WBEZ | pension reform

Morning Shift: Funny dads, marching moms and rockin' bands

Fri, 10 May 2013 07:42:00 -0500

A new take on Mother's Day: Dede Koldyke of the EarthHeart Foundation gathers mothers for peace, comedian Jim Gaffigan tells stories from his new book Dad Is Fat and Chicago band Bear Claw throws down.

Gov. Quinn claims breakthrough on pension reform

Fri, 04 Jan 2013 12:26:00 -0600

Illinois Gov. Pat Quinn said Friday one of the most controversial proposals to fix the state's massive pension debt is temporarily off the table.

Quinn and some legislators have supported a so-called cost shift, which would require local school districts to pick up the tab of their own teacher's pensions.

Many Republican legislators have opposed that plan, saying it would force local property taxes to go up.

Teachers' pensions are one of the biggest contributors to the state's $95 billion pension debt.

Steve Brown, a spokesman for House Speaker Michael Madigan said lawmakers will meet on Saturday to discuss the details of a compromised bill that would not include the cost shift. Brown said the cost shift is a way to end the extraordinary amount of money the state spends on teacher pensions, but, “We need to try to pass what we can pass.”

Brown said bipartisan support is needed to pass the kind of pension reform needed to be effective.

For months, Quinn has called on lawmakers to pass pension reform in January, before the session ends on Wednesday. With the clock ticking, Quinn met with some suburban lawmakers Friday morning before addressing the media.

Republican State Rep. Darlene Senger, who attended the meeting, said, “The fact they came out of the gate with the cost shift removed really, I think, opened it up to a listening phase.”

But passing any pension reform legislation could still be difficult, since any plan approved by the House would also need the support of the Senate, which adjourned Thursday.

The Senate earlier passed a measure that did not include the cost shift and affected just two of the state’s five separate pension systems. Senate President John Cullerton says that plan is the most legally sound option available, since a legal challenge to any pension reform legislation is likely. If the courts strike down a new pension plan, the legislature could be back to square one.

Quinn said Friday the ideas in the Senate bill will be incorporated, but he didn’t go into specifics. One aspect of the Senate’s measure gives affected state employees a choice between pay raises in retirement or receiving health insurance.

“There are ways you can, in drafting a bill, have what are called backstops that provide for protections against anything being declared unconstitutional,” Quinn said.

School officials decry Quinn's pension-shifting plan

Mon, 30 Apr 2012 10:24:00 -0500

Approximately $44 billion of Illinois’s underfunded budget is attributed to pensions owed to the Teacher’s Retirement System, according to the Chicago Tribune. Retired teachers earn 75 percent of their annual salary in pensions, with a 3 percent increase in benefits every year.

That’s a pretty nice deal, if you're a retired teacher. As the state becomes increasingly unable to support that rate, however, there has been heightened disagreement over who should pay for it in the future.

Gov. Quinn -- and the majority of his pension reform panel -- believes that it should be the school districts. The districts, they argue, negotiate salaries and contracts, and should therefore have the responsibility of paying for them. The system already works this way in Chicago, and Quinn says the transition to this system throughout the rest of the state would be gradual.

School officials see things differently. They argue that shifting the burden doesn’t solve the pension problem from a systemic standpoint at all, and call Quinn’s plan an “unfunded mandate.” Since decisions about pension law are made at the state level, they argue, TRS pensions should be funded by the state. Estimates for what the cost to individual districts could be range from $750,000 to $18 million a year depending on size. School districts across the board, already running on lean budgets, say that property tax hikes and teacher layoffs would basically be guaranteed if pensions were their responsibility.

Other measures, like raising the retirement age to 67, would make the transition easier on the schools. State Sen. Mike Noland, who sits on the governor’s pension reform panel, said a 3 percent increase in input by teachers was also being considered. He believes that a serious analysis by the state of what the cost of the transition would be is the next step towards essential tax reform in Illinois.

Meanwhile, on Thursday evening in Naperville, TRS Executive Director Dick Ingram gave a presentation on the potential shift, and said that while raising the retirement age and increasing input are solid ideas, the governor has backed off the idea of having schools cover pension costs somewhat. “There's a lot of conversations that still need to take place,” said Ingram, according to the Daily Herald, “This is nowhere close to being a done deal right now. We're going to be sorting it out over the next six weeks, or perhaps longer.”

Monday on Eight Forty-Eight WBEZ's Michael Puente will give us the latest on how this issue is developing. For many school officials, it’s the uncertainty that is a problem, especially as they have to think about passing their own budgets in the future. Puente will sit down with School District 158 Superintendent John Burkey, whose board of education recently passed a resolution opposing the potential transfer.

“We’ve taken a lot of hits,” says Burkey of his district, where faculty has been on a 2-year pay freeze, and in which the average salary in considerably lower than elsewhere in the state. “There is nothing left to cut other than programs and teachers.” Even if given the power to levy a property tax hike to cover the pensions costs--which are estimated to be around $2.75 million per year in District 158-- Burkey says the taxpayers wouldn’t stand for it.

State Sen. Heather Steans will also drop by Eight Forty-Eight to talk about the governor’s plans for pension reform. Steans, who has sponsored some minor pension reform bills in the Senate, will share her perspective from inside the negotiations.

Illinois pension director suggests cut for retired teachers

Mon, 02 Apr 2012 10:09:46 -0500

The director of the Illinois Teachers Retirement System is warning that financial troubles are so great it could consider reducing pension benefits to teachers who have already retired.

The Springfield State Journal-Register reported Sunday that it obtained a confidential memo written by Dick Ingram that contains the warning of that politically explosive possibility.

In it, Ingram says the state's largest pension system has been underfunded for decades and is no longer confident the state will continue to pay it enough money to remain solvent.

The suggestion is an indication of just how high concerns have risen over Illinois' pension problems.

Ingram says pension funding is under severe threat from the state's unpaid bills, soaring Medicaid costs and the $85 billion in overall unfunded pension liability.

Illinois Republicans say pension reform is top prioirty in 2012

Thu, 12 Jan 2012 23:49:00 -0600

Illinois state Republican leaders say reforming the pension system must be a top priority in 2012. They're calling on Democrats to help fix the state's ailing system in the coming year.

Illinois is facing an $85 billion shortfall in eventual pension costs due to years of underfunding and the prolonged economic downturn.

Republican House Leader Tom Cross co-sponsored a pension reform bill with Democratic House Speaker Mike Madigan last year, but Madigan has yet to call it for a vote.

Cross said the bipartisan support needed to approve the bill is not there yet.

"It's a very, very complicated issue and it's going to take both parties working together and be willing to make some very very tough choices," Cross told reporters Thursday.

That lack of action on pension reform was cited when Moody's downgraded Illinois' credit rating last week, making it the worst in the nation.

Gov. Pat Quinn, a Democrat, has pledged that reforming the state's pension system would be one of his top priorities for the year.

Pension 'double-dipping' now illegal

Fri, 06 Jan 2012 13:01:00 -0600

New pension reforms are now in effect for Illinois. Governor Pat Quinn signed a law yesterday ending the practice of so-called double-dipping by public employees. The law also closes a loophole that allowed two lobbyists to qualify for teachers' retirement benefits after spending just one day in the classroom.

Illinois House Republican leader Tom Cross pushed for the changes.

"It's something that had to happen. We have seen a large number of abuses -- in my opinion types of fraud -- that were going on, and we needed to shut those doors so it does not continue," Cross said.

It's unclear whether the new law will be challenged in court. The Illinois Constitution says state pension benefits "shall not be diminished or impaired."

The new law does not address the state's under-funded pension system.

Wisconsin governor interrupted by protest

Thu, 03 Nov 2011 18:22:00 -0500

Wisconsin Gov. Scott Walker was in Illinois Thursday giving advice on budget reform. But his speech was interrupted by Chicago protestors.

About 30 protesters chanted sayings like, "Hey hey, ho ho, Scott Walker has got to go" and marched with signs in front of the Union League Club starting around 7:30 a.m.

Meanwhile, about 60 more protesters in suits and ties were sitting obediently at tables during Walker's breakfast talk.

The Republican governor kicked off his speech by joking about sports, noting how Illinois and Wisconsin both hate the Minnesota Vikings. Then one of the protesters jumped up, yelling, "Mic check!" The other protesters repeated him while Walker and the rest of the room took in what was happening.

The group, composed of Occupy Chicago protestors and members of the consortium Stand Up! Chicago, used one another like human megaphones. One protester would shout a line out from their collective speech and the rest would repeat it. When Union League workers and Gov. Walker's handlers approached each standing protester delivering their line, another would then pop up and pick up where the speech left off. That process continued for about five minutes until the protesters were ushered out.

As the chant started, Walker at first tried to continue his talk over the chanting. When it became clear they would not stop, the emcee stepped in and attempted to shout over them, asking them to leave. The rest of the crowd also began clapping to drown out the sound of the protesters, and gave him a standing ovation once the protesters were escorted out of the room.

Protesters paid the $20 for tickets for each of their seats. Catherine Murrell, the communications coordinator for Stand Up! Chicago said most protesters paid out of pocket, but anyone who could not afford to pay had their ticket paid for by a pool of money collected by Stand Up! Chicago.

No arrests were made.

Walker continued his talk after protesters cleared out, touting Wisconsin's reforms and slamming Illinois Democrats for the state's budget problems.

Walker mentioned the possibility of getting recalled as governor and said he welcomes the challenge. He also said he could use Illinois government officials' handling of the state's budget crisis as a case study for what not to do.

"Illinois raised taxes earlier this year, rather substantially on both employers and individuals, and instead they didn't solve the budget crisis, Walker said. "They didn't solve their long-term structural crisis."

Ill. Gov. Pat Quinn has said he does not wish to follow Walker's lead. Quinn has frequently criticized the Wisconsin governor for being unfair to unions.

Illinois' debt burdens 5th highest in nation

Fri, 28 Jan 2011 21:53:00 -0600

A new report ranks Illinois fifth in the nation for having the largest combined pension and debt burdens per capita. The Moody's Investors Service report attempts to hone in on how pension liabilities will affect credit ratings. The report looks at metrics such as personal income, Gross Domestic Product, and debt as a percentage of state revenue to figure out state by state debt burdens.

Robyn Prunty is an Illinois analyst with a different credit rating service, Standard and Poor’s. She says that company is keeping a close eye on the state's finances, but isn't sure whether Illinois will receive a credit downgrade.

“The rating's not directly tied to pensions,“ she said, “There's many other factors that we use in establishing our ratings. But certainly pensions have been a significant focus for Illinois.”

Joshua Rauh is a professor of Finance at Northwestern’s Kellogg School of Business. He is concerned that government accounting standards across the country grossly understate pension liabilities. Rauh said the methods endorsed by Government Accounting Standards Board are not endorsed by the majority of finance economists. According to Moody’s report, Illinois debt burden per capita is close to $7,000, but Rauh said, “What you find is Illinois actually has unfunded pension liabilities alone of over $200 billion. This adds up to an unfunded liability of over $40,000 per household.”

Moody's ranking comes just after a recent Security and Exchange Commission’s inquiry into claims Illinois officials made about savings resulting from recent pension reform. The SEC is looking into whether expected savings from recently passed legislation are accurate. Illinois officials are planning on selling off $3.7 billion in bonds on February 17th to cover this year’s pension payment.