It was a decade ago that I stood on the floor of the Illinois Education Association’s Representative Assembly as a delegate and pleaded with them not to open the door to discussions with the General Assembly on pension reform.
Madigan would read it as our concession, I warned.
And that’s just what he did.
We lost the vote at the RA and a week later Tier II was born.
Beware of following union leaders blindly.
The shocker in the report is something that’s been quietly discussed for awhile in Springfield but has not until now become prominent. That’s the finding that the 2011 reforms may violate federal law.
Under federal standards, local pension systems that substitute for Social Security must pay at least the same level of benefits to get “safe harbor” status, a legal determination that the system follows the law. But, said the report, the creation of Tier 2 not only has irritated new workers who will get lesser benefits than those hired before 2011, but it has raised “significant concerns that the slower Tier 2 pensionable salary cap growth and revised final average salary calculation will be in violation” of Social Security law.
The report does not flatly state the state cut benefits too far, referring only to a “potential and costly safe harbor violation.” But the state would do better to fix it now, rather than waiting until later, when it might have to make expensive retroactive payments.
To deal with that and the “unique” circumstances affecting sometimes dangerous fire and police jobs, the task force recommended the state partially roll back benefit cuts for such workers in the 2011 law.
Specifically, it would revamp annual cost-of-living adjustment from half of inflation to the lesser of inflation or 3 percent, boost payments to surviving spouses to the Tier 1 level and base pensions on the highest four of the last five years of a worker’s career, rather than the current eight of the last 10 years.
Doing all of that would eat up part of the investment gains from consolidation, costing municipalities $70 million to $95 million, but might help the state deal with its safe harbor problem.
Of course, I was not the only one to warn that the day of reckoning would come. And some still choose to ignore the fact.