We Are One Illinois’ statement on the “consideration model”.

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The following points represent the We Are One Illinois Coalition’s position on a pension model currently receiving attention that is commonly referred to as the “consideration model.”

The hundreds of thousands of workers (teachers, firefighters, nurses, police and other public employees) represented by We Are One Illinois oppose this purported “consideration model” because it fails the test for good pension law:

• It is not constitutional;

• It is unfair in its outcome;

• It will not solve Illinois’s long-term pension funding obligations; and

• It will exacerbate the challenges those obligations pose by kicking down the road to a future day implementation of a lawful funding solution.

The following core points explain the why this plan is not constitutional. Additional legal analysis of its unconstitutionality is set forth in this memo.

 • This supposed “consideration model” violates the Illinois Constitution.

The Illinois Supreme Court has now made it clear in two cases (the state “SB1” case and theCity of Chicago case) that unilateral changes to diminish the pension benefits belonging to any member of a retirement system are unconstitutional.

The model commonly referred to as “the consideration model” also fails the constitutional test because it offers pension system members (regardless of Tier I or Tier II) a choice between two versions of diminished benefits. There in fact is NO CONSIDERATION in the legal sense. A public employee would be forced to choose between two options, each of which illegally strips away pension benefits. This is a construction that the Supreme Court has expressly ruled violates the Illinois Constitution Pension Protection clause.

Consideration requires some countervailing substantial new benefit that the pension holder must be able to accept or decline. This suggested new model offers no such thing; in fact, it offers a choice between reduction of two already protected pension benefits. Therefore, it is unlawful.

• This supposed “consideration model” will not survive a court challenge and therefore will only worsen Illinois’ fiscal position.

If passed into law, such a plan will be swiftly challenged in court. When the Illinois Supreme Court rules—yet again—that diminishment of pension benefits is illegal, the state’s pension systems will surely be further underfunded and the pension payments the state must pay will be larger. Simply put, our problems will only be harder to solve. A vote for such a plan is a vote to kick the can down the road, a vote to not solve Illinois’s fiscal challenges.

The We Are One Illinois coalition strongly urges all legislators to abandon pursuit of illegal pension benefit diminishments and work instead on lawful, rational and fair approaches to funding Illinois pension systems.

Action: http://www.weareoneillinois.org/news/statement-on-so-called-consideration-model-pension-changes

10 thoughts on “We Are One Illinois’ statement on the “consideration model”.

  1. Yes that is right. Off I read the laborers deal is reported right it might pass because they can keep what they have it pay more and get out early.

  2. What I heard about the deal: Pay in more to your pension and get out early or pay in less and work longer. It sounded like their benefits are not diminished in either choice. Of course, if it was reported correctly.

    • Linda,
      The deal either contains a genuine consideration – an exchange of equal or greater value – or it doesn’t. If someone brings suit, the courts will decide. But either way, if it doesn’t save the city much money, which I suspect it doesn’t, they still must deal with the revenue side.

  3. blockquote, div.yahoo_quoted { margin-left: 0 !important; border-left:1px #715FFA solid !important; padding-left:1ex !important; background-color:white !important; } So why is ANYONE considering it?  We know IEA would prefer we die; how about the rest of the. Folks?

    Sent from Yahoo Mail for iPad

  4. blockquote, div.yahoo_quoted { margin-left: 0 !important; border-left:1px #715FFA solid !important; padding-left:1ex !important; background-color:white !important; } We are NOT one.

    Sent from Yahoo Mail for iPad

  5. The way the city would save money is, the sooner a Tier 1 retires, the sooner they are replaced by a new Tier 2 employee.

    • I don’t think so. As soon as the first tier 2 employee retires and discovers that their pension doesn’t even meet federal standards of ‘safe harbor’ there will be law suits plenty and then they will have to be paid to bring them up to at least federal standards, costing millions. Maybe billions. The fun has just begun.

      • To me it seems like stall tactics. Even if it passes they are still going to need more and more revenue. Yeah, the fun has just begun but at what point does it come to a point of no return. The funds become unsolvent. Will Congress step in with a bail out. I don’t think so because all the other states will be looking for a handout. I just don’t understand where all this money is going to come from.

  6. “Safe Harbor” sounds good, but I am not sure of the details. “At least as good as social security” sets the bar really low, (but Rahm and Rauner will try to go under it). However, there are a lot of variables, interpretations, and fundamental differences that need to be researched. The maximum monthly benefit for social security for 2016 is listed as $2639, IF you retire at 66 AND you got 35 years in at the maximum income that was taxable for social security each year. That amount for this year is $118,500. The average retired worker amount is listed as $1346.72, roughly half the maximum. From there, it gets really complicated.
    Are they going to go by the basic benefit, then all Rahm would have to pay is $2639 a month to equal social security. But social security gives a spouse 50% extra, the other systems usually not. Social Security contributions by the employee are taxed when earned, the other systems, they are tax deferred. If a single person drops dead before collecting social security, no one gets anything, social security keeps all the money, the other systems refund the contributions to designated beneficiary or, if no beneficiary, they track down relatives, if no relatives can be found, they give it to the estate.
    Social security reduces earned benefits because of getting a pension from another system, (WEP/GPO), the other pensions do not do this.
    Social security is somewhat progressive, a person getting minimum wage, (what Rahm and Rauner want public employees to work for) might get more under social security then the other systems. The other systems are somewhat linear, the higher the employee wage, the pension is proportionately higher.
    Not saying Tier 2 is good at all, (it is terrible), I am just saying it might not trigger a large “safe harbor” payment depending on the details of how and what is figured into the equations.

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