Saturday, July 4, 2015

Active Tier I Teachers and Tier I Retirees! Join IRTA NOW!

"We can make pension changes to those still working, right?"

Three years or so before my retirement from teaching, a very good friend and young colleague complained to me about the distraction the upcoming departures had on the too many of my elder companions leaving so soon.

“I’m really tired of hearing all of you trying to figure the square of the hypotenuse of the percentage of income when you all leave,” she muttered.  “There should be something better to do with an educated mind.”

She was right, of course. An advisor with the state office for the Teachers Association was the person with all the answers, and only a phone call away.  And, ironically, she was only a year or so behind me in the pipeline to retirement.

And, even though calculating accurate numerical numbers in the English Department was an unlikely prospect, an educated mind should be able to see the future a bit more clearly than just a monetary number.

If I knew what I now know, I believe I could have made a very strong and educated  commitment to do at least one thing: join the Illinois Retired Teachers Association even years before I retired.

Let me explain why. 

For as long as anyone can remember, the State of Illinois has reneged on its duty to pay into the pension funds of its State workers.  In the last half century, Illinois has also avoided the “promises” to fully pay into the pension funds that are protected by Article XIII, section 5: ”Membership in any pension or retirement system in the State…shall be an enforceable contractual relationship…the benefits of which shall not be diminished or impaired.”   Even though it would seem an a priori argument to require appropriate payment, the General Assembly continued to shirk the expectation for decades long after the inclusion of the Pension Protection Clause in 1970.

The Illinois General Assembly – a bi-partisan collection of legislators – has always dodged and sidestepped every opportunity or request or demand to provide the appropriate amount to the pensions, and it is likely they will do so again – regardless of the Illinois Supreme Court’s unanimous decision striking down SB1. 

"They can choose a 401K as a better alternative."
This is not opinion – it is both history and what State leadership is saying at this moment.

In 1995, acting as if the General Assembly had suddenly come to an epiphany regarding the money owed ($17 Billion at the time), legislators decided to create a “ramp” to make sure they were held to the payments necessary.  The “ramp” was designed to allow for minor payments in the beginning and finally swept upward in impossible costs by the end of the “pay-back” in 2035.  In truth, the ramp provided them with an ability to forestall full payments until many years later.  The Committee of Government Forecasting and Accountability found that from 1985 until 2012, Illinois pension liabilities grew by over $87 Billion.  More than half of that increase came from the State’s not paying its share.  That is why – despite the hue and cry from the Tribune and other corporatist enemies of all things pensions – that they now face an unfunded liability of well over $100 Billion. 

On April 14, 2010, in less than 24 hours both chambers of the General Assembly created a Tier II to absorb the costs of the growing unfunded liability.  Retirement age without penalty was extended until age 67, Cost of Living benefits were eviscerated, and retirement benefits were capped despite continued high salary contributions to the pension systems.  In short, Tier 2 was designed to help and ultimately pay off the liability accrued by the General Assembly.  

In December of 2013, the General Assembly passed SB1, a bi-partisan bill designed to curtail the benefits of current retirees and all Tier I active teachers.  The law provided a severely reduced schedule for Cost of Living, figured a salary cap for active Tier I teachers, offered defined contribution plans for current employees, prohibited sick leave accruals, and supplied a statutory promise of payments from then on into the pension funds.  Legislators Rep. Nekritz and Sen. Raoul predicted a savings for the state (in the previous bill owed) of hundreds of $Billions. 

"I think we can find a choice like Sen. Cullerton had - with SB2404."

IRTA lawyers were leaders in the battle to overturn SB1 as unconstitutional, and they were successful.  Indeed, even a somewhat contrite Representative Nekritz confirmed the admonishing tone of the Court’s unanimous decision during a recent interview.  President of the IRTA Bob Pinkerton exclaims, “Special thanks to Tabet, DiVito, and Rothstein for leading the battle in court. The IRTA attorneys were the leaders among all the attorneys involved and made an outstanding presentation to the Supreme Court.”

On the other hand, current leader of the State Governor Rauner has indicated his wish to return to a plan much like the proposal offered by Senator Cullerton in 2013 as an alternative to SB1:  A bill that provides a specious form of “consideration,” like Cullerton’s original SB2404 which provided a choice for health care or a cost of living benefit.   In Rauner’s vision, he would offer an opportunity for Tier I employees to join a defined contribution (401K) or remain in a reduced benefit pension plan.  According to his mouthpiece Tribune, Rauner believes that there is still the possibility that we can move forward from where we are “with Tier I as well as Tier II and possible III, to develop an optional (or required) 401K system for teachers.” 

Our new Governor, who is not much of a reader, has evidently not perused the recent decision by the ILSC declaring SB1 not only illegal in its attempt to recoup money that should have been given to the pension funds, but also affirming the Pension Protection Clause for even active Tier I teachers currently in the classroom.

From page 20 of the Supreme Court Decision/Analysis section of the majority opinion delivered by Justice Karmeier.  “The protections afforded to such benefits by article IIII, section 5 attach once an individual first embarks upon employment in am position covered by a public retirement system, not when the employee ultimately retires…Accordingly, once an individual begins work and becomes a member of a public retirement system, any subsequent changes to the Pension Code that would diminish the pension benefits conferred by membership in the retirement system cannot be applied to that individual…”

Despite the recent Supreme Court decision on SB1, Rauner believes that retirement benefits are set and remain static after initial employment.  

"You get what you get the day you start, not at the end. Right?"
And the General Assembly?  Have they learned any lesson?  Will they seek new revenue streams like progressive taxes, services taxation, transaction fees, amortization of the unfunded liability, re-design of State bill paying operations, etc.?  Or will they once again allow a mob mentality – like those that brought us SB7, Tier 2, SB1 – to elude the responsible path? 

This last battle cost us all in IRTA over $1/2 million. 

NOTE:  Active Tier I Teacher, these continued efforts to diminish and impair your future hard-earned retirement income will not cease.  You need protection from an organization that will not waver in their defense of your earned benefits.  Join IRTA now.

NOTE: Retired Tier I Teacher, this year the US Supreme Court will hear a case for those who wish the benefits of collective bargaining without having to pay for such advocacy.  Have you paid forward your share for yourself and for those about to retire? 

Wednesday, June 24, 2015

Naperville "Townhall Meeting" to Promote Rauner Agenda by Two Legislators

Take the Agenda…or the Helpless Get It

Perhaps you remember the infamous National Lampoon #34’s cover shot by Ronald G. Harris in the days before photo shopping.  It more than raised a few eyebrows; in fact, it brought forth vehement protest on the part of animal activist groups and other humane organizations that felt the exploitation of a helpless creature(s) was unspeakably wrong. 

Last evening at a “town hall meeting” in Naperville, one held by State Representative Grant Wehrli and State Senator Michael Connelly, the two politicians tried to emphasize the importance of passing Bruce Rauner’s TurnAround Agenda as a prerequisite for the promised increases in revenue that the new Governor had assured – and the possible relief to those citizens facing brutal cuts to social service programs.

Likewise, their allegiance to Rauner as well as their strong vows of compassionate conservatism (especially by Representative Wehrli) raised more than a few eyebrows and prompted some serious questions by young and elderly about the direction of Illinois – and its current indirection.

By the end of the evening, a good number of individuals had expressed serious concerns with the manner in which the new Governor identified and held up the marginalized and impoverished as a negotiating tool in his standoff with his political foes.  One elderly gentleman held the audience’s attention for nearly ten minutes, describing the unacceptable immorality of holding the poor responsible for the revenue shortfalls the state was experiencing.  The applause was resounding.

Another lady wondered at the Governors imperfect timing, especially Good Friday for adding $26 million in cuts to children suffering from autism, or those too poor to afford a burial, etc.  She softly grilled both politicians about the Governor’s awkward timing and the primary use of the poor and the infirm as hostages in his fight for a budget resolution.  “Why them first?” she asked.  “Why not at first find other areas to cut, or other ways to seek resolution?  Why must those least able be the ones?” 

Senator Michael Connelly
Both politicians reiterated their conservative compassion, and Senator Connelly reminded the questioner of the fine work that had been accomplished when they all worked together to correct the waste and fraud of Medicaid. 

Indeed, they did (from an earlier blog on the identified Medicaid changes in 2012). 

“Family Care for those families (two person household) making more than $20,000 annually will see their access to assistance stopped immediately. 

While this may seem injurious to those in the shady area that hovers just above a basic $20,000, Republican Senator Dale Righter of Matoon, IL, rationalizes this as an appropriate line in the sand:  “We need to incentivize the providers to make the Medicaid population healthier.  To me, this is about pay for performance”  (www.  In other words, let’s target the most desperate cases while eliminating the merely needy.  With that logic, those struggling people working at basic service jobs earning just over $20,000 annually are doing well enough to no longer deserve medical assistance, even if they have kids.”

According to Rep. Wehrli and Sen. Connelly, the state of Illinois has a structural deficit, one which can be mostly alleviated by agreeing with the basic tenets of the Governor’s Agenda – a pro-business effort that will return the numbers of working  people to our state.  Referring to an ominous looking slide in the PowerPoint showing vectors of numbers leaving an outline of Illinois, both politicians lamented that they might indeed lose their own children to some other place if the terrible business and economic conditions carried on.  “If we fix the deplorable business conditions, we fix the revenue issues, and we fix the coming drought to social services.”

Representative Wehrli was asked about the recent Crain;s article indicating that Illinois was just identified as a significant player in the United States for the development of new jobs and businesses, not the dire description they had just addressed. 

“So much for the jobs-killer rep—when it comes to states that are growing new businesses, Illinois is among the top U.S. leaders.
The Land of Lincoln ranked No. 2 among states where businesses are being created the fastest, according to numbers released yesterday by the U.S. Bureau of Labor Statistics. 

Representative Grant Wehrli
Representative Wehrli responded that he had not read the article, but he imagined that “those people running out of unemployment benefits were coming to a point possibly where they needed to jump back in to the work force and that is perhaps what we are seeing; I’m not sure and can’t really say, but I think that may be one possibility…” 

Senator Connelly was quick to identify workers’ compensation, another of Rauner’s Agenda items, as causal for the loss of jobs to other areas, ignoring the news release altogether.  He explained his inside look at Office Max’s decision to leave Naperville because of the simple differences between costs of workman’s compensation insurances in Illinois vs. Florida.  The Senator did not recall that the General Assembly had failed to provide the promised $563 million in EDGE credits to Office Depot, the Florida-based purchaser of Office Max,  Nor did he consider that Office Depot’s home in Boca Raton would be a natural residence for its new, smaller corporate purchase. 

Representative Wehrli’s justification for Worker compensation tort reform was more to the point.  In Illinois,” decried the Representative, “a broken elbow costs (significantly higher) than in Florida.” 

One questioner sitting directly in front of the two asked why anyone (including him) should get something like a pension after working at a job.  In fact, he wanted to give his back but no one would take it.

Senator Connelly explained that they could not take it back, nor could the state as the Supreme Court had recently declared the pension clause inviolate and the man’s  annual annuity was a contractual guarantee for life.  “But,” he added, “even my 81 year old retired educator father wonders why he gets the 3% compounded COLA.  And that cost-of-living is what’s driving up the costs of pensions and our pension payment every year, eating into all the other services we have discussed this evening.”

Glen Brown, a blogger who has spent years trying to de-bunk this overused misperception was immediately up in his chair and hand waving.  His hand continued to wave for another five questions without notice by either the Senator or the Representative.  In fact, in regards to the COLA’s Representative Wehrli described a time in the near future where the retirees of the public workers would find themselves “at the Dirksen building without any pensions, wondering what happened?” 

It would appear that the 28 page decision by the Supreme Court was just one more article the freshman Representative has not read. 

Finally, when asked if the Governor’s credibility with the working people of Illinois faced an increasing, unfortunate disconnect as he traveled about avoiding the crowds of workers waiting for him at various Chamber of Commerce meetings to follow his TurnAround Agenda, or whether a billionaire who calls for the elimination of the unions that protect hundreds of thousands of workers in the state was the wisest way to begin a request to trust him; the Representative answered firmly , “No. He is a man we can trust.” 

Connelly swung his arm past Glen Brown to another person who stood and said, “I am a state worker and I don’t trust Madigan.”

And, while both Senator Connelly and Representative Wehrli agreed that they might not agree with “everything on the TurnAround Agenda, they’d support it totally to move our state forward.”

As the meeting wound down and the man next to me reviewed his notes, he noted, “I guess they missed the part on their slide show where it says term limits.  I wonder how they feel about term limits?”

Perhaps it is a question Naperville can answer for them.

Monday, June 15, 2015

Bruce Rauner & The SneakAround Agenda

Bruce Rauner: The SneakAround Agenda

In Oak Forest, Illinois, this morning, torrential cloudbursts and flash floods pounded over 200 picketers waiting for a chance to give Governor Bruce Rauner a piece of their collective minds.  Many wore soaked and clinging t-shirts proclaiming their affiliation with various union groups – electricians, pipefitters, drivers, and even CTU union representatives.  Others held umbrellas or walked about in neon raincoats used when on the job.  The mood was determined but patient. 

Rauner was scheduled to appear before the Chamber of Commerce for the Orland, Illinois, area at Gaelic Park in Oak Forest to preside over a $30/person luncheon plate and a chance to hear the stumping Governor promote his “TurnAround Agenda.” 

Its pretty much the same message that saw little interest and some blowback by union workers earlier this spring, but the Governor has added a cast of insidious characters in his new marketing campaign:  Speaker Madigan and Senate Leader Cullerton.  Rauner’s hoping for some traction with his tale this time.

In case he doesn’t get any, once again, he will launch what worked for him last time: an unending series of television commercials to make us all hate “the machine.”  I wonder if Diana will be back to soften up the arrogance we often see in the effendi. Hope so.

An old blue and white bus struggled to find parking in the extra lot opened for the mushrooming crowds.  Children and teachers from Park Lawn, a Southland center for Individuals with Intellectual and Developmental Disabilities, warily stepped from the bus, all trying to stay under the safety of two very large umbrellas.  Having shuffled to the safety of the canopied front entrance, they awaited the Governor’s arrival with signs decrying their uncomfortable and inhumane situation – being caught between a political game of chicken between the plutocracy and the politically puissant. 

You might recall Rauner’s earlier budgets which called for the slashing of $millions normally provided for those with disabilities like autism and epilepsy.  No wonder the Park Lawn kids were there. 

Only three days ago, the Governor threatened he will also slash funding for the bus they came on. 

The children – some of them clearly no longer children – held signs and posters for the Governor.  Despite a bit unnerved by the downpours, the students of Park Lawn seemed more excited to be there and about to meet someone important.  “We Matter,” spelled one sign – flourishing with sparkly glitter and colors.  “Remember us,” pleaded another.

The luncheon was to begin at 11:30, but the rain poured from before 11:00 and past noon, with still no sign of the Governor’s entourage.  Police traveling through the crowds in SUV’s kept the crowds aware of the Governor’s timeline for arrival. 

Meanwhile, those attending the affair came dressed to the nines, well coiffed, and tastefully painted.  They trotted briskly from opened automobile doors to get in the front, past the children from Park Lawn.

One obviously insulted working class watched the people arriving, crossed his tattooed arms and snorted, “I suppose this is Rauner’s idea of the Middle Class.  What a joke.”

“Kill off the unions, take away the worker’s rights and protections on the job, slide past safety standards, and make each village its own little fiefdom.  It’s a TurnBack Agenda.”

Finally, the police informed the picket leaders that Rauner was arriving in another five minutes.  “Do you think he’s being fashionably late?  Or does he care about his wealthy constituency as little as he cares for the Middle Class,” suggested one of the CTU Union representatives.

“He’s trying to cut through the side parking lot to avoid having to approach the entry,” warned one of the leadership.  “Quick, let’s meet him as he must walk through the side lot to the front (where the children of Park Lawn had left nearly half an hour earlier).  Nearly 200 members of the Middle Class began a quick walk up to the front, but Rauner had driven behind the building to use a back door patio entrance to get in to his waiting crowds. 

“A Man of the People…”  yelled one frustrated man.

“The baddest enemy you could ever have is something of a coward,” suggested one other.

TurnAround Agenda?  Heck, he’s just shown us his real plan, just like in Springfield, the SneakAround agenda.”

SneakAround to the back door.

Saturday, June 6, 2015

From Ralph Martire of the CTBA: Finding Revenue in Illinois

From Ralph Martire of the CTBA

State Journal-Register posted May 20, 2015   
  CTBA's Ralph Martire

"It's relieving to know that, as a matter of Illinois state constitutional law, words in the English language actually have the meanings identified in the dictionary - which is really what the Illinois Supreme Court ruled when it held that the "pension reform" legislation of 2013 was unconstitutional. 

That law attempted to reduce the significant - as in currently north of $100 billion - unfunded liability in the five state pension systems by cutting benefits of current workers and retirees. That's verboten, because the Illinois Constitution specifically provides that public pension benefits in Illinois "shall not be diminished or impaired." 

Emphasizing the constitution's "plain and unambiguous language," the court found that "the clause means precisely what it says: if something qualifies as a [pension] benefit .... it cannot be diminished or impaired." 

Score that as a win for Merriam-Webster.

Does this decision mean Illinois must raise taxes? No. Regardless of how the Supreme Court ruled, Illinois actually has needed to raise taxes for decades. Indeed, the outsized unfunded pension liability isn't the cause of Illinois' fiscal problems; rather it's a significant consequence of poorly designed tax policy.

In fiscal year 1994, the aggregate unfunded liability across all five state systems was $17 billion. That sounds like peanuts given the size of the problem today, but it meant the systems were only 37 percent funded, a far cry from the 80 percent recognized as healthy.
The reason Illinois had accrued $17 billion in pension debt at that time had nothing to do with generous benefits and everything to do with debt. Even then, the state's flawed tax policy wasn't working in the modern economy.

There's been a longstanding imbalance between revenue growth and service cost growth, which prevents Illinois from sustaining the same level of services from year to year. This creates a real challenge for politicians, because $9 out of $10 the state spends on services goes to education, health care, social services and public safety. Cutting those core services every year is hardly a blueprint for re-election or good public policy.

Raising taxes always scares politicos, no matter how rational or needed the increase would be. So decision makers consistently chose a third, irresponsible path: using the pension systems like a credit card, diverting revenue that should have funded the normal cost of retirement benefits to instead fund current services.

This avoided the need for service cuts or distasteful tax increases, while allowing constituents to consume services without paying the full cost thereof in taxes.
It became such a political crutch that the practice of borrowing from what was owed the pensions to fund services was codified into law as part of the 1995 pension "funding ramp."

This ramp so aggressively borrowed against the pensions that it ballooned the unfunded liability from $17 billion in 1994 to $54 billion in 2008 - when the Great Recession hit and financial markets crashed. It accomplished this boondoggle by using an amortization schedule that was so back-loaded it resembled a ski slope, calling for annual payments in excess of $16 billion in out years.

It's this goofy debt repayment schedule that's causing problems. 

Now that we know the Illinois Constitution means what it says, the only viable and constitutional solution going forward is replacing the current back-loaded repayment schedule with a longer, level dollar amortization that permits payment of all retirement benefits when due, increases the funded ratio to a point that's considered healthy, and is affordable so that bond rating agencies have confidence payments will be made.

And Illinois still must raise taxes so it finally has the means to sustain core services without irresponsibly borrowing to pay for them."