Statement from President Klickna on Gov. Quinn's Budget Message

Colleagues: Today, Gov. Pat Quinn spoke about the state of the Illinois' budget. It was a mostly grim presentation; he talked about the need for budget cutting that will mean closing state health care facilities, prisons and reducing the number of state employees. The governor also spoke of the need to make cost-saving changes in the state pension and Medicaid systems. 

The only somewhat positive information for public education is that the budget proposal, containing so many cuts to so many programs, maintains funding for K-12 and higher education. In addition, the state will increase early childhood funding by $20 million. The Monetary Award Program (MAP), which provides college scholarships for needy students, will also see a funding increase of more than $50 million. 

The budget is a proposal and still must be approved by the state legislature. Pensions IEA leaders have been involved in discussions with leaders from other Illinois public employee unions to try to identify

Solutions to the pension crisis the governor spoke of today. The Illinois Labor Pension Coalition has been meeting regularly for months. More recently, the coalition has had conversations with the Governor, legislative leaders and various state legislators, exchanging information and looking at scenarios that might help lead to proposals that can address the Illinois pension problem. IEA has stated from the beginning that we are open to discussing ideas that will help put the state of Illinois and the state pension systems in better fiscal health. We also have made clear that any proposals that IEA decides to support:

      •    Must be constitutional

      •    Must be fair to our members

      •    Must help stabilize the pension systems. 

Here are some excerpts from the governor’s speech: “We must stabilize and strengthen our pension systems to prevent them from swallowing up our core programs in education, health care, and public safety and to ensure that we can pay all our bills. We need to do pension reform in a way that’s meaningful, constitutional and fair to the employees who have faithfully contributed to the system. We can do this in a way that does pass constitutional muster.  But everything has to be on the table.”

“…Historical funding practices, employer contributions, employee contributions, the retirement age, and the cost of living adjustment. When it comes to solving our pension challenges, everybody must be in and nobody left out. It should be noted that only 22 percent of the $5.2 billion pension cost this year is actually for the retirement costs of state employees. More than three quarters of this pension cost is for non-state employees—from suburban and downstate teachers, to our university and community college employees. Every unit of government has a stake in this mission. We must repair this broken system.  And we must do it now.”

We are glad the governor reiterated his commitment to a constitutional solution and we applaud his firm position that the problem should not be the sole responsibility of the participants in TRS, SURS and the other state employee pension systems.  Our members have always made their pension payments. It is the state that has failed to meet its obligation to the systems, causing the crisis. It also is clear from the governor’s remarks, as well as statements from all of the legislative leaders, that currently employed state pension system participants will be expected to play a role in fixing the problem.  IEA leaders and staff are fighting to protect the pension benefits of our members. The goal is to protect the state pension systems, thereby ensuring our members get the benefits for which they have paid. The active participation of IEA members in back home lobbying and other actions will lead to the best possible result for the members.  Please check the IEA website regularly for information about pensions and other key issues of concern.

Schools Say They Can’t Absorb Pension Costs

Illinois Senate President John Cullerton

 

Even though one-third of Illinois’ schools have been placed on financial watch lists by the state Board of Education, leading Democrats are moving closer toward a plan that would shift teacher retirement costs from the state to schools.

 

The new plan–which gained ground after House Speaker Mike Madigan mentioned it last month during a speech at Elmhurst Colllege–would force school districts and the state’s public universities to pay for part of the costs of their retiring teachers going forward. Previously discussion about the state’s pension troubles had focused primarily on the prospect of reducing benefits for future retirees. 

 

Illinois Senate President John Cullerton, who has been floating the idea with newspaper editorial boards, said the plan would allow individual school districts and state colleges to make choices about how to address the pension problem. Some districts and universities would absorb the cost. Others might be forced to take a tougher stance with teacher unions during contract talks and negotiate pensions as part of overall salaries and benefits, Cullerton said. 

 

“What we’ve suggested is for local school districts to have a little skin in the game when they hire teachers and administrators and set their salaries,” Cullerton said. “They should be required to set aside money into the pension system for their future retirees.”

 

But the plan is running into resistance from groups including the Illinois Association of School Boards, which said Tuesday it would force local districts across the state to make an additional $800 million in contributions toward teacher pensions–likely leading to cuts in education spending, hikes in property taxes, or some of both. Districts already are too strapped to simply absorb the cost of pensions, according to Ben Schwarm, the association’s executive director.

 

“On the heels of an income tax increase last year and taxpayers looking at the fact that the state still has a huge budget deficit, and then they’re looking at a cut to education or a property tax increase, a lot of taxpayers are going to look at it and think it’s not the best idea,” Schwarm said. “I think legislators see that, too.”

The Illinois State Board of Education put 94 school districts on two of its financial watch lists last year with another 203 flagged as potentially worrisome. 

 

But the state’s top Democrats have signaled their support for the new pension funding plan in recent weeks as they discuss overall pension reform. State leaders are getting more serious about solutions as they head into an election year facing more than $8 billion in unpaid state bills and more than $80 billion in unfunded pension liabilities. Talks on Senate Bill 512—legislation that would have reduced pension costs by requiring current workers to pay more into the system or accept a lower benefit—stalled last fall. 

 

Currently, Chicago Public Schools is the only district that pays its share toward teacher pensions without state help. All other suburban and downstate districts rely on state funding and contributions from teachers themselves to fund teacher pensions. 

 

And state funding has dwindled. For more than two decades, the state failed to pay its full share into the pension systems. This created an imbalance that now imperils the long-term survival of Illinois’ five pension systems, which serve the state’s teachers, university workers, state employees, judges and General Assembly retirees. 

 

Cullerton said the state wouldn’t pull out completely from paying into teacher pensions. But help from the districts would ease the state’s budget crunch and, potentially, free up more money for schools, he said. 

 

Poorer school districts already receive more money from the state than wealthier districts through general state aid, a sliding-scale formula that directs more resources to low-income areas. But even those schools would not be immune, Cullerton said. 

 

“When you negotiate a teacher salary, whether you’re in Harvey or Winnetka, you should always have the responsibility, as we do in Chicago, to put aside some money for the future pension costs of that teacher,” Cullerton said.

PENSION UPDATE FOR FEB. 9, 2012

Discussions that could change state pension policy, involving policymakers and unions representing public sector workers, have begun in earnest. 

 

Here is the latest information on those discussions.

 

Three meetings held this week were related to the issue of pensions. All three meetings involved representatives of the Illinois Labor Coalition, which includes IEA, IFT, AFSCME, SEIU, the Illinois AFL-CIO, as well as other labor organizations.

 

Early in the week, coalition representatives met together. Later in the week, the coalition participated in two separate meetings, the first with the presidents of state universities; the second with Gov. Quinn's pension panel.

 

The Quinn pension panel is led by the governor's senior advisor, Jerry Stermer, and is comprised of representatives chosen by the four leaders of the legislative caucuses:

• Sen. Mike Noland (D-Elgin),
• Rep. Elaine Nekritz (D-Des Plaines).
• Sen. Bill Brady of (R-Bloomington),
• Rep. Darlene Senger (R-Naperville)

 

Legislators are being joined in the meetings by senior staff representing all four legislative caucuses.

 

While it is fair to say that the negotiation process has begun, it should be noted that there are no agreements and no proposals have actually been put on the table by any of the parties.

 

While no formal proposals have been made, Senate President John Cullerton (D-Chicago) spent the week  publicly discussing pension ideas, including a proposal that would shift the state's pension contribution responsibility to the local school districts.

 

Again, no members of the pension coalition have taken a position on any of the ideas and nothing has yet been presented in the form of a proposal by anyone participating in the negotiations.  

 

IEA's position on changes in pension policy is that:

• Any proposed changes must be legal under the Illinois Constitution.
• Any changes should be fair to our members.
• Any change must maintain the stability of the state retirement systems.

 Read more about the IEA and pensions.

 

Coming up will be more meetings of the Illinois Labor Pension Coalition with policymakers. IEA members are encouraged to make their feelings known to their state representatives and senators via email or by participating in in-district lobbying.

Pension Update from January

Samuel E. Yusim, Region 37 GPA
***********************************

This is the first posting in what we expect to be an ongoing series of pension reports to IEA members.

The focus will be on both the legislative debate concerning the state pension systems and the actions that IEA (in concert with other labor organizations) is taking to protect member pensions.

Members are encouraged to email questions about pensions to iealistens@ieanea.org

Pension funding and benefit discussions are taking place among policymakers and the various labor unions whose members contribute to any of the state pension systems. IEA is an active participant in the discussions; our members must be represented wherever their pensions are being discussed. The process benefits from the expertise IEA staff and leaders can bring to the discussion.

The IEA has made clear that the organization is willing to consider pension proposals that meet all of the following criteria:

1. Proposals must be constitutional
2. Proposals must be fair to IEA members
3. Any change must maintain the stability of the state retirement systems.

Gov. Pat Quinn has declared his interest in resolving the pension issue in 2012. To that end, the governor has announced formation of a pension panel comprised of members appointed by the state legislative leaders. This group, which has already had its first meeting, is charged with initiating the discussion on how the pension issue should be addressed.

IEA, along with the other unions, will participate in the panel’s discussions when invited to do so.

In addition to the governor’s pension activity, IEA is also engaged in pension conversations with the various legislative caucuses and with members of the Illinois labor coalition (which includes IFT, AFSCME and the AFL-CIO).

IEA leaders and staff also meet regularly to discuss the pension issue. NEA is providing resources to assist with the pension issue.

IEA has not committed to support any changes in pensions.

Members of the labor coalition have discussed a number of proposals that have come out of the legislature for the purposes of trying to understand what the potential impact of any proposal would be, should it ever be passed into law and upheld by the courts.

Among the ideas that have been floated by legislators are:

• Shifting a portion of the “normal cost” of pensions (year to year expense for
benefits earned by active members, not the underfunding cost) to school districts,
 
• Increasing member contributions to address the address the funding problem,
 
• Creating a “Pension Stabilization Fund” with dedicated revenue from a specific
source, such as gaming,
 
• Modification of actual benefits (COLA, retirement age, multiplier, final average
salary),
 
• Reducing the funding target for the state systems from 90 percent to 80 percent
in 2045.

Again, IEA has not taken a position on any of these proposals. Some of these ideas are clearly unconstitutional.

IEA remains willing to listen because we believe it is in the members’ best interest for the organization to be actively engaged. The pension systems require consistent funding that works for our members and the state. We believe a solution to the funding problem is needed, but it must meet our three principles.

Without input and serious negotiation with the affected organizations, the likelihood of the legislature passing a truly bad, unconstitutional proposal, such as SB 512, becomes more likely.

We will fight SB 512 and any other unconstitutional, unfair and destabilizing pension proposals with everything we’ve got.