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* House Republican Leader Tom Cross’ pension reform bill will get a hearing today, according to Speaker Madigan’s spokesman…
The Cross bill “will come before committe and they’ll do what they do,” [Steve Brown] told me a bit ago. And the speaker’s position? The bill is “under review,” with “some questions” about its fiscal impact that may or may not get resolved in committee on Tuesday.
The bill will be heard today at the Stratton Building’s D-1 at 2:30.
* More info…
Illinois leaders also are groping for some way to cut government pension costs, but they’re hampered by language in the Illinois Constitution that bars reducing retirement benefits for current employees.
To get around that, House Minority Leader Tom Cross, R-Oswego, has come up with legislation to create three different “tiers” of pension benefits and costs. It would let state employees keep their current level of benefits but would require them to contribute far more money to the retirement system. In other words, it wouldn’t technically reduce their benefits but it would give them a strong incentive to switch to one of the new tiers with fewer benefits.
One of the other tiers is a scaled-down version of the current pension system. It will cost the employee less money but offer smaller payments after retirement. The other tier is a 401k-style “defined contribution” plan, where the state and the employee both contribute money that is invested until the worker retires.
* Details…
Option one is to keep their current benefits, but pay more — a lot more. For instance, according to a fact sheet issued by Mr. Cross’ office, workers in the State Employees Retirement System who also get Social Security would have to pay 9.29% of salary, more than twice today’s 4%.
The hike in Chicago and Cook County pension contributions is somewhat less, but still considerable. For instance, workers in the main Chicago municipal plan would have to pay 12.75% of salary every year, up from 8.5% now.
Option two is to accept lesser benefits, but pay less for them than in option one.
Option three is to give up a traditional defined-benefit pension plan and convert to a 401(k)-style self-managed pension.
* The Tribune editorial board is becoming more frustrated by the day at the possibility of no floor vote…
We expect lawmakers this week to clamp down on some of those sweeteners for union officials — egregious deals exposed in recent weeks by Tribune reporters. But don’t let anyone tell you that a remedy in this area will save a pension system so grievously in debt. It won’t. Only a cut to the benefits public employees earn in future years will begin to fix a debacle Made in Springfield.
Or lawmakers could again hide from the bigger problem here and let taxpayers’ unfunded obligations keep growing until the spring legislative session. What’s a few more billions?
* And so is Ty Fahner...
“We’re broke, as everyone knows,” said Ty Fahner, a former Illinois attorney general and president of the Civic Committee, which focuses on economic growth.
His group has been pushing legislation that would make state workers, teachers and others pay more toward their retirements. Because the state is so far behind paying its share to their retirement accounts, there is little money left over. The debt grows each year, taking a bigger share of the state budget. […]
But lawmakers seem to be gearing up for their final week of session without addressing the single biggest budget pressure facing taxpayers.
“This all comes from basic cowardice, and I mean that word sincerely,” said Fahner who believes lawmakers are more focused on their re-eletion campaigns than on the state’s budget crisis. Goups that oppose the bill are powerful. Unionized teachers and state workers are hounding lawmakers with phone calls and e-mail. And union leaders are determined to run candidates against incumbents who support the idea of making their members pay more.
* Meanwhile…
Union leaders have mounted strong opposition to Senate Bill 512, which would require current state workers to pay more toward their retirements. The proposal was held over from the spring session because legislative leaders lacked the votes to pass it.
Organized labor also reacted furiously to the new proposal from House Republican Leader Tom Cross of Oswego to give the mayor and the Cook County board president power to appoint the majority of employee pension board trustees.
At a news conference last month, Emanuel had acknowledged meeting with Cross about the legislation but declined to say whether he supported it.
On Monday, Cross spokeswoman Sara Wojcicki Jimenez said he was “still waiting on some feedback from Mayor Emanuel’s office” and did not know if Cross would attempt to promote the bill in the veto session.
Discuss.
posted by Rich Miller
Tuesday, Nov 8, 11 @ 9:35 am
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Cross plugs in a last minute amendment yesterday, and expects a vote on the bill today? Why not wait for an actuarial review of the consequences of the bill…oh wait, they already found out SB512 would cost taxpayers more…34 billion more.
Comment by PublicServant Tuesday, Nov 8, 11 @ 9:44 am
The part about giving the Chicago Mayor and Cook County Board President the power to appoint the majority of pension board trustees is disturbing.
Comment by Ravenswood Right Winger Tuesday, Nov 8, 11 @ 9:44 am
It is amazing that we could be voting to extend hundreds of millions in tax breaks to the CME millionaires and reducing the pensions to teachers cops and firemen on the same day. Illinois is special. Maybe the 99%’s are on to something.
Comment by Fed up Tuesday, Nov 8, 11 @ 9:49 am
SB512 looks half-cooked at best. In scanning Amendment 2 out yesterday, I note with interest GAs final salary computation remains the LAST DAY’S SALARY and includes remuneration received for being on committees, etc., yet “other state employees” computation remains highest 48 most of last ten years with no financial consideration given for any overtime. So much for shared sacrifice!
Comment by AtALoss Tuesday, Nov 8, 11 @ 9:54 am
I know you don’t do national stuff but it’s extremely funny that that tea party event that was ridiculed here last month has become part of the herman cain event.
Comment by shore Tuesday, Nov 8, 11 @ 10:04 am
I agree with Fed up. There is a great letter to the editor in today’s Chicago Sun Times, about the CME’s massive profits and a financial transaction tax that if enacted would be nominal and would greatly enhance revenues.
Comment by Grandson of Man Tuesday, Nov 8, 11 @ 10:04 am
Rahm and Toni having Cross sponsor the deal to appoint the majority of pension board members. Where have we seen that before? Oh yes-when Daley had Daniels (or Cowlishaw in this case) sponsor the bill to take over the Chi schools…or change the way Chicago mayors are elected (run off-no primary).
There are prob other examples also. slick.
Comment by going back Tuesday, Nov 8, 11 @ 10:06 am
I’ve heard that part of this deal is that law enforcement officials will not receive retirement benefits until age 62, yet they are constitutionally required to retire at age 60. Since these guys do not receive Social Security, there is a two year window without coverage. Can anyone confirm this? If true, it seems we need to square that circle…
Comment by Cincinnatus Tuesday, Nov 8, 11 @ 10:11 am
I hear the train acoming …
Comment by Retired Non-Union Guy Tuesday, Nov 8, 11 @ 10:12 am
Cowardice? Because you won’t sign off immediately on an unvetted plan to grab working stiffs’ retirement?
GA members, are you going to take that? Shove that word back in his face, and do the right thing at the same time. Win-win.
Comment by wordslinger Tuesday, Nov 8, 11 @ 10:18 am
Here’s the problem, folks. Maybe Cross’ bill is not the cure-all. Maybe it has flaws–maybe many flaws. But it at least puts the pension crisis on the table. It seems that nobody fighting vigorously against this bill has another/different/better solution to address the pension problem that they are willing to put in front of taxpayers (or in bill form). Last night Anders Lindall was repeatedly asked by Carol Marin (Chicago Tonight) what AFSCME’s solution or alternate proposal was. After he nervously adjusted his glasses, demurred, and riffed on at least three different occasions she gave up pressing him but it seemed like she was not amused.
What IS the union’s actual proposal to protect their members’ pensions–beyond litigation, I mean? How much additional revenue do their own actuaries say is needed over the next 40 years? Where do they believe it should come from? In what form and in what balance? What have they said to their membership about the shortfalls?Their public stance, which appears to be “not MY problem to fix, man, you owe us” approach is wearing kind of thin out here in the real world.
Comment by Responsa Tuesday, Nov 8, 11 @ 10:22 am
Seems like Cross tried to engage here, tried to make this a bipartisan plan but Madigan bobbed and weaved.
Comment by Robert Tuesday, Nov 8, 11 @ 10:28 am
responsa, thin or not, it is true. union workers did not cause the problem but are now expected to take a double hit in “sharing the pain”. 1. reduced benefits or increased payments 2. same pain as all other taxpayers.
Comment by anon Tuesday, Nov 8, 11 @ 10:31 am
@cinci
State Police are required by law to retire at age 60 and, no, they do not receive SS. Troopers are in the alternative formula which means they can begin collecting benefits at age 50.
Comment by William Tuesday, Nov 8, 11 @ 10:43 am
Responda,
Like it or not, these are the facts:
1) The State legislature set the pension rules.
2) I and other State employees did our time and paid our money into the fund. We followed the rules as defined by your representative, the State legislature.
3) The State didn’t pay into the fund as required. Your representative, the State legislature, didn’t do what they were supposed to do.
4) The State is contractually obligated to pay according to those rules set by your representative, the State legislature.
5) The State taxpayers will have to pay. Your representative, the State legislature, will have to figure out how.
6) The only question is whether it will be a corporate tax hike, a personal income tax hike, a sales tax hike, or some combination.
Comment by Retired Non-Union Guy Tuesday, Nov 8, 11 @ 10:49 am
Is there language in the bill that mandates the state to fund their share of the pension contribution? If not, then what does any of this really accomplish?
Comment by blogman Tuesday, Nov 8, 11 @ 10:49 am
blogman, yes, there is. It’s in existing law. Laws can be changed.
Comment by Rich Miller Tuesday, Nov 8, 11 @ 10:52 am
blogman,
It doesn’t matter; they won’t follow it anyway. There has been language in past pension reform bills requiring the State to pay the pensions first before any other monies are obligated out of GRF.
You know how well that has worked out …
Comment by Retired Non-Union Guy Tuesday, Nov 8, 11 @ 10:54 am
@Retired Non-union guy,
Agree completely with facts #1-#4.
But now the taxpayers would like to figure out a way to get out of this somehow.
And because of Fact #3, there is not enough money to pay what is promised, so I’d bet that Facts #5 and #6 won’t happen. Instead the legislature will eventually figure another way out of it.
Comment by Robert Tuesday, Nov 8, 11 @ 10:56 am
This bill is a very interesting tactic to eliminate defined benefit pensions once and for all.
Give people a choice between three options(sounds good, doesn’t it), but make the defined benefit plan so onerous that many will choose not to continue. This will remove their support for the ongoing pension fund, thereby making the actuarial shortfall even worse than it is.
Now the state must still catch up on its funding, so that current retirees, and those who choose to stay in the current plan eventually get paid, without the ongoing contributions of those who left. That is why the cost to taxpayers may actully rise with this plan. When we set up a new system guaranteed to fail, it will.
Comment by walkinfool Tuesday, Nov 8, 11 @ 10:59 am
I keep asking myself what is in it for Ty Fahner and his group? Are they trying to get a piece of the 401 k pie? I simply don’t know why they are engaged in this and has spent quite a lot of money. I am sure it is simply not for the “Good of the state”, there has got to be some $$ on the back end. Can someone explain?
Comment by He Makes Ryan Look Like a Saint Tuesday, Nov 8, 11 @ 11:02 am
Take a look at Amendment 666 to the proposed pension bill — doctors receive a bounty for not treating, or incorrectly treating, retired state employees and teachers thereby causing early death.
Comment by Capital View Tuesday, Nov 8, 11 @ 11:02 am
==nobody fighting vigorously against this bill has another/different/better solution to address the pension problem that they are willing to put in front of taxpayers==
That is absolutely untrue. There are many different ways to approach the problems which the state has caused by not paying their payments for decades. The most obvious is to adjust the ramp downward and spread out the payments. Also, the goal of 90% funding by some future date could be adjusted downward. A dedicated revenue stream could be identified so that the state could and would be forced to make at least minimum payments. The state could re-finance some or all of their pension debt at a lower rate than it is costing the state. All of these suggestions would go a long way toward solving many of the problems but they just wouldn’t hurt public employees enough or break their unions so they are not acceptable to the millionaires boys club, the trib,and right wing republicans.
Comment by Bill Tuesday, Nov 8, 11 @ 11:06 am
Madigan is straddling both sides of the fence on this third rail issue.
Let’s remember he has to win re-election next year in order to continue his reign as the King of Illinois.
Nothing new here. Self preservation and self love on display here for all to see.
Comment by Borealis Tuesday, Nov 8, 11 @ 11:08 am
What’s in it for the Civic Committee? If I was guessing, they don’t want to see their taxes change, which is about the only realistic solution to fully funding the pension system. They don’t want to lose their sweetheart tax breaks, like what is being considered for CME and Sears. They don’t want the corporate or individual tax rates to go up. They may want to bust the State unions, so then they won’t have to match / provide defined benefit pensions to their employees. Whatever it is, you can bet it has to do with keeping money in their pockets …
Comment by Retired Non-Union Guy Tuesday, Nov 8, 11 @ 11:11 am
@Cinci
Also, it’s my experience thay most Tprs I’ve worked with don’t max out their benefits. The job is not easy and wears down even the most optimistic people. Tprs regularly deal with domestic assaults, child abuse, murder, fatal crashes and abusive drunks. On a daily basis they are berated by irate motorists. They place their lives on the line everyday in ways that aren’t obvious. If anyone has had occasion to be on the shoulder of a Chcgo expressway outside of rush hour even once in your life you know how intimidating and dangerous it seems. Tprs do that every night, multiple times. When cars go past at 60+, literally three feet from your door, it rocks your car back and forth. When big trucks go past it sucks the air out of the car. And that’s just part of it. Tprs deal everyday with people who would, given the opportunity, put a bullet in them without blinking an eye. It’s a dangerous job and not for 50 to 60 year olds.
Comment by William Tuesday, Nov 8, 11 @ 11:16 am
I am always amazed how naive the people of the state of Illinois are to the workings of our government representatives. Whether it be at local, state, or federal level today’s politician is interested in only one thing - how much money can they collect for their next election. So they listen to groups like CME that can fattened up their election back accounts. CME’s whole state retirement issue has nothing to do with saving the state money or having moneys for schools or social programs. CMEs only concern is how much money is left in the pot for them. It’s time for the citizens of Illinois to wise up and listen to the people who actually run the state retirement systems. They’re the one who truly know the condition of the retirement system, and at this point in time they say that there isn’t crisis, however, if CME and our money grubbing representatives have their way there will be.
Comment by wonderland Tuesday, Nov 8, 11 @ 11:16 am
@Bill 11:06am–
Oh, I’m sorry, I must have missed that. What is the bill number again that contains the approaches you mentioned, and who is sponsoring it?
Comment by Responsa Tuesday, Nov 8, 11 @ 11:17 am
Well you should probably ask your legislators that question. I can’t introduce legislation neither can public employee unions. The fact that none of the geniuses in the GA have introduced a bill doesn’t mean that there are no solutions that are legal, constitutional, and fair.
It is also quite ironic that the same right wingers who constantly bray about the constitution are so willing to circumvent, if not outright violate, it when it could make them a few extra bucks.
Comment by Bill Tuesday, Nov 8, 11 @ 11:27 am
The only thing we can count on is that the legislature will dodge actually fixing the problem and living up to its responsibilities for as long as it can. And the legislators will retire just before the stuff totally hits the fan.
Comment by Aldyth Tuesday, Nov 8, 11 @ 11:32 am
It seems as though the legislators are too timid to allow these issues to be solved at the bargaining table. Yet, that has been the most effective strategy so far. Under Blago, state employees agreed to increase their contributions. This sort of thing can be bargained at the next contract, all without unconstitutional legislative changes. A slow upward increase in contributions, on the part of the state and employees would be tremendously effective. Combined with the lower benefits new employees now have, it would go a long way toward solving the problem. Certainly it would do more than SB512 which would make the fiscal situation worse.
Comment by AC Tuesday, Nov 8, 11 @ 11:33 am
The only way anyone should support any pension reform bill is if it makes each individual Legislator, the Governor, the Comptroller, and the Treasurer personally and criminally responsible for any funding shortfall after the passage of the bill and removes any and all legal protection from being sued for failing to fund the pension systems.
That’s the kind of pension funding reform that is needed …
Comment by Retired Non-Union Guy Tuesday, Nov 8, 11 @ 11:47 am
I would like to see where the opposition is coming from. I ask that all members of the Civic Committee divulge their annual salary and benefits and what pensions they are going to enjoy in their retirement years.
Then let’s compare that to the average salary, benefits, and retirement packages that average rank and file state employees can look forward to.
I am betting the comparison will be a perfect picture of the 1% vs. the 99%. I believe the request is valid as we should know what the Civic Committee feels is an adequate standard for their compensation. As they say in court, “you opened the door”, by their active involvement in setting compensation and retirement for others they should let us know what theirs is so we can judge whether they have standing in the public eye to be making these demands.
Comment by Irish Tuesday, Nov 8, 11 @ 11:50 am
Irish,
Assuming they are public corporations, most of that should be in their company’s annual statements.
Maybe that could be a project by one of the union’s for a TV ad?
Comment by Retired Non-Union Guy Tuesday, Nov 8, 11 @ 11:54 am
Good questions, Irish. Now, I’m sure they would say there is a difference between privately owned companies and what those CEOs get in benefits not being public money. But who, in the end, pays for those huge salaries and perks? We do.
Comment by Decaf Coffee Party Tuesday, Nov 8, 11 @ 11:56 am
I wrote this over an hour ago but kept debating whether to post it. What the heck …
Two wrongs don’t make it right, but it’s time for the unions to push back even more against the Civic Committee. Need to fight fire with fire. The way things stand now, the unions have nothing to lose fighting back.
The unions should call for a boycott of all the Chicago Commercial Club member businesses. They should publish the salaries and golden parachutes of top management at each company … most of that could be found in their annual statements. They should dig into the campaign disclosure forms and publish the contributions from CCC members to the legislators who are pushing for this. It shouldn’t be that hard to show the Legislature (or are least some members) seem to be for sale. Better yet, partner with the 99% and start a grass roots campaign to raise the corporate tax, but only on companies in Cook and the collar counties. I’m not saying it would be good tax policy for the state (it isn’t), but it would help focus the anger of the unions … and cause the CCC to spend some of the money now being used against the State employees to be spent defending themselves.
Comment by Retired Non-Union Guy Tuesday, Nov 8, 11 @ 12:03 pm
== I can’t introduce legislation neither can public employee unions.==
Bill, please do not insult our intelligence. If the public employees’ union leadership wanted a bill there would be a bill.
==And the legislators will retire just before the stuff totally hits the fan==
Aldyth, you are correct. By the time the well is dry and it is far too late for pension salvation, the legislators who did not fund and allowed this to fester will be long out of office and/or passed on to their greater reward. The high salaried union leadership which stood by and watched it happen for decades will be happily retired to a golf course community somewhere warm. And we born and bred Illinoisans–taxpayers who could no longer afford to live in Illinois will have moved along.
I wish the hard working rank and file union members well, not ill. But they need to wake up.
Comment by Responsa Tuesday, Nov 8, 11 @ 12:06 pm
Those of us who are within a few years of retirement but had planned on several more productive years in service, will jump at retirement earlier than we might have otherwise. This is because staying longer as a contributor simply does not make financial sense. As a result, my contributions to the pension system will be less and my drain on it will be greater.
A gradual transition to a new contribution/benefit formula could save money over the long haul.
Also, if my contribution to the traditional plan suddenly increases, the result may not be an increase in my contribution to my 403b (same as a 401k for those of you in a private employee plan), but rather a decrease. I will simply contribute less to the 403b to make up for the increase in contributions to the traditional pension system.
Comment by from the other side Tuesday, Nov 8, 11 @ 12:16 pm
The Civic Committee is not exactly a bastion of free-market ideology. There’s a very large representation of “crony capitalists” whose businesses are oriented toward government contracting, defense contracting, financial bailouts, health care, pulic utilities gambling and other sectors where special favors from government determine profitability and law firms that service these clients.
http://www.civiccommittee.org/members/index.html
They represent the absolute wealthiest group of people in this state and they have marshaled their connections and money to attack very modest pensions of ordinary people (who have paid into the system), while shifting enormous frontloaded costs to the taxpayers (currently kicking in $ 0). Furthermore, their arguments, spewn through the Chicago Trib editorial page, have been dishonest and misleading about the facts of SB 512.
I’d be a lot more impressed with the Civic Committee’s argument if their members attempted to live in the free market themselves rather than off of taxpayer dollars and special legislative favors.
This is what the ancient Greeks used to call “oligarchy”.
Comment by zenpundit Tuesday, Nov 8, 11 @ 12:19 pm
Any state pensioner caught by a speed cam exceeding the speed limit near a nursing home will be fined and that money will go toward funding the pension gap…there, problem solved.
Comment by D.P. Gumby Tuesday, Nov 8, 11 @ 12:29 pm
“The State taxpayers will have to pay” the state and local government pensions is probably a likely outcome because the GA will do nothing to imperil the $$$$ flowing in from AFSME etc. So taxes will escalate through the foreseeable future until a point that those individuals and businesses that can will move out of state and those remaining behind will push back. At some point the taxation will create enough unrest from those that can’t or won’t leave that the politicians will fear loss of office and relent with meaningful change. One thing is certain: recent gov pensioners and those approaching retirement better have a Plan B, especially in light of increasing life spans. For younger gov workers, I strongly urge considering a 401k-like option instead of a defined benefit plan reliant on an increasingly impoverished tax base.
Comment by Cook County Commoner Tuesday, Nov 8, 11 @ 12:46 pm
Quiite a group on that link…
Let us start with U of I -Do they want to be a state institution or hang out with their new friends?
The University of Chicago -source of the toxic pilosophy of Milton Freidman-we could take away their MAP grants!
Of course there are all the bailout banks from TARP and the Fed and the horse track guy who wants a handout
And Bill Daley didnt he just get fired I mean like reassigned for teh great job he is doing
Comment by western illinois Tuesday, Nov 8, 11 @ 1:23 pm
I do not understand why a House Democrat would vote for the bill. The vote is certainly going to cost them in support from what has been a core portion of their base. Those whose pensions would be diminished will never forget which members voted for it. Further it is a costly vote for legislation that is unlikely to be implemented. The Senate will probably kill it. If the Senate does not, Quinn could be expected to veto it in order to recover some of his base. Even if it gets passed and signed then rejection by the courts is probable.
A better, and constitutional, solution needs to be adopted.
Comment by east central Tuesday, Nov 8, 11 @ 1:27 pm
If they are smart, they will wait until after today’s elections in Ohio, to see what happens with Issue 2.
Comment by Working hard in Southern IL Tuesday, Nov 8, 11 @ 1:47 pm
We are in this mess because the legislature filed to make the required payments over many years. In other words, they violated their own requirement. Meanwhile, we state employees dutifully paid in as we were required to for years. We were not the cause of the problem. The legislature was. Now they must solve it. My first two suggestions for places to start coming up with the money: 1) Any money that they are considering giving to CME in tax breaks and 2) Any money allocated for legislators’ retirement funds (since they are the ones who failed to meet their own requirements).
Comment by John (retired) Tuesday, Nov 8, 11 @ 1:59 pm
Here’s another suggestion for coming up with the money - amend the constitution to allow a graduated tax, and raise taxes sharply on the 1% whose incomes have been soaring while the rest of us have been going down the toilet. The super-rich of the Chicago Civic Committee are paying lower taxes than they would pay in any neighboring state, yet they want to target hard-working state employees while they have enjoyed their low taxes made possible by the legislature’s failure to follow its own rules.
Comment by John (retired) Tuesday, Nov 8, 11 @ 2:04 pm
There’s a pension issue that I never hear discussed here or anywhere else: that’s how much the funding scheme has skewed from it’s original premise of approximately equal contributions from employer and employee.
I have to admit that it’s not something I particularly noticed during my time working for the state, including my time as budget director. We basically just wrote a check for the amount called for under law.
The debate that has been going on for the past few years has educated me, something I should have done myself years ago. It is obvious the employer contribution has grown to many time the employee contribution, and that is going to have to be fixed if the system is going to work. If the employee contribution is static, and the employer therefore liable for all benefit enhancements, investment under performance, etc, the system will not be sustainable, and that’s where we’re at right now.
Comment by steve schnorf Tuesday, Nov 8, 11 @ 2:30 pm
Steve,
The costs have skyrocketed because of the enormous debt run up by the Edgar administartion in 1995 with the time bomb ramp and holiday scheme which was scheduled to go off when he was safely out of office. If the state was only paying the normal cost of benefits the payment would be miniscule compared to what it has grown to today. A giant portion of the payment goes to past due debt and to pay for the big Ryan early retirement incentive. Blag made matters worse when he sold $10 billion worth of bonds and only put $8 billion into the systems. There has been decades of abuse of these systems by the last 4 governors and past GAs. It has nothing to do with the benefits which are average at best.
Comment by Bill Tuesday, Nov 8, 11 @ 3:17 pm
Steve,
So who is responsible for the investment underperformance (actually, non-performance) that resulted from all the intentional funding shortages?
Comment by Anonymous Tuesday, Nov 8, 11 @ 3:20 pm
Anonymous @ 3:20 pm was me; forgot I was using a different computer
Comment by Retired Non-Union Guy Tuesday, Nov 8, 11 @ 3:23 pm
Steve,
I’d be interested in seeing a chart showing what the employee/employer contribution percentages were over the last 50 years of the system’s existance in order to keep the funds at 90% funded.
Comment by PublicServant Tuesday, Nov 8, 11 @ 3:27 pm
That last post of mine should read “would have been” in place of “were”. Assuming all the contributions were made on time by the state.
Comment by PublicServant Tuesday, Nov 8, 11 @ 3:29 pm
Guys, think about it. I’m not talking about the unfunded liability, I’m talking about annual normal costs.
Comment by steve schnorf Tuesday, Nov 8, 11 @ 3:33 pm
Cook County Commoner,
Yes, the taxpayers (which also includes us State employees and retirees) are going to pay, one way or the other. It’s a obligation under Federal contract law and under Federal law State’s can’t declare bankruptcy, so the options are limited.
Benefits have already been reduced; you can only save so much that way before you reach the point of diminishing returns … which they are getting close to if they haven’t already crossed with the SB512 proposal.
One choice is increased taxes.
Another choice is decreased services in the pork barrel / social / welfare programs.
Another, very interesting choice no one has whispered, would be for the State to dump the all non-State pension obligations (TRS, Chicago, etc.) on the local government entities. The State is clearly on the hook for the actual State obligations (SERS, LRS, SURS). Not necessarily so for the rest of the systems. Think what it would do to the cities and school districts to have all that dumped on them. Property taxes would have to skyrocket. Unlike States, counties, school districts and cities can declare bankruptcy. You want to see city hall sold or given away to satisfy judgments? … that’s already been done in East ST. Louis and hasn’t worked out very well.
Comment by Retired Non-Union Guy Tuesday, Nov 8, 11 @ 3:42 pm
C’mon, Bill. You can do better than that. Look at the state’s contributions before the ‘95 legislation.
Comment by steve schnorf Tuesday, Nov 8, 11 @ 3:44 pm
Steve that’s why I said if they had made their payments each year on time. trying to see what percentage the state’s normal contribution would have been over a 50 year period given changes in pension law, actuarial assumptions etc. Just never saw that. It would be interesting.
In addition, I’d really like to see figures that support, or debunk the right wing contention that the pension funds will be bankrupt in 10-15 years, if nothing is done to change the pensions for current employees. Never saw independent confirmation of that particular talking point.
Comment by PublicServant Tuesday, Nov 8, 11 @ 3:52 pm
Steve-
Your point is another reason that every pension fund governed by Chapter 40 is a different animal. I don’t know the answer to your question regarding TRS or some of the other State funds, but several of the City pension funds are paid for by equal contributions by the City and the Employee.
Comment by chi Tuesday, Nov 8, 11 @ 3:54 pm
At this point looking back as to how the State got to where it is at is absolutely meaningless- past Governors and General Assemblies rather then raising taxes to pay what the Pension Systems required and at the same time paying for all other costs, kicked the pension issue into the future- We can’t go back - It is not feasible at this point to pay into the Systems what the future benefit payments require- Absent unrealistic future market returns, the State has few options other then to modify the programs- Anyone who thinks we can raise taxes by another 60 percent and retain any employers is a fool- It is time for the General Assembly to stare down the public sector Unions who historically have owned Springfield- Absent action in the near future more and more $$$$ will be sucked into the Plans and there will be less $$$$ available for other vital needs- Mike Madigan can fix this and be remembered as a hero or he can continue and worry about keeping his first name- Speaker
Comment by sue Tuesday, Nov 8, 11 @ 3:57 pm
That is incorrect Sue. It’s far from meaningless if we are to address the root cause of the problem in a fair, equitable, and with an eye on shared sacrifice. In addition, am I supposed to accept your particular verbiage as gospel? Let’s get some independent confirmation of your “sky is falling” message. Answer the questions being posed, and quit trying to say the situation is so dire that there’s not time to bring all the facts, and answer all questions that people have before ramming a bill down there throats. It’s the least that can be done, given that you want us to accept the full brunt of the unfunded pension liability.
Comment by PublicServant Tuesday, Nov 8, 11 @ 4:05 pm
There should be their. Sorry, I’m not at my best when people try to shove their particular version of the truth down my throat.
Comment by PublicServant Tuesday, Nov 8, 11 @ 4:21 pm
Pension reform is absolutely essential to Illinois’ financial solubility and future success. Currently, Illinois government is a national laughingstock, and its businesses and wealthy people are leaving in droves to avoid the current and expected taxes. If this bill needs to be tweaked, then the lawmakers should put their shoulders to the wheel and do it now.
Comment by Anon Tuesday, Nov 8, 11 @ 4:35 pm
Don’t let the door hit you on the way out Anon. SB512 is fatally flawed, and all parties need to be brought into the conversation to find a just, equitable, and fair solution. A bill pushed by the Civic Committee plutocrats is, and always has been, a non-starter.
Bring all parties into a discussion, establish and independently confirm all the salient facts, answer all questions, and then arrive at a solution. Anything short of that won’t fly with me, and most others. Your bluster and rhetoric is what’s unsustainable here. The pensions have been underfunded for 50+ years, have never missed making a payment and are about underfunded at the same level as they were then, so why is the sky falling now?
Comment by PublicServant Tuesday, Nov 8, 11 @ 4:44 pm
it’s not all abuse that caused the problem. a lot of it has to do with sweeteners approved by the legislature, a reduction in returns and longer lifespans. there are probably a multitude of other factors that led to the problem as well. the salient issue isn’t what caused it, it’s how to solve it.
Comment by Easy Tuesday, Nov 8, 11 @ 4:51 pm
Here is a pertinent fact. Had the state made its full payment each year the systems would be funded at around 97% of liability. They didn’t. The normal cost of benefits is less than 35% of the state’s certified pension payment this year. The rest is debt service.
Then there is the question of whether the unfunded liability number of 85 billion is even a valid number to determine sustainability. I’m sure that the sky is falling rhetoric spewed by Sue and the civic committee is just another attempt to solve the state’s serious fiscal problems by further hurting state employees.
Comment by Bill Tuesday, Nov 8, 11 @ 4:58 pm
There are some great posts here today. I’m trying to recall some of the op-ed pieces by Civic Committee people in the Tribune, like R. Eden Martin (retired), and I can’t recall the CC offering to help the pension crisis by saying the wealthy should agree to tax increases. I agree with Retired Non Union guy, that the very rich don’t want to contribute money to help solve the pension problem. This was reflected during the national deficit battle earlier this year, when Obama offered a generous cuts-to-revenue package that was rejected by the U.S. House Republicans, who wouldn’t even go as far as closing corporate loopholes.
Not that it matters to anyone, but to clear my conscience, I am apologizing for providing misinformation yesterday. I said that AFSCME lost a court ruling yesterday in their quest to legally enforce an arbitration victory to stop layoffs and facility closures. The case was continued to next month (I hope I got this right).
Comment by Grandson of Man Tuesday, Nov 8, 11 @ 6:21 pm
I look at it like Steve does. It appears that the retirement systems used to operate like Social Security - 50% paid each by employer and employee. Of course it all comes from the same pot. If the problem is underfunding of the retirement systems, it would make some sense to decide how much is needed; then negotiate the split. Just don’t forget it all comes from the same pot.
Comment by CitizenF Tuesday, Nov 8, 11 @ 7:10 pm
It all comes from the same pot in both the public and private sectors. And don’t forget that public employees are taxpayers too.
Comment by PublicServant Tuesday, Nov 8, 11 @ 7:23 pm
First, this bill is going to do nothing to fix the current unfunded liability of the pension system.
Second, its possible that this bill is going to end up costing Illinois tax payers more in the long run. There is the TRS, social security issue. There is also the supplements to the GRF that are created by the Feds reimbursing for the state contributions to pensions. DCFS has this reimbursement and probably other federally reimbursed agencies do as well. This will go bye-bye under a 401-k type plan so the state will be going it alone with their contributions. And in the long run, after the new plan is found unconstitutional, the state will have to reimburse any contributions missed, plus interest. They will also be paying big legal fees and there is that $200,000 actuarial fee every time Cross proposes an amendment.
I think this bill is half-baked attempt to cater to the Chicago Civic Committee. But why they have more pull than the 1000’s of teachers, police, firefighters, and other public employees of Illinois is beyond me.
Comment by Jack Tuesday, Nov 8, 11 @ 7:26 pm
The problem I’m talking about isn’t underfunding per se: it’s the imbalance that has developed in who is paying the normal cost.
To me it’s hard for anyone to argue that the employer owns the blame for the underfunding. That doesn’t mean the employee isn’t going to get gored some in fixing it.
I think we would all be well served and discussions would be more clear if we separated the questions of paying the ongoing normal costs of the pensions and of paying off the unfunded liabilities.
And, as pointed out above, we have to look at SURS, SERS, and TRS separately, if for no other reasons than the differences in the programs and the differences in who the employer is.
Comment by steve schnorf Tuesday, Nov 8, 11 @ 8:14 pm
Looks like a landslide in Ohio. If Madigan really thinks that civic committe crowd is going to help the democratic party He isnt as smart as everyone keeps saying he is.
On the other hand by angering his base he ivites primaries and if he thinks the Unions cant do Look at Ohio
Comment by western illinois Tuesday, Nov 8, 11 @ 8:15 pm
Those of you who are FOR this bill, should read the Government Forecasting & Accountability notes for Amendment 1 & 2 which forecasts this bill will cost more between FY13-FY19 than the current system.
And while we are talking about treating pension systems separately, let’s not forget about GARS and JRS. I would say, since the legislature created this problem, dismantle GARS and pay the proceeds into the other underfunded systems. Not that it would go very far, but its a start. Really, how many part-timers outside of the GA actually get a pension?
Comment by Jack Tuesday, Nov 8, 11 @ 8:58 pm
I didn’t mention GARS and JRS specifically because of comments like the one above. They don’t involve meaningful amounts of money and they divert us from focusing on the problem while we vent about their unfairness. It’s why the magician has the attractive, scantily clad assistant; something to watch rather than the real action Fortunately, Jack, you can join GARS if you wish.
Comment by steve schnorf Tuesday, Nov 8, 11 @ 10:05 pm
I agree that pension reform needs to happen….but I don’t think this bill is the answer. First, why are the Illinois State Police exempted? They get some of the largest pensions of any state employee. What about the other state law enforcement officers? Are their jobs any less dangerous? I see Secretary of State Police and Conservation Police doing pretty much the same type of work as the State Police every day. Why do they not rate the same special treatment the State Police seem to be getting? Why not just be fair and make the law apply to ALL state employees and not exempt a select few? Second, there are still questions about how much this will cost! It appears the legislators are trying to rush this through in the middle of the night! Typical for Illinois politics! I think that if the State is going to make these types of drastic changes to people’s pensions…they could do it incrementally over several years and not double these workers contributions all at once. Leave the system alone, freeze pay increases, and just increase pension contributions 2% a year for several years so that families have time to adjust their budgets and the employees start paying more into the pension system. Thats the end result the State wants isn’t it? Why bludgeon the state employees to death in one big hit?
Comment by Sojourners Tuesday, Nov 8, 11 @ 11:27 pm
I’m also wondering whether the effective dates in SB512 being July of 2013 mean it only needs a majority in the veto session, and not a super-majority?
Comment by PublicServant Wednesday, Nov 9, 11 @ 6:12 am
–Currently, Illinois government is a national laughingstock, and its businesses and wealthy people are leaving in droves to avoid the current and expected taxes.–
BS. If you have any game at all, put some facts to it or go away.
Comment by wordslinger Wednesday, Nov 9, 11 @ 8:26 am