Saturday, May 26, 2012

A Report from Bob Lyons, TRS Trustee

"Putting Aside the Constitution" was how one of the Democrat leaders was able to justify what legislators plan to do next. She may have forgotten that to “uphold and protect” that very same document was in her oath of office.
Andrew Bodewes, TRS legislative liaison, who serves the same role for the Illinois Teachers Retired Association (IRTA), reported to the TRS Board on the content of the so-far unnumbered bill that will reduce the costs of the existing pension systems of the State of Illinois. As some of us may know, Bodewes is considered an expert on pension law and once served in that role for the House Democratic staff. What he described to us was the bill, as it was written, [also affected retirees].

Between January 1 of 2013 and June 30, current retired teachers would be required to make an irrevocable choice between keeping their existing benefit of an automatic compounded three-percent increase [Cost-of-Living-Adjustment] in return for giving up their access to state provided health care vs. keeping the access to TRIP, or whatever will replace it going forward, but losing the existing COLA and having it replaced by the current Tier II COLA of three percent or half the rate of the CPI, whichever is less and, thus, compounding being replace by simple interest.

Simple interest means the number the percentage is taken from is always the cost of the pension for the year the new program starts, or the first year for new retirees. [According to] Speaker Madigan’s interview that has been circulated online, [Madigan believes] that a required choice is acceptable under contract law. Madigan, Cullerton, and Quinn are lawyers and constitutional leaders of the state and that would lead one to assume they understand the Illinois Constitution specifically governs our pension benefits – apparently not!

Bodewes expected that while the draft could certainly change in the next few days that some final version of it would be introduced on Monday, May 28. He also said legislators understood that having retirees in the bill made it less likely to pass and more likely to be found unconstitutional.

The Democratic leadership was also being told that Republicans would vote against the bill if current retirees were in the bill. The latter point may have more to do with the fact that the bill is written only by Democrats. The bill does have that portion of the current state contributions that cover the “normal cost” of the pensions of current employees being gradually shifted to the local school districts, which has also been opposed by Republicans.
While a self-imposed guarantee for state payments was not in the bill, the draft does call for the pensions to be at full funding in thirty years. Active teachers would have to make the choice between keeping the existing COLA which would be based on their salary for next year and losing state health care vs. Tier II COLA based on their ultimate final salary and continued access to state health care.

This proposed bill certainly could and should be defeated. If all retired and active teachers call their representative and senator in Springfield, it can be stopped. Legislators are scheduled to be in session over the weekend in Springfield, including Memorial Day. If the bill is passed, we can expect the unions and the IRTA to be part of a suit, [and there will also be a request for] an immediate injunction to delay the implementation of the bill until the lawsuits are settled. While the majority of us are covered by Medicare and giving up access to TRIP, especially when we don’t have any idea what it will be, would be the easy choice, there are certainly others that [would find] either choice a great hardship.

It's also possible that by Monday May 25, it could be different.
--Bob Lyons

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