State Universities Annuitants Association
Mini Briefing
May 17, 2009
Have you asked someone to join
lately? All SURS active, inactives and
retirees are eligible!
News has it that Senate President Cullerton
is striving for the 96th General Assembly to adjourn by
May 29th. Can it happen? There is still much to discuss – pensions;
pension holidays; mini-capital bill; income tax increase; broadening of the
sales-tax base; sin taxes; fees; fumigation; and, oh yes, ETHICS.
The list is actually much longer, but issues will begin to drop off as the
calendar is narrowed and the clock ticks what will seems exceedingly faster.
Lead bill of SUAA interest is SB 1292. As stated before, it was introduced as an
innocent bill; nothing that anyone would be opposed to, plus the pension
systems were already adhering to its content.
Then comes along Amendment #1 which replaces everything after the
enacting clause and then Amendment #2 which tries to clean-up some of the
objection to Amendment #1 but just doesn’t go far enough.
Description of
Amendment #1 - Amends the Illinois Public Labor Relations Act.
Exempts the changes made to the Illinois Pension Code under this amendatory Act
from provisions providing that, if there is a conflict between the Act and any
other law, the provisions of the Act or any collective bargaining agreement
negotiated under the Act shall prevail and control. Amends the General
Assembly, State Employees, State Universities, Downstate Teachers, and Judges
Articles of the Illinois Pension Code (the 5 State-funded Retirement Systems).
Adds different provisions concerning retirement benefits applicable to persons
hired on or after August 1, 2009 (later entrants), including provisions
concerning creditable service, conditions for eligibility for a retirement
annuity, amount of retirement annuities, alternative forms of retirement
annuities, annual increases, employee contributions, refunds, and re-entry
after retirement. Effective immediately.
House
Committee Amendment No. 2
Reduces the teacher's contribution under the Downstate
Teachers Article of the Illinois Pension Code from 8% to 7%. In each of the 5
State-funded retirement systems, allows for establishment of creditable service
(i) for military service if the person was a member or participant within 6
months prior to military service and returned to service as a participant under
the system within one year after discharge and (ii) for up to 2 years of
military service not immediately following service as a member or participant
under the system. Provides that the total amount of creditable military service
shall not exceed 5 years.
What you see don’t see is: The legislation pre-empts the
Public Labor Relations Act, meaning that the changes will override current
collective bargaining agreements; Amendment #1 did not provide for maternity
leave nor has not been completely corrected in Amendment #2; The creation of a
second tier of pension benefits for all who are employed by the state would be
in effect for those hired January 1, 2010.
Pension formula for future members to 2% for those not connected to Social
Security – 78% are not provided for by Social Security; lowering pension
formula from 1.67 to 1.5% for those who would receive Social Security;
increases retirement age for members to age 67 with 10 years of service or age
62 with 35 years of service; eliminates the prefunding of survivor benefits;
reduces COLA to 50% of the CPI or 3% whichever is less and is not cumulative.
What you might not know is: Rep.
Kevin McCarthy, sponsor of SB 1292, chairs the Personnel and Pensions
Committee. Speaker Madigan selects the
chairs for the House committees. Rep.
McCarthy has served in the House since 1997.
He taught in the Chicago Public Schools, his mother is a SURS annuitant,
and his daughter is a teacher (TRS). He
has a total of 707 SURS Active & Inactive and Benefit Recipients in his
district. However, he has an additional
4,535 TRS Active, Inactive and Benefit Recipients.
Others on the committee – Marlow Colvin
(D–33, Chicago), Vice Chair, was substituted for a yes vote; Republican
Spokesperson Raymond Poe (R-99, Springfield); Edward Acevedo (D-2, Cicago)) was
substituted was a yes vote; Dan
Brady (R-88, Bloomington); Rich Brauer (R-100, Petersburg); James Brosnahan
(D-36, Oak Lawn); Daniel Burke (D-23, Chicago); Deborah Graham (D-78, Chicago)
and Michael McAuliffe (R-20, Chicago).
Substitutes were Elaine Nekritz (D-57, Northbrook) and Kathy Ryg (D-59,
Vernon Hills) who were there to provide “yes” votes. The tally was 6-4. No votes were Poe, Brady, Brauer and
McAuliffe – all Republicans. However,
Rep. Graham said that she had agreed to vote “yes” but unless there was more
information coming forth to support these changes she would not be voting yes
again. She would have been substituted
if she had not agreed; it was good that she was there for the discussion.
Amendment #1 to the bill came at the 11th
hour. Hardly anyone saw the first
amendment. All testimony was based on a
draft that had been passed around. Rule
25 had been enforced which means that the normal postings for the bill were not
in effect. Amendment #2 was also under
Rule 25 for the hearing this past Tuesday.
However, it didn’t seem that anyone had seen this amendment. It was prepared after limited discussions
with the unions on Wednesday; separate discussions; short discussions.
So what is on the table going forward – SB 1292 has been placed on Calendar 2nd Reading with a
Short Debate for Wednesday, May 20th. However, the Calendar doesn’t actually show
the date at this time and quite possibly they will decide not to call it then. There is much opposition, and even more
will be coming. It will be called though
and SUAA must make the opposition known.
First, the question must be asked as to why,
with such drastic changes to the pensions, is considerable time not being taken
to re-structure the pensions? Why is it
necessary for all pensions to be treated the same, they serve different groups
of public employees? What guarantees are
in place for the pensions to be funded going forward – normal costs? (None at
this time.)
It looks as if there are two concepts being
mixed, but the largest elephant in the room is still being ignored – the
pension debt. By changing the pension
systems, it most likely appears to the public sector that the debt goes away. What guarantees are in place that the pension
debt will be funded if a pension holiday occurs? We can’t let a pension holiday happen!
The changing of the pension system is not
addressing the profound public policy impacts.
There is no cost data for the change.
The pension systems need cash now.
The systems are selling assets.
When the market recovers what assets will there be left to allow the
systems to recover on their own?
Non-funding could cause the systems to collapse.
While McCarthy said that he was interested
in constructive and meaningful change, it is evident that not much was thought
out. There were no meetings with the
unions – his office or the Governor’s office.
There was no process. While
changes might need to be made for new hires, it is not evident that money will
be saved within the time that it is needed – which is now! It will be decades before the savings will be
noted. Is it worth the damage that it
will do to the state?
Is SB 1292 causing a distraction from the
much needed income tax increase and a broadening of the sales tax base? Both would bring immediate cash to the State.
____________________________________________________________________________________________________________________
SB
0369 - Senate Sponsors - Sen. Dan Kotowski - Chris Lauzen - Larry K. Bomke - Kwame Raoul - John O. Jones, Bill Brady and Dave Syverson House Sponsors (Rep. Elaine
Nekritz - Mike
Fortner)
Replaces everything
after the enacting clause. Amends the General Assembly and the Judges Articles
of the Illinois Pension Code. Provides that, for persons who first become
participants on or after the effective date of the amendatory Act, annuities
are calculated using an average monthly salary obtained by dividing the total
salary of the participant during the period of: (1) the 48 consecutive months
of service within the last 120 months of service in which the total
compensation was the highest, or (2) the total period of service, if less than
48 months, by the number of months of service in that period. Makes conforming
changes. Effective immediately.
This legislation could be labeled the Kurt Granberg bill although he definitely
was not the first to take advantage of appointments after serving in the General
Assembly. Rep. Granberg left the GA in
January to pursue his appointment from former Governor Blagojevich as the
Director of the Department of Natural Resources. The $133,000 position for a term ending in
January 2011 provided a significant pension boost for Granberg. Governor Quinn removed Granberg from his new
poisiton quite soon upon becoming Governor.
However, Granberg was still able
to collect the higher pension that this position afforded because of laws that
were in effect.
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In an effort
to further clean-up government or – Fumigate
– House Speaker Madigan introduced HB
4450 Synopsis As Introduced - Creates the
Officials and Employees Termination Act of 2009. Provides that the terms of
office or employment of all designated officials and employees are terminated,
by operation of law, effective on the effective date of the Act. The designated
officials and employees are (i) the heads, assistant heads, and deputy heads of
executive State agencies who were nominated by the Governor between January 11,
1999 and January 29, 2009 for a position that requires the advice and consent
of the Senate, (ii) members of executive boards or commissions who were
nominated by the Governor between those dates for a position that requires the
advice and consent of the Senate, (iii) employees of executive State agencies
or executive boards or commissions, whose employment in a Rutan exempt position
began between those dates, (iv) employees of executive State agencies or
executive boards or commissions, appointed to a term appointment between those
dates, and (v) any other official or employee who was nominated by the Governor
between those dates for a position that requires the advice and consent of the
Senate. Executive State agencies and executive boards or commissions are those
of the executive branch not under the jurisdiction and control of the
Lieutenant Governor, Attorney General, Secretary of State, Treasurer, or
Comptroller. Allows hold over for no more than 60 days. Allows the Governor to
make temporary appointments and to subsequently nominate or employ a terminated
person. Effective immediately.
Governor Quinn stopped the
bill from moving forward so quickly.
This would actually put the State in a bind. Plus, are there really 3,000 people who
should lose their jobs? At this time,
there doesn’t seem to be a justifiable list of people who might suffer the
consequences of this legislation. Plus,
this legislation could be an opening for lawsuits that would also cause another
slow down or weakening of the State. The
question remains, “who is really the target?”
HB
4450 is scheduled to be
heard again on May 19th in the Executive Committee. ________________________________________________________________________________________________________________________
Something else on the horizon is
Redistricting. The Illinois Constitution
Article IV, Section 3 will provide the structure for legislative redistricting.
“In the year following each Federal decennial census year, the General Assembly by law shall redistrict the Legislative Districts and the Representative Districts. A Legislative Redistricting Commission will be comprised of eight members – four members from each political party. The Speaker and Minority Leader of the House of Representatives each appoint one Representative and one person who is not a member of the General Assembly. The President and Minority Leader of the Senate shall each appoint one Senator and one person who is not a member of the General Assembly.
The Ethics Reform Commission is
suggesting that the General Assembly return to Springfield sometime after
adjournment to concentrate on Redistricting.
A change in elected terms could
be on the forefront. Reps. Suzanne Bassi
and Rosemary Mulligan introduced HJRCA0006 to change both the House and the
Senate (longer elected terms); also specifies that Senators and Representative
elected 2010 shall serve two-year terms.
While this legislation remains in the Rules Committee, the fact that it
was sponsored will begin to bring about discussion.
_______________________________________________________________________________________________________________________
COGFA and SB 1734 – for a look at
the Analysis of Investment Fee Savings and Transition Costs due to Potential
Consolidation into Illinois Public Employees Retirement System (ILPERS) follow
this link:
http://www.ilga.gov/commission/cgfa2006/Upload/AON_Rpt_PublicEmplRetSys0509.pdf
The report by Aon Investment
Consulting summarizes by suggesting “that a merger of the systems would result
in modest savings.”
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Ballots for those who qualified to be elected to the SURS Board of Trustees
will be sent on May 29th to eligible voters. SUAA will provide information on certain
candidates as soon as available. We urge
everyone who is eligible to be a part of this election.
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The SUAA Annual Meeting deadline for
registering for a hotel room is rapidly approaching. Please contact the President Abraham Lincoln
Hotel and Conference Center in Springfield to register for your overnight stay
no later than Memorial Day, May 25th
(Monday). The rate is $90 +
tax. Parking rates will apply. Call 217.544.8800
or 866.788.1860 and ask for the SUAA rate.
Program should be confirmed by the end of May.
Senate President John Cullerton has been invited to be the Keynote
Luncheon Speaker and Governor Quinn has been invited to address the audience at
dinner.
__________________________________________________________________________________
With legislation session days coming to a
close, there will be many candles burning.
SUAA will its best to keep you up-dated on the occurrences.
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Those of you who wonder about Windfall
Elimination and Pension Offset – A conference is being held in Columbus, Ohio
on May 19th to discuss this topic along with Social Security, Health
Care and Pensions.