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*** UPDATE *** From Rep. Nekritz’s spokesperson…
Just wanted to clarify a couple of things from the numbers Cullerton’s staff put out on SB 2404:
Elaine was careful the other day to NOT talk about a 30-year savings number. It was Darlene Senger and the House GOPs who had come up with a number of $30 billion. The actuaries had been asked to look at certain scenarios, so Elaine wanted to be careful to only look at the unfunded liability number when the full bill wasn’t scored yet.
On the unfunded liability point, Cullerton’s staff agrees with us. The scenario Elaine and Darlene talked about would be just under $6 billion in savings, and their update agrees.
We think it proves well our point of the real uncertainty of the Cullerton pension model and we look forward to talking soon about the actuarial numbers on the House-approved Senate Bill 1.
* A couple of tweets from WUIS’ Amanda Vinicky…
Dispute over #pension savings of Cullerton’s SB2404 continues. Prez: drops unfunded liability by $9.1b, vs. House estimate of $5.2 - $5.7b
— Amanda Vinicky (@AmandaVinicky) May 24, 2013
Part of the difference: Cullerton’s figure includes using money used to pay bonds once they’ve matured - House didn’t include that $
— Amanda Vinicky (@AmandaVinicky) May 24, 2013
* I told subscribers about this earlier today. Senate President Cullerton talked a bit about it on Chicago Tonight yesterday evening…
* The Senate President asked the pension systems to redo their cost savings estimates by including the dollars eventually directed to pension funding that are currently being used to pay off pension obligation bonds. From Cullerton’s office regarding his reform bill, SB 2404 …
New SB 2404 savings numbers over next 30 years is $56.9 billion and reduction in unfunded liabilities is $9.13 billion.
This assumes 50% of actives take simple COLA, other 50% of actives take a 3 year delay in 3% compounded COLA and 2% contribution increase, and 100% of retirees taking a 2 year staggered delay in 3% compounded COLA.
This is the most likely scenario because of union support and feedback that we have received from retiree groups. This is the scenario that we relied upon when we passed the bill.
Other scenarios also included in the attachment. Savings for the scenario referenced by Nekritz is $46 billion and $6 billion respectively.
Keep in mind this includes the Fortner money.
Nekritz claimed that the savings would only be about $30 billion. But that’s not what the final numbers show. Here are the attachments…
* Meanwhile, the union coalition that backs Cullerton’s reform bill is running TV ads. Watch…
* The state AFL-CIO President penned an op-ed in the Tribune today…
The Tribune instead backs Senate Bill 1, pointing to its purportedly greater “savings.” But this obsession with savings is misinformed and misguided.
* In other news, Eden Martin believes that the House should’ve required a three-fifths vote for the House’s pension reform bill…
Representatives of organized labor in Illinois contend that the pension-reform bill recently passed by the House would be unconstitutional because it diminishes or impairs the claims of retirees. I think it’s probably unconstitutional for a very different reason.
Our Legislature can spend money by simply passing an appropriation — by majority vote of both houses and with the approval of the governor.
However, the framers of our state Constitution realized that the incurring of debt was more dangerous to the future of the state. So they provided that debt may not be incurred for general purposes except under tight limits in amount and duration, and that debt “for specific purposes” may not be incurred — “or the payment of State or other debt guaranteed” — except by a vote of three-fifths of the members of both houses.
The Madigan pension reform bill passed by the House (though not the Senate) would impose a new “contract obligation” on the state, mandating annual funding. This funding obligation is declared by the House bill to be “protected and enforceable under” Section 16 of Article I (prohibiting any law impairing the obligation of a contract) and Section 5 of XIII (the pension clause) of the state Constitution. If the state should fail to pay the “amount guaranteed,” a special judicial “mandamus” mechanism is made available to compel payment.
* Related…
* Editorial: Who blinks first?: As a show of good faith, Cullerton could call the House bill for a vote in the Senate. If it passes, we’re done here, and we await the lawsuit. If it fails, likewise in good faith, Madigan can call the Senate bill in his chamber. If it passes, the Legislature has at least moved the ball forward - if not nearly enough - and can return to do more radical surgery another day, when the decisions will be no less difficult - maybe more so - than they are now. If it fails, we’re back at square one, and the meltdown accelerates, putting state-provided pensions, jobs and services in jeopardy, perhaps sooner than anyone imagines.
* Justice? No Pension Cuts For Illinois Judges
* U Of I Campus Faculty Association Votes Against Pension Bills: The University of Illinois at Urbana-Champaign’s Campus Faculty Association will not support either pension reform bill currently being considered in the Illinois General Assembly.
* McHenry County College officials expect to pay for pensions
* Editorial: Clock ticking on pension reform
posted by Rich Miller
Friday, May 24, 13 @ 11:17 am
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That Journal-Star editorial is an epic failure even considering the borderline-mentally-disabled standards of Illinois editorial boards.
Yeah do a “show of good faith” and wait the half-decade it will take the House bill to work through the courts then get back to us.
Comment by Will Caskey Friday, May 24, 13 @ 11:23 am
Finally the President was able to create a scenario that resulted in the savings he promised!!!! Unfortunately, his pretend scenario has 100% (every last one) of retirees to make the same decision. And even when all these retirees stand together for the good of the State, regardless of their own self interests, the bill still leaves us in a worse place than we were last year when we only had $83.1 billion in unfunded liability.
Comment by Big D Friday, May 24, 13 @ 11:24 am
This assumes 50% of actives take simple COLA, other 50% of actives take a 3 year delay in 3% compounded COLA and 2% contribution increase, and 100% of retirees taking a 2 year staggered delay in 3% compounded COLA.
Of all my fellow retirees I have spoken with, only one is planning on keeping access to healthcare by accepting the two year staggered COLA. Everyone else is keeping the COLA and dropping healthcare access. The concern is the unknown premiums the State may charge in the future. The reason the one retiree is keeping access to healthcare is he has tongue cancer and is not yet eligible for Medicare.
Comment by Tsavo Friday, May 24, 13 @ 11:32 am
“New SB 2404 savings numbers over next 30 years is $56.9 billion and reduction in unfunded liabilities is $9.13 billion.”
Lets assume SB2404 becomes law and reduces the unfunded liabilities by $9B. That is a good start with but still only about 1/10 of the total unfunded pension liability. Is there a proposal by Senate President Cullerton to pay the other 9/10’s of the unfunded pension liability? Is it the taxpayers or is the plan to cut state spending or is it something else?
Comment by Small Town Taxpayer Friday, May 24, 13 @ 11:39 am
Give Cullerton credit for putting the numbers right out there. Haven’t seen the same for SB1.
Comment by archimedes Friday, May 24, 13 @ 11:51 am
Eden Martin is a very smart man, and the 3/5 argument is a fascinating wrinkle to this discussion.
Comment by LincolnLounger Friday, May 24, 13 @ 11:53 am
That Skype feed was awful. Cullerton looked and sounded like he was speaking from the Galactic Senate on Coruscant, not the Illinois Senate in Springfield.
Couldn’t they hook him up with a PBS crew in Springfield?
Comment by wordslinger Friday, May 24, 13 @ 12:01 pm
Big D @ 11:24 am:
Maybe you haven’t been following the numbers closely enough.
The scenario of all the retirees keeping their 3% compounded COLA (and giving up health care access) is the most likely and most expensive option to the pension systems, so scoring it with that assumption is the conservative approach. It’s also the right approach because (a) Maag isn’t decided yet, the State may yet be on the hook for the health insurance and (b) the COLA is clearly protected under the Constitution so almost no one will voluntarily give it up. (Rememebr, even MJM has publicly said he’s keeping the compounded COLA.) If some retirees decide otherwise, then there is more savings than expected.
And as far as last year’s $83B versus this year’s $97B - $100B, about $1B - $2B is a result of delaying aciton for a year … the rest of it is a change in some of the underlying assumptions used to calculate the debt, primarily by TRS lowering expected earnigns rates.
Comment by RNUG Friday, May 24, 13 @ 12:03 pm
Interesting point by Eden Martin.
As to the #’s, at least Cullerton has had actuaries already look at his. I’ll wait to see the official House #’s before criticizing either.
Comment by Keep Calm and Carry On Friday, May 24, 13 @ 12:03 pm
===Couldn’t they hook him up with a PBS crew in Springfield? ===
Satellite rental fees are high. Skype costs are nil.
Comment by Rich Miller Friday, May 24, 13 @ 12:04 pm
Bug D,
Correction, I misread it. You’re right, they should have scored it like I described, not the way they did.
Comment by RNUG Friday, May 24, 13 @ 12:05 pm
Eden Martin’s theory should have worked each year the General Assembly failed to fully fund the ARC for the Pensions. Each time this was done, the debt increased….
Comment by archimedes Friday, May 24, 13 @ 12:07 pm
They should have used the hi-def cameras at Blue Room video works like a champ all the time
Comment by CircularFiringSquad Friday, May 24, 13 @ 12:07 pm
Has the House bill been vetted the way the Senate bill has been? I may have missed it. The House bill touts HUGE savings - even better than what the revised Senate figures are. I’d like to see a good comaprison rather than just taking MJM’s word on it, especially since I will be retiring in a few years from state gov’t.
Comment by dupage dan Friday, May 24, 13 @ 12:09 pm
comaprison? Is that near Thomson prison? Sheesh - should have been comparison.
Comment by dupage dan Friday, May 24, 13 @ 12:10 pm
On the selection of COLA over insurance. I’m not sure that TRS members wouldn’t choose a lower COLA. The subsidy for insurance has been paid (by local school districts and active members) and they know the cost. If the subsidy holds - my pension reduction under SB2404 would make up for keeping the health insurance.
Of course, it would seem that the very fact that active members have been paying into the THIS fund would weaken an argument that it can simply be taken away (as Maag has done so far).
If Maag reversed - no need to give up COLA.
Comment by archimedes Friday, May 24, 13 @ 12:18 pm
Oops - sometimes a hastily put together press conference to try to capitalize on a Trib editorial backfires.
Comment by Obamas Puppy Friday, May 24, 13 @ 12:18 pm
What gets lost in these conversations about the cost savings in SB1 vs SB2404 is the oath that our representatives took upon entering office: “I do solemnly swear that I will support the Constitution of the United States, and the Constitution of the State of Illinois and that I will faithfully discharge the duties of the office of…to the best of my ability.”
SB1 is such a violation of that oath and the Illinois Constitution that Mr. Madigan had to write a nine page preamble (read that list of excuses) as a work around.
So we are left with a couple of possible conclusions:
1) They truly are working to the best of their ability (yikes!)
2) They are willfully ignoring the oath of office.
Comment by Calhoun Native Friday, May 24, 13 @ 12:21 pm
The whole constitutional question rests on balancing the preamble of the Illinois Constitution against the constraints/limitaions of the Articles within the constitution.
The Preamble states, “in order to provide for the health, safety, and welfare of the people; maintain a representative and orderly government; eliminate poverty and inequality; assure legal, social, and economic justice; provide opportunity for the fullest development of the individual; insure domestic tranquility……”
The Speaker of the House is saying our financial state has eroded to the point that we cannot reasonably “provide for….” without impairing/diminishing the pension contract.
The courts will decide if that action is reasonable and neccessary.
Comment by archimedes Friday, May 24, 13 @ 12:44 pm
No reason a Skype feed HAS to look ugly: they were just doing it in the most expedient way. When the customer doesn’t care, “good enough” is what you get It looked like Cullerton was holding up an iPad and looking at himself. But he got his message out at the time he wanted to, so that was more important than looking good.
Comment by TechBoy Friday, May 24, 13 @ 12:51 pm
There is no reason a Skype feed HAS to look ugly: they were just doing it in the most expedient way. When the customer doesn’t care, “good enough” is what you get. It looked like Cullerton was holding up an iPad and looking at himself. But he got his message out at the time he wanted to, so that was more important than looking good.
Give him points for being technologically more forward than some. Imagine old Pate on Skype (shudders).
Comment by TechBoy Friday, May 24, 13 @ 12:53 pm
How many pensioners have close to 100K pensions and how many have close to average 30K pensions. The answer will tell you how many can afford to buy their own insurance and how many can’t under Cullerton’s plan. I can understand a lot of posters on this board favoring this plan tilted towards the affluent pensions but the union sell out baffles me. All those thousands that really have no choice are their members. What they are doing is wrong, period.
Comment by Mouthy Friday, May 24, 13 @ 1:02 pm
The Constitutionality question may well come down to the Court’s opinion as to whether or not the General Assembly has any other choice but to violate the diminishment clause. And of course they do! They can raise taxes! They can cut other programs! They do not want to do that, but there is no constitutional reason why they cannot.
Comment by Bobbysox Friday, May 24, 13 @ 1:02 pm
In suggesting that SB1 needed 60% to pass since it was “issuing debt”, Eden Martin seems to have neglected the consititutional definition of “State Debt”: “For the purpose of this Section, “State debt” means bonds or other evidences of indebtedness which are secured by the full faith and credit of the State.”
Comment by archimedes Friday, May 24, 13 @ 1:06 pm
I don’t think Speaker Madigan is buying into Eden Martin’s argument. I haven’t seen a new vote scheduled.
If Eden Martin, for whatever his reasons, thinks that Madgian’s pension bill is unconstitutional — if it becomes law without “Martin’s 3/5’s majority”, he can get in line with everyone else to file a lawsuit against it. That line might be kind of long.
Comment by Joe M. Friday, May 24, 13 @ 1:39 pm
Why are the Judges being exempted from all of this? Most of them will be seeing pensions of over $100,000. I will never live long enough to make anywhere near this.
Comment by CATCH 22 Friday, May 24, 13 @ 2:12 pm
Many of the judges are making close to $200,000/year in pensions. Why do you think they contribute to the Democratic Party to be slated?
Comment by funny guy Friday, May 24, 13 @ 2:39 pm
“Many of the judges are making close to $200,000/year in pensions.”
Lets see, first year COLA is 6K, Second year COLA is 6.18K making 200K pension $212,180 after two years and there is no 2% or 4% reductions for insurance co-pays. $700 a month insurance premiums come to $8,400 a year leaving them $3,780 a year to the good after 2 years with unrestricted COLA’s as far as the eye can see. Is it any wonder that the high-end pensioners want to prosper at the expense of average pensioners with SB1? Disgraceful.
Comment by Mouthy Friday, May 24, 13 @ 2:55 pm
Eden Martin’s grasp of voting requirements in the General Assembly rivals his knowledge of the Illinios Constitution.
I could go into detail, but why bother.
It’s Eden Martin.
Comment by Michelle Flaherty Friday, May 24, 13 @ 2:58 pm
Real classy move of Nekritz to try to throw Senger under the bus. Her pro couldn’t have wordsmithed that a bit better?
Comment by Easy Friday, May 24, 13 @ 3:57 pm