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“Evolving” positions

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* Back in March, the Chicago Tribune editorialized against a provision in the Nekritz/Cross/Biss pension reform proposal that guaranteed the state would make its pension payments in the future…

One caveat on Biss’ bill: It includes unfortunate language that would put the state on the hook for regular payments into the pension funds as a contractual obligation. That’s a worthy commitment, but also one stronger and more enforceable than what’s now in state law. Which makes it a precarious requirement that we hope the House will eliminate.

Well, Speaker Madigan’s new pension bill has even stronger pension payment guarantees than the NCB bill. From the HDem analysis…

If the State fails to make a required payment under the funding schedule or fails to contribute the additional $1 billion promised above, the systems will have a right to bring a mandamus action to compel the State to make the payment. Each Board will have a fiduciary duty to bring an action if necessary. Payments compelled under this provision are expressly subordinate to the state’s debt service obligations.

* So, what did the Tribune say today? Well, they didn’t even mention the pension payment guarantee in their editorial and enthusiastically endorsed the bill…

We hope to see swift approval in the House.

* Meanwhile, the governor has “evolved” yet again…

“This is the way forward,” said Brooke Anderson, spokeswoman for Gov. Pat Quinn, who has promoted several elements in the Madigan plan. “This is the fastest way to pension reform.”

Since the beginning of this year, Quinn has backed Senate President John Cullerton’s SB1, laid out his own “fundamental elements” that were promptly ignored [Adding: MJM’s bill includes pretty much everything in those elements, however], backed Madigan’s three pension bills that passed the House as the best approach to reform, and now has endorsed the Madigan bill.

* From the We Are One Coalition statement on Madigan’s bill…

we want to work together to solve the pension problem

But…

Cullerton said earlier Tuesday that he is continuing to meet with union representatives in an attempt to reach a compromise. However, in an email Tuesday, union representatives said the chance of reaching an agreement “at this time looks dim.””

Hmm.

* The biggest unanswered question, however, is what Senate President John Cullerton will do if and/or when Madigan’s bill passes the House. The two men have long been at loggerheads over how to proceed. Greg Hinz has the statement…

“The speaker and Cullerton have the same goal with different approaches,” the statement says. “Cullerton has worked to build consensus for a plan that is clearly constitutional. To that end he has sought to work with Republicans, members of his caucus and labor leaders. Those efforts will continue this week.”

Then comes the knife:

“The roll call on SB 35 may be instructive to those who are guessing at how unilateral pension changes will fare in the Senate,” adds the statement, referring to an earlier bill that is quite similar to Mr. Madigan’s new proposal. That bill “only received 23 yes votes,” well short of the 30 needed.

Ms. Phelon concludes on a more moderate note, saying, “There is an increasing urgency that the General Assembly finalize some action on this issue.” But the test of wills surely looks like it’s on. If Mr. Madigan’s bill passes the House, will Mr. Cullerton refuse to call it for a vote in the Senate, like Mr. Madigan now is doing with Mr. Cullerton’s S.B. 1 by amending it to his liking?

* More…

In a state Senate hearing earlier Tuesday, Cullerton pushed back against deep pension cuts proposed by state Sen. Jim Oberweis, a Sugar Grove Republican. The Illinois Constitution says pension benefits can’t be diminished.

“We’re not making this stuff up,” Cullerton said. “This is a constitution.”

The unions had better get to the table soon.

* And even Speaker Madigan is evolving…

Madigan left out a plan to make suburban and Downstate school districts pick up the state’s tab for paying the pensions of retired teachers and school administrators, which he had identified as a top priority.

Brown said that issue could resurface before the scheduled close of the spring legislative session May 31.

posted by Rich Miller
Wednesday, May 1, 13 @ 9:46 am

Comments

The Chicago Tribune editorial board evolves its positions so regularly, it should run for public office.

Comment by siriusly Wednesday, May 1, 13 @ 9:49 am
I don’t get what you mean about the Unions They looks to be at table with Cullerton. This all looks like Madigans bully stuff and maybe Cullerton and the Unions have tired of it

Comment by RNUG Fan Wednesday, May 1, 13 @ 9:55 am
===I don’t get what you mean about the Unions ===

Read the post…

===union representatives said the chance of reaching an agreement “at this time looks dim.””===

Comment by Rich Miller Wednesday, May 1, 13 @ 9:57 am
I did It could be because the house wont act on anything the Senate does not because of a cullerton /Union Breakdown

Comment by RNUG Fan Wednesday, May 1, 13 @ 9:59 am
===The Illinois Constitution says pension benefits can’t be diminished.

“We’re not making this stuff up,” Cullerton said. “This is a constitution.”===

That pesky Constitution is melting Jim Oberweis’ Ice Cream again!

To the Post,

While the Constitution is quite clear, in the negotiated aspects of what Cullerton and Madigan are trying to do, the Unions can NOT be passive in this and expect due process in … the process.

Comment by Oswego Willy Wednesday, May 1, 13 @ 10:04 am
The “funding guarantee” in SB1 is nearly worthless and far less strong than the Nekritz approach. What SB1 now does is guarantee funding as set in law which means that the GA could pass a pension holiday, but the unions could rest easy because the funding in the holiday is guaranteed to be paid. See page 141 line 21.

I was very surprised to say the least that the We Are One Coalition didn’t hit on this at all today. They truly are bested again by Madigan.

Comment by Big D Wednesday, May 1, 13 @ 10:07 am
Why does anyone think Madigan will ever allow the “mandated” state contribution to be made. He has always allowed the legislature to dodge their funding responsibility in the past (perhaps even orchestrated it). We can’t trust anyone apparently. 401k plans will primarily benefit those who are not state employees (fund managers, financial managers, etc) …you know….the same people that are pushing for the 401k plans. As state employees…we are screwed. Call the lawyers…..

Comment by Jasper Wednesday, May 1, 13 @ 10:13 am
If this awful bill passes, it will open the flood gates for reneging many other pensions, both public and private sectors.

Madigan’s constitutional argument, oddly embedded in the bill, that there is no other way to go forward is totally false. Illinois can easily avoid welching on contractual pension obligations to it’s workers by raising income taxes to be closer to the much higher progressive rates in other big business states like NY and California.

Many state politicians seem answerable to the ultra-high income interests, not to the ordinary folks that will suffer with this grossly unfair bill.

It is a sad state of affairs.

Comment by cod Wednesday, May 1, 13 @ 10:14 am
===See page 141 line 21. ===

I looked at that page and that line and didn’t see it. Please illuminate us.

Comment by Rich Miller Wednesday, May 1, 13 @ 10:17 am
“If the System or a department submits a voucher for
contributions required under Section 14-131 and the State fails
to pay that voucher within 90 days of its receipt…”

So the State is guaranteed to make a payment as required in section 14-131, which in the bill starts on page 129 if you are following along. Section 14-131 is just the required state contribution that is set by law meaning that if the General Assembly makes a change to the funding schedule in 14-131 then the State is only guaranteeing whatever they set in statute.

Complicated but the story is the guarantee only guarantees whatever is in statute for that year’s contribution. The same language is in all the systems.

Comment by Big D Wednesday, May 1, 13 @ 10:26 am
So a pension plan goes to court with a mandamus action to force the state to make its contribution. The court issues an order of mandamus against the governor, GA, treasurer, etc. to pony up. How does the state judiciary enforce such an order against a co-equal branch of state government?

Comment by Cook County Commoner Wednesday, May 1, 13 @ 10:27 am
=== Illinois can easily avoid welching on contractual pension obligations to it’s workers by raising income taxes to be closer to the much higher progressive rates in other big business states like NY and California.===

That wouldn’t be “easy.” Doing what you demand would require a constitutional amendment, which will mean a three-fifths in both chambers and then a popular vote.

If you think that’s “easy,” then you’re crazy. Sorry, but you are.

Comment by Rich Miller Wednesday, May 1, 13 @ 10:28 am
Madigan and Cullerton have had different approaches to addressing this problem from day one. It has nothing to do with anyone being a “bully”, or resistence between the chambers on general principles.

Cullerton has taken what he perceives as the quicker, safer route legally and politically; Madigan has gone for the deepest and hardest changes that would produce more for the long term, if they stick. He was equally aggressive and correct about the “cost-shift” IMHO, but had finally to back off for suburban and downstate support.

Do we want to wade in carefully, and hope to ride out the tsunami, or run for higher ground? Time to get moving.

Comment by walkinfool Wednesday, May 1, 13 @ 10:29 am
There’s another card to play here if there a grand bargain can’t be reached between the state and the unions. The state could simply get out of the health insurance business for retirees.

Comment by wordslinger Wednesday, May 1, 13 @ 10:33 am
Quinn’s for whatever “is the fastest way to pension reform.”

Comment by walkinfool Wednesday, May 1, 13 @ 10:34 am
As I commented in yesterday’s post, the guarantee doesn’t allow an individual retiree to sue the State or the system’s for failing to act as specified in the statute. That was in previous versions of the bill. This version only allows one STate entity to take action against another State entity; there is nor provision for an outsider (read retiree) to force any entity to take action.

Comment by RNUG Wednesday, May 1, 13 @ 10:37 am
Bruce Dold made it to the White House Correspondents dinner, their interview of Sandra Day O’Connor “rethinking her stand on that small bush gore call” made national news so the Tribune is good.

meantime, not an oberweis fan but nice to see a Republican down there standing for something other than political squishiness. more please.

Comment by shore Wednesday, May 1, 13 @ 10:38 am
Personal opinion:

While I would prefer it to be constitutional, at this point I just want to see something get passed so the lawsuits can start and we can eventually get to some kind of certainty in about 2 years after the courts have their say.

Comment by RNUG Wednesday, May 1, 13 @ 10:42 am
Congratulations to Speaker Madigan for introducing the most significant attempt at pension reform. Sure, the special interests are yelping. That’s to be expected. But his preamble speaks volumes to why the average citizens out in voter land want to see significant reform — not easily-passed proposals that don’t solve the problem.

Comment by NW Illinois Wednesday, May 1, 13 @ 10:53 am
‘Welching’ is an ethnic slur. Just thought you’d want to know so you don’t mistakenly slander the Welsh anymore.

Comment by Chavez-respecting Obamist Wednesday, May 1, 13 @ 10:54 am
I think some form of the pension reform will pass and be signed into law with great fanfare and declarations that the problem has been taken care of and everybody will run for re-election claiming credit for having done a great job of taking care of the state finances.

Then after the election and before the new GA convenes the courts will declare parts of the “solution” to be unconstitutional (likely the COLA change) and then the temporary income tax will then be extended to take care of the court’s decision. The legislators will fume and blame the courts.

Comment by Cassiopeia Wednesday, May 1, 13 @ 10:58 am
Chavez-respecting Obamist - @ 10:54 am:

Just as an FYI … the term has come to be used as shorthand in the pension discussion because it was included in the title of the widely referenced Eric Madiar analysis of the pension problems

Comment by RNUG Wednesday, May 1, 13 @ 11:08 am
Gov. Quinn’s position keeps evolving because he wants a pension plan–any pension plan–to pass so he can say he got a pension deal done.

Comment by Fan of the Game Wednesday, May 1, 13 @ 11:18 am
There are reasons that items become codified into a state Constitution. One reason is so that the Legislature can’t mess it up by passing laws that diminish or invalidate the codification. Now, 43 years after the 1970 Illinois Constitution was ratified, we have legislators who are trying to abridge the Constitution through any number of mental gymnastics.

Agreed, the pension problems as they stand are a bitter pill for the people of the state of Illinois, but it is the Constitution. As one previous writer noted, the larger population of Illinois received goodies as a result of the legislature’s failure to pay up in the past; therefore, the larger population of Illinois is going to have to pay the piper now for the legislature’s lack of attention and the public’s willing acceptance of “stolen” money.

One question: when will the people of the state of Illinois send a message to the legislature by ousting those who continue to do stupid things?

Comment by ProblemChild21 Wednesday, May 1, 13 @ 11:24 am
==How does the state judiciary enforce such an order against a co-equal branch of state government?==

I’m also curious about this and hoping that someone will provide some perspective. If the Supreme Court can accept that this ‘fiscal crisis’ is justification to override previous constitutional precedents why couldn’t the GA declare another crisis a few years from now because of an urgent need to fund member projects?

Comment by Out Here In The Middle Wednesday, May 1, 13 @ 11:42 am
It’s hard to put much faith in any legislation when you consider the state’s outrageous debt despite a constitution which states, “Proposed expenditures shall not exceed funds estimated to be available for the fiscal year as shown in the budget.” In other words we are $10 to $100 billion in the whole despite a supposed balanced budget amendment.

Comment by Caveman Wednesday, May 1, 13 @ 11:49 am
==How does the state judiciary enforce such an order against a co-equal branch of state government?==

What was it Andrew Jackson once said?

“John Marshall has made his decision; now let him enforce it!”

Comment by RonOglesby Wednesday, May 1, 13 @ 11:56 am
==“We’re not making this stuff up,” Cullerton said. “This is a constitution.”==

You’re only for something when it suits you, constitutions included.

Comment by Precinct Captain Wednesday, May 1, 13 @ 12:14 pm
Word, if they go that route hopefully they will do it before the Supremes take up the appeal on 1313. It will add a fresh perspective on the breaking of the state’s commitment to provide health benefits.

Comment by Norseman Wednesday, May 1, 13 @ 12:25 pm
I Am not an attorney. So, maybe one can clarify this for me.

Retired… Union, nonunion.. We all are on a level playing field… We all have the same gaurenteed constitutional protections. If the state imposes on nonunion retirees a negotiated settlement… Negotiated by a union that in some cases could be hostile to their individual interest… Would this not weaken the legal argument of constitutionality?

Comment by Legal question??? Wednesday, May 1, 13 @ 12:37 pm
Also, even those retired as union members would be at a disadvantage. Active workers vote in the union. Active workers pay dues into the union. Active workers ratify a contract. Active workers serve as officers and are on committee that elect Henry Bayer. Retired workers have no voice in any of this. Would not the union be tempted to take care of active union members over ones who are not active. Agree to a provision against retired workers. Maybe for an extra 1 percent raise. Just thinking out loud.

Comment by Legal question??? Wednesday, May 1, 13 @ 12:45 pm
@NW Illinois; Madigan is a big reason (biggest?) why the state and taxpayers are in this mess. The state refused to pay the pensions in full, increasing the pension debt, and now that pension debt is out of control, Madigan’s solution is to introduce/pass something that is more than likely unconstitutional. Giving him kudos is like thanking someone for giving you _______.

Comment by From The 'Dale to HP Wednesday, May 1, 13 @ 12:48 pm
A worker retired, does not even have standing to file an unfair labor practice against the union for not representing his interest. An active union worker has all the leverage previously listed, but also has the right to file an unfair labor practice against the union. So, I don’t know if Cullerton’s bill is more constitutionally sound… Or not.

Comment by Legal question??? Wednesday, May 1, 13 @ 12:52 pm
What can the union offer at the bargaining table, aside from increased employee contributions? Most legislators viewed closing tax loopholes as a non starter. Everything else is unconstitutional diminishment, something that the union isn’t going to discuss. I can’t imagine the backlash we are one would face if the agreed to diminished pensions.

Comment by AC Wednesday, May 1, 13 @ 12:56 pm
- Precinct Captain -

===You’re only for something when it suits you, constitutions included.===

You can be for something and it can be unconstitutional.

You can be against something and it can be unconstitutional.

Heck you can be AGAINST something that IS constitutional,…

but the goal for everyone involved is to get behind something that has a CHANCE to BE constitutional.

Tough “ask” so far.

Comment by Oswego Willy Wednesday, May 1, 13 @ 1:03 pm
I really think it is going to be super difficult to prove police powers are necessary when there are sound actuarially proven proposals of dealing with unfunded debt that do not put the state in bankrupt-like status.

Comment by mid-level Wednesday, May 1, 13 @ 1:05 pm
Legal - Constitutionality does not lie in who negotiates anything, but rather in whether a law or agreement is in concert with the constitution. Sometimes, the constitution is quite clear, other times vague and requiring interpretation. In the case of pensions, the codification is quite clear. In addition, the legislators who were involved in drafting the constitution have been very, very clear about the intent of the elements, which is usually reviewed and often quoted by justices prior to making rulings.

This makes for interesting fireworks after the legislature passes whatever they will eventually pass. The biggest question is whether the courts will stick with the constitution, or find some wiggle room to allow the legislature to override or sidestep the will of the people, formed in the 1970 Constitution?

Comment by ProblemChild21 Wednesday, May 1, 13 @ 1:06 pm
Frankly, I hope vendors are next. I mean, if Madigan is so non-plussed about abrogating worker pension payments, I’d love to see this same “dire fiscal” strategy and rhetorical “we’re in debt, therefore we need to upend the constitution” frenzy applied to nullifying all vendor payments down the road.

In fact, if this nullify the constitutional language strategy and frenzy works — and manages to actually diminish benefits after a judicial review — I wish Madigan would recruit a lobbying team in DC and do the same for the 2nd amendment. It’s nice to know that “infringed” (as in the U2 2nd amendment) is sacrosanct, while “diminished” (as in Illinois) is a mere technicality.

Comment by Frenchie Mendoza Wednesday, May 1, 13 @ 1:12 pm
The unions should be at the table. However, their past position is that any “reform” include an iron-clad enforcement mechanism to ensure employer pension contributions. Haven’t seen that yet. While Leader Cross’ position has evolved since this statement:

==After the hearing, Cross conceded there is no mechanism to make the legislature meet its obligations.==

http://www.sj-r.com/top-stories/x1355383674/Cross-pension-bill-spells-out-employee-contribution-levels?zc_p=2

Most union members I’ve met think any law to guarantee pension contributions would be ignored, or “BIMP’ed,” on a regular basis and we’ll be right back where we started.

Comment by Anyone Remember? Wednesday, May 1, 13 @ 1:21 pm
Frenchie - While we’re at it, what the hell? Let’s just get rid of all of the constitution that we don’t like or that isn’t interpreted in ways we like. Even better, let’s just do away with constitutions and let the legislatures and administrations make it up as they go.

Elected public servants (I say that with a twitch) swear to uphold the constitution. Let them do so…

Comment by ProblemChild21 Wednesday, May 1, 13 @ 1:26 pm
OW, ANYTHING has a CHANCE of being constitutional, but similar to having advanced stage cancer, while it has a chance of going into remission, I’d still be preparing for the funeral.

Comment by PublicServant Wednesday, May 1, 13 @ 1:34 pm
Raising the flat personal income tax rate to 6% and keeping it there permanently is completely legal and constitutional, and would probably generate $3 billion per year in revenue above and beyond what the current 5% rate is raising. Eliminating the income tax exemption for all forms of retirement income is completely legal and constitutional, and has been estimated to generate an additional $2.5 billion per year in revenue.

I suspect the pension contract breaches Madigan is proposing would save the state at most $2 billion per year. How can he possibly argue in his preamble that the state has no other alternative when legal, constitutional alternatives do exist that would raise substantially more money?

Comment by Andrew Szakmary Wednesday, May 1, 13 @ 1:35 pm
- PublicServant -,

I didn’t say the “remedy” would “cure” the patient, I was coming at it from the political “constitutional goal” side.

If you feel the need to prepare for the worse with Illinois as a patient, go for that too.

If one way to find the cure would be to utterly dismiss the most logically unconstitutional manners to address the issue, I think you would be in the camp of trying to save the patient.

Food for thought.

Comment by Oswego Willy Wednesday, May 1, 13 @ 1:43 pm
And Andrew, since there is so much uncertainty regarding whether the temporary income tax hike will be extended, making it permanent would eliminate all that uncertainty, and actually help the economy. It would also go a long way towards satisfying the bond rating agencies, depending on how that revenue is used.

Comment by PublicServant Wednesday, May 1, 13 @ 1:53 pm
There is another aspect of the so-called COLA that many are not aware of. At least in SURS, where most people retire under the money purchase formula (rule 2), it is explicitly stated that 0.5% of a workers salary that is contributed each year is not a normal contribution, but goes towards providing the COLA in retirement. This is further evidence that retirees have prepaid for the full 3% COLA they are receiving and are contractually guaranteed these payments.

If the courts allow COLA breaches for SURS members who have retired under rule 2, there is no limit to the amount of mischief governments can do. For example, the U.S. Treasury has issued hundreds of billions of dollars of TIPS (Treasury Inflation Protection Securities), wherein coupon interest payments and principal payments are indexed to the CPI-U. Given the Illinois precedent couldn’t the Treasury say, well, we will suspend indexation for five years, and then we will only index a small portion of each coupon payment and the principal payment, never mind the indenture under which the bonds were issued?

Comment by Andrew Szakmary Wednesday, May 1, 13 @ 1:59 pm
Andrew - Good comments on legal and constitutional methods of increasing revenue streams and solving problems. Madigan’s “no other alternative” delineates those which he thinks he and the ILDems can politically survive, and little other.

Comment by ProblemChild21 Wednesday, May 1, 13 @ 2:14 pm
CR Obamist, as a person of Welsh descent, I resent your calling it a slur. Frankly, I always preferred to think that the insult referred to that vile tasting fruit drink. But you had to go and link it with us Celts. Thanks alot,

Comment by dupage dan Wednesday, May 1, 13 @ 4:21 pm
Andrew, TRS’ers also contribute .5% toward the AAI as it is called in statute. That’s an interesting observation in re: that slice of the contribution not being normal cost, but I’m not sure that the actuaries would agree with you. Need to research further.
I dislike these proposals as much as anyone, but you’re also wrong to say that the .5% contribution for the AAI makes it “fully prepaid.” This has been studied extensively in the recent past and the actuaries have determined that the contribution no longer supports the cost of the AAI-not even close.
Why do you think all these proposals are out there to kill it, cap it, or lower it?

Comment by Arthur Andersen Wednesday, May 1, 13 @ 6:52 pm
To finish off my last comment: Pretty slick, Mike. I swear, sometimes, this man at times can make even the great “Slick Willy” smooth talker (i.e. Former President Bill Clinton) look like an Amateur!!!

Comment by Just The Way It Is One Wednesday, May 1, 13 @ 7:05 pm
==but you’re also wrong to say that the .5% contribution for the AAI makes it “fully prepaid.” ==

True, but not in the way you think. The AAI is “fully prepaid” because the teachers performed the services they were required to perform to earn it. Whether the contract says “We’ll pay you $50,000 and withhold $5,000 for retirement and AAI,” or says “$4,750 for retirement and $250 for AAI,” or “We’ll pay you $45,000 and pick up your retirement and AAI,” it all comes down to the same thing: “You do the work, and you get $45,000 before taxes and retirement with AAI.” Trying to interpret any of those provisions differently is just accounting smoke and mirrors.

Comment by Anon. Wednesday, May 1, 13 @ 7:07 pm
http://www.ieanea.org/2013/05/01/cullerton-union-proposal-credible-constitutional/?fb_source=pubv1

Guess there was no breakdown in the Union/Cullerton Talks-now the house I would be nothing on that one

Comment by RNUG Fan Wednesday, May 1, 13 @ 7:38 pm
In evolutionary theory rapid evolution is known as saltation or punctuated equilibrium

Comment by RNUG Fan Wednesday, May 1, 13 @ 7:41 pm
Anon 7:07 that is ridiculous.

First of all, I’ve read plenty of CBAs and exactly zero mentioned the AAI.

Secondly, mixing the cost of the benefit and whether or not it was “earned” is frankly irrelevant. I think I earned my AAI, too, but I can read the experts’ findings and face the facts.

Finally, talking about the district picking up your contributions isn’t probably the savviest political move at this moment. Just friendly advice.

Comment by Arthur Andersen Wednesday, May 1, 13 @ 8:20 pm
The Trib wants to apply a loose interpretation to the pension clause, essentially emasculating it. I bet they don’t favor similar treatment of the freedom of the press clause. Nor do our friends on the Right want the Second Amendment treated that way.

Comment by reformer Wednesday, May 1, 13 @ 8:46 pm