State Universities Annuitants Association

October 19, 2009

Hang on to your hats folks, the financial crisis of the State is going to get worse!

The first three days of Veto Session ended on Friday, October 16th. The biggest item to draw attention was the passing of SB 1180 which will allow funding for the Monetary Award Program (MAP) for spring semester. The MAP grants are available to all community colleges and universities – both public and private. There had been talk of introducing legislation that would limit the grants to the public universities and the community colleges. However, the bill was overwhelmingly passed in both Houses without any changes. The only nay vote came from Senator Michael Jacobs (D-36, East Moline) calling it “disingenuous” (the Governor already has the power to fund the grants). Before Veto Session, Governor Quinn had made an appearance on several campuses throughout the State to rally for the reinstatement of the MAP Grants. Interestingly, it was Governor Quinn who had cut second semester funding of the MAP Grants to help repair the budget gap.

At this time, there is no income source for the MAP Grants. Normal funding for a full year is $425 million. The Legislature gave Governor Quinn the authority to spend the additional $205 million but that is not the same as giving the Governor the money to spend. Rep. Bob Pritchard (R-70, Hinckley) introduced HB 4622 that would possibly raise over $100 million to fund the MAP grants. The plan would provide an amnesty period from January 1, 2010 through February 15, 2010. It allows that interest and penalties not be collected for taxes due after June 30, 2002 and prior to January 1, 2010. The Governor and other Democrats have asked for $1.00 tax increase on cigarettes instead. To pass either idea would require a three fifths vote in both Houses. While the Democrats are not inclined to agree to the tax amnesty plan, it should be recognized that there have been three plans since 2003. Governor Quinn is hoping to find a solution during January.

Rep. Kevin McCarthy (D-37, Orland Park) sponsored House Joint Resolution 75 to study the “efficiency and sustainability” of the MAP. The resolution passed the House and was assigned to the Senate Higher Education Committee. The Illinois Board of Higher Education will be responsible for producing the study with input from ISAC and ICCB. The study is due no later than February 28, 2010.

The Pension Modernization Task Force has been meeting since June. The final report is due to Governor Quinn by November 2^nd. There does not seem to be a consensus on many areas of the discussion or with the subcommittees. Therefore, this might be a compilation of opinions rather than recommendations. To access the minutes and reports presented at the Task Force Meetings follow this link: http://www.illinois.gov/gov/pensionreform. The Commission on Government Finance and Accountability is responsible for compiling the final report which will also be available to the public.

The health care problems for those covered under the State Employees’ Group Insurance Plan are not going away any time soon. Health claims have been paid through February; dental claims remain 120 days behind. There are no plans to make future payments. Linda Brookhart, SUAA Executive Director spent an hour with David Vaught and Steve McCurdy, Assistant Director at CMA, discussing the financial problems associated with CIGNA. Five copies of a report stating email testimonies from SUAA members were made available to the Governor’s office. Questions regarding the Health Insurance Reserve Fund were presented. The same report has been sent to all legislators; State’s Attorney Lisa Madigan; Comptroller Dan Hynes; and, Auditor General Bill Holland. Senator Larry Bomke (R-50, Springfield) says he will introduce a Resolution during the second week of Veto Session. Other legislators have responded either by letter, phone, or personal contact. Rep. Chapin Rose (R-110, Mahomet) and Senator Michael Frerichs (D-52, Champaign) are interested in looking further into the health care plans and the inability to fund the claims with the health care premiums. Since then Health Alliance has been notified that it will not be receiving payments either. A spokesperson for HA said that people would continue to be treated without a requirement of prepayment. HA had received payments through July and August.

Other items talked about with then Senior Advisor to the Governor David Vaught was the possibility of asking the Federal Government to refinance the Pension Debt. The interest rate would be much lower – 3%. The second issue was income tax on pensions; possibly as low as $40,000 – this is for both public and private pensions. Another matter was a two-tiered pension system and of course, an income tax increase. There most likely will not be any outwardly discussion about income taxes until after the February 2^nd Primary.

HB 1409 sponsored by Speaker Madigan, Rep. Barbara Flynn Currie and Rep. Jack Franks, provides that “the Governor shall submit a State budget by the fourth Wednesday in March in 2010 (March 24, 2010) instead of by the third Wednesday in February. Effective January 1, 2010.” Placed on Calendar – Consideration Postponed.

A hearing to address the Dental Insurance grievance filed by AFSCME will be heard on November 4^th. No other information is available at this time.

The Illinois Policy Institute unveiled a new website this past Wednesday – www.IllinoisOpenGov.org. It will not be available until later this fall but its content will be of interest to Illinois Taxpayers, especially to those whose names will appear on the website. State employee payroll and retirement contributions; vendor names and amounts; and state retiree pensions will be disclosed. This information has already been provided to the Institute by the State Employees Retirement System, the Comptroller’s office, and other State departments. SURS will be included later. The Institute was able to gather this information due to the Freedom of Information Act (FOIA). Accordingly this information does not violate the privacy of state employees. It is stated that “every member of the public is entitled to see how much state employees make in their jobs and in retirement, both of which are funded by taxpayers.” There are websites available now that provide teachers salaries, but not their pension amounts.

There is the Illinois Transparency & Accountability Portal http://accountability.illinois.gov/ that includes information about state employee salaries, state agency expenditures, state agency contracts, corporate accountability and professional licenses. Through this, it is hoped that the citizens of Illinois and the media will have better information to base their decisions. Another note of interest is that the Paul Simon Public Policy Institute takes the information from D-2 reports filed with the State Board of Elections to compile totals of contributions to legislators by business/industry. Transparency is available we just have to know where to look.

As an FYI - Earlier this session, House Speaker Madigan attempted to pass a fumigation bill; it would eliminate all people who were hired under the Rutan law (bans hiring based solely on political patronage). The real target could have been John Filan, former Governor Blagojevich’s Budget Director and then named executive director of the Illinois Finance Authority. Quite recently, Governor Quinn moved Blagojevich appointed Ginger Ostro, Management and Budget Director, to a policy advisor’s position for the Illinois Student Assistance Commission. David Vaught, who had been the Senior Advisor to the Governor, has now taken the position of Director of Management and Budget. John Filan, who had resigned from his position at IFA, was hired back by the Illinois Finance Authority as an advisor. Governor Quinn will be keeping his folks (who include holdovers from Blagojevich) and Speaker Madigan, it seems, will not push for fumigation at least not at this time.

Before Veto Session is over, expect to see legislation that will ask for the General Assembly’s privilege of awarding scholarships to state funded universities be revoked along with free or lowered tuition for children and spouses of state funded universities.

Lastly, it is time to put on your hardhats folks. The passage of Public Act 96-0043 provides SURS with the full certified state contribution for FY2010 due to the sale of pension obligation bonds. But, the pension obligation bonds have not been sold as yet – Highway/Road repair funding came first due to contracts already in place. In the meantime, SURS has submitted monthly vouchers to the Comptroller’s office. Because the payments are not being made, SURS has continued appropriation authority as granted in Section 1.1 of the Continuing Appropriations Act, which provides a continuing appropriation from the General Revenue Fund when all other appropriations are deficient. At this writing, SURS has not received funding through August and September even though it had this mechanism available. SURS did receive $8.5 million which is sufficient only to cover the defined contribution SMP employer contributions.

As most of you are aware, the State is responsible for payments to the pension trust fund until the pension bonds have been sold and that money is available for the contribution. If the State does not make the necessary payments, additional assets in the pension trust fund must be sold to make the necessary benefit payments.

Letters of concern are being written to the Governor, the Comptroller, and the Leaders in both the House and the Senate.

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IF YOU ARE NOT A MEMBER OF SUAA, please join to make sure to know what is cooking for you legislatively. Thousands of voices are much louder than yours alone. It is quite easy to become a member! Either respond to this newsletter at suaa@suaa.org or call the State Universities Annuitants office 217.585.2370.

Let us know if you have a question, a concern, or just want to introduce yourself. If you want to volunteer, SUAA most likely has something to fit everyone!!!