Can the IEA bargain away my pension benefits? What did the court say?

Screen Shot 2016-03-24 at 11.01.11 AM

Yesterday, following the Illinois Supreme Court’s ruling on the City pension case I focused on the contention by the City’s lawyers that an agreement with unions representing employees made the law constitutional

In its ruling the Court said the unions “were not acting as authorized agents within the collective bargaining process….Rather, ‘these negotiations were no different that legislative advocacy on behalf of any interest group supporting collective interested to a lawmaking body.’”

From that I drew the conclusion that the public employee unions could not bargain away our benefits as the IEA, IFT and other public union leaders tried to do when they bargained SB2404 with Senate President John Cullerton. SB2404 never made it into law. If it had, retirees would have seen their COLAs diminished.

In a response to the Court’s ruling yesterday, IEA General Counsel Mitch Roth sent out an email. He wrote, “Whether a union and employer could agree to changes through the collective bargaining process remains an open question.”

I think this is a large amount of self-serving lawyer talk.

I don’t argue that in the past the unions have represented us in bargaining to improve retirement benefits. 

However, the crux of the matter is whether the result is an improvement or a diminishment of benefits.

Chicago argued that a promise to secure the solvency of the pension systems counted as consideration. Consideration is required in any change to a contractual agreement. The court ruled that Chicago could not claim that simply continuing to fund the system counted as consideration.

The Court has ruled that there is no constitutional requirement to fund the pension system. The Court has been consistent on this. But the constitutional and contractual promise to pay it is their concern.

So. Is Mitch right that whether a union and employer can agree to changes through the collective bargaining process remains an open question?

Not really.

Nobody challenged the right of the union to represent their members and members of a class when it was done to improve retirement benefits.

The court was clear that the unions can’t bargain on behalf of the employees if the results are a diminishment or impairment of benefits.

14 Replies to “Can the IEA bargain away my pension benefits? What did the court say?”

  1. “But the constitutional and contractual promise to pay is their concern.” OK…..It is their concern. What if they are not concerned and the funds become unsolvent in 10 to 13 years. This is my concern. Does it just become a moral hazard? I don’t know if the city is ready to take the steps necessary. How much more can they tax and cut. Are they going to ask their wall street partners and corporate to pitch in? I doubt it.

  2. I heard on Chicago Tonight that the SC may have given the city a back door approach by having the city get together with the Unions in a collective bargaining situation or use the consideration model that Cullerton and Gov Carhartt came up with.

    1. Understand that the retirement benefits of current retirees and employees are in a lock boxed according to the ruling on SB1. That covers all Illinois public pensions. Any changes could only impact future employees.

  3. The contract is with the state. That was clear in Kanerva because there is no fund for state retiree health and it is and has always been paid out of general funds. This ruling is short and they will get shorter to what part of Kanerva don’t you folks understand
    I think the union is just toying with Rauner and ipi over collective bargaining.

  4. Dear Fred,
    I suspect that I.E.A. support of SB 2404 had a lot to do with trying to protect opportunities for future wage increases (and smaller pension benefit reductions for active I.E.A. members) by agreeing to the impairment of already earned and owed benefits of retirees.

    Now that the courts have ruled that retiree pensions and benefits cannot be reduced or impaired, ALL savings / cost reductions in future pension reform proposals will likely be directed at active worker compensation and pensions.

    The I.E.A. chose to place active member interests in direct conflict with retiree interests. They framed the sellout of one group to protect another as “shared sacrifice”. To me it meant, “Sacrifice me so others can get more or pay less.”

    What the I.E.A. should have said was, “We have already paid not only for our pensions and benefits, but so you could get more services at no cost to you. Now it is your turn to “share the sacrifice!”

    The result of the “I.E.A.” approach is this: active workers now stand alone as the targets of these pension thieves. Retirees have been protected by the court, even after the union tried and ultimately failed to sell retirees down the river. We will get our pensions. But what about them? Wouldn’t it have been better for all of us to stand and fight together?

    Nice job, I.E.A.

  5. Dear Fred,There is a bit of history attached to our COLA.  First, IEA became one of the first Midwest teacher unions to establish a political action arm. Second, IPACE quickly rose to be considered on of the ten strongest lobbying groups in the state.Three, as a “sweetheart tag-on” our influence at Springfield managed to slip through a bill putting our COLA in place at a time when the U.S. cost of living kept rising rapidly. None of those factors are true today.  With all the private funds pouring into Springfield the teacher unions strength has greatly diminished, and the cost of living hasn’t risen as much as three percent annually in recent years. Personally, I was rather surprised, albeit pleased, that we still have our COLA.  It was just included as part of “What we were promised”. I don’t believe you should refer to the COLA at all on your blog, because in my opinion if it becomes commonly known, it would be one of the items most severely criticized. Those living off their social security do not automatically get what i am getting, and as the years march by, my pension is really growing. As an aside at age eighty-three I now have the average pension income of someone living in the village of River Forest I taught in for over thirty-five years. No, I don’t intend to move there.Mary Richie

    1. Dear Mary,
      What you refer to as a C.O.L.A. is really an automatic annual increase paid for by each worker with an additional separate deduction from every pay period.

      All state pension programs had similar items built into their plans to try to account for account for inflation. It was a state worker thing that I.E.A. joined in on. For teachers, the percentage amount of the A.A.I. as well as the cost of the program was dictated by the state, not by the union.

      The state’s actuaries determined that the contribution was sufficient to pay for the benefit. Even according to them, we were getting what we paid for.

      Pension funding problems are NOT the result of any C.O.L.A. They are the result of many years of the state failing to make its required contributions. TOTAL cost of pension payments this year for all retired state employees is about 1.6 Billion dollars.

      The rest (about 6 Billion dollars) is money already earned by (and owed to) pensioners but never paid (as well as the interest owed on that borrowed money). If the state had paid what was owed on time there would be no problem.

      When you hear people carping about paying for teacher pensions, they are defending the practice of never paying back money taken from people like you. The money was owed to pensioners as part of their earnings. Instead, it was spent to pay for new state programs without having to raise taxes to pay for those programs.

      You paid for what they got. Now the bill has come due. Why are you the “bad guy?” There is no “free lunch”. Not paying your bills on time can really make a debt grow. That debt is owed to pensioners and must be paid.

      Social Security is not like your pension. It is not an “apples to apples” comparison. Social Security was meant not only to provide some income in old age, but also to redistribute wealth to poorer people. People who earned modest incomes while working get back much more of what they paid in than people who earned more while working. And unlike your pension, it does have a C.O.L.A.

      These C.O.L.A. complaints are really made to imply that you are unfairly getting something for nothing. Not true. Everything you get (including that A.A.I.) you earned and paid for. No need to apologize to anyone for that.

  6. The union does not represent retirees and can not bargain away their pensions.
    The constiution is clear that retiree benefits can not be diminished. The city and state not funding pensions to the point of insolvency is a diminishment of retiree pensions and can not be done constitutionally.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s