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* A pension reform bill passed the House 87-26 yesterday that applied only to the Chicago Park District. Greg Hinz has deets…
Specifically, according to a fact sheet provided by Mr. Madigan’s office, the amendment would require the district to almost triple the ratio of what it pays relative to what workers pay over the next several years, moving from a 1.1 ratio now to 2.9 in 2019. The heavy employer contribution would remain until the funded ratio moved from the 58 percent figure to at least 90 percent.
In terms of money, CPD would make “supplemental contributions” of $12.5 million in 2015 and $50 million in 2019.
In exchange, workers who now contribute 9 percent of pay toward their retirement would gradually move up to 12 percent by 2019. The figure would remain there until the 90 percent-funded target was hit, eventually dropping to 10.5 percent.
Also, for district employees hired prior to 2011, the minimum retirement age would move from 50 to 58. But for newer workers, who are covered under a different standard, the age for normal retirement would drop from 67 to 65.
In one other big change, annual cost-of-living hikes would move from 3 percent simple (uncompounded) to the lesser of one-half inflation or 3 percent. That change would take effect immediately and apply to current retirees.
* More…
“This is an honest solution to address a problem that has been decades in the making,” Emanuel said in a prepared statement. “It reflects a balanced approach of reform and revenue, giving employees, retirees and taxpayers the security and certainty they deserve but that has long been missing.”
On the House floor, Madigan acknowledged the plan has “mixed” support from labor unions.
“Some are for. Some are against,” he said. “Generally, you’ll find the trade unions support the bill. The non-trade unions, maybe not.”
I’m not sure any unions are really “for” this plan.
* Either way, if it passes the Senate and is signed into law, Illinois will finally start the process of judicial review over whether a phrase specifically written into the Constitution to prevent any pension benefit changes like these can be overcome by fiscal necessity.
*** UPDATE *** The bill has passed the Senate and will now go to the governor’s desk.
…Adding… From a Tribune editorial board member…
So #Cullerton got behind @ChicagoParks pension bill that raises retirement age, inc contributions, which he said for mos was unconstitional.
— Kristen McQueary (@StatehouseChick) November 7, 2013
So, now they’re attacking a new ally?
posted by Rich Miller
Thursday, Nov 7, 13 @ 12:05 pm
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I am a bit confused about who pays the pensions for CPD employees. If its the state, then yes this would be a test of the constitution. But, if its the City, probably not? Can someone clarify?
Comment by lincolnlover Thursday, Nov 7, 13 @ 12:21 pm
===But, if its the City, probably not?===
Constitution…
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.
Comment by Rich Miller Thursday, Nov 7, 13 @ 12:23 pm
@lincolnlover The constitutional clause applies to “any public pension system” - not just those funded by state government.
Comment by Reality Check Thursday, Nov 7, 13 @ 12:24 pm
If they intend to use this as a test case, they should hold off on other pension system “reforms”. I’m predicting a lawsuit being filed by CPD Retirees, if not the unions before Quinn’s pen leaves his hand. I’d also expect a request for an immediate injunction on enforcebility while the suit proceeds through the courts. Start calling your senate reps people, and express your sentiments ASAP. We need to stick together here, and make sure we loudly register our disdain for any attack on the middle class whether they worked for the park district, or not.
Comment by PublicServant Thursday, Nov 7, 13 @ 12:38 pm
“So, now they’re attacking a new ally?”
Some folks just can’t stop themselves.
– MrJM
Comment by MrJM Thursday, Nov 7, 13 @ 12:39 pm
Funny this snuck through house and senate so fast while everyone was basking in glow of gay marriage bill.
Comment by Fed up Thursday, Nov 7, 13 @ 12:40 pm
While the constitution section defines the pensions as contracts that cannot be impaired nor diminished, the other key is section 1 (the Bill of Rights) of the state constitution that prohibits the State from passing any law that impairs a contract.
The argument has been that the State can exercise its Police Power and pass statutes that violate certain sections of the constitution in order to preserve the public welfare, arguing that the fiscal condition of the State could endanger the public without the statute.
The Park District is actually paying the tab - so this statute would not seem to impact the ability of the State to preserve the public welfare.
My thought would be that this would make it even tougher for the State to prevail.
Comment by archimedes Thursday, Nov 7, 13 @ 12:43 pm
Tell the average taxpayer “we decided to raise the minimum retirement age from 50 to 58. Is that an impairment to someone who is in their late 40’s who was planning on retiring next year?” Seems pretty obvious that raising the age impairs their ability to fulfill their contractual agreement with their employees. Also ask if reducing their COLA from a firm 3% to one half of inflation with a maximum of the old 3% (it would only be .5% this year btw). Is that a diminishment to their pension?” Seems pretty obvious, but then again I am not one of he “3 or 4″ judges that Madigan mentioned “having” a few months ago, so up may mean down to them…
Comment by Roadiepig Thursday, Nov 7, 13 @ 12:45 pm
hmmm… test case some people wanted?
Comment by Liberty First Thursday, Nov 7, 13 @ 12:52 pm
Hi Ho, Hi Ho it’s off to court we go!!
So where does the CPD get $50 millon in 2019??
TAXES!! Welcome to Chicago!!
Comment by Union Man Thursday, Nov 7, 13 @ 12:56 pm
Good bill for the unions to take to court…no “emergency powers of the state” argument can be made when your talking about a local park district pension.
Comment by thomas Thursday, Nov 7, 13 @ 1:10 pm
Where can we view who voted up or down on this in both the house and the senate?
Comment by PublicServant Thursday, Nov 7, 13 @ 1:14 pm
And no “consideration” since it appears to be lose, lose for the employees/retirees.
Comment by anon Thursday, Nov 7, 13 @ 1:15 pm
Interesting. I expected the state to drag its feet until some clarity on public pension modifications issued from the federal courts in the Detroit bankruptcy. I believe PublicServant has it right. If this becomes law, the complaint, which already has been drafted, will be filed immediately in state court. But I’m not so sure that an injunction or stay will issue immediately. I presume the defendants, who supposedly represent the taxpayers, will file a petition to disqualify all state judges, which certainly have a financial interest in public pension reform. That portion of the case alone could consume a year or more before the court even reaches the point of considering an injunction or stay. Meanwhile, the fiscal clock keeps ticking.
Comment by Cook County Commoner Thursday, Nov 7, 13 @ 1:27 pm
That Constitutional language is awfully powerful, to this layman’s eyes.
I really don’t see any way around it. You have to pay.
Comment by wordslinger Thursday, Nov 7, 13 @ 1:32 pm
@publicservant:
Here’s a link to the roll call for sb1523:
Tinyurl.com/cpdpensions
Looks like it got through the House 87-26-2 and through the Senate 46-4-4. Brady was a Y and Dillard an NV.
Comment by hisgirlfriday Thursday, Nov 7, 13 @ 1:34 pm
==The Park District is actually paying the tab - so this statute would not seem to impact the ability of the State to preserve the public welfare.==
Actually, you have it backwards. The prime case for “police powers” argument is the Blaisdale case, where the US Supreme Court used that argument to uphold a statute imposing a moratorium on mortgage foreclosures during the depression. The “police powers” argument is a lot shakier when the State is trying to renege on its own contracts. See the U.S. Trust case:
“As with laws impairing the obligations of private contracts, an impairment may be constitutional if it is reasonable and necessary to serve an important public purpose. In applying this standard, however, complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake. A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”
Comment by Anon. Thursday, Nov 7, 13 @ 1:40 pm
They are zealots and why Cullerton worries about the Fox Tribune I have no idea.
Comment by Obamas Puppy Thursday, Nov 7, 13 @ 1:44 pm
Any thoughts on why the CPD union would agree to such an atrocious deal?
Comment by anon Thursday, Nov 7, 13 @ 1:47 pm
Rahm told the Park District employees to take this or he was going to privatize them all out of jobs.
Rahm tried to snake his way with the Sergeant’s Union but that went nowhere.
I’m told that the CPD pension fund is also a disability fund and the city has never paid into workman’s comp. All it would take to really put the hit on city finances would be for a few of police officers to get hurt answering calls in a one man car w/o backup and sue the city. Rahm’s rolling the dice he gets re-elected and then jumps on Hillary’s ticket. He himself under funded the CPD pension plan by the tune of 247 million last year along against the advise of his own actuary!
Comment by Rollo Tomasi Thursday, Nov 7, 13 @ 1:53 pm
Anon, I’m not seeing where any CPD unions agreed to this. Where are you getting that information?
Comment by PublicServant Thursday, Nov 7, 13 @ 2:05 pm
RNUG and others here have convinced me that most of the pension reform ideas are likely unconstitutional, but I’m no judge. So it is great to see a test case. If the courts approve, then more pension reform can continue. If not, then time to raise more revenue.
Comment by Robert the Bruce Thursday, Nov 7, 13 @ 2:05 pm
Previous court cases have ruled against changing service terms used to calculate pensions, including age, for existing government employees employees.
Comment by RNUG Thursday, Nov 7, 13 @ 2:07 pm
RNUG, always, really appreciate the knowledge and thoughtfulness you bring to the party.
The Tribbies must go out of their way not to learn from you. Salud.
Comment by wordslinger Thursday, Nov 7, 13 @ 2:20 pm
@Rollo Tomasi with you 100% on Rahm’s plan. I’m shocked the Chicago media (national media even) is so either clueless or scared to write about it. Which brings up the Trib Ed board… if they want to fix the city, they need to start hammering Rahm. And if they want to fix the state, they need to stop writing.
Comment by From the 'Dale to HP Thursday, Nov 7, 13 @ 2:26 pm
“Rahm told the Park District employees to take this or he was going to privatize them all out of jobs.”
Any reason Quinn could not do the same?
Comment by catrike Thursday, Nov 7, 13 @ 2:30 pm
Lets try asking Joe Taxpayer, who has to work well into their 60’s, how they feel about changing the CPD retirement age from 50 - 59…no wonder the system is broke.
Comment by Boog Thursday, Nov 7, 13 @ 2:32 pm
Is this the sacrificial lamb to test the courts?
Comment by walkinfool Thursday, Nov 7, 13 @ 2:33 pm
That would be my guess … has most of the elements that were being discussed for the 5 state level funds.
Comment by RNUG Thursday, Nov 7, 13 @ 2:45 pm
One of the first resources that should be used by the lawyer(s) filing a challenge on behalf of CPD employees and retirees will be the Cullerton staff brief prepared by Eric Madiar.
Comment by Norseman Thursday, Nov 7, 13 @ 2:52 pm
And the second resource will be the State’s testimony about the pension protection during the Maag appeal …
Comment by RNUG Thursday, Nov 7, 13 @ 3:06 pm
As I stated, I think there will be a quick injunction on enforcing the bill’s provisions. Quinn won’t waste any time signing this. Hrrrrm. Now to find someone to support against my reps if they voted to condone this theft.
Comment by PublicServant Thursday, Nov 7, 13 @ 3:12 pm
I have to wonder…did they chose a relatively small group to test the pension change on wisely because the group would have less money to spend on taking the issue to court.
Comment by Curious Thursday, Nov 7, 13 @ 3:14 pm
I’m pretty sure they’ll have more than enough funding to take it to court, Curious. I’d expect Pro Bono representation, otherwise.
Comment by PublicServant Thursday, Nov 7, 13 @ 3:24 pm
==I have to wonder…did they chose a relatively small group to test the pension change on wisely because the group would have less money to spend on taking the issue to court.==
I wouldn’t think so. Members of other groups can always help with the costs.
Comment by Anon. Thursday, Nov 7, 13 @ 3:24 pm
Another 2-3 years sloughing thru courts and we may get an answer.
Comment by mokenavince Thursday, Nov 7, 13 @ 4:01 pm
Curious @ 3:14 pm:
small group = ,aybe less lost feet & votes in the primary or general
Comment by RNUG Thursday, Nov 7, 13 @ 4:14 pm
@Boog, most times “retire at 50″ goes along with “30 or more years”. Only a very few employees qualify for that. Also a lot of times the retirement amount is prorated, retire early for a reduced amount. 30 years ago, a lot of big companies in the private sector had pension plans that included “30 and out”. It was an incentive to get people to stay on for 30 years.
Comment by DuPage Thursday, Nov 7, 13 @ 4:23 pm
Cutting pension benefits for those retired is not a “fiscal necessity.” Politicians not spending money that they do not have is.
Comment by jk9kids Thursday, Nov 7, 13 @ 4:34 pm
=Rahm told the Park District employees to take this or he was going to privatize them all out of jobs.= He is done using them as a test case to lower pensions. When he is done with that he could then privatize them out anyway.
Comment by DuPage Thursday, Nov 7, 13 @ 4:40 pm
Boog @ 2:32 pm:
Most the city & state pension systems have the pension baed on years of service. There is a minimum number of years required to retire at the “minimum” benefit and there is a maximum number of years to earn the “full” benefit.
I don’t know the Chicago Park Board specific rules, so I’m going to use one of the State systems as an example. Under the normal SERS Tier 1 program, you earn 1.67% per year of contributions. The maximum benefit that can be earned is 75%. To earn the “full” benefit you have to work 45 years (75/1.67). If you add an age of 23 (college grad) to 45 years of service, you have to work to age 68 to get the maximum benefit. The minimum benefit can be taken at age 60 with only 8 years for a pension a bit over 13%. There are other combinations that do allow retirement before age 65, but they are all based on the number of years worked and are all a reduction from the “full” pension.
Comment by RNUG Thursday, Nov 7, 13 @ 4:41 pm
http://www.suntimes.com/23603997-418/chicago-park-district-pension-reform-bill-heads-to-quinns-desk.html
Article has union’s position on bill.
Comment by tsavo Thursday, Nov 7, 13 @ 5:13 pm
“Rahm told the Park District employees to take this or he was going to privatize them all out of jobs.”
Any reason Quinn could not do the same?
+++++++++++++++++++++++++
For many unions he could do it. But I would like to see him privatize the Troopers. Or Rahm privatize the CPD.
Comment by Rollo Tomasi Thursday, Nov 7, 13 @ 5:26 pm
Union concurrence might, maybe, just might let them change the terms for current union employees but it has NO effect on the retirees. I think you would have to see a union vote tally before a judge would buy that there was concurrence. Unions do not represent the retirees.
Once I finish reading the bill as passed I may have additional comments.
Comment by RNUG Thursday, Nov 7, 13 @ 5:42 pm
After reading this news, I would change my survey vote on whether the GA will pass a bill to renege on paying past due contributions to the big five pension fund. It now seems very likely. The success of the CPD bill is a big event. I hope the teachers and professors wake up now.
I bet Ty and his CC clubbers are celebrating tonight!
Comment by cod Thursday, Nov 7, 13 @ 6:40 pm
Just finished my first complete run through of the bill. Interesting read. Breaking my comments up into a couple of posts. This one will cover a lot of the specifics.
AAI change to 1/2 CPI-U has a floor of 0% and a cap of 3%. Also includes “AAI holidays” in years 2015, 2017 & 2019. AAI changes applies to both existing employees who might retiree and existing retirees.
A number of changes to retirement requirements, including age, but its’ impact really is dependent on each person’s situation. In some cases it actually lowers the threshold age at which a person can file for a reduced pension and also lowers the age the penalties start to apply when taking early retirement. Overall, both limits are actually lowered by 2 years starting in 2015 … so you would pay the same penalty for retiring early but you would be able to retire 2 years sooner.
(It’s not a change, but I found it interesting that their survivor’s benefit level is 66 2/3% instead of the 50% applicable to a lot of state employees.)
The “earliest” retirement age is moved from 50 to 58, but only for employees under age 45 as of 1/1/2015.
Duty disability coverage is slightly changed downward. It is currently 75% of salary; in 2015 it is reduced to 74%, in 2017 it is reduced to 73% and in 2019 it is reduced to 72%. Makes no distinction between those currently on disability or new people on disability and there is language to that effect, so I assume this affects existing duty disability receiptiants.
The increased payments by the park district and the increased contributions by the employees have been outlined already so I’ll mostly skip them. The one thing I will note is the employee contribution is actually a floating one; if the fund ever reaches 90% level, it goes down to 8.5% and if the funding drops below 90% level, it goes back up to 10%.
The bill has the same funding language we’ve seen before giving the pension fund the right to sue if the payments are not made.
There is a couple of other funding language changes but I’m going to put that in a separate post.
Comment by RNUG Thursday, Nov 7, 13 @ 6:45 pm
Finally, and I hate to lend legitimacy to them, but if you had any doubt about exactly how severely the Illinois Policy Institute and the corporate types want to punish government workers & retirees, just read their latest screed.
They are not happy with this bill because taxpayers are going to have to actually pay more to help solve the problem, and, reading between the the code words, it doesn’t eliminate the defined benefit pension.
Comment by RNUG Thursday, Nov 7, 13 @ 7:14 pm
As a State retiree, I guess I’ll take whatever negative votes there are against reducing SERS/SURS/TRS pensions regardless of their reasoning. But a quick comparison of the opposition votes on the latest CPD pension reduction bill and SB 1 certainly demonstrates to me that many of our solon allies are less concerned about the constitutional guarantee against diminishment than the local/regional political ramifications. Now for all those who don’t see this as a huge surprise, click on the following link:
http://www.youtube.com/watch?v=sDbHwz6JGzo
Comment by Norseman Thursday, Nov 7, 13 @ 11:05 pm
LOL
Comment by RNUG Thursday, Nov 7, 13 @ 11:07 pm
Any State Rep. that votes for this should be thrown out of office for breach of fiduciary duty they took an oath to uphold the constitution.
Comment by chuck Friday, Nov 8, 13 @ 7:52 am
Cullerton also voted for SB1… I don’t think there has been a pension reform bill that he hasn’t voted for…
Comment by Anon Friday, Nov 8, 13 @ 8:37 am