Quinn’s Pension Assembly > Bob Lyons

5 Mar

I heard Mike Nolan and Elaine Nekritz, the two Democrat members of the Governor’s Pension Assembly, speak at an IFT legislative breakfast on Saturday and that along with reporting out of Springfield indicates the four members of the group are starting in four different places. One piece of good news, both Nekritz and Senate President John Cullerton have said that taxing pensions and annuities is not on the table. “That is a very challenging proposal to try to get an majority of 60 votes in
the House and 30 in the Senate,” Nekritz said. “Particularly in a redistricting election year, and particularly on top of another recent tax increase.” And in the Springfield paper, John Cullerton who has mentioned the idea of taxing retirement income before, flatly ruled it out. “It’s not on the table with me.” Cullerton said. “I would never go that way. We’ve had enough tax increases. Now we are talking about constitutional reforms.” Taxing pensions does not raise that much money and legislators are coming around to the idea that it would not be worth the effort.

Nekritz also claimed that SB 512, the bill that would have raised teacher contributions and provided for a 401K alternative, and that she voted for in the House Pension Committee is no longer being considered.She told our group that she “voted for it not because it was good solution, but because it was the only solution that they had.” She also said she was glad that there were not enough votes to bring it to the floor. “We have moved on and we are considering other ideas,” she told
us. Obviously in Springfield no bad idea ever truly goes away, so any part of that bill could reappear.

One idea that we know is being considered is shifting the cost of current teachers’ and community college and public university employees’ pensions to the local school districts and universities themselves. Of the $2.4 billion that the state is required to pay to TRS this fiscal year, approximately one-third or $800 million would represent “normal cost” and the other two-thirds is part payment on the long term unfunded pension obligation. Since traditionally Chicago taxpayers were largely
responsible for paying the pensions for the Chicago Public Schools, it is no surprise that Cullerton, Governor Quinn, and Speaker Mike Madigan have all spoken in favor of this transfer. More of a surprise is that they have also argued that the increased cost to the schools would not necessarily lead to the necessity of property tax increase but that “the
schools could find the money.” As you will have read, suburban and downstate legislators, both Republican and Democrat, were outspoken in their opposition to this proposal because the schools could not afford the increased cost and property taxes would have increased. Talking to the Business Manger of my high school district, he said it would cost the district over $7 million. When I suggested that the bill could be proposed with a provision that would allow school districts to tax above
the tax cap if it is to be used to support pensions, he said it would make no difference to the school board that they just would not want to vote to increase taxes. Cullerton has talked about implementing the transfer in stages, but if schools were reluctant to raise taxes than their only alternative would be to take the money out of the quality of the education they provide. It has been pointed out that a significant advantage of having the schools increase their contribution to the
pensions is that there would be a greater certainty of payment than is the case for the state’s share. That is certainly true and as a TRS trustee it would be welcomed, but I would know that it would be paid for at a terrible cost for Illinois students and teachers. Other than city of Chicago representatives, I do not see many legislators that will vote for this solution.

We should all understand that anything that affects what teachers, schools and the state pay into the pension fund affects us because we are living on that money. The retiree coalition made up state employee retirees, university retirees, Chicago and downstate teacher retirees met with the Governor’s pension group last week and will meet again this week. Decisions made about us should not be made without us. We need to be at the table and fortunately we are.

Bob Lyons

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