Wednesday, December 12, 2012

Rising to the Bait - Senator Michael Noland

Rising to the Bait (Sen. Michael Nolan on HB6258)

Idiom: Rising to the bait describes the response to a temptation or enticement exactly as planned or intended.  The colloquialism is also used to describe the acceptance of an offer that proves a trick or quite the opposite of what was expected.

In a progressive talk radio program last weekend, Senator Michael Noland of Elgin talked openly about the current proposals made by Rep. Elaine Nekritz and twenty other legislators in HB6258.  You’ll remember that Sen. Noland was originally a member of Governor Quinn’s committee designated early last spring to forge a path to pension reform that would include all stakeholders.  The governor’s Director of Management and Budget Jerry Stermer also sat in on the group.  The result was proposal of choices in benefit reductions  (B1673) that was hot-potatoed between Madigan and Cross and failed to receive a vote (but remains alive).  The sticking point was the proposed cost shift to local districts.

Now, HB6258 puts forth a number of alterations to the current public teachers’ pension program, many which would be immediately challenged in court.  These include increased contributions without benefit increases, severe restriction of the COLA for future and current retirees, a cost shift to the local districts, the change to a cash balance plan, etc.  The proposal is Representative Nekritz and Representative Biss’ “new normal” for pension reform. 

Although Sen. Nolan’s interpretation of the “new normal” means “those already hired should be the least harmed,” he considered this latest and more draconian proposal put forth by the younger group of twenty-one a show of frustration as well as a “show of her (Nekrtiz) consideration of leadership.”  Indeed, while Representative Senger, Senator Brady, and Rep. Noland have seemingly stepped back, Representative Nekritz has become the prominent figure in moving her own agenda to make pension reform happen. 

Although Noland stated he needed time to  “review the (proposed) legislation before I can comment in detail,” he did express qualms about forcing change rather than offering choices in future legislation regarding pension reform.  Holding onto the original senatorial view expressed last spring by Leader Cullerton and others, Noland feels that “we cannot do this (pension reform) without their willingness to accept change.”  There are the public sector unions or their representatives.  Noland holds to the legal position that providing a choice would increase the likelihood of passing a later legal challenge.  “Stakeholders need to be willing to sacrifice so that others can have a job.”  Although heretofore neither public sector unions nor their representatives have been called to the table during the genesis of HB6258, Noland obviously feels their presence necessary.  Necessary to have them agree to concessions.

The enticement or bait this time (HB6258) is the promise to pay the annual cost of TRS pensions.  According to TRS, “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 Illinois Municipal Retirement Fund can force local governments to pay their contributions” ( ).

On the other hand, given the eventual if not possible inclusion of the shift of costs to local school districts integral to this and other legislation, sue whom?  The state or the local districts?  And of course, this time the state’s promise carries more validity than it did for each of the last 60 years? 

Mr. Noland’s emphasis on choices adheres to Chief Legal Counsel Eric Madiar’s position that compliance with the Illinois Constitution depends upon a selection of options, even if such seems coercive (you will remember the choice between health care and COLA’s).  One could therefore attempt to describe a selection as willing or negotiated, especially if given sanction by stakeholders at the table. 

As Ellen Schultz warns in Retirement Heist, offering options is a ploy used in the private sector quite successfully.   “To enhance their chances at success, some companies started to use a strategy…creeping take-aways.“  This involves taking small steps – increase premiums a small amount, or perhaps start charging premiums in the future.  The retirees and unions ignore them.  Then, a few years later, the company cuts benefits in a big way, saying that the retiree’s prior lack of legal action signaled tacit agreement that the company could change the plan.”

Like the creation of a committee with many axes to grind, HB6258 is a vast array of punishments for public teachers – current, retired and future.  Its design displays little regard for stakeholders or for promises.  Listening to Rep. Cassidy’s delusional explanation of how selective cutting of COLA’s will protect the truly deserving retirees was wretched.  BUT HB6258, like its predecessors and successors, does contain the bait offering a deal.  

Let’s hope that our stakeholders realize just how dangerous any inducement will be. 

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