On Illinois pension reform, there’s nothing to negotiate.

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My good friend and teaching colleague Jerry writes me.

I was contacted today by a Virgina survey company on behalf of the IEA leadership and asked to answer questions about my level of support of the Cullerton proposal. Once again, IEA leadership places meaningless, deceptive survey results over any sensible degree of moral objectivity and leadership. How many times to I have to tell these mother fuckers that I want them to fight for my pension? Apparently, any number of real membership voices is not clear enough to them on the issue. The questions asked to me were regulated in such a way that merely acting on the results would give little indication or confirmation of members’ completed beliefs about the question. Cinda and crew apparently know what they want to do about the pension issue and need data to show members when we start to go ballistic on them again. Needless to say I answered “very poor” on the question of my level of support of the IEA fighting for my pension.

Why is the IEA surveying members about pensions now?

Because part of the temporary budget deal reached between Bruce Rauner and the Democrats was a promise to go after public employee pensions again.

The thing that is different from the last time is that the Illinois Supreme Court has reaffirmed the pension protection clause of the Illinois Constitution.

Promised retirement benefits cannot be diminished or impaired. The protection – and this is important – covers every public employee from the day they we were hired until the day we die.

True. Future employees can be forced to accept something different. But what Rauner, Cullerton and Rahm cannot do is agree to something that says from now on current employees will get less than they were promised.

It is the liability – the debt – owed to the pension systems of current employees and retirees that is the source of the current problem. The liability was incurred because of the failure of the city and the state to pay what they owed over years. In the case of the state of Illinois, it has been a failure to pay over decades.

This is the substance of the debate between Cullerton’s attorney Eric Madiar and Gino DiVito and his associate John Fitzgerald.

Briefly, Democratic Senate President – with advice from Madiar – believes that current employees can be forced to choose between a reduction in pensionable salary or future pension increases.

DiVito, Fitzgerald and I believe that this is a choice between two diminishments and would be unconstitutional based on the Illinois Supreme Court’s May, 2015 ruling.

Given that, what reform can Cullerton and Rauner come up with?

Nothing.

What is there for the IEA to hire a polling firm to find out?

Nothing.

It is sad that this farce continues.

22 thoughts on “On Illinois pension reform, there’s nothing to negotiate.

  1. They will stop at nothing and continue forever to try to diminish constitutionally guaranteed benefits of public employees. They are just stalling as the hole gets bigger and bigger. I guess the thinking is MATH will get in the way.

    • Retirement income is subject to federal income tax. In Illinois, all retirement income including pensions, Social Security and income from annuities are not subject to a state income tax.

      • Precisely one of the reasons Illinois has a revenue problem. Most states tax all or some portion of ones pension, annuity, 401k, etc. There is a tremendous amount of revenue there left on the table. You could start at everything above the 50,000 level. This way you don’t hurt public servants too much but you bring into the fold the 1% with their multi millions. Of course the other problem is Illinois reducing the income tax rate by 20%.

      • Well, yes. There is that. And an income tax rate that is flat and low. I think they should only consider taxing retirement income AFTER they start with taxing the rich their fair share.

      • Taxing pensions to pay back what was already stolen from the pension systems is not a good idea. Public employees in Illinois paid their money into the pension system every paycheck. The public employers largely skipped paying in their employer matching funds. A new tax on retirees is basically asking the retirees to pay back money already stolen from the same retirees.

  2. The Chicago Teachers Union is committed to preserving the pensions of all our members and to work together to get rid of Tier II eventually. All this takes time and patience. Don’t panic folks,but remember the Constitution also has a flat tax, too and trying to get a graduated income tax can open up a can of worms. We need to make sure we don’t cut off our noses to spite our faces.

  3. You can add some prgressivity with the standard deduction. Quinn proposed it but switched to pension theft. That worked out so well. But the wasteful poll counts toward GDP so IEA is helping Hillary with the economy.

  4. In response to Fred’s comment….” I think they should only consider taxing retirement income AFTER they start with taxing the rich their fair share.”
    About 6 weeks ago, Len and I went into Rep. Steven Andersson’s office to talk about a number of things. He asked us about taxing pensions above $50,000. My answer was the same as Fred’s…..I told Andersson that if this state wants to start taxing our pensions, then they better tax the rich FIRST!!!

      • “The rich is already paying 70% of taxes.” Aside from the poor grammar, you provide no evidence. Who are your “rich?” Do you include corporate taxes. If class warfare is not the answer, tell the ruling class to stop waging war on the working class.

  5. All right then start at 100,000. That takes care of at least 95% of public employees. And of you are a retired public employee making over 100,000 you can afford it. At least you ensnarl the wealthy.

    • Dear Jack Retired Water,
      While starting at 100,000 would be better then 50,000, there are a couple bad things about it. Once they open the door to start taxing pensions, it would be easy later on to lower the threshold amount down to 50,000 or even lower. One of the Rauner-Republican pension-theft proposals had a exempt amount in the mid-20,000s, grand total of everything, including pensions, social security, withdrawals from IRAs, 401Ks/403Bs, and any other income. Meanwhile Billionaires (like Rauner) would still pay the low income tax on a million dollar a week income. Secondly, unless the amount is automatically adjusted with the cost of living, it will end up taxing more and more retirees. Young people just starting out in tier 2 today may not be retiring for 40 years or more. Back in 1970, $4 an hour was a good salary. People could live OK on $10,000 a year. Now, that would be impossible.
      The best solution would be to put the income tax back to a level adequate to pay the bills. A new tax on retirees would be discriminatory as it would only be on retirees. Retirees paid income tax, property tax, sales tax, and all other taxes and fees IN ADDITION to paying into the pension funds all their working years. The state “borrowed” by diversion the money they were supposed to put into the pension funds. Chicago did the same thing. They used the pension money for roads, bridges, public buildings, and other expenses that should have been paid by general revenue funds. This allowed them to keep taxes low for many decades. By this “pension borrowing” they ran the state and city of Chicago BELOW COST. Now the time has come to actually make the pension payments, even if we must increase tax revenues from areas other then retired people.
      Anon

  6. Dear Fred,

    Either I am confused, or the I.E.A. is.

    Why does the I.E.A. insist on this concept of so called “shared sacrifice” where teachers get billed twice and everyone else pays once? Aren’t teachers taxpayers too? If teachers are to contribute more at work, then that amount should be credited against their state tax bill. If not, why are they being singled out to pay more?

    This is a debt of the state issue, not a “pension” issue. Every citizen of the state should equally share the burden of that debt. By offering increased contribution rates, the I.E.A. is selling out it’s own members in an effort to have something to “offer at the table” (you know, the one they are always seeking a seat at).

    There is no actuarial flaw in the design of the pension system requires increased contributions by teachers. The problem with the present situation is that payments to the pension system don’t just pay for pensions. Payments to the pension systems are projected to consume about 25% of General Revenue Fund income. Of that payment, 6 out of every 7 dollars paid are owed because of previous non payment of (earned and owed) deferred compensation. Only 1 out of each 7 seven dollars actually goes to pay for benefits.

    Teachers are not indentured servants or second class citizens. Why are we expected to pay twice? Do bond holders get taxed twice because the state owes interest on the bonds they own? Of course not. It is not their fault the state owes this money. The state sold the bond and must pay it back.

    The state owes our pension system lots of money it never paid. As citizens of this state, we ALL equally owe this debt. Why do teachers need to give “more” than anyone else? We pay our taxes, as all citizens do. Equal treatment means just that. EQUAL. If the I.E.A. can’t figure that out, then it is time to get rid of the I.E.A.

    • Where is the IEA currently offering an increase in pension (I assume that is what you are referring to) contribution?

      • I wouldn’t have thought it to still be operative either after the Supreme Court decision, but here is a direct quote from the I.E.A. website as of this morning (7/31/16) Here’s the link and some quotes:

        https://ieanea.org/legislative/pensions/

        “Teachers, community college and university faculty and staff, and other public employees have offered to accept changes that would save the state billions, including increasing our contributions to the pension systems. We’re willing to pay more to make sure the systems remain solvent, but there must be shared sacrifice.”

        “No legislation to change the pension systems should be enacted without the agreement of the unions representing employees. Our coalition will continue to work with the state’s political leaders as long as they are making a good faith effort to reach a solution that is constitutional and fair to employees.”

        It is already clear to me that the I.E.A. does little to represent the interests of retirees. Now discussions are about “future” earned benefits of active workers. It looks to me that the I.E.A. wants to negotiate away already guaranteed benefits. I hope I’m wrong for their sake.

        I.E.A. offers increased contributions. I.E.A. demands to be included in negotiations to change pensions consistent with these listed “principles”. Why? Looks to me like more “seat at the table” stuff. If this is not true, then they need to take these statements down.

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