Thursday, September 5, 2013

Re: Letter from Daniel Biss

Dear Friends,

I am writing to update you on the progress of the pension conference committee. There are two topics that I would like to address: the timing of our work, and recent news reports about items under consideration by the committee.

Regarding timing, I know that many people are frustrated that the committee has not yet completed its work, and are anxiously awaiting our official proposal. Please know that I share this frustration: hundreds of thousands of people rely on these pension systems to provide them with a secure retirement, and they deserve clarity and resolution as soon as possible. This problem weighs heavily on our state’s fiscal condition and reputation, and we will all be better off when it is appropriately resolved.

This process has been lengthy, partly due to the difficult and contentious nature of the issue — even as we hone in on a recommendation, conference committee members are hashing out every aspect of the topic carefully, and many components require significant compromise from all participants. Perhaps even more importantly, we are taking very seriously the need for a robust, credible actuarial evaluation of our final product. Consequently, we are requesting very thorough — and, yes, time-consuming — studies of our ideas.

These facts notwithstanding, the problem still stands before us and demands a resolution as soon as possible. I am completely committed to achieving this, and I am hopeful that I will be back in touch before too long to discuss our proposal.

This brings me to my second topic: a leaked media report about some of the committee’s deliberations. On Friday, August 23, several news outlets published a list of items under consideration by our committee. These items included:

* A decrease in employee contributions by 1%;

* Replacing the current 3% automatic annual increase with a cost of living adjustment of one-half the consumer price index, potentially with floors and caps;

* Staggered delays to cost of living adjustments;

* Fully funding the pension plans over thirty years;

* Dedicating the pension funds money that is currently being used to make bond payments, beginning in Fiscal Year 2019;

* Switching to the Entry Age Normal actuarial cost method; and

* Changing interest rates used to calculate the money purchase option formula.

These ideas are in fact all under discussion by the conference committee, but nothing has been finalized yet and our conversations remain in a state of flux. That means that this is an ideal moment for you to share your feedback on these items, as well as any other thoughts you have on the pension issue. I look forward to hearing your thoughts as we hopefully enter the late stages of our deliberations, and I very much hope that we will be able to reach a compromise that, while painful, will be manageable for all stakeholders and will put our pension systems on a clear path to stability.

Best regards,

Daniel


On Daniel Biss’ Wishful Thinking and Disregard for the Illinois Constitution (originally posted on this blog March 27, 2013)

“…The debate over Biss' bill seemed to turn on the question of constitutionality because the bill imposed a reduced COLA as well as increased employee contributions and raising the retirement age incrementally for any employee younger than 45. Biss admitted he was pinning his hopes on the fact that the courts would take Illinois' fiscal crisis into account and 'balance' the pension protection language in the Illinois Constitution against the other obligations of state government under the constitution…” --IASA Capitol Watch, March 20.

Daniel Biss:

“… [T]here are those among us who want to abandon] the fundamental principle that the rules of the game for contracting parties are not to be changed midstream… This is especially hard to comprehend when public employees have diligently and faithfully paid their contributions while their government employers have failed to pay their required share. Indeed, for decades, states have treated pension systems as a credit card to pay for government services and avoid tax increases or service cuts (p. 194)... For lawmakers, it is simply politically more palatable to unilaterally cut pension benefits for public employees and retirees than to raise taxes, cut services, or both…” (Eric M. Madiar (2012). Public Pension Benefits under Siege: Does State Law Facilitate or Block Recent Efforts to Cut the Pension Benefits of Public Servants? ABA Journal of Labor & Employment Law, V. 27, no. 2, 179-194. Retrieved December 7, 2012 (Also reprinted in Defending and Protecting Public Employees’ Pensions against the Legislative Siege).

“…One thing we cannot do… is ignore the Constitution of Illinois… No principle of law permits us to suspend constitutional requirements for economic reasons, no matter how compelling those reasons may seem…” (from Ann B. Jorgensen et al., Appellees, v. Rod R. Blagojevich, Governor, et al., Appellants). (Also reprinted in COLA: a Guarantee for Illinois Judges).

“… [T]he Supreme Court would most certainly reject Sidley [Austin’s] public policy argument that the State somehow retains a reserved police power to abscond on its obligations to pension recipients should a pension system default. (565) …Illinois courts have concluded that the Clause affords the legislature no such reserved power. (566) Relying on Kraus [v. Board of Trustees of the Police Pension Fund of the Village of Niles (1979], the Supreme Court explained in Felt [v. Board of Trustees of the Judges Retirement System (1985)] that to accept the Attorney General’s argument ‘we would have to ignore the plain language of the Constitution of Illinois, reject the New York decisions on the constitutional provision which was the model for section 5 of article XIII, and overrule this court’s decision in Bardens [v Board of Trustees of the Judges Retirement System (1961)].’ (567) As a New York court noted, ‘although fiscal relief is a current imperative, an unconstitutional method may not be blinked.’ (568) (from IS WELCHING ON PUBLIC PENSION PROMISES AN OPTION FOR ILLINOIS? AN ANALYSIS OF ARTICLE XIII, SECTION 5 OF THE ILLINOIS CONSTITUTION by Eric M. Madiar, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate, pg. 69). (Also reprinted in What happens if the Illinois public pension funds are “on the verge of bankruptcy?”)

Illinois citizens are tired of those members of the Illinois General Assembly who lack ethical responsibility and moral courage; they are also tired of those members who are willing to challenge the State and U.S. Constitutions. These “so-called” representatives and senators are incompetent cowards.

Every article, every interview, and every legislative session about Illinois public pension reform should begin with these statements: The public pension systems were not, and are still not, the cause of the state’s budget deficits. The state’s budget deficits were triggered by past policymakers’ corruption, arrogance and irresponsibility. This is the main reason why the State of Illinois has revenue and pension debt problems.

Past Illinois General Assemblies have created the severe unfunded liability for the five public employees’ retirement systems over several decades. The legitimacy of the current Illinois General Assembly is dubious. The current state government is attempting to isolate and sacrifice one group of people for hardship and, for many of these public employees, create a dispossession by way of intentionally-diminishing laws while perpetuating special exceptions and windfalls for the wealthy elite. This is a mockery of justice, Daniel Biss.

It is critical that today’s policymakers protect legitimate expectations and concerns for all the state’s citizenry, especially for people who must be defended against those with excessive economic clout and inequitable schemes to pass prejudicial legislations that benefit the financial elite at the expense of everyone else.  


Glen Brown

P.S. I doubt that you look forward to hearing anyone's thoughts except your own.


4 comments:

  1. Glen,
    I have heard that the COLAs may not be constitutionally protected because they were given to us by the legislature AFTER the constitutional amendment was passed. This is definitely true for the TRIP health insurance. Can you check on that and report to us?

    ReplyDelete
  2. COLA & Guarantees:

    According to Rich Frankenfeld, TRS Director of Outreach, “the attorneys of the IEA, IFT and school management have said for years that pension benefits for current and retired teachers cannot be changed. For them, this includes the 3% post-retirement increase (what most members call the COLA). Last year, the chief legal counsel [Eric Madiar] to the Illinois Senate Democrats issued a comprehensive analysis of these issues, basically supporting their position.”

    http://teacherpoetmusicianglenbrown.blogspot.com/2012/03/cola-cost-of-living-adjustment-is-it.html

    ReplyDelete
  3. P.S.

    It is inevitable that the Illinois Supreme Court will decide on the issue of so-called "pension reform."

    ReplyDelete
  4. History of the Cost-of Living Adjustment of the Illinois Teachers’ Retirement System

    Illinois Pension Code: 40 ILCS 5/16-133.1) (from Ch. 108 1/2, par. 16-133.1) Sec. 16-133. (Automatic annual increase in annuity):

    http://teacherpoetmusicianglenbrown.blogspot.com/2012/12/cost-of-living-adjustment-cola-of.html

    ReplyDelete