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* AP…
The State Universities Retirement System now says a troublesome piece of last year’s state pension-reform law may not cut retirees’ pensions after all.
William Mabe is the executive director of the retirement system. He said the language in law that would cost retirees’ a year of pension should be interpreted as if it didn’t – because it wasn’t intended to.
That’s based on the interpretation the Teachers Retirement System has been using when it looks at the law. Now SURS plans to follow suit.
* The News-Gazette broke the story…
Teachers also have a money-purchase option when they retire, and that annuity calculation was changed in the new pension bill as well. But the Teachers Retirement System chose to interpret the “legislative intent” of the added provision, preserving members benefits earned through June 30, 2014.
“From the get-go the way we read the law, the legislative intent was designed to hold members harmless,” said spokesman Dave Urbanek. “Our interpretation was fiscal year 2014 all along.”
The state pension code says that whenever a statute’s language is ambiguous, the interpretation must favor the employee, he said.
Only about 14 percent of teachers use that option when they retire, as opposed to approximately 60 percent of SURS retirees, officials said.
Mabe said SURS had been trying to get the problem fixed legislatively for months, and had been considering adopting the approach used by the teachers’ retirement system anyway when he received [House Speaker Michael Madigan’s] letter. There is legal precedent to support that approach, he said, and Madigan’s letter provided evidence of “clear evidence of intent.”
* From Madigan’s letter to Mabe…
With respect to the money purchase benefit, SURS is the only pension system interpreting the language in a manner that is inconsistent with the intent of the General Assembly. It is my understanding that SURS and the University of Illinois were directly involved in the development of the money purchase benefit language, and reviewed several drafts of the legislation prior to the General Assembly taking final action. At no point did SURS, University of Illinois, or any other pension system indicate there was a technical error with the language that would cause it to be inconsistent with the intent of the Conference Committee Report.
Given that members of the General Assembly have received numerous letters and emails regarding this issue, it is worth addressing the timeline related to the development of the language. The concept of changing the money purchase benefit was introduced on April 30, 2013, in House Amendment #1 to Senate Bill 1, and approved by the House on May 2, 2013. When the Conference Committee was appointed, the members of the Committee met with representatives from SURS and the University of Illinois, and together they drafted the language that ultimately became law. The pension systems were provided with copies of draft legislation throughout the fall and prior to the General Assembly taking action in December 2013. On November 26, 2013, legislative staff specifically asked each of the pension systems if there were any technical concerns with the language. At this time, SURS did not present this objection.
Legislative staff was advised that SURS preferred a hard date for the provision, but that this request was simply to ease administrative burden and would not impact the intent of the provision.
With respect to your concerns regarding the effective date of the bill and the method used to determine the effective rate of interest, again, SURS reviewed this language over the course of many months and did not present any objections. After passage, legislative staff was advised that these provisions could be difficult, but would not be impossible to administer.
While I support efforts to correct the technical error, I urge SURS to consider that its interpretation is inconsistent with the intent of the General Assembly, and also inconsistent with the way TRS has interpreted the same language. A similar reading by SURS may help ease the concerns of university faculty and personnel impacted by the language and assist with avoiding unintended consequences for our universities.
With kindest personal regards, I remain
Sincerely yours,
MICHAEL J. MADIGAN
Speaker of the House
posted by Rich Miller
Thursday, May 8, 14 @ 9:21 am
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No comment needed.
No “technical error”.
No need to yell “Fire.”
Comment by Walker Thursday, May 8, 14 @ 9:29 am
Give me a hamburger today and I’ll gladly pay you for it tomorrow.
I’ll interpret in such a way to help today but can’t promise what my successor will do tomorrow. After all, it’s just my interpretation.
Comment by When will it end Thursday, May 8, 14 @ 9:34 am
May the best Bully win!
Comment by Makandadawg Thursday, May 8, 14 @ 9:38 am
Always a bit questionable when you read things a bit differently than the way they are written. I agree the courts would look at legislative intent as one of their guides. Now we know MJM is on record supporting that interpretation … but a quick and easy amendment would eliminate any misunderstanding if it ever did get into court.
Just fix it …
Comment by RNUG Thursday, May 8, 14 @ 9:39 am
Looks to me like SURS and the universities manufactured a crisis and scared a lot of people for no reason.
Comment by anon Thursday, May 8, 14 @ 9:39 am
Give this to Clemenza. I want reliable people, people who aren’t going to be carried away.
Comment by PublicServant Thursday, May 8, 14 @ 9:46 am
So it appears that SURS and U of I officials did a careless job of reviewing the bill before it was passed, despite MJM bending over backwards to get them involved.
What a surprise!LOL
Comment by Arizona Bob Thursday, May 8, 14 @ 9:47 am
If SURS agrees with this interpretation, which has been now established as the legislative intent, then SURS will pay out benefits accordingly — and no retiree will actually lose based on this language.
They do lose in other ways, and that might be reason for earlier retirement. This never was.
Comment by Walker Thursday, May 8, 14 @ 9:53 am
Legislative intent is only used by the courts if the language is ambiguous. A date doesn’t sound ambiguous to me. Of course, if nobody sues the interpretation becomes the de facto law.
The interesting part of this story is Madigan’s letter. Clearly, the Speaker doesn’t want to reopen the law and came up with the solution you SURS couldn’t refuse to use. His letter also points out poor staff work by SURS.
Comment by Norseman Thursday, May 8, 14 @ 10:02 am
RNUG has it right. Just fix it. Who cares when SURS found it. Who cares what the intent allegedly was.
JUST FIX IT…problem solved.
Comment by PublicServant Thursday, May 8, 14 @ 10:06 am
Really bad idea. Management by administrative “interpretation” is an invitation to disaster.
Taking shortcuts with a law (even with good “intentions”) often leads to unintended bad results. Imagine what might happen with less than good intentions.
Bite the bullet and fix it.
Comment by vttk17a1 Thursday, May 8, 14 @ 10:17 am
The Speaker’s letter is absolutely meaningless. It says nothing about what the legislature intended by the problematic language, much less does it offer any evidence of what was intended. All it says is “we asked if anyone saw a problem and no one did.” There is nothing in it on which a court could pin a “legislative intent” intperpretation of the statute that is contrary to what the statute actually says.
Comment by Anon. Thursday, May 8, 14 @ 10:35 am
I’m skeptical that this will convince many of the affected individuals to postpone retirement anyway.
Presumably, if you’re already eligible to retire, you are still working because 1) you like working and don’t want to retire or 2) you want to continue working to increase the amount of your pension when you retire.
In this new interpretation, the only difference is that if you retire in the future, your pension is guaranteed to be no less than it would be if you retired now. So now you’re going to be continuing to work without seeing any increase in your potential pension benefit for some number of years until either your benefit under the general formula eventually surpasses your previous benefit under the money-purchased option, or the amount of your contributions and interest earned plus the state’s contribution becomes great enough to purchase a larger annuity when calculated using the new interest rate.
I think a lot of people will still chose to retire, rather than continue to work for nothing essentially.
Comment by drew Thursday, May 8, 14 @ 10:48 am
anon@9:39
SURS is supposed to follow the law as written. If the law has a specific date, I can see where SURS wants authorization to change it.
Cop: Hey buddy, your license plate sticker expired a couple days ago. Get a new sticker on there ASAP!
Motorist: But Officer, It’s OK, I have a letter from Mike Madigan saying the legislative intent was to add an extra year on to the expiration date.
Cop: What the ____?!
Comment by DuPage Thursday, May 8, 14 @ 10:58 am
Anybody that understands the full contents and implications of SB 1 will tell you that this glitch was not as catastrophic as universities made it out to be. The issue all along has been what Mr. Kennedy said in the Sun-Times yesterday. What is really causing university personnel to flock to the door is the SB 1 provision that is changing the annuitization rate for money purchase so drastically. It is an issue that should be fixed by legislation. TRS took the “convient intepretation”. The plain language of the bill is not ambiguous. This letter sent to the SURS letter is nothing more than a cover your ass letter.
Comment by Disenchanted Thursday, May 8, 14 @ 11:04 am
Agree with Disenchanted. The law didn’t have a specific date, and it isn’t ambiguous. SURS created a controversy that didn’t exist. The issue is the substance of SB1 and its impact, not a technical issue in the bill.
Comment by Blah Thursday, May 8, 14 @ 11:10 am
I rather doubt that Chris Kennedy would have issued such a strongly worded alarm if there were not evidence that some extremely valuable professors are leaving the U of I.
Regardless of who is responsible (UI Board, UI President, Legislators, Governor), what counts is whether high-profile professors are leaving who would otherwise stay. Some of these professors are taking huge grants and a few will cause outside start-up companies to move with them. The potential cost to the State could be enormous.
This is an opportunity for Rauner to condemn the Madigan-Quinn pension reforms (including Tier II and the recent changes) and to win over many members of the SURS system. If Rauner declares that he would have offered a defined contribution or hybrid system that would have avoided the drastic cuts that some faculty and staff will experience, he might pick up substantial support.
Comment by east central Thursday, May 8, 14 @ 11:17 am
Hate to be so simplistic, but the GA and leaders just are not going to ride to the rescue of granola eating professors on this. SB 1 is here to stay. The academic folks are not going to leave at catastrophic rates. They love the lifestyle and everyone knows it.
Comment by Anonymous Thursday, May 8, 14 @ 11:22 am
=== the GA and leaders just are not going to ride to the rescue of granola eating professors on this ===
Wow, such an astute comment. Clear evidence that our educational system does need to be improved.
Comment by Norseman Thursday, May 8, 14 @ 11:36 am
With the changes to the pension system, Illinois is last by a wide margin in the Big Ten in retirement contributions, according to a table in the News-Gazette on 4/11/14. The employer contribution is now half of the average for the Big Ten.
Those who assume that faculty do not care about compensation might be in for a surprise.
Comment by east central Thursday, May 8, 14 @ 11:37 am
===SB 1 is here to stay.===
Until the courts throw it out. There. Fixed.
Comment by PublicServant Thursday, May 8, 14 @ 11:41 am
As a current SURS member who was projected to retire under money purchase, I found this letter from Speaker Madigan comical. He fails to mention that he sponsored the bill, so accountability ultimately rests with him. He mentions that SURS did request language to set the hard date which would have accurately reflected the intent and eliminated this “issue” that was blown out of proportion in the recent media campaign launched by the U of I. I found it comical that SURS requested a solution that was ignored and now the Speaker is deflecting blame to SURS even though he denied their request he admitted was provided before the bill was passed. We wonder why nothing gets done, too many legislators prioritize deflecting blame as opposed to actually solving simple problems.
Comment by Gamma Beta Thursday, May 8, 14 @ 12:08 pm
Anonymous, I do not eat granola, but I am an academic, and I do love the lifestyle. Thing is, I love it just as much in Virginia as I ever did in Illinois, and I am treated a whole lot better here. If you really believe that only a small number of professors will leave Illinois in response to eviscerating their pensions, then you obviously have no understanding of the academic labor market. Assuming the courts uphold SB1, which is very unlikely, let’s you and I revisit this issue in about 10 years, and we will see who is right.
Comment by Andrew Szakmary Thursday, May 8, 14 @ 1:26 pm
Too little, too late. State colleges and universities are claiming that the pension fix gave them no choice other than to stop hiring SURS annuitants as emeritus professors or part-time lecturers. Popular teachers are being told not to reapply for classes in the Fall on account of Biss.
Comment by Upon Further Review Thursday, May 8, 14 @ 1:46 pm
As far as I can tell, Madigan is telling SURS, don’t follow the law we passed, follow our intent. All this reinterpretation does is allow SURS participants to keep whatever they’ve earned under the money purchase formula through the end of this fiscal year instead of the end of last fiscal year. The money purchase formula remains decimated, especially for mid-career faculty and staff who do not benefit from the grandfathering. I expect that in about ten years, very few state university employees will have their benefits calculated under money purchase and nearly all will do better under the general formula.
Comment by aunt_petunia Thursday, May 8, 14 @ 2:57 pm
I believe the following is the disputed language, from Sec. 15-136: “Notwithstanding any other provision of this Rule 2, a participant’s retirement annuity calculated under this Rule 2 shall not be less than the retirement annuity that participant would have received under this Rule 2 had he or she retired during the fiscal year preceding the effective date of this amendatory act of the 98th General Assembly.” The effective date of the act is June 1, 2014, but Fiscal Year 2014 does not end until June 30, 2014. Under the original SURS interpretation, the fiscal year preceding June 1, 2014, would technically be Fiscal Year 2013, because some of Fiscal Year 2014 comes after (and does not precede) the law’s effective date. Yes, it was a squabble over a technicality that was blown up out of all proportion, and no, the reinterpretation will not significantly reduce the mass exodus of state university employees.
Comment by aunt_petunia Thursday, May 8, 14 @ 3:30 pm
Legislative intent matters only if the judge cares. Justice Scalia, for example, is openly contemptuous of legislative intent (among other things).
Better to just fix it.
And yes, let’s work to keep the big brains in the state and bring in some more.
It’s fashionable among some faux populists to be down on fancy book-learnin’ and crazy things like peer-reviewed science, but I think more is better.
We’re already flush with the willfully ignorant.
Comment by wordslinger Thursday, May 8, 14 @ 4:49 pm
More retirees are bailing out because of the Biss confusion. It does not help matters that the colleges and universities have administrators who are using the pension law as a pretext to do what they damn well please and some are spreading bad information on top of it.
Comment by Oh Come On! Thursday, May 8, 14 @ 6:32 pm
The language in the Illinois constitution regarding pension benefits is pretty clear, and the intent matched the language…. but we got SB1 anyway. I wouldn’t trust any state agency to honor the ‘intent’ versus the language.
Comment by mythoughtis Thursday, May 8, 14 @ 7:23 pm
Is this a done deal? Is it legit? Can some one postpone his/her retirement safely?
Comment by Barry Wednesday, May 21, 14 @ 1:11 am