Thursday, January 29, 2015

Important IRTA Update

Important IRTA Update

A total of 10 amicus briefs in the pension case were filed between January 12- 16. 
Per the Supreme Court Rules, each amicus has filed a motion asking the Supreme Court for leave to file its amicus brief.  (Under the rules, anyone who files an amicus brief technically has to first ask the Supreme Court for permission to do so, and must submit the brief that would be filed if permission were granted.)
While it's not unusual for a few amicus briefs to be filed in an important Supreme Court case, the large number and the sheer volume of these amicus filings is unusual.  In this case, the number and volume of amicus filings also is entirely inconsistent with the spirit of the accelerated docket that the State requested and received.  It would be unfair and extremely burdensome for the plaintiffs to have to respond not only to the State's brief, but also to 10 other briefs, within the accelerated schedule and within the normal 50-page limit for Supreme Court briefs.
On January 20, 2015 our attorneys filed a motion for a 28-day extension of time to file our appellate brief.
On January 22, 2015 the Supreme Court ruled on the procedural motions:
1. The Supreme Court denied leave to all of the State's amici.  None of the State's amici briefs will be allowed to be filed.
2. Because of #1, our motion for an extension of time was denied as moot.
In March the Supreme Court will hear oral arguments.

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These “friends” of the Attorney General’s motion utilizing police powers to ignore a Constitutional promise upheld in an earlier Circuit Court were as follows:

The International Municipal Layers Association - a non-profit, national think-tank offering legal advice to client municipalities.  You might remember in 2007, this group lobbied against the FederalPublic Safety Act, which allowed an employee to join a union.

Contracts Professors -  Professors Katharine Baker, Chicago-Kent College of Law School; Wendy Epstein, DePaul University College of Law; Adrian Walters, Chicago-Kent College of Law – three members of the legal community specializing in commercial law, corporate law and contracts.  They argued against any absolute interpretation of the Pension Clause.

The Civic Federation -  A politically influential player in local and state politics, headed by Lawrence Msall – a frequent guest on WTTW Chicago Tonight where he battles against Ralph Martire of the CTBA and all things public worker.  Mr. Msall and his predecessor Eden Martin were active and influential during the development of the current Pension Ramp that annually undermines the state budget.

Constitutional Law Professors - A collection of five legal counselors, writers and professors working collaboratively to refute the absolute nature of a constitutional guarantee. 

Chicago Public Schools  Several briefs filed by lawyers representing the Chicago Public School System, Chicago Transit Authority, and the Chicago Park District – all apply the future crises they face in pension shortages as a necessary concern and motive to support Lisa Madigan’s police power argument.

Will-Grundy Center for Independent Living et al. – Argues that if the earlier Appellate Court decision is upheld, it will severely reduce the opportunity or amount of funding targeted to health services for the least able of our citizens.

The City of Chicago – As in the arguments by the CPS et al., the brief presented the looming crisis facing the city in its pension obligations and its poor investor’s rating as well as the ongoing structural revenue problem

The Civic Committee of the Commercial Club of Chicago – The well-heeled collection of corporate heads and powerbrokers led by Tyrone Fahner, close advisor and friend to past-Governor James Thompson, himself one of the more egregious pension thieves during his tenure.  The brief argued that the dire fiscal situation facing the state, even after making changes in a second tier of public workers, demonstrates that “any fiscal future” is reliant on an overturning of the Circuit Court decision.

The Illinois Policy Institute - This brief from the often vocal tea-party group on WTTW Chicago Tonight argued that without necessary changes provided by SB1, the pension systems themselves would be jeopardized; thus, change must be forced despite earlier Circuit Court declarations that the law was unconstitutional. 

The Illinois Municipal League.  A group representing over one thousand local municipalities and a member of the advocate group the Pension Fairness Coalition, urged a reduction in state retirement programs in order to assure continued funding of local public safety workers retirement.   You might remember when the IPI suggested that North Riverside’s fire department privatize as a result of “forgetting” to make payments into the pension funds for decades.  Many other municipalities face such shortfalls for a variety of reasons.

Tuesday, January 20, 2015

WTTW: The More Things Change...

2015:  Plus Ça Change

Now that I’m over the age of consent for anything but Powers of Attorney, it surprises me how often short term memory disappears and resurfaces in a matter of weeks…like floating objects on a glassy lake.  What bumps, dislodges or releases the reminiscences is hard to tell, but on occasion something will happen which unleashes a raft of them splashing about importantly.

Watching Chicago Tonight the other evening, I suddenly recalled my disregarded commitment to send money for legal support to the IRTA for the continued battle(s) against the state’s “pension theft.” 

On Monday, January 19th, Carol Marin on WTTW sat before three veteran legislators and one Tea Party freshman Representative to pose some questions about the coming budget crisis facing Illinois.  The unforthcoming Governor Rauner has thus far spoken sparingly about specifics – even after his election – regarding what to do with a tax rollback that will certainly create a fiscal bloodletting unless averted.

Rep. Elaine Nekritz
Present before Carol Marin were Representative Elaine Nekritz (D) from Northbrook, Senator Kwame Raoul (D) from Hyde Park, Senator Matt Murphy ® from Palatine, and Representative Peter Breen ® of Lombard. 

Because the program was concerned about the budgetary crisis facing Illinois, and because I’d happened to read Glen Brown’s recent blog about the Institute on Taxation and Economic Policy identifying Illinois as having the 5th most unfair taxation policy in the Union, I was armed with not only schema but interest.

On changing the current tax structure, an issue proposed by Carol Marin with some suggestion toward a “progressive” plan, Nekritz jumped right in: Yes, I hope we would look at that.  For example, about half 46% of all retirement income that is not taxed in Illinois goes to people under the age of 65.  That's one of the things I think we should be considering and looking at”. 

When asked if this idea were "Democratic heresy?”Nekritz replied that it wasn't “when you consider we always want to broaden the base to lower the rate, which is always the goal of tax policy.”

Sen. Matt Murphy
In fact, Nekritz’s plan identifying retirement revenue for those under 65 in a state facing a $6 billion deficit this next year without significant changes in taxation and policy is like hunting down buffalo with a peashooter.  Evidently, the very concept of a progressive tax was too treacherous for her to mention in any way on even local television – or perhaps in front of Speaker Madigan, her boss. 
It would appear that Senator Harmon’s ditched progressive tax plan offering a 4% increase in revenue (or the CTBA’s offering a 6% increase) is not on Nekritz’s political horizon for the present.  Or the future?

And as for Pension Theft? 

Except for the newest member of the General Assembly, the others all had a few words to offer on whether the upcoming Illinois Supreme Court decision will be helpful.  Interestingly, none of the three seemed overly optimistic that the seven justices will find in favor of SB1 – the piece of legislation constructed by a Quinn-appointed team that included them all.

Murphy hoped that some judiciary “tea leaves” would result, giving them some concept of what might work better.

Nekritz, who had earlier erroneously labeled the pension payment as the largest part of the budget (rather than call it the pension payback for all the decades we never paid in to what was owed to public workers), now suggested that the General Assembly had wisely never counted on the savings of SB1 in looking forward at the current budgetary crisis. 

Of course her statement flies in the face of the Speaker’s daughter’s AG contrived demand for Police Powers because without that SB1 money the state remains in fiscal crisis.  Maybe she's planning on my forgetting...

Sen. Kwame Raoul
BUT most importantly was Kwame Raoul’s hope that “better guidance” from the Illinois Supreme Court will give them strategies with which to begin negotiating again.”  

Negotiating with whom? 

Now I remember...

Dear IRTA Members,

As the leading advocate for Illinois retired educators, the IRTA continues to fight to preserve your benefits. Protecting your benefits is our number one mission. That is what we do! We are a proud, strong organization that exemplifies purpose and integrity and working together; we can accomplish anything!

This determination has been demonstrated the past year with our successful challenge in Circuit Court to the unconstitutional legislation known as SB 1. This law, passed in late 2013, would have reduced our COLA and our overall pension benefit by a considerable amount.

Any donation, large or small, is appreciated. A suggested contribution is to compare your take-home pension amount [net] for January 2015 to your take-home amount [net] in February 2015. This is your monthly increase provided by your COLA and demonstrates the value of the 3% compounded annual benefit. We are recommending one month's increase as your contribution.

Thank you for your support. Please send your donation to IRTA, 620 N Walnut St., Springfield IL 62702. Checks should be made payable to the IRTA Legal Defense Fund, or you can go to the IRTA web-site home page and look under IRTA Events to donate online.

Thank you again!


Bob Pinkerton, IRTA President
To donate to the Legal Defense Fund

Wednesday, January 14, 2015

From Bob Lyons and Glen Brown: Rauner Changing Make-up of TRS

TRS Trustee Bob Lyons
TRS Trustee Bob Lyons Reports Sudden Changes to The Board that Protects Your Retirement Contribution

Background: Quite simply, Tier I and Tier II teachers in the State of Illinois contribute 9.4% of their salaries to the Teachers Retirement System for investment in their own future retirements – as well as supporting those of us currently retired. TRS manages and invests those funds in various vehicles to grow that money for future use by later retirees.   In a volatile and choppy world economy, TRS has stewarded the funds at a strong 7.7% in the ten years leading up to 2012, and (after an unusual 2013) a higher rate of 12.6% for the decade. Given the fluctuations in markets, TRS plans on a long-term average return of less than 8%.

TRS is governed by a 13-member Board of Trustees.

The State Superintendent of Education: Christopher Koch.
By statute, Mr. Koch is President

Four trustees elected by contributing TRS members: They are currently Sharon Leggettt, Mark Bailey, Rainy Kaplan, Cinda Klickna, Bob Lyons, and Cynthia O’Neill.

In May of 2015, an election will be held to fill trustee positions by TRS annuitnats and by active teachers. 

***Six trustees appointed by the Governor: They were Michael Bysby, Marcia Campbell, Mark Harris, and Sonia Walyn.  There were two vacancies.

This morning from TRS Trustee Bob Lyons:

“Monday we had two open seats on our board and the outgoing governor appointed one of his people to the TRS Board that morning, though he should have known that the appointment was made too late.  Today that person and also two Quinn appointees, Marcia Campbell and Mark Harris, that were appointed, but never confirmed by the senate were told that they are no longer TRS trustees.  Campbell of course is a state officer of the IFT and has served with distinction for some years.  That means that now we have four openings for gubernatorial appointees that Rauner can make. Two Quinn appointees still have two yeas on their term.  Recall that there are a total of thirteen seats on the board with the State Superintendent of Education as our president.  Chris Koch was appointed superintendent under a Democratic administration and Rauner will have new appointments to state school board as well.  Six seats on the TRS are held by active and retired teachers.”

Anyone who invests in a financial future knows that there are fees for making those investments, and hedge fund managers invest in extremely risky investments to charge higher percentages for possibly greater returns.  This is how our new Governor works and receives his less-taxed millions with which to purchase political office.

As TRS holds nearly $40 billion in assets, and each year receives funding contributions that total (for year 2014) nearly $3 and ½ billion, it would be a choice award for an  investment counselor.  

This may be an initial indication of what a Governor Rauner will do – recoup for his friends and fiscal allies the money spend to secure an opportunity to make more. 

Responding to Mr. Lyons warning, Glen Brown has warned that

Let's not wait until it is too late to act. I have said before we must openly resist the way in which the state's politicians (without moral conscience) continue to regulate public welfare. We must protest against the liars and thieves who have manufactured a financial crisis. We must protest against the liars and thieves who have perpetuated a financial crisis through irresponsibility, mismanagement and corruption; we must protest against the liars and thieves who have ignored moral responsibility and refused lawful remedy for the financial problems they have created. They are stealing part of the pension you have earned. They will continue to steal more of your pension in the future.

Bob Lyons reminds all of us that the new Governor has the right to make these new appointments and remove those appointed by an earlier Governor; furthermore, he notes: "Remember there is no pay to be gained by joining this board and the background to be considered a candidate will be some skills in investing."  That said, in the following days, weeks and years, you will find information here and in other blogs (see sidebar) re: the character and nature of those who Rauner would appoint to fill vacancies in the organization that watches over the contributions paid by hard-working teachers in the state of Illinois for their future retirements.

And probably much more…

Monday, January 12, 2015

Tier II Employees - Ingram's Got Your Back?

Tier II Employees – Ingram’s Got Your Back?

I received my TRS flyer by e-mail the other day, and in it was the Executive Director’s Report from Dick Ingram. 

Ingram describes that he is now part of an Illinois Task Force convened by order of House Joint Resolution 27, which asks for a final report regarding that status and impact of the added Tier Two system for new hires after January of 2010. 

The Task Force is called the “Teacher Recruitment and Retirement Task Force,” and the final report was to be delivered by January 1st of this year, but they’re running behind.

In his “message,” Ingram reminds us, “Tier II is designed to help solve the financial problems faced by TRS and other systems by reducing pension benefits for these new members (hired after Jan. 1, 2010).  Lower pensions means reduced long-term costs for the state.” 

In fact, while interviewing the 20 legislators who supported and then passed Tier II (SB1946), it was clear for Glen Brown and me that little thought to savings in terms of real numbers was utmost in their minds.  In truth, according to one very intelligent Republican Representative, they were desperately trying to raise the bond ratings in Illinois before once again borrowing, and the Speaker had targeted an unthought-of fiscal host: future workers in the state system.  Very convenient, really.

When Ingram states “that if left alone, Tier II will accomplish its mission…”; in fact, the ultimate outcome – like many pieces of legislation in Illinois – was not primary in any of the General Assembly’s collective mind. 

Case in point: SB1.  But I digress.

And yet, in sum, the Director is spot-on correct: the benefit structure is not only punitive and confounding, it is likely unable to meet federal standards as required by the Social Security Administration in very short order.  By the way, a quick review of blogs by Klonsky or Brown shortly after the passage of SB1946 predicts this very issue.  

But what became worrisome to me was one passage by Ingram that offered this derisive tease to retirees and current workers: “Like other Tier II members, I’m happy to help out, but I’m not really too thrilled with paying for my pension and paying extra to subsidize somebody who is paying less than half the cost of their pension.  I like all of you very much, but this is a matter of equity for Tier II members.”

If I remember, we in Tier I – retired and current –had little to do with the legislation.  Indeed, most of us fought against it desperately. 

But Speaker Madigan has always excelled in finding a way to generate a divide-and-then-conquer strategy for his victims.

While initially stating that he would remain neutral when he assumed his position as TRS Executive Director, Ingram has been recurrently vocal about his victimization as a Tier II employee, and he has never shrunk from opportunities to point out various benefits in Tier I as dangers, time-bombs, or negatives that make his own personal position in Tier II “unfair.” 

In October of 2012, Ingram responded in a Crain’s Chicago Business interview, “’Look at every other state that’s done pension reform – what have they done? They’ve changed the COLA because that’s where the cost is,’ Mr. Ingram said, noting that 25 percent of TRS payments are for cost-of-living increases on pension benefits. ‘Changes in cost-of-living adjustments could be targeted so they have the least impact on the oldest retirees and those with the lowest incomes,’ he said.”

In an article with Reboot, Editor Madeline Doubek reports, “Dick Ingram, the head of the Teachers Retirement System, has said that the system will be insolvent in 16 years…”

After explaining once again how he was fiscally punished for being a Tier II employee at a 2013 gathering of retired and current actives at Richards High School in Oak Lawn, Illinois, Ingram suggested that something like a Cash-Balance plan might look pretty enticing for someone like him (Tier II employee).  Cash Balance Plans were developed by accountants and actuaries at Kwasha Lipton in 1985 for Bank of America as a way to disguise a 401K-style program in a wrapper that looked more like a promise than a gamble on the market.  Bank of America was looking for a way to shed its pension responsibilities. 

In fact, more than one retiree and teacher in the audience that evening asked Ingram why he continued to make such reckless assertions because it made meetings with legislators regarding appropriate solutions to the pension debt issue more than difficult.  “Whenever I go to talk with my Representative, he just parrots what you have said, as if the systems will never be fixed without a complete destruction.”

Case in point: SB1.  But I digress again.

There’s much to learn in Ingram’s Report in the current TRS Newsletter, please don’t get me wrong.  Read it and understand what havoc a non-thinking legislature can accomplish quickly.  Tier II employees’ SSA situation will be a serious problem for Illinois very soon.  Money extracted from Tier II employees will create an ultimate backwash in fiscal surplus in the somewhat distant future.  Yes, it is unfair - extremely unfair for those who work as hard as we in Tier I know they do.

And I’m not saying that Ingram is going off the reservation again, but I’m wary. 

Ingram ends with, “The goal of this effort is to fix Tier II so it does not hurt TRS members and Illinois, and with billions of dollars and the future retirements of Illinois teachers at stake, the earlier we get started, the better.”

I recall when Bob Dylan gave a try at creating a Christmas Album after the age of 60.  One of the critics said of his faltering voice, “I’ll Be Home for Christmas sounds more like a threat than a promise.” 

Ralph Martire of the CTBA would tell us the answer is simple:
1.     Re-amortize the debt, and begin a level payment that can be coped with as we move forward.
2.     Change the antiquated tax structure in Illinois to a progressive rate that changes appropriately with the economy.
3.     Make the payments to the normal costs of the pension funds moving forward instead of avoiding that responsibility and ending up with a +$100 billion shortfall.

Sadly, it’s not likely that the Task Force will be looking in Martire’s direction at all.

And what about the Task Force?  Can we count on them to promote a return of some sort for those caught in the bolgia of Tier II to a real and secure retirement – or will it be some different modification to a more business-like prototype suiting the new Governor? 401K?  Cash Balance Plan?  Hybrid defined benefit or defined contribution?

Here are the players.  What do you think?

Teacher Recruiting and Retention Task Force members:

Senator John Sullivan, co-chair: Voted against SB1 because he preferred SB2404, and cooperative between unions and GA.  Received a lion’s share of campaign donations from Democratic Party of Illinois, controlled by Speaker Madigan.

Representative Chapa LaVia, co-chair:  Told the Fox Valley News that she was voting yes to SB1 after telling Associated Press that she hadn’t looked at it yet.  Told AP she was “awaiting enough evidence to review it.”

Senator Michael Frerichs: Voted Nay on SB1; instead, was proud “to stand in support of legislation (SB2404) done the right way…”

Representative Frances Hurley:  In letter to constituent Jerry Mulvihill explained she was voting yes on SB1 to save the solvency of the pension system.  (search Frances Hurley in Fred Klonsky blogs)

Representative John Anthony: One of 26 lawmakers to opt out of his pension as a some show of his willingness to forgo the promise of Article XIII, Section 5.  A recent lawmaker, one of his only Yes votes is on SB1.  All others are NAY – on limiting smoking in public areas, on prevention of bullying in schools, on requiring accommodations for pregnant women in the workplace…

Representative Barb Wheeler: Also opted out of pension plan (unclear).  According to Northwest Herald, she was made aware of her ability to recuse herself from pension in 2013 as she assumed office and was preparing her paperwork to do so.  Voted yes on SB1.  Also according to Northwest Herald, she prefers public employees have absolute option for a 401K.

Senator Jim Oberweis:  Dairy millionaire opted out of pension plans.  After voting yes to SB1, Oberweis apologized to Tea Party hardliners, stating that “the bill wasn’t true reform – but it was the best Illinois was going to get right now (Chicago Tribune).  Also, co-sponsor to HB3303 with Morrison and Ives to convert entire pension system to a 401K program (IPI Newsltter).

Senator Chapin Rose: Voted Nay to SB1 and supported a negotiated bill like SB2404 (Sun Times). 

Dr. David Schuler, Supt. Dist. 214: Advocate and member of Advance Illinois.  Very much involved in Common Core and Race to the Top.  (Google “Advance Illinois Policy Breakfast David Schuler” for video for program).

Frank Mott, Board President Forest Park Dist. 91: 

Brittany Archibald, Educator, Westville CUSD 2:

Steve Grossman, President, North Suburban Teachers Union: IFT leader with association to Dan Montgomery and picketing against SB1, but nothing re: SB2404.

Vinni Hall, Secretary, State Board of Education: Hall was critical in seeing Illinois adopt and implement Common Core State Standards and Response to Intervention, as well as improving state Supplemental Education Services, and new principal and teacher evaluations in the state.”

Dick Ingram, Executive Director, Teacher Retirement System: 

Of course, the Task Force is waiting, even holding its breath to see what the outcome of the ILSC’s decision on SB1 will be, but given the characters and previous backgrounds of those making up the Task Force (including Ingram), I wouldn’t be astonished to see an option of some kind or another for an opt out to something more like a defined contribution. 

Once, not so long ago, a retiree objected during a conversation, “Why should we concern ourselves with what happens to these incoming people after January of 2010.  After all, we’re protected, aren’t we?  We’re retired and they shouldn’t be able to touch us.”

We tried to explain that our consistent payments to TRS were one leg on the three-legged stool (w/ TRS investment returns and state government payments) that we could not avoid or we would destroy the system.  We tried to explain that those remaining would never have the promise of a secure retirement in their later years if the defined benefit system was replaced with what was originally a savings program.  We warned of the divide-and-conquer machinations of someone like the Speaker.

Looking at the members of this Task Force, I cannot feel secure that their recommendation will be anything but a move away from a defined benefit.