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* In essence, here is Gov. Pat Quinn’s proposal for a newly revamped public employee pension system…
· 3% increase in employee contributions
· Reduce COLA (cost of living adjustment) to lesser of 3% or ½ of CPI, simple interest
· Delay COLA to earlier of age 67 or 5 years after retirement
· Increase retirement age to 67 (to be phased in over several years)
· Establish 30-year closed ARC (actuarially required contribution) funding schedule
· Public sector pensions limited to public sector employment
To entice (or force, depending upon your standpoint) workers into that new system, employees who elect to stay in the current system would no longer be eligible for any government subsidies of their health insurance upon retirement. And none of their future pay raises would count toward their retirement income if they decide to stay in the current pension system.
* The response from organized labor…
By appearing to endorse these unfair and unconstitutional cuts, the governor has made the process of finding common ground much more difficult.
Forcing public servants to choose between two sharply diminished pension plans is no choice at all. It is a clearly illegal attempt to solve the problem caused by past governors and the legislature solely on the backs of teachers, caregivers and other public workers.
We’ll talk about more details as we go along, but I’m curious today what you think about the overall fairness of this plan to workers and to taxpayers.
posted by Rich Miller
Monday, Apr 23, 12 @ 9:55 am
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it makes bill bradys hb512 look good, at least with that plan you still had cola,insurance,no reduced pension if you stayed in tier 1. I was willing to pay more to keep current benefits. Using case law in a new york school district as justification to reduce tier 1 pensions seems.pretty weak to me. It will be a battle in the courts,our union BA has indicated there could be a posible strike.
Comment by Foster brooks Monday, Apr 23, 12 @ 10:10 am
Two things Rich…First, there is no indication that the pension fix already instituted for new employees shows up in their calculations, and second, I’m still very upset that the true reason for this mess has NOTHING to do with employees whom have mandated payments, rather the General Assembly and their lack of following their own rules…which by the way can STILL be abrogated by future GA’s.
So is it fair…No.
Comment by Captain Illini Monday, Apr 23, 12 @ 10:10 am
Changing the rules in the middle of the game is never going to be fair. People signed up to work for the State based on a certain set of considerations. You cannot take away some of those considerations and have it be fair.
It will be unfair to taxpayers as well, because the legal bills will be unprecedented in trying to uphold this proposal if it somehow passes.
Comment by Generation X Monday, Apr 23, 12 @ 10:15 am
So current state employees would work longer, contribute more and get less - assuming that the state keeps its end of the bargain. Sounds real appealing. I can hear the footsteps for the door already.
What never seems to be acknowledged is that the legislature used the money that it should have been putting into the pension for the last several decades to fund other budget items. Why should the fallout of such ingnorance now be foisted solely on the backs of state employees?
Comment by Anonymous Monday, Apr 23, 12 @ 10:18 am
State employees would be better off in SS and having individual 401Ks then this proposal. At 12.4 percent the state will be making money off me. I will die before I receive the contribution I but in.
Comment by STT Monday, Apr 23, 12 @ 10:18 am
overall, the plan is unfair and coercive on employees. all of the provisions either take more from employees or give them less, in exchange for what? a promise that this time, the state will fund its obligation. really, we promise, scouts honor. that wont keep it from being popular w the general public who want something done (bordering on revenge) or many editorial boards.
3% more from employees, 0% more from the state
reduced COLAs, no compounding
go along w the plan, or lose the healthcare you have been planning on for years.
no retirement benefits til 67, so you have employees (esp teachers who start young) staying longer, at the top of the pay scale, when they want out.
not only threaten to withhold health care benefits to coerce cooperation, but there are still proposals to jack up the cost of health care to half, instead of free, right?
health care is not protected by the constitutional provision vs diminishment, but that does not make it constitutional to coerce cuts/changes that could not otherwise be legally enacted. other provisions may also be unconstitutional.
Comment by langhorne Monday, Apr 23, 12 @ 10:19 am
No, it is not fair.
The fault for the pension payment backlog is solely on the backs of the GA and the past Governors. Those same people enjoy a very hefty salary for a part time job, plus they get paid extra if they don’t get their work done on time.
So on one hand you have a group who has done what they have supposed to do. They have paid their fair share on time as required. And now they are being told they have to sacrifice.
And on the other hansd you have a group who has abdicated their responsibilities, has dragged their feet in solving the fiscal mess because it might have cost them personally, has a very poor history of doing their job, has been rewarded for that, and now will face no hardship for their poor performance. And they control the purse strings.
And on top of all of that you have the second group blaming the first group for the problem. They don’t even have the intestinal fortitude to take responsibility for their actions.
As I have said before. If the GA and the Gov are truly interested in being fair, then give the employees the exact same benefits as they, the GA and Gov. enjoy or take the package that the employees already have. Then everyone will be equal. Other states have just one insurance pension package for everyone. Just one time I would like to hear one of the four leaders or the Gov answer why that can’t be. What makes them so special and elite that they can have a special benefit/retirement package and yet they deny less to the average worker. The arrogance is unbelievable.
Comment by Irish Monday, Apr 23, 12 @ 10:20 am
A couple of questions. Is the rule of 85 still in effect if you choose the new plan? Why isn’t anyone talking about compound versus simple interest which will be thousands of dollars less in a persons pension after a few years?How much will the healthcare subsidy be for a retiree compared with what they currently pay?
Comment by Scottzo Monday, Apr 23, 12 @ 10:20 am
The problem was indeed caused by past governors and lawmakers whose raids on the pension funds, in the end, really benefited all Illinoisans. Now the current thought is that burden has to be carried solely by retirees. No, it is not fair. But if retirees are made to carry the load all by themselves…the extra burden doesn’t seem to be too bad.
Comment by Deep South Monday, Apr 23, 12 @ 10:21 am
As a State employee and tax payer I have a few comments on the Governor’s latest proposal. I would have no problem increasing my pension contribution 3%. I already contribute 8.5%. I do, however, want the General Assembly to commit to actually making the state’s payment as well. When I retire, I would not have a problem with paying a portion of my health insurance and I certainly do not expect an automatic 3% cost of living increase every year. What I do not want to see continued is the Gov balance budgets by slashing services and closing facilities. I would like to see actual budget reform instead of the the usual cutting services and closure of facilities. I would like to see actual fiscal responsibility and accountability.
Comment by Walk in my shoes Monday, Apr 23, 12 @ 10:22 am
Rich and all, does this proposal cover teachers, or just state workers?
Comment by Today Monday, Apr 23, 12 @ 10:24 am
What will further erode the fairness of this proposal will be the attempt by the Governor to divide the Union and conquer through the mandatory retirement age. The Governor will pick an arbitrary cut off date of 10 years for example. Those with 10+ years with the State will not be subject to the mandatory retirement age. Those with less will be subject. This type of warfare on collective bargaining is not fair and should be rejected by the Unions
Comment by Generation X Monday, Apr 23, 12 @ 10:29 am
===This type of warfare on collective bargaining is not fair and should be rejected by the Unions===
Public employee unions are forbidden by Illinois law from negotiating pension benefits in the collective bargaining process.
Comment by Rich Miller Monday, Apr 23, 12 @ 10:32 am
Fair? No. Paying more and getting less is not fair, especially when you did not cause the problem. I wonder about the 67 retirement age: Would this mean you could not receive ANY retirement benefits until you turn 67, or that you could not not receive FULL benefits until then?
Comment by Just Wonderin' Monday, Apr 23, 12 @ 10:35 am
It’s fair for the taxpayers, but probably a little unfair to the employees. I don’t think asking teachers to work until their 67 is a good idea, thus maybe it makes sense to have them contribute more to their pensions and retire earlier like 57 or 58. I think there is some middle ground in all of this that could be found that would be fair for all. I also don’t think we should make all the pension systems the same. Teachers should not have the same retirement age as sate employees; the demands of the profession are just too different. Likewise, I think the legislature should give up more to set an example, be leaders for once.
We simply cannot afford the current system, it’s just too generous. If anyone can find a private pension system that still gives the current benefits, I’ll buy you a beer.
The change in COLA and limiting public pensions to public employment is a no-brainer.
Comment by Ahoy Monday, Apr 23, 12 @ 10:35 am
Given what’s going on with private sector pensions and health plans, yes, it’s fair. At least the state can’t go into bankruptcy court and just walk away from all of it.
Comment by wordslinger Monday, Apr 23, 12 @ 10:41 am
What do state employees pay for their pension now? I was told 4% by a state employee. I work for another government agency and we pay 9.5%, so another 3% would hurt. What is the retirement age for the state now? I think part of the problem was the state & city didn’t make their match, but I believe both agencies also promised more than they could deliver. Fair, no. There should be give and take from both sides in a negotiation and all the state is promising is to make the pension payments that they were supposed to already be making.
Comment by James the Intolerant Monday, Apr 23, 12 @ 10:46 am
If the retiree HC subsidy is not guaranteed by the constitution and is not in the nature of a contractual agreement, then how can Gov. Quinn guarantee that it will still be in place 20-30 years from now? Will there be a refund provision in the law similar to the modified Early Retirement Option in TRS, where if the subsidy goes away the member will get some of his or her money back? Without such a refund provision, it seems like a big leap of faith for a young worker to make the additional 3% contribution in the hopes that the retiree HC subsidy will still be there years from now.
The press corps let Quinn skate on Friday without asking him to articulate how his proposal meets constitutional muster while SB 512 supposedly does not. One could argue that 512 has more constitutional merit than this proposal because 512 contained an option for workers to pay more to maintain the status quo. This proposal obliterates the status quo.
Comment by The Elderly Man You Used to Love Monday, Apr 23, 12 @ 10:47 am
Put it to a vote of the citizens of Illinois! I can’t wait!
Comment by Downstate Monday, Apr 23, 12 @ 10:51 am
Wordslinger, disagree with your comment. It is NOT fair to retirees. What happened in the private sector was NOT fair, either. But two wrongs do not make a right, which is what calling this proposal “fair” would be…
Comment by downstate commissioner Monday, Apr 23, 12 @ 10:53 am
No it is not fair, but it was also not fair that for 30 years the state hasn’t even put in an amount even close to what they would have if all state employees were in Social Security. It is also not fair what kind of pension a legislator gets. At 20 years they get 85%, no other state employee can get 85% even if they worked 50 years. Also if the legislator came on before 2003 they can get well over 100%, Madigan in on track to get over 130% if he can hang on a few more years,and puts in 40 years.They get 3% more for each year over 20 years, they shouldn’t get any pension , if they would, give them same as a regular employee.Also Quinn said nothing about what he wants to do with the alternative formula pension, he has to do something there also.A few ideas I have is that pension is based on average of high 4 years, no last day pay formula, no overtime is counted towards your pension. Also no COLA until you are retired for 5 years, also cut back on end of job large payouts , many employees leave with greater than $50,000 when they retire.
Comment by Stevie Monday, Apr 23, 12 @ 10:54 am
I think it’s fair. Most people on this site (and Rich) know how I feel. Workers should have urged their union leaders and negotiators to read the tea leaves and take possible radical proposals into account when the times were appropriate. Failure to have adhere to the requests should have left state employee union leaders at the mercy of the employees. The employees and union leaders have punted just as much as the state. When negotiating contracts, it takes two to tango. That’s why it’s called “collective bargaining”. If it weren’t collective, Governor Quinn would lay siege to the pension system without care or consideration for the workers and the union leaders. What solutions does AFSCME really have?! All I ever hear from AFSCME leaders and reps is wind. Quinn and his people have put together a cogent, actuarial plan.
From a constitutional standpoint, please remember that large, national companies have shirked pension responsibilities for years. Those alterations could have easily been scrutinized under the U.S. Constitution’s Commerce Clause but were not. GM’s pension overhaul greatly affects multiple states and the PBGC, and UPS’s suit to leave its pension provider also impacts the entire country. It’s not unthinkable that legislated changes to the state pension system could be upheld by a more conservative set of federal judges (i.e. an appellate bench and/or the U.S. Supreme Court). And the U.S. Constitution trumps the state constitution. I know some may think that’s a stretch, but what happens if the state does nothing and then reached out to the feds in a few years to beg for pension assistance? That would greatly impact the federal budget and would open the possibility of other states doing the same.
And the argument that it shouldn’t be done now always puts a smirk on my face. If not now, then when? When all the baby boomers are retired and bog down the system even further? When taxes need to be raised again to take care of a sliver of the state’s overall workforce? Should we not change the employee requirements and instead cut social programs and further harm education to keep with a “constitutional mandate”?
The argument that (most) retirees alone do not make that much each month and do not receive incredible fringe benefits makes sense on its face - but you then must consider the SSA’s formula. Do Social Security recipients earn much per month? No. But imagine granting a COLA of 3% to every single Social Security beneficiary and you quickly enter the realm of Social Security paying out billions of dollars more per year on top of the hundreds of billions of dollars per year it already expends. The same goes for SERS and SURS. When thinking of each individual earner’s annuity, the number is not that large. But if no changes are made, multiply the further burden of monthly pay and benefits by the number of retirees and you have a much larger number. As awful as this is to say - it’s a numbers game and not a human game.
I think the best way to handle this matter is to meet in the middle. If the union thinks 67 is to high - which is the full Social Security retirement age - then AFSCME needs to counter with a real number and not just more wind. If Governor Quinn wants to change retiree health insurance, then AFSCME needs to indicate a slight bump in copayments and deductibles would be better than a more gaudy number. Trading press releases looks silly.
Comment by Team Sleep Monday, Apr 23, 12 @ 10:55 am
Fairness has nothing to do with any of this- As president Obama is fond of saying- this is about Mathematics- The State cannot afford to continue funding an ever increasing annual pension tab without severely reducing all other services- is it fair to gut public education so we can continue the pension program as is- I don’t think so- the 60 percent increase to the tax bill for state residents is going almost entirely into the pension plans when it was passed on the promise of reducing other budget obligations- it is time to stand up to these public sector unions who are intent on driving the State into receivership
Comment by Sue Monday, Apr 23, 12 @ 10:56 am
No, this is a “State” problem, created by “State” elected officials not making the payments that should have been made by the State. This proposal puts almost all the burden on the State workers. I don’t want my real estate taxes to go up either, but realize as a citizen of Illinois this is a problem that should be fixed/shared by all citizens, after all, we elected the “officials” who helped to create this mess. There are proposals out there that “share” the burden in a much fairer way for all concerned.
Comment by Huggybunny Monday, Apr 23, 12 @ 10:56 am
Why isn’t anyone talking about compound versus simple interest which will be thousands of dollars less in a persons pension after a few years?
Indeed.
Take the average pension of $32,000 a year. Assume inflation of 3 percent per year for 20 years.
Under the current COLA provision, the pension will still be worth exactly what it is today.
Under the proposal, the buying power of this average pension will be slashed to just $18,000 over the period — a loss of more than 40 percent of its value.
Comment by Reality Check Monday, Apr 23, 12 @ 11:00 am
Fair, absolutely not. Quinn is making state workers pay for the sins of the legislature. Not only is this unfair, qualified government professionals having been jumping ship ever since Ryan came in. The last two goof balls have been bringing in people to run agencies that do not know the subject matter of their agency. The talent pool of knowledgable professionals has gotten awfully shallow and this pension idea will drive more good people away. It is time for the executive and legislative branches to start thinking about work force competancy.
Comment by BMAN Monday, Apr 23, 12 @ 11:00 am
Who is to say what’s fair? Is it fair when water floods my basement? No. It doesn’t matter if heavy rain, swollen rivers, or poorly designed sewer systems caused it. The bottom line is “I have water in my basement and I need to get it out or my house will rot from the inside”.
That is what we have here. Pension water in our basement. Why is it everyone else has to sacrifice but the pensioner? OK, I get it. You bacame a state/county/municipal worker because it had a good pension. But that system is on the brink of collapse. What did I, a non-state employee, do to deserve the brunt of the pain (in higher taxes, property and otherwise) to pay for this fix? Yes, the Quinn proposal is fair.
Comment by Knome Sane Monday, Apr 23, 12 @ 11:02 am
–Under the current COLA provision, the pension will still be worth exactly what it is today.–
Actually, I believe due to the compounding, it is worth more. Under a simple, it would be worth the same. If there is an actuary in the house, please correct me.
Comment by Ahoy Monday, Apr 23, 12 @ 11:07 am
Public unions could care less if the State crashes and burns.
Unions have no place in government, not when their allowed to fund the people they are negotiate with. 67 in this day and age is
a reasonable retirement age. 65 was set in the fortys when people were only to 55.
Comment by mokenavince Monday, Apr 23, 12 @ 11:09 am
“What did I, a non-state employee, do to deserve the brunt of the pain (in higher taxes, property and otherwise) to pay for this fix?”
Well, perhaps you voted for public officials who promised all sorts of good things such as funding for construction projects, schools, social services, healthcare, etc. and instead of raising your taxes to pay for them, decided to skip pension payments instead?
That said, I don’t think this plan is totally “fair” to either the employees or to the taxpayers (given the likely costs of the litigation that will result); but since when has life been fair? And the ultimate question is not what’s fair, but what can the state AFFORD to provide without undermining or destroying most or all of its other services to the public in order to pay for it.
Comment by Secret Square Monday, Apr 23, 12 @ 11:11 am
==What did I, a non-state employee, do to deserve the brunt of the pain (in higher taxes, property and otherwise) to pay for this fix?==
What you did was enjoy the very expensive state services provided while the state kept your taxes artificially low by using money that should have been paid to the pension funds.
No, it is not fair to anyone. The state should raise revenue and pay what it owes. The Edgar ramp is in place. The state should pay what the law demands.
Comment by Bill Monday, Apr 23, 12 @ 11:11 am
@Ahoy - Inflation compounds, so to keep pace, a COLA must as well.
Comment by Reality Check Monday, Apr 23, 12 @ 11:12 am
We need to keep in mind that public employee benefits vary. Some state employees pay both social security and into the pension. Retirement age for social security was raised under Pres. Nixon - so no full benfits are age 66 - 67. As a non-union member there has been no increases in years and so an an extra 3% - just means less - again. The total amount for soc security and pension probably means it is not cost effective to work.
Comment by sadie Monday, Apr 23, 12 @ 11:13 am
No, it’s not fair. I’m a retired state employee so it won’t affect me (except increased health insurance that will come). Current employees decided to work for the state because of their entire employment package including salary and all benefits. If changes are for NEW employees, then it’s fair.
Comment by Soccertease Monday, Apr 23, 12 @ 11:19 am
O.K. you want the retirement age moved to 67, fine, but let folks retire earlier (62-67), but with a reduced pension. The State can’t afford to pay all of the health care costs, fine, adjust the charts to include all current and retired employees to pay more. The current retirees who make over a set amount should start paying in, I have to admit full health care after 20 years is a sweet deal. They also do not need to fund it at 100%, 90 or 80 is good enough.
Comment by Huggybunny Monday, Apr 23, 12 @ 11:21 am
–Unions have no place in government, not when their allowed to fund the people they are negotiate with.–
Seriously? Then I guess banks, insurance companies, utilities, docs, lawyers, manufacturers, etc., should not be allowed to fund the lawmakers they negotiate with about taxes and regulation.
Comment by wordslinger Monday, Apr 23, 12 @ 11:22 am
Quinn’s proposal is not fair to either taxpayers or workers. It is a bad proposal that is certain to end up in courts, possibly for years. The odds are high that it will be declared unconstitutional. Think about what the bond rating agencies will do then.
The Hobbits should come up with a proposal that is clearly constitutional so that battles do not extend for years.
Comment by east central Monday, Apr 23, 12 @ 11:38 am
Why no mention of the 5.25% the state still owes its employees? The state should make good on its promise and give the employees their raise. The employee should then agree to an increased pension contribution of 5.25%. Wipes the table of costly litigation, and puts the pension system on firmer footing. Simple.
Comment by Chalk dust torture Monday, Apr 23, 12 @ 11:44 am
Keep in mind that the “free” healthcare current 20 year retirees receive isn’t really free. Those of us who have paid retirement AND social security
are forced to pay $99 per month for medicaire and then the state insurance picks up what medicaire doesn’t cover. Still better than having no insurance, but NOT the same as having Tier 1 benefits that the still employed state worker receives.
Is it fair. NO. Not to employees, who have been fulfiling their end of the bargain for years, and not to tax payers, who have been lied to by the GA for years about how much money their taxes provide.
Comment by lincolnlover Monday, Apr 23, 12 @ 11:52 am
Patently unfair.
The people who played by the rules, sacrificed higher private sector pay for longer term security and served our state for years are the ones paying the price in this plan for the reckless behavior of others.
This proposal is both unfair and obscene.
Comment by Freeman Monday, Apr 23, 12 @ 11:53 am
US states face legal action over pensions
By Hal Weitzman in Chicago and Nicole Bullock in New York
US states are increasingly being blocked from changing public employees’ retirement benefits as the fight over shoring up chronically underfunded public pension systems moves from state legislatures to the courts.
While some states have successfully altered terms for future employees, plans to force all current public workers to contribute more to state pensions have been ruled unconstitutional in Florida, Arizona and New Hampshire in recent weeks, a significant victory for public sector employee unions.
Other states are expected to face similar legal battles as they plan to close large holes in their public pension funds by redrawing benefits.
Changes enacted in Rhode Island, the state that has made the most aggressive push to revamp its ailing pension system, are expected to face a legal challenge soon. Bobby Jindal, governor of Louisiana, wants to replace the state’s existing system – which allows workers to retire as young as 55 – with a retirement age of 67 for many public sector workers but the state’s legislative auditor has warned that could be ruled unconstitutional.
“With public employee pension plans, it is state law that governs,” said Amy Monahan, associate professor at the University of Minnesota Law School. “Every state goes into this with a different set of legal rules.”
Comment by Jouster Monday, Apr 23, 12 @ 11:56 am
===obscene===
Oh, for crying out loud.
Comment by Rich Miller Monday, Apr 23, 12 @ 11:56 am
Not fair but maybe not even constitutional. Rhode Island law took a judicial hit recently and last month Florida’s reform did as well.
http://www.pionline.com/article/20120306/DAILYREG/120309927
I think the best course is for the GA to pass the Gov’s bill and let the unions take it to court. That will provide some much need clarity to how far the state can go in changing the terms of a current employees pension.
Comment by Raising Kane Monday, Apr 23, 12 @ 12:00 pm
Fair? Doubt it but it is hard to tell. To begin with there are a number of pension plans. They need to be discussed separately. Lumping everything together ensures it is not fair somewhere. If the result is to make the plans self sustaining biased on current obligations and current contributions then the result would be fair. No opinion about surviving a challenge on state constitutional grounds. If the result is to make current employees pay the past obligations incurred by all of the taxpayers of the state, through their legislature, then is is not fair. For that matter it is probably not constitutional under the federal constitutions equal protection clause. But, just to get the discussion started let us pass this immediately for legislators and judges. We can work the rest out later.
Comment by Bigtwich Monday, Apr 23, 12 @ 12:05 pm
I wouldn’t call it fair, exactly, but I guess it could be worse. I still don’t understand why they’re shooting for 100% funding at any point, are the ratings agencies demanding this? Or am I missing something about a situation that would require 100% funding?
Comment by Small Town Liberal Monday, Apr 23, 12 @ 12:07 pm
Lot’s of talk about how public employees should feel the pain private employees have felt with regards to pensions.
Question: How many private sector companies require MANDATORY contributions from their employees to a company funded defined benefit plan?
Comment by Choice? Monday, Apr 23, 12 @ 12:10 pm
I still don’t understand why this is one hundred percent the fault of governors and legislators. Where the heck were the elected union leadership this past 30 years, while these pension skims were enacted?
I agree that retorted are getting scammed, but not just by the government, but by their own union representatives, who may have calculated - accurately it seems - that no matter how bad a job they did representing their future (not current) members’ interests, they’d get off scot-free and the blame would all fall on “those darn politicians.”
Comment by ZC Monday, Apr 23, 12 @ 12:15 pm
I don’t understand how increasing the retirement age saves the system money.
Comment by Cheswick Monday, Apr 23, 12 @ 12:15 pm
Retired sorry, not “retorted”
Comment by ZC Monday, Apr 23, 12 @ 12:16 pm
I agree the pension problem was not made by us the employees but rather the GA. But if we want to continue our benefits we need to be grown ups and be part of the solution.
To get facts straight. It was Reagan (not Nixon) who increased the retirement age, tax Social Security benefits, and include all federal employees in Social Security http://www.u-s-history.com/pages/h1609.html.
Comment by illinifan Monday, Apr 23, 12 @ 12:17 pm
Fairness for all is not something that will happen. It’s not fair for the non-state-workers to have to pay more for us. And it’s not fair for the state-workers to pay more when we’ve been paying what was contractually obligated. How many of us would like to find out that our mortgage payments to a bank were instead used for other things - and then to be told that it’s our responsibility to pay more money?
The problem is that the people who should have been using the pension money for the pension instead used it for something else. That’s not the state worker’s fault. But it also not Joe-citizens’s fault. It’s the fault of the legislators. But even if we get rid of every single legislator - the issue still exists.
So what goes best with this crap-sandwich? Mustard, mayo, or ranch dressing?
Comment by Name Withheld Monday, Apr 23, 12 @ 12:18 pm
“I don’t understand how increasing the retirement age saves the system money.”
It saves the pension system money because the older you are when you retire, the fewer years you end up drawing benefits. What it DOESN’T save is the cost of retaining on the payroll employees that might otherwise have retired. But meeting current payroll is not the concern of the retirement systems.
Comment by Secret Square Monday, Apr 23, 12 @ 12:21 pm
Fair is in the eye of the beholder. And who is getting ‘hit’, and how.
To government employees - certainly not fair.
To non-government employed taxpayers - most of them will think it’s fair, maybe even too little, too late.
From an ‘Economic’ basis instead of a ‘fairness’ basis, these proposed pension changes are the only real, practical avenue still available to the State of IL.
There’s no appetite for substantial tax increases among a majority of either chamber of the GA.
Just increasing cigarette taxes is going to be a battle for the Medicaid budget struggle, and there’s likely to be some level of Republican support for doing that. But pushing that support to also favor higher taxes for pension funding is most unlikely (snowball in Hades comes to mind).
Comment by Judgment Day Monday, Apr 23, 12 @ 12:24 pm
Small Town Liberal - I have the same question. Why does the system have to funded at %100? Doesn’t that mean that there needs to be enough money to pay 100 percent of all employees in the system, whether retired or not? If 100 % of all the current employees retire at the same time, we have more issues than funding pensions. But, I am not an accountant. What am I missing? Anyone?
Comment by lincolnlover Monday, Apr 23, 12 @ 12:26 pm
ZC - the union leadership did take the state to court in either the 70s or 80s (there were a couple of cases; I know one was the IEA) saying that the state needed to put their portion in. They were told that the constitutional clause only guaranteed that the pension would be paid, it didn’t make any requirement regarding how to fund it.
As far as Rich’s question - is this proposal fair? No, but I’m not sure that anything at this point would really be “fair;” I’m just not sure those options exist anymore. I haven’t seen the specifics of the proposal and the devil is in the details, but it might work. I’m not sure why anyone would agree to pay more based on continued health insurance payments, though. Those could go away at any time and then you’re left with paying more *and* no health insurance contributions.
Comment by Katiedid Monday, Apr 23, 12 @ 12:28 pm
None of it is fair but increased pension contributions have been bargained before. Another promise from the state isn’t meaningful consideration. I suspect this proposal is intended to maximize the number of May retirements and also to get concessions from unions negotiating with the state.
Comment by AC Monday, Apr 23, 12 @ 12:30 pm
Fair or not, this is a pay cut and you get what you pay for. The state is already finding it next to impossible to replace merit comp employees because it isn’t willing to pay market rates, and this is just going it harder for the State to keep those already working for it and to replace them when they do leave.
Comment by anonymice Monday, Apr 23, 12 @ 12:32 pm
No, it’s not fair because (a) there is still no guarantee (and never will be) the State side funding will be there and (b) the health insurance “subsidy” promise is vague enough it could be as little as $1.
Comment by Retired Non-Union Guy Monday, Apr 23, 12 @ 12:34 pm
Yes, it’s unfair, but that is beside the point. Crying about fairness won’t save the pensions and a new tax increase isn’t coming either.
Quinn’s plan has some promise, but a lot of unanswered questions. I would like to see more details. As far as I can tell, Quinn only issued a press release and fact sheet.
Questions: What is the “phased in” schedule for the 67 year retirement age? Free health care in retirement is the carrot in this plan, but if you can’t retire until you’re 67, the free health care benefit is close to meaningless because most of your health care costs are covered by medicare at that age. Right?
Does Quinn’s plan really pass constitutional muster if future raises are not going to count in the pension formula for employees who refuse to opt-in to the new package? Seems like that penalty changes the contractual relationship employees established when the were first hired.
Comment by FRANK Monday, Apr 23, 12 @ 12:48 pm
To those questioning where the unions were the last 30 some years, there was a lawsuit re the underfunding and it was ruled the State didn’t have to fund the pensions at any specific level in a given year, they just had to pay out the pensions when due. In other words, go away and only come back and sue when you don’t get your pension check. The case has cited here before …
Once the unions lost that case, there was no reason to keep fighting that issue …
Comment by Retired Non-Union Guy Monday, Apr 23, 12 @ 12:48 pm
Adding:
Madigan’s constituional amendment requiring a 3/5th vote of the GA for pension benefit upgrades should be changed to include language mandating th GA make pension payments.
Comment by FRANK Monday, Apr 23, 12 @ 12:52 pm
Frank @ 12:48,
They get around the issue by calling the raise a “bonus payment” instead. Kind of like the Obamacare bill saying that a mandatory requirement isn’t a tax, even though you have no choice in paying it.
If the State gets away with it, in about 20 years people will be getting $40,000 salaries and $60,000 annual “bonuses”. Be tough to defend it is isn’t part of the salary at that point …
Comment by Retired Non-Union Guy Monday, Apr 23, 12 @ 12:53 pm
OK so the unions couldn’t use the courts to defend the pension skimming. But what about old fashioned “Vote to defraud our pensions and we’ll vote you out of office? Or primary you?” I don’t see the treatment of retirees as fair to be sure. But I don’t see them as totally helpless victims of conniving politicians either.
Comment by ZC Monday, Apr 23, 12 @ 1:01 pm
You need to put your comments into a letter to your state rep and senator, not just post them here. The sooner the better.
Comment by Toni Monday, Apr 23, 12 @ 1:30 pm
=== But what about old fashioned “Vote to defraud our pensions and we’ll vote you out of office? Or primary you?” ===
Really? What percentage of the total population is made up of state employees? It is unrealistic to expect such a small portion of the population to carry out such a punishment. Maybe in a few districts, but even then, it is unlikely that it will have any effect in keeping the legislature in line.
Then you have to consider all of the districts that are receiving benefits from the legislature while not paying for them through tax increases. Do you really expect these people to vote out their legislator? It reminds of the addage that when you plan to rob Peter to pay Paul, you can expect the full support of Paul.
Comment by Slick Willy Monday, Apr 23, 12 @ 1:32 pm
“…our union BA has indicated there could be a possible strike.”
What if you strike and nobody cares?
Comment by wishbone Monday, Apr 23, 12 @ 1:45 pm
Reality Check,
Point taken, but a pension still goes up under a simple COLA. If you retire with a $30,000 a year pension, under a 3% simple COLA, in 20 years your pension would be $47,100. While you might not get compounded raises like when you were working, it’s a pretty good retirement deal and a lot better deal than most taxpayers.
Comment by Ahoy Monday, Apr 23, 12 @ 1:56 pm
Not fair, and not constitutional. Giving a state employee less than they now have, even if they made the “choice,” is a diminishment. I’ll give Quinn credit for proposing something, but I don’t see how this would pass constitutional muster if it applies to current state employees.
Comment by TwoFeetThick Monday, Apr 23, 12 @ 2:06 pm
Cheswick @ 12:15 pm:
The theory is, if you can’t retire until a higher age, then the State will be paying you pension checks for less years. That’s also why they don’t want future raises to count towards the pension. If the raises did count, the State might be paying less payments but they would be bigger payments, so there would be no overall savings.
ZC @ 1:01,
There are some downstate counties where State employees are large enough to matter (such as Sangamon) in voting the SOB’s out, but there aren’t enough. Remember, the districts are proportional based on population; one or two large population centers can control. As Quinn’s election demonstrated, all you need is the northeast and southwest corners of the State (roughly 3 counties) to outvote everyone else.
Comment by Retired Non-Union Guy Monday, Apr 23, 12 @ 2:08 pm
Toni A 1:30,
My State Senator knows how I feel; I’ve told him in person many times, most recently two months ago, during a half hour discussion on various State topics. And I don’t really need to talk to my State Rep, I know he agrees with me also.
Comment by Retired Non-Union Guy Monday, Apr 23, 12 @ 2:12 pm
Rich,
You missed the most relevant line from Sam Gamgee, attributable to his dear old gaffer:
“It’s a job that’s never started that takes the longest to finish.”
Comment by Mark R. Monday, Apr 23, 12 @ 2:24 pm
“Giving a state employee less than they now have, even if they made the “choice,” is a diminishment.”
Serious question for all of the “it’s unconstitutional” folks:
Can the Gov–strictly from a constitutional perspective (ignore all other laws)–just fire every state worker tomorrow and keep them from earning *added* pension benefits above what they have earned through today?
And, if he can do that without violating the constitution, why can he–again, strictly from a constitutional perspective–not reduce their *to-be-earned* pensions?
If not, why not? And, doesn’t that make a state job a job-for-life, which it NEVER was intended to be?
Comment by Chris Monday, Apr 23, 12 @ 2:49 pm
Not fair, not consitutional - but any solution will end up being unfair, has to be constitutional.
This problem needs to be solved. In all the proposals - I have never heard a goal. The pensions (normal cost, plus Unfunded Liability) are costing about 16% of General Funds and will increase to 25% in 15 years if nothing is done.
Everyone (Quinn - this, Cross - SB512) throws out plans, but no one has said what the goal of the plan is. Quinn says this will get us a closed 30 year funding of the system. Missing is the cost goal - what % of the General Fund are we trying to hold pensions to?
State those goals, then have each pention system test all the solutions and define the changes needed to meet the acutarial goal and the funding goal.
After you ha
ve that, then you can put your GA committee to work.
Comment by Archimedes Monday, Apr 23, 12 @ 2:49 pm
RM: “Public employee unions are forbidden by Illinois law from negotiating pension benefits in the collective bargaining process.”
But teachers’ unions for decades negotiated with school districts for ten and twenty percent pay increases upon individual members giving notice of retirement. These inflated salaries played into the TRS calculations.
‘More than one way to skin a cat.
Comment by Anon III Monday, Apr 23, 12 @ 3:03 pm
OK, so whats the answer????
Comment by downhereforyears Monday, Apr 23, 12 @ 3:14 pm
Absolutely not fair. However all they need to do is cut union salaries and put the money into the pension system. University employees go without raises for years and get furloughed. Time for state workers to take the same medicine.
Comment by Liberty_first Monday, Apr 23, 12 @ 3:14 pm
Of course it’s not fair. But it’s reasonable.
Comment by Cheryl44 Monday, Apr 23, 12 @ 3:23 pm
@Chris
While I don’t understand your point about making a “state job a job-for-life”, regarding your main argument about benefits that have yet to be earned, that is the $20,000 question for the courts to decide. The other $20,000 question is will a judge (or ultimately, judges), decide that their pension can be reduced. Because even if they are exempt this time, if one of their numbers rules that a state pension can be reduced, it’s only a matter of time before judicial pensions are reduced as well. And, if the courts rule that pensions can be reduced this time, what’s to stop the GA from coming back to the well again and again everytime a shiny new program needs funding? One GA cannot tie the hands of a future GA. If the courts rule that pensions can be reduced this time, those pensions are as good as gone, regardless of what the members of this GA intend. The money pot will just be too tempting to resist.
Comment by TwoFeetThick Monday, Apr 23, 12 @ 3:25 pm
Quinn quipped that he was “put on earth” to solve the pension problem. Awesome hyperbole.
Now to your question…I defy anyone here to come up with a solution to this problem that is (a) constitutional, (b) fair to existing pensioners, (c) fair to existing state workers and (d) reasonably affordable to taxpayers.
Not an easy task. I haven’t read the bill yet (if there is one yet), but it appears as if the existing state workers take the pain away from the the pensioners. Expect a mass exodus of state workers before this would become effective. Even the most ardent kool-aid drinkers want their COLAs.
Comment by Jake From Elwood Monday, Apr 23, 12 @ 3:31 pm
By the way - for TRS (teacher pensions)Illinois was paying 20% of the retiree insurannce premium - about $90 million a year. Quinn’s 2013 budget zeroed this out (back in February). So the loss of retirement insurance for TRS members isn’t going to be a big motivator to move to the “new plan.” Maybe a frozen current salary (for the highest 4-yr average) pension base will motivate some….
Comment by Archimedes Monday, Apr 23, 12 @ 3:38 pm
Chris - The governor can lay workers off, but he cannot fire without cause. Otherwise, everytime the politicos change at the helm, everyone from the opposite party would lose their jobs.
Comment by lincolnlover Monday, Apr 23, 12 @ 3:39 pm
“Absolutely not fair. However all they need to do is cut union salaries and put the money into the pension system. University employees go without raises for years and get furloughed. Time for state workers to take the same medicine.” Duh?
Where have you been for the past 10 years? DNR,DOT,DCFS,HPA,DOC and many other agencies and departments have taken lay-offs. Additionally, university employees have a much more lucrative pension than most state workers. But, the real problem I have with your post is that you want to see this as an us-vs-them thing, instead of realizing that we all sink or swim together. If they do this to state workers, how long do you think it will be before they do it to you?
Comment by lincolnlover Monday, Apr 23, 12 @ 3:48 pm
The bottom line to this problem is they took from Peter to pay Paul. Also if they would rehire people to replace others to pay into the pension fund and Social Security we would not have a problem. Everyone that paid into the funds have a
right to them.
Comment by Luck Monday, Apr 23, 12 @ 3:53 pm
Fair? Certainly, but in the big picture fairness is not the key issue here. The most important consequence will be the decline in the quality of State services that will inevitably result as the State acquires the reputation of an untrustworthy and duplicitous employer. Current employees will no longer feel the same loyalty, new employees will be leery of joining up, and employees at or near retirement age will exit in droves, taking their expertise with them.
Comment by Quiet Sage Monday, Apr 23, 12 @ 3:53 pm
I meant to say, “certainly NOT” fair.
Comment by Quiet Sage Monday, Apr 23, 12 @ 3:54 pm
@ Ahoy - I’ll take that beer. The executives at the Trib, Civic Federation, and State Chamber have great retirement and wealth management packages. They also happen to be the same people who think public employees should be ripped-off.
Comment by Honestly Monday, Apr 23, 12 @ 4:07 pm
Funny how the civic federation,the republican GA,commercial club were crying how the retirees health care and cola were sinking the state budget and they left them alone.Can you say vote buying?
Comment by sour grape private sector guy Monday, Apr 23, 12 @ 4:12 pm
Honestly,
I said specifically pension plan, not retirement plan or wealth management packages.
Comment by Ahoy Monday, Apr 23, 12 @ 4:19 pm
Not fair - period.
Something no one is talking about. If this happens Quinn will launch the largest “brain drain” in Illinois govt history. If you thought 2003 was bad, just wait till this summer.
Comment by Moderate REpub Monday, Apr 23, 12 @ 4:26 pm
I have not read or heard anything about the human impact on individuals or families — just the cry of the Governor, other State officials and the business community about the State’s budget malpractice, the state’s poor credit rating, delayed payments to vendors, corporate incentives to stay in Illinois, etc. Nothing about how a family connected to a State employee or pensioner can take a 3%, 4% or more hit on their inflation-impacted personal income; nor about the 60-year old who has worked 30+ years for the state can cope with having to work 7 more years, regardless of their physical or mental capacity to do so, not saying anything about their capacity for productivity.
Comment by ANAL Monday, Apr 23, 12 @ 4:33 pm
Someone asked what would be fair and be Constitutional?
Fair would be keeping the promises that were made to the employees, so that means coming up with the money to pay the pensions and health benefits as promised.
Looking back in hindsight, every wage earner should have had to pay a higher (presumably) income tax all along over the past 30 or so years in order to pay for the capitol projects (some of which were pure pork), pensions, and the day to day operating expenses of the State. We now know the State “robbed” too much from the pensions (technically, just shorted them by underpayment). So that means to be “fair” everyone who benefited, both current worker and retiree, needs to pay a higher income tax now to make up for the “tax savings” they received in the past.
The not politically feasible but logical solution would be to bump the income tax up say, 1%, and have retirees (since they should have paid years ago) pay 1% also on their retirement income. (Disclaimer: I don’t know 1% would be enough but you have to throw out a number first before it can be analyzed.)
Because of the flat income tax rate in Illinois, I don’t know how you could legally work it so retirees only pay 1%. (That’s the Constitutional rub in my suggestion.) Maybe you just have retirees figure a “normal” tax payment and then give them a credit equal to all but 1% of it. That’s no crazier than taxes that aren’t taxes or pay raises that aren’t pay raises, just annual bonuses.
All the revenue from this increase should be dedicated to just paying off the pension backlog and should not relieve the State from making normal pension payments. And about the only way to be sure that revenue stream stays dedicated is to issue bonds today (that’s somewhere between $83B and $300B worth) whose repayment is funded by that revenue stream.
I think the above could be sold if properly explained. The problem the politicians will have is, in order to sell it, they will have to tell the truth and admit they lied about previous actions, like the temporary tax increase, taking care of the problem. That’s why I said above it wasn’t politically feasible; the politicians will never admit they lied to the public.
Comment by Retired Non-Union Guy Monday, Apr 23, 12 @ 4:53 pm
Ahoy,
IMRF annuitants … they get exactly what they were promised.
Comment by Retired Non-Union Guy Monday, Apr 23, 12 @ 4:55 pm
As if organized labor were ever going to find common ground beyond status quo. That’s funny.
Comment by Shemp Monday, Apr 23, 12 @ 5:23 pm
Again, we give $400 million to Sears and rip things away from regular working people. Let’s keep doing that so no one can afford to buy anything from Sears in the first place.
Comment by Flan Monday, Apr 23, 12 @ 5:51 pm
Name Withheld 12:18 pm
It’s going to taste bad anyway … so bleu cheese
Comment by Retired Non-Union Guy Monday, Apr 23, 12 @ 6:00 pm
Believe me, I understand how current employees feel. I have family members who feel the same way.
To those folks, I’d encourage them to stand up like the folks in Madison did and march down in the Loop and on Lake-Cook Road at the headquarters of the three-martini lunch bunch who are pushing this.
But you haven’t done that yet, have you?
Don’t you get it? The economics on pensions are not nearly as dire as the Chicken Littles say. Quinn and the Dems don’t want to do this.
But they have to stay in power or the ignorant media and Civic Committee crew will complete their goals, bring in today’s lunatic GOP and throw your pensions out the door, just like they did in the private sector.
Those guys are out to get you. Wake up. Don’t you know what side your bread is buttered, after all this time?
Comment by wordslinger Monday, Apr 23, 12 @ 6:59 pm
No, not fair.
Who voted into office the legislature and the governor that underfunded the pensions during the Edger administration?…The taxpayers.
Who voted into office the legislature and the governor that (intentionally) under-valued the cost of the massive early retirement at the end of the Ryan administration?…The taxpayers.
Who voted into office the legislature and the governor that skipped entire pension payments into the pension fund during the Blagojevich adminstration?…The taxpayers.
Who is responsible for the unfunded pension liability?…
It’s time for the taxpayer to learn a life lesson.
Comment by Choice? Monday, Apr 23, 12 @ 8:03 pm
Forcing the issue by threatening a non-guaranteed contract right (health care benefits) to accept a lower benefit in a guaranteed right (pension) is sheer brilliance.
I wonder who thought of it.
Comment by Bruno Behrend Monday, Apr 23, 12 @ 8:13 pm
Uhm, when I was hired in 1982, there was no unions representing state employees. I was told our benefits and we would receive a retirement with 35 years of service. then came the union cards and we signed them. sure the union helped with better benefits and then the rule “85″ came. I think all those employees who are at 3 years or less of retiring, should be able to retire at the rule “85″, for the retirement class is for those under 3 years, all those who qualify for that, should receive what they were promised, planning has already taken place for those group of employees, now changing all that would be a mistake. I don’t understand how a governor or legislature can go in and change what was promised to those who were hired and promised those benefits. If they insist to make changes to the state employees benefits, then its only fair that they also pay the penality of being a government employee and pay for there benefits and there retirement should be cut to the same level as the state employees and all employees should have the same pension system, regardless of what state agency you work for. that seems fair to me. no one wants to make decisions to make necessary cuts, but if the cuts must be made, then it should be across the board to affect all state employees, teachers, judges, elected leaders, all gov employees. fair is fair!
Comment by thunder Monday, Apr 23, 12 @ 8:41 pm
The general assembly and statewide officials pay, pensions and health insurance should also be suspended until all past skipped payments are made up in full
Comment by titan Monday, Apr 23, 12 @ 8:44 pm
A point a few folks folks have mentioned is actually happening.
A few different folks I know that were within a few years of the maximum they could work for a max pension (we’re talking regular types, not high end muckety mucks), recently started contacting Springfield about their retirement info if they were to go ASAP.
They have been told that there is a 2-3 week backlog in processing because of the number of folks looking to do retire before there is a chance of the guvs proposals happening and also because of the diminished manpower to handle the paperwork processing.
Also one was told that their division they work for could be down in manpower by as much as 30% by the end of the year with the mass exodus if most of the inquiries turn into applications for retirement.
So, those folks who questioned how is this mess “fair” to the taxpayer, keep that in mind when the SOS License facility reduces hours or closes more locations, more incidents start happening at correctional facilites, or the highway for your commute isn’t plowed as quickly as usual, because of the exodus of employees.
It’s not fair to ANYBODY.
As a state employee, I am very leery of these proposals that change the rules in the middle of the game, with “guarantees” that everything will be solved THIS time. I really would have no confidence in a proposal that promised me anything down the road. After what I’ve seen over 20+ years state employment (under current terms, I would have to work for about 45 years for a max pension of 75% fyi), I would have very little faith that they would hold up their end of the bargain
Comment by Concerned Voter Monday, Apr 23, 12 @ 8:49 pm
‘I was put on this earth to get this done’. What do they put in the water in Chicago? Time and time again we get an arrogant leader who thinks they are above the law and can’t be trusted with their promises. With that said, here are some issues I have with Quinn’s plan.
Assuming that an employee works until the age of 67, gets health benefits while they are employed, and then get a subsidy when they retire, how does that save any money on healthcare? How is the subsidy suppose to be attractive to employees? Some will rely on medicare, some will think the subsidy will not buy much healthcare so far into the future, and others will bet if the government can change the rules now that they will be changed again later.
Including future pay increases in an employees pension calculation is not an incentive for the new ‘bold’ plan either. Raises for non-union employees has been on hold for years and the union employees have not received the increases that were promised in the current contract. Does Quinn really expect that employees think that they are going to get raises anytime soon? His next plan will be to cut salaries. If one stays in the current plan and agrees that raises will not be figured in their pension, will they be guaranteed that any reduction in salary will not be figured in as well?
Taking away the pensions promised when hired will also cause negative effects in the workplace such as lower productivity, increase in disability and workman comp claims, etc. I even heard one employee say that they might as well quit an get a Link card. Once agin the government makes social programs look better and better everyday than working and getting nowhere.
Comment by Bippy Monday, Apr 23, 12 @ 9:06 pm
Wordslinger said, “Don’t you get it? The economics on pensions are not nearly as dire as the Chicken Littles say. Quinn and the Dems don’t want to do this.”
Was that written with a straight face?
Comment by Shemp Monday, Apr 23, 12 @ 9:37 pm
Just throwing out there that once a state employees hits 65 his primary insurance is Medicare and not the state insurance.
Comment by Rick Monday, Apr 23, 12 @ 10:03 pm
thunder, unions have been representing state employees since the mid 70s (Walker Executive Order)
Comment by steve schnorf Monday, Apr 23, 12 @ 11:45 pm
It’s neither fair, nor legal. Coersion, the threat of losing a healthcare “stipend”, is not negotiation.
Comment by PublicServant Tuesday, Apr 24, 12 @ 6:07 am
My days of working hard for the state are over.
Comment by lazy state worker now Tuesday, Apr 24, 12 @ 7:17 am
It is something that AFSCME supported these same ppl who keep wanting to make more and more cuts to our state benefits. Seems to me I was better off working for the Republicans than the Democrats
Comment by thunder Tuesday, Apr 24, 12 @ 12:09 pm
” The governor can lay workers off, but he cannot fire without cause. Otherwise, everytime the politicos change at the helm, everyone from the opposite party would lose their jobs. ”
@Lincolnlover–that’s a *constitutional* prohibition? Please provide a cite.
@TwoFeetThick:
Point of the “job4life” is the (admittedly extreme) slippery slope argument of an absolute prohibition on any change in *future* earned benefits–if it is absolutely impossible to reduce benfits not-yet-earned, how can we fire anyone? The person only took the job with the expectation that s/he’d work for 30 years and then retire with a pension of $X, so if you fire him/her after 20, you “reduced” the expected future-earned pension, which is unconstitutional.
So, if you can *constitutionally* fire (layoff, whatever) a state employee, thereby “reducing” their future-earned pension benefits (to Zero additional, that is), how can it NOT be constitutional to reduce the not-yet-earned pension?
Comment by Chris Wednesday, Apr 25, 12 @ 1:50 pm