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State Sen. Daniel Biss (D-Evanston) says Gov. Bruce Rauner’s plan to shift more state employees into a lower-cost pension plan may violate federal law.

Biss and State Rep. Elaine Nekritz (D-Northbrook) today introduced resolutions calling for a rigorous examination of whether the plan complies with federal regulations and its impact on workers and taxpayers.

“The road to pension hell is paved with rash actions,” Biss said at a Springfield news conference, arguing that the tier 2 pension system the state adopted for new employees in 2011 may not meet federal requirements that say governments can only escape having their employees covered by Social Security if their alternative plan provides equivalent benefits.

Rauner has proposed moving older state workers into the tier 2 plan starting July 1, unless they buy out their pensions and move to a 401(k)-style plan.

Rauner claims that would cut expenses in next year’s state budget by $2.2 billion and cut $25 billion off the state’s $105 billion unfunded pension liability.

The Biss and Nekritz resolutions, SR 315 and HR 358, call for the state to work with the federal government to study the constitutionality and sustainability of the tier 2 level pension plan.

If the state had to also pay into Social Security for workers, that could also increase costs for the state and local school districts, rather than relieving spending pressures, Biss says.

He says the best and most efficient way to receive an answer as quickly as possible is through a formal request from the pension systems to the IRS asking if a proposed pension fix like the governor’s is indeed feasible and legal.

If the state doesn’t seek answers to these questions and once and for all find a sustainable, affordable and actuarially sound pension solution, it could find itself in a hole without a means to climb out, Biss added.

Bill Smith is the editor and publisher of Evanston Now.

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5 Comments

  1. What’s good for the goose…

    With all of the educated professionals that live in Evanston, is there anyone who can explain why we could not fix our pension armageddon by moving all current and future state and municipal employees into the Social Security program that all the other American citizens participate in?  Couldn't we turn over the assets of their pension plans to the Treasury Department, plus pay over time, any unfunded actuarial deficit.  (And yes, I know what the Illinois constitution says.  I also know it requires us to have a balanced budget every year – which we do not have.)    

    1. If state employees are to go
      If state employees are to go into Social Security, I think that the state would be required to match the employees’ contributions. If they didn’t, the feds would go after the state to make them comply.

      And that is the crux of the problem: some years ago (well over a decade ago, I believe) the state, which had been matching employees’ contributions to the pension fund, decided that it wouldn’t do so any more, and used the money for other purposes. So now the state (one Madigan or the other) is saying, “We can’t afford these pensions; it’s an emergency!” As the attorneys for annuitants noted in their brief, it’s equivalent to a person who killed his parents pleading for mercy because he’s an orphan.

    2. Biss?

      Is Biss trying  to coverup his legislation that would cost Evanston school districts millions in operating funds. He knew that the schools would require huge property tax increases in a city that already has a high property taxes.

      We should never forget what Biss has tried to do to us.

      Biss already knows  that over 20 states have done similar things with their government pension plans. If he doesn't know, he is not nearly as smart as he has claimed to be. He just has to ask his buddies in New York. They have been doing this for years to reduce state expenses. They have grown from a single pension plan to seven over the last 40 years.

      Who thinks that Biss is trying to boost his name and about to announce that he will announce a run for the Senate seat that will be coming up in about 18 months.

      We should never forget what Biss has tried to do to us.

    3. $105 billion so far in unpaid pensions is taxpayer hell

      The answer is simple. Government unions do not want to give up their jackpot pensions and that's why they contribute roughly 90 percent of all campaign donations to Democrats that include Biss.

      Government union employees can retire in their 50s, earning 50-75 percent of their final salary for life with a guaranteed 3 percent annual pay raise. And just like Evanston's forner police and fire chiefs, they can retire with a pension and get another job in the same capacity, earning another pension and salary – a tactic called double dipping.

      Government unions in 2011 marched on Springfield, demanding a tax hike and the Democrats raised our income taxes 65 percent. That did not even put a dent into the pension train wreck.

      Biss is only defending his campaign contributors if ya ask me.

      1. Linear Pension

        If Pensions were based on a 40 year work cycle, we would not have some of these problems. If you work at job A for 10 years, your pension for that job would be 10/40 of salary at year 10. You can then go to job B for 15 years and get 15/40 pension for the salary at year 15. If you take job Z at year 40 and work one year, you get 1/40 pension for the salary at year 40. That way people can change jobs as often as they want and no 'double dipping.' Really though with the Pension obligations what they are, workers are better off with 401-k plans where the money is put in with a third party every year and you take that with you when you change jobs. Companies, Cities and States can go bankrupt or out of business and no matter what government agency or city/state constitution says, you could lose much or all of that defined-benefit plan.

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