They Failed (Again) - Thanks to YOU

Despite the last minute, desperate antics surrounding pension reform legislation in the Capitol today, the 97th General Assembly adjourned late this afternoon without voting on blatantly unconstitutional pension legislation that could have decimated the retirement savings of active employees and current retirees. Clearly, bill sponsors could not get the required votes to pass their bad proposal. That is because of YOU.

As the IFT has been proud to say many times before, this victory is the result of the activism and dedication of our members. This session, thousands of you called, visited and e-mailed your lawmakers and came to Springfield to rally and lobby, especially in recent days. In huge numbers, you made your voice heard and stood up for the pensions you have paid for and were promised.

Your extraordinary efforts combined with those of tens of thousands more members of We Are One Illinois coalition unions statewide, making all the difference. Together you sent a clear message to lawmakers that “A Pension Is A Promise.”

IFT President Dan Montgomery joined coalition leaders in Springfield to strengthen your powerful voice and to promote the coalition's message. In numerous meetings with lawmakers, through testimony in committee and in press conferences that garnered media attention statewide, Montgomery and other leaders urged lawmakers to do the right thing for Illinois' middle class public servants.

But this fight is far from over. We know that public employee pensions will remain the target of unfair, unconstitutional attacks in the days ahead. Thanks to the power of union solidarity and your activism, we are confident we will continue to prevail. IFT members and all public employees WILL be heard.

The members of the 98th General Assembly will be sworn in tomorrow afternoon in Springfield, and the next session begins in earnest in early February. The IFT and leaders in the We Are One Illinois coalition are already planning next steps in the ongoing fight to find long term, fair and constitutional solutions to the pension crisis that include SHARED sacrifice. So-called "solutions" that place the debt entirely on the backs of dedicated, middle class public servants who have paid their fair share will continue to be simply UNACCEPTABLE.

Thank you for everything you have done, and will continue to do, to protect your retirement security and that of ALL Illinois’ public workers. Watch the IFT Web site and your inbox in the days ahead for updates from Springfield and to learn what you can do next to ensure that state keeps its pension promise.

Publication: IFT-AFT Email

Publication Date: January 9, 2012

Amendment 10 to SB1673 Passes Committee(Includes SURS Summary)

First a great big thank you to all who have contacted or tried to contact their Representative. We do realize that the phones are somewhat paralyzed due to all of the calls. So for those of you who did not make contact do appreciate your efforts just as much.

Amendment 10 to SB1673 passed the House Personnel and Pensions Committee earlier today. The votes were as follows:

Yes – Nekritz, Biss, Currie, May, Schmitz, Senger
No - Burke, Poe, Morrison

It is thought that there will be another Amendment added; quite possibly on the House Floor.

At this time, it is still possible that Amendment 10 will be heard yet today as there is still lots of time left for House activities.

Please read the SURS synopsis of Amendment 10 below:

SB 1673 (HA #10)
Tier I Employee and Tier I Retiree Reform
House Amendment #10 to SB 1673 applies to members of the General Assembly Retirement System (GARS), the State Employees’ Retirement System (SERS), the State Universities Retirement System (SURS), and the Teachers’ Retirement System (TRS).

The following analysis is SURS specific.

Automatic Annual Increase Reform
Tier 1 participants and Tier 1 retirees shall not receive an automatic annual increases to their retirement annuity until January 1, 2020. Beginning January 1, 2020 and each January 1st thereafter, Tier 1 retirees age 67 and over shall receive an automatic annual increase that is equal to 3% compounded on annuities up to $25,000. Members receiving annuities in excess of the cap on automatic annual increases shall receive an automatic annual increase of $750.

Pensionable Earnings Limitation
Pensionable earnings shall not exceed the Social Security Wage Base (wage base is $113,100 for FY 13). Tier 1 participants that are receiving earnings exceeding the social security wage base as of the effective date are grandfathered and will be limited to their annual earnings rate on the effective date. Participants subject to a collective bargaining agreement or employment contract shall be exempt from this limitation until the expiration of the existing agreement or contract. No calculation of benefit shall include earnings in excess of this limitation.

Tier 1 Employee Contribution Increase
Tier 1 employee contributions shall increase by an additional 1% of earnings in Fiscal Year 2014, and by an additional 1% of earnings in Fiscal Year 2015 so that such participants shall be contributing 10% (11.5% for alternative formula participants) of earnings for Fiscal Year 2015 and each year thereafter.

Change to the State Contribution Schedule
The State shall be required to adhere to a funding schedule that provides an annual contribution sufficient to cover the employer’s normal cost plus an annual amount to amortize the unfunded liability so that SURS is 100% funded by 2043. Then, in Fiscal Year 2044 and each fiscal year thereafter, the State shall contribute an annual amount to maintain a funding status of 100%.

Additional State Contributions beginning in Fiscal Year 2020
Beginning in Fiscal Year 2020, $1 billion will be transferred from the General Revenue Fund into the Pension Stabilization fund on an annual basis. Such transfer will serve as an additional contribution to the required State contribution provided under Section 15-155, and the transfer shall be made each fiscal year thereafter until the 5 State Retirement Systems are 100% funded. This annual transfer of $1billion is available due to the expiration of debt service payments to pension obligation bonds issued in Fiscal Years 2010 and 2011 to fund the State Retirement Systems.

State Funding Enforcement
Beginning July 1, 2013, the state shall be contractually obligated to contribute to the System in each state fiscal year an amount not less than the sum of the state's required contribution. The obligation is a contractual obligation protected and enforceable under Article I, Section 16 and Article XIII, Section 5 of the Illinois Constitution.

Notwithstanding any other provision of law, if the state fails to pay in a state fiscal year the amount guaranteed under this subsection, the system may bring a mandamus action in the circuit court of Sangamon County to compel the state to make payment, irrespective of other remedies that may be available to the system. In ordering the state to make the required payment, the court may order a reasonable payment schedule to enable the state to make the required payment without significantly imperiling the public health, safety, or welfare.

Prohibition of Non-Public Employers
Employers that are not defined as an employer under the SURS articles shall be excluded from enrolling new employees in SURS. Those employees of such employers that are already SURS participants shall remain participants. SURS is given the authority to determine whether or not a person is an employee. SURS members shall not be eligible to receive service credit for a leave of absence for service with a teacher organization if that leave of absence begins on or after the effective date.

Severability
The changes made by this amendment to Acts other than the Pension Code are severable from the other changes made by this Act. The changes made by this amendment to an Article of the Pension Code are severable from the changes made by this amendment to another Article of the Pension Code. However, the changes made by this amendment in an Article of the Pension Code that relate to (i) automatic annual increases, (ii) employee or member contributions, (iii) State or employer contributions, (iv) State funding guarantees, or (v) salary, earnings, or compensation are mutually dependent and inseverable.


Source: Email to SUAA membership
Author: Linda L. Brookhart
Link: www.suaa.org

Weekend Cut Short!

The introduction of Amendment 9 to SB 1673 brought about much scurrying from those of us who have been involved these first few days of the Lame Duck session. By now most all of you have read in the newspapers about the content of the Amendment.

By the time you read this leadership will have met to determine what language is to actually be taken forward in a new or additional Amendment to SB 1673.

Thus far we know that Amendment 9 is identified as HB 6258 with some inclusions from Rep. Fortner's bill. The highlights for today's discussion are most likely:

• Cost-of-living increases delayed until age 67 (or 5 years after retirement) 
• Cost-of-living freeze for the next five to six years
• Limit on cost-of-living increases to the first $25,000 ($20,000 if a person is a SERS retiree who receives Social Security due to contributions made to Social Security through their State employment)
• A 2% increase in contributions phased in over two years with a guarantee that the State would make its required contribution
• Phased-in increase in retirement age for employees younger than 45 for those hired before January 1, 2011
• Cost shifting to local school districts removed - this would most likely be revisited at a later time
• An employee's pension would be based on his or her salary upon passage of the bill or the wage base for Social Security, whichever is higher
• The requirement of certain amounts to be transferred from the State's general revenue fund to the pension stabilization fund - if the State tries to skip payments, the retirement systems could go to court to enforce the law
• A cash balance plan would be created for employees who began work after January 1, 2011 or referred to as "Legacy Tier II participant" - a new cash balance plan participant is a person hired on or after July 1, 2013
• The deletion of tying the cost-of-living allocation to health insurance remains in place
• According to the Tribune "the proposals could result in shaving as much as $30 billion off the state's pension debt. The state has $5.7 billion devoted to pension funding this year and $6.7 billion for the next budget year . . ."

While the next few days will be quite trying we would ask all of you to stay on alert. Calling your
representative with concerns regarding their position on the new proposed pension legislation will give the SUAA lobbyists an idea of who to contact face-to-face at the Capitol.

What we know for sure is that a new Amendment will be proposed after today's talks.
Representatives will be at the Capitol starting at 2:00 p.m. on Sunday, January 6th. Calls can be
received at their Springfield Office.

The Senate is not scheduled to return until Tuesday, January 8th.

You are welcome to provide comments and concerns to the State office by email. John, Dick and Linda are currently monitoring the activity and will be reporting as activity progresses.


SUAA Mini Briefing
January 5, 2013
Link: http://tinyurl.com/ast7ymz

Lame Duck Session

Remember the big hype about Lame Duck session? The Senate and the House were going to meet from Wednesday, January 2nd through Wednesday at noon, January 9th, and yes, even through this weekend. Accordingly there were a number of issues that needed to be wrapped up before the new General Assembly would take office. At least the onlookers thought that there was much work to be done.

Now here it is Friday and the only activity was the We Are One Rally which was quite low-key as the Senate went home last evening and the House will not arrive until Sunday. The ralliers for today must have been greatly disappointed just as many were yesterday. Speaking of yesterday's rally, pictures can be found on the SUAA Facebook page.

The Senate did pass HB 5210 (Amendments 1 and 2) Wednesday which is a trailer bill to HB 1447 previously passed in the Senate as the Spring Session came to and end. However while there seems to be a lot of talk regarding this pension fix for two of the pension systems - Illinois General Assembly (GARS) and State Employees Retirement System (SERS) - the House did not take any action on HB1447. It was referred to the House Rules Committee (not on order of concurrence) at the end of Spring Session where it remains according to the bill's activity.

When the House returns on Sunday will an amendment be added to HB 1447 which will then need to be sent back to the Senate for passage or will the amendments added to HB 5210 suffice? Confused? Need a refresher? Read on! Remember these bills DO NOT affect the State Universities Retirement System (SURS) or the Teachers Retirement System (TRS) or the Judges Retirement System (JRS). In addition, these two pieces of legislation together could be considered a test case for pension changes going forward.

HB 1447 - Senate President Cullerton's sponsored legislation "provides that Tier I employees and Tier I retirees must make an irrevocable election either: (1) to accept changes in eligibility for, and the amount of, automatic annual increases in retirement annuity or (2) to avoid those changes. Provides that a person who elects the first choice may have any future increases in income included as compensation and is entitled to certain healthcare benefits. Provides that a person who elects the second choice forgoes those benefits. Includes an in-severability provision." This legislation is much like the content provided in SB1673 for all pension systems, again, except GARS.

HB 5210 - Amendments 1 and 2 contains relatively minor technical changes to the Illinois Pension Code. The amendments include ‘severability’ clauses that will become law if the Illinois Supreme Court rules part of 2013 pension reform is illegal. The amendments also change the time frame for implementing parts of another bill (SB 1447) currently in the House Rules Committee that reforms the State Employees Retirement System (SERS) and the General Assembly Retirement System (GARS). These amendments in HB 5210 only become law if the Illinois House of Representatives passes HB 1447 next week. In that case, the Illinois Pension Code will be amended to require (i) the election period established in House Bill 1447 of the 97th General Assembly to run from July 1, 2013 to November 30, 2013 (rather than from January 1, 2013 to May 31, 2013), (ii) those elections to take effect January 1, 2014 (rather than July 1, 2013), and (iii) to postpone the implementation of the new schedule of State contributions established in that bill.

Severability clauses are also commonly found in legislation, where they state that if some provisions of the law, or certain applications of those provisions, are found to be unconstitutional, the remaining provisions, or the remaining applications of those provisions, will, nonetheless, continue in force as law.

The purpose of HB 5210 is to ensure if the Supreme Court rules the irrevocable election process forced on SERS and GARS members is unconstitutional, other aspects of pension reform will nonetheless remain legal.

What can we anticipate for Sunday when the House returns? No one is predicting as there continues to be quite a number of issues up in the air. Has Speaker Madigan really been working the Governor to pass some type of pension reform? Or will it be decided to go with HB 6258?

Interestingly several civic groups came out in support of HB 6258 - Nekritz/Biss pension reform. Chicago Tonight, January 3, provides a complete interview on the pros and cons. Those groups that are supportive are: Metropolitan Planning Council, The Civic Federation, Chicagoland Chamber of Commerce, better Government Association, Illinois Chamber of Commerce and Chicago Urban League.

HB 6258 is possibly not constitutional and it does not provide a revenue fix but leaving these aside the pluses are: would reduce the State’s unfunded pension liability by an estimated $28 billion, or 29%, from $95 billion to $67 billion; would reduce the State’s required General Funds pension contributions in FY2014 by approximately $1.8 billion, or 29%, from $6.2 billion under the current funding plan to $4.4 billion. (This does not include $1.6 billion of required debt service payments on pension bonds.); the State’s General Funds pension contributions in FY2014 would represent an estimated 14% of State-source General Funds revenues, down from 20% under current law; the State’s General Funds pension contributions would peak at approximately $10.8 billion in FY2043, down from roughly $15.5 billion under current law. The share of State-source General Funds revenue consumed by pension contributions would be approximately 23%, down from 33% under current law; would gradually shift normal pension costs for the Teachers’ and Universities Retirement Systems at a rate of 0.5% of payroll per year to the employers that are responsible for salary decisions: school districts, public universities and community colleges; and would achieve 100% funding by 2043 and would create a legally enforceable right to compel the State and other employers to make required contributions.

Another report will come at either during or the end of Lame Duck Session - the Tribune had an article on the front page this morning relating to the pension "fix". It is well worth reading. . . Happy weekend!


SUAA Mini Session
January 4, 2013
Link: http://tinyurl.com/bzwsa5b

"Legislators Propose Innovative New Legislation on State Pension Reform"

Title: SUAA Mini Briefing:"Legislators...
Date: December 5, 2012
Link:http://tinyurl.com/a4mbt6b

HB6258 was introduced this morning with a 10:00 a.m. press conference led by Representatives Nekritz (D-57) and Biss (D-17). These two Representatives were not alone in the unveiling of yet another but possibly more comprehensive bill to address pension reform. Others standing up before the audience were Representatives David Harris (R-66), Chris Nybo (Lame Duck R-41), Kelly Burke (D-36), Kelly Cassidy (D-14), William Cunningham (D-35), Robyn Gabel (D-18), Ann Williams (D-11), Linda Chapa LaVia (D-83), William Davis (D-30), Sara Feignholtz (D-12), Jehan Gordon (D-92), Greg Harris (D-13), Elizabeth Hernandez (D-24), Charles Krezwick (Lame Duck D-37), Karen May (Lame Duck D-58), Deborah Mell (D-40), Cynthia Soto (D-4) and Michael Zalewski (D-21).

From the first it was made clear that this is not a perfect piece of legislation however it offers new ideas and it is a new start for continuing the pension reform talks. The leaders complimented themselves on being bold and pragmatic. Everyone in four of the five state funded pension systems would have to sacrifice; judges are omitted. In return the benefits would be sustainable and affordable. However, there is no actuarial support at this time.

The bill will be refined over the next month - everyone's input is welcomed.

It is believed that more Republicans will become co-sponsors. The interest for some in the audience was who was not in appearance to show support of this legislation. That too could come over the course of the next month.

The most obvious question that provided a bit of a stumble and with no clarification was the COLA on the first $25,000 (or $20,000). However, the answer seems to be that the COLA will be compounded. Therefore, on the first year COLA would be $750; the second year would be 3% of $25,750 or $772.50; third year would be $26,522.50 or $795.68 additional and so on.

The best part and most notable of this new legislation is (bravo for the Representatives recognizing) the omittance of the choice between COLA and access to health insurance.

Concerns are how the higher pension contributions will change the defined benefit amounts upon retirement. What is the actual impact on reducing the state's unfunded liability?

Rep. Nekritz believes the "plan . . . will survive a legal challenge because it contains a guarantee the state will make its obligated pension payments in the future. The major reason for the current pension debt is the state's failure to make payments into the system."

HB 6258can be found (all 228 pages) on the General Assembly's website. There will be several analysis's coming over the next month.

In addition you can review the following for certain focuses of the bill:

Overview: House Bill 6258 aims to end the years-long quagmire over pension reform at the state Capitol by combining the best parts of previous reform plans with some new ideas. The bill puts in place necessary limits on pensions to preserve the health of the systems moving forward, but it also provides historic new protections to help ensure the state does not again shirk its funding obligations.

Tier 1 Members (state employees in the current state pension systems)

Cost-of-living adjustments would apply only to the first $25,000 of the employees’ pension
o That limit is set at the first $20,000 for employees eligible for Social Security
COLAs will take effect as of the effective date of the bill when the employee turns 67 or five years after they retire, whichever comes first
o This applies to all employees and retirees who are currently receiving COLAs
Retirement age increases as of the effective date of the bill by:
o No increase for employees age 46 and older
o One year for employees age 40 to 45
o Three years for employees age 35 to 39
o Five years for employees age 34 and younger

Employees would be required to contribute more toward their pensions by:
o One percent for the first fiscal year the legislation is in effect (that would be Fiscal Year 2014 at the earliest)
o Two percent for each year thereafter

Pensionable salary – the amount of salary that counts toward a pension – is limited to the higher of the Social Security wage base or the participant’s salary when the legislation becomes law

Tier 2 Members (state employees in the alternative system created in 2010)

All new employees in the Teachers Retirement System and State University Retirement System would be in a cash balance plan
o Employees and employers both contribute to the pension cost and both have protections on benefits paid and costs accrued – a combination of the best pieces of defined benefit and defined contribution plans

TRS and SURS employees hired before the effective date this bill would become law can choose to remain in Tier 2 or join the cash balance plan

COLAs for General Assembly Retirement System members will match those of Tier 2 members in the other pension systems

Employer Contributions

Schools and colleges/universities will assume employer costs for benefits in the TRS and SURS systems now paid for by the state, with that responsibility shifting to them at a rate of 0.5 percent of payroll each year

TRS and SURS employers will pay the specific pension cost of any employee’s salary they increase, to prevent a school from increasing a superintendent’s salary and then having other schools share in the cost of paying that increase once they have the responsibility of paying the pension costs for their employees

Employer contributions will be on a 30-year level-funding plan to achieve 100 percent funding

Employer contributions will be enforced through court action or intercept of other state funds if payments are not made as required under the new funding plan

Revenue now being used to pay pension obligation debt will annually go to pay the broader pension deficit down once the pension obligation bonds are paid off
o This would mean $693.5 million per year going to pay off pension debt starting in Fiscal Year 2016, and $900 million per year starting FY 2020
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While the legislators are calling for action during the Lame Duck session in January, there has also been word that the newbie's will be the ones voting on any pension reform. Nothing is for certain. Being prepared is the best we all can do.

Both the House and the Senate have adjourned until 2013. The House is scheduled to be in on Thursday, January 3 through Tuesday, January 8 (including the weekend) with an additional date of Thursday, January 10.

Senate is scheduled for Wednesday, January 2 through Tuesday, January 8 (including the weekend).

Swearing-in ceremony of the 98th General Assembly will be at Noon on Wednesday, January 9.

The We Are One Illinois coalition is possibly planning Pension Preservation rallies for January 3 and 4 at the Capitol. More information to come.

The House and Senate calendars for the 98th General Assembly are posted on the SUAA website.
Click to see the House Calendar or Click to see the Senate Calendar

District and Springfield office information for all legislators is not available either and most likely will not be until late January or early February. Half of the Capitol is being remodeled thus making space more cramped.

Look for updates and responses to the newly presented legislation as it becomes available. If you have any comments or constructive ideas that could be shared to legislators regarding HB 6258 please either contact the sponsors of this bill or send them to linda@suaa.org.

SUAA's Legislative Steering Committee will also be taking a look at this legislation. There will be pension reform therefore it is important to make constructive contributions to the conversation.

SUAA will be working with the stakeholders throughout the Lame Duck session.
Make a daily habit of looking at the SUAA website for various articles of interest and updates on legislation.

Alerts will be forthcoming - as necessary. Dick Lockhart and Linda Brookhart will be following closely as January begins to unfold. John Carr will be available on a somewhat limited basis as he will be a new dad within the next few weeks.

For a well-rounded education on HB 6258 other reports can be found, of course, in newspapers, on the union websites, Illinois Policy Institute, Governor's website, Civic Federation, Civic Committee, Illinois State Chamber of Commerce, Capitol Fax blog, Illinois Channel and various other sites.

As we prepare for the holidays stay safe, stay happy, stay alert and most of all Stay Tuned!

"Bill Aims to End Long Impasse on Illinois' Most Critical Issue Before Legislature Adjourns" Press Conference in its entirety can be found at www.suaa.org