Illinois Senators Who Voted “Yes” on Both SB 0001 and SB 0035...

These are senators who apparently have no regard for a teacher’s earned constitutionally-guaranteed benefits and will most likely vote “yes” for an unconstitutional bill from the House of Representatives.

1. John Cullerton (217-782-2728, Chicago: 773-883-0770)

2. Daniel Biss (217-782-2119, Skokie: 847-568-1250)

3. Don Harmon (217-782-8176, Oak Park: 708-848-2002)

4. Patricia Van Pelt (217-782-6252, Chicago: 312-888-9191)

5. Steven Landek (217-782-0054, Burbank: 708-430-25100

6. Napoleon Harris III (217-782-8066, 708-232-8780)

7. Bill Cunningham (217-782-5145, Chicago: 773-445-8123)

8. Michael Hastings (217-782-9595, Matteson: 708-283-4125)

9. Michael Noland (217-782-7746, Elgin: 847-214-8864)

10. Mike Jacobs (217-782-5957, Moline: 309-797-0001)

11. Heather Steans (Yes vote on SB 35, “Present” on SB 1) (217-782-8492, Chicago: 773-769-1717)


Other Illinois Senators Who Voted “Yes” on the blatantly unconstitutional SB 0035 and will most likely vote “yes” for an unconstitutional bill from the House of Representatives.

12. Michael Connelly (217-782-8192, Wheaton: 630-682-8101)

13. Kirk Dillard (217-782-8148, Westmont: 630-969-0990)

14. Jim Oberweis (217-782-0471, North Aurora: 630-800-1992)

15. Dan Duffy (217-782-8010, Barrington: 847-277-7100)

16. Matt Murphy (217-782-4471, Palatine: 847-776-1490)

17. Pamela Althoff (217-782-8000, McHenry: 815-455-6330)

18. Karen McConnaughay (217-782-1977, South Elgin: 847-214-8245)

19. Darin Lahood (217-782-1942, Peoria: 309-693-4921)

20. Sue Rezin (217-782-3840, Peru: 815-220-8720)

21. Christine Radogno (217-782-9407, Lemont: 630-243-0800)

22. William Brady (217-782-6216, Bloomington: 309-664-4440)

23. Dave Syverson (217-782-5413, Rockford: 815-987-7555)

These senators voted “present” on SB 0035

24. Mattie Hunter (217-782-5966, Chicago: 312-949-1908)

25. Jacqueline Collins (217-782-1607, Chicago: 773-224-2830)

26. Thomas Cullerton (217-782-9463, Villa Park: 630-903-6662)

These senators “did not vote” on SB 0035

27. Kimberly Lightford (217-782-8505, Westchester: 708-343-7444)

28. Tim Bivins (217-782-0180, Dixon: 815-284-0045)

29. Gary Forby (217-782-5509, Benton: 618-439-2504)

CALL THESE LEGISLATORS!

Commentary on SB 1 (SB 35 is blatantly unconstitutional)

Senate President John Cullerton’s SB 0001 is an attempt to circumvent the “Pension Clause” by giving retirees and public employees a “choice” (or new consideration) to impair their own contract for a precarious state guarantee. John Stevens, Legal Consultant for the “We Are One” Labor Coalition, stated “To take away the Cost-of-Living Adjustment [COLA] for [current and future] retirees is not a free and fair choice.”

Though perhaps most contracts have an element of duress, where one side has something the other has no legal right to, Illinois legislators will be breaching a contract by forcing public employees to make a choice to diminish their originally-vested and paid-for guarantee. Legislators will be attempting to break an enforceable contractual promise, one that is bilateral and emphasizes an agreement between the State of Illinois and its retired and current public employees as to their future rights and benefits.

The courts will likely find this “illusory promise [of health care]… grossly inadequate and accompanied by unfairness because the employer [the state] is using its superior bargaining position to take undue advantage of the employee and [to] substantially impair the employee’s exercise of free will” (250 Ill. App. 3d 423, 620 N.E.2d 1328, 1^st Dist. 1993: footnote to 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, pg. 62).

It is a diminution of the public employees’ contract to receive less than what the original vested right and benefit guaranteed. A choice between the COLA and uncertain state-sponsored health care offers public employees and retirees no ethical and lawful alternatives except to consent to the General Assembly’s demands to make an illicit choice.

Consider that “A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty (Professor of Law, Emeritus, Claude D. Rohwer and Professor of Law, Emeritus, Anthony M. Skrocki, Contracts in a Nutshell). Based upon both past and current legislators’ dereliction of duty to pay for the public employees’ constitutionally-guaranteed pensions, a court of law could find that the Illinois General Assembly has been and will be currently in “violation of any standard of good faith and fair dealing.”

Any modification of the “Pension Clause” should be seen as “the result of a violation of fair dealing,” as an accommodation for “only” the General Assembly who have stolen money from the public pension systems for decades and are, thus, “avoiding a pre-existing duty rule” (Rohwer & Skrocki).

“The significance of any modification of the “Pension Clause” is “the extent to which [public employees] will be deprived of the benefit [they] reasonably expected; the extent to which [public employees] can be adequately compensated for the part of that benefit [COLA, for instance] of which [they] will be deprived; […and] the extent to which the behavior of the party [Illinois General Assembly] failing to perform or to offer to perform [or] comports with standards of good faith and fair dealing” (Rohwer & Skrocki).

The promise to honor commitments and pay for the public employees’ pension is of “sufficient importance” to all citizens of Illinois. To pass pension reform is “an unequivocal manifestation of intention not to perform… legal duties…under a contract… When there is a duty of immediate performance of a promise, failure to perform in full is a breach” (Rohwer & Skrocki).

Though many legislators would rather dispute one of the Bill of Rights contained in both the Illinois and U.S. Constitutions instead of addressing the “real causes” of the state's budget deficits (the pension ramp, the pension debt, and the state’s insufficient revenue), legislators should reexamine the concept of justice and what lawfulness demands: that people must keep their covenants with one another. In particular, no justice is accomplished when diminishing public employees' earned benefits and rights because of decades of legislators' irresponsibility, corruption and incompetence. (A petition to that effect).

Let us not forget how the State of Illinois has arrived in this financial predicament. The state’s unfunded liability has increased to $96 billion (and it is increasing). Forty-six percent of that amount ($44.2 billion) is the result of legislators’ “diversion” of money (a polite euphemism for stealing) from the public pension systems to pay for other services without increasing taxes.

All citizens of the State of Illinois are vulnerable because of the fiscal morass caused primarily by past incompetent, unethical and negligent General Assemblies, but also because of today’s scheming Illinois legislators who are attempting to seize political opportunity via “pension reforms” that violate a contract.

There should not be any contract modification of the retirees’ and current public employees’ guaranteed, earned benefits. To respect a contractual promise as a legitimate right and moral concern is at stake for all retirees and public employees, as well as for every other citizen in Illinois. 

--Glen Brown

For more constitutional analyses, please also read:

Illinois Pension Reform Is without Legal and Moral Justification (posted May 29, 2012)

“Defending and Protecting Public Employees’ Pensions against the Legislative Siege…” (excerpts from Eric M. Madiar) and “How Much Can States Change Existing Retirement Policy? In Defense of State Judicial Decisions Protecting Public Employees’ Pensions” by Douglas L. Greenfield and Susan G Lahne) (posted December 10, 2012)

Illinois Pension Clause’s Convention Debates, Text and Historical Background (excerpts from Eric M. Madiar) (posted February 4, 2013)

House of Representatives Passes HB 1165

from IEA

The House on Thursday afternoon passed HB1165 which is commonly known as the Nekritz-Biss (Cross) plan.

This plan, which passed 66-50, cuts the 3-percent automatic compounded Cost-of-Living Adjustments on annuities of more than $25,000. It would apply to active and retired participants in all the pension systems except for judges.

The House has previously voted to cap pensionable salaries at $113,700, or the rate of Social Security, and to increase the retirement age by five years for those 35 and younger, increase it by three years for those ages 35-39 and one year for those ages 40-45. There is no change for those 46 and older.

House Speaker Michael Madigan noted at the end of the debate on HB1165 that it’s likely all these changes will be lumped into one omnibus bill and sent to the Senate.

HOUSE ROLL CALL for HOUSE BILL 1165

THIRD READING

PASSED March 21, 2013
66 YEAS 50 NAYS 0 PRESENT

Y Acevedo, Y Durkin, N Lang, Y Roth, Y Arroyo, N Evans, Y Leitch, Y Sacia, N Beiser, Y Farnham, N Lilly, Y Sandack, Y Bellock, Y Feigenholtz, Y Manley, N Scherer, Y Berrios, N Fine, Y Martwick, Y Schmitz, N Bost, Y Flowers, N Mautino, Y Senger, Y Bradley, N Ford, N Mayfield, Y Sente, N Brady, N Fortner, Y McAsey, N Sims, N Brauer, Y Franks, N McAuliffe, N Smiddy, N Brown, Y Gabel, Y McSweeney, N Smith, Y Burke Daniel, NV Golar, N Meier, N Sommer, Y Burke Kelly, Y Gordon-Booth, Y Mell, Y Sosnowski, N Cabello, Y Halbrook, N Mitchell Bill, Y Soto, N Cassidy, N Hammond, Y Mitchell Christian, Y Sullivan, N Cavaletto, N Harms, N Moffitt, Y Tabares, E Chapa LaVia, Y Harris David, Y Morrison, N Thapedi, Y Cloonen, Y Harris Greg, Y Moylan, Y Tracy, Y Conroy, Y Hatcher, Y Mussman, N Tryon, N Costello, N Hays, Y Nekritz, N Turner, Y Crespo, Y Hernandez Y Osmond N Unes Y Cross N Hoffman N Phelps N Verschoore Y Currie Y Hurley Y Pihos, Y Walsh, Y D'Amico, Y Ives, N Poe, N Welch, N Davidsmeyer, N Jackson, Y Pritchard, Y Wheeler, Y Davis Monique, N Jakobsson, N Reboletti, N Williams, Y Davis William, Y Jefferson, N Reis, Y Willis, N DeLuca, Y Jones, N Riley, Y Yingling, Y Demmer, Y Kay, N Rita, Y Zalewski, N Drury, Y Kifowit, N Rosenthal, Y Mr. Speaker, N Dunkin, Y Kosel

E - Denotes Excused Absence

Madigan is methodically passing parts of HB 6258.
http://teacherpoetmusicianglenbrown.blogspot.com/2012/12/house-bill-6258.html

Delivery of Petition to Illinois Legislators: “Illinois Revenue and Debt Reform, Not Pension Reform”

Senator Cullerton’s Press Secretary requested that we crop her out of this photo (Photo by John Dillon).

On March 15^th, John Dillon and I met with Senator Michael Connelly (Naperville) and asked him to deliver a 542-page petition signed by 5,342 concerned citizens across Illinois to Senate President John Cullerton. (These citizens are asking legislators not to cut their earned and constitutionally-guaranteed benefits, but to find sources of revenue to pay what the State of Illinois owes its dedicated public employees). On Tuesday, March 19th, I was apprised by Connelly’s secretary that he was unable to complete the task (“he forgot”), so I printed another copy of the petition.

On Wednesday, March 20^th, this petition was personally delivered to the office of Senate President Cullerton in Springfield by John Dillon and me.

The petition states:

Illinois has a pension debt and revenue problem. Most legislators know this, and they also understand the concept of justice and what lawfulness demands: that people must keep their covenants with one another. No justice is accomplished when diminishing public employees' earned benefits and rights because of decades of legislators' irresponsibility, corruption and incompetence. Stop Illinois pension reform. It is immoral and illegal.

Many Illinois legislators want to challenge both Illinois and U.S. Constitutions instead of addressing the causes of the state's budget deficits. Illinois public employees have earned their pension. Their pension is a constitutionally-guaranteed contract.

The on-going petition link: http://signon.org/sign/illinois-revenue-and
Contact: glen brown

Divide (and Conquer) Current TRS Members from Retirees and Other Public Employees

from the IRTA

“Today the Illinois Senate voted on SB35 and SB1. SB35 which diminished retirees' and current employees' pension benefits was defeated 23-30-3. SB1 was amended to remove retired educators from the bill. SB1 passed 30-22-2. SB1 now goes to the House for consideration. Retired educators live to fight another day!”

NO!  RETIRED TEACHERS MUST STAND TOGETHER WITH THE CURRENT TEACHERS IF THIS BILL IS SIGNED INTO LAW!

from the IEA

Senate passes Cullerton plan dealing with TRS members only

Sen. President John Cullerton put a bill in front of the Senate today — twice — that has a direct effect on active Tier 1 TRS employees who have not yet submitted their letters of retirement.

IEA is OPPOSED to the bill.

The bill, known as SB1, forces current Tier 1 employees to choose to freeze their pensionable salaries as they are today in exchange for keeping a 3 percent compounded COLA in retirement and access to health care [?]. Or, active Tier 1 employees can continue to count salary increases toward their pensions but reduce their COLA in retirement to half of the consumer price index or 3 percent simple COLAs, whichever is less, and have access to healthcare.

Other key components to this bill are that it does not include any current TRS retirees or anyone who has already declared through irrevocable letters of retirement that they are leaving the profession.

In addition, the bill includes other key components of the We Are One Illinois bill, SB2404, including the establishment of a pension stabilization fund, and the right for TRS members to sue the state if the state doesn’t make its future payments.

There is no 2 percent increase in member contribution in SB 1, and there also is no shifting of the cost of pensions from the state to local school districts.

This bill has only been passed by the Senate. It still would have to be heard and passed by the House in order to be considered by the governor for passage. The bill was heard twice — the first time it failed by one vote 29 Yes, 22 No, 4 Present. Cullerton asked that it be put on postponed consideration and it was heard again about 15 minutes later and it passed 30 Yes, 22 No, 2 Present.

For various constitutional analyses, please access the posts in the “Pension Analyses” tab of this blog.

March 20^th IEA Post (Updated and Corrected)

March 21, 2013 by IEA Government Relations

…The bill, known as SB1, forces current Tier 1 employees to choose to freeze their pensionable salaries (the salary on which their pension would be based) where the salaries are today and to forgo access to any state provided health insurance, to retain a 3 percent compounded COLA in retirement.

Or, active Tier 1 employees can continue to count salary increases toward their pensions but they would see their COLA reduced in retirement to half of the consumer price index or 3 percent simple COLAs, whichever is less, to retain access to a (as yet undefined) healthcare plan. The legislation even suggests that this access could be to a plan in which the participating retiree could be required to pay for the entire cost of their health insurance (unlike TRIP as we know it today)…

§  It does not include any current TRS retirees or anyone who has already declared through irrevocable letters of retirement that they are leaving the profession.

§  It includes other key components of the We Are One Illinois bill, SB2404, including the establishment of a pension stabilization fund, and the right for TRS members to sue the state if the state doesn’t make its future payments.

§  There is no 2 percent increase in member contribution in SB 1.

§  There also is no shifting of the cost of pensions from the state to local school districts…

Senate Bill No. 1

POSTPONED CONSIDERATION

THIRD READING
Mar 20, 2013

30 YEAS, 22 NAYS, 2 PRESENT

N Althoff NV Forby NV Lightford N Radogno
N Barickman N Frerichs Y Link Y Raoul

Y Bertino-Tarrant Y Haine N Luechtefeld N Rezin

Y Biss Y Harmon N Manar N Righter

NV Bivins Y Harris Y Martinez N Rose

N Brady Y Hastings N McCann NV Sandoval

Y Bush N Holmes N McCarter Y Silverstein

NV Clayborne Y Hunter N McConnaughay Y Stadelman

Y Collins Y Hutchinson Y McGuire P Steans

N Connelly Y Jacobs Y Morrison N Sullivan

Y Cullerton, T. Y Jones, E. Y Mulroe N Syverson

Y Cunningham Y Koehler Y Muñoz Y Trotter

P Delgado Y Kotowski N Murphy Y Van Pelt

N Dillard N LaHood Y Noland Y Mr. President

N Duffy Y Landek N Oberweis

When David Koehler changed his vote to "yes," the bill passed.

Charter schools and the future of public education by Stan Karp

“…According to Education Week, there are now more than 6,000 publicly-funded charter schools in the United States enrolling about 4 percent of all students. Since 2008, the number of charter schools has grown by almost 50 percent, while over that same period nearly 4,000 traditional public schools have closed. This represents a huge transfer of resources and students from our public education system to the publicly funded, but privately-managed charter sector. These trends raise concerns about the future of public education and its promise of quality education for all.

“Charters and small specialty schools [are now] fragmenting [school] districts [and] creating tiers of schools serving decidedly different populations with unequal access... The Charter movement [attracts] the attention of political and financial interests who [see] the public school system as a ‘government monopoly’ ripe for market reform.

“In the past decade, the character of the charter school movement has changed dramatically. It’s been transformed from community-based, educator-initiated local efforts designed to provide alternative approaches for a small number of students into nationally-funded efforts by foundations, investors and educational management companies to create a parallel, more privatized school system…

“The most complete national study of charter school performance by CREDO, a research unit at Stanford University that supports charter reform, found that only about one in five charter schools had better test scores than comparable public schools and more than twice as many had lower ones. Unlike most charter schools, traditional public schools accept all children, including much larger numbers of high-needs students. In most states, charters do not face the same public accountability and transparency requirements as public schools, which have led to serious problems of mismanagement, corruption and profiteering.

“Invariably beneath accounts of ‘spectacular charter success’ lie demographics that reveal fewer special needs children, fewer English language learners, and fewer numbers of children from the poorest families…There are many other factors that make charters unsustainable as a general strategy for improving public education [as well]. Significant evidence suggests that charters are part of a market-driven plan to create a less stable, less secure and less expensive teaching staff. Other trends reflect the efforts of well-funded groups working to privatize everything from curriculum to professional development to the making of education policy.

“Nationally, charter school teachers are, on average, less experienced, less unionized and less likely to hold state certification than teachers in traditional public schools... As many as one in four charter school teachers leave every year, about double the turnover rate in traditional public schools. The odds of a teacher leaving the profession altogether are 130 percent higher at charters than traditional public schools, and much of this teacher attrition is related to dissatisfaction with working conditions.

“Charter schools typically pay less for longer hours. But charter school administrators often earn more than their school-district counterparts…This is why grassroots parents groups have been pushing back against unwanted charter expansion that undermines the quality and budgets of district schools. They promote polarization among parents and pockets of privilege instead of district-wide improvement…

“For the charter movement, parents are mainly customers seeking services with no major role in school governance or advocacy for all children. But in a system of universal public education, parents are citizens seeking rights and, collectively, the owner-managers of a fundamental public institution in a democratic society…

“Public schools have federal, state and district obligations that can be brought to bear. School boards, public budgets, public policies and public officials can be subjected to pressure and held accountable in ways that privatized charters don’t allow. In post-Katrina New Orleans, where next year virtually all students will attend unequal tiers of charter schools, there are now students and families who cannot find any schools to take them. We cannot let that happen here…

“It has become impossible to separate the rapid expansion of charter networks from efforts to privatize public education... Those who believe that business models and market reforms hold the key to solving educational problems have made great strides in attaching their agenda to the urgent need of communities who have too often been poorly served by the current system. But left to its own bottom line logic, the market will do for education what it is has done for housing, health care and employment: create fabulous profits and opportunities for a few and unequal access and outcomes for the many.

“Our country has already had more than enough experience with separate and unequal school systems. The counterfeit claim that charter privatization is part of a new ‘civil rights movement’ addressing the deep and historic inequality that surrounds our schools is belied by the real impact of rapid charter growth in cities across the country. At the level of state and federal education policy, charters are providing a reform cover for eroding the public school system and an investment opportunity for those who see education as a business rather than a fundamental institution of democratic civic life.

“It’s time to slow down charter expansion and refocus public policy on providing excellent public schools for all. Using charters as a reform strategy has become too much like planting weeds in the garden. Better to tend the soil and help all public schools flower to their full potential.”

Stan Karp is director of the Secondary Reform Project for New Jersey's Education Law Center.

The above excerpts are from Charter schools and the future of public education

Pension reform creeps along in Illinois legislature (a look at last week's legislation) by Doug Finke

Q. What passed the House?

A. The House has been voting on a series of amendments that deal with individual aspects of the state’s pension problem. Most of those have been rejected, such as plans to freeze retirees’ cost-of-living adjustments and raise working employees’ pension contributions by 5 percentage points. However, the House did approve two amendments and last week took final votes on the bills containing those amendments. House Bill 1154 limits the salary on which a pension can be earned to the Social Security wage cap, currently $113,700. People currently earning more than that would still get a pension based on those higher salaries. House Bill 1166 increases the retirement age on a sliding scale. Someone age 46 or older would see no change, but some people 34 and younger would have to work five years longer to earn full pensions. Although the bills passed the House, Representative Elaine Nekritz does not believe pension reform will be handled through the individual bill approach. “I still think we have to put the whole package together that hands the (Illinois) Supreme Court one piece of legislation to consider,” she said.

Q. Are there bills that do that?

A. Yes. Senate Bill 1 and Senate Bill 35 are both pending before the full chamber. In the House, the comprehensive reform bill is House Bill 3411. They are considered comprehensive because they incorporate many different elements of pension change. All of them would raise employee contributions and the retirement age. All of them would cap pensionable salary. They also all contain mechanisms to force the state to make its contributions to the pension systems. Significantly, they also all change cost-of-living adjustments automatically granted to retirees’ pension benefits. The bills delay when a retiree can begin receiving a COLA, and the COLA would be applied to only $20,000 or $25,000 of pension income, depending on whether or not a person is covered by Social Security. Also, the COLAs would no longer compound.

Q. Why are the COLA changes significant?

A. Governor Pat Quinn’s administration has repeatedly said COLAs are the biggest factor in ongoing increases in pension costs. Senator Daniel Biss, D-Evanston, sponsor of SB 35, testified last week that 80 percent of the pension savings produced by his bill come from the COLA changes. That would mean the annual state pension contribution could go down, which is why lawmakers are going through this exercise. [Read COLA: A Guarantee for Illinois Judges]

Q. So are all of the bills identical?

A. No. The single biggest difference is in SB 1, sponsored by Senate President John Cullerton, D-Chicago. That bill consists of two parts. Part A has all of the things the other reform bills contain, like the higher retirement age and COLA changes. Part B is Cullerton’s own plan. That’s the one where workers would have to choose between enjoying state-subsidized health insurance in retirement and a lesser COLA, or keeping the same retirement COLA and giving up the insurance. Cullerton believes offering a choice is the only way pension reform can survive a constitutional challenge. He wants lawmakers to pass his bill, and if the courts strike down Part A, Part B will already be on the books without further action by the General Assembly.

Q. Does Cullerton’s plan save as much money as the others?

A. No, and he admits that. But Cullerton also said his plan will save billions, and it’s better to have an immediate backup in place should the courts strike down Part A.

Q. Aren’t all of these plans unconstitutional because they diminish pension benefits?

A. Public employee unions certainly believe that is the case. Their legal experts can cite court decisions both in Illinois and in other states to support their argument that all of these bills will be voided by the courts. They cite the state Constitution’s pension clause, which says promised benefits cannot be impaired or diminished. Of course, advocates of pension change also have legal experts who can cite court decisions, both in Illinois and in other states, to support their arguments that the changes are constitutional. One point they raise is that the state’s pension systems are in such bad shape that cutting benefits can be legally justified to ultimately save the systems from insolvency, which would be the ultimate diminishment of benefits. ["No principle of law permits us to suspend constitutional requirements for economic reasons, no matter how compelling those reasons may seem" (from COLA: A Guarantee for Illinois Judges)].  They also point out that even the First Amendment to the U.S. Constitution, which guarantees free speech, is not absolute. [Read more rebuttal: Constitutional Issues Concerning SB 0001].

The Senate Executive Committee spent more than three hours last week debating the two Senate pension bills. Much of that time was spent by lawyers on the committee and lawyers representing those in favor and against the bills discussing fine points of constitutional and contract law. It also served to underscore the argument raised by many lawmakers: that no one knows what will happen until a pension proposal is passed, it is challenged in court, and the legal system decides the outcome. [Read more rebuttal Defending and Protecting Public Employees’ Pensions against Legislative Siege]

--Doug Finke
from Pension reform creeps along in Illinois legislature

Illinois Senate Bill 2404 (a review)

Hearing Scheduled for Wednesday, March 20, 2013 at 3pm in Springfield

SB 2404: Senate Sponsors
Sen. Linda Holmes - Pamela J. Althoff - Mrs. Melinda Bush - Toi W. Hutchinson - Kimberly A. Lightford, Mike Jacobs, Wm. Sam McCann, Dan Kotowski, John G. Mulroe, Thomas Cullerton, Pat McGuire, Bill Cunningham, Michael W. Frerichs, Jennifer Bertino-Tarrant, Julie A. Morrison, Tim Bivins, Gary Forby, Iris Y. Martinez, William E. Brady and Andy Manar

Synopsis as Introduced
Amends the Budget Stabilization Act. Provides for transfers from the General Revenue Fund to the Pension Stabilization Fund according to a specified schedule beginning in FY 2016 and continuing until FY 2045 or until the retirement funds have achieved a 100% funding ratio, whichever is earlier. Amends the General Assembly, State Employee, State Universities and Downstate Teacher Articles of the Illinois Pension Code. Changes the manner in which the annual required State contribution is calculated so that the affected systems are 100% funded by 2045. Provides that employee contributions to the retirement systems are increased an additional 1% on July 1, 2013 and 2% on July 1, 2014. Provides that the State is contractually obligated to each retirement plan participant and retiree to provide funding to the retirement systems according to the specified amortization schedule beginning in FY 2016 and continuing until FY 2045 or until the retirement funds have achieved a 100% funding ratio, whichever is earlier, in addition to the annual required State contribution certified by the Board for each fiscal year. Provides that each retirement system has the right to bring a mandamus action against the State to compel the State to make any installment of the annual required State contribution certified by the Board and the transfers required under the Budget Stabilization Act. Further provides that if a retirement system shall fail to bring a mandamus action against the State to compel the State to make any required installment, then any participant or retiree may bring such a mandamus action. Effective July 1, 2013.

We Are One Coalition of Illinois support SB 2404 for these reasons:

A Funding Guarantee

“It is essential that proper funding for the pension systems is guaranteed by law. That means allowing those who have the most at stake, the members of these systems, to have the right to bring action in court to compel the state to make its required annual contribution. In addition, making these contributions a constitutionally-protected provision will ensure that the Legislature cannot underfund these systems by a simple majority vote when it is politically expedient” [SB 2404 full text: read pgs. 13-15, 21, 30-32, 46-48, 72-75, 88-89].

 

A Pension Stabilization Fund

“Illinois needs to create a constitutionally-protected pension stabilization fund. Devoting additional resources… is essential for any pension funding plan to be successful. Part of this proposal was championed by Representative Mike Fortner (R-West Chicago) and is a sensible approach to paying down the state’s pension debt. Dedicating resources that have already been built into the base of the Illinois budget to directly pay down the unfunded liability, all while the state and the members continue to make the actuarially-required contribution, is a common-sense and constitutional approach.

“The idea is to use pension bond payments, which the state currently makes to pay off pension obligation bonds (POBs), to supplement the funding of the pension systems. The state sold POBs in 2003, 2010 and 2011 to fund pensions. When each set of bonds are paid off, the proposal would redirect those dollars, which are already included in the state budget, to go toward the pension funds. The 2010 bonds are paid off in 2015, which will free up hundreds of millions of dollars that would go to supplement the funding of the retirement systems. The 2011 bonds are paid off in 2019, which would then free up over $1 billion that would go to fund pensions. The 2003 bonds are paid off in 2033, freeing up a combined total of $1.79 billion that would go to fund pensions” [SB 2404 full text: read pgs. 58-63, 75-79].

We Are One Coalition of Illinois are willing to offer:

An increase in Membership Contributions

“Out of every paycheck, members of Illinois’ pension systems have consistently paid toward their pensions. While public workers are not to blame for Illinois’ pension shortfall, they are willing to share in the sacrifice and be part of the solution. In this proposal, active Tier 1 members would contribute 2% more of their salary (phased in 1% a year over 2 years) to help fund the pension systems. This will generate an estimated $350 million more each year and $3 billion over the next ten years. Although this may seem like a small amount when compared to the pension funding issue, it helps mitigate the annual increases in the state’s required pension payment and adds to the $1.6 billion annually contributed by public employees” [SB 2404 full text: read pgs. 15-16, 62-63, 69-70].

from the Teachers’ Retirement System of Illinois

“…The TRS contribution rate for active teachers would climb from the current 9.4 percent to 10.4 percent in the first year after enactment and to 11.4 percent in the second year. Active TRS members contributed $917.6 million to the System in fiscal year 2012 [At 11.4%, Illinois teachers will have the highest rate in the country].

“…The main reason the TRS funding level is only 40 percent is because state government has never funded the System at levels that an actuary would say are required to cover all long-term obligations. Since 1970, this funding shortfall to TRS totals $36 billion.

“Senate Bill 2404 calls for a new state law that guarantees the state will make an actuarially-required contribution to TRS every year. In Illinois, only pension benefits for members are protected as a contractual right by the state constitution. In other states, both pension benefits and state contributions to help fund the benefits are guaranteed as contractual rights for members... [Read about the New York State Teachers’ Retirement System].

“The Illinois Municipal Retirement Fund is the only statewide pension system that currently has a legal guarantee of funding (from local governments) and the IMRF funded ratio is 83 percent. Under Senate Bill 2404, if the state does not pay its annual contribution to TRS within a set period of time, TRS could go to court to force the state to pay the contribution in the same way that the IMRF can force local governments to pay their contributions.”