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Cullerton floats pension idea

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Illinois

* Cullerton wants a semi-fix before the election…

Illinois Senate President John Cullerton will push for quick action on changing pension rules for state employees and lawmakers even if top state officials continue to disagree on similar changes for teachers and university workers.

In an interview Tuesday with The State Journal-Register, Cullerton argued that taking steps to reduce costs of the State Employee and General Assembly retirement systems will signal bond rating agencies that Illinois is willing to tackle its pension funding problems.

“If we pass a bill in a bipartisan fashion that deals with 25 percent of (the pension shortfall) as soon as possible, it would go a long way towards showing the rating agencies that we are getting serious about this,” Cullerton said.

That process would be made easier because, in the closing hours of the spring session Thursday, the Senate passed House Bill 1447, which would cut the state’s expense for state employee and legislator pensions. The House did not take up the bill, but could if a special session is called.

* Cullerton got almost no publicity (and even less credit) for passing a pension reform bill last week. So, the media interviews serve to highlight his chamber’s achievement. The reaction from other leaders was not overwhelmingly positive ahead of today’s planned meeting in Chicago…

Steve Brown, spokesman for Democratic House Speaker Michael Madigan, said the value of Cullerton’s proposal will depend on reaction from the governor and from the rating agencies that are threatening to downgrade the state’s credit yet again if Illinois doesn’t fix its pension problems.

A better way to deal with the situation, Brown said, would be making it clear that state government can no longer pay the retirement costs of local employees.

House Minority Leader Tom Cross, R-Oswego, will not comment on the proposal before discussing it with Cullerton, a spokeswoman said.

Quinn also had no comment.

* Meanwhile…

A wave of retirements at the Illinois Department of Natural Resources could result in no full-time employees at some parks.

DNR confirmed Tuesday that 80 of the department’s 1,100 employees have filed notices of their intention to retire.

“There are some sites that if they were down to one or two people, if they decide to file for retirement, … then there would be nobody there,” DNR spokesman Chris McCloud said.

However, McCloud said the department is still deciding what it will do in the event of those retirements.

posted by Rich Miller
Wednesday, Jun 6, 12 @ 9:16 am

Comments

Okay…I’ll say it again. Remove vested employees from the pension fix consideration, and create a whole new system for all new hires moving forward, as well as unvested current employees. That alone would change the actuaries dramatically moving forward and would not create a legal battle from those already in the system.

As for IDNR…they’re screwed until the state understands their value, since the last eight or ten years, they’ve been ravaged by budget cuts and less than desireable hires in upper management…it would also help if their funding were not subject to sweeps…just sayin’

Comment by Captain Illini Wednesday, Jun 6, 12 @ 9:29 am
If they have actually filed their paperwork for retirement, why can’t DNR start the hiring process now to replace them. Not sure why this is a problem. In fact, the new folks would presumably be lower on the salary scale and their pensions costs would be lower (for the taxpayer) as a result of the recent reforms. And surely the agency has a process for re-assigning employees during temporary staff shortages.

Comment by cassandra Wednesday, Jun 6, 12 @ 9:33 am
=== and create a whole new system for all new hires moving forward===

That was done two years ago.

Comment by Rich Miller Wednesday, Jun 6, 12 @ 9:35 am
===That alone would change the actuaries dramatically moving forward===

But it does nothing for the unfunded liability, which is about the past.

Comment by Rich Miller Wednesday, Jun 6, 12 @ 9:36 am
Is IDNR alone in facing massive retirements?
I’m guessing others agencies may be in the same boat. It might be interesting to hear from SERS about the number of retirees expected over the next few months.

Comment by pipersls Wednesday, Jun 6, 12 @ 9:48 am
Cass– “If they have actually filed their paperwork for retirement, why can’t DNR start the hiring process now to replace them. Not sure why this is a problem. In fact, the new folks would presumably be lower on the salary scale and their pensions costs would be lower (for the taxpayer) as a result of the recent reforms. And surely the agency has a process for re-assigning employees during temporary staff shortages.”–

It’s just not that easy, Cassandra. Staff levels have been low in the field for what seems like ever. The more funds disappeared, the less any of the staff leaving were replaced. The parks have been short changed staff for years. Now the staff they do have is aging. Not only low staff, but now the time and process (aka funds) to replace begins to be an additional problem.

Sure, each and every having left/leaving is replaceable. But it is not a simple matter of just bringing in a load of new faces. As each park is individual to it’s needs and it’s round up of job description (aka training/knowledge to perform) some sites will have more trouble then others. As far as the superintendents (and some sites the assist super too) it leaves very little room to work with a untrained staff. Not just in the tasks but in the knowledge of the site also.

Comment by Cindy Lou Wednesday, Jun 6, 12 @ 9:51 am
“… state government can no longer pay the retirement costs of local employees.”

Neither can local government, which really is mostly struggling home owners and private sector employees who must save for their own retirements without a tax payor backstop. We need a statewide fix including public employee pensions at the county and local government level. The state government handcuffed everyone in 1970 by inserting the pension impairment clause in the state constitution. The only solution is reduction in benefits prohibited by the clause. Expecting mercy from the union bosses is foolish. Maybe Gov. Walker can save us.

Comment by Cook County Commoner Wednesday, Jun 6, 12 @ 9:57 am
Rich, you missed Capt. Illini’s point. Include all not-vested employees in fix. That will reach back 10 years and will have a dramatic impact on unfunded liability. The fix two years ago only covered new hires as of Jan 1, 2010.

Comment by Air-Is-Total Wednesday, Jun 6, 12 @ 9:57 am
Captain Illini has it right; agree totally. But, with regard to the DNR retirements, and the so-called “headcount” reductions seen at other agencies, in many cases any cost savings are illusory because the vacancies get filled by consultants and contractors, and those substitutes DON’T pay into the pension systems! The state would do better to hire new state workers, at their lower pay scales, and get those pay-ins to the pension funds added. If headcount goes to zero, who then pays into the system?

Comment by JustaJoe Wednesday, Jun 6, 12 @ 10:02 am
“If they have actually filed their paperwork for retirement, why can’t DNR start the hiring process now to replace them.”

1) by the time you pay for unused vacation and sick time they are a drain on this year’s appropriation.

2) You assume the payroll funds are there to replace them.

3) CMS is in charge of the hiring process. Ever known them to be fast or correct the first time?

Comment by Leave a Light on George Wednesday, Jun 6, 12 @ 10:03 am
I would like to see an estimate of the payouts required as 4,000 folks go out the door by June 30. One friend said he went to three retirement parties on one night.

Comment by Langhorne Wednesday, Jun 6, 12 @ 10:04 am
Cost shifting to local governments, increasing employee contributions to the full pick up, reducing the ramp up of state contributions and removing the retiree exemption from state income tax would fix the problem. Transitioning the changes in over time would make it politically viable. All the things I mentioned are legal and constitutional. Trying to fix the problem unconstitutionaly is a waste of taxpayer resources. Working with unions and bargaining changes would eliminate many legal challenges and encourage buy in. So would rejection of SB1313 by the governor.

Comment by AC Wednesday, Jun 6, 12 @ 10:04 am
Any pension reform could also include some increase in the time for new employees to become vested. This could be palatable for the new employees if there is a stronger guarantee (I use the word with caution) that the state will annually meet its part of the funding relationship.

Comment by JustaJoe Wednesday, Jun 6, 12 @ 10:06 am
Capt. Illinis:

“As for [fill in any agency*]…they’re screwed until the state understands their value, since the last eight or ten years, they’ve been ravaged by budget cuts and less than desireable hires in upper management…”

*Except CMS, which has grown fat at the expense of the operating agencies.

Comment by Anonymice Wednesday, Jun 6, 12 @ 10:10 am
You cannot legally distinguish vested vs non-vested employees. Their legal status is the same. They were both hired with the same Constitutional protections. A law like that violates Equal Protection

Comment by Generation X Wednesday, Jun 6, 12 @ 10:22 am
Captain Illini is right-there is no quick fix to a self-inflicted problem that started a long time ago. If the proposed law is ruled unconstitutional for retirees as it may well be, the proposed law won’t help and will actually create a bigger mess.

Comment by Soccertease Wednesday, Jun 6, 12 @ 11:31 am
A top to bottom review of the DNR’s mission is urgently needed. There has been too much mission creep into projects like the World Shooting Sport Complex, a $50 million project, while some basic functions like ecological restoration have been extremely neglected and/or short changed. Should the DNR be promoting the ATV industry by providing grants for ATV parks? Whe are bean counters at CMS ham stringing the agency? How many sub performing political hacks are employed in the agency? How difficult would it have been to implement a park user fee system instead of the $2.00 registration fee increase (out of state users will still be subjected to user fees)? The list of questions could go on and on.

Citizens are due an extensive public hearing in the legislature before sponsors of the IDNR funding bill send this back up for vote, even if they do have the votes.

Comment by vole Wednesday, Jun 6, 12 @ 11:49 am
–In fact, the new folks would presumably be lower on the salary scale and their pensions costs would be lower (for the taxpayer) as a result of the recent reforms.–

Unfortunately, the employee that’s retiring was paid more and was paying in more to the retirement system. Now they will start drawing retirement and the employee that replaced him/her is making less and contributing less to the retirement system, so the unfunded percentage will only increase.

Comment by Tommydanger Wednesday, Jun 6, 12 @ 12:27 pm
I went to a retirement reception on May 30 for a former coworker in a small office. Much to my surprise about 8 other people were leaving by the end of the next day. These are people that keep the state’s bills paid. What’s the new word everybody likes to use, contagion, that’s it…

Comment by Mouthy Wednesday, Jun 6, 12 @ 12:28 pm
AC:

Increasing the employee contribution to full pick-up would mean that 40% of an employee’s salary would go towards their pension. That’s hardly a fair solution or a viable one.

Comment by Demoralized Wednesday, Jun 6, 12 @ 12:52 pm
About three weeks ago I was able to go with my niece on a field trip to the Kankakee State Park. It was absolutely beautiful but what made the trip more educational was the DNR person who led our “hike” around the river (it was a class of 8 and 9 year olds, so it was a very tame hike). She was able to do some great hands-on teaching about the history of the river, the geology of the area, etc. It would be really sad to lose these folks as a resource.

Comment by The KQ Wednesday, Jun 6, 12 @ 1:00 pm
At this point I think you need to add everything imaginable to a bill, stuff in a bunch of serverability clauses, throw it at the courthouse wall and see what sticks.

It’s quite possible that the cost shift is the only thing hangs on.

Comment by Choice? Wednesday, Jun 6, 12 @ 1:18 pm
Demoralized: The full pick up has a specific legal meaning, and is well defined. For most state employees it is 8% + .5% for a total of 8.5%. I’m not sure of the exact number for the locals but it is no where near 40%.

Comment by AC Wednesday, Jun 6, 12 @ 1:31 pm
@ Gen X, courts across the nation have interpreted constitutional rights differently — your retirement benefits as of date of hire, date of retirement, date of vestment? But, courts seem to generally agree that benefits can be changed going forward, not going backwards. Tier II cannot be legally implemented the way it was written because they overlooked establishing a minimum benefit amount for employees not participating in Soc Sec. Cullerton’s proposal is an appeasement and not really pension reform since it’s the university retirement system eating up most of the benefit payout.

Comment by Emily Booth Wednesday, Jun 6, 12 @ 3:51 pm
It would be interesting to see the scoring for a bill that would eliminate the COLA and Health insurance contributions from the pension fund for “retirees” who are still working, some as consultants in their old jobs or in new jobs in another pension fund.

Some public employees can take a pension and keep working in the same organization. For example, a teacher in the TRS can take full early retirement benefits and health insurance under their “retirement” plan, then start the next day as a subsitute teacher, crowding out the young teachers who want to stay in education until there’s an opening.

The laughable thing was this “double dipping” was supposedly necessary because of a “teacher shortage”

It is not unusual for these “retirees” to get first call over perhpas better suited younger teachers becasue the more days you work as a sub, the higher rate they pay you.

Comment by Palos Park Bob Wednesday, Jun 6, 12 @ 4:20 pm
AC:

The state’s portion of the pension cost for employees is nearing 40% of salary. I’m unclear as to what you mean by “full pick-up” of costs if you are not referring to the full cost of the pension.

Comment by Demoralized Wednesday, Jun 6, 12 @ 5:11 pm
I assume Bob, you’d have no problem with a state retiree obtaining a private sector job in their retirement. State retirees worked under the agreed upon contractual terms over the life, some with over 3 decades of employment in various positions with the state. Those contractual terms detailed both current and deferred compensation. Your concept of what the pension should be is irrelevant. It’s deferred compensation. Already earned contractually by state employees. If a retiree wants to work, after beginning to receive their earned, deferred compensation from a previous position, in a new position that would cost the state quite possibly more to fund if it went to another applicant, that new exchange of services for compensation according to equal employment opportunity laws should be open to all qualified applicants without exception. The USA is based on the rule of law. That’s what you’re advocating against. That is un-American. If you don’t believe that, you’ll soon have it hammered home in court. I’ll be the one with the hammer. See ya soon.

Comment by PublicServant Wednesday, Jun 6, 12 @ 7:26 pm
I seriously hope, as do many people I talk with, that not only do record numbers of public employees race out the door, leaving people scratching their heads, wondering what ever happened to the services they’ve enjoyed? but I pray that parents do NOT allow their kids to go into Education and the REAL bottom of the barrel reigns in the classrooms of the future! We told our kids that if they chose Education, we’d cut them off from any financial help we could scrounge together for their college degree. The public not only deserves what they get, they deserve the worst because that’s what they’re asking for. New hires? Hope there aren’t too many that can read or “serve” the public that feels such repulsion for them.

Comment by Inactive Wednesday, Jun 6, 12 @ 8:49 pm
Four of 12 in my office since December.

Comment by park Wednesday, Jun 6, 12 @ 8:59 pm