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Unions bring Cullerton “credible” pension proposal

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Illinois

* Subscribers have some extremely hard to come by details of organized labor’s pension proposal, but let’s start here with Senate President John Cullerton’s press release…

Since the beginning of session, I have made it clear that enacting constitutional pension reform is my top priority. Illinois faces a crisis; we owe it to our children and grandchildren to take action.

I have worked to build consensus for reform within my caucus and across the diverse factions on both sides of the aisle. In these pension discussions, I have expressed a preference for the framework that, in my view, has the best chance of holding up in court. I have also worked to include labor in these conversations.

Today, I concluded a series of meetings with representatives of teachers, nurses, police officers and other public employees. This coalition of labor leaders offered a credible and constitutional plan for consideration.

* From the We Are One Coalition…

Our coalition has consistently said that we want to work together with policymakers to address Illinois’ pension funding problem. We appreciate that, over the past several weeks, Senate President John Cullerton opened up dialogue with us, and we have worked diligently with him to find common ground. Today, we presented President Cullerton with a proposal that is both fair and constitutional, and we are heartened that he has responded positively to our efforts.

* Cullerton’s remarks to the media…

Cullerton said [yesterday] afternoon that he has not yet reached a final agreement with union leaders. But he says they have presented him a “substantial proposal” that his caucus will consider along with House Speaker Michael Madigan’s plan, if it passes Thursday.

“We’re not finished talking to them. We might want to make some proposed changes to their proposal. We just got it today,” Cullerton told reporters. “What’s significant is that they’re supportive of a major bill that saves billions of dollars, which I would say they’ve never been before. So that’s a major move. There’s still some details to work out.”

Cullerton said the union’s plan is based on the concept that workers must be offered something in exchange for pension cuts. He has maintained that without such a trade, any bill that reduces retirement benefits would be unconstitutional. “Since it’s not unilateral cuts, it doesn’t save as much money, but it’s billions of dollars,” he said of the union proposal.

When asked if he would call Madigan’s bill, Cullerton said he would consult his members. “We’re going to hopefully see what the caucus wants to do, whether they want to support that bill, or the bill that the unions are supportive [of] or a combination thereof.” He noted that the Senate has already rejected a bill similar to the one the House plans to vote on Thursday. “We’ll see if this has any differences that get more people to be supportive, but you know, it’s not like we haven’t voted on this already,” Cullerton said.

Speaker Madigan plans to call his own pension bill today. We’ll discuss that in another post. Also, make sure to keep a close eye on the session live blog post for updates on this and other issues as the day goes on.

posted by Rich Miller
Thursday, May 2, 13 @ 8:44 am

Comments

I think at this point public employees and retirees will embrace Cullerton’s plan even though it will cost them money over time since the current Madigan and previous Nekritz plans would have cost them far more. This coupled with the notice from CMS announcing that Medicare-eligible retirees will be forced into a state-selected Medicare advantage plan makes giving up state-sponsored health plans an easy decision. Retirees can easily get a “good” medicare advantage plan on their own and it will be less costly within a few short years to the Madigan alternative.

Comment by Cassiopeia Thursday, May 2, 13 @ 8:55 am
i am not so sure retirees will embrace any reductions of earned benefits. not sure how many retirees are/were included in the above “negotiations”. if none, its back to who has the standing to negotiate our rights away.

Comment by wizard Thursday, May 2, 13 @ 9:06 am
Cass, I think the whole purpose of this dance over the past few months has been to bring the unions to the position that they will accept something tough in order to avoid something tougher. As has been the norm lately, the unions held out to long too reach an agreement with the Speaker, who is about to do to them what he did on Tier 2. So now they reach an agreement with the President. That could make the next 30 days fascinating.

Comment by steve schnorf Thursday, May 2, 13 @ 9:09 am
Any good fiscal analyses on either one yet? It seems that Cullerton’s plan could save significantly less money than Madigan’s, but be more acceptable to key stakeholders and possibly the court.

But what is the tradeoff vs. the future taxes necessarily required to finally reduce debts and payables? Does Cullerton’s plan guarantee that we make the current tax rate increase permanent? Is Madigan trying to avoid that?

As bad as it would be, I’m still in the go big or go home camp on fixing this mess.

Comment by walkinfool Thursday, May 2, 13 @ 9:28 am
The courts won’t care if it is a union deal or not. Unions do not represent retirees. Following up on Cassiopeia- the people who will really take a hit are the under 65 retirees who will be forced into 2 choices both of which diminish the benefit.

Comment by Liberty_First Thursday, May 2, 13 @ 9:34 am
Re: Madigan’s proposal: the unions should be sending out to each retiree and future retiree a chart showing how much money they would lose over various retirement periods at various levels of retirement income at moderate to high inflation rates.

I still don’t think ordinary folks understand the pernicious effects of inflation sufficiently. The
(mostly) Democrats who are sponsoring this cola cut evidently do, though.

Comment by cassandra Thursday, May 2, 13 @ 9:36 am
Explain to me how being forced into a state-selected Medicare advantage plan makes giving up state-sponsored health insurance an easy choice. At 68 a good Medicare advantage plan with part B will cost me at least $300.00 a month. Maybe you have that kind of money to throw around but I don`t. I`m really getting rich on my $1000.00 a month pension. Easy choice my rear end.

Comment by Harry Wasko Thursday, May 2, 13 @ 9:36 am
Steve, Good comment.

I’m sure you’re right about the dance. I’m not sure it isn’t too late to break in. It will be fascinating.

Comment by walkinfool Thursday, May 2, 13 @ 9:38 am
Since I’m not a subscriber, I don’t know any of the details Rich has, but it’s very painful for the existing retirees I see a court challenge coming. Madigan and Cullerton may be able to bring the unions to the table but they likely can’t get all the individual retirees there. As shown by the cases consolidated into Maag, there are retirees willing to self-finance court challenges when the unions won’t.

Comment by RNUG Thursday, May 2, 13 @ 9:40 am
As one of the under 65 retirees with a under 65 dependent with pre-exisiting conditions, I don’t see any good choices on the health insurance if we are forced to make a choice between the AAI and insurance access. I’ve ran the numbers of previous proposals on the AAI reduction against my life expectancy and it’s a huge number. Either way I lose; either I lose … the only question is how badly.

Comment by RNUG Thursday, May 2, 13 @ 9:46 am
If the amount of money conserved isn’t enough to address the deficit, all this positioning will lead to naught.

Let’s run the numbers to be sure the effort is better than another kick the can down the road maneuver.

The next reform will be even harder because all the stakeholders will have recent memories of being ‘hosed’ by the last effort.

Comment by Plutocrat03 Thursday, May 2, 13 @ 9:46 am
How can the state force retirees to give up their regular Medicare and sign up for a Medicare Advantage plan? I assume I will still be paying my Medicare premium to the feds. And have money taken out of my pension going to the state. How does any of this make sense?

Comment by Concerned Retiree Thursday, May 2, 13 @ 9:49 am
“How can the state force retirees to give up their regular Medicare and sign up for a Medicare Advantage plan?”

If you are a Medicare-eligible retiree your state insurance is your secondary plan. CMS is selecting a Medicare advantage plan for you as your new secondary plan January 2014.

Comment by Cassiopeia Thursday, May 2, 13 @ 9:53 am
If you have to use a Medicare Advantage plan the premium you have deducted by the Feds goes to the plan, then based on the plan selected you pay an additional premium. Plans may also include dental and vision. Employers are able to establish unique MA plans under specific rules. If you want to understand these rules you check them out at http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c09.pdf

It does set a baseline as to what the minimum coverage is. The big issue is it is coverage that is limited geographically so if as a retiree you winter in other parts of the country this plan may not be the best unless it is designed well.

Comment by illinifan Thursday, May 2, 13 @ 9:59 am
Someone please tell me in the nth hour that we are not dealing with egos and bravado
on the pension issue.

I don’t see Madigan’s plan standing up in court, and I guess the Senate bill will never see the light of day in the other chamber. Deja vu all over again. Madigan wears the jacket for stubborness, and intractbility on the pension issue IMO…one man, holding countless captive…

Comment by Loop Lady Thursday, May 2, 13 @ 10:01 am
What the heck has happened to the Democratic Party? Even though it will take some time to change the “ironclad” hold the Democratic Party has on Illinois politics, the Dems have really turned their backs on their traditional support base.

Comment by Meaningless Thursday, May 2, 13 @ 10:02 am
Bottom line; until the state re-amortizes the current pension debt, enacts real prohibitions against state not making its contributions, enacts a progressive income tax as well as a sales tax on services then all this babbling of a supposed pension crisis is really non-sense and a big lie. This is disaster capitalism in the public sector.

Comment by Anonymous Thursday, May 2, 13 @ 10:03 am
===all this babbling of a supposed pension crisis===

Yeah, there are no problems at all. That’s why the unions came up with a big compromise solution.

Oh. Wait…

Comment by Rich Miller Thursday, May 2, 13 @ 10:06 am
Medicare Advantage is NOT an Medicare supplement plan. Medicare Advantage REPLACES regular Medicare plus a supplement. Medicare Advantage plans are not accepted by many doctors. In that case you do NOT have Medicare coverage.

A plan that supplements Medicare is called a Medigap plan. For Medicare eligible retirees, that is what our state insurance is.

How can the state force me to give up regular Medicare?

Comment by Concerned Retiree Thursday, May 2, 13 @ 10:18 am
If the Unions have given on benefits (not just kicking in 2% more and State makes up the rest) its too bad they didn’t start that 2 years ago. Moving the COLA down to 2% or a simple 3%
and reducing future benefits not yet earned might have had some traction - and might have avoided Madigan bill with, essentially, no COLA.

In Rhode Island (Madigan bill parallels their 2011 pension reform) the judge has had State and Unions in mediation for over 5 months. If settled through mediation - there will be benefits lost to some degree. Point being - winning in court doesn’t necessarily mean winning.

This might force a compromise that hasn’t been coming.

Comment by archimedes Thursday, May 2, 13 @ 10:21 am
==“I think there will be at least four members of the Illinois Supreme Court that will approve the bill,” Madigan said.==

How is it that Madigan can feel confident, in advance, how the four supreme court judges will vote on the constitutionality of his proposed $150 billion cut in pension obligations? Doesnt that raise some serious questions about the independence and objectivity of the court system??

Comment by cod Thursday, May 2, 13 @ 10:28 am
Sorry for the typo in my previous post…

Archimedes may be onto something here. Force the Speaker, Senate Prez and Union leaders into court ordered mediation…oh yeah, JRS is not included in said pension rework…I guess this could be good or a bad depending on which side of this thing you are on…politically, one must admit it is very convenient for the powerful in the Statehouse…

Comment by Loop Lady Thursday, May 2, 13 @ 10:29 am
Illinifan, thanks for the information.

I guess the state can force us to replace Medicare with Medicare Advantage.

But I do not have to like it.

And it makes this bid that CMS is going out for all the more important. If all they are going to specify is that the state save money, many of us could basically be without any insurance.

Comment by Concerned Retiree Thursday, May 2, 13 @ 10:29 am
–
Force the Speaker, Senate Prez and Union leaders into court ordered mediation
–

I suspect this would send Madigan (or Madigans) into conniptions. My sense is that anything having to do with union or labor is lately anathema to Madigan (senior, at least for now).

Moreover, the idea of mediation — or any semblance of judicially imposed negotiation — probably does not exist in the dark cosmos of Madigan’s brain at this point in his career. I assume he assumes that the only reason AFSCME has any say whatsoever is that (a) Madigan has thus far allowed it and (b) that they falsely labor under the impression that theirs is a say that matters — or, worse yet, that theirs is even a say to begin with.

Comment by Frenchie Mendoza Thursday, May 2, 13 @ 10:59 am
Every judge in Illinois should recuse themselves from any pension related cases since their pensions are not on the line, isn’t there an argument for equal protection there? Madigan’s statement, “I think there will be at least four members of the Illinois Supreme Court that will approve the bill.” And the exclusion of the judges retirement plan in any pension theft legislation gives the appearance of a bribe. If it was up to me and if it is possible I would take any court challenges to the federal level.

Comment by Pacman Thursday, May 2, 13 @ 11:01 am
3 questions:
Is Cullerton backing off the “current retirees” bit?
Why don’t they just go to gap insurance through Obamacare?
Have any other states gone after current retirees before?
My googling finds the phrase “does not apply to current retirees” over and over in terms of “reforms” done or attempted by other states.

Comment by Wallendar Thursday, May 2, 13 @ 11:20 am
At the very least — I mean, really, at the very *least* — one would think (hope) that the “shall not be impaired or diminished” clause does, indeed, apply to current retirees. If it *doesn’t* — and if retirees who retired assuming one thing and then, five, ten years later find out something quite different — then the Illinois constitution is, quite literally, worthless. And if that’s the case — everything’s up for grabs now and forever.

Madigan’s assuming that the supreme court will uphold this impairment and diminishment surely means legislators no longer “uphold” the constitution but can actively upend and abrogate it at will.

I gotta think this has legislators salivating at the prospect of doing pretty much whatever they want, however the want, to whomever they want.

Comment by Frenchie Mendoza Thursday, May 2, 13 @ 11:28 am
Frenchie……”whenever they want!”

Comment by Ready To Get Out Thursday, May 2, 13 @ 11:39 am
The union will not be able to negotiate away benifits for those already retired. It must be a choice that each retiree makes for themselves. The union may be shaping through negotiations a plan that gives that choice to retirees. The current employees may have a deal reached for them by the union. I suspect it will be something that incudes all pension benifts earned to date will not be changed with a choice of somekind going forward. Sounds like a “choice” plan is being worked that may be combination of the Cullerton plan and some additional elements from the union. I beleive the house is trying to put pressure on the unions to come to the table, however, the unions legal position is very solid. I suspect, however, given the uncertainty and expense of a legal fight there may be a compromise in the offing.

God only knows.

Comment by facts are stubborn things Thursday, May 2, 13 @ 12:07 pm
Frenchie Mendoza

I could not agree more. I think the House actually knows this and what we are seeing play out is the political dance that must be danced. The house knows the SC will likely shoot down their diminishment schems and the house also knows they need political cover before they move to a plan that may be constituional. I also beleive the Speaker is trying to strenghen his hand in negotiations. I had the pleasure of flying the speaker for 26 years (retired state pilot) and I can tell you he always has a plan and it is often not what it first appears. He was always a gentlemen I must say.

Comment by facts are stubborn things Thursday, May 2, 13 @ 12:13 pm
Rich the unions came up with a plan because they are in bed with them

Comment by Anonymous Thursday, May 2, 13 @ 12:15 pm
I doubt very much that 4 Supreme Court justices could be convinced by these snake oil sales specialists that this is a proposal both constitutional and not soon thereafter headed for the judiciary as well lest they find otherwise…

Comment by Madison Thursday, May 2, 13 @ 12:21 pm
@- Anonymous - Thursday, May 2, 13 @ 12:15 pm:

I agree but this time I don’t think it’s enough…

Comment by Mouthy Thursday, May 2, 13 @ 12:30 pm
=== The only positive thing about using political clout to ram the bill through is it will end up in the legal instead of the political arena. ===

I would hope that would be the case, but the cynic in me fears that politics would play a role in the decision. There’s no better master at that then Madigan.

Because he knows about politics, he and others made the political decision to not gore the judicial ox. Its one thing to get people to do a political nasty to others, its another to have them to it to themselves.

Why am I dismissing the judges have special protection argument? If the reduction forces can argue that the extremely clear cut pension diminishment clause can be overcome through various legal fictions, I argue the judges provision is even weaker.

The constitution states, “Judges shall receive salaries provided by law which shall not be diminished to take effect DURING THEIR TERMS OF OFFICE [emphasis added].”

So you can argue that any change to current judges would become effective after their terms. Retired judges don’t have terms.

IMHO, a legal based decision by the SC would clearly find Madigan’s bill unconstitutional.

Comment by Norseman Thursday, May 2, 13 @ 12:32 pm
obamacare is not gap coverage and it is not for people on Medicare. get Medicare and purchase a medical policy just the same as everyone else. if not on Medicare use the private market or come 2014 see if you are below 400% FPL to get help with premium cost

Comment by illinifan Thursday, May 2, 13 @ 12:34 pm
darn auto correct meant to say purchase a medigap. policy

Comment by illinifan Thursday, May 2, 13 @ 12:43 pm
From the Benefits Choice brochure from CMS–

“Effective January 1, 2014, Medicare primary retirees, annuitants and survivors (including those who have Medicare primary dependents on their health insurance coverage) may be required to enroll in a State-sponsored Medicare plan. Impacted members will receive a letter in the coming months outlining this change and their health plan choices.”

Comment by Nearly Normal Thursday, May 2, 13 @ 1:27 pm
Obamacare is a health care plan exchange and may very well offer a gap plan.

Comment by Wallendar Thursday, May 2, 13 @ 1:36 pm
In addition to retirees who are not represented by the union, aren’t there also current employees who are in the pension and who are also not in the union?

Comment by funny guy Thursday, May 2, 13 @ 1:40 pm
I wondered how the union allowed the “other” was it the Gov, or the Attorney General to not fund the pension system to begin with. Then I see Mr. Madigan”s mega bill will remove the Pension system from contract negotiations. Does this mean that in the past the union allowed the state not make their funding payments to the system. Something stinks here folks.

Comment by GRUMPA Thursday, May 2, 13 @ 4:30 pm
Oh. my gosh I get it. The union negotiates with CMS(divulging no details to anyone), the Gov makes the agreement and the attorney general blesses the concoction. Sorry I should have used my head this is clear as mud what could I have been thinking.

Comment by GRUMPA Thursday, May 2, 13 @ 4:44 pm
The courts won’t care if it is a union deal or not. correct. all it takes is for one person to sue. checkmate

Comment by foster brooks Thursday, May 2, 13 @ 9:30 pm