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Interview with myself: pensions.

February 25, 2013

What is Senate Bill 2404?

This is the bill backed by the We Are One coalition of public employee unions. It has three components.

It requires ‘ironclad” funding of the state’s obligation to the employee pension funds. It also includes a requirement of debt repayment.

We Are One says the bill allows for legal remedies by the pension systems or individuals if the payment into the systems aren’t made.

It requires that active employees pay an additional 2% into their pension systems.

Are you for it or against it?

I’m mostly for it.

I have a number of concerns.

I don’t believe anything is ironclad when it comes to Springfield.

For example, what if the pension obligation is shifted to the local school districts or municipalities?

If the obligation isn’t met, do we have to go and sue each one of these small government units at a time?

Senate President Cullerton has already said that if there were a progressive income tax he has no interest in using it to pay down the pension debt.

Some don’t believe that this General Assembly can require future General Assemblies to be bound by current promises.

So much for ironclad.

Then there is the 2% additional contribution.

I think it is a bad idea.

It muddies the issue of who is to blame for the underfunding of the pension systems. And it divides active employees who would have to pay the additional contribution from retirees who don’t.

Union leaders tell me that if they offer nothing, they will get nothing in return.

But those same union leaders tell me  that it will all end up in court anyway.

So why make the concession? It will do very little to address the debt, but will hurt individual teacher and public employees a great deal.

So, why are you for it?

First, who knows what a final bill will look like?

There will be a lot of movement and rewrites before anything gets passed.

If anything gets passed.

Secondly, we now have a bill that addresses the issue of funding – an admission that the solution is revenue – not cuts to the benefits of future or current retirees..

For pension activists SB2404 combined with HJRCA0002 – the amendment to the Illinois Constitution that will establish a progressive income tax –  means we now have a legislative agenda that stands in contrast to the Nekritz/Biss pension bomb.

Do you really think these two bills have a chance to pass in the form you want?

Who knows?

After all, this is Springfield we’re talking about.

What we  do know is that if we are going to change the conversation about pensions from cutting benefits to raising revenue, a movement is needed. 

Look how much has changed since a year ago.

Then we were all on the defense.

Now we have a few legislators openly supporting both a reliable funding stream and a fair tax constitutional amendment. With work, more will come over.

Because of our efforts, the common sense solutions of Ralph Martire and the Center for Tax and Budget Accountability must be acknowledged whenever some politician talks about pensions, whether they agree with him or not.

4 Comments leave one →
  1. Joan OMalley permalink
    February 25, 2013 7:12 pm

    Fred, I do not thank you often enough for the way you spread our thinking about retirement issues. So, thanks again for this examination of legislators fooling around trying to save their jobs and trying to appease their constituents. Joan

  2. Cliff Olson permalink
    February 25, 2013 7:19 pm

    If you pay more for less that is a diminishment, which happens to be unconstitutional Without some additional “consideration” and this cannot be a promise to keep something you already have such as access to health insurance…so again unconstitutional. Cliff Olson

  3. Bill permalink
    February 26, 2013 9:16 am

    If there is a cost shift and the district does not pay, the pension cost would be subtracted directly from state aid payments similar to the Illinois municipal retirement system which, by the way, is funded at over 80%. It would be a much stronger guarantee of funding than the ability to sue. It would make for some very difficult contract negotiations, however, and the cost shift would not address the existing debt.

  4. Cliff Olson permalink
    September 25, 2014 4:35 pm

    Cliff Olson

    Begin forwarded message:

    > From: jim ceithaml > Date: September 25, 2014 at 3:42:40 PM CDT > To: Dale Anderson , M Barbezat , Cheryl Busick , Deanna Engelke , Maryellen Goodwill , Bob Husa , Lynn Kronvold , Karen Lemcke , Marsha Miller , Cliff Olson , Pat Rataj , Beth Varchmin , Jane Watson , Sondra Woolcott > Subject: Fw: An important message from IEA-R > Reply-To: jim ceithaml > > AS A LIFE MEMBER OF BOTH IRTA & IEA/NEA RETIRED, I am passing this on to all of you as a quote without comment – I felt if you haven’t seen it, you should and make your own evaluation. > > ON ANOTHER NOTE, at my house we are having a major problem with the new insurance – Medicare Advantage – underwritten by United Health Care. I will share more later when I have a better handle on this. If you have any insurance problems you can share with me, I would appreciate the information but DON’T hit “Reply All.” > > Thanks, jim > > >

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