Pension plan sparks uncertainty, frustration

URBANA — Uncertainty was the word of the day on campus. And frustration — to put it mildly.

University of Illinois employees anticipating today's vote on a legislative plan to fix the state's pension problem scoured the Web, talked to colleagues and emailed administrators to find out how the changes would affect their retirement bottom line.

"I'm worried because I don't know what the details are and how it's going to affect me," said Professor Bryan White, graduate program coordinator for the Department of Animal Sciences.

White, 59, said he wouldn't be hurt by the proposal to push back the retirement age for those 45 and younger. But a cap (currently $109,971) on how much salary could be used to calculate pension benefits would diminish his retirement in future years, even though his current salary would be grandfathered in, according to the draft bill. He'd also see his benefits cut by new limits on cost-of-living increases for pension payments.

That insecurity is felt by every employee on campus, said Professor Amr Elnashai, head of the UI's highly ranked civil engineering department. He's particularly upset about the reductions in cost-of-living adjustments.

"It's a really very negative message to send," said Elnashai, who is leaving to become dean of Penn State's engineering college. "All other universities are subjected to the financial hardships that the country has gone through. But they didn't turn around and penalize the faculty like Illinois is doing through the pension reforms. It's affecting everybody's future."

The changes will affect academic professionals and other staff as well as faculty. Some staff members are re-evaluating when they might be able to retire, said Tammy Nohren, administrative assistant in the College of Engineering.

"People are still trying to absorb this. It's kind of shocking," said Melissa Madsen, assistant director of human resources in the College of Fine and Applied Arts and head of the Council for Academic Professionals. "I don't see how getting 1 percent back in our paychecks is in any way going to make up for the harm done down the road."

Beyond personal interest, many professors and administrators worried about the fallout on efforts to recruit talented new faculty — and keep the UI's stars from being lured elsewhere.

Professor Gene Robinson, head of the UI's Institute for Genomic Biology, couldn't point to a specific case but said the university has had trouble recruiting and retaining "the best and brightest" because of the state's financial problems. It hasn't been able to keep pace with its peers on salaries and overall compensation, and the proposed pension changes wouldn't help, he said.

"Certainly people will be thinking about it. They owe it to their families to be thinking about it," Robinson said, who fears the changes could affect a search he is leading with five other departments to recruit three new faculty in "human sociogenomics," the study of social behavior using genomics.

Robinson said he supports the efforts to solve the state's pension problem, as it would benefit the entire state. But for the UI to remain a top university, "we have to be able to compete favorably with the other top universities in the country, public and private, for the top talent in the nation. And to compete favorably, this would include having a pension plan that is solid but not too limited in scope."

White, who also holds an appointment with IGB, has chaired recent search committees for top faculty prospects. Pensions and state finances almost always come up, he said, especially when the school is trying to recruit a more senior faculty member.

Younger recruits are more worried about landing a position than their eventual retirement, he said.

At the same time, the UI has seen many talented assistant professors come in, establish their careers and then get "poached" by another school, he said.

Professors usually don't leave for just one reason, but finances certainly play a role, he said. And this could make some "mid-career superstars" who had toyed with the idea of moving on take the prospect more seriously — especially if they're approached with a better offer, he said.

White was heavily recruited by another institution four years ago, when the recession was at its worst and the UI was in the throes of an admissions scandal. He stayed for two reasons: the "fantastic" intellectual environment on campus, and the community itself.

"The intellectual environment here far surpassed this other institution," he said, and his son was about to start high school. "It was hard to leave."

But his own department has seen "severe attrition" in the last few years, dropping from 60 faculty members to "somewhere in the 40s." They either left campus or retired so they could lock in their pensions, he said.

"You don't just rebuild that overnight," he said.

History Professor Teresa Barnes said her salary is well under the proposed cap in the pension bill, but her take-home pay is now $100 per month less than when she was hired more than five years ago because of rising insurance premiums and tax increases.

"Why would a mid-career person come to a university like this when they know that their pay is not going to be able to keep up with inflation?" she asked.

"People will start their careers here, but they won't stay," she said. And that ultimately means "students are getting shortchanged because they'll be taught by a never-ending succession of people starting out in their careers."

Math Professor Bruce Reznick, who has won several teaching awards at the UI, said he's turned down opportunities to move elsewhere because he loved working with the students and faculty here.

Reznick said a senior UI professor told him when he was recruited in 1979 that "when it comes to salaries, we're 11th in the Big Ten, but the pensions are very good and are protected by the state Constitution."

"The first part was a joke: back then there were only 10 schools in the Big Ten. I'm beginning to realize that the second part might have been a joke, too," he said via email.

"My pension (for whenever I might retire) is part of the deferred compensation that was used to recruit and retain my professional services for more than 30 years. If the state of Illinois wants to renege on its contractual obligations, they should do so, not just for state employees, but for every company that has a contract: 'People are corporations too, my friend; people are corporations too.' And there is a word for somebody who takes your work and then doesn't pay you what they promised, and that word is 'thief.'"

BY THE NUMBERS

327: Pages in the amended Senate Bill 1, the "final" version of which was made available Monday

30 & 60: Votes needed in the Illinois Senate (30) and House (60) for passage

8:30 a.m.: Scheduled start time of the conference committee hearing on Senate Bill 1 in Room 212 of the Capitol, which starts today's process

$100 billion: State's unfunded pension obligation, the worst in the country

4 of 5: Affected retirement systems: state universities', teachers', state employees' and General Assembly; the judges' system is exempt

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tominmadison wrote on December 03, 2013 at 7:12 am

Uiuc has, for quite awhile, become a farm club for the real big leagues.  Way to go.

 

 

capt80 wrote on December 03, 2013 at 10:12 am

Welcome to the "real world". The private sector has been dealing with pension theft and mis-management for decades. Can't believe it took this long for it to catch up. 

Sid Saltfork wrote on December 03, 2013 at 11:12 am

Another "real world" believer....  This is the one, and only world unless you have a private one. 

The private sector was hit with 401k plans taking a dive during the beginning of the recession.  Public employees were not given the option of a 401k plan.  They were stuck on pensions by their employer years, and years ago.  The employees paid their contributions, but their employer did not.  The private sector benefited from the "skipped" employer payments since the payments went to popular things rather than raising taxes.  It was at the cost of the public employee.  Now some "public employee hater" who could not possess the qualifications for the public service job gloats about the "real world"?  

Fedupwithstatereps wrote on December 03, 2013 at 11:12 am

So by your statement it is then OK for the state to rob it's employees, past, present and future?  Just sit by and say, oh well? It's that kind of attitude that is at the root of the State's problems. Passive, agreessive attitudes are not useful.

This is the REAL WORLD: "The University of Illinois is the 7th largest employer in Illinois, with 21,000 employees and 5,000 faculty members in Springfield, Urbana, and Chicago, Illinois."

Sid Saltfork wrote on December 03, 2013 at 11:12 am

Add the state employees, and the K-12 teachers to the list.  As their incomes go down so does their local economies.  It will motivate many to move to lower cost of living areas in the country.  The legal fight over the state constitution will cost the state a bundle.  The cost to the state in future bondholders, and businesses being afraid to do business with Illinois.  If a state can steal it's retired employees peansion, it can default on anything.  This arrogant, illegal act will cost the State of Illinois more than the stolen savings.

spangwurfelt wrote on December 03, 2013 at 1:12 pm

Does the NG intend to ever talk to anyone who isn't tenure track or making 100K+?

Bulldogmojo wrote on December 03, 2013 at 2:12 pm

Well this seems completely on the up and up? Right?

https://twitter.com/illinoispolicy/status/407878158558707712/photo/1/large

Sid Saltfork wrote on December 03, 2013 at 3:12 pm

How about land grants to the retirees in exchange for their money?  Say, 40 acres in Fox Ridge State Park...?  Who will get the new, ornate doors at the Capitol Building? Who gets dibs on Lincoln's Nose?  The state should pay up, or trade up.

capt80 wrote on December 03, 2013 at 3:12 pm

Saltfork, you always go off on a tangent, don't you. I can assure you, 401K accounts aren't the only retirement plans that were frozen, terminated or turned over to the PBGC for 25 cents on the dollar. I just find it funny that public employees are so indignant when it's been going on all around them for years. Public employee hater? You missed the mark there too, my wife's been a SURS participant for the last 20 years. "could not possess the qualifications for a public service job", that's what I love about you big time libs, always throw in the personal attack after you end your rant. Swell.

FedUp, kind of like you've been sitting by while many private corporations have been robbing it's employees past, present and future. No difference. Neither made their required contributions.

Sid Saltfork wrote on December 03, 2013 at 8:12 pm

Your attitude is that if something happened to some, it should happen to all.  Sorry if you got stuck in the past; but that should not apply to others.  I get tired of someone spouting off about my earned pension.  You got your wish.  The bill passed.  Now, it goes to the state supreme court whose justices are exempt from the pension reform in the bill.  Yeah, I know how that is going to turn out also.  Don't hurt your back doing back flips.

bluegrass wrote on December 04, 2013 at 11:12 am

Your attitude is that if something happened to some, it should happen to all.  Sorry if you got stuck in the past; but that should not apply to others. 

That's rich coming from Mr. Shared Pain.

Sid Saltfork wrote on December 04, 2013 at 12:12 pm

Your not "sharing pain", and the other commentor is not "sharing pain".  Pension money was spent on you, and others; but your right there at the through wanting more just like the politicians of both parties.  Hey Blue, it was not your money that was stolen; but you benefit from it.  Keep hating; it evidently works for you. 

bluegrass wrote on December 05, 2013 at 8:12 am

Hmmm.  I must have missed my pension check....   I hate it when that happens.

Sid Saltfork wrote on December 05, 2013 at 12:12 pm

The theft did prompt a discussion on staying in Illinois versus somewhere warmer.    I would imagine that many public service retirees are looking at the southwest, and south home prices, and cost of living.  The pension check can be sent anywhere in country, or out of country.  The taxes generated would go to the new area.  They would be lower also.  Unless there are compelling reasons for public service retirees to remain in Illinois; it makes sense to move to a better climate.

bluegrass wrote on December 06, 2013 at 10:12 am

Ahhh, so when it benefits people to leave for a better physical, cost of living, and tax climate, they should just hit the road?  Are you admitting there are evil market forces at play, and even raging, foaming at the mouth, union red liberals pay attention and react to that market?  The horror.  Rather selfish of those people to simply pack up and leave instead of sticking around paying their fair share.  Not surprising though.

Still waiting on my pension check......  

Sid Saltfork wrote on December 06, 2013 at 12:12 pm

You have to earn one first before you can get one.  You can push for someone else to have theirs stolen in order to benefit you of course.  However, it still takes work over years to get a pension.  Sorry, Blue; but you would have to work for it, and earn it.

I must have been too tough on you with my previous comment to you.  You can have this one pulled like the last one too.