Problems surface for pension plan

Problems surface for pension plan

SPRINGFIELD — An Illinois House committee approved a controversial and far-reaching pension revision plan Tuesday, but it may be in trouble with House Republicans.

The measure was approved by the House Personnel and Pensions Committee, 6-3, with all but one vote coming from majority Democrats.

With just two days remaining in the Legislature's spring session, the pension revision is the biggest obstacle remaining besides passing a slimmed-down state budget for the fiscal year beginning July 1.

Problems with the pension plan surfaced on the House floor when Republicans tried to amend the bill by removing a provision that would require downstate and suburban school districts to gradually pick up the employer's share of teacher retirement funding. The state now covers that share.

The amendment was ruled out of order by Democratic leaders, leading to heated remarks by House Minority Leader Tom Cross and Rep. Mike Bost, R-Murphysboro.

Cross suggested that House Speaker Michael Madigan's cost-shifting proposal was designed to fail, with Republicans getting the blame.

"I think this is typical Speaker Madigan. Let's throw a poison pill in there so (Madigan) can say, 'I tried. It didn't happen,'" Cross said. "He told me three weeks ago he didn't want to" include teachers pension payments in the legislation.

Even though House Republicans appeared somewhat split on the bill, and some downstate Democrats were said to be opposed, the measure did get the support of the pro-business Civic Committee of the Commercial Club of Chicago, plus the Illinois community colleges and the University of Illinois.

"We're very troubled by the need to have to pick up these costs," UI President-designate Robert Easter said after the committee hearing, "but we're troubled significantly by the instability and the lack of confidence in the current system. People who have opportunities to go elsewhere or people who are long-term employees deserve to have some confidence that the system will be there as well."

But union officials were overwhelmingly against the measure, calling it unfair and unconstitutional because, they claimed, it was a diminishment on contractual promises made to public employees.

Another major provision in the measure is designed to encourage public employees to sign onto a program that would give them smaller cost-of-living increases for retirees. Instead of receiving a 3 percent COLA, they would receive 3 percent or half the rate of inflation, whichever is lower. And their increases would not be compounded annually.

As an incentive to accept the lower COLA, they would be allowed to remain in the state's health care system in retirement.

"This bill would for sure cut the unfunded (pension) liability for the state," said Henry Bayer, head of the AFSCME public employees union. "But think about that. What is the unfunded liability? That is money that is owed and already deferred by current retirees and current employees."

The state would never tell bondholders, Bayer asserted, that it couldn't pay them the money it owed them.

"By the same token you shouldn't be saying that to active and retired public employees," he said.

"That is not something the General Assembly should be doing. But that is exactly what you will be doing if you pass this bill."

Bayer also decried the financial impact of the pension revision on state universities.

"The university budgets have been taking it on the chin now for decades. You've been reducing the funding to universities, and they've been forced to raise their tuition," he said.

"Now with this added cost on the shoulders of the universities that says you're going to have to pay the normal cost of pensions, that added cost is going to have to come from somewhere. It's either going to come from higher tuition and higher fees, or they're going to have to start laying people off, cutting back on the number of staff they have. That is not something that is going to maintain the high quality of the public universities in this state."

Easter, in fact, admitted that another tuition increase might be required to cover the cost.

"At this point we would do everything we can to be efficient in the use of resources to minimize the impact on tuition, but inevitably it could have an effect," he said.

Madigan, in his testimony to the House committee, said the Legislature has "been called on to administer a lot of tough medicine" this spring, including cuts to Medicaid and free health care to retired state employees.

"I have said to people from the beginning of the session that service this year in the General Assembly is not for the faint of heart," he said. "But as the sponsor of this bill, I am telling working men and women that their cost-of-living adjustment is not going to be as rich. It will still be there, it will just not be as rich. That's tough medicine."

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jimed wrote on May 30, 2012 at 9:05 am

I hope Madigan knows how to take his tough medicine.He needs to go.

Fedupwithstatereps wrote on May 30, 2012 at 4:05 pm

He will and with his full pension!

Fedupwithstatereps wrote on May 30, 2012 at 4:05 pm

He will and with his full pension!

rsp wrote on May 30, 2012 at 9:05 am

Madigan, in his testimony to the House committee, said the Legislature has "been called on to administer a lot of tough medicine" 

Just as long as he doesn't have to take it. Hasn't touched his pension or pay raise has he?

jms wrote on May 30, 2012 at 10:05 am

I'd like to know the names of the people on the committee, and who voted for this awful bill.

Sid Saltfork wrote on May 30, 2012 at 11:05 am

House of Representatives Personnel and Pension Committee:  Chairperson, Elaine Nekritz (D); Vice Chairperson, Daniel Burke (D); Republican Spokesman, Raymond Poe (R); Members: Daniel Bliss (D), Karen May (D), MICHAEL MADIGAN (D), Thomas Morrison (R), Darlene Sanger (R), Dave Winters (R).  I do not know which Republican voted for it.  The Republican opposition is against including teachers due to downstate property taxes rising if it is past.  Either way; the state employees, and the state university employees will be sacrificed.  If you are a current employee, you might as well stay on until age 65.  You will face poverty later over the years.  If you are a retiree, you will face poverty sooner.  It still is unclear how much as a retiree you will have to pay for health insurance to the Dept. of Central Management Services.   You thought you earned health insurance in retirement after 20 years of service; but now you will still have to pay up to 49% ( $666.66 per month ) for health care insurance.  You will have to make a decision to "touch the pen" for changing to the Tier II level; or remaining on the Tier I level.  If you decide to remain on the Tier I level; you will have no health insurance, but you will continue to get the 3% COLA.   You need to look at supplemental health insurance cost if you are on Medicare to compare the gains versus losses.  If you do not qualify for Social Security, you need to sign for the Tier ll since you will need some sort of health insurance.  You need to remember that the legislature may, or may not make the employer pension payments in the future just as they did not in the past.  You need to remember that the legislature will come back in the future to steal more from you since they will use the employer pension payments for pork barrel projects that result in "campaign donations" which line their pockets.   You need to remember that they are liars, and thieves.  "Theft is theft however it is justified."                                                                                            

GoingtoHeck wrote on May 30, 2012 at 11:05 am

N-G misspoke here:

"Even though House Republicans appeared somewhat split on the bill, and some downstate Democrats were said to be opposed, the measure did get the support of the pro-business Civic Committee of the Commercial Club of Chicago, plus the Illinois community colleges and the University of Illinois."

The University of Illinois absolutely DOES NOT support this bill!  And I'm sure that's also true of Illinois community colleges.

Lets get this corrected, please.

Tom Kacich wrote on May 30, 2012 at 12:05 pm
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UI testified in favor of the bill Tuesday, as did community college board. Official with the latter group also testified in favor of cost-shift at a Senate committee hearing this morning.

GoingtoHeck wrote on May 30, 2012 at 12:05 pm

Yikes!  Thanks for setting me straight, Tom.  I certainly couldn't imagine UI supporting this bill that will devastate current and future retirees, but ... clearly I was wrong.

Sid Saltfork wrote on May 30, 2012 at 1:05 pm

According to the State Journal Register (Springfield), it looks like the bill will be divided into three bills.  One bill will be in regard to teachers.  One bill will be in regard to university, and community college employees.  The third bill will be for state employees excluding the judges, and perhaps the legislators.  The Republican opposition is on the teachers, and university employees pensions being displaced on the local school districts, and universities.  The concern is that property taxes would have to be raised, and more tuition hikes would result.  The state employees except the judges, and legislators will be sacrificed.  It is the old game of divide, and conquer.  The lone Republican who voted in favor of the bill on the House Personnel and Pension Committee was Dave Winters.  You are right about the devastation of current, and future retirees.  It will fall the hardest on the current retirees.  Those at the lower pension income level will be living in poverty.  A state retiree who worked 30 years with a four year average of $50,000, receives 50% ($25,000) before federal taxes, property taxes, license and plate fees, insurance co-pays, etc.  Now; they will pay up to $8,000 for insurance, and do without any adjustment for inflation for 5 years following their date of retirement.  After the 5 year period, they will receive a no compounded adjustment each year based on 1/2 of the Consumer Index.  If the price of food, gas, etc. goes up; they will receive 1/2 of the cost increase annually.  There are no guarantees that the legislature will pay the employer pension payments either.  Public service as a career gets you nowhere unless you are a legislator, or a judge. 

Fedupwithstatereps wrote on May 30, 2012 at 1:05 pm

Madigan has lost his mind!  This is the worst solution (bill) ever.  He keeps his golden egg, we get screwed.  Get serious Springfield!!  Make it fair and across the board, from the top down.  Jeez!  I'm glad that some people on the floor are getting mad at Madigan. He deserves it for trying to pull a fast one on the state and it's employees. 

Sid Saltfork wrote on May 30, 2012 at 1:05 pm

It is not just Madigan.  There are the rest of the legislators, the governor, the media, the Civic Committee of Chicago, big business, and the howling mob that the media panders to in their paid opinions.

Fedupwithstatereps wrote on May 30, 2012 at 4:05 pm

Yes agreed.  They all stink.  Ugh!

rsp wrote on May 30, 2012 at 5:05 pm

Make it fair and across the board, from the top down.

Maybe they should do the opposite, take the most from the top and the least from the bottom. And really start at the top. The very bottom? May need to be left off. 

aantulov wrote on May 31, 2012 at 11:05 am

I hope ALL of these legislators know where Mr. Zimmerman is hiding.  They may need to join him. These actions will leave people without insurance or without a home. Its legalized theft. If you have these legislators ears please try to influence them to do the right thing, but I would'nt sit too close to them in public for fear of a tossed egg or ...worse.