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We Are One coalition blasts pension reform bill

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Illinois

* From a We Are One coalition press release…

“We are extremely disappointed that Governor Quinn and legislative leaders have shut out the voices of workers and retirees in their latest talks on pension legislation. Instead, once again, Illinois politicians are preparing to use unconstitutional schemes to ruin the retirement security of hundreds of thousands of Illinoisans while ignoring the state’s revenue problem.

If the General Assembly rams through last-minute legislation that violates the Illinois Constitution, we are prepared to sue to protect the hard-earned benefits of teachers, caregivers, corrections officers, university employees, and others.

It doesn’t have to be this way. The coalition has put forth a real plan to fix the state’s pension funding problem and called to meet with lawmakers at a mid-January summit. Our plan — to create an ironclad guarantee, curtail corporate welfare by closing tax loopholes, and share in the sacrifice by asking employees to pay more into the pension systems — remains the only fair, constitutional, and sustainable proposal on the table.”

Thoughts?

posted by Rich Miller
Sunday, Jan 6, 13 @ 1:05 pm

Comments

–…while ignoring the state’s revenue problem.–

It’s unrealistic to think the GA would go for more revenues after the income tax increases. It will be tough enough to keep the last increases from sunsetting.

Comment by wordslinger Sunday, Jan 6, 13 @ 1:09 pm
Heavy lifting on the tax front will ultimately need to be done. It’s even more unrealistic to put it off Word.

Comment by PublicServant Sunday, Jan 6, 13 @ 1:13 pm
I get dismissed for talking about tax increases, but if you want to fix it in less than 30 or 40 years, the math says additional revenue has to come from somewhere … and I don’t see much deeper cuts in any current program spending.

Anyway, back to the posting point … AFSCME has at least put a couple of ideas on the table; they should at least be considered.

Comment by RNUG Sunday, Jan 6, 13 @ 1:19 pm
There is only one side that has kept their part of the bargain. They are not allowed in negotiations. No matter what is passed there will be a way for the legislature to not make payments. You also watch and see if somewhere down the road the GA pension system gets opted out of reform. It will be hidden in another amendment somewhere. They caused the problem not anyone else.

Comment by He makes Ryan lookalike a Saint Sunday, Jan 6, 13 @ 1:28 pm
===but if you want to fix it in less than 30 or 40 years===

No need for that.

Comment by Rich Miller Sunday, Jan 6, 13 @ 1:29 pm
I posted this on another thread but wanted to see if anyone here would agree with this. By the way it would now read in Springfield.

What is the population of this State ? Five people sit in a room in Chicago to decide how to fix the pension system that is so important to all of us - just wrong. No input asked for from any of the people this will affect, why not ? Are these five people smarter than the entire population of this State ?

Comment by Sgtstu Sunday, Jan 6, 13 @ 1:42 pm
Sgtstu, are you familiar with the theory of a constitutional republic?

Comment by Rich Miller Sunday, Jan 6, 13 @ 1:43 pm
So many uninformed people use the last state income tax increase to close their minds off from the benefits of a properly structured graduated tax structure that would reduce taxes for 94% of the tax payers!

Comment by Meaningless Sunday, Jan 6, 13 @ 1:48 pm
Rich- I’m not sure why you deleted my comment, but I still believe the time when the Unions will get their say in this reform process will be in court. The goal right now for the Governor and congress is to say they fixed the pension problem, even it they all know much of what they are proposing to do will likely not stand up in the courts.

Comment by Roadiepig Sunday, Jan 6, 13 @ 1:55 pm
An important part of the “state’s revenue problem” is the unrealistic Pension Ramp. In fiscal year 2013 the contribution jumps by 23 percent! Less than one third is for the cost of funding benefits. The rest is interest on the debt caused by borrowing from pension funds to pay for the cost of government. The Pension Ramp needs to be addressed first. This is the true emergency that is being overlooked.

Comment by Ruby Sunday, Jan 6, 13 @ 2:20 pm
A Constitutional Republic is a state where the officials are elected as representatives of the people, and must govern according to existing constitutional law that limits the government’s power over citizens. They all know any diminishment of a State workers pension is unconstitutional. My point is if two heads are better than one, would not input from others be of help ?

Comment by Sgtstu Sunday, Jan 6, 13 @ 2:22 pm
Rich, I am sure sgtstu gets the idea of a representative democracy, but with the two party, first past the post system in this country hardly anyone gets really represented. But that is besides the point….

It baffles me why the unions haven’t been at the table. Ultimately, they are the ones who are going to sue if the ‘reform’ is something they don’t like. Seems to me the pols know they can’t get the kind of savings they want in a constitutional manner; so they aren’t even going to bother to work around the clause. They will pass an unconstitutional bill, it will be overturned after a couple of years in court, and then they’ll throw their hands-up, not knowing what to do.

For the record, I thought Fortner’s original purposal was a good one that may have stood constitutional muster. Doesn’t seems like the pols like well thought ought solutions, just simple ones that raise retirement age, cap benefits, and removes COLA.

Comment by iThink Sunday, Jan 6, 13 @ 2:27 pm
Rich Miller @ 1:29 pm said: “No need for that.”

Then, other than getting lame duck votes on it, there’s no need to rush to fix it in one day or one week …

Comment by RNUG Sunday, Jan 6, 13 @ 2:39 pm
If this thing is going to pass the constitution test, AFSCME will have to get their say in on it. Everything else out there is too questionable. This took too long to develop, so there is not going to be any quick solution…sorry, Pat! There will be no fix this week.

Comment by Rusty618 Sunday, Jan 6, 13 @ 2:57 pm
Five guys are going to fix the pension problem?. It took 2 convicted governors and a clueless Illinois government to screw it up. They will push this bill through like they did the tax increase and screw the taxpayers and pensioners. The lame duck reps who vote will be awarded state jobs after they leave office like many did the last session. If they had a few Phd economists on the panel I think the taxpayers would have more faith in the process.

Comment by Rocketman Sunday, Jan 6, 13 @ 3:34 pm
Of course they will sue. That’s hardly a new thought. Nor is it a scary thought for legislators, who are unlikely to be blamed by most voters if the court overturns any aspects of pension reform legislation.

What would scare legislators is a statement to the effect that AFSCME will use its considerable financial and precinct-walking resources to work for the defeat of any legislator who votes for a
bill that effectively cuts retiree benefits. Is this the dog that didn’t bark? Or maybe these lame duck pension reform efforts are all a charade and not worth barking about, from AFSCME’s perspective.

Comment by cassandra Sunday, Jan 6, 13 @ 3:47 pm
Here is a novel idea. How bout all these present and former legislators who got a full time pension/healthcare for only 4 years of service give up those benefits? That makes more sense than to try and penalize those who give 30-40 years of contributions. How much money would that save?

Comment by Rocketman Sunday, Jan 6, 13 @ 3:54 pm
Rocketman,

Let’s go all the way to your suggestion’s logical conclusion (strickly tongue-in-cheek but …):

How about we citizens of the State introduce a bill requiring all current and past state government elected officials and representtives to follow the leadership of the founders of this county and “pledge to each other our Lives, our Fortunes and our sacred Honor” to solving this problem? Most the founders ended up broke after funding the Revolution. It would be fitting if the past Representatives, Senators and Govenors who caused the pension problem ended up in the same situation.

Comment by RNUG Sunday, Jan 6, 13 @ 4:12 pm
Cassandra, I’d contribute both my time and money to that effort, and I fully expect it to be forthcoming.

Comment by PublicServant Sunday, Jan 6, 13 @ 4:39 pm
Given the numbers of employees and retirees in this state being affected by the benefit reductions, I am amazed that the hundreds of thousands don’t use their power to make a statement. How many prison employees called in sick to cause a lockdown? A bit disruptive to the normal day, I’d say. I can only imagine if there was a statewide stoppage of services. Do you think that would get anyone’s attention? Why oh why there is such civility and such demure requests is beyond me.

Comment by geronimo Sunday, Jan 6, 13 @ 4:58 pm
Messing with the retirement age, COLA, or pension amount all seem to be an unconstitutional reduction of benefit in my view. As deferred compensation, the healthcare benefit in retirement sounds like it will be deemed a breach of contract to mess with. The only leverage I think could be used is to increase the employee contribution, reduce pensionable income/raises, or fire/rehire employees under a new plan. Those options could be used to get employees to elect for retirement age increases, COLA decreases, etc to avoid those latter options. The GA should proceed carefully, though, because any changes they make will give up some of their leverage and make it difficult to make further changes should they be necessary. Trailer bills don’t work so well when every change is a potential unconstitutional benefit reduction so they need to get it right the first time.

Comment by thechampaignlife Sunday, Jan 6, 13 @ 5:25 pm
Changes…go nowhere unless the Legislators on Wednesday decide that they don’t have to abide by there oath of office. If they are trually our elected officials, they won’t pass any bill that is unconstitutional.

Comment by Cheech Sunday, Jan 6, 13 @ 6:02 pm
the GA can toot their horn on Pension reductions jan 9th but reality will kick in

To Whom It May Concern

April 13, 2010

The March 10, 2010 Tribune Op-Ed Don’t Call this Pension Reform by R. Eden Martin of the Civic Committee of the Commercial Club of Chicago and the March 27, 2010 Tribune Editorial, Yes You Can claim that Governor Quinn and the General Assembly should have gone further in bringing pension reform to Illinois by reducing the pensions not only of new employees, but of existing employees as well. My colleague, John Fitzgerald, and I have looked closely at this important State issue, and our conclusion is inescapable – as a matter of law, the pension rights of current employees simply cannot be diminished as Mr. Martin and the Tribune contend. (Our legal analysis is below)

The plain language of the Illinois Constitution’s Pension Protection Clause (Article XIII, Section 5) states that, “Membership in any pension or retirement system of the State . . shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

As courts in this State have confirmed, this language is crystal clear. Public employees become members of a pension system at the time of hire or shortly thereafter and once they become members, their pension rights are set and cannot be “diminished or impaired.”

This is exactly what the framers of the State’s 1970 Constitution intended. At the Constitutional Convention, one of the co-sponsors of the Pension Protection Clause succinctly illustrated the point: “Benefits not being diminished really refers to this situation: If a police officer accepted employment under a provision where he was entitled to retire at two-thirds of his salary after twenty years of service, that could not subsequently be changed to say he was entitled to only one-third of his salary after thirty years of service, or perhaps entitled to nothing.” Not surprisingly, as it noted in a 1996 decision McNamee v. State of Illinois , the Illinois Supreme Court has “consistently invalidated amendments to the Pension Code where the result is to diminish benefits” to which State employees acquired a vested right when they entered the pension system. Legal analysis that Sidley Austin LLP performed for the Civic Committee glosses over this controlling authority, misconstrues a comment that the Illinois Supreme Court made in a 1974 decision (which has been distinguished in subsequent cases), and incorrectly relies on a 1979 Illinois Attorney General opinion that has been trumped by subsequent Illinois Supreme Court decisions.

Any pension reform effort will depend on the strength of its legal foundation. The Governor and the General Assembly have been careful to comply with the Illinois Constitution’s Pension Protection Clause, as well they should. The alternative would be a short-lived pension reform that is invalidated by court order after protracted litigation, which would be a disservice to the taxpayers.

Comment by Anonymous Sunday, Jan 6, 13 @ 7:04 pm
and dont forget the verbatim

MRS. KINNEY: Yes, you are right, Mr. Lyons. That is what it is designed to do. Benefits not being diminished really refers to this situation: If a police officer accepted employment under a provision where he was entitled to retire at two-thirds of his salary after twenty years of service, that could not subsequently be changed to say he was entitled to only one-third of his salary after thirty years of service, or perhaps entitled to nothing. That is the thrust of the word “diminished.” . . . It is simply to give them a basic protection against abolishing their rights completely or changing the terms of their rights after they have embarked upon the employment ─ to lessen them

Comment by foster brooks Sunday, Jan 6, 13 @ 8:02 pm
So the ramp jumps 23% this year. If the courts force the contract to be honored (which seems likely) and additional taxes to cover that 23% is not likely, where does the actual cash come from? Going to cut vendors, providers,and others with equally legit state contracts that are already 6-8 months behind? Many more people working for them than there are state employees and many of those companies are barely hanging on, often with no benefits.

Comment by zatoichi Sunday, Jan 6, 13 @ 9:54 pm
Zato..

The GA created the problem ramp, it is not in the constitution, and they can fix it with a stroke of the pen. Get rid of the ramp and set a more realistic timetable for repayment.
After all, the problem with Tier 1 employees has already been dealt with - new hires get drastically reduced Tier 2 benefits.

Comment by iThink Sunday, Jan 6, 13 @ 10:26 pm
When I read someone saying that unions will have to be involved for any changes to pass constitutional muster, it is simply not true. Conversely, if they are involved and negotiate, it only takes one person in a pension fund to file a constitutional challenge and be victorious/fail.

Comment by Law Sunday, Jan 6, 13 @ 11:50 pm
I am suspect of anything that Madigan has his hand in. Have we not seen that he has been in office the entire time when all these pension contributions were not made. They have neglected the problem for years and now are going to fix it in two days. Amazing it was also one of Madigans former employees who worked for him for a total of 8 years and then was employed by another angency and is getting a great state pension, below is a Tribune editorial regarding this..ENJOY READERS!! This is why the system is screwed up.

Gail Purkey wasn’t employed by the state of Illinois long enough during the 1980s to earn a state pension. Her stint with House Speaker Michael Madigan’s legislative staff, plus her time at the Illinois Arts Council, an agency chaired by Madigan’s wife, Shirley, totaled less than seven years. Then she left public employment for a job with the Illinois Federation of Teachers, a statewide group that includes the Chicago Teachers Union.

Purkey never returned to state government from her private-sector job with the union. But state government hasn’t forgotten her. The former IFT lobbyist and spokeswoman, now 58 and retired, collects a state pension of more than $100,000 a year. If she lives to age 78, she’ll collect a total of about $3 million in benefits from the State Employees’ Retirement System. This despite the fact that her final state salary was $36,800: Her pension instead is based on the average of her four highest salaries during her last 10 years with the union. That average was about … $195,000.

Related
State paying 6-figure pension to ex-teachers union lobbyist
Ads by GoogleOh, Purkey also qualifies for free health coverage.

What a fabulous retirement.

“I followed what the law said,” Purkey told the Tribune’s Ray Long in an interview. And what law is that? As Long reported Sunday in exposing this latest Illinois pension outrage, the state stands to lavish steadily rising payments to Purkey under legislation sponsored six years ago by Speaker Madigan and his allies in the General Assembly. She is receiving $101,909 this year. Add a compounding 3 percent cost-of-living increase in January. And the January after that. And the January after …

The law gave employees of a statewide labor organization who previously had worked in Illinois a six-month chance to rejoin the taxpayer-supported plan for state workers. A different provision in the law allowed two other IFT lobbyists to qualify for lifetime teacher pensions by working one day apiece as substitute teachers.

Purkey had to shift $666,300 into the pension fund in order to qualify for her benefits. That money, from Purkey and her union, covered employee and employer contributions, and was the equivalent of the contributions that would have been required if she had been in the pension system all along, plus interest. “What did strike me as I looked at the numbers was HOW MUCH MONEY I contributed to participate” in the pension plan, Purkey wrote in an email to the Tribune’s Long. “Looking at that total really drove home to me the commitment I personally made to participate.”

Is that so. Never mind that, in the first seven years after her retirement at age 56, Purkey’s pension payments will top the $666,300 that she and the IFT contributed. Should she live another 20 years, that $3 million in total payouts — much of it courtesy of Illinois taxpayers — will make her contributions look like a relative pittance.

Comment by Rocketman Monday, Jan 7, 13 @ 7:25 am
Here’s a test for intellectual honesty: if we can amend the state constitution to allow for progressive rates, why can’t we amend it to allow for reasonable pension reform (knowing full well that the US Constitution protects vested benefits)?

Comment by Think Big Monday, Jan 7, 13 @ 8:58 am
Not all pensions are the same, so why treat them the same? Some get 75%, 80% - some get full health care, some don’t. Madigan was quoted as saying they shouldn’t pay attention to details, just get something done. More of our government’s “ready, fire, aim” ways. Shouldn’t rush something as important and complex as this. Don’t be hasty to get something done in lame duck session. I do think we’re all going to have to tighten our belts, but some of the things I hear could be life changing, especially to those who have already had a “freeze” for up to 5 years. Finally, it seems silly to do something unconstitutional so that all parties will throw millions of dollars into law suits when we’re trying to figure out how to save money????
Amen to rocketman!

Comment by fed up Tuesday, Jan 8, 13 @ 7:09 am
They were smart enough in Springfield in 1970, to know that the politicians would attempt to steal pensions from the working people in the future. That is why they stated, you will not diminish pensions. Read the state constitution before you attempt to pass a bill, Tom Cross.

Comment by 1970 Tuesday, Jan 8, 13 @ 10:17 am