A Response to the Chicago Tribune’s Recent Editorial

“… [G]rab your pencils and calculators, dear readers. We've got a little math quiz for you: Add up the days between June 19, when legislators established a pension conference committee, and Oct. 22, the start of their fall veto session. What do you get? We'll help: 125 days. Now take that number and multiply it by $5 million, the amount the state's unfunded pension liability grows each day. What's your answer?

“Please, allow us to assist: $625 million. That's how much your liability will have grown by the time lawmakers reconvene in Springfield this month. Add $80 million in debt if they adjourn, again, on Nov. 7 without reform. And then keep adding $5 million each day after that…

“Last year, 10 states made major changes to public employee retirement plans, according to the National Conference of State Legislatures. States increased employee contributions, raised retirement ages, reduced cost-of-living adjustments, created new 401(k)-style options — you name it. Reforms vary state to state. But the goal is consistent: to save dangerously underfunded systems.

“Illinois changed pension benefits for new workers in 2009. But lawmakers have not revised the system for existing employees. Those employees — teachers outside Chicago, university employees, state workers, judges and General Assembly members — depend on a pension system that in total is only 39 percent funded. Compare that to the state of New York where pensions are fully funded and lawmakers still passed pension reform last year to reduce the state's future obligations. How wise and responsible of them...

“Had Illinois legislators passed aggressive pension reforms three, four, five years ago, our courts could have ruled by now on any challenges. We would know where we stand. We might actually be realizing pension ... wait for it ... savings…"

from the Chicago Tribune Editorial: Real decisions and no decisions

Commentary:

“Grab your pencils and calculators, dear [Editorial Staff]. We've got a little math quiz for you [too]: Add up all [the years when… legislators stole money earmarked for the public pensions systems to pay for state services rather than raise taxes…] What do you get? We'll help: [$30 billion from the pension systems, $15 billion from the Teachers’ Retirement System alone]. Now take that number and multiply it by [9.1%: the average return for investments over the last 30 years for TRS…]. What's your answer?”

For several decades, Illinois policymakers have consistently failed to make the annual required contributions to the state’s pension systems, primarily because they could pay for services and their “pet projects” without raising taxes; moreover, in 1995, policymakers created a flawed re-funding schedule, and they have refused to correctly amortize the pension systems’ unfunded liabilities since then. Instead, they have favored corporate interests rather than the interests of their citizenry and; thus, they have sabotaged the public employees’ retirement plans and the State of Illinois’ future economic solvency through mismanagement and fiscal irresponsibility. State policymakers left us with a fiscal disaster, and so-called “pension reform” or breaking a constitutional contract will not resolve today’s $100+ billion unfunded liability. “Had Illinois legislators [paid into the pension systems throughout the years…], we would know where we stand. We might actually be realizing pension ... wait for it ... savings.”

You state: “Illinois changed pension benefits for new workers in 20[10]. But lawmakers have not revised the system for existing employees…” Perhaps it is because “A plain language reading of the Pension Clause’s text makes clear that governmental entities may not reduce or eliminate a public employee’s pension payments and other membership entitlements once the employee becomes a pension system member. At the same time, the plain language also indicates that an employee’s pension payments and other membership entitlements are ‘contractual’ rights that may be presumably altered through mutual assent via contract principles. Further, the Clause’s prohibitory language against the diminishment or impairment of pension benefits is cast in absolute terms and lacks any exceptions…” (Eric M. Madiar (2011), Is Welching on Public Pension Promises an Option for Illinois? An Analysis of Article XIII, Section 5 of the Illinois Constitution) (link: Illinois Pension Clause’s Convention Debates, Text and Historical Background). 

We are tired of skewed coverage regarding the Illinois public pensions’ unfunded liability. We are tired of hearing about Illinois credit ratings and from writers who blame the public pensions for the state’s fiscal morass. And we are tired of the media’s omission of the most significant facts about public pension debt and anyone who talks or writes about bond ratings, cuts to services and the siphoning of the state’s money from education, public safety and human services because of “failed pension reform.”

Every editorial, every article and 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 and are currently perpetuated by some members of this General Assembly. The state's pension debt and revenue problems need to become our legal and moral emphasis. Breaking a constitutionally-guaranteed contract with the state’s public servants is the wrong focus! To reiterate, this flagrant disregard for the State and U.S. Constitutions will not address the State’s incurred unfunded liability or its revenue problems.  

-Glen Brown

The Sparks of Rebellion by Chris Hedges

“…The corporate leviathan, which is global, is freed from the constraints of a single nation-state or government. Corporations are beyond regulation or control. Politicians are too anemic, or more often too corrupt, to stand in the way of the accelerating corporate destruction. This makes our struggle different from revolutionary struggles in industrial societies in the past.

“Our revolt will look more like what erupted in the less industrialized Slavic republics, Russia, Spain and China and uprisings led by a disenfranchised rural and urban working class and peasantry in the liberation movements that swept through Africa and Latin America. The dispossessed working poor, along with unemployed college graduates and students, unemployed journalists, artists, lawyers and teachers, will form our movement.

“…It is not the poor who make revolutions. It is those who conclude that they will not be able, as they once expected, to rise economically and socially. This consciousness is part of the self-knowledge of service workers and fast food workers. It is grasped by the swelling population of college graduates caught in a vise of low-paying jobs and obscene amounts of debt. These two groups, once united, will be our primary engines of revolt…

“Erica Chenoweth and Maria J. Stephan examined 100 years of violent and nonviolent resistance movements in their book ‘Why Civil Resistance Works.’ They concluded that nonviolent movements succeed twice as often as violent uprisings. Violent movements work primarily in civil wars or in ending foreign occupations, they found. Nonviolent movements that succeed appeal to those within the power structure, especially the police and civil servants, who are cognizant of the corruption and decadence of the power elite and are willing to abandon them…

“The most important dilemma facing us is not ideological. It is logistical. The security and surveillance state has made its highest priority the breaking of any infrastructure that might spark widespread revolt. The state knows the tinder is there. It knows that the continued unraveling of the economy and the effects of climate change make popular unrest inevitable. It knows that as underemployment and unemployment doom at least a quarter of the U.S. population, perhaps more, to perpetual poverty, and as unemployment benefits are scaled back, as schools close, as the middle class withers away, as pension funds are looted by hedge fund thieves, and as the government continues to let the fossil fuel industry ravage the planet, the future will increasingly be one of open conflict. This battle against the corporate state, right now, is primarily about infrastructure. We need an infrastructure to build revolt. The corporate state is determined to deny us one…

“Most of the citizenry detests Wall Street and big banks. It does not want more wars. It needs jobs. It is disgusted with the subservience of elected officials to corporate power. It wants universal health care. It worries that if the fossil fuel industry is not stopped, there will be no future for our children. And the state is using all its power to stymie any movement that expresses these concerns…

“[R]esistance needs a vibrant cultural component. It was the spirituals that nourished the souls of African-Americans during the nightmare of slavery. It was the blues that spoke to the reality of black people during the era of Jim Crow. It was the poems of Federico Garcia Lorca that sustained the republicans fighting the fascists in Spain. Music, dance, drama, art, song, painting were the fire and drive of resistance movements...

“The degradation of education into vocational training for the corporate state, the ending of state subsidies for the arts and journalism, the hijacking of these disciplines by corporate sponsors, severs the population from understanding, self-actualization and transcendence. In aesthetic terms the corporate state seeks to crush beauty, truth and imagination. This is a war waged by all totalitarian systems…”

These excerpts are from The Sparks of Rebellion by Chris Hedges.

“Britain’s two largest teachers’ unions will stage key coordinated nationwide strikes on Thursday October 17 in protest against their pay and pensions”; meanwhile, in Illinois…

“The industrial action by members of the National Union of Teachers (NUT) and the National Association of Schoolmasters Union of Women Teachers (NASUWT) will also hold protest marches in Bristol and Durham as well as in London to voice their anger at the government’s policies that they say risk teaching and education. The strike will hit over 100 councils across England and Wales after the two unions staged another walkout on October 1. 

“The NUT said on its website that they will be calling on the government to halt dismantling of the national pay system, stop plans to introduce longer school days and years and scrap proposals that force teachers to work longer and get less in payment and pension.

“‘Strike action is a last resort, teachers have been left with no choice but to demonstrate their anger and frustration in the face of their genuine concerns being dismissed and trivialized,’ NASUWT General Secretary Chris Keates said.

“‘Such action would have been unnecessary had the Secretary of State been prepared to engage in genuine discussions. Teachers are asking nothing more of the Secretary of State than to recognize that their pay and conditions of service are directly linked to the provision of high quality education and that their concerns cannot simply be ignored,’ he added.

“This comes as NUT said even parents are supporting them, citing YouGov poll results that show 60 percent of parents back the continuation of a national pay system for teachers, with only eight percent thinking the government has made a positive impact on the education system.”
 

from UK teaching unions to take nationwide strike 

Meanwhile, in Illinois...

Because we are victims of today’s disappearing and weakened organized labor unions that were once the guardians of middle-class workers and representative democracy; because we are victims of a lack of courageous leadership and a lack of sustained organizational acumen; because we are victims of our indecisiveness and political ignorance and our inability to build an effective coalition and to launch a counter-attack against the arrogant wealthy minority that is waging an economic war against the poor and middle class in Illinois, we will remain scapegoats for the reprehensible problems created by the so-called “wealthy elite” until we mobilize our collective efforts against their powerful economic interests, their lucrative lobbying of the state’s policymakers, and their emphasis upon breaking our constitutional contracts.

from Why Illinois Pension Reform Is a Devious Ruse

On Breaking a Contract or So-called Illinois “Pension Reform” and Giving the Money to Corporations

"The power of changing the relative situation of debtor and creditor, of interfering with contracts, a power which comes home to every man, touches the interest of all, and controls the conduct of every individual in those things which he supposes to be proper for his own exclusive management, had been used to such an excess by the state legislatures, as to break in upon the ordinary intercourse of society, and destroy all confidence between man and man. This mischief had become so great, so alarming, as not only to impair commercial intercourse and threaten the existence of credit, but to sap the morals of the people and destroy the sanctity of private faith. To guard against the continuance of the evil was an object of deep interest with all the truly wise, as well as the virtuous, of this great community, and was one of the important benefits expected from a reform of the government" (Chief Justice Marshall). 

"It is competent for the States to change the form of the remedy, or to modify it otherwise, as they may see fit, provided no substantial right secured by the contract is thereby impaired. No attempt has been made to fix definitely the line between alterations of the remedy, which are to be deemed legitimate, and those which, under the form of modifying the remedy, impair substantial rights. Every case must be determined upon its own circumstances" (Von Hoffman v. City of Quincy, supra, pp. 71 U. S. 553).

Of course, every case “must be determined upon its own circumstances” and here are some significant “circumstances” to consider” in Illinois:

·         Illinois State legislators have not fully funded the state’s public pension systems for years so they can gain favor from their constituency and from their wealthy supporters. It has been said that approximately 30 billion dollars have been "diverted" from the five public pension systems; 15 billion dollars of that amount was stolen from the Teachers' Retirement System. (Total Employer Contributions to the Illinois Teachers' Retirement System Since 1970).

·         “For decades, states have treated pension systems as a credit card to pay for government services and to avoid tax increases or service cuts…” (Eric M. Madiar, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate (2012), Public Pension Benefits under Siege: Does State Law Facilitate or Block Recent Efforts to Cut the Pension Benefits of Public Servants?).

·         In 1995, policymakers created a flawed re-funding schedule, and they have refused to correctly amortize the pension systems’ unfunded liabilities since then.

·         Instead, policymakers have favored corporate interests (by providing them with unwarranted tax breaks) rather than the interests of their citizenry and; thus, they have seriously sabotaged the public employees’ retirement plans and the State of Illinois’ future economic solvency through mismanagement and fiscal irresponsibility.

·         Instead of protecting public pension rights and benefits, which have a legal basis under Illinois State and U.S. Laws; instead of restructuring the state’s revenue base to pay for the state’s growth in expenditures and its recklessly-accumulated debts and obligations, some current policymakers want to diminish the public employees’ constitutional rights and their benefits, even though revenue restructuring and pension debt re-amortization are the best legal and moral solutions. 

How can it be deemed fair that so-called “pension reform” is a legitimate remediation of the state’s incurred pension debt and its revenue problems, especially when pension reform will inevitably create a severe economic disadvantage for most public employees and their families in retirement while creating an economic advantage for the wealthy among us and corporations that subsidize unethical policymakers? This is not protection of the vital interests of the citizens of the State of Illinois. It is, however, a violation of public employees’ guaranteed constitutional rights and benefits.

Now consider the absurd conflict and irony of Governor Quinn v. the Illinois General Assembly recently: Quinn wants to steal money from public employees’ pensions just like some members of the General Assembly, via breaking a constitutional contract, and then give the money to Archer Daniels Midland Co. and other kindred, extortionate corporations (like he did with Motorola Mobility, Chrysler, Navistar International, U.S. Cellular, Mitsubishi Motors, Sears and Roebuck...).

“…Gov. Pat Quinn said today that a request by Decatur-based Archer Daniels Midland for millions of dollars in tax incentives to stay in Illinois should not be considered until lawmakers first reform the state's highly indebted public employee pension system. The company has asked lawmakers for as much as $24 million in incentives over the next two decades to continue to operate in Illinois. The company, which has been based in Decatur for more than four decades, wants to move its headquarters to Chicago. Quinn said the agricultural giant should ‘hold back’ from seeking special tax breaks and instead put pressure on lawmakers to implement pension reforms” (Quinn: No ADM tax breaks until pension deal). 

Just when you forgot Quinn "was put on earth" to solve the pension mess that legislators and their cohorts had created, now he wants corporate extortionists to coerce the unethical members of the Illinois General Assembly! Isn't that Ty Fahner's modus operandi? 

Something to look forward to in January, now that Illinois legislators have stolen more money from their favorite scapegoats: retirees and public employees.

Illinois Senate President John Cullerton: “There’s a compromise that we’re talking about right now… if it were to pass and be ruled unconstitutional, we’d go right back to the bill we passed that the unions supported, tweak it some more, get some more savings… and then pass that.”

The following article is by Bernard Schoenburg at The State-Journal Register:

Illinois Senate President John Cullerton said Wednesday he’s working to build support for a compromise pension reform plan that would save $138 billion over 30 years.

“There’s a compromise that we’re talking about right now,” Cullerton told the editorial board of The State Journal-Register. But he said that while the legislative pension reform committee worked to develop and evaluate the plan, that group has yet to reach agreement.

The Chicago Democrat said he supports the plan, adding that he hopes it can be acted on during the veto session scheduled to begin Oct. 22.

Elements of the compromise include having what is now a 3 percent compounded cost-of-living adjustment added to pension payments changed to half of the Consumer Price Index. Cullerton said the COLA couldn’t drop below 1 percent.

“It has a ceiling of 4 percent,” he added, “which is important because if there is inflation, there could be an actual opportunity for people to … get more than they’re getting now.”

Estimates are that the proposal would have state pension funds fully funded by 2043. The proposal would also decrease active employee contributions by 1 percentage point…

[According to Cullerton,] the combination of reduced employee contributions and inflation protection afforded by allowing the COLA to potentially rise to 4 percent could solidify the argument that the plan meets requirements of the state constitution, which doesn’t allow pension benefits to be diminished…

Cullerton said he expects unions, who had agreed to SB 2404, to oppose the hybrid plan now on the table, and added that it could end up challenged in court.

“That’s fine with me, because if it were to pass and be ruled unconstitutional, we’d go right back to the bill we passed that the unions supported, tweak it some more, get some more savings — that’s my opinion — and then pass that.”

The proposal would need 30 votes this fall to take effect July 1.

"Hopefully, I can get to 18,” Cullerton said of Democrats in the Senate. That would mean that the GOP would have to provide at least 12 votes…

Read more: Cullerton backs pension reform plan to save $138 billion by Bernard Schoenburg, State-Journal Register

U.K. TEACHERS STRIKE OVER PAY AND PENSIONS; meanwhile, teachers in Illinois are waiting passively for…

"Thousands of schools were closed as members of the two biggest teaching unions took strike action in a row over pay, pensions and workloads. The walkout affected schools in 49 authorities in the east of England, the Midlands, Yorkshire and the Humber. It is part of a continuing campaign of rolling regional strikes involving members of the National Union of Teachers (NUT) and National Association of Schoolmasters Union of Women Teachers (NASUWT). 

"The government said the strike would disrupt learning, inconvenience parents and damage the reputation of teachers. At least 2,500 schools were closed or partially closed. The strikers are angry about changes to their pensions, increased workloads and government plans to bring in performance-related pay. 

Relentless attacks  

"NUT general secretary Christine Blower said teachers could not 'stand by and watch our profession be systematically attacked and undermined.' The NASUWT's John Allison explains why he is striking. She declared the action a 'huge success' and added: 'There can be no doubt left about the feeling of anger towards this government's treatment of the teaching profession. Strike action is never a step that teachers take lightly and we are very aware and concerned about the inconvenience it causes parents. Unfortunately, we are faced with a coalition government that is refusing to listen to the reasonable demands of the profession.' Teachers gathered for a series of marches and rallies in support of the strike…"

from Teachers strike over pay and pensions