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* So, while Gov. Pat Quinn has been running all over the state cutting ribbons on capital projects approved by the General Assembly while, ironically, defending his veto of legislative salaries because those same legislators hadn’t finished their jobs, was he actually working on pension reform? Not according to Rep. Elaine Nekritz, the House Democratic point person on pensions…
[Nekritz] said she had not spoken to anyone from Quinn’s office since July on the progress of pension negotiations.
* Despite Quinn’s non-involvement, or maybe because of it, Nekritz believes a pension plan could be voted on during the veto session later this month…
“We’re close enough where I think that there’s a definite possibility we could take action in veto session,” Nekritz said of the scheduled Oct. 22 return of the General Assembly.
“We have a few, what I would call, details to work out, but as in any negotiation, when you get to the end, the things that were not so significant in the beginning become big,” she said in a WGN-AM 720 interview. “So, I’m not saying that the whole thing can’t fall apart, and we’ll be back to square one, but it’s also very likely we could come to an agreement and be done in a couple of weeks.”
* More…
She acknowledged that the move for a 1 percentage point reduction in employee contributions to their pensions was aimed at meeting a state constitutional prohibition against diminishing or impairing public employee pension benefits.
Still, she said, “I don’t think there’s any way we can avoid being sued by the public employees — whether it be actives (current employees) or retirees.”
The House Republicans are pushing hard to eliminate that 1-point reduction, among other things.
* Sen. Kwame Raoul, who chairs the pension reform conference committee, has pushed back…
“The charge of the (pension) conference committee is to come up with a proposal that we think (can) solve the pension problem … and that can pass a constitutional challenge,” Raoul said.
But, in the end, Raoul still wants a bill. So, we’ll see.
…Adding… Sun-Times editorial board…
The big snag, we understand, is a new list of demands unveiled by committee Republicans two weeks ago and a new total savings target — $150 billion, up from an agreed-upon $140 billion. We want more savings, too, but what’s maddening is that most of the Republican demands don’t amount to much.
They’re pressing for things like raising the retirement age, raising the employee contribution and creating a 401(k) option. Those sound good but would barely move the cost-savings needle.
I really think this bill should not be tanked over a 30-year savings of $10 billion. But they may try to blow up the process anyway.
posted by Rich Miller
Monday, Sep 30, 13 @ 10:20 am
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It is my understanding that the COLA change being proposed by the Dems is at 1/2 the CPI but with a floor of around 1% to 1.35% and a cap of 4% to 6%. I beleive under this proposal yearly COLA is compounded.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 10:23 am
The “1-point reduction” doesn’t benefit retirees. No consideration there for this cohort. Unless there is something else in the conference committee report that can be interpreted as consideration for retirees, the proposal wouldn’t meet the “constitutional” litmus test that they are supposedly trying to meet.
Comment by Norseman Monday, Sep 30, 13 @ 10:36 am
If you’re already retired, how does the 1% less employee contribution meet the Constitutional issue? You’re not paying into the system, so what’s the “consideration” for those already retired?
Comment by huggybunny Monday, Sep 30, 13 @ 10:39 am
What do we do if the only potentially acceptable compromise just doesn’t save enough money?
Do we “solve” anything if we only impact 40%, rather than 80% of the long-term financial problem? (Just wild-guessing)
Still a fan of SB1 plus future partial cost-shifting on teacher’s pensions, driven primarily by the numbers. That apparently ain’t happening, so what should one settle for?
Either way, one side will declare “victory,” and the other call it “failure.”
Comment by walkinfool Monday, Sep 30, 13 @ 10:43 am
Are they going to refund me 1% plus compounding interest for every year I paid in?
Comment by anon Monday, Sep 30, 13 @ 10:45 am
The 1% lower contribution isn’t a good tradeoff for anyone near retirement either.
Comment by Joe M. Monday, Sep 30, 13 @ 10:52 am
The Repubs on that Conference Committee cannot find enough ways to inflict the kind of pain that they really want to on teachers and other public employees. Instead of asking how can we solve this they are asking how much more can we take away. OH yeah and don’t give me that canned “want to make sure there is a system”, response - they could care less.
Comment by Obama's Puppy Monday, Sep 30, 13 @ 11:03 am
=== Quinn’s non-involvement ===
=== Nekritz believes a pension plan could be voted on during the veto session later this month ===
Can Quinn issue an amendatory veto on legislation passed during veto session? Is it possible his non-involvement is by design?
If you are Pat Quinn and you believe that this issue helps you among the electorate, you are going to try and keep this issue alive as long as possible.
That means:
1.) You take no strong stance on any negotiating position. Draw no lines in the sand. You simply rail against “do-nothing” legislators, suspend paychecks and portray yourself as the “good guy” who was “put on earth to solve this”.
2.) No matter what the committee and legislature passes, you find reason to either veto it or make significant changes to it.
If it “does not do enough to protect the future solvency of our state and the future for our children”? Massive re-write or outright veto.
If it “unfairly punishes our elderly, cuts too harshly into the livelihoods of our retirees, and does not live up to the promises Illinois has made”? Massive re-write or outright veto.
Either way, you clutch to the public narrative that you are the only one standing up for the “little guy” against those scoundrels in Springfield for as long as possible.
If these cuts are “too deep”? You’re the “good guy” defending the public interest.
If these cuts “aren’t deep enough”? You’re the “good guy” defending the public interest.
After November? He would gladly sign whatever the legislature wants, assuming he can engineer enough chaos between now and then to keep them from passing anything with a large enough majority to override him.
The alternative possibility, that Quinn has absolutely no plan or ideas of his own, is equally plausible but too scary to consider on a Monday morning.
Comment by Anonymous Monday, Sep 30, 13 @ 11:04 am
@Norseman - Monday, Sep 30, 13 @ 10:36 am
The change to the COLA is suppose to be consideration. We would no longer have the 3% flat COLA but would have a COLA tied to 1/2 the CPI with a floor of say 1% and a Cap of say 5%. The idea there is that for us losing the 3% flat COLA we have gained inflation protection (during periods of high inflation) of up to 5%. I don’t agree at all, but am trying to present the rationale.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 11:08 am
The purpose of the state’s proposed change in retiree benefits is to save money so slmost by definition those changes will be unconstitutional.
The biggest opportunity would seem to be future benefits earned by current employees. For some reason, this approach seems not to have been seriously considered by anybody.
So it’s on to court I guess with, hopefully for current retirees, a stay while the case proceeds.
Comment by Cassandra Monday, Sep 30, 13 @ 11:08 am
Obama’s Puppy: Most of the legislators taking the hardest lines on cutting pensions right now are Dems, not Republicans.
It’s strange I know, but it is Illinois.
Comment by walkinfool Monday, Sep 30, 13 @ 11:14 am
Is that they best they’ve got?
Is the idea really that a huge cut in pension rights doesn’t count as diminishing them if there a 1% reduction in contributions? Maybe someone with more knowledge of the law can correct me (I’d be grateful), but this idea seems absurd on the face of it. Yes, contributing less is a benefit, but much smaller than the cuts are likely to be.
Not to mention the fact, emphasized in previous comments, that there is no benefit at all to those already retired, and very little for those within a few years of retirement.
Maybe the ISC is corrupt enough to accept the argument. But I’d have thought that if that’s the best they can do by way of an argument for the proposed cuts (whatever exactly they turn out to be) being constitutional then they might as well give up.
Comment by UIC guy Monday, Sep 30, 13 @ 11:14 am
If the Republicans stray into the area of red meat for their base (401k options, raising the retirement age) and moving the goal post on savings, instead of trying to fix the problem, this is going nowhere.
Comment by Anonymous Monday, Sep 30, 13 @ 11:16 am
Got to see what the pie looks like when it’s done, but there appears to be some hope here.
Comment by A guy... Monday, Sep 30, 13 @ 11:17 am
@Cassandra - Monday, Sep 30, 13 @ 11:08 am:
I remember well when MJM and everyone else was saying that no one is talking about changing any benifits earned to date but only looking at changes going forward. I agree this idea has gone by the wayside. I don’t know about legality, but from a fairness standpoint those retired should have no change and then those working have what they have earned to date and then going forward they should have oppertunity to contribute more and keep old system or contribute what they have been and have a “blended”system or hybrid of years to date and then years going forward. I am sure that does not save the money they want.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 11:19 am
Thanks Facts. I’m with you. This is not consideration, especially when the proposals I’ve heard about have a freeze for retirees under Medicare age.
Comment by Norseman Monday, Sep 30, 13 @ 11:22 am
The change in COLA as a consideration is kind of iffy, if we look at the cost of living figures from 1982 to 2012.
from an editorial by Robert F. Rich, former director of the University of Illinois Institute of Government and Public Affairs and retired UIUC professor:
“The Consumer Price Index has gone from 97.6 in 1982 to 229.6 in 2012. The cost of living has more than doubled over this 30-year period. In other words, a person receiving a pension of $9,760 in 1982 would need a pension of $22,960 in 2012 to maintain the same purchasing power.
Over this same 30-year period, a person in the State University Retirement System earning a $10,000 pension is receiving $24,272.62 in 2012 under the current COLA system — a 3-percent compounded annual increase.
If a person is part of the current U.S. Social Security system and receiving a $10,000 pension in 1982, he would receive $24,175.23 in
2012, reflecting the Social Security system COLA.
However, if this same person was limited to one half of the consumer price index (the current IGPA proposal), he would be receiving a pension of $15,687.31 in 2012 and would have lost about $8,500 in purchasing power.”
Comment by Joe M. Monday, Sep 30, 13 @ 11:26 am
@Cassandra - Monday, Sep 30, 13 @ 11:08 am:
= So it’s on to court I guess with, hopefully for current retirees, a stay while the case proceeds =
I would think the courts would issue a stay because the postion of harm and the huge dollars the state would have to pay back if they lose. I sure hope so as well. What a scam, spend pension dollars on other services to get re-elected and then pay back those dollars (tax payers enjoyed for many years) with earned benifits from those already retired. Sounds like solid legal and ethical thinking to me.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 11:26 am
@ Norseman - Monday, Sep 30, 13 @ 11:22 am:
You bet. I am hearing different things on the freeze issue. One rumor was for no freeze on retirees but a freeze for current workers (when they retire) based on their curreent age. For example, if you are 30 years old when you retire you will have a 5 year COLA freeze. If you are 50 years old now you will have a 1 year COLA freeze upon retirement. The idea being a phased in freeze from 1 to 5 years depending on current age. That stinks but at least does speak to the idea of giving people time to ajust. The idea that you freeze a current retirees COLA for 5 years is mean spirited and cruel. If you let a 30 year old know that in 30 years he will face a 5 year freeze that may be illegal but does let them plan for that and retire knowing.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 11:30 am
The problem is big, so the solution might as well hurt everyone equally, because it’s going to hurt. Tax all retirement income(IRA, public pension, private pension, etc.) at some point(over $50,000 maybe??), raise retirement age for everybody under 50(?), increase emloyee contributions and tie the COLA to the CPI in some way with a floor and ceiling. This problem can’t be 100% fixed by revenue(additional taxes), just like it shouldn’t be fixed by cuts to pensions. We have already had a substiantial increase in income tax rate in IL, something has to give on the other side too. Totally replacing the pension with a 401k is a formula for disaster, just like it has proved to be in the private sector.
Comment by Really Illinois? Monday, Sep 30, 13 @ 11:34 am
Will Republican legislators, especially the gubernatorial candidates, latch on to the final committee bill as a wonderful, or at least adequate piece of bipartisan work all can be proud of? Or will they be leary of handing the Governor a campaign assertion that he solved the worst state fiscal crisis ever (according to him, anyway). I’m thinking they might find the former approach hard to swallow. Hence, various roadblocks. And maybe a bill and court in 2015?
Comment by Cassandra Monday, Sep 30, 13 @ 11:37 am
@ facts
As a taxpayer, you enjoyed “those dollars” equally along with the non-state employee taxpayers. Some of your co-workers were probably hired as a result of “those dollars” and most importantly, my dollars are just as important to me, as a non-State working taxpayer, as your dollars are to you. The difference is that state employees are the only ones that directly benefit from a pension.
Comment by Really Illinois? Monday, Sep 30, 13 @ 11:44 am
What does “benefits earned to date” mean? Are they interpreting that as the money an employee put in? Does it mean the pension an employee would receive if they retired on the date of the legislation?
Also, if the unfunded liability is $100 Billion and the Madigan plan takes $187 billion, where is the other $87 billion going?
Comment by Ronin Monday, Sep 30, 13 @ 11:50 am
Various thoughts come to mind.
1) Anything that saves repaying the kind of money the committee is looking to welch on will be unconstitutional.
2) Changing already earned benefits has been previously ruled unconstitional. As others have pointed out, the reduciton in contributions is not a consideration for the already retired.
3) Changing future benefits for current employees has been previously ruled unconstitional. The committee is trying to slip though the theoretical loophole that Eric Madiar identified in his report. We’ll have to see if the court buys the theory.
4) Even giving “consideration”, the contract change is involuntary. To be clearly legal, it has to be voluntary and one of the choices has to be “keep what you’ve got”. We’ll see how that holds up in court under contract law.
5) In the long run, changing the AAI (COLA) probably won’t save a penny. The average CPI, depending on whether you pick a 40 year or almost 100 year timreframe, is either 2.9% or 3.1%. All the AAI change will do is potentially lower the pension fund payments during periods of low inflation. The formula will let you “make” a lower payment now, but it will require a substansially higherpayment when inflation returns. And we shouldn’t lose sight of why a fixed percentage was picked: it allows budget predictibility, something a variable AAI doesn’t.
Comment by RNUG Monday, Sep 30, 13 @ 11:53 am
I should have clarified the AAI comment. If they make it 1/2 CPI and cap it, yes, it will save some money. If they leave if uncapped, and we enter a really high period of inflation like some economists expect, even at 1/2 of CPI it would be more expensive than today’s fixed rate. May still save some in the long run, but it’s pretty much a carp shot at that point.
Comment by RNUG Monday, Sep 30, 13 @ 11:58 am
crap shoot
Comment by RNUG Monday, Sep 30, 13 @ 11:59 am
=The change in COLA as a consideration is kind of iffy, if we look at the cost of living figures from 1982 to 2012.
from an editorial by Robert F. Rich, former director of the University of Illinois Institute of Government and Public Affairs and retired UIUC professor:
“The Consumer Price Index has gone from 97.6 in 1982 to 229.6 in 2012. The cost of living has more than doubled over this 30-year period. In other words, a person receiving a pension of $9,760 in 1982 would need a pension of $22,960 in 2012 to maintain the same purchasing power.
Over this same 30-year period, a person in the State University Retirement System earning a $10,000 pension is receiving $24,272.62 in 2012 under the current COLA system — a 3-percent compounded annual increase.
If a person is part of the current U.S. Social Security system and receiving a $10,000 pension in 1982, he would receive $24,175.23 in
2012, reflecting the Social Security system COLA.
However, if this same person was limited to one half of the consumer price index (the current IGPA proposal), he would be receiving a pension of $15,687.31 in 2012 and would have lost about $8,500 in purchasing power.”=
Your not making a fair comparison. Many state pensioners start taking their pension at age 55 versus most social security pension start at age 66. Big difference in cost of pensions to the state(taxpayers for that extra 11 years.
Comment by Downstater Monday, Sep 30, 13 @ 12:02 pm
Elaine Nekritz - “I don’t think there’s any way we can avoid being sued by the public employees” Of course there is a way! Propose a plan that is constitutional. Ralph Martire and others have offered very sound proposals to restructure the debt, close outrageous corporate tax loopholes, tax services, and other realistic plans to raise more revenue and not violate the constitutional protections.
Comment by My Thoughts For Whatever Monday, Sep 30, 13 @ 12:11 pm
“But (Nekritz) said, “To me the most immoral thing that could happen is to say to someone, a 75- or 80-year-old retiree, ‘I’m sorry, the system’s broke. I can send you no check.’ ” Translation: Nekritz does not want to have to say to her Northbrook constituents, ‘I’m sorry, we have to have a graduated income tax. For years, we have paid state bills by not paying pension funds.’
Somewhere, Jimmy Hoffa is laughing.
Comment by CityGal Monday, Sep 30, 13 @ 12:13 pm
@Really Illinois? - Monday, Sep 30, 13 @ 11:44 am:
Those billions of dollars that were not paid into the pension system to pay Constitutional protected benifits were spent elswhere so that politicians could be relected. Those dollars would have benifited state workers also but at disproportionatly smaller number. It was pension dollars that should have been put in the pesnion system. The point i was making was that all of illinois enjoyed the pension dollars being spent and so did the politicians. Now to ask those who are retired to put those dollars back in is rediculious.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 12:14 pm
DC plans will actually cost the State over the next 30 years and the committee has seen proof of that, but whatevs.
Comment by Anonymous Monday, Sep 30, 13 @ 12:16 pm
@RNUG - Monday, Sep 30, 13 @ 11:58 am
yes, what I am hearing (total rumor of course) is that they want to cap the COLA as well as set a floor. Agree with you totaly of course.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 12:18 pm
@My Thoughts For Whatever - Monday, Sep 30, 13 @ 12:11 pm:
You nailed it. What Nekritz is really saying is that any plan she is politicaly willing to pass will be taken to court. You are correct in how it should be done. We are seeing a political solution play out under the “rule of law” and if it wasn’t so serious it would be fun to watch.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 12:24 pm
@Really Illinois? - Monday, Sep 30, 13 @ 11:44 am:
Please also keep in mind as taxpayers state workers and retirees are going to have to help pay back those pension dollars that were taken from us just like you are.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 12:25 pm
@ Facts
I don’t disagree that those contributions should have been made, but they weren’t and Flux Capacitors are no longer on the market to go back and fix that. It is no doubt that the fault lies with the pols. They vote and legislate to maintain power 1st and foremost. Keeping/making unions happy in IL was/is a great way to become a career politician.
About this comment: “Those dollars would have benifited state workers also but at disproportionatly smaller number” State workers are the ONLY ones that will benefit from the pension system being fixed. I, as a taxpayer, have no skin in the game other than my 5%, and probably increasing, income tax I’m required by law to pay. As I said, it should be a shared burden, even though it is not a shared benefit.
Comment by Really Illinois? Monday, Sep 30, 13 @ 12:39 pm
@Really Illinois? - Monday, Sep 30, 13 @ 12:39 pm
That was a thoughtful post and appreciate your postion, but I disagree. =State workers are the only ones who benifit from the system= state workers are the only ones in the pension system and are the only ones being harmed by diminishing the benifits earned. Please don’t let the politicians succeed in pittig one group against the other. The rule of law must be upheld or you will be next. I understand the frustration of non state workers feeling like those pensions are too big or I don’t want to pay more to cover them, but it is the law of the land and the people of illinois passed a constitutional amendment in 1970 to protect those benfifits.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 12:45 pm
===Flux Capacitors are no longer on the market to go back and fix that===
Exactly. Too often, this debate centers around the past. The past can’t be fixed.
It’s now - today - a reality that needs to be dealt with. Griping about the past adds almost nothing to the discussion.
Comment by Rich Miller Monday, Sep 30, 13 @ 12:45 pm
Really Illinois?
The committee’s changes probably won’t pass the courts and, even if they do, won’t fix anything for any period of time. The only long term legal and viable solution is to pay the money back.
If you haven’t done so, read the Madiar report:
http://www.senatedem.ilga.gov/phocadownload/PDF/PensionDocs/madiarrevisedpensionclausearticle.pdf
and Ralph Martire’s various budget analysis:
http://www.ctbaonline.org/
specifically look at his graduated tax proposal which, using actual IDOR information for the analysis, clearly lays out the problems of the current budgets and tax system. Pay close attention to the charts; they show proposed pension changes are just a 2 to 4 year budget patch:
http://www.ctbaonline.org/New_Folder/Budget,%20Tax%20and%20Revenue/CTBA%20Graduated%20Income%20Tax%20FINAL%20Report%20Feb%202012.pdf
Comment by RNUG Monday, Sep 30, 13 @ 12:49 pm
No amount of wishing is going to make this stuff constitutional. And “police powers” isn’t going to fly when the State is spending money on shiny brass doors. The GA is going to have to actually go out and recoup the money it took from the pension fund.
Comment by Realist Monday, Sep 30, 13 @ 1:04 pm
@Rich Miller - Monday, Sep 30, 13 @ 12:45 pm
For those who want to diminish pension benifits it is nice to say, “it does not matter how we got hear the important thing is to fix the problem”. that is fine with me if we don’t try to fix the pension problem by passing laws that don’t diminish pension benifits earned. The politicians would love us not to look at the past…they are counting on it.
If you don’t learn from history you are doomed to repeat it.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 1:08 pm
===If you don’t learn from history you are doomed to repeat it. ===
Then save your back-looking rhetoric for other websites that don’t understand the problem. It’s not needed here.
Comment by Rich Miller Monday, Sep 30, 13 @ 1:09 pm
@RNUG - Monday, Sep 30, 13 @ 12:49 pm:
Excellent points all. I have read, in the past, all of the reports you pointed to. It really is true that the pension bills being considered don’t fix the problem, but they do help the politicions fix their political problem. Illinois has a revenue problem and that is at the heart of whey the pension dollars got spent in the first place.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 1:10 pm
@ Facts
I’m not against anybody, but I also know if there is no benefit adjustment/reduction, the only solution is another increase in income tax or cuts to other areas such as education. That’s why my first post floated the idea of making all pension income taxable at a point. $50k maybe??? That way, people getting a pension, public or private, and people living off IRA/401K income are having to contribute.
Are state benefits too generous??? Compare them to SSI and formulate your own opinion. I think we all know the answer. Thiank about all the private workers you know retired at 55-60, if any at all. They don’t have “free” or reduced healthcare, they can’t take money out of retirement accounts without penalty. We pay 7.5% of our income into SSI up to $113,700/yr, yet the maximum monthly benefit we can get @ 66 is $3,800 combined for a earner and spouse. We are never going to feel sorry for the state employee because you have to wait till 58 to retire or because you have to pay an extra $100/month for your insurance or because your benefit is locked in at $5,800/month with no COLA for a few years.
Both sides have to contribute to solve the problem. Constantly referencing the 1970 constitutional amendment and threatening legal action is not going to solve anything. Things change, I once paid a 3% income tax, I now pay 5% and will probably pay more sooner rather than later.
Comment by Really Illinois? Monday, Sep 30, 13 @ 1:11 pm
RNUG, You make some excellent points, as usual, but I disagree with your contention that changing the COLA to 1/2 the CPI, with or without floors and caps, would not constitute a huge diminishment for retirees and a correspondingly huge savings for the state. Here is what the latest Philadelphia FED Livingston Survey says about survey participants’ inflation expectations:
TABLE THREE
LONG-TERM (10 YEAR) FORECASTS
__________________________________
SERIES: CPI Inflation Rate
__________________________________
STATISTIC
Minimum 1.80
Lower Quartile 2.05
Median 2.50
Upper Quartile 2.60
Maximum 3.00
Mean 2.39
Std. Deviation 0.32
N 29
Missing 1
__________________________________
Not one of the 30 Economists surveyed predicted that CPI inflation would average more than 3% in the next 10 years. To break even under the proposed formula vis-a-vis a flat 3% AAI, inflation would have to average 6%. Is this possible? Sure. But the probability is extremely small, and the rational expectation based on survey data and/or other forward-looking measures of expected inflation is that COLAS will likely be around 1.25% per year instead of 3%.
Comment by Andrew Szakmary Monday, Sep 30, 13 @ 1:14 pm
Does anybody else see the federal courts being used in this issue. When you have judges that have been appointed or elected to the state courts I see no way they can rule on this issue with the appearance of biase.
Comment by Nieva Monday, Sep 30, 13 @ 1:16 pm
@- Rich Miller - Monday, Sep 30, 13 @ 1:09 pm:
= Then save your back-looking rhetoric for other websites that don’t understand the problem. It’s not needed here. =
I think everyones ideas if presented with respect are not only needed here but essential. The idea that laying out the history of a problem is now being cast as “back-looking rhetoric” is an attempt to label or intimidate someone away from a serious discusion. Rich, you are fantastic at what you do and I am so greatful for this forum to express ideas etc. but I don’t think someone should be told that there views (again if presented respectufuly which mine are) are not welcome.
Keep up the great work….love this site and all of the information, views and opinions that are presented.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 1:19 pm
=== is an attempt to label or intimidate someone away from a serious discusion===
We’ve had that discussion about a kabillion times here already. The drive-by history posts are not adding anything new.
Comment by Rich Miller Monday, Sep 30, 13 @ 1:22 pm
@ RNUG
So what you are saying is there is no amount of “cuts” that can be made to fix the problem??? Then maybe, just maybe, those proposed cuts just aren’t deep enough. Eliminating lawmaker pensions wouldn’t fix the problem either, but I think that should be the first thing done.
The solution has to be fixed through revenue AND spending.
Comment by Really Illinois? Monday, Sep 30, 13 @ 1:27 pm
@Rich Miller - Monday, Sep 30, 13 @ 1:22 pm:
= We’ve had that discussion about a kabillion times here already. The drive-by history posts are not adding anything new. =
There are new people comming to this excellent site all the time. So I don’t think it is a waist of time. Also, if you are going to start eliminating points that have been made often in the past there may not be too much to discuss. This whole issue comes down to is the state in such dire straits that it must invoke it’s Police poweres authority and diminish pensions which would otherwise be protected. That is it. Anything beyond that is speculaton rumor guesswork etc. This whole site deals with people reacting to and sharing their views on all kinds of proposals that may never se the light of day. One could argue that any of thise “ads nothing” since we don’t even have a firm proposal yet. This exchange though is important to people (i comend you!) because it helps us develop our thoughts, share them and perhaps infuence others to include ourselves.
Again thanks so much to you and to all who I have the pleasre to agree with and to disagree with. i always do it with respect and appreciating for the other view. I have even learned how to spell “lose” thanks to you.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 1:31 pm
facts…you might have learned how to spell “lose” but check the rest of your post…just sayin’
Comment by Ready To Get Out Monday, Sep 30, 13 @ 1:34 pm
The state employee population has been shrinking for the past 20 years (anecdotal evidence) and death is always part of any human equation. Given these two facts is there any actuarial evidence to support any course of action? I know how politicians hate real numbers like vampires hate garlic, but maybe some projections of benefit costs, not debt are needed.
Comment by Weltschmerz Monday, Sep 30, 13 @ 1:39 pm
@Really Illinois? - Monday, Sep 30, 13 @ 1:11 pm
= Are state benefits too generous??? Compare them to SSI and formulate your own opinion. I think we all know the answer. Thiank about all the private workers you know retired at 55-60, if any at all. They don’t have “free” or reduced healthcare, they can’t take money out of retirement accounts without penalty. We pay 7.5% of our income into SSI up to $113,700/yr, yet the maximum monthly benefit we can get @ 66 is $3,800 combined for a earner and spouse. We are never going to feel sorry for the state employee because you have to wait till 58 to retire or because you have to pay an extra $100/month for your insurance or because your benefit is locked in at $5,800/month with no COLA for a few years.=
SS was never intended to be a retirement system, whereas a pension is. I am not asking you to feel sory for state workers, but rather asking you to try and understand that when you work for 30 years and pay in all you are asked to do and retire based on the states own constitutional promise you want thos benifits and I beleive you would to. You may be corect about benifits being to high, and in 2010 through out elected officials we changed that so that pensions for new workers are much less gracious and may infact be so much so that they are illegal. I bet if I was in your shoes I might very well feel the same and if you were in mine I suspect that might also be true. one thing I hope we can agree on is the importance of the rule of law and abiding by our state constitution. If the pension issue could ont be solved by other means and the state was truely out of options then I would agree that under the police powers out pension contract could be altered. I think this site, thaks to Rich, allows us to sort of try and get in each others shoes. To do that we sometimes have to cover the same ground over and over, but I think it is worth it and applaud you for taking the time to have a spirited debate and exchange of ideas.
You make good points but I respectfully beleive you are arguing with your emotions (totaly understand) and not with your obvious intellect.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 1:39 pm
@Ready To Get Out - Monday, Sep 30, 13 @ 1:34 pm
= facts…you might have learned how to spell “lose” but check the rest of your post…just sayin’ =
What yo are saying is very correct! I am a very poor speller and I have no excuses for that. I hope my poor spelling does not take too much away from what I hope is a little better content. You are dead on with that comment.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 1:42 pm
At the risk of being bounced for re-iteration, it is not fair to compare a state worker’s pension to social security alone. First, most state jobs paid less than the private sector with retirement benefits as a partial equalizer. Second, many private sector workers for large companies received 401(k) matches and were not reliant solely on Social Security. Down the road, the State may indeed have to pay higher wages to be competitive. I think the universities are already struggling with this.
Comment by anon Monday, Sep 30, 13 @ 1:44 pm
A solution to the problem exists. Pay the pension payment. There is a plan in place and it is being executed. The ramp has slowed to a manageable rate.
If the higher income tax must remain in place, so be it. If other programs cannot be expanded, so be it. These are penalties for past sins.
Make modifications that are constitutional, pay the pension payment, move on.
Comment by Jack Handy Monday, Sep 30, 13 @ 1:47 pm
@anon - Monday, Sep 30, 13 @ 1:44 pm:
Be careful this topic has already been asked and anwsered many times.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 1:49 pm
I want to offer this. We all know how we got into this pension mess — right? We all know that the constitution has a 1970 amendment that protects pension benifits from being diminshed. I beleive most would agree that it is important for the state to follow the constitution. I think we all would agree that for new employees begining in 2010 pensions have been greatly reduced. What if we limited the argument to this. Is the state out of legal options to deal with the pension issue or is it out of popular options to deal with the pension issue. If the answer is the former then can we agree that pensions need to be reduced under the constitutional polic powers. If the latter is true can we agree to not diminish them? From hear we could have a constructive discussion on legal options to fix the system or a constructive discussion on how much reduction in pensions would be necessary for the state to survive.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 2:07 pm
As to the whole SS argument…
First, SS is not and never was a complete pension system. It is partially welfare in the form that you earn about 75% of the max benefits of SS with your first about 35% of contributions. The higher income earner is subsidizing the lower income earner under SS.
Second, SS is also a disability insurance program, which a pension is not.
Third, if you take the same amount of contributions paid into SS by both the employer and the employee, and assume those funds were invested in the financial markets at historical rates, then started withdrawals at an actuarial level based on life expectancy, your personal investment would pay off about 4 times higher than SS. There is just no way to compare SS to state pensions, unless you are talking about the theft of money from the recipients’ of both programs.
Fourth, as others have pointed out, a large portion (about 80%) of the state retirees do not participate in SS. They didn’t have a choice; the State made the rules and the retirees contributed at a higher rate into the State systems. The State saved a ton of money not having to pay the employer half of SS …. But instead of putting that money in the pension systems, the State spent it also.
Finally, this is nothing new. This crisis was clearly visible from 1970, 1975, 1995 and 2003, just to name some of the key dates in pension actions. The can has been kicked as far as it can be; it’s time to pay the piper.
Comment by RNUG Monday, Sep 30, 13 @ 2:11 pm
@ facts
1) We are running out of options. You can’t tax everyone out of the state, but we are trying to and have had some success on the business level.
2) A friend of mine says it best: “You make good points but I respectfully beleive you are arguing with your emotions (totaly understand) and not with your obvious intellect.”
@ anon
Coming from So IL, the best paying jobs around, and the vast majority of the good ones unfortunately, are state jobs.
Just to give everyone an idea what it takes, in a lump sum, to providde these pension benefits: If you walked into a financial professionals office @ 55 and wanted to get a guaranteed $5,000 every month for as long as you live, you would need to be prepared to hand him a check for well over $1,000,000. This would not do anything for a surviving spouse and would not provide a COLA. My point is that while there is no 401k or SS for state employees, we are talking very, very big dollars to provide those benefits to retirees.
Comment by Really Illinois? Monday, Sep 30, 13 @ 2:22 pm
@ anon
Stte workers don’t have to only rely on the pension system either. They are free to set up IRAs or use the deferred comp system that is in place or leave said employment and find one of those jobs on the “green side of the pasture”. Private workers can’t opt out of SS and try to do better somewhere else with their money.
Comment by Really Illinois? Monday, Sep 30, 13 @ 2:27 pm
I suppose one political problem with letting the current ramp go on is that to do so without really starving other services would require retaining the income tax increase, and advocating for same in an election year. I’ll let someone else estimate how severely essential services would be starved by retaining the tax as it currently is, the key word being essential, but I’m sure many politicians are trying to decide
if they can safely advocate for keeping the tax.
The answer might be no these days if the alternative is a pension “fix,” which at least appears to solve the problem.
Comment by Cassandra Monday, Sep 30, 13 @ 2:30 pm
@really Illinois
You assume that ALL private sector retirees have NO Pension and NO Free or Reduced Healthcare (meaning no company paid retiree health premiums)
That is NOT true. Many large companies have pensions in addition to their 401K programs. Those large companies usually match into the 401K, and the pension is a company provided benefit…. meaning the employee never contributed to it out of his paycheck. The employees pay increases may have been less, but it was all under the covers.
Same with retiree health insurance. Many large companies do provide retiree health insurance at the same price they charge their employees, which would be considerably less than some state retirees pay depending upon their years of service.
You cannot think to compare state worker benefits to Walmart, McDonalds, or some retail establishment with all low-level mimimum wage part time employees. You have to compare the state worker benefits to State Farm, Allstate, Caterpillar, etc.
Private sector employees are free to have IRAs also.
Some people argue that state workers are public servants. My response to that is I happen to work for the state just as I used to happen to work elsewhere. I have a vested interest in seeing my employer succeed… but I didn’t take a vow of poverty when I accepted the offer.
Comment by mythoughtis Monday, Sep 30, 13 @ 2:49 pm
@ Really Illinois, if those State jobs were really such incredible boondoggles, where were you? Your argument can be turned around back at you. You too could have gone for that supposedly greener pasture. Having failed to do so, why are you complaining now about what others receive? If I am re-iterating here, it’s because the whiners, begrudgers and dogs in the manger never cease.
Comment by anon Monday, Sep 30, 13 @ 2:51 pm
Also, most state workers do not retire at 55 or even 60. Only those that have worked at the state since they were 18 or 20 seem to retire younger than 62 or 65. Unless they work for law enforcement or highway where they are doing physically intensive or hazardous work. I don’t begrudge those people one bit. I will not be one of them because I worked in the private sector too long. I won’t retire until at least 62, and since I will not have 20 years in…. I never expected my health insurance to be free.
Comment by mythoughtis Monday, Sep 30, 13 @ 2:58 pm
@Really Illinois? - Monday, Sep 30, 13 @ 2:22 pm:
= 1) We are running out of options. You can’t tax everyone out of the state, but we are trying to and have had some success on the business level.
2) A friend of mine says it best: “You make good points but I respectfully beleive you are arguing with your emotions (totaly understand) and not with your obvious intellect.” =
I don’t think we are taxing everyone out of the state and there are many legal options left. These have been presented many times on this forum but they include taxing retirement income, changing the pension ramp to a flat payment over 30 years, keep the temp tax or move to a progressive tax , negotiate a higher contribution rate wiht current employees etc.
I appreciate and accept being put into the friendship camp — I liked that one. I don’t think I am being emotional though by wanting to follow the constitution and wanting the pension that I have always been promised. It is an emotional issue for sure for those of us retired and counting on promised benefits, but I hope me arguing for IL to pay up for what they have promised and agreed is a protected right is an intellectual argument.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 3:14 pm
Really Illinois? @ 2:22 pm:
IL Sales Tax Revenue (rounded):
FY-11 $9.6B, FY-12 $9.9B
IL Corporate Income Tax Revenue (rounded):
FY-11 $2.3B, FY-12 $3.0
If businesses are leaving the state, care to explain the increasing amount of coporate income tax revenue?
Comment by RNUG Monday, Sep 30, 13 @ 3:16 pm
==Are state benefits too generous??? Compare them to SSI and formulate your own opinion==
You can’t possibly be serious with that comment. So you’re saying anything that provides a retirement payment above SS is too generous? That’s just ludicrous.
==State workers don’t have to only rely on the pension system either.”
No, they don’t. But when you are told you have a pension you might rightfully rely on that. I’m sorry that you don’t “benefit” from a state pension. But then again you didn’t work for a state pension.
Comment by Anonymous Monday, Sep 30, 13 @ 3:25 pm
@ mythoughtis
Big difference, private companies do not require taxpayer money to provide their benefits. Plenty of private pensions out there, none or very few as generous as the state offers. I even referenced private pensions in previous posts on here. State workers are not public servants, they are normal people who happen to work for the state to provide essential services. They deserve a competetive wage, good benefits at a cost equal to what private employers offer and a reasonable retirement benefit. State workers are not over-paid by any means, but a pension system that potentialy pays someone for 70 years when they only work for 30 years is destined to fail. I understand that most do not retire at 55 for the exact reason you stated, they started later in life, but many do retire at less than 60.
@ anon
I like what I do, I’m self employed and have no reason to change employment to the state. I also love this state and want it to remain financially solvent without punishing everybody with another tax increase. Money is only an issue when the is a shortage of it. We have a very large shortage of it in IL.
Comment by Really Illinois? Monday, Sep 30, 13 @ 3:25 pm
That was me above. Sorry.
Comment by Demoralized Monday, Sep 30, 13 @ 3:25 pm
==but a pension system that potentialy pays someone for 70 years when they only work for 30 years is destined to fail.==
Who in the world is getting a pension for 70 years? I hope that was a typo.
Comment by Demoralized Monday, Sep 30, 13 @ 3:26 pm
I think I read that 70 year howler in some propaganda from one of those anti-pension fomenting organization. I’m sure those employees who started working for the State while still in diapers and who then lived to be 100 years old (30 + 70) are really a drag on the system.
Comment by anon Monday, Sep 30, 13 @ 3:45 pm
==private companies do not require taxpayer money to provide their benefits==
Until we change who pays for the PUBLIC’s services, including Education, can’t think of how else money would be provided. What seems to be an underlying theme in all of this is that people have become increasingly selfish…..willing to pay for public services with their taxes for their own interests, but don’t want to have to pay taxes for anyone else’s benefits. That is the deal as we now know it, today, and it’s part of being a member of this society. Pensions are part of the compensation package of public employees and until someone comes up with a genius plan to fund it without taxing anyone, let us all know.
Comment by Anonymous Monday, Sep 30, 13 @ 3:47 pm
@ Facts
I’m not totally opposed to any of the options you mentioned and I would never support the idea of changing benefits on a retired person. You make a intellectual argument, good debate.
@ RNUG
Are you going to argue with me that IL has done a great job luring and retaining business? I can’t tell by our unemployment rate @ 48th in the nation.
@ Anonymous
I’m not at all saying that anything over SS is too much, but comparatively, the current pension system is a ferrari parked next to a prius with a price tag that isn’t much different for the employee. And I don’t want to give up more of my income so that you can keep 100% of your retirement intact. If anybody should have to give up more income to protect that benefit, maybe it should be those who will recieve it. How about a larger employee cost share in conjunction with taxing some amount of retirement income, public and private?
Comment by Really Illinois? Monday, Sep 30, 13 @ 3:48 pm
If you go to work at 25, retire at 55 and die at 95, you got paid for 70 years.
Comment by Really Illinois? Monday, Sep 30, 13 @ 3:51 pm
===private companies do not require taxpayer money to provide their benefits===
Puh-leaze. There are a jillion tax breaks for private retirement accounts. Also, too, how many corporations have dumped their pensions on the government?
Comment by Rich Miller Monday, Sep 30, 13 @ 3:53 pm
do those who wish to diminish pensions argue that in 1970 the IL constitution was amended to include a pension clause wich made pensions an enforcable contract that states clearly that benifits shall not be diminished? The voters had in front of them an amendment wich clearly explained the amendment. The amendment was put in because in 1970 the pension system was 40% or so funded. The pension was amended for exactly this moment right now. The founders new that some future GA and Gov. would try and welch on promised benfits.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 3:53 pm
@really, sure, as long as the State of Illinois can take the same percentage away from your SSI and retirement account checks as it does from my pension. I already “gave up more income” when I took a lower-paying government job.
Comment by anon Monday, Sep 30, 13 @ 3:53 pm
@Rich Miller - Monday, Sep 30, 13 @ 3:53 pm:
Totaly agree, and also tax breaks for some companies in the tax code unrelated to retirment accounts.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 3:56 pm
Look at our neighboring States. How did they fix it?
Comment by bk Monday, Sep 30, 13 @ 4:02 pm
Exatly Rich. The prvate companies found out the promises they made couldn’t be fulfilled and they can’t print money or increase taxes to cover them. It’s why private pensions are quickly becoming a thing of the past. At some point, I look for tax breaks on retirement accounts to be removed, rules to be changed etc….
@Anon
I look for that to happen, but that would be the federal government doing it since it is their benefit. I’d prefer a tax on retirement income over a certain dollar amount though in IL.
I’m not wanting to eliminate pensions, but when your broke, something has to give. The options are pretty obvious, increase revenue or decrease spending.
Comment by Really Illinois? Monday, Sep 30, 13 @ 4:07 pm
- Really Illinois? - Monday, Sep 30, 13 @ 3:51 pm:
If you go to work at 25, retire at 55 and die at 95, you got paid for 70 years.
Huh? They may have got paid for 70 years but they were on the job for 30 years! Are you suggesting that they shouldn’t get paid? As for living to 95 you are talking about a very small percentage of the population. The average life expectancy is 78.7 years and those living to 95 represent less than 3% of the population who make it to 55! Not a very logical nor compelling case to argue….but then that was not your intent was it.
The average state pensioner does not collect anything near what you are suggesting and I am sure that someone out there without an axe to grind can tell us exactly what the average is. BTW the average pension is very modest for older workers….
Really Illinois? Get a clue!
Comment by Old and In The Way Monday, Sep 30, 13 @ 4:08 pm
@ Old and in the way
Exactly as I said, you would be paid for 70 when you worked for only 30. And no, my suggestion is that they push the retirement age back, not that they eliminate the pension. 55 is really, really young to be retired when everybody else has to wait till 65 for instance. The life expectancy is going up and I’ll agree that most pensioners don’t collet anywhere near $5,000/month, but tell me about those who retired in the last 10 years or the ones due to retire in the next 10 years? I’d say $5,000/month is pretty reasonable number.
Here’s your link:
http://illinoispolicy.org/news/article.asp?ArticleSource=4523
Here’s the highlight:
2010 Average pension for all TRS retirees - $44,844
2010 Average TRS pension for new retirees with 30 years of service - $65,109
Comment by Really Illinois? Monday, Sep 30, 13 @ 4:27 pm
The average TRS retiree age at retirement is about 59 and time in retirement about 28 years.
Comment by Arthur Andersen Monday, Sep 30, 13 @ 4:30 pm
Really Illinois? @ 4:27 pm:
Teachers get a better pension than state employees because they don’t pay into SS. The average State employee (SERS) pension is between $28K and $32K … and there are quire a few making less than that.
Comment by RNUG Monday, Sep 30, 13 @ 4:36 pm
@Really:
I think you hurt your argument a little by relying on the Illinois Policy Institute. Not exactly an unbiased source.
Second, everybody else does not have to wait until they are 65. My mother retired at 62 and started drawing her pension from her employer. You are speaking in far too many broad brush strokes.
Third, I’m not sure the point of posting the average pension for TRS retirees but I don’t really consider $44,000 outrageous.
I think it would be helpful if you would say what you consider to be a “fair” retirement package and them maybe we could go from there.
And your 70 years argument continues to be ridiculous. Stop already.
Comment by Demoralized Monday, Sep 30, 13 @ 4:41 pm
@- Really Illinois? - Monday, Sep 30, 13 @ 4:27 pm:
The state dramaticaly reduced the pension package for new workers starting in 2010. That is an example of a fair and ethical way to make change. The state is also free to negotiate a tough new contract in a couple of years with current state employees to see that they contribute more into their pensions. If the state does not accomplish this then they are free in accordance with the law to lay off workers etc. The point I am making is this. The benifits earned should be honored but there are so many legal and ethical ways to address the pension system. You could tax pensions for example. How can anyone argue that contractual benifts promised should not be honered as long as there are legal ways to do so. Now if the state had no options left then an argument can be made to use the states constitutional police powers. We are no where even close to that point.
Comment by facts are stubborn things Monday, Sep 30, 13 @ 4:42 pm
Really Illinois?
BTW - My $2.3B or so number from taxing pensions (in a previous post today) was taxing ALL pensions, which includes SS and private, at standard deduction levels. If you kick the exempt amount up to $50K, you only get a bit under $1B …
Comment by RNUG Monday, Sep 30, 13 @ 4:44 pm
A couple random thoughts on timing.
1) The longer it takes to pass pension reform, the longer it’ll take to discover whether reforms are constitutional. And if the reforms are not constitutional, the longer it’ll take for the state to pursue revenue opportunities instead.
2) I fear that the closer we get to the general election, the greater the chance that republicans won’t agree to anything, in order to pin pension reform failure on Quinn.
Comment by Robert the Bruce Monday, Sep 30, 13 @ 4:52 pm
Really Illinois - do you understand what a pension or social security is ? It’s money paid during your retirement. So, this argument about being paid in retirement for 70 years is not only not true, but besides the point.
If I retire at 62, and I live to 90, I will be paid a pension AND my social security (I paid into it my entire working life) for 28 years. Just like you. You are self-employed now and will get social security, and your IRA, etc when you retire, so you will have gotten paid for the same 70 years.
Comment by mythoughtis Monday, Sep 30, 13 @ 5:52 pm
@ Demoralized
So your saying those facts are incorrect? Also, I realize some private employees retire earlier than 65, just like some state employees retire even earlier than 55. $44,000 isn’t outrageous, but where is that number in 5 years, 10 years and beyond? Tell me what the new retirees had in 2012, I’d bet it’s more like $70,000 and it only goes up from there.
@ facts
We have a problem today, not 30 years from now when those folks start to retire. It helps long term, but we have to survive till then.
@RNUG
It’s a start at $50,000 or somewhere. I don’t think we need to hit those retired on lower incomes.
Comment by Really Illinois? Monday, Sep 30, 13 @ 5:53 pm
From RNUG:
====There is just no way to compare SS to state pensions, unless you are talking about the theft of money from the recipients’ of both programs.====
Quote of the day
Comment by Diverdown Monday, Sep 30, 13 @ 5:56 pm
3/4 of the people in my neighborhood retired before they were 60 and none of them worked in government. i.e. Com Ed ,Cat,Nicor,AT&T,GM,Ford.
Comment by foster brooks Monday, Sep 30, 13 @ 8:56 pm
Andrew Szakmary @ 1:14 pm:
You make good points also. We’ll jusrt have to agree to disagree on the future economic forecasts. Having lived through the mid-70’s to early 80’s period, I see signs of it happening again. Others, including the report you cited, disagree. Just remmember, when you look back at economic history in the US over the past 100 years or so, the biggest lie every time was: “This tine it is different”.
Comment by RNUG Monday, Sep 30, 13 @ 9:34 pm
Really Illinois? @ 5:53 pm:
Your exempt the first $50K of retiree income comment just reminded me of one of my somewhat tongue-firmly-in-cheek lines earlier this year on taxation.
If you want to stay with a flat tax, the state could generate the same or more personal income tax revenue by hiking the rate quite a bit and exempting the first $150K of income. It would be another way of achieving the same general effect of taxing the rich as the Martire graduated tax proposal and would not require a change to the State Constitution.
Comment by RNUG Monday, Sep 30, 13 @ 9:52 pm
Hey. Isn’t it funny that all the corporate CEO’s make millions of dollars and get all the tax breaks. We pay into the pension system with our own money and we pay taxes and it’s all about us the workers that gave the people of the state service.
Let’s not break the bank of these big wigs because they mean more to the Pat Quinn and the
committee. The money you borrowed and didn’t pay back would have made the system work it was working fine for all the other years before you people put your hands in the cookie jar. Don’t hurt us go after the big wigs that you keep giving breaks to and help the State workers that has given the service to the people of our State and made your job easier.
Comment by No Sense Tuesday, Oct 1, 13 @ 7:17 am
@ Really Illinois? Monday, Sep 30, 13 @ 5:53 pm:
= We have a problem today, not 30 years from now when those folks start to retire. It helps long term, but we have to survive till then.=
We do have to survive until then. The question is are we going to survive as an ethical legal constitutionaly bound state or trash our promises and commitments and turn the constitution into just a page out of a book. Below are what I beleive to be three important statements or excerpts. The first gives (at one time) the view of contracts that the commercial club held. The second is the language that was on the ballet in 1970 that voters used to democraticaly add the 5th amendment. The third is the 5th amendment to the Illinois constitution
“There is no moral exemption for any man or body of men that breaks
contracts. Nor is there any hope of public or private respect for a
contract breaker. A contract breaker is an utter misfit as a citizen or a
business man.”
—Franklin MacVeagh, former President of the Commercial
Club of Chicago and U.S. Secretary of Treasury2
The Convention stated in its official text and explanation of the proposed Constitution that under the
Pension Clause “provisions of state and local governmental pension and retirement systems shall not have
their benefits reduced.”197 And, “membership in such systems shall be a valid contractualrelationship.”198 The Convention’s official explanation also stated that the Clause was a new section “and
self-explanatory.”199 The Convention’s official text and explanation was mailed to each registered voter
in Illinois and published in newspapers throughout the State prior to the special referendum election held
in December 1970 to approve the proposed Constitution.200
Similarly, the Illinois State Register reported that the Pension Clause was a “sweetener” that gave
public employees on State, county, and municipal payrolls “a constitutional right to their full pension
benefits.”201 Other Illinois newspapers simply repeated the text of the Clause202 or described it much the
same way as the Illinois State Register.203 As a result, both the official explanation and newspaper
descriptions of the Pension Clause show that voters were informed that the provision protected pension
benefit rights from reductions and granted public employees a constitutional right to their “full pension benefits.”
SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the
State, any unit of local government or school district, or
any agency or instrumentality thereof, shall be an
enforceable contractual relationship, the benefits of which
shall not be diminished or impaired.
(Source: Illinois Constitution.)
Comment by facts are stubborn things Tuesday, Oct 1, 13 @ 8:34 am
@RNUG - Monday, Sep 30, 13 @ 9:34 pm:
I remember the inflation years in the late seventies and early 80’s very well also. Our first home had a 14% interest rate and that was a low FHA loan..we really had something there. Economists are about as accurate as weather men at fordcasting things and the further out they go the less accurate they are. I don’t know if inflation will come back any time soon but the laws of economics are still alive and well. We have created trillions of dollars in stimulus in response to the great recession and probably correctly so. It will be interesting to see how well that can be withdrawn once the economy is strong enough to do so.
Comment by facts are stubborn things Tuesday, Oct 1, 13 @ 8:43 am
This whole pension reform is a Hobson’s choice for retirees!!!
Comment by LisaC Tuesday, Oct 1, 13 @ 10:03 am
@LisaC - Tuesday, Oct 1, 13 @ 10:03 am:
=This whole pension reform is a Hobson’s choice for retirees!!! =
Interesting observation, would you please explain a bit further. If I understood the reference to Hobson, it would be a choice that appears to be a choice but uppon further examination is nothing of the kind. Not sure I follow?
Comment by facts are stubborn things Tuesday, Oct 1, 13 @ 10:26 am
You offer a choice to have a lesser COLA but get to put in less money…I am retired…how do I contribute less from my paycheck for this so called choice???
Comment by LisaC Tuesday, Oct 1, 13 @ 11:15 am
@LisaC - Tuesday, Oct 1, 13 @ 11:15 am:
=You offer a choice to have a lesser COLA but get to put in less money…I am retired…how do I contribute less from my paycheck for this so called choice??? =
I am in the same exact position as you are. I am retired from IDOT after 27 years of service in the alternative formula under SERS. We would not receive any benifit from the 1% less contribution. They are saying that the 1% less contribution is consideration for those working for the freeze of their COLA when they retire. For you and I, the consideration is suppose to be the better inflation protection of the 1/2 the CPI with a floor of say 1% and a cap of say 5%. I do not agree with any of it, but I beleive that is the rational behind it as I currently understand. Of course no proposal yet, but seem to be firmly settling around this concept as a framework.
Comment by facts are stubborn things Tuesday, Oct 1, 13 @ 2:31 pm