TIER ONE ACTIVE TEACHERS: MAKE THE CALL
NOW!!!
From We Are One Coalition
Call your State
Representative TODAY to urge a NO vote on SB 16, HB 4027, HB 4045 or any
other bill that cuts the pensions of public employees. Dial 888-412-6570 or Click to Call.
In recent years, the Illinois Supreme Court has twice
found legislation reducing the pension benefits of active and retired public
employees to be unconstitutional. So why does Governor Rauner keep pushing to
cut public employee pensions—and why are some legislators going along with
him?
It’s important to note that no legislation before the
General Assembly would cut the pension benefits of current retirees.
There is widespread acceptance that the court has flatly rejected any
reductions in the pensions of those who have already retired. And it’s
important to remember that, despite strong opposition from the unions of We
Are One Illinois, the General Assembly acted in 2010 to significantly reduce
the pension benefits of all those hired after January 1, 2011 (Tier 2 pension
participants). The courts have consistently ruled that only the benefits of
current employees and retirees are constitutionally protected. Benefit
reductions—or even elimination—are legal for any employee not yet hired at
the time changes to the pension code are made.
Rauner and some in the
General Assembly are focused on finding ways to get around the constitutional
prohibition against cutting the benefits of all employees hired before
1/1/2011 (Tier 1 participants). Relying on the principle of “consideration”, they argue
that if employees are given something in return for the reduction in
benefits, then the cuts would be constitutional. Senate Bill 16, House Bill
4027 and House Bill 4045 are all based on this “consideration” model, as are
several other bills that have been introduced.
SB 16, HB 4027 and HB 4045 affect all Tier 1 active
employees in the SERS, SURS, TRS and Chicago Teachers pension systems. Each
requires employees to make an irrevocable choice between:
1. Accepting a delay and
reduction in his/her cost-of-living annual adjustment when he/she retires; or
2. Agreeing that his/her
pension benefit would be calculated using only his/her current salary,
excluding all future pay increases from calculation of his/her benefit.
These bills attempt to compensate employees who choose
Option 1 above by providing for a “consideration payment” of 10% of an
employee’s past pension contributions and lowering the employee’s
future contribution rate by 10%. However, the amount that the
employee receives through this payment would be far short of the amount
he/she would lose.
Union attorneys argue that this scheme does not meet the
“consideration” standard but rather is an involuntary and forced diminishment
because either choice represents a reduction of benefits. No matter which
choice an employee makes, he/she would lose tens of thousands, or even
hundreds of thousands, of dollars over the course of his/her retirement
years.
Moreover, both bills threaten further harm to retirement
security because they initiate a process of moving new employees out of all
the state’s pension systems and placing them in a defined-contribution plan.
This will have the effect of reducing contributions into the systems, thus
exacerbating the underfunding that has consistently plagued all the systems.
Yesterday, the Senate passed SB 16 with bipartisan
support and little debate. Click here to read a summary of the bill and here to see how senators voted.
Now the battle shifts to the
House of Representatives. HB 4027 and HB 4045 (which have the same core provisions as
SB 16) passed the House Pension Committee earlier this week, but a number of
those who voted to allow them to move out of committee made clear they intend
to vote against them on the floor.
At this time, we don’t know whether the House will vote on
SB 16, HB 4027 or HB 4045. But one of these bills is very likely to come to
the House floor in the next few days.
It’s critical that you call
your State Representative TODAY to urge a NO vote on SB 16, HB 4027, HB 4045
or any other bill that cuts the pensions of public employees. Dial
888-412-6570 or Click to Call. Make clear that these
bills are unconstitutional, unfair, and you expect your representative to
OPPOSE them.
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