Wednesday, May 08, 2013

Cullerton defends union-backed legislation to change pensions

By Jamey Dunn

Despite threats of at least one lawsuit challenging the constitutionality of his plan, Illinois Senate President John Cullerton today defended his pension reform bill as the best option on the table.

Cullerton announced this week that he had reached a deal with unions that represent public employees and teachers. However, one group that represents retired teachers says the bill violates the pension protections in the state’s Constitution. “They have their own legal theories. I can’t stop anybody from suing. But clearly, this is a stronger argument for the constitutionality than the other versions that are out there,” Cullerton said today during a committee hearing on his bill. The Senate Executive Committee approved Senate Bill 2404, and Cullerton says he plans to bring it up for a floor vote tomorrow.

Union officials say the bill is constitutional because it offers current and retired employees several options, which give them something in exchange for reducing benefits. (See this blog from Monday for details on the options.) Last week, the House approved SB 1, which would unilaterally reduce retirement benefits. House Speaker Michael Madigan supports the plan, but Cullerton and the unions say it is unconstitutional. “We have always acknowledged that contract principles of offer acceptance and consideration are the way to go to reach an agreement to solve the fiscal crisis,” said John Stevens, a lawyer for the We Are One unions' coalition.

Michael Carrigan, president of the Illinois AFL-CIO, said the unions involved in the negotiations agree. “We cannot ignore the Illinois Constitution. The Constitution mandates that our public pension benefits cannot be diminished or impaired. We believe this legislation in its present form represents a fair, responsible and constitutional solution to the public pensions problem.”

Cullerton said that even though individual members of the pension systems or other groups could sue, that agreement matters. “As I’ve said before, anybody can sue. But the fact that these unions are not going to sue is very significant,” he said. “I’m not on the Supreme Court. I’m not saying that I know exactly what the court’s going to do, but a much stronger argument can be made for the constitutionality of this approach because it’s taking the very plain words of the Constitution, and then acknowledging it and then working around it.”

But the Illinois Association for Retired Teachers is not on board. “To be sure Sen. Cullerton’s legislation represent a willingness to include workers and retirees in this process,” said Bob Pinkerton, vice president of the Illinois Association for Retired Teachers. However, he said that the association was not involved in the negotiations over the bill and cannot support it. “The IRTA believes that this legislation diminishes the state’s responsibility to a contract to which we fulfilled our part in it’s entirety. The IRTA believes that this diminishment does not come with any choice that is beneficial to its membership.” Pinkerton compared the options offered to retirees as a choice between having a gun to their heads or jumping off of a cliff. When asked whether the association would sue if Cullerton’s plan becomes law, Pinkerton said, “We would hope that it would not come to that, but we would reserve the right to do so if it appears that we need to.” He said the group has a legal defense fund and could afford a court challenge.

Leaders from two of the states teachers' unions — the Illinois Federation of Teachers and the Illinois Education Association — said many of their members, including retirees, support SB 2404. Both the IFT and IEA were involved in the negotiations over the plan. “We do have overwhelming support from our members, and obviously we're going to have some who disagree. ... But I have heard from retired members as well as active members who are saying: ‘Thank you. This is what we wanted you to do, to be at the table, to make a constitutional and fair proposal and work to support our pensions,’” said Cinda Klickna, president of the Illinois Education Association.

Critics of Cullerton’s plan say it would not do enough to reduce the unfunded liability, now pegged at nearly $100 billion. Sen. Matt Murphy, a Palatine Republican, urged Cullerton to call SB 1 for a vote. “I just don’t think this solves the problem and saves enough money, and I think it invites us to have to be back here far too soon to have to face this again. The House bill isn’t perfect. Nobody’s happy about it. But the reality is, it passed that chamber, it has broad support in our caucus and the governor has said he’d sign it.” But Cullerton noted that a similar plan already failed to pass in the Senate. “We’re trying to get 30 votes here. That bill fell short. That’s another problem that we haven’t talked about.” To that, Murphy implied that Cullerton could do more from his leadership position to put votes on SB 1. “There are ways that things work around here, and sometimes they work a little better with a little elbow grease when that’s applied.” With a laugh, Cullerton responded: “Well, maybe you can change your mind on this bill. I don’t know.”

Madigan’s plan is expected to shave almost $30 billion of the unfunded liability and save the state $140 billion in future pension costs. Cullerton said that since employees would be offered choices, his bill presents a range of savings. He said that could reduce the liability by a figure between $8.5 billion and $15.7 billion and cut the overall future pension costs by between $45 billion and $52 billion. “You don’t save as much money along the way. I admit that,” he said. But he said his plan is a “much less risky approach” because it attempts to satisfy the pension clause in the Constitution. Supporters of the House plan have argued that the state’s fiscal crisis and pension problem, which is the worst in the nation, give it standing to ask for special powers from the courts to address the unfunded pension systems.

Sen. Kwame Raoul, a Democrat from Chicago, said that just because both plans could face potential lawsuits, it does not mean they are equal. “The notion that comparing two bills and saying, ‘Well, people may sue [over] either bill, and so basically, they’re basically at the same risk’ is garbage, essentially. Because it doesn’t take a lawyer to look at the English language and look at the explicit language in the Constitution that protects pension benefits as a contractual relationship,” he said.

Cullerton has said he is open to tweaks being made to his bill if it makes it to the House. However, Carrigan today warned that if changes were made, the unions’ support would be swiftly withdrawn. “If that happens, we all lose.”

Carrigan said of the measure, “Our position today [is that] this is final, bottom-line agreement that has been memorialized in the bill.”

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