Chicago Mayor Lightfoot caused some concern yesterday when she spoke of “unsustainable” COLA benefits for retired public employees of the city when she sat down with editors from Crain’s Chicago Business.
It is hard to know what she actually said since Greg Hinz didn’t quote her except to put quotation marks around the word, “sustainable.” He does quote the mayor as saying paying the COLA benefits would be a “tough slog.”
Later her office issued a statement walking all that back. But, too late. Any mention of cutting pension benefits will prompt an immediate response from retirees.
Including from me.
I tweeted: “Changes to current retirees and employees COLA? Not unless she can get 8 Supreme Court members (or at least 5) to change their minds. Not going to happen.”
I don’t know what the Mayor actually said to Crain’s editors. Maybe somebody has the transcript and can share.
Let’s deal with what we do know.
The current benefits, including the 3% COLA increases, are protected contractually and constitutionally. That is what the Illinois Supreme Court ruled.
Even a change to the constitution can’t be applied retroactively to the benefits of current members of the city or state retirement systems. As for future hires, they don’t need a constitutional change to get screwed. They got screwed already with Tier II. Their pension contributions are the only thing paying down the pension debts.
This whole discussion of changing the language of the constitution is a waste of everyone’s time.
Are the COLA benefits a “tough slog?”
This is a common misconception, and I am disappointed that the Mayor, who I agree with on most things, appears to have repeated it.
Maybe Larry Msall of the Civic Federation has been putting up post-it notes around the halls of city hall saying, “Blame it on the COLA.”
The annual increase in public employee pensions – commonly but not really accurately called the COLA – is a part of the guaranteed retirement benefits of public employees. The cost of all the retirement benefits represents a small portion of the pension costs of the city and state. The benefits are entirely sustainable and relatively low compared to Social Security.
On May 8, 2015, the Illinois Supreme Court delivered the judgment of the court, in their upholding the pension protection clause:
“By way of comparison, data published by the Social Security Administration show that Social Security increases, which are tied to the cost of living, averaged 3.98%, nearly a percentage point more than under the Illinois formula, between 1975 and 2014 (page 4).” (http://www.ssa.gov/OACT/COLA/colaseries.html.). “While the automatic annual increases have sometimes exceeded changes in the cost of living, these judgments are not cost of living adjustments, and as indicated earlier in this disposition, the increases have actually lagged the average increases granted by the Social Security Administration, which are tied to the cost of living” (page 27).
What is unsustainable? The debt incurred because of the failure of the city under Rahm and Daley to pay the city’s share of the pension obligation.
The debt is the problem. Benefits are not even close to being the problem.
Illinois Federation of Teachers President Dan Montgomery popped up with his own tweet yesterday.
Wow. You’d think a lawyer would understand the law. I can send her a copy of the ILSC unanimous decision written by a GOP justice that guarantees benefits. AND btw Tier II pensions already did away with 3%. AND even amending the const. would not void earned benefits. Sheesh.
Perhaps whoever is writing Montgomery’s tweets should avoid the “wow” and the “sheesh.” After all, he’s a grown man.
On the other hand, maybe whoever is writing them isn’t old enough to recall 2013. Then it was the IFT’s Dan Montgomery and the rest of the state’s public employee union leaders who were quite ready to give up our COLA benefits in a pension reform deal with Senator John Cullerton.
I remember because we pension activists raised hell.
By a largely party-line vote of 40 to 16, the Senate sent to the House a bill that would give workers and retirees a series of choices over whether to take less or pay more. Mr. Cullerton said it would save state taxpayers $46 billion to $51 billion by 2045.
The bill, SB 2404, which the IFT’s Dan Montgomery supported, would have severely reduced his member’s COLA benefits. And mine.
And then Hinz reported:
Mr. Cullerton argues his bill, which has the backing of key labor unions * that represent government workers, is all that will pass constitutional muster. And, he says, it has a better chance of winning a majority in the House than the House bill has of winning a majority in the Senate.
*Key labor unions included Dan Montgomery’s IFT and the Illinois Education Association.
The Cullerton/Montgomery bill never passed the House. The House which went on to pass a much worse Madigan pension theft bill that was signed by Governor Quinn and ruled unconstitutional in 2015.