Illinois Pension Heist
Reportedly House Speaker Madigan is still blocking SB2404, Cullerton’s bill (We Are One coalition supported), from being voted on by the House. Madigan is concerned that if SB2404 gets to a vote in the House it will pass.
Cullerton’s pension plan moves to Senate floor
The Senate Executive Committee approved Senate President John Cullerton’s union-backed pension reform bill by a 10-5 vote along party lines Wednesday afternoon. Senate Bill 2404 now will go to the Senate floor and could be voted on as soon as Thursday.
Labor leaders representing the AFL-CIO, the Illinois Education Association (IEA) and the Illinois Federation of Teachers (IFT) testified in favor of the bill. The Illinois Retired Teachers Association (IRTA) spoke in opposition, saying that they were not part of the negotiations and that the choices presented in the bill were not beneficial to retirees.
Bob Pinkerton, vice-president of the IRTA, stopped short of vowing that his organization would file a lawsuit contesting the constitutionality of the bill but that they would reserve their right to challenge the bill in court.
IFT President Dan Montgomery said his organization supported SB 2404 and was committed to helping pass it even though “I don’t think anyone is jumping for joy” about losing part of their pensions.
“We’ve heard the term ‘shared sacrifice’ a lot, but this is the only bill that actually does that,” Montgomery said, estimating that Madigan’s proposal would cost retirees about half of their retirement benefits. “To those who say (Cullerton’s plan) is not enough, I say it’s a lot, it is massive.”
IEA President Cynda Klickna said the bill has “overwhelming support” from IEA members, including retired as well as active members.
Michael Carrigan, president of the Illinois AFL-CIO, called the plan “fair, responsible and constitutional,” but also called it a “final, bottom-line agreement” and said the “We Are One” coalition of labor organizations would pull its support from the bill if substantive changes were made to the bill either in the Senate or the House, where the bill will go if it passes the Senate as expected.
Cullerton was questioned by Republican members of the committee regarding the projected savings of his plan versus the estimated savings of House Speaker Michael Madigan’s plan, Senate Bill 1.
“I don’t think there is much more room given the language in the constitution,” said Cullerton, who estimated that his plan would save between $8.5 billion and $15.7 billion in unfunded liability and would net between $45 billion and $51 billion over the next 30 years depending on which choices employees and retirees would make. “This plan is much less risky (than SB 1) and it gets you to virtually the same outcome in 2045. It doesn’t save the same amount along the way…but if (SB 1) is unconstitutional then you save zero, another year has gone by and we’re back here again trying to pass another bill.”
Madigan puts pressure on for cost shift; convenes Thursday meeting
On another front, Madigan has fulfilled his vow about resurrecting the cost shift issue and ending what he has termed a “free lunch” for downstate schools when it comes to paying the pension costs. The Speaker has called for a meeting Thursday with stakeholders, including IASA and the Illinois School Management Alliance, to discuss ways in which to implement shifting the state’s normal pension costs to local school districts, colleges and universities.
In a rare move, the Speaker has decided to make the meeting a public forum by allowing for the discussions to be streamed live.
Stand for Children, the advocacy group that spent a lot of money in Illinois legislative races a couple of years ago when they were trying to get school reform measures approved, apparently is ready to support the cost shift if the state agrees to reinvest those savings back into education.
Jessica Handy, policy director for Stand for Children, says her group has studied the issue and that only 26 of Illinois’ 102 counties would lose money under a cost shift that included money being put back into General State Aid, which was cut by 11 percent this school year and is projected to be cut by 18 percent in FY14.
Senate Republican Leader Christine Radogno, who is from suburban Lemont, has said that the pension costs are just part of the education funding picture when it comes to comparing downstate to Chicago, which has its own pension system and a separate tax levy with which to fund that system.
“The argument is also made that downstate and suburban communities are getting a free lunch when the state makes its pension payments, while Chicago pays its own. However, with data provided by the State Board of Education, we came to the unavoidable conclusion that it is Chicago Public Schools that receive a disproportionate share of state school funding,” Radogno told reporters, drawing the potential battle line for the cost shift issue.
Diane L. Hendren
Chief of Staff/ Director of Governmental Relations
Illinois Association of School Administrators
PENSION REFORM IN DISARRAY AGAIN
by IEA News
The agreement, which will be part of Senate Bill 2404, is a constitutional alternative to House Speaker Michael Madigan’s Senate Bill 1, which was passed by the Illinois House last week and is awaiting a vote in the Illinois Senate. Senate Bill 1 is clearly unconstitutional and unfair to the employees and retirees in the affected state pension systems.
The unions that comprise the coalition (IEA, IFT, SEIU, AFSCME, and other public employee unions) released a statement on Monday evening:
We Are One Illinois Union Coalition Reaches Pension Agreement with Senate President John Cullerton
The We Are One Illinois coalition of unions announced today that it has reached a negotiated pension agreement with Illinois Senate President John Cullerton, who will sponsor the measure.
The following statement is attributable to Michael T. Carrigan, president of the Illinois AFL-CIO, on behalf of the We Are One Illinois coalition:
“The union coalition has made a great effort to ensure fairness for the public employees and retirees who did not cause this problem, to ensure the stability of the pension systems for future generations, and to offer a credible way forward. This agreement is our coalition’s bottom line.
“We continue to strongly oppose Speaker Madigan’s mega-bill, SB 1, which threatens to rob the retirement savings of teachers, police officers, and others in public service, by 20-40 percent. His proposal is not only drastically unfair, but it is blatantly unconstitutional, rendering any advertised savings fictional.
“We urge lawmakers from both parties in both chambers to embrace the agreed bill and oppose SB 1.”
The coalition also released the following details about SB 2404:
1. Include an ironclad pension funding guarantee to ensure that the state cannot skip or short payments to the state’s retirement systems. This fixes the fundamental, chronic problem of state underfunding and ensures that future legislatures and governors can never again engage in the type of fiscal negligence that led to today’s pension funding problem.
2. Dedicate state revenues to a Pension Stabilization Fund to make supplemental payments on top of the state’s required contribution. This major financial commitment will strengthen the retirement systems’ solvency.
3. Establish three choices for employees in Tier I:
a. Move from a 3% compounded to a 3% simple COLA with a two-year delay. Employees choosing this option would a) receive guaranteed access to health care in retirement; b) ensure that all future salary increases count toward their pensions; c) have the option to enroll in a cash balance plan (on top of their defined-benefit pension); and d) for TRS participants, continued eligibility for the TRS ERO.
b. Choose to keep the 3% compounded COLA, but with a three-year delay before the COLA would take effect. These employees would also pay 2% more of their salary into the pension system. Employees choosing this option would receive guaranteed access to health care in retirement and ensure that all future salary increases count toward their pensions.
c. Choose to keep the 3% compounded COLA exactly as it is. These employees would not have guaranteed access to health care in retirement and would forgo any future salary increases counting toward their pensions.
4. Establish a choice for current retirees and those set to retire as of January 1, 2013.
a. Retirees could choose to keep their guaranteed access to health care and keep their 3% compounded COLA, but would agree to a two-year COLA freeze. The freeze would occur in non-consecutive years.
b. Alternatively, retirees could choose to keep their 3% compounded COLA without any freeze, but forgo guaranteed access to health care in retirement.
5. Create a Tier II task force to study improving the retirement benefits for Tier II employees.
IEA members are urged to contact their State Senators by calling 888-412-6570. Tell your senator to VOTE NO on SB1 and support SB 2404, the bill agreed to by the unions.
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Announcement on Pensions, check all four out at:
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YOU MIGHT EVEN SEND THEM TO YOUR SENATOR
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