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* “Movement” doesn’t mean “passage.” The pension reform bill has a very long way to go before it becomes law. The House floor is just one step…
The legislation, pushed by House Speaker Michael Madigan (D-Chicago) and Minority Leader Tom Cross (R-Oswego), passed the House Personnel and Pensions Committee on a 6-2 vote with one member voting present. The measure now is positioned for a vote by the full House as early as Friday.
“This is an awful discussion, but if we let this go, if we put our heads in the sand, it just gets worse,” Cross said. […]
“This will not be for the faint of heart,” Madigan said.
* There are lots of legislators opposed to the proposal…
State Rep. Chapin Rose, R-Mahomet, said he didn’t believe changing pensions for current state employees would pass constitutional muster. […]
State Rep. Rich Morthland, R-Cordova, said he is not inclined to support the current version of the legislation, because the employees weren’t consulted. […]
Republican state Reps. Bill Mitchell of Forsyth and Dan Brady of Bloomington agreed. “We certainly have a problem, but we should bring all the parties together and work out a solution,” Mitchell said. […]
State Rep. Adam Brown, R-Decatur, said he would likely oppose the legislation. “The average state worker’s pension in my district is $29,000 a year,” Brown said. “It’s not the extravagant pension that you hear about.”
* And…
One provision that “troubled” Rep. Karen May, D-Highland Park, was that the out-of-pocket payments eventually could go up if workers opt to pay more now in order to maintain their current level of pension benefits when they retire.
In particular, she questioned why the worker payments would be based on a percentage of an employee’s salaries for the first three years and then recalculated every three years. She called the three-year review a “last-minute wrinkle” and voted against the bill in the House Personnel and Pensions Committee.
* TRS agrees with May…
The amounts most state workers, teachers, university employees and legislators would pay to keep their current pension benefits would keep climbing in the future under legislation sent to the floor of the Illinois House on Thursday. […]
“The numbers can only go up. They can’t go down,” said Dick Ingram, executive director of the Teachers’ Retirement System. “How far and how fast will be determined by how many people elect to leave” the first tier of benefits and go to a second, lesser tier or a defined contribution plan similar to a 401(k). […]
TRS opposed the bill partly because it would cap state contributions and tie them to state revenue projections. The measure proposes to revise a 1995 law aimed at getting the five state-funded systems to 90 percent funding by 2045. It ramps up funding in fiscal years 2013 through 2015 in order to ensure the state contributes a level percentage of its tax revenue through 2045.
“Tying funding to state revenue is not a current or common or accepted actuarial practice,” Ingram said. “We have experienced a ramp proposal in the state twice before. It has failed to deliver both times.”
* The Tribune was not impressed with opposing arguments…
We watched Thursday as the reform bill emerged from committee on a 6-2 vote with one member “present.” That tally reflected some courage but also cowardice. One “no” came from Raymond Poe, a Springfield Republican with a history of caving to union pressure. The other came from Karen May, a Highland Park Democrat who fancies herself a pension reformer but who, when confronted with a pension reform bill, also caved.
Then there’s Daniel Biss, a freshman Democrat from Evanston. In blather-rich questions and a pre-vote soliloquy, he illogically twisted his proclaimed belief in free markets into a fear that workers will abandon public employment if their pension plan changes. (Mr. Biss, next time do your homework. Governments have high retention rates because of the job security and benefits they offer to comparatively risk-averse employees. With these reforms, Illinois’ benefits package still would trounce most private-sector packages.)
We zero in on Poe, May and Biss because they represent three clusters of legislators who know the current pension system needs to change but who may not be strong enough to change it: Some downstate Republicans seem terrified by lobbying from teachers groups and others fighting to keep the doomed status quo. Some Chicago-area Democrats posture as pension worriers but in the end abandon taxpayers. And some freshmen of both parties want to be seen — not all of them honestly — as new-style legislators who will rescue state government finances.
* Some other good points were made in opposition…
Ken Swanson, president of the Illinois Education Association, said that since 1990, members of TRS contributed $12.7 billion to the system. “It has been said that 95 percent [of the public] are paying for five percent [of state employees]. It should be remembered that in the 30 some years of periodic underfunding of the pensions, the state has used our pension systems as a credit card. One hundred percent of those 95 percent actually received that benefit because they got more state government services then they were paying for in taxes. So our pension systems have been used as a credit card, and everyone benefited from that,” said Swanson, who added that 97 percent of Illinois students are educated by his members. […]
University of Illinois President Michael Hogan said he would also face problems recruiting employees, and he expects that many of the 20 percent of U of I employees who are eligible for retirement would likely retire to avoid the change. “There’s a high probability if this goes through, they’ll get the hell out as fast as they can.”
Hogan said a reduction in pension benefits would come on the heels of furlough days, which resulted in reduced pay for employees. “ A pension cut like this, a change like this, would amount to another pay cut, and a substantial pay cut.”
* And Henry Bayer took off the gloves…
But a top AFSCME official needled the Civic Committee, which has sponsored an aggressive media campaign seeking public-employee pension givebacks, for attacking modestly paid state retirees when several business leaders on the organization’s board are in line for gold-plated pensions themselves.
The union cited the Civic Committee’s CEO, Abbott Laboratories’ CEO Miles White, who has a retirement package valued at more than $20 million and had total compensation in 2010 of more than $26 million.
“That’s Mr. White, who thinks that a $23,000 pension for state employees is too high. … A state employee would have to live a thousand years to equal Mr. White’s pension,” AFSCME Executive Director Henry Bayer said, prompting laughter within the packed hearing room.
posted by Rich Miller
Friday, May 27, 11 @ 7:34 am
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Since Henry Bayer has challenged the pension reforms because of proponents pay and perk packages what does Mr. Bayer make out of his member dues?
I am sure the AFSCME members would be shocked at how highly paid he and his staff are.
Comment by Cassiopeia Friday, May 27, 11 @ 7:45 am
Maybe so Cassiopeia, but bottomline is mine is still that 23,000 (actually a tad less). With less pension to come, higher contributions while working, and an attempt to attack my HC and premiums (currently and future)…I guess I’ll end up being the oldest employee ever as I won’t be able to leave.
Comment by Cindy Lou Friday, May 27, 11 @ 7:54 am
Cassiopeia, you seem to have an inside line on how much Bayer makes. Do you have the amount? If so, state it. If not, we can safely assume it’s just another unsubstantiated right wing talking point that has no merit.
Comment by PublicServant Friday, May 27, 11 @ 8:00 am
What does the reform bill do to address the persistant problem that got the state into this mess?
How does this reform bill fix the problem of the legislature failing to pay annual money the legislature is supposed to pay over into the system?
Comment by titan Friday, May 27, 11 @ 8:07 am
The SJ_R said Poe had no comments at the hearing cause everyone knows where he stands. What about another solution instead of silence?
Comment by waitress practing politics... Friday, May 27, 11 @ 8:17 am
Simple. The other solution is to pay your bills according to the payback bill by 2045, and quit trying to modify the benefits during the fiscal crisis caused by the banksters who fund the groups trying to leverage this crisis by causing further pain and misery to the people most affected by it’s fallout.
Comment by PublicServant Friday, May 27, 11 @ 8:22 am
Listen folks, I’m about as conservative as they come, and in AFSME as well…I know, seem odd…my pension is being attacked like everyone elses, and I’ve said from the beginning that if BOTH parties would have done their job and followed their own laws, this issue would not have been on the table. Ironically, the only Governor in the past twenty years not to have missed a pension payment is…wait for it…George Ryan. Maybe ole’ George did something right afterall…
Comment by Capt. Illini Friday, May 27, 11 @ 8:25 am
“It has been said that 95 percent [of the public] are paying for five percent [of state employees]. It should be remembered that in the 30 some years of periodic underfunding of the pensions, the state has used our pension systems as a credit card. One hundred percent of those 95 percent actually received that benefit because they got more state government services then they were paying for in taxes. So our pension systems have been used as a credit card, and everyone benefited from that,” said Swanson…
Now it’s time to pay up.
Comment by PublicServant Friday, May 27, 11 @ 8:28 am
Titan,
there’s nothing in the bill to make sure the State pays their share … just more empty promises
Comment by Retired Non-Union Guy Friday, May 27, 11 @ 8:40 am
University of Illinois President Michael Hogan seems rather confused.
In his comments above, he appears to oppose any pension changes. Yet he is on the masthead of the Civic Committee of the Commercial Club, the group that has been spearheading radical changes to pensions and pounding lumps on public employees with radio spots for months.
Perhaps in his teaching life he was a Hegelian philosopher: Thesis, Antithesis, Synthesis.
Or maybe he just needs to pick a lane.
Comment by wordslinger Friday, May 27, 11 @ 8:41 am
The shareholders should take care of CEO pension issues. Illinois taxpayers, shareholders of the state, should take care of the state issues. Nice soundbite, but no logic. That said, if we borrow from pensions by underfunding, we need to pay up and then change the system.
Comment by Alexander cut the knot. Friday, May 27, 11 @ 8:42 am
ACTK, agreed. And the way you do that is change the system all you want for new hires and anyone else that understands what their getting themselves into when they take the job…you don’t change the deal mid stream and pull the rug out of those who’ve been there. Right, wrong or indifferent, the 1970 constitutional language is what it is, and as far as I know, it takes both groups to change a contract…not one with legislative caveat. Where’s Abner Mikva when you need him…
Comment by Capt. Illini Friday, May 27, 11 @ 8:49 am
If there’s no language that forces the state to make their payments, then every 3 years the percentage for the tier 1 will go up. We all know the state will never put in their fair share. So it will have to increase to make up the difference.
Comment by GoFigure Friday, May 27, 11 @ 9:11 am
thre Trib swings wildly with statmnts attacking Poe. He has been a key component to the over 2yrs of review of pensions - a bipart committee. The man knows pensions, running a business and legislation. May has championed tax relief for munis and her reservations should signal true flaws in the proposed reform. Regarding Rep. Biss, this Harvard educated math professor gets it - the Trib staff has to see its fingers to count.
Comment by IL ESQ Friday, May 27, 11 @ 9:12 am
King Henry wants to talk about other pension, What is AFSCME paying out. I remember Gov. Quinn made the statement they he was going to stop, state retirements for Union representatives. They have a real sweet deal! Become a union staff representative after being hired by a state agency. You then work full time for the Union and when you retire your can draw a state pension off what you where paid by the Union!
Comment by Bob Friday, May 27, 11 @ 9:13 am
Republicans in Springfield are being total weenies again. If they can’t even stick together on what should be a natural Republican issue, this all sounds like a waste of time.
You’re not in Wisconsin anymore Toto. Rs and Ds are equally in bed with the unions here.
Comment by just sayin' Friday, May 27, 11 @ 9:22 am
I simply do not know what to say about this. I am simply incensed about this. The legislature takes MY money out of the pension that I’M contributing to pay for their pet projects and in past years balance the budget. THEN, when it all goes south, the legislature expects ME to bail them out. NO.NO..NO!…NO!!
As we all know, according to our State’s constitution, pensions cannot be dimished or impaired for current employees. Period.
“Never a lender nor borrower be”–Polonius, Act I, Scene 3 of William Shakespeare’s Hamlet
Comment by ah-HA Friday, May 27, 11 @ 9:23 am
===The legislature takes MY money out of the pension that I’M contributing to pay for their pet projects===
No, they didn’t.
Comment by Rich Miller Friday, May 27, 11 @ 9:24 am
ah-Ha,
The state constitution also requires a balanced budget…
Comment by Cincinnatus Friday, May 27, 11 @ 9:28 am
===The state constitution also requires a balanced budget… ===
There’s a big loophole…
===Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year..===
So, if the GA says it’s balanced, it’s balanced.
Comment by Rich Miller Friday, May 27, 11 @ 9:32 am
ah-HA,
To be clear, the legislature never took any of the money the SERS employee contributed. In fact, the years the State picked up the SERS employee portion in lieu of a raise, the State always put the employees’ portion in. What the State did not consistently do was put the half the State was supposed to be contributing as the employer’s portion. Sometimes a partial payment was made with State revenues; sometimes a partial payment was made with borrowed funds.
Bottom line: the State didn’t pay what the employer should have paid … and that one of the reasons the pensions are considered underfunded today.
Comment by Retired Non-Union Guy Friday, May 27, 11 @ 9:34 am
===”No, they didn’t.”===
Ok, so explain how we got to the point we’re at then. They skipped pension payments,there’s no denying that. So what did they do with the money when they skipped the payments and passed budgets that were a billion dollars out of whack? Are you telling me that not a single dollar of skipped pension payment money was used for legislator projects? How else would the leaders have got the members to vote for unbalanced budgets than loading the budget with bloat and special “member initiatives”?
Comment by heet101 Friday, May 27, 11 @ 9:35 am
heet101, the accusation was made that the GA had taken employee penstion contributions and spent that cash on pork. That’s completely ludicrous on its face.
Comment by Rich Miller Friday, May 27, 11 @ 9:36 am
If this gets pushed through, the state will need to come up with the money to fund the pensions far quicker than 2045. The current employees if they decide to go to lower tiers, will be contributing 6% or 0% to the current program. The current percentages contributed by active members is equal to the money being paid to current pentioners. Without money coming in, funds will have to be sold and when the funds run out, the state will be paying.
Comment by Anon Friday, May 27, 11 @ 9:39 am
Rich, thanks for pointing that out to Cinci. That argument is getting old.
As for the pension bill, I am concerned about the doubling of my pension contribution, but am even more concerned about the fact that it is going to go up in the future and they can’t tell me to what numbers. How am I supposed to plan? I fully understand the problem but there has got to be a better solution that what is out there now. Maybe we get rid of the Rule of 85. I don’t need to retire when I’m 55. Or set the pension age to 60. Some combination of contribution increase and age increase. This draconian increase is not acceptable, though.
Comment by Demoralized Friday, May 27, 11 @ 9:43 am
Demoralized - Friday, May 27, 11 @ 9:43 am:
Rich, thanks for pointing that out to Cinci. That argument is getting old.
There’s a big loophole…
===Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year..===
So, if the GA says it’s balanced, it’s balanced.
Ah, I stand corrected. The budget for the past couple of years has been balanced. Since the pension obligations are also part of the budget, they too must have been paid.
The constitutional provisions for both a balanced budget and pension obligations are a farce and not worth the toilet paper they’re written on.
Comment by Cincinnatus Friday, May 27, 11 @ 9:49 am
===The constitutional provisions for both a balanced budget and pension obligations are a farce and not worth the toilet paper they’re written on. ===
You are correct about the balanced budget provision. It is meaningless and unenforceable. The pension contract language is pretty darned clear, however…
=== Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which
shall not be diminished or impaired. ===
Comment by Rich Miller Friday, May 27, 11 @ 9:54 am
before they should be able to do this, there should be an iron clad requirement that the state meet its annual contributions. without that, member contributions will continue to rise. at 62 with 22, i am definitely gone 12/31/11.
Comment by wizard Friday, May 27, 11 @ 9:57 am
The high paid CIO’s of the civic committee will make more in one month of retirement than I will in a year. If they get this way through scare tactics of running people against incumbants, then it appears that they will be a MAJOR lobby and will be able to push through any bill they want.
This session it has been the vogue thing to attack state workers. The sad thing is they did not get us in this situation, that blame falls on the Legislative leadership that has been in office entirely too long.
Comment by He Makes Ryan Look Like a Saint Friday, May 27, 11 @ 9:57 am
=== “Tying funding to state revenue is not a current or common or accepted actuarial practice,” ===
This point should really trouble fiscal conservatives.
What the state of Illinois is essentially doing is pulling the bricks out from underneath the pension system.
I have serious doubts that this measure passes the Senate or gets signed by the Governor, even if it passes the House, and that’s probably a good thing.
Because I have no doubt that the measure is unconstitutional owing to the contract clause in the Illinois Constitution.
And that means that any monies unpaid into the pension system as this thing works its way through the courts would simply add to the pile of debt that taxpayers owe the pension system.
Comment by Yellow Dog Democrat Friday, May 27, 11 @ 10:06 am
This bill, if passed and found constitutional, would eventually end defined benefit pensions in Illinois. The increases in contributions are not based on the health of the pension. They would continue to increase as people retired and left Tier 1 until there was no one left in Tier 1.
And the Tribune is really shameless, citing so-called reckless pension giveaways as the cause. The average pension is somewhere around $30k, and most of the affected employees don’t collect social security. Just absolutely shameless on the part of the Tribune and anyone who votes for this bill.
Comment by chi Friday, May 27, 11 @ 10:09 am
Schoenberg has filed Amendment 1 to SB175 to establish retiree premiums for health insurance. Looks to me like it hits a lot more retirees than just the non-Medicare eligible retirees who have other high paying jobs. Is this going to move in the current form?
Comment by BigBob Friday, May 27, 11 @ 10:11 am
–Since the pension obligations are also part of the budget, they too must have been paid.–
That’s correct. Every pension obligation has been paid. No one has missed a payment or even received one late.
There’s no Constitutional requirement to follow a particular actuarial formula. But you will have to honor the contracts. How you get there is the rub.
Comment by wordslinger Friday, May 27, 11 @ 10:16 am
BigBob–
“the benefits of which
shall not be diminished or impaired.”
So, how does Schoenberg reconcile his bill with this?
Comment by Jones Friday, May 27, 11 @ 10:28 am
==This session it has been the vogue thing to attack state workers==
No. State workers are not being attacked (except for the workers’ comp fraud ones).
The union leadership who obviously did not represent you, their members, properly over the years while happily collecting dues and spending union money on their own salaries and perks and on campaigns are being rightfully attacked.
The Illinois elected office holders who obviously have not properly represented us taxpayers for a number of years by ignoring and exacerbating the pension mess while happily collecting their own salaries and perks and running campaigns on “contributions” are being attacked.
It’s time for the regular citizens of Illinois to quit blaming each other and quit threatening each other and settle in to put the blame and demand responsibility for a fix where it belongs: The union bigs and the political bigs.
Comment by Responsa Friday, May 27, 11 @ 10:29 am
Jones,
Unfortunately for retirees there is no guarantee of free healthcare in the constitution.
Comment by Demoralized Friday, May 27, 11 @ 10:41 am
Nope. Don’t roll out the right wing tripe that the pols are in bed with the unions whose contributions pale when compared to the likes of the Koch Bros., R. Eden Martin and their ilk.
Comment by PublicServant Friday, May 27, 11 @ 10:42 am
-union leadership… are being rightfully attacked-
They are? By whom? Most employees of unions are in their respective union’s pension fund. You seem to be the only one attacking union leaders.
How did the union leaders fail their membership? Are their other potential union leaders you feel would have been able to force the state to make their full contribution every year? If so, please let everyone know, because I’m sure there are several unions that would love to hire these people.
Second, what good would placing the blame on political and union leaders do at this stage? There is a bill on the floor that would take away the modest pension benefit of thousands of “regular citizens of Illinois”. The best thing anyone could do would be to ask their legislator to vote against it, rather than “settling in” to place blame.
Comment by chi Friday, May 27, 11 @ 10:55 am
Demoralized —
Is healthcare a benefit (contract) with employee?
Written into law?
The amendment begins “Notwithstanding”. Which means; no matter the previous health care contract with the retiree as provided in this statute… it is now “diminished”
Unconstitutional!
Comment by Jones Friday, May 27, 11 @ 11:01 am
Public Servant– Your generic and all purpose Koch talking point pretends to address the “in bed with” thingie. But what about the incompetence thingie? Is the utter ineffectiveness and abrogation of responsibility by the union leadership AND the politicians from both parties just “right wing tripe”, too? I’m afraid the citizens of Illinois have finally had their eyes opened and do not see it that way.
Comment by Responsa Friday, May 27, 11 @ 11:01 am
Responsa, thanks for asking, and I’m sorry I wasn’t clear. Yes, your entire rant is right-wing tripe. Unless, that is, you’d care to clothe your claims by citing some facts.
Comment by PublicServant Friday, May 27, 11 @ 11:09 am
Contrary to what seems to be the general perception - pensions for Illinois public employees are not some sort of “gift” They are the direct result of decades of contributions by both the workers and their employers. The only party that has failed to fulfill its part of that contract is the state of Illinois. I wonder how the citizens of Illinois who have annuities or 401 Ks would feel if, when they went to collect their benefits upon retirement, were told that due to some poor decision-making, the financial institution found it “inconvenient” to pay them the interest that they owed them…. Although I guess the bank could just call it an interest “holiday” or “furlough” and all would be well.
By the way - public employees are NOT the enemy. If you want to find fault for the current condition of our economy you need to look elsewhere. I don’t think Miss Smith, the local kindergarten teacher, had much to do with it. She was too busy wiping your child’s nose, zipping up his coat, and making sure he got on the bus safely.
Comment by rationalthought Friday, May 27, 11 @ 11:17 am
Quick Question Mr. Miller,
If this bill passes, then we may see a rush of retirements. If so, that means less employees to contribute to pension–which then we would be required to contribute more.
Comment by ah-HA Friday, May 27, 11 @ 11:20 am
Unbelieveable the Trib blasts Biss for asking questions. Yeah, that’s just illinois needs. More legislators who blindly follow the leadership without applying their own thought or asking questions. That’s worked out well for us so far.
Comment by Jojo Friday, May 27, 11 @ 11:21 am
The pensions of anyone making over $200,000 could be taxed to fund public employees pensions. I suggest a tax of 90% for pensions over that amount.
Comment by Tax Pensions over $200K Friday, May 27, 11 @ 11:27 am
==Unless, that is, you’d care to clothe your claims by citing some facts.==
Actually, I was using as reference your
own 8:28 post in which the claim is made that periodic underfunding of pensions has been going on for thirty years. That sure seems to point to either/both incompetence or willful negligence. Thirty years is longer than many current state employees have even worked for the state. And longer than many taxpayers have lived in Illinois or even been alive. Whatever.
Comment by Responsa Friday, May 27, 11 @ 11:36 am
Thanks for the suggestion. Go lobby your state reps for that, and see how many seconds it takes for you to get laughed out of their office.
Comment by PublicServant Friday, May 27, 11 @ 11:37 am
The Civic Committee of the Commercial Club of Chicago has led the charge to change the way our hard-working civil servants earn their pensions, despite the fact that any prospective change is unconstitutional. It is just plain wrong to break promises made to our pensioners for a lifetime of hard work and service to the people of the State of Illinois. As we all know and as has been admitted by our elected officials, the mess we find ourselves in is in no way the fault of the people receiving their modest pensions. Quite the contrary, the people who live in their mansions and work in dark boardrooms of corporate offices across this state and the ones who supported people like Ryan and Blagojevich are the ones who caused this deficit, not the public servants. Not one payment into the various pension funds has ever been missed by the employees of the State of Illinois. It is the men and women of the Civic Committee and the people they backed with their millions of dollars who caused this fiasco. And they want to take our pensions away?
Just who is on the noble sounding Civic Committee?
Miles White, who is the Chairman of the Civic Committee, is the Chairman and CEO of Abbot Labs. This man, who by and large sets their agenda, earned almost $30 million last year. See: http://www.chicagobreakingbusiness.com/business/ct-biz-10-million-ceos-2011,0,717542.photogallery
This fat cat wants to take away our modest pensions. How did he earn so much last year? Beats me! Abbot Labs’ profit fell 19.48%, while Abbot stock fell 8.3%. He wants to tell the State of Illinois how to get our house in order?
Other key members of the Civic Committee, all of whom earned over $10 million last year:
• Gregory Case, President and CEO of Aon…Aon’s net profits fell 5% last year!
• W. James McNerney, President and CEO of Boeing…Boeing’s revenue fell 5.82% last year!
• Irene Rosenfeld, Chairman and CEO of Kraft Foods
• Gregory Q. Brown, President and CEO of Motorola…Motorola just negotiated millions in concessions from the State of Illinois to stay headquartered here…money the citizens of this state will need to pay…Mr. Brown made over $13 million last year!
• Frederick H. Waddell, Chairman, President and CEO of Northern Trust…he has the gall to try to take away our pensions while Northern Trust received $1.6 billion in federal bailout money!
• Robert L. Parkinson, Chairman and CEO of Baxter Labs…Baxter’s profits fell 35.6% and Baxter shares fell 11.56% last year!
There are many others on the Civic Committee who are trying to convince the governor and General Assembly to wreck our pension system. The complete list is here:
http://www.civiccommittee.org/members/index.html
Not one of these silver-spooned people have ever put out a fire, kept our streets safe, taught schoolchildren or helped the sick. These are the people who want to take away our hard-earned modest pensions. Tell your elected officials that these fat cats don’t speak for you or for the citizens of the State of Illinois.
Comment by teacher & learner Friday, May 27, 11 @ 11:42 am
—-Actually, I was using as reference your
own 8:28 post in which the claim is made that periodic underfunding of pensions has been going on for thirty years —
I started teaching in 1972. I also joined in a lobbying trip to Springfield that year. The topic of the day? Underfunding of the state retirement system.
Comment by rationalthought Friday, May 27, 11 @ 11:43 am
Responsa, that post references the fact the the state has shorted their portion of the pension payment for decades while they were providing services that you either directly, or indirectly benefitted from without paying for them. You seem to think that anything short of the union telling the legislature to jump, and them asking how high, is “incompetance and willful negligence” on the part of union leaders. (1) that’s ridiculous on its face, and (2) maybe it was the Koch Brothers calling the reps, like they did their puppet, Scott Walker in Wisconsin, and telling them to disregard the fervent pleas of the diligent union leadership.
Comment by PublicServant Friday, May 27, 11 @ 11:46 am
The hypocrisy of the bankrupt Chicago Tribune knows no limits.
The accuse Poe of caving in to unions when he is representing the residents of his district- a huge collection of both union and non-union state employees.
The Trib, like the Republican party, will never rest until there is no retirement except for the wealthy, and people work at crummy jobs until they die. Once they kill of the pensions they will kill off Social Security. Their vision for our country is simply shameful.
Comment by DuPage Dave Friday, May 27, 11 @ 11:49 am
If I correctly understand what I’ve read about this new plan, in at least one of the systems employees will shortly be contributing in excess of normal cost. It’s really disingenuous to call that a pension plan, it’s a savings plan.
Comment by steve schnorf Friday, May 27, 11 @ 11:58 am
Steve, that’s an interesting point. Do you think the feds might step in and say this isn’t a pension, and instruct the state to start making FICA payments?
Comment by PublicServant Friday, May 27, 11 @ 12:02 pm
The Chicago Tribune’s bankruptcy and ex-frat house management has drained its increasingly shrill editorials of much of their earlier credibility in Springfield.
It’s just trying to staunch the circulation fall-off and snarf up subscriptions from the suburban Tea Party wackos.
Comment by King Louis XVI Friday, May 27, 11 @ 12:11 pm
PS, my guess is Tom Cross has drafted really carefully to avoid any such problems. Actually, I guess it’s sort of a savings plan with a lug off the top to help pay for the unfunded liability.
Comment by steve schnorf Friday, May 27, 11 @ 12:11 pm
Slowly but surely, private sector voters are understanding the core issues involving guaranteed pension payments, COLAs and the early retirements already in the pipe. They also are beginning to understand this Springfield side-show doesn’t involve local gov unit pensions. And they are starting to boil when they understand what they have for retirement and what their taxes are funding. It’s unfortunate that Springfield is considering minor changes. With some luck and plenty of union contributions, the issue will fail and continue to expand like a leprosy infected limb until it bursts and destroys itself for good. This issue must involve current and future retirees. And if you polyannas out there have some sort of problem with breach of contract, I suggest you review some law books on fraud and collusion (between the unions and legislators) as defenses, which would probably result in nullification of the pension contracts in the real world. but this isn’t the real world: it’s Illinois. And the pension hungry judges in Illinois will probably hear any law suits, and they will vote their totally conflicted self interest to favor pension recipients. At least the spat is public so prospective employers know better than to enter this vortex of self-dealing, irrationality, greed and simple-mindedness.
Comment by Cook County Commoner Friday, May 27, 11 @ 12:23 pm
Is that you Mr. Koch?
Comment by PublicServant Friday, May 27, 11 @ 12:34 pm
–With some luck and plenty of union contributions, the issue will fail and continue to expand like a leprosy infected limb until it bursts and destroys itself for good.–
Cheery thought. But I don’t think leprosy infected limbs burst, like the bad guys in the Indiana Jones movies. I think they just atrophy.
–At least the spat is public so prospective employers know better than to enter this vortex of self-dealing, irrationality, greed and simple-mindedness.–
I don’t know. As was pointed out earlier, a lot of the Civic Committee members earn north of $10 million a year in this vortex, so they probably don’t think Illinois is all that bad. Especially when the state has shelled out $230 million so far this year in corporate tax breaks.
Comment by wordslinger Friday, May 27, 11 @ 12:37 pm
Everyone needs to get into the action. Yes, to get our pensions state workers have to make up much of the money not paid by the State in the past. Yet, no law that does not force the State to pay their share will solve this problem, because with increased worker contributions the State has more money to steal. What if a small bussiness did this, are there laws to make them pay, then there needs to be a law to make the State pay.
Comment by Doc Friday, May 27, 11 @ 12:46 pm
If passed this bill will wipe out the pension funds entirely, and soon.
Assume 10 to 20% of participants leave each tier now rather than pay double their current contribution. Add 3% turnover in each of the next three years. At the time of the first triennial readjustment, that means 19 to 29% fewer actives paying in than today, forcing employee contributions up at least that amount again, causing more people to leave. And so on. In very short order, nobody is left in the systems and they collapse.
Let’s be clear, this is a bill to destroy the pension funds, period.
Comment by Reality Check Friday, May 27, 11 @ 1:03 pm
So lets see if I am getting the arguments right here…
– The Civic Federation is filled with rich guys so therefore they should be ignored.
– It’s the Koch Brothers. (Who I suspect are used in campfire tales to scare liberal Children) so therefore any changes suggested to the system are invalid on the their face.
– The Tribune is a bunch of hypocrites so therefore they must be ignored as well. (Can I remember this one next time the endorse a Democrat?)
– Union leaders are highly paid fat cats so therefore they should be ignored as well.
– How can you even think about touching the benefits of those hard working teachers and firefighters (please ignore the 300K a year assistant school superintendent please)
– Rich people are bad.
Did I miss anything?
Comment by OneMan Friday, May 27, 11 @ 1:13 pm
But I pose two somewhat serious questions to all of those who are against this in any way shape or form.
1) Is there in fact a problem?
2) If there is a problem, how do we fix it?
Comment by OneMan Friday, May 27, 11 @ 1:15 pm
The business about employees paying more than normal cost is from TRS’s last actuarial report and is predicted for about 2036 if all the assumptions hold.
And actually the Constitutional provision is not as clear as some of you think. I predict that before this is all over the Supremes will have to decide how to interpret the word “benefits.” Does it mean the annuity earned by and paid to a retiree, or a more expansive interpretation that really means “net effect” that would bring employee contributions under it. Yeah, annuities cannot be touched, but can employee contibutions be raised, and if so, what is reasonable? That will be one of the nubs of the litigation if SB0512 passes–and that it will be impossible to calculate the annuities for some people and therefore they cannot be forced to choose a benefit package.
Comment by Marty Friday, May 27, 11 @ 1:16 pm
@CCC
We pay the same taxes as you my friend what’s your point? Plus I actually contribute to my pension and have done so for years without skipping the payment.
Your over the top rhetoric is tiring. What other civic committee talking points do you have ?
Comment by Farker Friday, May 27, 11 @ 1:18 pm
Well farker, I guess I have a question. What political price has your union (if you are a member of one) made any elected official pay for not making the state contribution?
Has support been withheld? Has the union targeted someone for defeat because the payment was not made?
Comment by OneMan Friday, May 27, 11 @ 1:20 pm
@ OneMan
1. there is a problem - the GA consistently fails to pay its “required” portion of the workers pension obligations.
2. the solution would have to invovle preventing the GA from such failures in the future, and to find a way to make up the past shortfalls.
If the bill is the model for how this is to work, there should be added to it a provision that the employees fund all of the pension (and give them an accross the board 6% raise so as to fund the shift of the GA portion to the employees).
Comment by titan Friday, May 27, 11 @ 1:26 pm
titan –
Thank you
Anyone else?
Comment by OneMan Friday, May 27, 11 @ 1:31 pm
I’m a non union university employee for the record.
And yes I’m enjoying a long weekend with vacation time.
As far as solutions to the shortfalls we could always revise the tax structure that allows me and a millionaire to pay the same rate on income. How about taxing services?
Hard choices but hey were taxed too much already right? So let’s balance the shortfall on every employees back that never took a pension “holiday”.
Comment by Farker Friday, May 27, 11 @ 1:35 pm
Some have touched on the members of the Civic Committee, no one has touched on Jefrey Smisek, who helped fly United Airlines into hock and then dumped their pension fund into a federal program so taxpayers can foot the bill.
We are not sure these are teh “reformers” leaders we should heed!
Comment by CircularFiringSquad Friday, May 27, 11 @ 1:37 pm
@OneMan -
I’d say that unions have done a great job of holding lawmakers accountable for skipping pension payments so they can fund popular programs like education.
Just as the business community has done a wonderful job of holding lawmakers accountable for skipping pension payments and delaying paying our other bills so that we could avoid or ameliorate a tax increase.
Comment by Yellow Dog Democrat Friday, May 27, 11 @ 1:39 pm
This is another major step of corporate American (Civic Federation is a prime example) destroying the pension system. They have destroyed many pensions in the private sector, and now their focus is the public sector. However, corporate America’s salaries and other benefits continue to increase. No other country pays their executive’s as the U.S. does. The differences in the salaries of the workers and the executives continues to widen. This bill is the start of the end of the pension system in Illinois.
Perhaps they should focus on retired members of the General Assembly from not taking more than one pension from the State of Illinois. Does this bill stop members of the General Assembly from becoming state agency Directors and then being able to receive a full pension after one paycheck?
Comment by So Blue Democrat Friday, May 27, 11 @ 1:49 pm
YDD –
Wow, great way to avoid my question. Yeah we get it, business and rich guys are bad, pure evil…
The difference is avoiding a pension payment has an impact on state workers that is likely negative.
Business isn’t impacted the same way by skipping the payments.
Just like I am not impacted the same way when the payments are skipped as the folks who may receive a state pension (Full disclosure I have about $125 in the SURS from when I taught at the local CC).
It’s the same reason I give to a group that lobbies for nurse practioners but not to a group that lobbies for doctors (different interests and the NP group matches the interests of my family more closely)
Comment by OneMan Friday, May 27, 11 @ 2:06 pm
Sen Schoenberg - Does the increase in health care premiums apply to all, including Teachers, legislatures, and judges? I know they have to be non-union for it to apply.
When you negotiate with the union in two years what will the state give them for an agreement. I will tell you what the state will give them.. more compensation in the future to make up up for the HC increase. WOULD IT NOT BE MORE FAIR TO WAIT AND SEE WHAT THE FINAL AGREEMENT IS AND APPLY IT TO ALL? THIS IS SO WRONG!
Comment by Wilson Friday, May 27, 11 @ 2:13 pm
Can anyone explain to me why elected officials should get pensions at all? That is supposed to be a period of public service within a longer career. If someone chooses to make it their life’s work they should have to deal with all the consequences.
Being an elected official isn’t a career or occupation, it’s a job title.
Comment by Marty Friday, May 27, 11 @ 2:14 pm
–And for most legislators, it’s part-time.
Comment by Marty Friday, May 27, 11 @ 2:14 pm
===Being an elected official isn’t a career or occupation, it’s a job title. ===
Yeah, OK. Enough with the bumper sticker slogans, please.
Comment by Rich Miller Friday, May 27, 11 @ 2:18 pm
Well Blue in some ways thanks to the nature of my work life I am kind of glad big corporations are destroying the pension system in the private sector.
Why?
Well in the 20 years I have been out of school I have worked for two entities (only one full time) that had any sort of ‘classic’ pension system.
The local community college where I have a small amount in SURS (less than $300 I think) and one employer who put money into an account based off of age and years of service and a bit more if you were at the max pay that is taxed for social security. But that plan did not have a defined long term benefit just a lump some waiting at the end.
All of them however had 401K plans, so I have had the flexibility to change jobs and employers without having to worry about losing anything besides some company match that had not vested.
In those 20 years, I have seen three employers go out of business and another 2 get acquired by other companies (I am the angle of death in some ways).
So in a traditional pension world at most I would have been vested at one or perhaps two employers.
Back in the day when you worked for one company your entire life pensions were a good idea. But now sadly perhaps those days are gone.
I think of the guys I graduated with (I was a comp sci major) only two of them work for the same company the started with out of school.
So in terms of me (at the end of the day the filter that virtually everyone look at things in terms of) the 401K system works better.
Comment by OneMan Friday, May 27, 11 @ 2:32 pm
@OneMan -
I disagree. Union members are impacted EXACTLY the same as the business lobby is by skipping pension payments — only indirectly.
The state has a Constitutional obligation to pay retired workers their benefits, and despite all the skipped pension contributions, the state has never failed to mail a pension check.
Of course, someday the taxpayers — which includes union members AND businesses, will have to pay the piper.
Comment by Yellow Dog Democrat Friday, May 27, 11 @ 2:32 pm
The union leaders and pension funds know where the abuses are and can propose meaningful legislation.
What drives me nuts is most teachers and administrators get one of two perks, or both.
1. 6% end of career annual salary increases, for each of their last 4 years, for a 24% raise over 4 years.
2. The Board pays some or all of the employees pension contribution to the TRS pension fund.
And sick bank cash out, whereas the employee exchanges sick days for cash and that goes into spiking the pension.
The pensions should be defined contribution not defined benefit, as private industry and Federal Government largely converted to 20 years ago.
Comment by Mark Friday, May 27, 11 @ 2:34 pm
I foregot to mention the 3% annual cost of living increase that everyone with a State of IL pension receives.
Comment by Mark Friday, May 27, 11 @ 2:39 pm
@YDD —
A direct and indirect impact are not the same by there very nature. That is why ComEd would lobby on an environmental issue differently that an entity that will end up paying more for power. But whatever.
I am not defending business, I just don’t get why unions (which I don’t have a problem with) haven’t been more pro-active on this in the past and used their leverage with the majority party in this state to make something happen.
Why not instead of getting that pay increase out of Governor Quinn (one union who made concessions) demand/negotiate the pension payment?
@farker
Well dude, you remember that little thing about a year ago for a constitutional convention that the unions were all against. That would have been a great chance make the changes necessary to allow a graduated tax. Well that didn’t happen.
Also why do I suspect you would expect your rate to remain the same but those who make more than you pay a higher rate?
If so I have a tax plan you will love the TOP plan (Tax on Other People)
http://htsblog.blogspot.com/2007/10/i-think-i-have-solution-for-tax-issues.html
Comment by OneMan Friday, May 27, 11 @ 2:41 pm
I also foregot to mention another point. The State of IL contributed to the problem by making late payments, we all know that. What’s not as well known is sometimes union lobbyists would lobby to allocate funds to the current General Fund (thereby increasing salaries) instead of pensions. You see, the Governor allocated a certain amount of money to education and pensions was in that pot.
Knowing full well the Pension Protection Clause (Article X111, Section 4) in the Illinois Constitution guaranteed the pensions would some day be paid, even if the annual pension plan payment wasn’t made.
There is not unlimited money folks. You cannot endlessly increase taxes or issue bonds. Money going to pensions, is not available for taking care of the elderly, other social programs, education, paying vendors, etc.
Each individual’s pension is unique. Some are reasonable, many are not.
Most middle and upper middle class suburban Chicago teachers who have started teaching within last 20 years. Start at 22, teacher 35 years, retire at 57 with $100,000 salary, receive $75,000 annual pension for the rest of your life. That’s $1.5 Million pension over 20 years, plus 3% annual cost of living increase.
The Board most likely either gave the employee their 6% annual increase each of the last 4 years of their career, or paid some or all of the employees 9.4% pension payment.
How much money did the employee actually pay into the TRS pension plan to receive that $1.5 Million pension?
The State of IL’s “fair share” payment which has often been late, is an additional payment by the State to the pension plan, over and above the employees 9.4% and employers .58%. Why? Whate if school districts paid into pension plan instead of the State. The School District is the employer, not the State. Most School Districts better manage their finances than the State.
These juicy pensions are only able to perpetuate because the State of IL is supposed to magically have enough money to contribute to them. The fact is due to the nature of the way the pensions are designed, the State never has had the money, and never will have it.
Keeping in mind some pensions are reasonable. Most are not.
Comment by Mark Friday, May 27, 11 @ 3:04 pm
@oneman
First as I stated earlier I’m not in a union man
Second I support a graduated tax that’s why I mentioned it. You asked for suggestions and assumed I wouldn’t reply. And as far as your assumption that I wouldn’t want or have to pay more your wrong again my friend. However yes millionaires should pay more than someone who is in the middle class. I realize that nothing is free but back to my point balancing the shortfall on state employees backs who have never taken a pension holiday is downright wrong and in several legal opinions unconstitutional.
Comment by Farker Friday, May 27, 11 @ 3:05 pm
One Man,
401k are also becoming a part of the past. Many companies have eliminated this benefit in the private sectors especially at the beginning of the present recession. The attack against benefits on all workers including those in the private sector is just starting. The middle class continues to decline. This is major element of the Ayn Rand philosophy that workers are parasites except for upper management. The Pauls and Ryans of the world believe all concepts in her very elementary but troubling philosophy.
Comment by So Blue Democrat Friday, May 27, 11 @ 3:15 pm
The public sector union folks whose pensions are guaranteed under the Pension Protection Clause, and whose leaders don’t bother to fix the system.
You expect taxpayers whose social security does not have a pension protection clause and whose benefits will likely be reduced and/or retirement age increased, to pay for your retirement.
You expect the State to raise taxes, issue bonds, reduce other services, come up with fees, or sell assets, so you can have your pensions.
Your union leaders are only telling you one side of the story. They are leaving out many key elements.
And the most key element, were these pensions ever sustainable from day one.
Let’s create an unsustainable pension that can be padded and spiked and guarantee it under the Illinois Constitution, and toss in annual increases.
Increases, padding, and spiking are legal.
But after we increase, pad, and spike it, we can’t fix it, because diminishing and impairing is illegal.
Who’s the servant in that scenario?
Comment by Mark Friday, May 27, 11 @ 3:27 pm
The pension systems are quite sustainable and would be 100% funded had the state paid its share each year. Instead the state paid for services for citizens like you Mark who have been living off state employees for decades without paying what the services you receive actually cost. You and your employers spent the state employees’ money and now its time to pony up. I can understand why you don’t want to pay. Too bad. Its time to pony up, dude.
Comment by Bill Friday, May 27, 11 @ 3:59 pm
“Were these pensions ever sustainable from day one?”
Yes, I believe they WERE sustainable many years ago, only in recent years have they become unsustainable for various reasons:
1. They were sustainable back in the days when most middle-class people worked for one company (or for one government agency) for the majority of their adult lives and paid into the system all that time.
2. They were sustainable back in the days when people didn’t live quite as long and had more children than they do now. The parents of the Baby Boomers got the most benefit; it’s the generations following the Baby Boom that are getting the short end of the stick.
3. They WOULD be sustainable today if the State had contributed its share like it was supposed to. All those missed pension payments from the last 20-30 years could have generated a lot of interest and we would not have had so far to fall during the recent recession.
4. They would be sustainable if the Ill. Supreme Court hadn’t made that hare brained decision back in the 1970s saying that the Constitituion only required that benefits be paid, but NOT that they be funded.
Comment by Secret Square Friday, May 27, 11 @ 4:00 pm
===Yes, I believe they WERE sustainable many years ago, only in recent years have they become unsustainable for various reasons: ===
Fiscal Year 1950, TRS had a 67 percent unfunded liability.
The whole reason for the constitutional language was precisely because the funds were so chronically underfunded.
Comment by Rich Miller Friday, May 27, 11 @ 4:08 pm
@farker…
I have to be honest I prefer the flat tax system this state has, which does result in me paying more than others (since I make more) I never quite understood the logic of you make more so therefore we are going to take a higher percentage.
The basic problem I have with increased taxes in this state is that government has demonstrated over and over again that it isn’t going to use them wisely. Solve that problem, go ahead and raise my taxes
Comment by OneMan Friday, May 27, 11 @ 4:12 pm
Fair enough
But none of that matters at the moment. What does matter is fixing the issue without some sky is falling tactic by millionaire republicans who for whatever reason hate state employees and the middle class in general
Comment by Farker Friday, May 27, 11 @ 4:21 pm
The Chicago Tribune remains the tool and voice of certain parties whose motives in the pension mess are not very clear. In any case, the Tribune has never been very clear, with an obvious purpose, on 1. what Illinois legislators did to compromise the pension system 2. who is obliged to pay what
3. what the State owes the pension system 4. what any current legislation will do to the Illinois budget and education in general in the State. There is never the whole story from the Tribune. Every article on the pension fund remains an editorial. Why?
Comment by OttotheScourge Friday, May 27, 11 @ 4:22 pm
One solution to fix the pension debacle is to enact term limits
Comment by Rick Friday, May 27, 11 @ 4:24 pm
@OneMan ==The difference is avoiding a pension payment has an impact on state workers that is likely negative.
Business isn’t impacted the same way by skipping the payments.==
Just the opposite. The state workers’ rights to their pensions is contractual and buttressed by the federal and state constitutions. Failure to fund the pension fund doesn’t affect them at all unless and until the state so bankrupts itself that it cannot fulfill its obligations. On the other hand, businesses (as taxpayers) suffer directly when the General Assembly decides not to put aside $1 today in an income-earning pension fund that will turn into $2 by the time it is needed. Failure to do the funding means the taxpayers must pay twice as much in that situation, and they will pay federal tax on the earnings they will need to come up with that extra money.
Comment by Pat Robertson Friday, May 27, 11 @ 4:32 pm
OK, Rich, no slogans, just tell me why a part-time job for someone who already has a middle- or upper class income rates a pension. I know nothing’s gonna change, but give me a rationale that’s not laughable, other than just “they do it because they can.”
Comment by Marty Friday, May 27, 11 @ 4:33 pm
Since none of its proponents in this thread have disputed my explanation at 1:03 that SB512 will actually destroy the retirement systems, I can only conclude they agree.
I guess they must think that’s a good thing. It would be nice if they were honest and said so.
Comment by Reality Check Friday, May 27, 11 @ 4:36 pm
RC, Sorry. I agree. SB512 would destroy the retirement system if it were legal, but it’s not.
And, if it were legal, it would be a bad thing, because it would do exactly that.
Comment by PublicServant Friday, May 27, 11 @ 5:02 pm
The states share is the key isn’t it?
It includes funds needed because the pension is underfunded because of salary spiking, sick bank cash in, and other schemes.
Teachers in many districts forever have been receiving large end of career salary increases because the State, not the District, would pick up the underfunded pension. Used to be 20%, now it’s 6%.
TRS was never sustainable. The salary and pension spiking in that system is legendary.
Well yes it was sustainable if you get the taxpayers to pay for the salary and pension spiking. Which is done by asking the state to contribute it’s fair share. Which includes funds needed because of the salary and pension spiking.
Comment by Mark Friday, May 27, 11 @ 5:14 pm
There is no possible way for the State to solely tax, borrow, or cut other programs, to solve the unfunded pension liability scenario.
Legislation will be passed, the Constitution amended, and/or Union Concessions will occur.
Anyone who thinks otherwise simply does not understand the economics of the State, the State Budget, and finances of the Pension Funds.
Quinn’s Budget Director will tell you the same thing.
Anyone knowledgeable about the situation, and there are more everyday, will tell you the same thing.
Everyone will take a hit.
I think your Union leaders did not try hard enough (they did try some) to solve the underlying problems. Instead they went after juicy perks for union members at the expense of pension sustainability.
These are very smart and talented people for the most part, they just got too greedy.
However there is no excuse for Union Leaders to not educate their members better on the problems I have mentioned in these pension funds. Glossing over those problems helps no one.
I would pick up the phone and call your union leader and ask him about the problems I have outlined.
Comment by Mark Friday, May 27, 11 @ 5:32 pm
I’ve said it before and I’ll say it again: The State can pass a tax dedicated to paying off the past pension shortfalls; the Legislature doesn’t have the will power to do so. But that is what the Legislature will end up doing once the current proposals are ruled unconstitutional and the legislature has someone else (judges) to blame for the tax increase. You’ll hear a lot of “we’ve been to court, our hands are tied, we have to raise taxes”.
Either that or someone will figure a way to get an Illinois pension case into a Federal court, The feds don’t want to go near this one if they can avoid it so it won’t be easy to get to Federal court. About the only way would be for the State to actually miss a pension payment to retirees. If it gets into Federal court, contract law and the fact state’s can’t declare bankruptcy will apply, and the conclusion is crystal clear. A Federal judge will order the State to fulfill their contractual obligations … and, if the State doesn’t take any action, may eventually go so far as to issue an order that the payments *must* be made each year (that would actually put teeth into the State “law” that pensions must the first thing be paid out of GRF every year).
We’ll know in about 5 - 10 years when the court cases get decided ..
Comment by Retired Non-Union Guy Friday, May 27, 11 @ 5:53 pm
Rich, I am still trying to understand SB175A1 establishing retiree premiums for health coverage. When are we going to see some good detail on where this is actually going?
I don’t see anything that differentiates medicare and non-medicare retirees. Would medicare retirees have to pay a Medicare Part B premium to the Feds and a premium to the State that is the same as paid by non-medicare retirees.
It reads like only retiree pension income will be used as the basis for determining household income. How does that address the issue of retirees making big money in other jobs while receiving a State pension.
Why a rate based on household retirement income rather than an individual rate for each individual based on their individual retirement income. Is it because household income will make married retirees each pay a higher percentage rate than a single retiree receiving the same pension amount? How about a retiree with a spouse making big bucks in a non-state related job or pension?
The progression of household income and percent of applicable rate for the various point levels look weird.
Regardless of whether you agree or disagree with the intent, this just seems like a poorly drafted bill to me.
Comment by BigBob Friday, May 27, 11 @ 5:57 pm
So Rich,
if the GA estimates the accounts receivable to be say a trillion dollars for 2012 we will be running a surplus. Until the actual bills come do and the money isn’t there.
Comment by Fed up Friday, May 27, 11 @ 6:02 pm
- BigBob -
As someone who knows labor negotiations… you need to wonder why labor is letting this go thru without much of a kickback. They understand that in two years when their contract is up they will be able to negotiate; maybe arbitrate a much better deal than what non-union retirees are getting today. There will end up being a two tier system with non-union retirees paying a much larger premium than union retirees. Same old song that has went on for two administrations. I hope Sen Schoenberg just doesn’t have enough experience to understand this… because if he does and still pushes this… it’s just wrong!
Comment by Labor Friday, May 27, 11 @ 6:10 pm
- The State can pass a tax dedicated to paying off the past pension shortfalls -
Technically the State can do that.
Realistically they cannot.
Who is going to pay the tax?
Businesses will leave.
Every large business will ask Quinn for a tax break.
Residents will leave.
Talk to your union leader and ask them, What tax rate would be required for the state to pass a tax dedicated to paying off the past pension shortfalls.
You cannot solely tax or issue bonds to get out of this situation.
There is a huge wave of new high cost pensions coming through. Just in my district alone, 3 administrators retiring each with over $100,000 pensions. That money will be spent on their retirements, not on educating students. They all received 6% increases, each of the last 4 years of their career. It’s mind boggling. Ask your pension fund for the number of people in your pension plan that will be retiring this year. Not just the total number of people and the total value of their pensions. Start digging into it some more.
This fuzzy “the average pension”. What does that include? People who worked for only a few years? “Average Pension” is misleading. How about the average pension of a worker who worked 35 years and retired in 2011. Ditto for 30 years. Ditto for 25 years. Etc. Now that is a meaningful number.
Comment by Mark Friday, May 27, 11 @ 6:11 pm
And a little off track, but let me add that our district had to lay off teachers supposedly because there was enough budget money. What they didn’t tell residents is the union refused to renegotiate their contract and give up perks such as the 6% end of career salary increase.
But that falls right back into the pension. Those 6% increases, increased their pension. So we layed off teachers but padded pensions. Crazy. That is just one example. There are many golden parachute compensation examples that increase pensions.
Comment by Mark Friday, May 27, 11 @ 6:53 pm
Mark:
state employee with the mean salary in an agency with lots of professionals would get $40915 per year pension after 35 years and after 25 years $29,225 per year. These are employees that also pay into SS so they are on the 1.67 formula.
Teachers without SS mean salary downstate large district $30,250 at 25 years and $40350 35 years.
The data is online to make these calculations.
Comment by mushroom in the dark Friday, May 27, 11 @ 7:26 pm
That is median salary not mean in above post. Also the dollar figures are the pension amount.
Comment by mushroom in the dark Friday, May 27, 11 @ 7:40 pm
Thanks for info.
SERS employees thus also draw social security?
I am in suburban Chicago. It seems any district outside Chicago is labeled “downstate”.
Our district produced numerous pensions over $40,350. I will have to look into this.
Comment by Mark Friday, May 27, 11 @ 7:41 pm
Also, if you have it, the URL for the figures and online calculations would be appreciated.
Comment by Mark Friday, May 27, 11 @ 7:45 pm
“SERS employees thus also draw social security?” Yes and they pay into FICA like everyone else.
State employees with SS formula is 1.67 % times years of service * compensation.
Those state employees without SS is 2.2% times years of service * compensation, same as teachers.
Go to any of the many online databases of state employees and teachers salaries and find find the median salary and apply these formulas.
I also used 2010 wages rounded up, when actually that compensation is based on highest 4 years in last 10 years for state employees and something like that for teachers. I am not looking it up.
Comment by mushroom in the dark Friday, May 27, 11 @ 8:12 pm
AFSME and SEUI should be calling for boycotts of any business that participates in the Chicago Civic Committee. If a union member buys from one of those businesses, then they are only contributing to the pensions of the people that want to take thier pensions away. If everyone eligible for a pension would stop buying at Sears, Jewel, Walgreens, or any of the others that might at least make a small dent in their profits. I mean screw making phone calls, hit them where it hurts, their wallets.
Comment by Jack Friday, May 27, 11 @ 8:31 pm
Jack, you’re suggesting that a union call for a boycott of a company whose employees belong to another union and receive benefits from that company? Isn’t there supposed to be some sort of etiquette about such things?
Comment by Responsa Friday, May 27, 11 @ 8:47 pm
BigBob,
Like you, I’m trying to make sense of SB175A1. It clearly hits *any* household with a retiree receiving more than $30,000 in pension payments. It doesn’t distinguish between government pension income and private sector pension income; it doesn’t define whether it is gross or net income.
Aside from the language being somewhat unclear, there is a really big question about how the 2002 ERI people will be treated; it’s not addressed in the definitions. Will the age used be the actual age or the ERI credited age (+5 years)? Will the service be the actual service time or included the additional purchased service time (+5 years plus credit for accrued sick & vacation), all of which we paid for at the normal retirement rate? That will make a difference, in my case, of 11 points under the calculation (81 or 86 or 91/92). If I was guessing, it will be actual age and all the time (which puts me at 86/87). How do they reconcile that with the free health insurance with 20 years service language that was left in the bill? I know they say “notwithstanding …” but they don’t use the language other bills have used to explicitly revoke / remove / replace conflicting provisions.
I agree that it looks like poorly crafted language and may bring a court challenge if passed in this form.
Comment by Retired Non-Union Guy Friday, May 27, 11 @ 10:42 pm
A court challenge passed in any form. It is not only unfair, but is unconstitutional!
Comment by Labor Friday, May 27, 11 @ 11:16 pm
re SB175A1: There is another problem. The effective date is Jan 1, 2012. But retirees have to choose a health care plan now without knowing what the future cost will be. Is the State going to offer a second open enrollment period in December to let us change plans? Or are we locked in to what we choose now w/o knowing the cost?
Comment by Retired Non-Union Guy Saturday, May 28, 11 @ 7:41 am
re SB175A1: what Po’s me the most about this bill is the fact the State took Obamacare money that was explicitly defined as being help for paying for early retiree health insurance … where did that money go, GRF to pay for more pork?
Comment by Retired Non-Union Guy Saturday, May 28, 11 @ 7:49 am
Responda, etiquette? You have to be kidding.
Besides I have never heard of Mc Donald’s, Allstate, or JP Morgan/Chase being unionized. If if they were, there should be solidarity.
There are many alternatives to the companies that the Chicago Civic Committe represents and the unions should be pushing that.
Comment by Jack Saturday, May 28, 11 @ 8:16 am
I keep rereading SB175 (now A2 apparently) and different portions keeps striking me as very poorly worded.
From the bill:
“Upon the expiration of any collective bargaining agreement in effect on the effective date of this amendatory Act of the 97th General Assembly, the Director may alter the schedule above to ensure that 49% of the costs associated with the basic program of group health benefits are covered by retired employees, annuitants, and survivors.”
If you were to take it literally as written, it says that, after the union contracts expire, retirees will have to pay 49% of *all* the cost of group health care for the *whole* group health program, which includes not only retirees but also current employees and dependents. I don’t know if that is what they were trying to say when drafting it … but that is the way I read it.
Comment by Retired Non-Union Guy Saturday, May 28, 11 @ 8:36 am
I don’t care what Henry Bayer makes he worth every penny of it.
Comment by springfield watcher Saturday, May 28, 11 @ 8:39 am
- Retired Non-Union Guy-
Let’s take the constitutional argument off the table.
You must have one hell-uv of a trust fund… to only be concerned that they write the bill correctly. Doesn’t it bother you that you will be paying an extra $8 - $10,000.
more in premiums than a union worker (and in a lot of cases they will be receiving a higher pension). The IDOC today is losing management staff… good people won’t promote; Wardens are busting down to union positions… no raises… furlough days… no job security… NOW THIS!
A person would have to be nuts to go into management in the State of Illinois.
Comment by Labor Saturday, May 28, 11 @ 9:01 am
Re SB175: how can charging premiums for retiree health benefits be considered even remotely constitutional? The constitution clearly states:
=== …the benefits of which
shall not be diminished or impaired. ===
They are called health BENEFITS for crying out loud.
The premium for dental coverage enacted a while back should never have been allowed to stand. It was the “foot in the door”.
Comment by Cornerfield Saturday, May 28, 11 @ 9:34 am
Labor,
No, I don’t have a great trust fund. What I have is my pension, period. And two house mortgages plus a equity line of credit I owe on. And I’m looking at what I have in my IRA’s to see if I can get through until the houses are paid off in 7 years. This is going to hit me big time. I’ll probably sell the house I live in (at a big lose due to the current market) and move into the house my son & daughter-in-law have been living in. They’ll have to move to section 8 housing and you taxpayers will be supporting them (more) soon. (They’re both currently unemployed with 2 kids under age 2.)
For the record, I didn’t “go into management” at the state. I had a technical skill and when CMS combined all the titles I “became” a manager (SPSA) on paper because of the pay level of my previous title. If I remember correctly, I was something like $1,000 over the cutoff line between PSA and SPSA at that time.
Also for the record, I’m not opposed to unions. My grandfather, father and his brother were all involved in founding a union. I just never happened to work in a job title at the State that was in the union …
Comment by Retired Non-Union Guy Saturday, May 28, 11 @ 9:36 am
- Retired Non-Union Guy-
All respect and gratitude to you for your service. As you illustrate, there will be a lot of extreme hardship created by this bill. I am also a person with a lot of respect for the union. Henry Bayer is a great leader for AFSCME. I don’t blame them at all. I am just pointing out the obvious… and have seen this show before… I would suspect Sen Schoenberg, Quinn’s staff, and Julie Hamos have no clue about the difficulties of collective bargaining. If this passes there will end up being a 2 tier system, with non-union paying much more than union. It’s not H Bayer’s job to represent the State of Illinois… he represents his union and does it well. But it is the job of Schoenberg, Quinn, and Hamos to represent the State of Illinois. All they can see is an additional $250 million for unproven social programs. They don’t seem to be concerned that real people will lose their homes and be affected adversely
in many different ways.
This is unconstitutional…. This is unfair… and this is wrong!
Comment by Labor Saturday, May 28, 11 @ 9:51 am
Yet another amended version of SB175. The current (as of this posting) version fixes the pension income language to only mean State pensions, which is an improvement. It creates more tiers in the income calculations, which is probably bad. Now *all* retirees, regardless of pension income level, will have to pay (previous version exempted under $30K). This is a definite “stick it to the retiree” bill. This version is slightly better for the long term employee by making them pay a bit less than the previous version. To put it in perspective, I might save me about a 1/2 tank of gas a month less than the previous version (your mileage will vary based on service time and income). Still draconian in terms of the payment levels. Still most likely unconstitutional.
Comment by Retired Non-Union Guy Saturday, May 28, 11 @ 7:26 pm
- Retired Non-Union Guy -
Draconian is right! They pay some group to give them a study and in one year they want to cut our pension in real terms… some25-30%. This will put people out of their homes.
This is not right…
Comment by Labor Saturday, May 28, 11 @ 8:11 pm
Cassiopedia’s comment above is so stupid it makes me laugh. That the president of AFSCME could somehow rival Miles White’s pay of $26 million is either incredibly stupid or naive. Amazing that so many people involved in the anti-public employee effort are CEOs from Abbott to Walgreens who make more in one month of one year than better-educated teachers and professors will in 37 years of working AND retirement combined. And so many of the dim-witted public are along with the ill-informed ride. That is the real tragedy!
Comment by theperspective Sunday, May 29, 11 @ 7:34 pm