @ 10:45 am
Irish,

For a moment I grant everything in your post. I have no reason to question your facts.

I took a bath in the markets the past couple of years, but at least the money is mine, and my family’s when I die (no plans on that yet which I am sure disappoints many on this blog). I think that Social Security problems will soon be addressed by a more sober group of politicians in DC than we have in Springfield. But there is no guaranteed return on my retirement savings.

But, since you chose to work for the State, would you not rather have had your retirement contributions in SS/401k which is yours and yours alone? Is that not better than this slush fund these corruptocrats have set up?

I would like to see those of you debate the benefits and detriments of the current scheme versus that used in the private sector. Why do you think that politically driven promises of returns are fair to taxpayers. Why is your risk minimized compared to the taxpayers? Would you and your heirs be better served in a private plan? You are the affected parties, what are your feelings?

Comment by Cincinnatus Friday, Mar 18, 11 @ 10:45 am
Jeff - I believe Cullerton’s call for massive layoffs is just more legislatorspeak. And this is what absolutely drives me crazy with these folks.
If they were REALLY interested in cutting spending and still provide as much of the front line services they could, a goal that their talk indicates but their walk defies; they would cut the true fat. There are currently SEVEN asst/assoc/deputy Directors in my agency. Back when we had twice the employees we do now, we had ONE. The salaries/benefits of each of those positions would fund three entry level full time employees. So there are 18 front line employees instead of six administrative employees. So get rid of the 18 positions by cutting the six. Ours is a small agency. Carry that same scenerio out over all of the other agencies in the state. Now there’s a savings.

Comment by Irish Friday, Mar 18, 11 @ 10:48 am
- I took a bath in the markets the past couple of years, but at least the money is mine -

You know, I’m pretty sure if I lost everything in my 401k I wouldn’t really feel like saying, “Oh well, at least that money was mine.”

Comment by Small Town Liberal Friday, Mar 18, 11 @ 10:51 am
“A frightened, aging, underwater middle class is at war with a subset of itself in the wake of a global economic meltdown caused by a handful of fantastically corrupt financial institutions.”

Best description ever of what is going on right now.

Everytime one of these discussions comes up I remember that that fun statistic that in one year the top 25 hedge fund managers made as much as 658,000 teachers. Until people understand that the problem isn’t the teachers/middle class workers, it is the hedge fund managers and their ilk, we will continue to fight each other for crumbs.

Comment by Lakefront Liberal Friday, Mar 18, 11 @ 10:53 am
STL,

My money. My responsibility. The less I am obligated to trust others looking out for me, the better in the long run.

Pretty much sums up the difference between our two world vies, huh?

Comment by Cincinnatus Friday, Mar 18, 11 @ 11:03 am
===The less I am obligated to trust others looking out for me, the better in the long run.===

Maybe you wouldn’t have taken such a bath in the market if you had a trusted financial advisor looking out for you.

Again, no one is a Libertarian when their house is on fire.

Comment by Obamarama Friday, Mar 18, 11 @ 11:10 am
I have an idea. Let’s save money by gettng rid of township government–oops–I forgot–members of the legislature are township supervisors, who receive kickbacks for contracts in their townships. The “corruption tax” strikes again.

Comment by preservationist Friday, Mar 18, 11 @ 11:21 am
@Cincinnatus - Do you have a stockbroker? If you don’t, since you took a bath in the markets, you might want to get one. Of course then you’d be obligated to trust him/her to look out for you. Although I’ll say that I don’t think it would have done you much good in any case. By the way that money of yours that you lost is now someone else’s money, so it won’t be there for either you, or your family. And for those supposedly orderly markets, don’t you need to rely on countless others to do the right thing to create an atmosphere where people trust (oh there’s that word again that you hate) that as their money disappears into it, those companies that they are investing in are legit, and not some ponzi scheme? Oh, wait, there was that Bernie Madoff thing. OK scratch that.

Yeah I think it’s a good idea (not) for people working hard for their retirement money to put it into a market that they don’t have the skills or time to monitor appropriately, and then lose it all. By the way, if they did get rid of SS, and those people who invested their own money in the market end up losing it, are you just going to drive by on the street safe in the thought that “Well, it was their money to lose, and they did so, so not my problem.”? I want to be as independent as possible, but those who think that self-managed funds are the answer are just kidding themselves.

Comment by PublicServant Friday, Mar 18, 11 @ 11:21 am
Actually, Obamarama, I did better than most during the past recession. I caught up on losses about 3 months ago. Again, my responsibility, one way or the other.

Certainly, those professionals you speak about were the same politically selected advisors who say a pension return (come hell or high water) of 8.5% is realistic.

Comment by Cincinnatus Friday, Mar 18, 11 @ 11:22 am
There’s a simple solution to the problem. Fire all state employees. Then if needed, rehire under new rules.

Or do what the State Board of Education has been doing, fire or retire, then hire back as private contractors.

Privatize whole departments. Decertify the union.

It is totally reprehensible that the governor can sign a contract with a union that ties the hands of the legislative branch, which are the representatives of the people.

Comment by Downstate Illinois Friday, Mar 18, 11 @ 11:23 am
Madiar’s article not only holds benefits sacrosanct, at te end he also writes that employee contributions cannot be raised except to pay for increased benefits.

This creates a virtually impossible financial and political situation when you have pension funds less than 50% funded. Don’t kid yourself, employees benefitted plenty from too-low State pension contributions that allowed a larger, better-paid work force than would have been the case if the pension funds were getting the money they should have.

But, the constitution says what it says and it is very, very hard to take the Sidley opinion seriously. The contribution issue I think is more arguable.

But in the end, someone is going to have to come up with about $70B for the State funds, $15B for the 4 City of Chicago Funds, and significant amounts for all the others. Rich often writes about education, nursing homes, hospitals, etc. Well, it’ll have to come from somewhere and if it can’t come from reducing pension benefits, those (plus Corrections) are where the State spends its GRF money and those are where it’ll have to come from. Maybe extend the duration of the income tax hike, after seeing if it raises what is expected, and how people and businesses respond.

To Cincinnatus–the private sector aproach is driven by the particulars of ERISA, it is not necessarily a superior approach in any economic sense. But in any case, to convert to a defined contribution scheme you would have to fully fund your current defined benefit promises, and it is our inability to do that which is the problem. Going forward, the benefit cuts for future employees under SB 1946 pretty much bring long-term (i.e., for future hires) expenses in line with contributions. There is much to be said for the DC approach in that it would shift risk off the taxpayers and give employees ownership of a real asset, but it does not help fund the current hole.

Comment by Marty Friday, Mar 18, 11 @ 11:27 am
PulblicServant said,

“By the way that money of yours that you lost is now someone else’s money, so it won’t be there for either you, or your family.”

Bad assumption, and one that is often made. The pie increases and shrinks. Wealth was destroyed in this past recession.

As far as having a broker, I have my investments spread around various no-load mutuals, and certain other annuities. A revisit the mix based on the economic conditions I see.

“Yeah I think it’s a good idea (not) for people working hard for their retirement money to put it into a market that they don’t have the skills or time to monitor appropriately, and then lose it all.”

This statement is the height of arrogance. Almost anyone can understand enough to manage his own money (no thanks to the public education system that feels this skill is less important than other more politically correct topics). Even a state worker should realize that their retirement should not be tied up in hedge funds and other risky investments (that’s the only way you can guarantee 8.5% annual returns). A well constructed 401k retirement plan run by the state would provide its employees with a wide range of investment options.

Comment by Cincinnatus Friday, Mar 18, 11 @ 11:31 am
The economic downturn is a sideshow to the public pension debacle. The problem has been the overpromising of benefits (like in SS and Medicare where 8.5% rates of return aren’t even assumed), underfunding, gaming and corruption. In other words, the plans were poorly designed and never sound.

What I can’t understand is why future and even beneficiaries don’t understand that they have they most to lose if the plan aren’t fixed in a way that makes them sustainable through reduced benefits, caps, taxes, etc. Otherwise, in the not too distant future, Mr. Math is going to stop sending the checks. If you don’t think that can happen look up Pritchard, Ala. They just had a memorial service for retirees who have passed away since the money stopped.

Comment by Sam I am Friday, Mar 18, 11 @ 11:33 am
- My money. My responsibility. -

So if you lost it all you’d just starve to death and be happy about it?

Comment by Small Town Liberal Friday, Mar 18, 11 @ 11:35 am
–The economic downturn is a sideshow to the public pension debacle.–

Chronic unemployment, record foreclosures, underwater mortgages, government bailouts, tanking government revenues, eight-month payment cycles. Some sideshow.

Comment by wordslinger Friday, Mar 18, 11 @ 11:37 am
Meanwhile the one percent of the super rich who own 40% of the economic wealth of our nation rub their hands in glee as the lower and middle classes fight among themselves for the crumbs of society. Fox News has won.

Comment by wishbone Friday, Mar 18, 11 @ 11:41 am
===Even a state worker should realize===

You call someone else arrogant and then say something like this? What a joke.

Comment by Obamarama Friday, Mar 18, 11 @ 11:43 am
Cincinnatus,
You just called someone arrogant? Whew…

Comment by countryboy Friday, Mar 18, 11 @ 11:43 am
ACT tests are designed to predict the potential success of students who wish to attend higher education institutions. They were never designed to be used as indicators of student achievement. A lot of students are not interested in careers that require a college degree so they haven’t taken the coursework that is tested on the ACT.

I wonder how many would want to take a test when they have no real interest in their test scores.
Think they would put the effort into it? How about those special education students who need to have it read to them? Most have not taken the course work for which they are tested. After a while, they get bored and put any answer down. I have proctored the ACT for the past several years so I have seen these situations.

My high school’s ACT average was always way above the state’s average. That changed when the ACT was administered to every student.

Comment by Nearly Normal Friday, Mar 18, 11 @ 11:43 am
Downstate….thanks for bringing up the “privatization” concept. I have not seen it discussed much, but under the current conditions it needs to be “dusted off”, debated, and considered.

I am interested in learning more about “teacher(public) bashing” comments. What I have seen thus far is that they are centered on what can be legitmately considered rich compensation and benefit plans and opportunities, and, in the case of some schools, documented underperformance.

Comment by Truth Seeker Friday, Mar 18, 11 @ 11:46 am
==But doesn’t change the fact that the public employee unions have too sweet of a deal at our expense that was always unsustainable.==

I do not know if that is true. I would like to see a calculation of where everything would be if payments to the pension system were made when due. It is beyond my abilities to do that but it would help define the problem. I do note that the Municipal Retirement system, where I think payments were made timely is, and which is not funded by the State, is 86.4% funded.

Responsa

I am not very familiar with the Teachers Retirement system but believe they are required to contribute 9.4% of their salary.

Comment by Bigtwich Friday, Mar 18, 11 @ 11:48 am
wordslinger,

Actually, it is a sideshow. When talking about retirements, we should be looking at timeframes of 40 years, not 40 months. That said, it does not alleviate the suffering that people are seeing. This is why it is important that economic instabilities be allowed to stabilize as quickly as possible. We can argue about the plusses and minuses of the reaction of our elected leaders to these short term recessions.

So, looking out 10 or 20 years in the future, is the current system sustainable? Right now, the system is 40 years old, and the handwriting has been on the wall for at least 10 years, so I would argue that the system cannot be sustained as it currently is.

Is the answer more taxes? There is a point of diminishing returns with respect to taxes. Eventually, the tax structure hits a limit where people/businesses move and revenues decrease. Where that point is is subject to debate.

Is the answer less spending on non-pension expenses? More trade-offs as we debate what programs can be cut to maintain the pension structure. Politically, anyone who goes earnestly down this past will be said to be kicking grandma to the curb, or not caring about “the children.” Takes a lot of guts to go down this path, brother.

Should the pension obligations of public service workers be tied to the national averages of donations in the private sector, and any guaranteed returns limited? This type of system still allows the type of shenanigans we see whenever a politician has an accessible slush fund.

Is the answer migrating to a 401k system similar to the private sector? This would cost the state more money, but provide better ability to plan and removes state political access to the funds.

But all in all, this short term economic downturn is indeed a sideshow to the real debate.

Comment by Cincinnatus Friday, Mar 18, 11 @ 11:53 am
- Obamarama - Friday, Mar 18, 11 @ 11:43 am:

===Even a state worker should realize===

“You call someone else arrogant and then say something like this? What a joke.”

Glad you caught the joke…

Comment by Cincinnatus Friday, Mar 18, 11 @ 11:54 am
“Fire all state employees”, “Ban Unions”, “Public employees make too much money”, “Pensions are too expensive and unattainable” -

And I say this, if any of the above actions or opinions were true and possible we would still be left with a fiscal management deficit.

It’s our legislature, after all, which has failed us. They have failed us time and again by underfunding pensions. Yet, even with knowledge of their actions, we continued and continue to vote them right into office so that they can make the very decisions at the foundation of our current crisis. A fiscal management deficit indeed.

So let’s not cry about being strong armed by teachers, state employees, or unions and the supposedly generouse benefits/employment packages they bargained for…Nor let us cry about the low tax rates the rich and corporate entites that they too bargained for…the blame is on the legislature and ultimately every single resident of the state who voted them in…plain and simple. So let’s raise taxes, float a bond, revamp the pension system and get on with it, because there are no guarantees that any action we take now will be strong enough to withstand fiscal management deficit seemingly inherent in every Illinois elected and appointed official…Okay, maybe not so “plain and simple”.

Comment by GetOverIt Friday, Mar 18, 11 @ 11:57 am
Consider this, the State pension system is in trouble becaue the general assembly kicked the can by spending the contributions on otherthings, planningto deal with the shortfall later. The problem is they kept kicking those cans donw the road.

The plan nowis to take current employees, cut their pensions off, and leave them to 401(k)’s. The problem is that unless you re just starting out in State government, for a majority of employees it is to late to start a 401(k) from scratch and build it to provie a menaingful nest egg for retirmenet. Th State formula, (this i a simplified version of the calculation) provides youwith 50% of your 4 highest (out of last 10) years salary if your age an years of service equal 85. There amount you get drops significantly if you do not have the 30 years in, and is ofset by the amount you get from social security.

Now tak employees with say 15-25 years of service. This pension change reduced their State benefit amount to below what they get from social security, thus wiping it out. For an employee in their 50’s with 20 years service, they now have little to no pension, and hav to start building one from scratch in their 50’s! Even at the full capped contribution amount they will be locking to have a few hundred thousand dollars put away.

So what are we doing? we are creating poverty level retirees who will be dependent on govt programs to support themselves in their retirment. Thus we are not saving money, we are kicking the can donw the road and moving the expnse over to the various senior support services who will have ever increasing burdens of taking care of our impoverished retirees. Nursing homes instead of assited lving facilities etc.

Penny Wise pound foolish.

BTW the 401K was supposed to supplement defined benefit plans, not replace them. the move to 401k in the private secotr has put millions of bonus dollars into top execs hands, and transfered the burden to the tax payers.

the 401k retirment system is not a model, it is a recipe for disaster which is creating a ever increasing impoverished grouped of retiree’s whoi must be cared for at taxpayer expense. The 401k system is one of our greatest failures, and weneed to move away from it or face larger problems in the future.

Comment by Ghost Friday, Mar 18, 11 @ 12:03 pm
Publicservant

I am aware of the tax increase. My understanding is this is just a tease compared to what will be needed to fix the pension problem. I hope the State Employees get all that they have been promised. The problem is that John Q. Public is quite fickle. They have been sold for some time now that Unions have too much power and get more than they need or deserve. If you question how many have bought into that just read the posts here. There have already been some inovative ideas put forth here as to what to do when the bill comes in. Now those nice folks at the ststehouse get elected by none other than said John Q. If John likes one of those neat ideas somebody at the statehouse will put it out there.

Unions sometimes make a show of standing together but that is not the truth if once was. That infighting has helped in thier decline. State workers have watched thier support base erode without great concern. A large segment of the public out there feel like ” you have it way better than I do so what is your beef”. In case anyone wonders I am a Union Guy. So I support the cause but the math is what it is and this may not shake out in the State Employees favor.

Comment by Bemused Friday, Mar 18, 11 @ 12:07 pm
==Only one legal opinion as to the constitutional protection of pension rights will have any merit- an opinion of the Illinois Supreme Court- ==

And those judges are looking forward to their pensions, too.

Also, there is also the US Supreme Court and the impairment of contracts clause. Which, by the way, means even amending the state constitution is not a guaranteed cure.

Would it be responsible to cut pensions in an arguably unconstitutional manner and reduce funding accordingly, when there is a good possibility that 5 or 10 years down the road, some supreme court is going to tell you that pensions could not be cut? How far underfunded will we be then?

Comment by Pat Robertson Friday, Mar 18, 11 @ 12:18 pm
Pat-

The state contract, in this case, is the employment contract which is year-to-year for non-union and the life of the contract for union. They most certainly can change employment contracts once the existing ones are up, and those contract can have new pension formulas.

Also, the case law on the Contract Clause does allow for a “extreme public necessity” out for breaking a contract. I doubt the courts would consider fiscal negligence (if not malfeasance) as an excuse to break an existing pension contract though.

Comment by John Bambenek Friday, Mar 18, 11 @ 12:32 pm
The simple fact is that public employees took their jobs on the good faith that there was a need for their services. A job was advertised and they took that job on the good faith that they could perform the duties that the employer said needed to be done.

Lots of people would love to have these jobs…good pay for a good job done. Now these same people, who instead of aspiring to better themselves, to work hard to attain the same benefits, or better, that the public employees have, they want to take away…to make those who work these jobs have less than they do. It’s disgusting.
They blame the public employees and want to penalize them…for what seems to be out of spite. And its newly found outrage to boot. Where were these regressives six months ago, a year ago?

Comment by Deep South Friday, Mar 18, 11 @ 12:46 pm
I’ve worked for the state 30 years. I can’t start a retirement plan now, it’s too late. When my money runs out, it’s Kevorkian time I guess. I won’t burden my family.

Comment by anon Friday, Mar 18, 11 @ 12:55 pm
That the Senate GOP can only put 15 votes on a pension roll back is telling in an of itself.

Comment by piling on Friday, Mar 18, 11 @ 12:56 pm
==They blame the public employees and want to penalize them==

I don’t see this blame anywhere on the thread today or any day. I see anger at politicians and union leadership expressed here frequently. But not blame for the workers themselves (with the exception of the recent scandal related to workers comp claims in the prison system.)

Comment by Responsa Friday, Mar 18, 11 @ 12:58 pm
Responsa….maybe they’re not being blamed here and maybe not today. But there are many who want to penalized them…many who want to take away…
And don’t tell me that they’re not being blamed and scapegoated. The Teahadists are all over teachers, snow plow drivers and third shift nurses…calling them union thugs, etc. And worse. Don’t tell me that’s not happening. Please.

Comment by Deep South Friday, Mar 18, 11 @ 1:08 pm
three words–”graduated income tax”
It is the most equitable followed closely by a value added tax.
Adopting either one of these at a reasonable level to match the actually funding requirements of state government is what is needed. No one in state government will touch the true third rail–abolition of current tax structure.

Comment by D.P. Gumby Friday, Mar 18, 11 @ 1:10 pm
Agree with Irish 100%; true for things at large agencies as well as small. Want to cut fat? Cut the Directors & Deputy Directors, and the Assistants to the Deputy Directors. Cut the “liaisons” and all the other vague and useless positions created solely to be filled by political hacks. Cut consultants supervising consultants who are overseeing other consultants. Cut sweetheart contracts to the connected. There’s lots to cut…if the GA is really interested.

Comment by JustaJoe Friday, Mar 18, 11 @ 1:11 pm
I do work for the state. I would pay more for everything I have. 20% for my pension would break me but as long as my husband keeps his job I would probably do it. I was offered a job at a college my son now goes to at the same exact time I took my current one that would have given free college for him in 8 years. I took the state job for the pension and health care since I have a personal experience with family going bankrupt over health issues. The thing is….I CAN’T GO BACK ten years. I am stuck. If I would have had a crystal ball I may have taken the other job. I know I am blessed. But what everyone is saying about political hacks is true. I see it everyday. I knew noone and still wonder how I got my job out of 50 applicants. Maybe because it’s technical. The point is JustaJoe has it right but noone will make the effort to find these positions because the ones in charge have an interest in them.

Comment by I get it! Friday, Mar 18, 11 @ 1:26 pm
BTW, if that’s all that Fahner’s going to bring to the table in the inevitable court case, the state might as well take a box of money over to the Supreme Court Building and start flushing it down the toilet.
Unless Ty’s going to do this pro-bono (and in this case it appears you’d get what you pay) its the taxpayers who pick up the legal fees.
Evidence and legal precedent tend to go further with the folks in robes than rhetoric.

Comment by piling on Friday, Mar 18, 11 @ 2:24 pm
What is happening right now is not fun for anyone. I understand the public sector employees for saying “This is what I signed up for, this is what I expect”. I probably would not be terribly happy with a change.

On the flip side, as a taxpayer, I am not exceptionally happy with “this is your (taxpayer) obligation, pay more in taxes so I don’t have to change my deal”.

Hopefully both sides can see the other.

The REASON we are here is because we have let politicians tell us for decades that you can have your cake and eat it too as they merrily kick the can down the street year after year. Well, guess what, the can just got kicked to the end of a dead-end street. We can’t kick the can any farther.

What we HAVE TO DO is take a realistic look at what our obligations are right now AND 20 years from now. If we move on from this year and we still have massive unfunded liabilities with no change in sight, then it is a travesty. We need grown ups in Springfield that will look at the long term liabilities and deal with them. We aren’t going to solve the whole problem in one year, but we need to be on a path to solvency. Anything less is just complete cowardice and deriliction of duty.

Comment by Ghost of John Brown Friday, Mar 18, 11 @ 2:25 pm
–Add up what it takes to fund all of the people that are in Illinois without legal status and the money it takes to house,feed and take care of their medical needs has to be huge.–

What makes you think taxpayers are paying for any of that?

Comment by wordslinger Friday, Mar 18, 11 @ 2:30 pm
==Teahadists…union thugs==

Tomato Tomahto
Sticks and Stones

Comment by Responsa Friday, Mar 18, 11 @ 2:31 pm
To Responsa…From my knowledge of NEA union dues, both to the national and your local, over the last 30 years it would be around 15 thousand.

Comment by Worse than Unreal Friday, Mar 18, 11 @ 3:12 pm
The ultimate solution to our pension/retirement funding problems would be to create a time machine capable of going back at least to the end of World War II. Then someone from today could go back, lay out the situation, and try to do one or more of the following:

1. Persuade the post-World War II generation to not have quite so many kids (which would reduce the size of the Boomer generation);
2. Persuade the Baby Boom generation to have MORE children (to replace themselves with younger workers/taxpayers who could pay into their pensions and Social Security);
3. Persuade adults of all ages to stay as close as possible to their families of origin so they can be around to care for their aging parents and grandparents (thereby avoiding or reducing the cost of long term care);
4. Persuade the 1970 Constitutional Convention to insert an even stronger pension protection clause in the state constitution;
5. Change past court decisions that allowed private companies to renege on their pension obligations (thereby creating the expectation among private sector employees that public employees should also be screwed out of their pensions in the interest of “fairness”);
6. Insist that all past administrations and GAs fully fund their pension obligations — maybe even organize 2011-WI-style massive protest marches on Springfield for that purpose;
7. Persuade everyone who went to the polls in 2008 to vote yes on con-con so that the pension clause could be revisited and revised.

Since time travel is obviously not an option, we are left to make the best of a bad situation, and there is NO solution that will not lead to significant hardship or injustice to many people.

Comment by Secret Square Friday, Mar 18, 11 @ 4:07 pm
{Only one legal opinion as to the constitutional protection of pension rights will have any merit- an opinion of the Illinois Supreme Court- until the dispute is resolved through the adjudicatory process, arguing over the merits of Cullerton’s, Fahner’s, Sidley’s or any other opinion issued on the subject may be fun but it is also a waste of time}

The February 2011 COGFA Monthly Briefing Report indicates that the Judicial Retirement System has the lowest funded ratio of the 5 systems; with the Judges system funded at just 28.8%.

How do you think they are going to rule?

With past performance as the greatest predictor of future results; please see Jorgensen v. Blagojevich, from back in 2003.

Also; the condensed IPI report “Judicial Pay and Perks in the Prairie State” here:

http://www.illinoispolicy.org/blog/blog.asp?ArticleSource=3351

Or you can read the full blown version here:

http://www.illinoispolicy.org/uploads/files/IllinoisJudicialPay_1.pdf

Really a must read when discussing Illinois’ publicly funded pension dilemma.

Comment by Quinn T. Sential Friday, Mar 18, 11 @ 4:14 pm
state workers: I can understand why you’re upset - as a GenX’r, I’m upset social security won’t be there while i’ve been paying in. And I’m upset my mom’s company screwed her out of her pension.

sorry, call me a nasty person, but I still won’t hope my representatives vote for higher taxes to fund your pensions. and i’d rather they not cut education funding or medicaid either. sorry.

one argument i don’t understand, becuase i’ve never worked in the public sector perhaps, is the notion that people took jobs in the public sector because of the generous pensions. I was thinking most did so because of the more regular 40-hour workweeks, and the unlikelihood of being fired. is that an unfair stereotype?

Comment by Amy Friday, Mar 18, 11 @ 4:16 pm
Larry Snow
When you say some teachers pay zero into their pension, what you mean is that their districts agreed to pick up and make those payments on behalf of the teachers in lieu of a pay raise.

Comment by reformer Friday, Mar 18, 11 @ 4:34 pm
Quinn T
I was with you up until the IPI links.
They could call the sky blue and no one’s going to trust em on it anymore.
The Blago vs Jorgenson is, I admit, a good indicator.

Comment by piling on Friday, Mar 18, 11 @ 4:37 pm
Piling on; shoot the messenger is a tried and true method of silencing the message; much like the Governor telling us yesterday that he was not going to listen to the Senate Republicans; even though they indicated that each of their proposals had the support of 50% of the Senate required for passage if they were incorporated into law.

The facts are the facts:

The Illinois NCSC data from 2009 shows Supreme Court justices receive $201,819 annually.

Appellate judges receive $189,949 each year, and circuit court judges are paid $174,303.

By comparison, the average per-capita personal income in Illinois in 2009 was $41,411.

Like their salaries, Illinois judges have a pension benefit that is among the highest in the country, according to the NCSC.

Illinois judges sworn in before January 1. 2011 contribute 11-percent of their gross pay until the age of 60. They’re vested after 20 years.

Under the old system, which affects most of the jurists, A 60-year-old judge with 20 years of service will receive 85-percent of their last year’s salary. In addition, there is a three-percent COLA added to their pension annually.

While many I know are hard working and highly competent, if you have ever had the privilege of standing in front of some of the other buffoons, I think you would recognize what an outrage that is.

These people are going to be taking home $150,000 per year, with an annual COLA, some for as long as 25-30 years.

Comment by Quinn T. Sential Friday, Mar 18, 11 @ 5:08 pm
@ Quinn T. - and first year Associates at large Chicago law firms start out at $145,000 to $160,000 - a must more valid basis for comparison than the average per-capita personal income.

Judges aren’t overpaid. If you want intelligent competent judges you need to pay enough, and provide sufficient pension benefits to attract intelligent and competent attorneys.

I’ve been practicing law for 30 years and have appeared before judges all over the state - from Cook County to smaller counties downstate. The judges deserve what they are paid.

If you have problems with the quality of judges now, imagine what you may end up with if the salaries and pensions are reduced.

Comment by Just the Facts Friday, Mar 18, 11 @ 5:32 pm

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