Shooting reported at high school in suburban Seattle

Winners and losers: Illinois pension fight appears far from over

It’s been nearly six months since sweeping pension reform was passed in Illinois, but the debate continues as some say they got the shorter end of the stick.

A lawsuit could stop the reform from happening.

Back in December 2013, Illinois lawmakers passed a pension reform in hopes of fixing one of the worst pension systems in the county.  The system was underfunded by more than $100 billion.

“The problems were so large that in order to solve them or to take step towards solving them we needed to make pretty significant changes,” said Illinois State Rep. Tom Demmer (R) Dixon.

If the reform works as Demmer and other lawmakers hope, it will cut Illinois’ pension spending by $160 billion over the next 30 years.

“When you look at 100 billion dollars in unfunded pension liability, there’s no easy way to get around that; there’s no small tweak you can make, there’s no hidden savings you can tap into.  So, we knew the changes that needed to be made were the difficult ones,” said Demmer.

However, with change comes sacrifice, at least for some. The reform calls for increasing the retirement age, and limiting retiree’s cost of living adjustments are just some of the measures included in the legislation.

Stew Adams said he wanted to be a teacher his entire life, and he taught special education in Rock Island for 33 years. Even though Adams is retired, he’s still actively involved with the Western Illinois Retired Educators and on the state’s pension defense team.

“I’ve had to work hard, gone to school, I’ve taken additional education classes, to get where I want to be to make a decent living; and expected that the pension would be there for me.  And now they’re slapping me on the back of the head making it my fault,” said Adams.

Adams and other retirees say pension cuts they face are a slap in the face.

“It’s like you get stabbed in the back, but you get continually stabbed in the back multiple times,” said Adams.

Andy Shaw is the CEO for the Better Government Association, an Illinois watchdog group based out of Chicago, who says the changes are painful to some but they are necessary.

“This was a long overdue bill that inflicts pain, unfortunately, on working people.  But, there really wasn’t any other choice. The politicians let the system get out of control by over-promising and under-funding,” said Shaw.

With this reform come winners and losers.

“The win is for the overall system that can’t survive a billion-dollars increase in pension cost every year,” said Shaw.

Related:  Unresolved pension crisis contributes to Illinois credit rating downgrade

Along with a healthier government, Shaw says reform should also lead to a more fair government.

“Winners of this pension reform bill are people who are sick and tired of pension abuse, people who are scamming the system and coming up with these gigantic pensions, and end-of-career bonuses and things that double their pension, in some cases, when it’s totally undeserved. The bill eliminates the half-dozen scams,” said Shaw.

The eliminated scams include an abuse we told you months ago that allowed non-state employees to receive a public pension.

Some might argue that judges are winners too, considering their pensions weren’t touched.

“I was disappointed that judges were exempt I think we should have applied this to all five state retirement systems,” said Demmer.

“It doesn’t take a brilliant scientist to figure out why they didn’t affect judges because, ultimately, they’re going to be the ones that decide the fate of this legislation,” said Adams.

“In a perfect world, we would punish the politicians responsible for this by over-promising and under-funding, but that’s not how it works,” said Shaw.

Who stands to lose the most

The legislation will likely end up in court.  Several groups have filed suit against the state, claiming the reform is simply unconstitutional.

“It very clearly states in Article 13, Sections 3 and 5, that our pension – according to the 1970 Illinois constitution – should not be impaired or diminished,” said Adams.

It will be up for the courts to decide if the measure stands, though.

“It’s unfair to people who went into government employment thinking that their retirement would look this way, only to find that it may look that way – and that way isn’t quite as good,” said Shaw.

“When we made those promises, those were richer than we could afford to make.  We didn’t pay for those adequately, we didn’t make the investments we needed to in order to pay that,” said Rep. Demmer.

It’s a deal that is done for now, whether people like it or not.

“It’s a devil’s bargain either way.  Unfortunate, but necessary,” said Shaw.

As far as the losers, Adams says that group includes “Anyone who had a pension that’s now been reformed.”

The reform is slated to go into effect June 2014.  With multiple suits filed, the court may act to delay the effective date of the law.

Get more coverage of Illinois pension reform – click here.

2 comments

  • Glen Brown

    Let’s not forget how the state’s economic catastrophe was created. The state’s unfunded liability has increased to approximately $100 billion; nearly 50 percent of that figure is a consequence of continual legislative negligence, dishonesty and ineptitude.

    Illinois policymakers have consistently failed to make the annual required contributions to the state’s pension systems, primarily because they could pay for services and their “pet projects” without raising taxes. In 1995, policymakers created a flawed re-funding schedule, and they have refused to correctly amortize the pension systems’ unfunded liabilities since then. Instead they have favored corporate interests rather than the interests of their citizenry and; thus, they have seriously sabotaged the public employees’ retirement plans and the State of Illinois’ future economic solvency through mismanagement and fiscal irresponsibility. Past state policymakers left us with this fiscal disaster.

    Instead of protecting public pension rights and benefits, which have a legal basis under Illinois State Law; instead of restructuring the state’s revenue base to pay for the state’s growth in expenditures and its recklessly-accumulated debts and obligations, current policymakers have chosen to diminish the public employees’ constitutional rights and their benefits, even though revenue restructuring and pension debt re-amortization are the best legal and moral solutions; even though there are over a dozen antedated cases that have upheld the Illinois Constitution.

    To defraud any person of his or her guaranteed rights and earned benefits violates a most significant interest in morality and ethics and in basic legal principles of both the State and U.S. Constitutions that protect every citizen. Any attempt to renege on any citizen’s rights and benefits that are earned is a costly and dangerous effrontery and precedent to set in motion. So-called “pension reform” diminishes and impairs the public employees’ contract with the state.

    Hundreds of thousands of Illinois citizens believe the Illinois Supreme Court judges will uphold the Illinois and U.S. Constitutions as they have in the past; that the Illinois Supreme Court judges are not capable of illegal and immoral thievery like the political opportunists who voted for SB 1, though Madigan/Cullerton and other committee members would have us believe Illinois Supreme Court judges are incapable of ignoring their own self-regard and, thus, had to be excluded from the bill. (According to Ann Lousin, a professor at the John Marshall Law School in Chicago who helped draft the Illinois Constitution in 1970, “Leaving the judges out of pension reform: ‘I would call this buying off the judges. It’s a very sad situation…’”).

    Hundreds of thousands of Illinois citizens believe today’s Illinois Supreme Court judges will confirm that “The plain language [of Article XIII, Section 5 of the Illinois Constitution, commonly called the Pension Clause] indicates that an employee’s pension payments and other membership entitlements are ‘contractual’ rights that may be altered [only] through mutual assent via contract principles…; [that] the [Pension] Clause’s prohibition against diminishment and impairment is cast in absolute terms.

    “The [Pension] Clause on its face does not support the claim that the legislature could utilize the pension system’s present unfunded liabilities as an [excuse] to cut the benefits of current employees participating in the system [as implied in the preamble of this bill]… [For] the Illinois Supreme Court [had previously] instructed, that ‘general language in a [judicial] opinion must not be ripped from its context to make a rule far broader than the factual circumstances which called forth the language’…

    “In 1982, the Appellate Court in Kuhlmann v. Board of Trustees of the Police Fund of Maywood, again relied on Kraus [v. Board of Trustees of the Police Pension Fund of the Village of Niles, 1979] as well as Ziebell [v. Board of Trustees of the Police Pension Fund of the Village of Forest Park, 1979] to fashion the following rule regarding the Pension Clause’s scope:

    “[A]ny alteration of the pension system amounts to a modification of the existing contract between the State (or one of its agencies) and all members of the pension system, whether employees or retirees. A member is contractually protected against a reduction in benefits. By the same token, a member cannot take advantage of a beneficial pension change without providing consideration [something of value given in return where both parties agreed] for the contractual modification…” (Eric M. Madiar, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate, IS WELCHING ON PUBLIC PENSION PROMISES AN OPTION FOR ILLINOIS? AN ANALYSIS OF ARTICLE XIII, SECTION 5 OF THE ILLINOIS CONSTITUTION).

    It is a flagrant injustice when policymakers like Michael Madigan (since 1971), John Cullerton (since 1979), Bill Brady (since 1993), Jim Durkin (since 1995), Christine Radogno (since 1997) Elaine Nekritz (since 2003) and others who are responsible for the state’s fiscal morass want to challenge an existing constitutional contract and force public employees and retirees to accept a substantial diminishment of their constitutionally-guaranteed pension that was lawfully earned; moreover, it is a brazen injustice when a governor can roll back the corporate billionaire’s and millionaire’s taxes, lacerate the state’s budgets, and sign into law a diminishment of public employees’ and retirees’ only pension. None of these transgressions will address the state’s inadequate revenue system and the state’s pension debt problems.

    To possess a right to a promised deferred compensation, such as a pension, is to assert a legitimate claim with all Illinois legislators to protect that right. There are no rights without obligations. They are mutually dependent. Fulfilling a contract is a legal and moral obligation justified by trust among elected officials and their constituents.

    Senate Bill 1 is a foul, insensitive attack on public employees’ and retirees’ rights to constitutionally-guaranteed benefits. An unconscionable challenge of those rights and benefits is a serious threat, not only to current public employees and retirees and their families but, to every Illinois citizen. A pension is a contract. Breaking a contract can never be legally or morally justified.

Comments are closed.


Related Stories


Follow

Get every new post delivered to your Inbox.

Join 886 other followers