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* From a Tribune editorial…
Dear John,
We hope this note finds you and your Illinois Senate well. How fortunate that we can write a postscript to our “Dear President Cullerton,” letter published Tuesday: We were relieved later in the day to finally see actuarial math attached to your plan, the one labor supports.
Pension fund managers for teachers, state workers and university personnel ran the numbers on your plan. We’re quite certain that you were among the disappointed.
Instead of the estimated $46 billion in savings to taxpayers that you had projected over the next 30 years, your plan would save closer to $40 billion — at best: That number includes potential savings when existing pension bonds mature and free up some money. But if future legislators divert that money to anything other than pension burdens, your plan’s savings drop to $30 billion.
That’s not much, is it John, compared with some $150 billion that a rival House pension plan is projected to save taxpayers. Plus, your plan would free up only $560 million in the budget for fiscal year 2015. That’s lower than the $850 million estimate you’ve used.
Aww. How sweet.
Those folks are really quite something, eh?
One problem, though: the House’s pension plan hasn’t yet been examined by the actuaries.
* And Senate President Cullerton doesn’t seem to care about what the Tribsters are saying…
Illinois Senate President John Cullerton is urging a House vote on his pension-reform plan even though Speaker Michael Madigan has his own proposal.
Cullerton told The Associated Press Wednesday he believes House members want to vote on his measure to close a $97 billion debt in the pension systems.
House members say the Cullerton legislation doesn’t save enough money. Cullerton says it can survive a court challenge.
* The Illinois Federation of Teachers’ president isn’t backing down, either…
“We have public employee unions saying, ‘Look, we’ll put in the order of $50 billion or more on the table to solve a public problem. I don’t think there’s any other state where that is happening,” Montgomery said.
Montgomery says the Senate plan is constitutional because it gives retirees a choice, unlike the House plan.
The measure gives workers and retirees a choice of benefit packages. For example, workers who want to receive 3 percent cost-of-living increases compounded annually wouldn’t get health insurance.
Even though the Senate pension proposal won’t save as much as the House plan, Montgomery said will still go a long way toward reforming Illinois’ broken pension system
* Here’s some audio of a Montgomery interview from this morning…
At about the the 3:30 mark, Montgomery claims that Nekritz’s own numbers “have never added up,” and blasts her for cutting benefits for the middle class.
* Background..
Illinois House members said Tuesday that Senate President John Cullerton’s pension reform proposal saves less than 60 percent of what he has predicted.
Reps. Elaine Nekritz and Darlene Senger released numbers from an actuarial study of the Cullerton plan that showed it would reduce the public employee pension system debt, now at $97 billion, by less than $6 billion. Cullerton, a Chicago Democrat, says his plan would reduce that obligation by $10 billion.
Lawmakers continue to wrestle with the monstrous unfunded liability; there are just 10 days left in the scheduled session of the General Assembly.
Nekritz and Senger met with reporters to lay out the calculations on the Cullerton bill, which was done by pension system actuaries. But they noted the decrease could vary depending on factors used to compute it _ House Democrats say $5.2 billion, the GOP says $5.7 billion.
* Nekritz explains…
posted by Rich Miller
Wednesday, May 22, 13 @ 12:20 pm
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“I don’t think there’s any other state where that is happening”
- perhaps because no other state has the long-term debt that we do? Thanks, Einstein.
Comment by Reader Wednesday, May 22, 13 @ 12:28 pm
$46B in promised savings really might mean $40B in promised savings?
Doesn’t sound like a big difference to me; I usually figure a bill proponent’s “fudge factor” would be more like 25%-50%.
Comment by Robert the Bruce Wednesday, May 22, 13 @ 12:28 pm
It’s ironic the legislator working hardest for the Tribune’s favorite pension plan didn’t get endorsed by the Tribune in her last election. Maybe next time.
Comment by reformer Wednesday, May 22, 13 @ 12:35 pm
Reader, it’s pretty clear he meant that unions are willing to sacrifice a significant chunk of what they’ve already contributed, and that’s not common.
Comment by Perspective Wednesday, May 22, 13 @ 12:41 pm
Cullerton’s bill passed in the Senate with a 71% vote. Madigan’s bill just barely passed the House with a 54% vote. Also, a bill similar to Madigan’s was defeated handily in the Senate.
It would seem that the ball should be in Madigan’s court to call for a vote on Cullerton’s bill in the House.
Comment by Joe M Wednesday, May 22, 13 @ 12:47 pm
It’s more than a little amusing that after years of portraying Madigan as some sinister corrupt force and the source of all trouble, the Tribbies are now head over heals in love with him.
Comment by wordslinger Wednesday, May 22, 13 @ 12:48 pm
Another problem: SERS and SURS numbers do not include pension stabilization fund transfers, something that was mentioned and apparently ignored.
Comment by Anonymous Wednesday, May 22, 13 @ 12:50 pm
I think the Tribune attack will actually work to Cullerton’s favor. Many House Dems are chafing under Madigan’s rule and and they are not exactly enamored with the Tribune. Since Cullerton is probably now digging in his heels and the unions are at work on these Dems too maybe they will put his pension plan over in the House. Assuming Madigan has the courage to let it be called.
Comment by Cassiopeia Wednesday, May 22, 13 @ 12:54 pm
So if Madigan’s plan is unconstitutional it doesn’t save a dime, but instead costs taxpayers thousands in court costs.
Comment by Jack Wednesday, May 22, 13 @ 12:56 pm
If Madigan’s Bill does get passes, and whacked in the courts, it could be entertaining to read the Trib’s reaction
Comment by titan Wednesday, May 22, 13 @ 1:10 pm
Sorry, I also forgot to say that if they pass the cost shift onto the local school districts, that also will add savings to the state pension costs. Is the Trib considering that too into the cost savings along with Cullerton’s bill?
Comment by Challenger Wednesday, May 22, 13 @ 1:27 pm
Dear Tribune Letter:
Please cancel my subscription. Judging by your circulation numbers you’ve heard this before!
Comment by Disgusted Wednesday, May 22, 13 @ 1:47 pm
==So if Madigan’s plan is unconstitutional it doesn’t save a dime, but instead costs taxpayers thousands in court costs.==
That’s the true measure. It doesn’t matter how much it “would” save if it will be tied up in the courts for years and ultimately ruled unconstitutional. After that, the hole would be deeper than ever. Even the Cullerton plan is questionable; just because the unions have agreed doesn’t mean someone won’t challenge it.
What they should do is: 1) Cost shift the employer portion of TRS and SURS to local districts AND give those districts the authority to tax for the contribution. 2) Set up a plan for the state to put in what it still owes over the next 30-40 years. The problem with not be solved without an infusion of NEW revenue. All of the state dollars as well as the local dollars in many districts are already allocated to necessary expenditures and have been for decades.
That’s why this problem exists, the revenue to fully fund the pension obligations has never been available.
Comment by Pot calling kettle Wednesday, May 22, 13 @ 1:49 pm
==That’s why this problem exists, the revenue to fully fund the pension obligations has never been available.==
Or perhaps the revenue has always been available and it has been diverted to new programs we really couldn’t afford or pork projects. Then again I read articles like the following and wonder what really goes on in Springfield.
http://illinoisreview.typepad.com/illinoisreview/2013/05/big-gamblings-hoard-of-taxpayer-cash-belies-state-budget-crisis.html
Back to lurking.
Comment by No Longer a Lurker Wednesday, May 22, 13 @ 2:19 pm
Dear John,
Keep digging those heals in. You’ve put forward a proposal that is a good faith effort to address constitutional concerns and is agreed to by the union coalition.
Besides, if the Trib s opposed you know it’s the right thing to do and the best approach for your caucus.
Comment by Norseman Wednesday, May 22, 13 @ 2:21 pm
Pot Calling Kettle, the IRTA will sue if the Cullerton bill passes. They were left out of the We Are One Illinois group, and therefore not at the table. They believe anything that affects retirees’ benefits is unconstitutional.
Comment by Dinosaur Wednesday, May 22, 13 @ 2:32 pm
I agree with Pot calling kettle @ 1:49 pm:
“What they should do is: 1) Cost shift the employer portion of TRS and SURS to local districts AND give those districts the authority to tax for the contribution. 2) Set up a plan for the state to put in what it still owes over the next 30-40 years. The problem will not be solved without an infusion of NEW revenue.”
This plan is better than either SB1 or SB2404, and as a bonus it is constitutional.
Comment by Ruby Wednesday, May 22, 13 @ 2:55 pm
=== One problem, though: the House’s pension plan hasn’t yet been examined by the actuaries ===
Is that in the works or are we just supposed to take the word of MJM & CT?
Comment by dupage dan Wednesday, May 22, 13 @ 3:08 pm
I bet some repubs are chaffing that Madigans going to try to shove the cost sift down their throats now…Oh the irony they could get primaried for be tax raisers
Comment by RNUG Fan Wednesday, May 22, 13 @ 3:27 pm
Curious,how much would moving the liability for teacher pensions back to the local school districts save?
Comment by DLR Wednesday, May 22, 13 @ 3:46 pm
The Cullerton plan: Keep repeating that his bill is constitutional until people believe it. Even though it isn’t constitutional.
Comment by Falconer Wednesday, May 22, 13 @ 3:54 pm
Dinosaur,
We Are One is a coalition of labor unions.IRTA is not a union. They were included in numerous pension committees, task forces, forums, etc..They had no answers and no suggestions other than to say no and demand tax increases. Their threat to sue is more of a recruitment drive and a fundraising campaign than anything else. Don’t believe the hype.
Comment by Bill Wednesday, May 22, 13 @ 4:08 pm
So does Nekritz count any of the savings from the alledged 50% that give up their health care benefits to keep their colas? The health care costs are not peanuts.
Comment by kimocat Wednesday, May 22, 13 @ 4:40 pm
If Madigan’s plan is found constitutional, how can it save money since it does not diminish pension benefits?
Comment by capncrunch Wednesday, May 22, 13 @ 4:45 pm
- capncrunch @ 4:45 pm: “If Madigan’s plan is found constitutional, how can it save money since it does not diminish pension benefits?”
SB1 does diminish pension benefits:
1. increase in retirement age
2. cuts and delays to retiree COLA’s
3. increase in employee pension contributions
Comment by Ruby Wednesday, May 22, 13 @ 5:20 pm
“Curious,how much would moving the liability for teacher pensions back to the local school districts save? ”
Point of Information:
For FY 2014, the state’s contribution to the Teachers Retirement System under current law is projected to be $3.439 billion, of which the total normal cost is projected to be $1.792 billion. Employee (teacher) contributions are projected to be $1.004 billion. Source: Appendix B & Table 10, IL State Retirement Systems, Financial Condition as of June 30, 2012. COGFA, February 2013. http://cgfa.ilga.gov/Upload/FinCondILStateRetirementSysFY2012Feb2013.pdf
Comment by Charlie Wheeler Wednesday, May 22, 13 @ 5:34 pm
Nekritz’s numbers may do more flips in the coming days than she does in Memorial Day parades.
News conf seems a little desperate. Is someone feeling the big mo shifting?
Comment by Michelle Flaherty Wednesday, May 22, 13 @ 10:44 pm