Tuesday, December 03, 2013

Public pension lobbying efforts
go down to the wire

By Jamey Dunn

Supporters and opponents of proposed changes to the state’s public pension systems are expecting close votes on legislation today.

A special conference committee, aided by some final negotiations among legislative leaders, produced a pension bill that has bipartisan support. However, those counting noses today say that the margin to get the bill passed is tight, especially in the Senate. Senate President John Cullerton did not attend a Senate hearing on the bill this morning. According to conference committee chair Chicago Democratic Sen. Kwame Raoul, Cullerton was working to round up votes for the new version of Senate Bill 1. Raoul said he would be doing the same after the committee adjourned. “It’s very close. It’s very close,” he said. Raoul said that lawmakers should ignore the opposition coming from high profile candidates and politicians such as Republican gubernatorial candidate Bruce Rauner and Republican U.S. Sen. Mark Kirk. “I think there’s a time when the politics of self preservation need to be set aside, and I think this is one of those times,” he said. “So I think some people need to visit the wizard and get some courage and vote the best interest of the state of Illinois.”

The proposal is projected to save $160 billion over 30 years and fully fund the pension system by 2043. It would reduce annual cost of living adjustments (COLAs) for current and future retirees. While previous plans have cut COLAs in a more straightforward way, this bill would apply differently to employees and retirees, depending on how long they worked and which retirement system they belong to. The current COLAs are 3 percent compounding interest. Under the new SB1, the COLA would be determined by 3 percent of salary or 3 percent of the product of years served multiplied by $800 for state employees or $1,000 for teachers and university employees. The COLA would be based on whichever number is smaller. The number for teachers and university employees is larger because workers in both systems generally do not get Social Security benefits. Some annual COLAs would be deferred for current employees upon retirement. The number is contingent of years of service. Employees younger than 46 would also have to retire later. For each year an employee is younger than 46, an additional four months would be tacked onto the time he or she would have to work to receive full benefits.

The proposal would also cap pensionable salary at $109,971, but that number would increase annually based on inflation. The plan would reduce the employee contribution toward retirement benefits by one percentage point and allow the systems to sue the state if it does not make its required payment. However, lawmakers could vote to change the payment schedule and reduce the annual payment. 

Raoul said that this new version of SB 1 is similar to a previous version, which passed in the House but twice failed to gain the votes needed in the Senate. “This is very close to the same level of savings of Senate Bill 1, it’s just put together in a different way.” Raoul did not support that legislation when it came up for a vote in the Senate, but he said his work on the conference committee has made him realize that he cannot get his way on every aspect of the issue. “We were in a stalemate, and we had to compromise. And this is where we are. This is our best chance to get this thing done to get it moving forward,” Raoul said. He added: “This is a tough vote, I will not deny that. ... We will have probably a very spirited discussion in our caucus.”

Union officials say that the new version of the proposal’s resemblance to the old SB 1 is part of the problem. “I am having flashbacks to the House’s SB 1. After months of conference committee meetings, the so called compromise bill that you consider today is nearly identical to where you started — a bill twice rejected by the Senate,” said Dan Montgomery, president of the Illinois Federation of Teachers. “There is only one way to describe that kind of blatant taking of ones life savings. We call it theft.” They called upon lawmakers to instead approve a union-backed plan that passed in the Senate last spring but was never called for a House vote. “We believe very firmly that there are problems that need to be solved and it in all of our interests as a state to solve them,” Montgomery said. Lawyers representing labor say that the bill is unconstitutional because it does not offer workers something of value in exchange for their benefits “There is no consideration. There is no offer and acceptance. There is no indication that anyone affected by this agrees to these changes. Therefore we’re left with the matter of unconstitutional changes [to benefits],” said John Stevens, a lawyer for the We Are One unions' coalition

Supporters of SB 1 say that the bill does offer workers and retirees consideration in the form of a funding guarantee and a reduction by 1 percentage point of employees' contributions to their benefits. Raoul said that no matter what was in the proposal, it would likely face a constitutional challenge. But he said hat the issue has reached the point where lawmakers must take action and see what the courts decide. “I think this bill will be challenged, and I think that there will be strong arguments that can be made on both sides of it, but we’ve got to get to that point. Let’s say that this bill was found unconstitutional. I think it’s very likely that the court would give us guidance as to what we can do. And if it’s found constitutional, then we’ve taken a major step towards securing our state. But we’ve got to get to that point. We can’t continue to just play this ping pong game and say that we can’t vote on anything because of a constitutional debate.”

Montgomery said that if the bill is approved and signed into law, his organization plans to file a lawsuit “a soon as we can.” But in the meantime, those on both sides of the issue are lobbying lawmakers hard. “I think they’re really faced with a choice. ... So they’re really coming to the brink of the abyss here, and some lawmakers have some real tough choices,” Montgomery said. “It’s very close. ... Very close in the Senate. I think there’s trouble finding the requisite votes on both sides of the aisle, but we will see.”

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