What should Illinois legislators do now since they cannot break a constitutional contract with retirees and public employees?

Glen Brown

-Today, Glen Brown re-posted what he wrote just after the historic Illinois Supreme Court decision rejecting official pension theft. In this post, Glen restates real solutions to paying the pension debt. The entire post can be found at Teacher/Poet/Musician.

“…The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and, as reflected in the SEC order, it is a crisis for which the General Assembly itself is largely responsible. Moreover, no possible claim can be made that no less drastic measures were available when balancing pension obligations with other State expenditures became problematic. One alternative, identified at the hearing on Public Act 98-599, would have been to adopt a new schedule for amortizing the unfunded liabilities. The General Assembly could also have sought additional tax revenue. While it did pass a temporary income tax increase, it allowed the increased rate to lapse to a lower rate even as pension funding was being debated and litigated.

“That the State did not select the least drastic means of addressing its financial difficulties is reinforced by the legislative history. As noted earlier in this opinion, the chief sponsor of the legislation stated candidly that other alternatives were available. Public Act 98-599 was in no sense a last resort. Rather, it was an expedient to break a political stalemate…” (In re PENSION REFORM LITIGATION (Doris Heaton et al., Appellees, v. Pat Quinn, Governor, State of Illinois, et al., Appellants) Opinion filed May 8, 2015, JUSTICE KARMEIER delivered the judgment of the court, with opinion. Chief Justice Garman and Justices Freeman, Thomas, Kilbride, Burke, and Theis concurred in the judgment and opinion).

What some of us have been saying for a very long time:

The state’s regressive tax rate is what few legislators want to confront. Politicians, the Civic Committee, Civic Federation, Illinois Policy Institute, the Chicago Sun-Times, the Chicago Tribune, and the general news media have capitalized on a mostly vulnerable public by calling for radical pension reform as the solutions for the budget problems in Illinois. They were (and will continue to be) diversionary, scapegoating tactics that have allowed policymakers to escape their legal and ethical responsibility.

Read the entire post here.

13 Replies to “What should Illinois legislators do now since they cannot break a constitutional contract with retirees and public employees?”

  1. Some things to think about. If Chicago and other districts eliminate the “pick-up” of employee contributions to the pension system, there are some consequences.

    First, the contributions will be after-tax, so that the employee will pay income tax on the amounts he/she contributes to the pension system.

    Second, the contribution will be subject to employer and employee FICA withholding.

    Third, the money that comes out of the pocket of Active Employee A will probably end up in the pocket of Retired Employee B. (This is the case because the employee contributions will go into a bucket that is being emptied faster than it’s being filled.)

    Check these things out, don’t just dismiss or ridicule them.

    The teachers union ought to look into this and at least protect the employee contributions for the benefit of those active employees whose compensation is going to be reduced.

    Potentially, the “thievery” will expand. The federal and state governments will withhold income taxes on contributions which used to be pre-tax. The federal government will exact FICA from both the teacher and the district for benefits the contributing teachers will likely not receive. The retiree teachers getting the money that the actives put in thinking it was a contribution to their own future retirement.

    You seem to have quite a few readers of above-average intelligence. Why not promote (or at least start) a discussion of a rational solution? Even Moody’s might take notice. If you are correct that there are sources of revenue that have not been tapped, then make some of your benefits contingent upon tapping those revenues. Do bankruptcy and legislative gridlock and polarization of citizens serve anyone’s long-term objectives? Does anyone have any long-term objectives?

  2. Another “Anonymous” disinformation attempt. Not buying it.

    Why do you suggest that retirees help pay because the state is trying to cut benefits of active workers? Do you blame other victims of state thievery for this attack on worker benefits? The state, (who actually owes the money) is trying to shift the cost of repaying the pension debt to active employees instead of paying it themselves.

    The retirees did nothing to anyone. Retirees do expect the state to pay all earned and owed pension benefits. They have no say in where the state gets the money from. Elected officials are the ones trying to do this to you. The Supreme Court told the state that these benefits must be paid. So now the state is trying to get the money to pay what they owe from you.

    Your solution is for retirees to take less because the state is trying to stick it to you. Why are you demanding nothing from any other citizens of Illinois? After all, didn’t everyone get services for many years funded by money owed to pension funds? Why aren’t you demanding that the state pay it’s own debts rather than put a hand in your pocket?

    No retiree has a hand in making this attempted theft happen. In fact, retirees were one of the few groups that actually challenged actions of the state relating to pensions (unlike the I.E.A. and I.F.T.). You ignore the fact that money is fungible. Money the state doesn’t pay into pensions gets spent elsewhere. Since other groups get more after your reduction, shouldn’t they “share the sacrifice” too? Why are you singling out retirees?

    Perhaps it is time for you to demand some actual resistance from the labor organizations who supposedly represent you. Maybe they should demand that the state pay it’s own debts rather than steal from you. Maybe you should make this demand as well, instead of suggesting that retiree earned and owed benefits get cut.

    All you seem to be suggesting is a “misery loves company” argument that lets the real thieves off the hook. A very “We Are One” SB 2404 approach where retirees are asked to give up already earned benefits to reduce cuts of active worker future benefits.

    Go back and read the recent Supreme Court decisions on pension benefits. Retirees already fought this battle for you. The cuts to your benefits being talked about are unconstitutional. They will not happen. Your fear is causing you to advance arguments that seem like something the Illinois Policy Institute might propose. The only way these cuts could really happen is voluntary reductions agreed to by you.

    Time to say No! and resist.

    1. “…[D]idn’t everyone get services for many years funded by money owed to pension funds? Why aren’t you demanding that the state pay its own debts…? Go back and read the recent Supreme Court decisions on pension benefits…”
      Excellent responses, Hugh.

  3. Yep for retirees and their pensions this nightmare is over. The cullerton treachery is for existing emplyees and since he seems to be going behind the back og Madigan and everybody else to suck up to Rauner…along with it being clearly unconstitutional ….I would not worry too much. I would worry about backstabbers like that guy enabling rauners ongoing destruction of Illinois however.

    1. I don’t think you are correct, David, about current employees. The court has ruled that the constitutional and contractual obligation against diminishment of pension benefits applies starting the day the employee enters the pension system, not just current retirees. As for future employees it may be a different matter.

  4. Sorry Fred. I just meant that they have to suffer more illegal attacks that will still cause stress. Also for most surs and sers current employees there won’t bench in raises anyway. As I write this WIU BOT is boring on 35 union and 8 non union layoffs. Those 8 are first year t 2 so I bet they leave illinois and never look back. I do know f you are a Sers or Surs and can retire do it for yourself and the survivors left behind.

  5. Absolutely, David. As we “pension bloggers” have been saying for years, the attempt at pension theft will not stop, even with the ISC decision. They will try and try again. Stressful for many for sure.

  6. Their continual attempts to try to come up with pension theft bills boguls the mind. What do they not understand about ISC ruling that says basically….NO. Are they stalling because they think they might become the first state to get a bailout or go bankrupt. Is this the Bank of Illinois….to big to fail.

  7. Yes, it is stressful.

    But that’s what they are counting on. They believe that one day we will run out of resistance and will simply acquiesce -accept reluctantly but without protest. Most people have been so conditioned by the system that they have difficulty believing that there is such a thing as justice.

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