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SPRINGFIELD  –  Illinois’ public sector unions, and the state’s Democratic Senate president, are trumpeting a new pension reform proposal.

By Benjamin Yount

SPRINGFIELD  –  Illinois’ public sector unions, and the state’s Democratic Senate president, are trumpeting a new pension reform proposal.

Senate President John Cullerton unveiled the plan backed by Illinois’ major public sector unions, chief among them the American Federation of State, County, and Municipal Employees, Monday evening.

The proposal is vastly different than a plan from Illinois’ top Democrat, House Speaker Mike Madigan, which cleared the other half of the General Assembly last week.

Here are the five things you need to know about the union plan.

Cost

Cullerton said the union-backed plan will save about $46 billion over the next 30 years, and close to $850 million next year alone. The House plan would save nearly three times that, saving just under $150 billion over the next few decades. But Cullerton said if the courts strike down the House plan, Illinois saves nothing.

Illinois needs to save as much as it can on pensions. The state’s five retirement systems are the worst in the nation. Illinois owes nearly $130 billion, and will pay close to $8 billion for pensions next year.

Choice

Cullertton has said for months that the only way Illinois can reform its pensions is to give public workers a choice. The union-backed plan gives employees a number of choices.

Workers can choose lower cost of living adjustments but keep their access to state health insurance and have all raises and salary increases added to their pensions.

Or workers can keep their existing three percent, compounding COLA in exchange for giving up access to state subsidized health care and not see their salary increases added to their pensions.

Or workers can choose to delay their COLA’s, pay two percent more toward their retirement and keep both their access to health insurance and their raises.

The House plan would impose COLA reform on all employees, force workers to pay two percent more for their pensions, and require some workers to stay on the job longer.

Constitutional?

Illinois’ constitution protects public worker pensions, which is why it has been so tough to reform them.

Cullerton insists the union plan, and its choice component, is constitutional.

It may, or may not be. But the courts will not decide.

Cullerton said the unions have promised not to sue the state if the choice plan becomes law.

“We must calculate the risk associated with passing a plan that could save zero if the court throws it out. We need to remember that the unilateral approach is a gamble,” Cullerton said in a statement. “Betting against the constitution is risky.”

Carrots

The union plan, as anyone would expect, is much softer on public employees than the legislation from the House.

Cullerton insists that giving employees a choice will make it easier to reform pensions.

“The unions are supportive of this bill, they will lobby for it,” Cullerton added. “Virtually every Democrat…will support this.”

Cullerton said the swift movement from the House drove the unions to the bargaining table.

The House approved its pension reforms last Thursday, the unions leaked word of their proposal the next day.

Coalition

While the Senate President sounds confident, Illinois’ public sector unions sound defiant.

“This agreement is our coalition’s bottom line,” Mike Carrigan the head of Illinois’ AFL-CIO and the We Are One Illinois Coalition said Monday. “The union coalition has made a great effort to ensure fairness for the public employees and retirees who did not cause this problem, to ensure the stability of the pension systems.”

The union coalition has said in the past that Illinois should raise taxes before it looks to cut pension benefits.

But the bottom line may be that the unions are stalling.

Madigan, last week, accused AFSCME chief Henry Bayer of trying to delay pension reform by dragging out negotiations.

Cullerton said he hopes to call the union backed plan for a vote Thursday.

Illinois lawmakers have set a May 31 deadline to agree on pension reform, and send it to Gov. Pat Quinn.

Watch more from Cullerton:

Contact reporter Benjamon Yount at Ben@IllinoisWatchdog.org

Bill Smith is the editor and publisher of Evanston Now.

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11 Comments

  1. One fact about Madigan’s bill

    One fact about Madigan's bill:  It will not save ANY money as it will not pass Constitutional muster.

    “No principle of law permits us to suspend  constitutional requirements for economic reasons, no matter how compelling those reasons may seem.” –  Illinois Supreme Court in Jorgensen v. Blagojevich

     

  2. Thats a plan?

    Cullerton says he has a plan with a $850 million savings next year, totaling all of 46 billion over the next 30 years.  But gee whiz, we have a  $130 billion and rising problem today, here and now. 

    Golly, lets get out the calculator to figure out how well his solution adds up, or, er, simply doesn't add up.

    Cullerton is and always has been a purchased and back pocketed union hack and this more of the same kick the can nonsense simply proves it.

    And the courts, well gee, don't they run in elections, basically they get appointed and then slated and supported in their election runs along partisan party lines?  Hmmmm, democrat majority on that court. 

    And the unions give over 98% of their political contributions to which party?   It's so damn broken.   

    1. Golly, those teachers paid

      Golly, those teachers paid 9.4% of their salary into the pension fund for their entire career. And, gee whiz, every time they negotiated a contract, they were reminded that the money the state was paying into the pension fund was part of their salary. Except, jeepers, the state did't put the money in the pension fund. Haven't people gone to prison for stealing from pension funds?

      Jeepers,unless they had enough to set up another fund, like a 403b, the pension as all they have. Too bad their pension fund was robbed by the state of Illinois and used for other things. If the state had followed the law, there would be no problem. 

      But golly, there must be some way to blame workers and unions.

      1. This is a pyramid scheme

        In addition to the pension amout that teachers pay, there is almost 1% that goes to the THIS fund. THIS pays for health insurance support of current teachers (not like a fund to actually defray their own in the future).

        The "access to state subsidized health care" is actually subsidized by the current teachers, not the state.

        If a teacher picks that option, does that mean they no longer pay into a fund that they no longer have any benefit from? Does this mean that the state will now pay into this fund (they don't now)?

      2. Jeepers

        Jeepers, ya think the union rank and file should have seen decades ago that they were being ripped off by their democrat political "friends" and that their "own" union never took their best interest into account by continuing to negotiate the obviously empty rhetoric contracts.

        Golly, what kind of idiot allows themselves to be ripped off for decades upon decades and never steps up and does anything about it, never demands change in how their very own money and future is handled?  When people lack any responsibility in how their money is handled they deserve to pay the price and come up short. 

        Whilly nilly Union members have nobody to blame but themselves and they should pay the price for their complete and total lack of intervention, the complete abdication of their responsibilities into their own affairs.  Gee whiz, decades upon decades, what naive fools.

      3. Except they didn’t

        Not true at all.  The district (you and I really)  "picked up" most of what the teachers are supposed to pay.  In reality the teachers paid only a small portion of this. Someone else may know the exact figure, but no teacher in Evanston has ever paid anything close to 9.4%

        1. But they did

          Whether the district picked it up or whether it came out of "salary" is really just a numbers game. Total compensation is a combination of salary and benefits. Another district might have a better looking salary schedule, but require teachers to pay the 9.4 percent from that salary. A teacher in that district could appear to be better paid, but his or her total compensation could in fact be less than a teacher who works in a district where the 9.4 per cent is called a benefit and is not deducted from the salary shown in the schedule.

          The point is, at the local level, the money that should have gone into the pension system got there. At the state level, for years, lawmakers have diverted funds that were supposed to go into all the pension systems and used it for other purposes. Blaming public sector workers and bashing unions is inappropriate. This problem is owned by every eligible voter in illinois.

        2. If by “picked up”

          If you mean  that a payroll deduction is actually picked up by your employer, then you must be Lauryn Hill's accountant.

          Teachers pay the 9.4% to TRS directly through a payroll deduction (like tax witholding, or social security, if you ever saw that on your paycheck).

          In addition, they pay .92% to THIS fund which funds the TRIP fund to defray health insurance of currently retired teachers.

          The district does pay into TRS. 0.58% and an additional 0.69% to THIS ( 1.27% of a teacher's salary)

  3. Who appoints the judges?

    What role does Speaker Mike Madigan and Senate President John Cullerton play in appointing judges in Illinois?

    Interesting to note that the proposed pension reforms EXCLUDE the Judicial Retirement System.

     

    1. Broken

      Majority of states in the union have judges selected by merit, 2 or 3 by appointment and confirmation, the majority of the remaining in non partisan elections.  Illinois holds very partisan elections with virtually all judges needing to be tied directly to one party or the other.

      Here in Illinois, when a judge, in particular democrat judges, lose an election, no problem, the IL supreme court simply returns them to the bench by appointment, repeatedly.

      The voters voice is irrelevant, merit is irrelevant, and all this yammering about constitution, well I guess past practices by our very own IL supreme court show that is also irrelevant.

      True, madigan and cullerton don't directly appt judges, but anyone who thinks party politics doesn't play a major role in our judical system here is naive at best. 

      Unions donate 98% of their money to democrats, in return democrats write laws and constitutional amendments to protect the union and their poltical cash contributions. 

      IL Supreme court, 3 republicans, 4 democrats.  Constitutional blah blah is irrelevant, whats right or wrong is irrelevant, the outcome is preordained.  Just like the voter outcomes in past judical elections, if the voters don't vote a certain way, it's ok, they just reappoint and keep the status quo the way they like it.

      Broken, completely broken.

       

       

  4. Freeze all current defined benefit pensions

    All of these options are amusing and nowhere near the needed pension & benefit reductions, especially when you consider that the Taxpayers (85% of whom are not Public Sector workers and benefiting from these excessive promises) who pay for almost all of these pensions & benefits never get any COLA increases on their pensions (for the very few that actually get pensions at all), and rarely get any retiree healthcare subsidies.

    We would be much better off if we let Illinois go completely insolvent, then end all retiree healthcare benefits, freeze the current defined benefit pensions (zero future growth, and replace it with a modest defined contribution plan of 3-5% of pay for future service … similar to what private sector workers typically get from their employers) and reset pensions for past service to the level that can be supported by existing assets and no more. The taxpayers are tired of being the sucker in this equation.

    What makes public sector workers so "special" and deserving of a better deal than those that pay their way?

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