Important message from Bob Lyons, TRS Trustee

5 Jun

What will happen next on pension reduction in Illinois will depend in part on if the union representatives along with the IRTA are allowed to actually be part of the process of negotiation. Do you recall hearing from Tom Cross, minority leader in the Illinois House, and Christine Radogno, holding the same position in the Senate, that our people were not part of the process in the spring. Of course the reason they may have thought that was the case could be because Cross and Radogno weren’t even in the room. The unions were there, but the Republican leaders were not, and while our people were making proposals to Speaker Madigan and President of the Senate Cullerton, my impression was the two Democratic leaders were themselves talking more than listening. Certainly SB1673 was not the result of negotiation. The bond rating agencies are threatening to drop the rating of Illinois state bonds, already the worst in the nation, by two notches, which would significantly increase the cost to the state to borrow. You can count on the Governor and now all four legislative leaders knowing that must make a decision to show they can pay the cost of the pensions going forward. The question remains if they will let the union and IRTA leaders be part of the process and actually consider their possible solutions in the hope of gaining some degree of union support for their final decision, or will they decide that the unions will be of no help, would never give them support for what they feel that they need to do. That the legislative leaders are not looking to raise new revenue, but to both reduce costs and shift part of the burden to other levels of government makes it more likely that they will just do their own thing and let our representatives just be spectators.

With 60% of each chamber needed to pass legislation and the Dems lacking that number in both the House and the Senate, the necessity of agreement from all four leaders means they will need to put aside their recent animosity to go forward on with any action. Media reports would certainly suggest that they will start their deliberations with the existing components of SB1637 and they may quickly work out an agreement on the forced choice between foregoing the present COLA to keep the access to state health insurance or losing the access to state provided insurance in order to keep the automatic three percent compounded. Their likely readiness to accept such a plan despite the fact that they have been told that it is unconstitutional would seen to indicate that they simply don’t care about the constitution, or that somehow they are convinced that providing a choice even between two bad alternatives makes it alright. I was part of a summit of public employee pension fund trustees that meet last week with people from the University of Illinois, including a constitutional scholar, and they said the plan was unconstitutional. Despite the professors’ conclusion it is likely that a narrow majority of legislators was ready to vote for that part of SB1637 last Thursday. The agreement fell apart with partisan infighting and the disagreement over the shift of the normal cost of the pensions to the local school districts, community colleges, and state universities. The Democrat leadership, all of whom reside in Chicago, are committed to moving the pension cost of current school employees to their employers, which would reduce state contributions by a third. To achieve that savings for the state, Quinn, Cullerton, and Madigan will have to convince not only Republicans but suburban and downstate Democrats that such a cost shift could be done without raising property taxes. Taking the money from teacher pay and the cost of education would likely be their argument though they could be counted on to describe it in more palatable terms. Our legislators need to know that there will be serious and long term consequences to the quality of education across the state.

More that three thousand retired teachers that are sixty-five or older lack enough credits for Medicare and more than thirty thousand others are under the age of sixty-five. For many of these annuitants a coerced choice between access to health insurance and a compounded COLA could have terrible results. Our legislators are home, they are in their home offices, and they need to understand that their decisions do more than change numbers but that they affect people, seriously affect people. They need to hear the stories of retirees that have had multiple surgeries in a single year and of those that take life-saving drugs that would cost them thousands of dollars a month outside of their insurance policy. Even those of us with excellent health can be a blood clout or a moment of distracted driving away from a very different need for health insurance that we can depend on. I was surprised to learn that the State of Illinois was counting on between fifty to seventy-five percent of both active and retired teachers to give up the best benefit that we have in a compounded COLA for the possibility of access to the TRIP program that is facing a very uncertain future. Ask the legislators what kind of a trustworthy guarantee can the state give us today that their insurance will be there for the rest of our lives. Remind that they would have given us an ironclad constitutional guarantee last year that they would never ever threaten to take away our COLA.

Ever legislator that I talked to last year about SB512 told me to my face that they were only going to change the pension benefits of active teachers and they would never consider reducing the benefits of those of us already retired because it would be wrong. Well, it was wrong then and now to change the benefits of active teachers going forward and it was wrong then and now to change the benefits of annuitants. If the legislature passes this bill anywhere near what it currently promises and Governor Quinn signs it into law, the Illinois Retired Teachers Association and all of the state’s public service employee unions will march into court, sue and ask for an immediate injunction to stop the law from going into effect. Considering the literally tragic consequences and serious inconveniences that would stem from the forced decisions the law requires it would be impossible for the courts not to issue an injunction.

What part of the Illinois Constitution are the legislators expecting the courts to ignore. Take this with you when you see your legislator and tell them that our own representatives need to be in the room and part of any decision which is made.

Bob Lyons

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