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SPRINGFIELD — Public employee unions in Illinois seem willing to play chicken with what may be Democrats’ final offer on pension reform.

By Benjamin Yount

SPRINGFIELD — Public employee unions in Illinois seem willing to play chicken with what may be Democrats’ final offer on pension reform.

Powerful House Speaker Mike Madigan D-Chicago, on Wednesday detailed a plan he calls a comprehensive fix for Illinois’ worst-in-the-nation pension system.

“The concepts in the package are not new,” Madigan told lawmakers who support the idea, and public employee unions who do not. “The House has already approved several of the items in the (plan).”

Madigan’s proposal would limit cost-of-living increases for public workers, except judges, cap the amount of salary on which a worker can base their pension and guarantee Illinois will pay its share of the multi-billion dollar pension payment every year.

“If the state fails to make a required payment … the (pension) systems will have the right to …compel the state to make the payment,” Madigan added.

Illinois’ pension payment next year will hit nearly $8 billion. The state’s five pension systems have a total deficit of nearly $130 billion.

The Illinois Constitution protects public employee pensions but never required the state to pay into the systems.

Public employee unions say the state’s failure to pay, over the past few decades, is to blame for the pension crisis.

“This (plan), in part, does address the crux of the pension problem,” Henry Bayer, director of Illinois’ largest public employee union, said Wednesday. “It does guarantee that if the state doesn’t make its payment to the pension funds, the pension funds have the right to sue the state.”

Bayer said members of the American Federation of State, County and Municipal Employees do not think pension benefits should be reduced.

AFSCME represents some 50,000 workers in state government and at Illinois’ state universities. Most of the public workers waiting for a pension are teachers.

Illinois Federation of Teachers’ President Dan Montgomery insists pension reform should not mean benefit cuts, but rather tax increases.

“Providing a fiscally responsible stream towards funding and other solutions can get us (reform),” Montgomery told lawmakers at Wednesday’s House hearing.

Madigan’s plan would guarantee pension checks but does not address who will pay for those pension costs. The speaker cryptically noted that a cost shift, which would have local schools pay for their teachers’ retirement costs, will be “dealt with” later.

The IFT, AFSCME and a handful of other unions who make up the We Are One Illinois Coalition have vowed to fight Madigan’s reforms and plan a legal challenge if they pass.

Republican state Rep. Dave McSweeney, R-Barrington Hills, pleaded with the public employee unions to agree to pension reform now.

“We are here today to save your pensions,” McSweeney told the union chiefs.

Democratic state Rep. Elaine Nekritz, D-Northbrook, said it may already be too late.

“We have a really, really significant problem facing this state,” Nekritz said. “We have asked the taxpayers to step up and pay more. This is one more aspect (of state government) we’re having to look at.”

Madigan has said his pension reform plan could come up for a House vote as soon as Thursday.

Contact reporter Benjamin Yount at Ben@IllinoisWatchdog.org.

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4 Comments

  1. I’ve never understood it

    There's a guy who lives in the neighborhood.  He's in his early 60s at the oldest.  Given his activities, he does not have any physical impairment that prevents him from working.  I hear that he has an occasional part-time job and you see him driving his car (much, much nicer and newer than mine) without difficulty.

    I also understand that he has been retired from state government for almost 20 years — so starting in his early 40s.  Word is that he "got a buyout" from his union job so he's living on a pension with some income from an occasional part-time job.

    I don't get it.  Retired and on a government pension in his early 40s?  I thought that pensions were intended to help retirees live when they retired — like in their mid to late 60s or later?

    What kind of system allows someone to "retire" from state government in their early 40s with a pension while the rest of us have to keep working into our late 60s and maybe even 70s, trying to save our own retirement money while paying the taxes to support state government retirees through their 40s, 50, 60s, 70s and maybe 80s or 90s?  He will likely live many more years collecting his state pension than he ever worked in state government.

    If such sweetheart deals abound, no wonder the system is $130 billion in the red.

  2. I assume [hope] it was proportional

    If someone wants to 'retire' at 40or 55 they should be able to but call it what it is 'quiting.'

    If the government promises them a pension at that age [few companies would] then it should be proportional to years worked at the job / (full expected life of work).  E.g. if he worked from 23 to 40, then the pension would be 17 years/43 years of expected working life.  This is linear but the pension probably should increase with number of years worked—i.e. the percent of full pension should increase with the number of years worked—working 23-65, the 60-65 period would be a larger vesting than the 23-60 years.  Not exponential but still some growth factor.  Of course if people want pensions instead of 401(k) [which go with you] the old rules of having to have reached a substanial age [like 60] before becoming vested or at least not being able to collect until 65 should really apply.

    More and more companies use 401(k) plans that have full or rapid vesting and you take it with you if you change jobs.  So at least on those factors, the company [or in the case of city/state government and taxayers] they don't care when you leave.

    Workers should really want 401(k) instead of pensions since the account is 'theirs.'  With pensions you always face bankruptcy of the company/government, forced re-negotiation, any settlements being partial, taxpayer revolt in the case of government, pension claw-back, 'funny works' in use of the funds and many other uncertainities.

    Even football players realize they won't play until 65 or 67 so they plan for what they will do after their playing stops—get a business/law/medical degree, start a business, coach, teach, management, etc..  Firemen, policemen and other government employees also need to plan for the future–when they will no longer be able to face the physical or psycological challenges.

  3. Proportional retirement

    Personally, I do not want 60 or 70 year old poilce and firemen on the job. There is a liability to the City due to greater chance of injury. I also do not think a 60 year old police officer would do well in a fight with a 20 year old gang member, or a 70 year old fire fighter in a structure fire.

    If one of these employees are injured on the job and unable to return to work do to the injury, the city must pay them 65% of their salary and provide them with free medical insurance for the rest of their life. If they retire after 20 years, they get 50% of their salary and must provide their own insurance. 

    Sounds like it is most cost efficient to let them retire as soon as they become eligable and save the City the liability. 

  4. Where will the funding come from?

    Simply put, where will this funding come from ? State employees need someone to fund their platinum-plated pension plans. If we already know by how much the pension plans are underfunded, can't someone calculate by how much our income taxes will rise ?

    Also, consider the guarantees that are being made by politicians to these unions. Because the guarantees are absolute, it means that it is now the unions which will decide how much income tax will be levied on Illinois taxpayers.

     

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