State Universities Annuitants Association

Through the Roof . . .
 
MINI BRIEFING
April 1, 2009
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Yes, it is April Fools Day, but there is no fooling around in Springfield!

 

 

The past week in Springfield was filled with facts, figures, vagueness, additional ambiguousness, and even more confusion.   As Rep. Will Davis stated at the Center for Tax and Budget Accountability’s Symposium on Monday, “they are talking (Senator Cullerton and Speaker Madigan), but what are they talking about?  What is it doing for us?”  In fact, there is a lot of talk coming from all different directions but not much indication of how issues will be settled.

There are shell bills awaiting content.  The number will ultimately be able to hold content of just about any issue that has not surfaced as yet.  Interestingly, Senator Cullerton is the chief sponsor of many of those bills in the Senate and he and Senator Harmon are picking up others coming from the House.  The bills awaiting budget content will likely not show until the end of April or first of May.  Another bill awaiting an unveiling is the new content of SB750.  Word has it that the proposals in the content are of better value to the public than the Governor’s offerings.  A 238 page amendment for 750 hit the scrap pile recently; fine tuning again.  This bill, while having been around for a number of years, will have a good chance of passing this year. 

This is the week that is quite important for bills that made it out of their assigned committees.  All bills must be out of their originating house by Friday, April 3.  If the bills are held it most likely means that the bill will probably not be seen again until the next session.  However, there are those shell bills that would allow certain issues to regain life.

The Taxpayers’ Advisory Board, set up by Governor Quinn, has been engaged.  This is most important to note because this Board is to make recommendations regarding the cost side of state government; how does the State spend its money and where can cost reductions be found.   The board of 25 (and growing) was divided into sub-committees:  Services, Employee Benefits, Medicaid, Education, Human Services, Government Operations A & B.
The Board has until May 22nd to submit its recommendations.  Note:  May 22nd is the Friday before Memorial Day and right before the last week of the 96th legislative session.  Adjournment is scheduled for May 31 (a Sunday).  In between, another full meeting of the Board will be held on April 28th.  

The Senate Committee on Deficit Reduction provided its report on March 25.  The 316 pages of content can be found at http://www.ilga.gov/senate/Committees/DeficitReduction/DeficitReductionFINAL.pdf.  The comments and testimony are diverse.  It seems that no formal agreements were found.  However, this is another document that will be part of the on-going discussion to reduce spending.  Providing testimonies on March 17 under the pension topic were:  Eden Martin, president of the Civic Committee of The Commercial Club of Chicago; The Civic Federation; The Taxpayers’ Federation of Illinois; Center for Tax and Budget Accountability; and AFSCME.

Another committee that has provided much attention is the Joint Committee on Government Reform.  The subject matter on March 24th was Procurement and Pension Board Reforms (Part I & II).  Topics included:

pension board of trustee oversight; requirements for emerging investment managers; consultant contracts for pension boards; competitive bidding requirements; oversight of purchasing; public disclosure by contractors; Procurement Policy Board.  One result from this committee will be how the SURS pension board is selected (see next page).  All testimonycan be found on the General Assemblies Website or by clicking the link below.  http://www.ilga.gov/joint/Documents.asp?HouseCommitteeID=786&SenateCommitteeID=787&Description=Joint%20Committee%20on%20Government%20Reform
2%For those of you who are currently working on staff at a community college or state university, you do need to be aware that in the Governor’s budget is his opportunity to change your pension benefit.  At first it was deemed that only new hires would be affected, but we now know for sure that the intent is for all public employees to contribute an additional 2% of income into your allowable pension.  This means a 2% decrease in your paycheck/salary.  There is no other way to say it.  The State will not be providing an increase in salary for the additional contribution from your salary.  It goes without saying that the State’s responsibility to fund your pension will be lowered.  How does this affect your pension over time?  How many additional years will you need to work?  How does this affect your ability to retire now?  How does this affect your ability to pay your bills now?  These issues are worth taking a look at regardless of the number of years you have in the pension system.

Healthcare Benefits are also on the chopping block.  Many of you are already finding out what the affects to you are personally because of the State’s inability to pay healthcare providers.  If you are living out-of-state you might be suffering a bit more than those in-state.  Several have found themselves being dunned for healthcare costs.  The ability to pay in-state providers is running behind six months.  Out-of-state providers are having collection agencies call the patients to provide payment.  This, of course, affects an individual’s credit rating.  Unfair to all involved.  This could even mean denied services.

The Governor and the Comptroller has provided figures of $11.5 Billion in the State’s Budget Deficit.  But, the real figure is at least $12.4 Billion.  Looks like it could grow even more.  Why?  Because the State is not receiving the revenue it based the budget on.  Invoices were held over from last year and the year before and the year before, etc. to make it seem that the State balanced its budget.  In a recession there is definitely a trickle down affect.  However, it doesn’t mean that State employees should be the only ones to help fund the deficit.  What can be done in a very short time?

Plan to come to the Rally Day now scheduled for Wednesday, April 22nd.  There will be some changes made from previous years.  There will be no big tent.  Everyone is to assemble on Second Street in front of the Lincoln statute which is located on the East side of the Capitol at 10:30 a.m.  There will be posters, postcards, Fact Sheets and a few speakers.  Even Governor Quinn has been asked to address the group.  Universities are now sending busses to this event.  We encourage you to gather the facts, make a noise and join us as we look for at least 2,000 of you to participate.  We also would ask that for those of you who cannot attend, that you make calls to your legislators, visit your legislators and help them to understand the unfairness of the Governor’s proposals.  Fact Sheets/Talking Points will be provided on the SUAA website for those of you who cannot make it to Springfield on April 22nd.  Also for those of you planning to attend, please make sure to secure appointments with your legislators. 

More information is forthcoming.  Let the office know who will need a ride.  Bring carloads if there isn’t a bus available.  SUAA will be providing some assistance for attendees.

The legislators will be on Spring Break from April 6 until April 21.  This gives only a bit of time for everyone to ready themselves for the Rally.  Some will be calling it “Advocacy Day”.  Call this day whatever you want as long as it gets you involved! 

A two tiered pension system isn’t going to be a cake walk.  It isn’t going to attract the best of the best to work for the State of Illinois.  In fact, when the recession is over, people will look for jobs outside of State employment.  What was secure will be no more.

What is in store for new hires
The Governor wants to match Social Security.  Unreduced benefits come at age 67 for those born after 1960.  Benefit formula would be changed to participants covered by Social Security would earn 1.5% of final pay per year of service.  Participants not covered by Social Security would earn 2%.  Final pay would be defined as the final eight year average, and considered compensation would be limited to base pay.  Credited service would be limited to 35 years.  The benefit would be payable as a life annuity.  Now here is a catch.  This means that the pension is payable only as long as that person is alive.  This does not allow for survivors to receive additional pension payments from their spouse.  Even Social Security provides that a spouse is entitled to a survivors benefit unless of course you fall under the Pension Offset Provision.  This would hurt those under SURS and TRS the worst. 

COLA which is now enjoyed by many who are retired will take a hit.  The Cost of Living Adjustment would be 50% of the change in the consumer price index or 3%, whichever is lower.  The annual COLA would be applied to the amount of the annual benefit awarded upon retirement.  This change would bring the five state retirement systems approximately in line with other public employee retirement systems.  Note:  2010’s CPI is 1/10 of 1%. 

New participants will contribute ONE percentage point less than currently required contribution rates.   Current employees will be asked to share the burden for the pension benefits they are entitled to.  Therefore, the employee contribution rate for current participants is proposed to be increased by 2% points. 

The good thing is that none of these proposals have passed yet.  This is why you need to be in Springfield on April 22nd.
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The plan to change the public-employee pension systems boards was unveiled today.  The current terms of the gubernatorial appointees would end.   There are currently 36 appointees.  Senate President John Cullerton and House Speaker Michael Madigan are pushing SB364.

 
 
In case you missed it, the State Journal Register had an editorial on Thursday, March 26 that agreed that the State’s burden should not be put on the backs of the public employees.  This newspaper was the only newspaper in Illinois that picked up on Ed Geppert’s, president of IFT, letter to all editorial boards.
                           
Three of the pension systems’ boards would expand in size; TRS would remain as is.  This is part of a goal to rid the State of anyone who was appointed by former governor Rod Blagojevich.   If this legislation passes, Governor Quinn would have 30 days to appoint new members.  He would also have the option of retaining those appointed by Blagojevich.

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The past week was spent in meetings with the Higher Education Legislative Coalition and the Illinois Retirement Securities Initiative.  Other occasions were the Taxpayers’ Federation of Illinois Spring Symposium, the Center for Tax and Budget Accountability Symposium, the Taxpayers’ Advisory Board Meeting and various hearings at the Capitol.

SUAA is participating in the new proposals and other controversies.  If you are not a member, we ask that you please consider becoming another voice among our membership.  All you have to do is respond by email to this mini-briefing.