August 22, 2018
On August 21, 2018 Governor Rauner signed into law SB3046 (Public Act 100-1017). SB3046 was an initiative of IRTA's. The bill provides that on and after the effective date of this amendatory Act, eligible TRS benefit recipients and TRS dependent beneficiaries may elect to participate in TRIP (this includes participants in TRAIL) if they previously opted out of the program. The bill provides that the election must be made during the benefit recipient's annual open enrollment period, subject to specified conditions.SB3046 becomes effective immediately.
Senator Manar and Representative Gordan-Booth were the main sponsors of this legislation. In addition there were several other representatives and senators that co- sponsored the legislation.
August 14, 2018 TRS Good News!
The 30-year rate-of-return for the TRS investment portfolio was 8.3 percent, net of fees, for the fiscal year that ended on June 30, according to a preliminary analysis. This return beats the System's current assumed rate of return for the 30-year period, which is 7 percent.
The TRS portfolio now totals $51.3 billion, a 3.8 percent increase over the $49.4 billion in assets recorded during fiscal year 2017. TRS assets have increased by 80 percent over the last decade.
This good news refutes a recently-published story in Crain's Chicago Business which implied that the TRS portfolio carries a high degree of "risk" that "poses a threat" to member pensions. That is incorrect.
The truth is the portfolio's risk profile is the same as a generic portfolio comprised of 60 percent stocks and 40 percent bonds. The amount of risk carried by the TRS portfolio is monitored closely by the Board of Trustees and investment staff and is lower than comparable public pension systems.
TRS maintains a highly-diversified portfolio – a mix of stocks, bonds, real estate, private equity – as well as investments designed to protect the portfolio in the event that there is a future downturn in the economy.
Sincerely,
Teachers' Retirement System of the State of Illinois
July 16, 2018 IRTA
On June 29, 2018 the Governor signed into law HB5627. HB5627 was an IRTA initiative that increases the amount of employment as a teacher that a retired teacher may perform without impairing the retirement status; allows 120 paid days or 600 paid hours in a school year, but not more than 100 paid days in the same classroom. The law became effective July 1, 2018.
June 14, 2018 TRS
In recent weeks, a new website identifying 30,000 TRS members as a "$100,000+ Salary & Pension Club" has been circulated via social media and several news sites.
The website was created by the OpenTheBooks.com watchdog organization. In Forbes magazine, the group said that Illinois is home to "the most out-of-control" and "corrupted... education pay-and-pension systems..."
However, a closer look at the numbers shows that membership in this "$100 K Club" was the exception for Illinois teachers, not the rule.
TRS provided the group with records through a Freedom of Information Act request. There were 30,492 active or retired TRS members in 2017 who either received a salary or a pension of $100,000 or more.
But here's what OpenTheBooks.com chose not to mention:
- There were a total of 268,608 active and retired TRS members in 2017. Therefore, the $100 K Club comprised just 11.4 percent of these TRS members. In other words, 88.6 percent of active and retired teachers in Illinois were not members of the $100 K Club.
- School districts throughout Illinois paid 18,760 teachers a salary of $100,000 or more in 2017, out of a total of 160,488 active members.
- There were 11,732 retired members receiving a pension of $100,000 or more in 2017 – out of a total of 108,120.
- The average active TRS member salary in 2017 was $71,773. The average TRS pension in 2017 was $54,180.
TRS did not provide OpenTheBooks.com with any member addresses or other personally identifiable information, but was required by the FOIA law to sort member salary and pension information by the school districts where active members were employed and by the last districts that employed retired members.
Teachers' Retirement System of the State of Illinois
May 31, 2018 IRTA
IRTA proposed legislation, Sponsored by Senator Andy Manar, has passed both chambers unanimously, 111-0 in the House and 58-0 in the Senate.
The language from the previous bill HB 3080 was amended onto House Bill 5627. This bill increases the amount of employment as a teacher that a retired teacher may perform without impairing retirement status; allows 120 paid days or 600 paid hours in a school year, but not more than 100 paid days in the same classroom.
This legislation has an immediate effective date so will go into effect as soon as it is signed by the Governor.
May 30, 2018 IRTA
Today, May 30th 2018, Senator Andy Manar has passed IRTA's backed piece of legislation out of the Senate and it will now go to the Governor for his signature.
SB 3046 - Would allow any eligible TRS benefit recipients or TRS dependent beneficiaries to re-enroll into the Teachers Retirement Insurance Plan (TRIP) if they have previously oped not to participate in the program. Opting back into the program must be done during the annual open enrollment period. This legislation passed the Senate 57-0.
May 26, 2016 IRTA
Yesterday, the House passed SB 3046, the IRTA Legislation that will allow retirees to re-enter the Teachers Retirement Insurance Program (TRIP). This bill was amended in the House so now it will go back to the Senate for concurrence.
There has been no opposition to this bill thus far so it should be voted on in the coming week in the Senate. Then it will go to the Governor for his signature.
We will keep you up to date on any changes.
April 25, 3018 Political will is the missing ingredient in the Illinois pension recipe
Click below:
www.bondbuyer.com/news/political-will-is-the-missing-ingredient-in-the-illinois-pension-recipe
March 23, 2018
Political Action Update 3/22/18
Since there is no session this week, instead of a legislative update this week, I thought I would send out a short update on the Primary Election.
As I am sure you have heard, the results of the general election for Governor in November will be between Bruce Rauner and J.B. Pritzker. However, it wasn’t just the governor’s race that was the focus on Tuesday, there were also constitutional officer races that were interesting and 30 members of the General Assembly who are retiring which made for more open seats than normal.
First off, in the race for attorney general, Kwame Raoul narrowly beat out Pat Quinn for the chance to take on the republican nominee Erika Holder in the General Election in November.
Other constitutional officers with no primary opposition were Michael Frerich’s for Treasurer, Jesse White for Secretary of State and Susana Mendoza for Comptroller. All three will have opposition in the General Election in November though.
In the Senate there was one turnover that passed from one Democrat to another. Embattled State Senator Ira Silverstein, a 20-year incumbent, lost his seat to Ram Villivalam, the Legislative Director for SEIU. The reason for the primary challenge is Silverstein had been accused of sexual harassment last year.
In the House of Representatives, there was also only two incumbent legislators who lost. Rep. David Reis lost his primary battle after voting for the Budget last year and voting for the tax increase to fund the budget despite the Governor’s opposition to both. He was taken out by opposition who received the bulk of their funding from businessman Dick Uihlein.
The other member, Dan Burke, lost his seat primarily because of a change in the demographics of the district. Burke is an Irishman representing a majority Latino district and the Latino community came out in droves and voted for someone who they believe will be more representative of them.
For all the money that was spent in the primary this year not much actually changed legislatively. However, those seats that did change were heavily influenced by social media, and younger voters coming out to show their desire for change from the status quo.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
March 19, 2018 IRTA Legislative Meeting notes
Legislative Update: Mary Shaw and Andrew Bodewes presented an update on Senate bills, House bills and Resolutions which have been introduced and are currently being tracked.
Legislation supported by the IRTA:
- House Bill 3080 - allows retirees to teach up to 120 paid days or 600 paid hours in a school year, but not more than 100 paid days in the same classroom. This would sunset on June 30, 2019.
- House bill 4518 - allows retirees to return to work in subject shortage areas. This would extend the sunset date to June 30, 2019.
- House Bill 4738 – allows an Illinois tax deduction for Illinois-licensed teachers for supplies purchased with their own funds for their classroom and the deduction is exempt from the automatic sunset provision.
- House Bill 5137 – allows TRS to offer a 403B type benefit to those that wish to participate.
- House Resolution – states the proposed educational pension cost shift from the State of Illinois to local school districts, community colleges, and institutions of higher education is financially wrong.
- Senate Bill 2236 – provides that no tax credits may be awarded to donors to private schools until the minimum State funding level is met to public schools.
- Senate Bill 3045 – July 1, 2018 – June 30, 2020 increases the amount of employment as a teacher that a retired teacher may perform. Allows 120 paid days or 600 paid hours in a school year, but not more than 100 paid days in the same classroom.
- Senate Bill 3046 – allows TRS benefit participants and dependents to opt in and out of TRIP and TRAIL only during the annual open enrollment period.
- Senate Resolution 113 – the Illinois Income Tax Act should not be amended to permit taxing retirement income.
Legislation opposed by the IRTA:
- House Bill 5674 – each Pension System shall establish and post on its website a searchable database of the names of all persons receiving an annuity and the amount of the annuity.
- Senate Bill 2517 – transfers the pension cost associated with any future pay increases for teachers to local school districts.
March 7, 2018 Interesting article
WEDNESDAY, MARCH 7, 2018“The 401(k) retirement plan has been getting great press this election season. Don’t bank on it"--Chicago Sun-Times Editorial“Employer-sponsored 401(k)s, which started in the 1970s, allow workers to save some of their earnings tax-free until they retire. Often, employers will match at least part of their employees’ contributions. Workers don’t pay taxes until they withdraw their money. In the private sector, 401(k) plans have rapidly replaced traditional pensions.
EDITORIAL
“The candidates who are touting 401(k)s like the fact that governments wouldn’t accumulate liabilities over the long term if they switched to a 401(k) system. If the employees’ accounts lost value in a stock market crash, that would be the employees’ problem. Even if the employees lost all their money, the governments wouldn’t have to step in. There’s no FDIC for 401(k)s.
“But doing away with big government pension funds could hurt virtually every average investor in the state. As David Webber, a law professor at Boston University, recently wrote in the New York Times, big pension funds have the clout to push fund managers to improve investment returns. They can switch managers who aren’t doing a good job. They can put pressure on companies that overpay executives at the expense of investors. They can demand reforms.
“Try doing that on your own with your personal 401(k). You couldn’t even get a return phone call.
“Without big public pension funds, such as those in Illinois, investors would lose leverage. They could expect to see their savings gain less value over time. Only money managers and others in the financial class would be happy about that.
“Yes, Illinois has a big pension problem. Massively underfunded pensions loom over the governmental landscape from the local level all the way up to state government. There are exceptions, such as the Illinois Municipal Retirement Fund. But the habit of underfunding pensions and adding a series of pension sweeteners without paying for them has created an almost unimaginable stack of IOUs.
“But to say, as Republican gubernatorial candidate Jeanne Ives does, ‘I support a move to 401(k)s for all new workers,’ raises false hope [and is foolish].
“The state would have to fully fund new 401(k)s upfront. The existing pension debt wouldn’t go away, and government pension costs would rise because fewer new employees would be paying into the funds.
“401(k)s also hurt the economy in other ways. They encourage people to retire early when the economy is booming because the value of their retirement funds soars along with the stock market. But that’s just when the economy needs as many workers as it can get.
“In bad economic times, 401(k)s encourage people to keep working longer than they planned because their retirement funds have shrunk to the point that it’s not safe to retire. But that’s just when a few more job openings would be most welcome to people who can’t find employment.
“Moreover, 401(k)s often include indecipherable fees that reduce returns, and employees are unlikely to manage their investment choices as well as pension fund professionals would. A 2012 study found 401(k) fees for a median two-income family could reduce a retirement nest egg by nearly a third.
“The Illinois Supreme Court has made it clear that state and local governments must make good on the pension promises they’ve made. Switching to 401(k)s won’t allow the state to get out of obligations it already has incurred, but it could leave a new generation of workers without retirement security.
“As Webber reports, such groups as the Koch brothers’ Americans for Prosperity, the Laura and John Arnold Foundation and the American Legislative Exchange Council are engaging in a multi-state push to replace public pensions with defined-contribution plans, such as 401(k)s.
“Illinois should resist them. Switching to 401(k)s won’t erase our pension deficits. And doing so could cause long-range damage to both the state and its workers (Chicago Sun-Times Editorial: 401(k)s aren’t the solution to Illinois governments’ pension woes).
Commentary:
A Defined-Contribution Savings Plan:
A defined-contribution savings plan (401(k), 403(b), 457) was not initially created as a retirement vehicle but rather as a supplementary savings account.
A defined-contribution savings plan shifts all the responsibilities and all of the risk from the employer to you; thus, your benefit is not guaranteed for life.
Your benefit ceases when your account is exhausted. There are no survivor or disability benefits and guarantees.
Your benefit is based upon individual investment earnings. You assume all funding, investment fees, and inflationary and longevity risks.
A defined-contribution savings plan does not have the pooled investments, professional asset managers, and shared administrative costs that a defined-benefit pension plan provides.
Though you bear no portability risks, accounts are not always rolled over when you change jobs. Changeover costs to this plan could be significant.
Your employer (state) will have to bear the administrative costs of both defined-benefit pension and defined-contribution savings plans when you switch over.
“Payments to amortize unfunded liabilities for the defined-benefit pension plan may be accelerated” (National Institute on Retirement Security (NIRS).
The Governmental Accounting Standards Board “requires [an] acceleration of unfunded liability payments when the defined-benefit pension plan is closed to be recognized on financial statements” (NIRS).
“No unfunded obligations [liabilities] for existing members are reduced when new members go into a defined-contribution savings plan” (NIRS).
“The loss of new members makes it difficult to finance the unfunded obligations of the defined-benefit pension plan” (NIRS).
The Statewill not save money. Most of the State’s obligation to the Teachers' Retirement System of Illinois, for instance, is for contributions not paid during the past several decades; therefore, the deferred cost of underfunding cannot be eliminated by switching to a defined-contribution savings plan.
Shifting to a defined-contribution savings plan can raise annual costs by making it more difficult for a State to pay down existing liabilities. The plan will include fewer employees and fewer contributions going forward. Even with a defined-contribution savings plan option, states and localities are still left to deal with past underfunding.
There is a several trillion dollar deficit between what 401(k) account holders should have and what they actually have.
A Defined-Benefit Pension Plan:
You cannot outlive your benefit.
Your defined-benefit pension plan is more cost efficient than the defined-contribution savings plan.
Your defined-benefit pension plan offers predictable, guaranteed monthly benefits for life.
Funds are invested by professional asset managers in a diversified portfolio that follows long-term investment strategies. The large-pooled assets reduce asset management and miscellaneous fees.
Your defined-benefit pension plan provides spousal (survivor) financial benefits.
Your defined-benefit pension plan provides disability benefits.
The State is responsible for funding, investment, inflationary and longevity risks.
Because you are not affected by Market volatility, your defined-benefit pension plan is a more effective protection than the defined-contribution savings plan.
Because teachers and other public employees understand the value of such a plan, they are willing to give up higher wages.
A defined-benefit plan encourages a long-term career and stable workforce.
Your defined-benefit pension plan provides you with self-sufficiency in retirement; it is associated with far fewer households that experience food privation, shelter adversity and health-care hardship.
Your defined-benefit pension plan is less expensive for taxpayers than Social Security – a reason why legislators, et al. had negotiated for Illinois teachers to not pay into Social Security.
Your defined-benefit pension plan has an economic impact of over $4 billion on Illinois; the effect on Gross Domestic Product is $2.38 billion; jobs that are created: 30,448 (Teachers Retirement System of Illinois, TRS).
Defined-benefit pension plans contribute over $100 billion to annual local, state, and federal revenue in the U.S. and provide capital to financial markets (NIRS).
Sources: the National Institute on Retirement Security (NIRS), Center for Retirement Research at Boston College, National Conference on Public Employee Retirement Systems, Center on Budget and Policy Priorities, and the Teachers Retirement System of Illinois (TRS)
“...The truth is this: the concept of a do-it-yourself retirement (401(k)s) [is] a fraud. It [is] a fraud because to expect people to save up enough money to see themselves through a 20- or 30-year retirement [is] a dubious proposition in the best of circumstances. It [is] a fraud because it allow[s] hustlers in the financial sector to prey on ordinary people with little knowledge of sophisticated financial instruments and schemes.
“And it [is] a fraud because the mainstream media, which increasingly relies on the advertising dollars of the personal finance industry, [sells] expensive lies to an unsuspecting public. When combined with stagnating salaries, rising expenses and a stock market that [does] not perform like Rumpelstiltskin and spin straw into gold, do-it-yourself retirement [is] all but guaranteed to lead future generations of Americans to a financially insecure old age. And so it [will].” To read the complete article, Click Here.
March 2, 2018
Legislation, sponsored by Sen. Andy Manar on behalf of the IRTA, was moved out of the education committee this week.
Senate Bill 3045 will allow retirees to substitute teach up to 120 days or 600 hours (currently 100 days or 500 hours) in a school year without impacting their retirement status or benefits. This legislation is more important than ever because Illinois is facing a teacher shortage. By increasing the number of allowable days a retiree can substitute teach, we can help to ensure that a qualified teacher is available for those classrooms.
In addition, Senator Manar also moved a bill out of the State Government Committee for the IRTA.
Senate Bill 3046 will allow TRS annuitants who have opted out of the Teachers Retirement Insurance Program to opt back in during the benefits choice period.
The Senate pensions committee also met this week, although none of the bills heard in that committee affect retired teachers.
Other issues taken up this week dealt with guns. Controversial legislation has been sent to Gov. Bruce Rauner’s desk that would require gun dealers to be licensed by the state.
The House also passed bills to raise the minimum age from 18 to 21 to buy an assault rifle; cleared a measure to ban the sale of bump stocks and other modifications and another which requires a 72-hour “cooling off” period on assault rifle sales.
The governor’s proposal to shift hundreds of millions of dollars of state pension costs to schools and universities has also taken a hit this week.
Rep. Dave McSweeney is sponsoring House Resolution 27 which declares “the opinion of the Illinois House of Representatives that the proposed educational pension cost shift from the State of Illinois to local school districts, community colleges, and institutions of higher education is financially wrong.” The Resolution now has nearly 70 House sponsors.
While both the House and Senate will be in session on and off over the next month, they are both not in at the same time until April 10th.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
February 24, 3018 Senator's letter
Dear friends,
Benefits for retired teachers are a target of Gov. Bruce Rauner again this year as he seeks to balance the state budget on the backs of working people and retirees.
Here’s what you need to know.
The governor outlined a framework for what he described as a “balanced” budget during a speech to the General Assembly on Valentine’s Day.
Unfortunately for the people of Illinois, his plan relies on lots of imagined savings from measures that would require favorable court decisions, agreements with unions, the sale of real estate and other iffy acts that could take years – should they happen at all.
Among the savings Gov. Rauner banks on in his proposal: $129 million by gutting health insurance for retired teachers and community college employees. He wants to double the out-of-pocket cost for retirees to go to the doctor, see specialists, undergo necessary surgeries and purchase medication.
Specifically, his plan eliminates the state’s $125 million subsidy for the Teachers’ Retirement Insurance Program (TRIP) and the $4.4 million subsidy for the College Insurance Program (CIP).
I see two significant problems with the governor’s proposal. First, it likely would be found unconstitutional. Second, it targets retired teachers whose modest pensions barely offer them enough to pay the utility bills and fill the refrigerator each month – people like elderly kindergarten teachers who haven’t set foot in a classroom in decades and have no Social Security to fall back on.
Here's an article from the Springfield State Journal-Register that contains more details about the governor's planned cuts and how they would affect retired teachers.
Gov. Rauner has proposed a heartless plan to weaken retirement security for aging teachers who worked hard during their careers to educate children. Democratic and Republican lawmakers are jointly opposed to the idea, and I believe we can come together to find other ways to save $129 million.
I will continue to keep you informed about developments regarding any cuts to the TRIP and CIP programs, but should you have any questions, please feel free to contact my office at 217-782-0228.
Sincerely,
Senator Andy Manar
48th District – Illinois
February 23, 2018
It has been a quiet week in Springfield. The Senate has been in session but the House has not.
Things that happened this week:
In a response to the massive Equifax data breach, the Illinois Senate Financial Institutions Committee passed out House Bill 4095. The legislation bars credit reporting agencies from charging consumers a fee to place or lift a freeze on their credit report. The bill, sponsored by Representative Greg Harris, passed with unanimous bipartisan support in the House last fall. Senator Bill Cunningham is the Senate sponsor.
A credit freeze prevents new account identity theft by stopping credit reporting agencies from sharing a consumer’s credit report with potential new creditors. Most creditors will not issue new credit to a customer without a credit report from at least one of the big three credit reporting agencies. Credit monitoring services, often peddled to consumers in the wake of data breaches, provide inferior protection: they only alert consumers once identity theft has occurred.
In addition, a Senate committee passed an advisory referendum to ask voters on the November ballot if they support the use of marijuana for recreational purposes.
Other Issues:
Since I have had a number of inquiries into the nature of Biss’s relationship with the pension issue in the past I thought this information may be helpful. Please understand this is not an endorsement from the association just information for your use.
Last night at the democratic gubernatorial debate in Springfield, Pritzker criticized Biss for voting for the 2013 pension reform legislation (SB1) that was later declared unconstitutional by the Illinois Supreme Court in Heaton v. Quinn.
Dan Biss introduced this bill that took pensions away from 450,000 workers across the state, including teachers and nurses.
“Pritzker went on to reiterate pensions were a contract we make with those folks, and it’s time we stand up to the plate and pay what’s owed to them.”
Biss said the vote was a mistake that he has since learned from.
“I was a legislator in early 2011 when there was a huge budget crisis,” Biss said. “I was trying my best and fell for a false choice on what this problem was. I’ve learned that lesson, and that lesson is visible in my voting record for years since that time.”
REALITY CHECK:
• After flip-flopping on pensions at the Crain’s editorial board earlier this election season, Biss was asked, “if you can so completely change your opinion on something you spent so much time and energy on, what can people trust you not to change your opinion on?”
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
February 21, 2018 Pension cost shift nonstarter for many lawmakers
Click here: www.news-gazette.com/news/local/2018-02-18/tom-kacich-pension-cost-shift-nonstarter-many-lawmakers.html
February 20, 2018
Rauner insurance changes hurt state workers and retired teachers
Click here: www.sj-r.com/news/20180217/opponents-rauner-insurance-changes-would-hurt-state-workers-retired-teachers?rssfeed=true
February 16, 2018 Legislative races in Winnebago County
This is a listing of the primary races slated for March.
Representative 69th District Representative 67th District Open seat
Incumbent: Rep. Joe Sosnowski (R) Maurice West (D), Angela Fellaro (D)
Challenger: Angelique "Angie" Bodine Gerald Albert (D), Valeri DeCastris (D)
Representative 89th District Open seat Representative 68th District
Andrew Chasney (R) Incumbent Rep. John Cabello (R)
Steven Friske (R) Jake Costanza (D)
Nicholas Hyde (D)
Senator 45th District Open Seat
Rep. Brian Stewart (R)
Dave Simpson (D)
You can help by contacting your local state senator, state representative, and any challengers they may have with the following questions:
1. Do you support continued full state funding for the Teachers' Retirement Insurance Program (TRIP)?
2. Do you support allowing TRIP participants to opt in and out of the state insurance plan during each year's benefit enrollment period?
3. Do you support continued full funding for Teachers' Retirement Service?
4. Do you oppose cost shifting the state's pension payment obligation to local school districts?
This is not an exhaustive list of questions but at least is a starting point for a conversation with your representatives. Passing back to me any information you get will be helpful to the PAC committee. I've also included the link to the Illinois General Assembly's webpage. You can use the "Member" link on both the Senate and House sides to find contact information for your senator and representative. Your voters' registration card will have your state districts listed. We will begin organizing for the November general election in late March.
Please let me know if you have any questions or suggestions.
Ed Wollet, Chair
IRTAPAC Committee
February 14, 2018 Legislative Update - Budget Day
Last week the legislature literally accomplished nothing, however today should be interesting.
This morning the four legislative leaders officially met in the governor’s office for the first leaders meeting since December 2016.
Also, today marks the Governor’s final budget address of his first term, and already he is again proposing balancing the budget on the backs of retirees, teachers and state employees.
He has zeroed out any funding for the Teachers Retirement Insurance Program. In addition, he is proposing lowering the states cost to TRS by shifting cost to local school districts.
Roughly $1.3 billion in proposed savings will come from shifting $490 million in pension costs onto schools, as well as a proposal to slash health insurance benefits for retired teachers and state employees.
The cost shift would be phased in at 25 percent per year over the next four years. Provided that the General Assembly enacts these cost shifts to school districts and universities, the state will save $363 million in fiscal year 2019 in pension contribution costs.
The proposal also relies on putting in place a new pension plan. It suggests state worker and teacher retirement benefits can be scaled back, but only if they agree to the changes and are given something in return.
Rauner estimates that plan could lead to $900 million in savings and would allow for a 0.25 percentage point cut in the income tax rate.
Whether the governor’s pension proposal would pass constitutional muster is an open question, as a previous sweeping law to cut benefits was struck down by the Illinois Supreme Court. Any pension change would almost certainly face a legal challenge, delaying any cost savings. The governor does not count that money toward his proposed budget for next year, unlike in 2015, when he factored the savings into his spending plans.
The governor’s budget calls for boosting funding for education by $556 million, with about $350 million of that going toward the new funding formula that was enacted last year.
The governor claims that this $556 million is a "record" funding increase for K-12. After the pension cost shift, however, K-12 would receive an extra $76 million or so in net additional funding next fiscal year under this plan.
Universities would be expected to pay about $101 million more in pension costs, but that money would be replaced by an increase in discretionary funds, according to the budget documents.
The proposal also calls for eliminating current programs for k-12: After School Programs, Advance Placement, After School Matters, District Intervention Funding, Parent Mentoring, National Board Certified Teachers, School Support Services (Lowest Performing Schools), and Teach for America. The total savings this would achieve is $28.9 million from the general revenue budget.
Major savings come from the government spending side. The governor wants to remove health insurance from the list of items that are negotiated through collective bargaining with government employee unions. He estimates that change would result in savings of $470 million next year.
Rauner also wants to cut the General Assembly and judicial budgets.
Governor's Pension Plan vs Actual Certification by TRS of how much the state owes.
System FY19 Cert. Gov FY19 Underfunded
TRS $4,466,178,109 $4,209,584,000 $256,594,109
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
February 14, 2018 Chicago Tribune
Rauner's budget will ask local schools to pay millions more toward teachers' retirements
Click here: www.chicagotribune.com/news/local/politics/ct-met-bruce-rauner-illinois-budget-20180213-story,amp.html?__twitter_impression=true
February 10, 2018
"A cautionary tale to public sector employers considering changes to their employee retirement plans" (The National Institute on Retirement Security)
WASHINGTON, D.C., February 8, 2018 - A new case study examines the impacts of the 2012 actions of the Town of Palm Beach to close its existing defined benefit (DB) pension systems for its employees, including police officers and firefighters.
The new "combined" retirement plans offered dramatically lower DB pension benefits and new individual 401(k)-style defined contribution (DC) retirement accounts. Shortly thereafter, the town experienced a high rate of retirements and unprecedented early departures of experienced police officers and firefighters to neighboring towns that offered better pensions. Now understaffed, the town faced increased costs to pay overtime hours and train replacements for more than 100 public safety workers who departed during a four-year period after the pension changes.
Following this large, swift exodus of public safety employees, the town reconsidered the changes. In 2016, the Town Council voted to abandon the DC plans and to improve the pension plan for police officers and firefighters.
These findings are contained in new research case study from the National Institute on Retirement Security (NIRS), Retirement Reform Lessons: The Experience of Palm Beach Public Safety Pensions. The research is authored by Diane Oakley, NIRS executive director.
- Download the case study here.
- Register for the webinar here.
- Watch here a video of a public employee regarding changes to the retirement plan.
Research finds that public workers place a high value on retirement benefits, even more so than private sector works. For public safety workers, pensions are highly valued because they also offer death and disability benefits, and because the risks and physical demands associated with their jobs can shorten their years in the workforce.
"Perhaps the most compelling data point in the case study is that a total of 53 mid-career police officers and firefighters left their jobs before retirement after the Town Council voted to change the pension plan," Oakley explained. "Previously, just two mid-career public safety workers left their jobs before reaching retirement. Faced with unprecedented departures and large overtime and training costs, the town moved to unscramble the egg and restore the pension plan," Oakley said.
This case study supplements past NIRS research examining retirement plans in Alaska, Michigan and West Virginia where a shift from DB pensions to 401(k)-style individual accounts caused pension plan costs to skyrocket. The new case study also can be considered alongside recent NIRS research that examines the employee recruitment and retention impacts of pensions.
The case study finds that pensions:
- Dismantling the DB pension benefit caused a mass exodus of public safety officers. Employees' reactions to losing their expected DB pension benefits were swift. The town's two public safety pensions covered 120 employees at the end of 2011. In addition to 20 percent of the town's workforce retiring after the change, 109 other protective officers left before retirement in the next four years. Mid-career public safety officers departed in unprecedented numbers, with 53 vested police officers and firefighters departing Palm Beach's forces from 2012 to 2015. By comparison, just two mid-career employees departed from 2008 to 2011.
- Neighboring towns benefited from the changes that Palm Beach implemented to its retirement plans. Nearby towns watched the controversy erupt in Palm Beach, and decided to adjust their pensions rather than dismantle this employees benefit. The 109 trained officers who decided to leave Palm Beach provided a talent pool for other towns and counties. For example, in the next four years, 31 newly-hired Palm Beach firefighters left with a refund of their pension contributions and seemed to jump at the chance for a DB pension offered by a nearby town. Previously, only three firefighters took refunds in the four years before the pension freeze.
- The shift away from the DB pension increased costs in other areas. The town did not anticipate the financial impact of the high attrition. For example, firefighters had to work extremely high levels of overtime to fill staffing gaps. Also, the unprecedented loss of new and experienced public safety officers caused the town's training cost to soar likely reaching upwards of $20 million, based on an "all in" cost estimate of $240,000 per officer to bring a new police officer through the rookie period in Florida.
- The DC switch proved a failed experiment in Palm Beach. The Town Council voted in 2016 to abandon the DC plans and improve the DB pensions for police officers and firefighters by raising benefits substantially and lowering the retirement age. The Council offset the cost of the police and fire DB pension improvements by increasing employee contributions and eliminating the DC plan with its employer match.
Contact: Kelly Kenneally | kkenneally@nirsonline.org | 202.457.8190
February 1, 2018 Legislative Update 1/31/18
State of the State Week
What the Governor had to say today:
Gov. Bruce Rauner on Wednesday issued a bipartisan call to lawmakers to work together to cut spending, roll back a tax hike and bring in more jobs. The theme of the governor's State of the State speech was "Bringing Illinois Back”. Rauner advocated for 'rolling up our sleeves and working together' to spur economic development. The governor also argued that cutting regulations, spending and taxes will help businesses grow and lead to an influx of people and businesses.
The governor once again pushed for term limits and property tax relief, and touted last year’s school-funding overhaul. In addition, he went over his plan to combat legionella.
What was striking was that he also spoke about his renewed his focus on Pension Reform, changing group health insurance and lowering workers compensation, stating if other states can do it so can Illinois.
The governor then went on to talk about the historic legislation he championed to recalculate how the state distributes funding to schools in order to be more equitable to low-income school districts. At first, Rauner partially vetoed it, but later signed a largely similar version into law. Since then, he has listed the measure as a major achievement of his time in office and has taken credit for its passage.
Rauner has praised the bill since then because it creates a new program that diverts state tax revenue to special funds that would help families pay for private school tuition or help send their children to public schools outside their home districts. Opponents have derided the program as a backdoor form of school vouchers.
He winds up his speech, and I quote, “In FY2019, our pension costs will rise another $600 million. Ask anyone in this room if they think this trajectory of pension expense can be sustained. Most will say “no.” But most lack the courage to break with the status quo so we can change our path to the future.
So, on this point I think we can also agree: It is time we do what the people of Illinois want. Halt the advance of taxes. Stop spending money we don’t have. Get our pensions under control. And give power back to the people.
To that end, I will submit a balanced budget proposal next month. It will offer a path to reduced spending, and it will show the way to surpluses going forward so we can reduce taxes and start to push back against the assault on middle class bank accounts.”
The budget address is scheduled for February 14, 2018.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
January 26, 2018
Daiber suggests taxing retirement income to help pay for pensions
Click here: http://www.sj-r.com/news/20180126/daiber-suggests-taxing-retirement-income-to-help-pay-for-pensions
January 24, 2018 Lawmakers at odds over pension reform
Lawmakers at odds over pension reform
By: Raquel Martin Posted: Jan 23, 2018 11:03 AM CST
Updated: Jan 23, 2018 11:03 AM CST
16 ILLINOIS (WCIA) -- It's the uphill battle no one was prepared for. The state owes more than $129 billion in pensions. Again, lawmakers are determined to find a fix to the unprecedented problem.
It's always a touchy subject. Lawmakers aren't shying away from the problem and, quite frankly, they can't. Pension debt takes up a lot of the state's spending and it's only growing larger.
The chairman of the state's pension committee says he's putting new options on the table to reignite the discussion. After years of failed payments, the state is facing roughly $130 billion in pension debt. It's a problem lawmakers can't ignore.
"It's something that we have to talk about every year because, like education, like healthcare, it is a significant portion of our budget."
But, solving it puts them at odds. The court deemed it unconstitutional to reduce the amount of money or benefits promised to state employees. But now, some lawmakers are looking for a work-around.
Sara Wojicki represents a district filled with government employees. She's open to discussion.
"We have to make those payments."
One idea is to give future retirees an option to opt out. They'd be offered more money up front, but less money down the road. Another choice: The state would turn to Wall Street to borrow $103 billion.
"It's got to be constitutional. If not, it will be challenged in court. We challenged one before. We'll challenge again."
That remains the bottom line for members of the Illinois Retired Teacher Association. Ed Wollet is the organization's chair. He says this session is no different than before.
"Anytime they come up with an option, anytime they come up with a pension idea, reform, we need to take a look. We're not opposed to giving more options to members. My only caution to members is to only take that option under strict advisement from a financial adviser."
A House committee meeting for Tuesday was canceled. They were set to discuss new options to shrink the debt. It's expected they'll take up the issue again next week.
Pensions are divided into three tiers: one is old school choice, two is what newer employees are in, three is the newest option.
The latest budget included changes which take the state off the hook and requires employers to chip into pension payments.
January 22, 2018
Fellow IRTA Members,
In just a few days, the Illinois General Assembly will return to begin the spring session. High on their agenda will be "pension reform". IRTA will be active in fighting for our pensions. Our first line of defense is the IRTAPAC. If you are not a current member of the IRTAPAC $1/month contribution program, then join now. If you are already contributing $1/month, then consider sending an additional check made out to IRTAPAC. Help fight for our pensions. Go to irtaonline.org to make a contribution today.
Ed Wollet
New Session will bring new efforts at pension reform.
Click below for latest pension article.
http://www.sj-r.com/news/20180121/new-session-will-bring-new-efforts-at-pension-reform
November 9, 2017
Legislative Update from Mary Shaw
Legislative Update – 11/9/17
Out of 39 total vetoes by Gov. Rauner this year, 15 have been overridden, while 22 others stood (and 11 of those died after no action was taken). One more is still pending Senate action as I write this (prohibition of asking for wage history). Out of 10 amendatory vetoes, 3 were overridden and no action was taken either way on 4.
Prior to this year, Gov. Rauner had been overridden just once.
One of the override motions that received zero “No” votes in both chambers allows active substitute teachers to seek a refund of the $50 fee they’re required to pay when they apply for a state license under a new law. This was sponsored by Senator Andy Manar.
The Senate Wednesday voted 53-0 to override the governor’s veto of House Bill 3298. The measure authorizes a refund of the licensure application fee for substitutes as long as they can offer evidence of teaching at least 10 full school days within a year of being licensed. The law goes into effect immediately.
Another measure that was overridden by both chambers will require increased reporting about state finances. The measure now becomes law.
In addition, HB 2977 determines that cursive handwriting will remain a subject in Illinois public schools.
Each school district will determine by local policy at what grade levels this would be implemented as long as students receive the instruction by grade 5.
Both chambers also voted to override Gov. Bruce Rauner’s veto of a measure that would crack down on predatory lenders who target college students and their families.
The Student Loan Bill of Rights, Senate Bill 1351, implements safeguards against lenders for student loan borrowers. The measure also creates a student loan ombudsman within the office of the attorney general to assist students with any questions or problems about student loans.
The bill also requires that all student loan vendors be licensed by the Department of Financial and Professional Regulation.
Another veto overridden this week was House Bill 302 which requires life insurance companies to compare electronic records of policies with the Social Security Administration’s Death Master File (DMF) to determine if policies should have been paid to grieving families. The bill becomes state law effective January 1, 2018, despite the Governor’s attempt to veto.
The treasurer thought this was necessary because some life insurance companies do not pay death benefits when they know, or should have known, a customer died. Between 2011 and 2015, treasurer’s office audits found more than $550 million in death benefits that were not paid to grieving families in Illinois. Nationally, the figure is more than $7.4 billion.
Opponents argued that life insurance companies would lose money if required to pay death benefits and that they are not required under the terms of the contract to notify beneficiaries. However, not every survivor knows about a policy, such as a spouse suffering from dementia, or has the capacity to determine if a policy exists, such as a child with a disability. There have also been instances of a person leaving money to a church or charity without telling the recipient, so the recipient would not know to pursue a claim.
In August, Governor Rauner issued an amendatory veto that outlawed the type of audits that found the billions that were owed to grieving families in Illinois and across America. Without this enforcement tool, life insurers would be able to act with almost complete impunity.
The use of contingency fee auditors ensures families receive every cent they are owed. Without the audits, insurance companies keep 100 percent of the death benefits.
October 30, 2017 IRTA
Retired Teachers Welcome Attorney John Fitzgerald
IRTA calls for member support and solidarity to fight the potential theft of benefits!
SPRINGFIELD, ILL- Members of the Illinois Retired Teachers Association (IRTA), a statewide association of retired educators, their families and supporters, will welcome attorney John M. Fitzgerald of Tabet DiVito & Rothstein LLC to keynote their biennial convention on Monday October 30, 2017.
Mr. Fitzgerald will speak about:
- pension rights
- constitutional protection of pensions
- healthcare insurance benefits
- further efforts through litigation if necessary
A recording of the speech will be posted in case of technical difficulties during the live stream.
The Illinois Retired Teachers Association represents 38,000 retired teachers and their families. IRTA is the sole watchdog for retired teachers in the Illinois legislature. Its goal is to maintain and improve benefits for annuitants of the Teachers' Retirement System (TRS); promote education and the professional, social and economic status of all members; and work in cooperation with other organizations to obtain these goals. For more information, to JOIN or RENEW NOW as a member or associate, visit IRTA's website at http://www.irtaonline.org.
###
October 28, 2017 From an August news release from TRS
TRS FOLLOWS NEW LAW AND LOWERS THE STATE’S FY 2018 CONTRIBUTION BY $531 MILLION
SPRINGFIELD, IL – The Teachers’ Retirement System Board of Trustees this week reduced the State of Illinois’ annual funding contribution to the System for fiscal year 2018 by $530.8 million; reluctantly adhering to a new law that changes the statutory pension funding formula.
The revised state contribution for TRS is now $4.034 billion. The previous FY 2018 contribution, certified by the TRS Board last October, was $4.564 billion.
“The changes enacted this year in the pension funding formula move TRS further away from financial stability and continue to kick the can down the road. Period,” said Dick Ingram, executive director of TRS. “Cutting the state’s contribution only increases our concern that TRS will eventually become insolvent.”
Ingram added that the System’s $71 billion unfunded liability – one of the largest in the country – is a direct result of decades of underfunding by state government. In FY 2018, the state’s contribution will fall $2.839 billion short of what the System’s actuaries say is “full funding” for the year, or $6.873 billion.
“For every dollar that the state cuts from the TRS contribution now, they will have to spend $3 down the road to replace that revenue because of the interest costs,” he said. “A $530 million funding cut today just puts off the inevitable and will create a payment of $1.6 billion in the future.”
A new state law approved in July by the General Assembly changed the pension funding formula in two significant ways that reduce the state’s allocation to the System:
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- TRS must retroactively “smooth” the fiscal effect of any changes made in the TRS assumed rate of investment return over a period of five years. The “smoothing” applies to any assumption changes from 2012 on.
- Local school districts will pay more of the cost of a member’s pension if that member’s salary is equal to or greater than the governor’s statutory salary of $177,412. The district will be responsible for paying the actuarial cost of the benefits earned on the portion of the member’s salary that exceeds $177,412.
The new state contribution does not include any potential cost savings from the creation in July of the Tier III “hybrid” retirement plan because Tier III is still being developed. When Tier III will be implemented will be decided by the Board at a future meeting.
The TRS Board is required each year to certify the state’s annual contribution to the System for the next fiscal year. That contribution is reviewed by the State Actuary before it is included in the state budget for the upcoming year.
In other action taken during its regularly scheduled August meeting, the TRS Board:
- Committed up to $200 million with the System’s $5.9 billion Absolute Return portfolio to Magnetar
Financial, of Evanston, Illinois. Magnetar currently administers $148.7 million in TRS assets. - Committed $100 million within the System’s $5.6 billion Real Estate portfolio to the Blackstone
Group, of New York, New York. Blackstone currently administers $592.4 million in TRS assets. - Committed up to $100 million within the System’s $6.3 billion Private Equity portfolio to Natural Gas
Partners, of Irving, Texas. NGP currently administers $104.9 million in TRS assets. - Committed up to $75 million within the Private Equity portfolio to Institutional Venture Partners, of
Menlo Park, California. IVP currently administers $18.6 million in TRS assets. - Committed $50 million within the System’s Emerging Manager Program to ICV Capital Partners, of
New York, New York, for private equity investments. ###
About Teachers’ Retirement System
The Teachers’ Retirement System of the State of Illinois is the 37th largest pension system in the United States, and provides retirement, disability and survivor benefits to teachers, administrators and other public school personnel employed outside of Chicago. The System serves 406,855 members and had assets of $48.6 billion as of June 30, 2017.
October 27, 2017
Lawmakers returned to the Capitol on Tuesday with a variety of topics on the agenda.
No issues were taken up that deal with pensions or health insurance of retirees.
Nearly 40 bills were vetoed over the summer by Gov. Bruce Rauner. New legislation was also on the docket, including that limiting the use of firearm modification following the mass shooting in Las Vegas.
Here are some of the highlights of the legislation being heard include:
Ban On Bump Stocks Fails
In the wake of the horrific mass shooting in Las Vegas that took place in early October a House committee approved a ban on bump stocks and other modifications that increase the rate of fire for semi-automatic weapons. However, the measure failed on its final vote on the floor.
Right-To-Work Zones Still Stand
The House also failed to override a bill that would’ve prohibited “right-to-work” zones, which weaken unions by allowing employees to work union jobs without paying dues.
The bill isn’t completely dead, however. A motion to reconsider can still be filed, and Rep. Moylan told the Sun-Times he plans to file a separate bill ahead of next month’s veto session removing controversial language which mandated penalties for municipalities violating the legislation.
Increased Transparency
The Debt Transparency Act, overridden by the General Assembly, will requires state agencies to report monthly the amount of bills being held and liabilities which are subject to interest payments, rather than yearly.
The legislature will take up a number of other measures when they return the week of November 6th.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
October 25, 2017
Posted on Facebook by the IRTA
RAUNER'S PENSION MENTION QUESTION
We wrote on Monday that Rauner has been telling groups at recent events that he's pushing Congress to change the law to supercede the state constitution and restructure Illinois' pension debt. So where is this headed?
"There's not a specific proposal - it's all part of conversations that have taken place in DC for a long time, is my understanding," said governor's office spokeswoman Patty Schuh. "The General Assembly is looking for ways to do it - the Attorney General argued for it because of the out-of-whack costs. But as we all know, the Supreme Court stepped in. If it's necessary for the feds to provide state legislatures like Illinois some flexibility in addressing the costs that are strangling the budget ... we're open."
We circled back with Congressman Peter Roskam after Rauner told the U.S. Chamber of Commerce he hoped to advance language allowing pension funds to file for bankruptcy reorganization through the tax overhaul that Roskam is helping lead.
That is not looking likely. The congressman's office tells us that the issue seems better suited for the Judiciary committee and that Roskam is "hyperfocused on tax reform."
"We're happy to listen, but honestly the governor's office has a lot of work to do to build a constituency for this kind of idea," a Roskam office spokeswoman said.
Outstanding question: Where does national committeeman Richard Porter fit into all of this? Rauner had painted Porter as the point person in the pension congressional effort.
October 23, 2017
This was posted on Facebook by the IRTA.
PUSH FOR PENSION BANKRUPTCY? - Rauner looks to the Feds
(with reporting from Politico Labor Reporter Marianne LeVine) --
Last week, Rauner (along with deputy governor Leslie Munger) made a surprise appearance at a New Trier Republican dinner. He created another surprise by making a couple of declarations, according to people in attendance: one, he singled out National Republican Committeeman Richard Porter for his role in a federal effort to allow the restructuring of public pensions. The state has the worst-in-the-nation pension liability, estimated now at an eye-popping $130 billion.
"The governor tells us we should all thank Richard Porter and congratulate him on the work he's doing - that he's trying to get federal legislation passed affecting public pensions which would supersede the Illinois constitution and allow us to restructure our pension system," one of the attendees told us.
Porter, an attorney at Kirkland & Ellis, is not a registered lobbyist, so it isn't clear what role he is playing in advocating for Rauner in Congress. Our efforts to reach Porter since last week by phone and email were unsuccessful. A GOP spokesman who followed up referred us to the Rauner campaign, which did not have a comment.
Rauner also told the crowd he was working to reverse a tax increase (something he reiterates today in his reelection rollout).
Timing: Rauner's talk about revamping pension debt and a lower tax rate comes just as the state is in the midst of a massive, $6 billion bond issue - attempting to borrow money at as low a rate as possible to pay down a bill backlog that's reaching $16 billion. When Illinois made its offer letter to potential investors, it was under certain assumptions - including that the state now had a "permanent" revenue stream under a recently approved 5 percent income tax rate and 7 percent corporate income tax.
Politically, however, it's a tall order to advance a federal law to circumvent state constitutions. And any agreement would need 60 votes in the U.S. Senate, which Republicans don't have. At an event last month before the U.S. Chamber of Commerce, Rauner talked about his efforts.
"We've got a bill now, we're working with Congress. (If) Congress passed a law, we're lobbying right now, allow states to restructure their pensions, supercede the restrictions that the special interest groups have put on the state," Rauner said at the Sept. 28 event. (Audio) "And I'm hoping to get it done with the tax overhaul that we're doing. If we can get this bill passed -- transformative for Illinois government and taxpayers."
Roskam, the Ways & Means Tax Policy chairman, who is taking a lead role in the tax overhaul effort, said there isn't a separate bill but added: "I've heard the concept discussed, I've not seen the language. Not pension funds - but there's some theory about the capacity of federal courts to get the jurisdiction to allow some level of bankruptcy," Roskam said in an interview. "There is some discussion ... there is no language that I'm aware of. I think it's conceptual."
As we reported on this last week, the Tribune published this.
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October 2, 2017 New State Employee Pension Plan Coming But Not Soon
Click here: www.sj-r.com/news/20170930/new-state-employee-pension-plan-coming-but-not-soon
This will not impact those already retired.
August 24, 2017
The Teachers’ Retirement System Board of Trustees this week reduced the State of Illinois’ annual funding contribution to the System for fiscal year 2018 by $530.8 million; reluctantly adhering to a new law that changes the statutory pension funding formula.
The revised state contribution for TRS is now $4.034 billion. The previous FY 2018 contribution, certified by the TRS Board last October, was $4.564 billion.
“The changes enacted this year in the pension funding formula move TRS further away from financial stability and continue to kick the can down the road. Period,” said Dick Ingram, executive director of TRS. “Cutting the state’s contribution only increases our concern that TRS will eventually become insolvent.”
Ingram added that the System’s $71 billion unfunded liability – one of the largest in the country – is a direct result of decades of underfunding by state government. In FY 2018, the state’s contribution will fall $2.839 billion short of what the System’s actuaries say is “full funding” for the year, or $6.873 billion.
“For every dollar that the state cuts from the TRS contribution now, they will have to spend $3 down the road to replace that revenue because of the interest costs,” he said. “A $530 million funding cut today just puts off the inevitable and will create a payment of $1.6 billion in the future.”
A new state law approved in July by the General Assembly changed the pension funding formula in two significant ways that reduce the state’s allocation to the System:
TRS must retroactively “smooth” the fiscal effect of any changes made in the TRS assumed rate of investment return over a period of five years. The “smoothing” applies to any assumption changes from 2012 on.
Local school districts will pay more of the cost of a member’s pension if that member’s salary is equal to or greater than the governor’s statutory salary of $177,412. The district will be responsible for paying the actuarial cost of the benefits earned on the portion of the member’s salary that exceeds $177,412.
The new state contribution does not include any potential cost savings from the creation in July of the Tier III “hybrid” retirement plan because Tier III is still being developed. When Tier III will be implemented will be decided by the Board at a future meeting.
The TRS Board is required each year to certify the state’s annual contribution to the System for the next fiscal year. That contribution is reviewed by the State Actuary before it is included in the state budget for the upcoming year.
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July 12, 2017 IRTA
For the first time in over two years, the state of Illinois has a full year budget. Up until this point, the state had gotten by on court ordered payment and continuing appropriations and stop gap budgets.
Senate Bill 6, which included the partial year for 2017 and full year budget for 2018, passed the General Assembly last week. Although promptly vetoed by Governor Rauner, it was over ridden by both the House and the Senate so it takes effect immediately. This includes full funding for the Teacher Retirement Insurance Program. Unfortunately, the General Assembly changed the funding formula for retirement systems, which allows for smoothing. Because of this smoothing, TRS will receive approximately $500 million less than the actuarial amount certified by the board earlier this year
Senate Bill 9 is also now law because both chambers overrode the governor's veto. This is the revenue portion of the budget package. This implements a 4.95 percent personal income tax, up from 3.75 percent, and increases the corporate rate to 7 percent.
Senate Bill 42, the third component of the package, is the implementation arm of the budget. This piece of legislation provides the spending authority to the comptroller to spend the funds allocated in the budget. You might remember earlier in the year this bill contained language that would have removed the continuing appropriation for TRIP. This version of the legislation does not contain that language.
Where does the state stand now:
Education funding is the final sticking point with the budget.
Senate Bill 1, the education funding reform legislation passed both the House and the Senate, and is currently waiting to be signed into law. The problem is the governor has said he would veto it, but he has not thus far.
This legislation is tied to the budget because as the budget is written, funding to local school districts can only be distributed based on the new funding formula in the bill, so unless the governor signs Senate Bill 1 schools may not open on time.
Both chambers of the General assembly are prepared to return to Springfield before the end of July to override the governor's veto if and when he decides to do that. If he decides to sign it into law then schools will receive their funding as laid out in the budget bill.
As we continue through the summer, the General Assembly working groups are also continuing to work on other issues the governor has insisted he wants passed such as a property tax freeze, workers compensation reform and local government consolidation just to name a few.
July 8, 2017 Tier III
In conjunction with this week's passage of a state budget for fiscal year 2018, the Illinois General Assembly approved a new law that significantly changes the Illinois Pension Code by creating an optional "Tier III" benefit structure and changing the way state government funds TRS.
None of the Pension Code changes enacted on July 6 affect active Tier I members or retired members in any way. There are no changes to benefits, active member contributions or health insurance coverage for Tier I and retired members. There are no changes to Tier II exceptthat these members will be able to switch to Tier III.
The legislature did not extend the state's income tax to retirement income.
NEW TIER III BENEFIT STRUCTURE
- The law gives current Tier II members and future Tier II members – all new teachers – the option of joining a new "Tier III" retirement plan.
- The optional Tier III "hybrid" retirement plan has two parts – a small life-long "defined benefit" (DB) pension and a "defined contribution" (DC) plan similar to a 401(k).
- It is unknown at this time when Tier III will be available to members. Before Tier III can be implemented, the plan must be reviewed and approved by the U.S. Internal Revenue Service. It is unknown how long that process may take. The TRS Board will establish the final implementation date of the Tier III plan.
- For Tier III members, the full retirement age will be 67 years and the automatic annual increase (AAI) is the same as the Tier II AAI – one-half of the previous year's consumer price index, not compounded.
- The calculation for an initial pension under Tier III is Service Years multiplied by Final Average Salary multiplied by 1.25 percent. The Tier I and Tier II pension calculation is Service Years multiplied by FAS multiplied by 2.2 percent.
New laws enacted with the state budget are designed to reduce the amount of money TRS will receive in fiscal year 2018 – and in the near future – from state government in its annual contribution to TRS. It is expected that the original state contribution for TRS in fiscal year 2018 – $4.65 billion – will be recalculated.
First, TRS must retroactively "smooth" the fiscal effect of any changes made in the TRS assumed rate of investment return over a period of five years. The "smoothing" applies to any assumption changes from 2012 on.
Second, local school districts will pay more of the cost of a member's pension if that member's salary is equal to or greater than the governor's statutory salary. The district will be responsible for paying the actuarial cost of the benefits earned on the portion of the member's salary that exceeds the governor's salary.
Sincerely,
Teachers' Retirement System of the State of Illinois
877-927-5877 (877-9-ASK-TRS)
July 7, 2017
House of Representative and the Illinois Budget Override
Yes - Rep. Litesa Wallace
No - Reps. John Cabello, Joe Sosnowski, and Brian Stewart
June 27, 2017
IRTA-IN-ACTION!
IRTA URGES ENDING THE CYCLE OF IRRESPONSIBLE BUDGETING
Members of the Illinois Retired Teachers Association (IRTA) warned state lawmakers not to continue the decades-long practice of under-funding the pension systems. “Current budget proposals pending in the General Assembly, which include delaying pension payments, just kicks the can down the road again,” retired educator and IRTA President Dave Davison said. “These plans of continuing to under-fund the pension systems will cost future generations of taxpayers billions of dollars.”
Current proposed plans, which include Senate Bills 16, SB 2214 & SB 2217 and House Bills 4045 & 4046 offer no systemic reform or financial solvency for the state’s pension plans, the retirees said.
“Supporters of the legislation will tell you that the bills are reforms, not pension holidays, but they are incorrect,” retired teacher and IRTA Legislative Chair Ed Wollet said. “In 2007, the state also tied pension under-funding to changes in benefit levels and actuarial tricks. Those actions were then, and are now, pension holidays, where artificial math is used to increase long term costs of pensions while reducing today’s costs to the state.”
80% of the pension payments made by the state that many legislators now call crippling were created through under-funding by your predecessors. Only 20% of our current payments are a result of benefits being earned by our fellow retired teachers. “The problem we face in Illinois was entirely created by a history of under-funding, and our only solutions seem to be to continue the cycle while creating an atmosphere of fear and dread of our retirees by other citizens of this state,” Wollet concluded.
“The state of Illinois must keep its promises to the people, like retired teachers, that have always kept up their end of the bargain,” Davison added. “The State of Illinois must fund its pensions and retiree healthcare promises.”
In addition, budget negotiations have suggested reducing the appropriation for retiree health care. In previous administrations, the state has raided the healthcare insurance fund, also the state has yet to transfer obligated dollars this year.
“It is unimaginable to think what retired teachers and families would endure if the continuing healthcare appropriation was ended,” Davison said. “Any increase in costs or reduction in services to retirees is an unconstitutional diminishment and impairment to retired teachers’ benefits and will be legally and constitutionally defended.”
The IRTA has been advised by Tabet DiVito & Rothstein LLC that, “Retired Illinois educators’ health insurance benefits are protected by the Pension Protection Clause for the reasons set forth in Kanerva v. Weems.”
“The IRTA believes that not funding the Teachers Retirement Insurance Program, commonly referred to as TRIP, is not only unfair, it is also unconstitutional,” IRTA Executive Director Jim Bachman noted. “The IRTA will protect and defend the benefits promised to retired educators.”
In 2015, the IRTA successfully defended an unconstitutional assault on pension benefits that was signed into law by then Governor Quinn.
On May 8, 2015, the Illinois Supreme Court unanimously struck down the state's 2013 pension reform law, Senate Bill 1, upholding a lower court ruling that it violated the state constitution under the Pension Protection Clause.
These budget and pension reform bills are now under consideration in both the House and Senate. The thousands of IRTA members and their families continue to contact their legislators and voice their opposition to these irresponsible and unconstitutional bills.
Watch Ed Wollet's Pension Remarks
Watch Dave Davison's TRIP Remarks
The Illinois Retired Teachers Association is a not-for-profit, non-partisan organization of retired educators. The Association serves the needs and interests of its members through advocacy, education, cooperation and socialization in a flexible organizational structure. Thank you for your membership! Please encourage your spouse, family and friends to join the Association. Join today at www.irtaonline.org.
June 2, 2017 Legislative Update from Mary Shaw
Well, we hit the 700 days without a state budget. Here is where we stand.
Illinois- the longest of any state in modern history - is running a deficit of roughly $6 billion and sitting on a $14.5 billion pile of overdue bills.
Senate Democrats have passed all of the components the governor stated he required to sign a budget for the state, something we haven’t had since summer 2015.
They passed four bills that make up this budget package:
SB 9 – Tax increase and revenue
SB 6 – The Budget
SB 42 – A reworked version of the Budget Implementation Act that no longer cuts the TRIP continuing appropriation and fully funds TRIP and TRS.
SB 521 – Authorizes the sale of general obligation bonds
In addition, they passed all of the components of the Grand Bargain and then some:
- education funding reform (SB 1),
- minimum wage increase (SB 81),
- local government consolidation (SB 3),
- bond restructuring (SB 4)
- pension reform (SB 16),
- a gaming bill to raise revenues (SB 7),
- Workers Compensation reform (HB 2525)
- a 2 year property tax freeze (SB 482, SB 484)
- procurement reform (SB 8)
- Legislation to allow the sale of the Thompson Center (SB 886),
So, although these things passed the Senate most are still sitting in the House without a vote.
Also, there seems to be some movement on a stop gap measure in the House that would at least ensure that k-12 schools open in August, but after midnight on May 31, 2017 anything passed by the legislature needs a 3/5 majority (71 in the House and 35 in the Senate).
Keep in mind that Gov. Rauner has repeatedly said he will veto a stopgap unless he gets a permanent property tax freeze. And, they technically have until July 1, 2017 to pass this stopgap so we may be in for a long summer.
Just a Bill:
- Senate Bill 1933 has passed both chambers and will create automatic voter registration (AVR). This will reform current registration laws so that whenever an eligible Illinois resident applies for, updates or renews a driver’s license or state ID, he or she will be automatically registered to vote or have their registration updated, unless they opt out. It also creates a similar program for other state agencies, such as the Department of Human Services and Department of Natural Resources.
- A bill likely to land on the governor’s desk within the next few days would prohibit the establishment of right-to-work zones, a blow for those who believe such zones could help recoup thousands of jobs lost to neighboring states in recent years. A veto also is likely, as right-to-work, or “empowerment” zones, are a concept that Gov. Bruce Rauner has championed since taking office in 2015.
Northeastern Illinois University to cut 180 positions. Northeastern Illinois University will begin the implementation of layoffs as a result of a two-year state budget impasse that has deprived it of both a FY16 and FY17 appropriation.
The University has a $10.8 million projected cash flow shortfall through September 30. To address this and the lack of a state appropriation, Northeastern will be eliminating at least 50 Administrative and Professional (A&P) positions and approximately 130 Civil Service positions, which account for about 25 percent of each of these employee groups. In total, that is about 180 positions. Layoff notification and the Civil Service bumping process begin immediately and will take place during the next several weeks.
Also, please be advised the House will be back in session next Wednesday, and every Wednesday, throughout June.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
May 26, 2017
Legislative Update 5/26/17
We are coming down to the wire. There has been a rollercoaster of activity this week with only 5 scheduled session days left before any bill that is voted on needs a 3/5 majority. Once we roll over to June 1, 2017, things get much more difficult to pass.
As of Tuesday, the Senate Democrats push ahead with a new budget proposal that includes an income tax hike and an expansion of the state sales tax because as they stated something had to be done to put back on track.
The four bills that make up this budget package are:
SB 9 – Tax increase and revenue
SB 6 – The Budget
SB 42 – A reworked version of the Budget Implementation Act that no longer cuts the TRIP continuing appropriation and fully funds TRIP and TRS.
SB 521 – Authorizes the sale of general obligation bonds
These bills have passed the Senate and now go to the House of Representatives for their consideration.
As Senate Democrats voted on a bill to permanently increase income taxes, Governor Bruce Rauner announced that he would not sign off on any budget agreement that increases taxes without real property tax relief.
So the plan for the Senate on Friday is to pass both a property tax freeze and an agreed upon workers’ compensation plan. Previously, these two issues were sticking points with the Governor.
If you talk to House Democrats about what happens next, you’ll hear three basic arguments.
1) Optimistic liberals and several members of the House Black Caucus say they believe both a spending package and a tax hike bill will be passed by the end of May. They don’t expect any Republican votes and they don’t believe the solution relies on a big push from Speaker Madigan. “We just have to do it, so we will,” is the message I’ve been hearing all month from these folks.
2) “Regular” Democrats, who tend to be more conservative, don’t believe that Madigan will ever put a tax hike up for a vote without Republican support and in the face of an almost 100 percent guaranteed veto. And many of them don’t even want Madigan to advance the package (but they will vote for it if ordered to do so, of course). They look at it from a more political perspective, and they saw how the Senate Democrats were hammered after this week’s tax hike vote and don’t want Madigan to do that to his own members.
3) There are still those who are holding out hope for a negotiated agreement. They don’t want to just pass a bill to say they’ve done something. The days of going back to their districts and claiming great accomplishments because they merely voted for a budget bill that went nowhere and solved absolutely nothing are over.
Democrats who participated in the governor’s office budget briefing yesterday said Rauner’s people seemed eager to make a deal and claimed negotiations were continuing behind the scenes in the Senate. And, there has reportedly been some extremely limited communications back and forth between Madigan’s office and Rauner’s office over the past few days, so maybe all hope isn’t lost.
House Appropriations committee is set to meet Sunday at 2 PM, some have pointed out a few flaws with the Senate’s plan so those might be “fixed” by the house then.
So again we are taking a wait and see approach…only now we will be down to just 4 days of session.
Just a Bill:
- A proposal to begin a limited system of public financing of races for state office has quietly picked up some momentum in Springfield. It still faces some big potential roadblocks, but I wouldn’t sell its prospects short at a time when voters perhaps are getting tired of watching millionaires and billionaires snatch top slots.
But these are odd times, and as lawmakers race toward a scheduled May 30 adjournment, the speaker—interestingly—has assigned the bill not to some burial-ground study panel but to the House Executive Committee.
- State Representative Will Guzzardi, the legislative leader of the Tuition Free Illinois campaign, joined fellow representatives Lou Lang (D-Skokie) and Christian Mitchell (D-Chicago) to announce plans for a new College Affordability Grant for Illinois students on Tuesday.
The College Affordability Grant is part of a broader package aimed at revitalizing public higher education in Illinois. The legislation also creates a pilot program to help alumni with existing college debt. It will refinance high-interest private student loans, purchasing the debt and lending it back to students at 0% interest.
Additionally, the program will create a fund for the recruitment and retention of top faculty, and will double the amount of work-study funding currently available.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
May 19, 2017 IRTA
Legislative Update 5/19/17
How we start the week: Monday
Senate President Cullerton penned a letter to the editor and then the Governor Responded on Tuesday…both were nasty. But, what has come out is that all this bickering about the budget is over a few hundred million dollars, which in terms of the overall budget is not a lot of money. And, what seems more important, who will get a win.
Seriously, this was where they were at…there are seniors in Illinois losing critical services, schools don’t know if they will have funding next year, and our credit rating is in junk bond status but that doesn’t seem to matter, it’s all about the politics.
And, then it gets worse… On Tuesday, the house held a pension committee on Representative Barbara Flynn Currie’s HB 4045 and Leader Durkin’s HB 4027, which are two pension reform proposals in the House of Representatives. These measures passed the House Personnel and Pensions Committee and we are waiting to see if they get a hearing on the floor before they adjourn Friday.
The identical proposals would:
--Recalculate how the state pays into the pension system. It will backload the pension payments, paying less now with the promise that the state will pay more down the road. This pushing off the pension payment is the same mentality that got the state into this mess in the first place.
--Requires active teachers and other current state employees to make a choice. They can choose to keep their compounded COLA in retirement, but can no longer have pay raises count toward their future pensionable salary. Or they can give up the compounded COLA, but continue having raises count toward their retirement benefits and be placed into the Tier II pension plan.
--Provides $215 million for Chicago teacher pensions.
--The General Assembly Retirement System will be closed to new members.
Then on Wednesday the Senate President made a decision that the Senate would start voting on grand bargain bills plus a balanced budget package. And, if it were possible… it got even worse.
Senator Andy Manar, whom we thought was a friend of the IRTA brought a proposal to the floor, bypassing the committee process, which removes the continuing appropriation for Health Care provided to annuitants. Under this legislation, the State’s portion of retiree health care will be subject to appropriation after fiscal year 2017.
This would add an additional 23% cost to premiums of those covered by the TRIP program.
Although some pointed out that it would still be funded by the state if it were in the budget/BIMP bill, we reminded members of the Senate that under Governor Quinn and now three times under Governor Rauner the TRIP program has been zeroed out in their budgets. The only reason the TRIP program has continued to receive the funding in some fiscal years was because of the continuing appropriation.
The first attempt to pass the bill in the Senate Failed on Wednesday. We later found out most members did not know TRIP was part of this bill until after they had taken the vote.
Although this bill failed, it was put on postponed consideration, meaning it could come back for a vote, but the IRTA was able to keep that from happening on Thursday. But, Friday is a new day and we are diligently working to keep SB 42 from coming back for any additional votes.
Through voter voice, and lobby efforts in Springfield we are trying to keep this legislation from a vote, or more importantly have the language that strips TRIP of its continuing appropriation taken out of the bill.
That is the major hurdle, because this language is in the BIMP bill. This is the bill that authorizes spending the money that has been appropriated in the budget. It is necessary, it is important and there are many good parts of the bill. Our opposition is to 6 words in the bill…only 6, so if we can have them amended out of the legislation we would no longer be opposed to its passage. Actually, without those 6 words we would be in favor of it because if it were to become law that would mean there is a state budget to go with it. Something Illinois hasn’t had in three years.
Please read and take action on the voter voice you were sent. If you did not receive the voter voice you can still email your senator through the grass roots portion of our website. Once you do this then please urge your unit, family and friends to reach out to their senators and tell them they should vote against this because it will hurt teachers. Or remind them with a small amendment to take TRIP out if the bill we would love this to pass along with a balanced budget.
We are down to 10 days of session left before they adjourn for the summer. It is going to be a crazy next two weeks. Help us make sure our members don’t get swept up in the crazy.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
May 18, 2017 IRTA
Urgent Call-to-Action Alert Posted
for IRTA Members
IRTA: PENDING SENATE PROPOSALS BOTH
‘UNFAIR’ AND ‘UNCONSTITUTIONAL’
(May 18, 2017 - SPRINGFIELD, Ill.) - Members of the Illinois Senate voted Wednesday on two separate bills that directly affect all annuitants of the Teachers Retirement System.Senate Bill 42, sponsored by Senator Andy Manar, would have ended the continuing appropriation for the Teachers’ Retirement Insurance Program (TRIP) in state statute. This means the state subsidy provided to CMS that covers roughly ¼ the cost of the entire program would have been subject to yearly appropriations.
This concerns members of the IRTA because both budget proposals by Governor Rauner and at least one by past Governor Pat Quinn zeroed out the funding that TRIP receives from the state. If this were to become law, and there was no appropriation for TRIP, TRS Annuitants who are members of TRIP would see their premiums increase by 23%.
The IRTA has been advised by Tabet DiVito & Rothstein LLC that, “Retired Illinois educators’ health insurance benefits are protected by the Pension Protection Clause for the reasons set forth in Kanerva v. Weems.” Because of this, the IRTA believes that not funding TRIP would be considered unconstitutional.
The other piece of legislation, SB 16, is the pension reform proposal sponsored by President Cullerton and touted by Governor Rauner. This legislation does several things, but most importantly, it will lower the amount the state pays into the pensions systems, once again.
This essentially creates another pension ramp and pushing off the pension payment is the same mentality that got the state into this mess in the first place.
In addition, it will require active teachers and other current state employees to make a choice. They can choose to keep their compounded COLA in retirement, but can no longer have pay raises count toward their future pensionable salary. Or they can give up the compounded COLA, but continue having raises count toward their retirement benefits and be placed into the Tier II pension plan.
Not only are these measures unfair, the IRTA would suggest the changes proposed are unconstitutional. The lawyers who represented the IRTA Members against Senate Bill 1, Gino DiVito and John Fitzgerald, recently wrote an opinion concerning proposed “consideration” language presented in this bill.
Senate Bill 42 failed, but only by three votes and there has been a motion to reconsider the vote. Senate Bill 16 passed the chamber and now goes to the House of Representatives for their consideration.
The Illinois Retired Teachers Association represents retired teachers, administrators and their families. IRTA is the sole watchdog for retired teachers in the Illinois legislature. Its goal is to maintain and improve benefits for annuitants of the Teachers’ Retirement System (TRS); promote education and the professional, social and economic status of all members; and work in cooperation with other organizations to obtain these goals.
IRTA | Springfield, Ill. | 217-523-8488| www.irtaonline.org
May 17, 2017 As posted on the IRTA website
Constitutional Issues Concerning Retired Educator Health Insurance Benefits
On February 16, 2017, IRTA presented the following issues to our law firm Tabet DiVito & Rothstein LLC.
Issues Presented
- Are the health insurance benefits received by retired Illinois educators protected by the Pension Protection Clause (Art. XIII, § 5) of the Illinois Constitution?
- If so, what is the scope of that constitutional protection?
Executive Summary
Retired Illinois educators' health insurance benefits are protected by the Pension Protection Clause for the reasons set forth in Kanerva v. Weems, 2014 IL 115811. The Pension Protection Clause prohibits the General Assembly from amending the State Employees Group Insurance Act, 5 ILCS 375/1, et seq., so as to reduce the State's subsidy for retired educators' health insurance benefits or push health insurance costs onto retired educators.
April 28, 2017
Legislative Update 4/28/17
After the House and Senate took a two-week Easter break, they are both back in session this week.
Rumors abound that the Senate would take a vote on the House’s plan for a stopgap measure that they passed before the break. However, there is always a catch…The Senate wants to add an additional amendment to the plan that would include dollars for violence prevention programs and MAP Grants for university students.
This original stopgap plan passed by the House contained more than $815 million to state universities and social service providers but no additional programs.
However as we arrive at Friday, this didn’t happen.
There was a thought that this might be rushed through because the five state universities were downgraded to Junk bond status by S&P Global Ratings late last week…however that didn’t happen.
As you may know, Gov. Rauner is adamantly opposed to another temporary stopgap budget that would use existing special state funds that are currently piling up in bank accounts to help out struggling universities, college students and human service providers and recipients.
Their argument is that distributing the money would take the pressure off everyone to pass a real budget with the governor’s demanded reforms.
At the same time, they want to take state employees out of the “pressure” equation with a continuing appropriation, which means those salaries would essentially be funded throughout eternity.
But since the lack of funding for social services and higher education over the past two years hasn’t spurred anyone in Springfield to action, it might be that only an actual government shutdown after state employees can’t come to work will actually move the needle.
In Other News
There was some movement yesterday when it was announced that the Governor and Speaker Madigan had a 45 minute meeting. Although this shouldn’t really be news, a meeting like this hasn’t happened since before the election last year.
Although there was a meeting…it seemed afterword the two couldn’t agree on what went on…so we are back to normal. Madigan issued a press release saying he’d met with the governor today and urged him “to turn his focus to the budget.”
The governor had a different viewpoint of what went on stating, “Speaker Madigan today hinted that he may be willing to enact a truly balanced budget.”
Later in the day Madigan’s spokesman Steve Brown disputed the Governor’s opinion that the House hadn’t been interested in passing a balanced budget, pointing to the cooperation with the governor on the FY 15 budget fix.
Brown also noted that the House has already passed a property tax freeze bill and “we’ve talked about things that create jobs,” including moving ahead with one bill today to make workers’ comp more affordable.
So this is where we stand at the end of the week…the two people most responsible for the mess Illinois is in had a conversation…but let’s all hope this is the start of some sort of movement to a budget agreement.
Just A Bill
- Legislation would require life insurance companies to go through their records and cross-check the names of the insured against all deaths since 1996. If a death occurred and a benefit was unclaimed dating back to 1996, the insurance company would have to attempt to find the beneficiary.
- Without a state budget, school districts are telling parents and their communities they cannot keep classrooms running beyond Thanksgiving. School District U-46 CEO Tony Sanders and more than 390 school chiefs from across the state, representing 1.3 million students, are calling on the Illinois General Assembly and the Governor to immediately pass a state budget. The grassroots initiative, called “Pass Illinois’ Budget!,” also urges lawmakers and the Governor to improve the state’s education funding formula, and pay school districts millions of dollars owed in unpaid bills this year.
- Don’t toss the grammar-school composition paper yet. The Illinois House approved legislation 67-48 Wednesday requiring elementary and high schools to teach cursive writing. The sponsor says it’s important that tech-savvy children retain cursive writing to read historical documents, write personal notes and sign documents. Opposing the legislation, Rep. Steven Andersson of Geneva says cursive does not help develop young minds any better than printing. He says a legal document doesn’t need a signature but only a “mark.”
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
April 13, 2017 from Ed Wollet, IRTA Legislative Chairman
A couple of questions arose from the original email that may be of common interest...
Is it true that any increase in the premium can be no greater than
5% in a year?
Yes. Current statute limits annual premium increases to 5% for TRIP participants. The state currently pays about $111M for their share of TRIP. This is funded through a continuing resolution because there is no state budget. Insurance premium costs to the state rose by about 8% last year. That means the state has to cover more of the premium cost. There is talk around the capitol to increase the 5% participant cap to have participants absorb more (or all) of the insurance premium increases. Currently, no senate or house bills have been introduced to increase the cap.
Does the Governor’s recommendation include defunding of both standard TRIP and Trail or just standard TRIP?
Yes. The budget line item that is zeroed out is found on page 101 of the governor's latest budget proposal. If adopted by the General Assembly there would be no funding for either standard TRIP (non-Medicare eligible) and TRAIL (Medicare eligible). The link to the proposed state budget is FY2018OperatingBudgetBook.pdf Near the top of page 101 is "Teachers' Retirement System". Under that title is "Retiree Healthcare Contributions" and "General Funds". The governor's proposed state appropriation for FY2018 is on the far right hand side and shows zero appropriated for TRS retiree health insurance.
April 7, 2017
Legislative Update 4/7/17
*Just a reminder the House and Senate are not in session for the next two weeks so legislative updates will resume the week of April 24, 2017.
Both the Senate and House are back this week in Springfield, passing bills out of committees are the focus this week for both chambers.
House and Senate proposals that urge Illinois not to tax retirement income remain alive. Senate Resolution 113 is currently in the Senate Subcommittee on Income Taxes and HR 29 is in the House Income Tax Subcommittee.
The IRTA continues to watch the progress of HB 3021. This legislation would allow temporary staffing firms to contract with school districts to provide substitute teachers for elementary and secondary public schools.
Wednesday, Illinois’ House Democrats advanced a plan to rush more than $815 million to state universities and social service providers, but that money might not arrive anytime soon because Gov. Bruce Rauner criticized the proposal and Senate Democrats still are working on their own plan.
Despite the political hurdles, supporters said they wanted to press ahead, contending that colleges and groups who care for the state's most vulnerable people are in desperate need of a "lifeline." A previous stopgap state budget expired at the beginning of the year as Illinois gets closer to going two years without a full spending plan in place.
The move came as Northeastern Illinois University announced it was canceling three days of classes in an effort to save on salary costs as it struggles to make ends meet without financial support from the state. School employees were already asked to take unpaid furlough days during the recent spring break.
Rauner, however, disputed the idea that the Democrats' plan would help. He posted a video on his Facebook page and said stopgap budgets do little to address long-term issues but "keep universities, community colleges and social service agencies on the verge of collapse with no permanent lines of funding."
A House committee approved the stopgap plan on a 10-5 vote Wednesday.
Illinois House Thursday approved another stopgap with a vote of 64-45-1 on the bill.
Lawsuits
A coalition of 17 Downstate school districts filed a lawsuit against Rauner and his administration Wednesday, contending the state has failed to provide enough money to deliver a "high quality" education for students.
The suit argues that Illinois' reliance on local property taxes to pay for schools creates a disparity in poorer communities where districts have less of a tax base to rely on. That makes it harder for students to meet educational standards adopted by the state as class sizes increase and programs are cut.
The school superintendents bringing the lawsuit want the state to put in place a different model to determine how much money the state should funnel to low-income districts in order for students to meet those standards, saying current assessments are "arbitrary and capricious."
The Responsible Budget Coalition totals up the carnage caused by the impasse…
• More than 1 million Illinoisans have lost access to critical services. (United Way)
• 22,000 seniors outside of Chicago have lost access to services such as home delivered meals, transportation and help accessing resources. (Age Options)
• Nearly 47,000 fewer children receive affordable childcare that allowed parents to work and go to school. (SEIU Healthcare)
• Higher education funding has been slashed by $2.3 billion over the past two years — 59% — threatening permanent damage to many colleges amid layoffs, decreased enrollment, academic program cuts, and tuition hikes. (Center for Tax and Budget Accountability)
• K-12 schools are struggling due to cuts to transportation, special education, and school lunches. (The State-Journal Register)
• $0 dollars of state funding has been provided for domestic violence services for the entire state since June 2016, putting thousands of
lives at risk. (Chicago Metropolitan Battered Women’s Network)
• Illinois is not funding tuition grants for 130,000 low-income college students, forcing many to drop out. (Young Invincibles)
• 80,000 people in Illinois have lost access to needed mental health services. (National Alliance on Mental Illness, Chicago)
• As rates of opioid addiction steadily rise, over 24,000 fewer Illinoisans were admitted to addiction treatment services. (Illinois Association for Behavioral Health)
• Nearly 30% fewer pregnant women and families with young children have received proven, cost-effective parent coaching and home visiting services. (The Ounce of Prevention Fund)
• 34% fewer women received life-saving breast and cervical cancer screenings. (Metropolitan Chicago Breast Cancer Taskforce)
• 90% of homeless service providers have been forced to cut clients, services, or staff. (Housing Action Illinois)
• 2,311 fewer formerly homeless Illinoisans received needed supportive housing services putting them at risk of losing their homes and entering higher cost systems. (Housing Action Illinois)
• Illinois’ 29 rape crisis centers were forced to lay off staff and cut hours resulting in waitlists for survivors seeking help. (Illinois Coalition Against Sexual Assault)
• Public transportation used by workers, seniors and those with disabilities has had days and routes cut in Central and Southern Illinois counties. (The State-Journal Register)
• Adult literacy grants were cut by 50%, significantly limiting access to this critical step toward self-sufficiency for the 2.1 million Illinoisans with low literacy skills. (Chicago Citywide Literacy Coalition)
• Cuts to HIV/AIDS testing, housing and prevention services are risking lives and increasing stigma. (AIDS Foundation of Chicago)
• Over 100,000 immigrants have lost access to services like citizenship assistance and language access. (Illinois Coalition for Immigrant and Refugee Rights)
• Employment and training programs have been cut, denying job seekers of these cost-effective services. (Chicago Jobs Council)
• Illinois’ agricultural infrastructure has been damaged by cuts to crop research and development, livestock laboratories, soil and water conservation districts, county fairs and more. (Illinois Farm Bureau, Illinois Farmer Today)
• 21 home healthcare agencies serving low-income seniors and people with disabilities have closed, reduced service areas or capped intake, raising the likelihood of institutionalization. (SEIU Healthcare)
• Services that divert youth from incarceration have been shut down in 24 counties across Illinois. (Illinois Collaboration on Youth)
• As community violence rises, over 15,000 youth have lost access to safe spaces after school. (Illinois Collaboration on Youth)
From the Chicago Sun Times –Dem dollar powerhouse J.B. Pritzker, a billionaire businessman and major Dem donor, officially announced his bid Thursday to run for governor in the Democratic primary.
The roll-out of the Pritzker campaign, which he is capable of self funding, follows in the wake of a major fundraiser in New York tossed for Dem primary opponent Chris Kennedy by his sister, Kerry Kennedy.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
March 29, 2017 TRS Report on Pension Reform
"Grand Bargain" Pension Bills Stall in Legislature
Major changes to the Illinois Pension Code that affect TRS Tier I active members continue to be a centerpiece of efforts in Springfield to reach a "Grand Bargain" on a state budget and other controversial issues that have been on hold in the General Assembly for years.
Illinois is nearing the end of a second straight fiscal year without a legislatively enacted budget, and sponsors of the so-called "Grand Bargain" say that pension benefit modifications are an integral part of cost saving measures in the plan.
One part of the pension proposal designed to cut the state's annual costs would require every active Tier I member to make a choice between keeping the current Tier I automatic annual increase (AAI) – 3 percent compounded annually – or switching to the Tier II AAI – half of the previous year's inflation rate, capped at 3 percent, and not compounded.
Those members electing the current AAI would forfeit the benefit of having all future salary increases included in their initial pension calculations. Members electing the Tier II AAI would have future salary increases included in their initial pension calculations.
The proposal also includes a partial shift of pension costs from the state to local schools districts. For active member salaries in excess of $140,000, districts would pay the actuarial pension cost of the portion of the salaries above $140,000.
While it is questionable whether the "Grand Bargain" will pass in its current form, it is anticipated that if the pension proposal is enacted, it will be challenged in court.
One of these ideas is a "pension buyout." Active members would have the option to accept a discounted lump-sum payment from TRS instead of a lifetime pension. One plan proposes a one-time payment equal to 70 percent of the present value of a member's pension. Another option would have the state Department of Central Management Services administer a buyout program administered by a private company.
In testimony before the House Personnel and Pensions Committee, TRS Executive Director Dick Ingram noted that pension buyouts are, in reality, a benefit diminishment that could be unconstitutional. In addition, Director Ingram said potential future savings from buyout programs do not correct the long-term unfunded liability facing TRS.
Other legislative proposals under consideration seek to lower future TRS funding contributions further below levels that actuaries say are necessary for "full funding." Currently the state's fiscal year 2017 contribution of $4.0 billion is $2.1 billion less than what is required for "full funding."
However, one other pension-related proposal has been removed from the debate. In an address to the General Assembly in February, Gov. Bruce Rauner said he would not support suggestions to extend the state's income tax to retirement income, which would include TRS pensions.
None of these "Grand Bargain" proposals impact retired teachers. However, we need to stay vigilant.
March 27, 2017 Click on link below:
www.sj-r.com/news/20170325/state-lawmakers-look-again-at-pension-buyouts
March 17, 2017
Happy St. Patrick’s Day
This week saw the House pass legislation out of the chamber concerning everything from recycling unlawful materials to commercial fishing regulations while the Senate focused on the budget. The Senate has come out and said they will hold hearings about the budget and revenues but not much else until an agreement is reached and something is passed.
Also this week two members of the Senate Republican Caucus, Senators Michael Connelly (R-Naperville) and Jil Tracy (R-Quincy), announced they were filing a statewide pension reform plan. This is an attempt to try to move a smaller measure that the legislature “agrees” upon. Although the last attempt to pass this type of legislation failed, pension reform seems to be the ideal starting place According to Tracy and Connelly.
The Connelly-Tracy pension package consists of two bills: One which includes the consideration model portions and one which includes the Tier 3 pension system.
SB 2172 creates a defined contribution plan for all new annuitants, offers inactive members a buy-out option and shifts costs to local school districts.
SB 2173 would require current teachers to make a choice of two diminished benefits. Either receive a reduced COLA and be able to retire with your full salary or keep your compounded COLA and retire with the salary you have when this bill becomes law. No other salary increases you may receive would be counted to your pensionable benefit. This would also prohibit collective bargaining for salary and benefits.
After the Senators’ press conference on Wednesday, Governor Rauner tweeted “I will sign this bill when it reaches my desk, making changes to our pension system is critical to a balanced budget.”
Another issue that maybe important to members concerns home health workers.
Gov. Bruce Rauner implemented new rules restricting overtime pay for home health aids, starting August 1, caretakers will be limited to a 45-hour work-week. If people require more care, they’ll have to find an additional worker.
The overtime rule has become an issue between Gov. Bruce Rauner’s administration and SEIU Healthcare Illinois, which represents the home care workers. The union issued a statement Tuesday saying that any savings the administration expects from the new rule would be wiped out if 182 people now receiving home care assistance are forced instead into nursing homes. The administration thinks placing limits on overtime will save $8 million.
In a vote along party lines, republican members of the Joint Committee on Administrative Rules (JCAR) voted to approve Governor Bruce Rauner’s DHS Overtime Policy. Over the last year, people with disabilities, their caregivers, and advocates have warned about the devastating affects this misguided policy would have on the lives of consumers and workers in the DHS Home Services Program (HSP). Despite the outcry from stakeholders, Bruce Rauner and DHS refused to meet with those impacted and instead stayed the course to implement their rules.
The following statement is on behalf of Access Living, the Illinois Network of Centers for Independent Living, in response to the JCAR vote:
“Today, thousands of people with disabilities and personal assistants in the DHS Home Services Program were abandoned by republican JCAR members. Hundreds of phone calls, emails, and personal letters were submitted to JCAR prior to their vote highlighting the problems with this policy. Instead of heeding the warnings, republican JCAR members voted to undermine the strength of the Home Services Program and the independence of people with disabilities.
“No one won today with this unfortunate vote – not people with disabilities, not personal assistants, and certainly not Illinois taxpayers. The minor cost-savings projected from this misguided policy will be completely negated if only 182 individuals with disabilities are forced into more costly nursing home care as a result, stripping them of their dignity and independence and leaving Illinois taxpayers to foot the bill.
“Our coalition vows to continue the fight against this terrible policy and our commitment to reaching a fair agreement that will protect the health and safety of people with disabilities remains.”
Other controversial bills
House Bill 1785 would update and modernize a more than half-century old rule by eliminating an antiquated surgical requirement that prevents countless transgender and intersex Illinoisans from changing the gender marker on their birth certificate to match their gender and the gender marker on their other state and federal identification documents.
Rep. Greg Harris said today at a press conference, in a high-security era where all your various documents need to match up and your documents need to match your appearance at, say, airport security checkpoints, the bill is actually needed.
Taxpayers bear the cost of hidden interest on Illinois’ enormous bill backlog with no real clarity about how deeply in debt the state is, how much interest is accruing on overdue bills and how long it will take to pay off the penalties.
Senate Bill 1652, the Debt Transparency Act will require more accountability from state agencies regarding Illinois’ bill backlog, which today is more than $12.4 billion.
An estimated $4.9 billion worth of overdue bills is being held by agencies because of lack of appropriation or processing delays, and the comptroller’s office projects that Illinois will owe at least $700 million in interest and penalties on those overdue bills by the end of the current fiscal year. The Debt Transparency Act would require state agencies to report monthly to the comptroller the bills they are holding and estimate the amount of interest that will be paid on those bills.
State lawmakers are attempting to revive an effort that failed last year to bring automatic voter registration to Illinois.
Sen. Andy Manar of Bunker Hill plans on introducing a proposal that would allow residents to automatically register to vote when they visit certain agencies. Lawmakers OK’d a similar measure last year but Gov. Bruce Rauner vetoed it over concerns it lacked necessary safeguards.
The latest iteration of the plan requires residents to confirm their eligibility before their information is passed along to election authorities.
Officials representing retailers, sheriffs and municipalities said they are opposed to raising the threshold value of a stolen item from the current $300 to $2,000 for shoplifting to be considered a felony in Illinois.
The higher dollar amount for a felony charge was among recommendations in a report issued in December by the Commission on Criminal Justice and Sentencing Reform, which was named by Gov. Bruce Rauner in early 2015. The goal of the commission was to recommend changes in state law that could reduce the prison population by 25 percent by 2025.
Senator Daniel Biss’ groundbreaking measure to protect Illinois college students from crushing education debt advanced out of a Senate committee on Wednesday.
Senate Bill 1351 establishes the Student Loan Bill of Rights in Illinois to provide as much protection as possible for student borrowers.
The Student Loan Bill of Rights would help to ensure students and their families receive clear information about the money they borrow for higher education and how their student loans are serviced. Among the protections offered in the legislation:
· Requires student loan services to provide specialized employees to assist borrowers with questions about loan payments, explain repayment options and evaluate a borrower’s financial situation to determine which payment plan is appropriate.
· Requires loan servicers to give borrowers accurate information on billing statements and properly process borrowers’ payments, and bars servicers from charging unreasonable fees.
· Requires loan servicers to tell borrowers when and how their federal loans may be discharged due to a borrower’s disability or a problem with the school the borrower attended.
· Requires loan servicers to provide information so cosigners know the conditions of being released from their obligations.
· Requires servicers to follow procedures when a loan is transferred to a new servicer to ensure continuity and ensure borrowers’ payments are properly handled.
· Ensures borrowers have the right to request information and file account disputes with their servicer and appeal any servicer determination.
· Creates a student loan ombudsman in the office of the attorney general to assist borrowers with student loans.
· Establishes a student loan servicing license with the Illinois Department of Financial and Professional Regulation to qualify, oversee and discipline services for violating the Student Loan Bill of Rights.
An Illinois lawmaker is seeking $25 million to help Jewish organizations tighten security after a series of threats and vandalism at Jewish institutions nationwide.
Illinois House Deputy Majority Leader Lou Lang introduced legislation Monday to fund a grant program in the secretary of state's office for "emergency" upgrades to prevent or respond to "acts of terrorism."
Last week, the Chicago Jewish Day School was evacuated because of a bomb threat that turned out to be false. The Anti-Defamation League in New York and several Jewish centers across the nation also received bomb threats.
The Democrat's legislation authorizes the secretary of state to approve a grant of any amount based on a detailed threat assessment from a nonprofit agency.
From the Twitter –
· Dems press Rauner budget guru Scott Harry for what he'd cut. Harry: "list does not exist," Gov-preferred budget counts on longterm savings
· Rauner's budget director just told #SenExec that the governor has no official budget cutting plan
For more than a week, Senate committees asked Gov. Bruce Rauner’s agencies to identify potential budget cuts to help close a $5 billion gap in the governor’s state budget. So far, they’ve been unable to come up with any.
That experience is among the reasons Democrats on Wednesday voted down a plan to give the governor unilateral power to cut whatever he wants to fill the gap in his budget. Another reason would be the Senate’s own efforts to create a grand bargain budget deal to restore financial stability.
In response to the rejection of his blind budget cutting authority, Gov. Rauner issued a press release criticizing Democrats for not working with him.
Illinois Senate Democrats took issue with that:
“If this is working with us on the budget, let me know when he starts working against us,” said Senate Assistant Majority Leader Terry Link, a Vernon Hills Democrat.
“Maybe the governor missed a memo. His own budget director has told us time and again that the governor’s budget is balanced. I don’t know what the governor’s getting so worked up about. He should go talk to his own budget director to be reassured of just how balanced his budget is,” said Senate Majority Leader James F. Clayborne, a Belleville Democrat.
As Illinois’ finances deteriorate and gridlock prevails in Springfield, dark money groups spend millions of dollars to influence elections and public policy without disclosing the sources of their funding.
That frequently leaves taxpayers and elected officials in the dark about a group’s true motivations for supporting or opposing legislation or policies.
Senate Bill 2089, sponsored by Senator Don Harmon (D-Oak Park), would require greater transparency of politically active dark money groups by requiring them to register as political committees and disclose their donors.
“Accountability for political donations is vitally important in our system of government and elections,” Harmon said. “For too long, dark money groups have been able to hide behind the cloak of their nonprofit status and conceal the true intent of their work, which is to raise unlimited amounts of money and peddle political influence, unbeknownst to the average voter and taxpayer.
Harmon noted that the groups in question are not the charities and civic organizations for whom tax-exempt status was intended.
“These are political groups organized specifically to take advantage of nonprofit protections and hide their political activity,” he said.
Harmon added that as Illinois continues to see unprecedented spending by candidates and outside groups seeking to influence elections, it’s important for voters that the General Assembly closes loopholes that allow runaway spending by dark money groups.
“I think nearly all of us can all agree that a flood of secret political donations by billionaires and corporations is not good for our state,” Harmon said.
Senate Bill 2089 advanced out of the Senate’s Executive Committee in an 11-3 vote Wednesday.
Numerous good-government organizations indicated support for the measure, including the Illinois Campaign for Political Reform, the Better Government Association, Illinois PIRG, and the 2,700 members of the League of Women Voters of Illinois.
Only two organizations indicated they are opposed to the measure, although they did not send representatives to Wednesday’s hearing to explain why: the Illinois Policy Institute and Americans For Prosperity. Both are dark money groups that would be required to disclose their contributions and expenditures when the bill becomes law.
State Senator Steve Stadelman (D-Rockford) realized the importance of allowing pharmacists to fill emergency prescriptions is sponsoring SB 1790.
Stadelman’s legislation would allow pharmacists to refill a prescription without a doctor’s authorization if abruptly discontinuing the medication would cause medical harm or danger to the person. It would not allow emergency refills of controlled substances. Pharmacists could fill a prescription for a time deemed reasonably necessary.
Senate Bill 888 is designed to fill a projected workforce shortage in rural Illinois while connecting students with good-paying careers in health care. This bill would allow community colleges to award four-year nursing degrees in an effort to deepen the pool of qualified registered nurses available to be hired by Illinois health care employers.
This bill will grant 20 Illinois community colleges the ability to award bachelor of science degrees in nursing and sets standards for establishing nursing programs, including accreditation, documenting unmet workforce needs and more.
The legislation does not require community colleges to offer the degrees. State money may not be used to establish or maintain the program, according to the legislation.
HB 2354 and SB 1291 would create a “Lethal Violence Order of Protection,” similar to an order of protection in domestic violence cases. These bills would make it easier for family members and police officers to intervene in such a mental health crisis passed the House Judiciary Committee on Wednesday.
Under the proposed legislation, a petitioner could file an affidavit alleging that the gun owner poses an “immediate and present danger of causing personal injury to himself, herself, or another possessing or receiving a firearm.”
The duplicate bills are the initiative of the Coalition and the Illinois Council Against Handgun Violence and are opposed by the National Rifle Association.
The Illinois House approved legislation sponsored by State Representative David McSweeney (R-Barrington Hills) is sponsoring to eliminate the requirement for the Secretary of State to do a statewide mailing with information about proposed changes to the Illinois Constitution.
House Bill 348 directs the Secretary of State to publish a proposed Constitutional Amendment, the explanation of the amendment, the arguments for and against the amendment, and the form in which the amendment will appear on the ballot on a website controlled by the Secretary of State when the amendment is published in newspapers. The bill eliminates the requirement to mail the information to people. Newspaper notices about the constitutional amendment would still be required.
This proposal would save taxpayers about $1.3 million each time the Legislature approves a Constitutional Amendment to appear on the ballot. This passed the House on a vote of 108-0 and now moves to the Illinois Senate where Senator Tom Cullerton is lead sponsor.
New Illinois License Plates are starting to be sent out by the Secretary of State…
May the roof above you never fall in, and those gathered beneath it never fall out.” – Irish Blessing
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
March 3, 2017
Legislative Update 3/3/17
The 100th General Assembly was brought to order in Springfield on January 11, 2017 with the inauguration of new legislators. There are a combined 32 new members of the General Assembly this year.
Since inauguration day, there have been over 2000 bills filed in the Senate and nearly 4000 bills that have been introduced in the House of Representatives.
There are over 40 bills dealing with the TRS pension system this year, not including shell bills that can be amended at a later date with language that would address public employee pensions.
There are a number of bills being proposed that would create some form of Tier 3 pension system by putting all new workers into a 401(k) style program or that would create a defined contribution plan versus the defined benefit plan teachers have now. Others would allow for the accelerated payment or a buyout of ones’ pension. There is legislation that would try to combat teacher shortages by increasing the number of hours one could return to work. And, still other measures concern the transfer of pension costs from the state to local school districts at the same time the Governor is calling for a property tax freeze.
The IRTA is also watching measures that concerns prompt payments for health care costs. This would require the state paying up to an eight percent interest penalty if payments are over a specified number of days late. The concern comes from not yet knowing if those funds would come from the state or TRS. The IRTA is against using TRS funds to pay those interest payments.
Current Legislation supported by the IRTA:
- House Bill 751 allowing retirees to return to work in subject shortage areas
- House Resolution 29 and Senate Resolution 113 both urging their chambers not to tax retirement income
- House Joint Resolution Constitutional Amendment 18 which calls for repealing the pension protection clause in the Illinois Constitution
- House Bill 2759 would suspend an annuitants pension if they return to work regardless of the hours worked
- House Bill 3021 would allow temporary staffing firms to contract with school districts to provide substitute teachers for elementary and secondary public schools
Although some of these measures have been passed, the Senate Republicans have put a stop to voting for any additional measures in this package for the time being.
Of the 12-piece bill package, those that have passed the Senate include:
- Local Government Consolidation (SB 3)
- $215 MILLION FOR Chicago Teachers’ Pension (SB 5)
- Fiscal Year 2017 appropriations for state agencies (SB 6)
- Gaming legislation that would add 6 casinos, slots at tracks, slots at O’Hare Airport and slots at motor speedways (SB 7)
- Procurement reform to save the state money on purchasing (SB 8)
- SB 1 – Education Funding Reform
- SB 4 – Debt Restructuring
- SB 9 – Tax Increase (4.99% personal and 7% corporate plus increasing taxes on services)
- SB 10 – Allows cities to borrow more for less
- SB 12 – Workers Compensation Reform
- SB 13 – Property Tax Freeze
- SB 16 – Pension Reform
The reason the package of bills is on hold currently is because if one of these proposals fails to pass both chambers all of the bills will fail based on language in all of these bills. They are all tied together for better or worse.
In addition, Governor Rauner introduced his budget to the General Assembly on February 15, 2017. One of the most important aspects of this proposal for the IRTA was stating he would zero out funding for the Teachers Retirement Insurance Program (TRIP). He again urged enactment of legislation that provides for funding changes to TRS that would under fund the pension systems. Once again kicking the can down the road for others to deal with in the future.
Both the Senate and the House are in session next week so I will send out more information as it becomes available.
The IRTA is and will continue working with legislators on your behalf.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
February 23, 2017
nprillinois.org/post/illinois-issues-great-pension-chasm#stream/0
February 8, 2017 Grand Bargain Pension Reform
IRTA
Senate Bill 11, the pension reform component of the Senate Grand Bargain, failed today in the Senate 18 yes -29 no -10 present. Most likely there will be a reincarnation of this bill in the future.
IRTA will continue to be vigilant and update our members on any proposed legislation that could affect retirees pensions.
January 23, 2017 Illinois Senate to try again on pension reform
Click here: www.sj-r.com/news/20170121/illinois-senate-to-try-again-on-pension-reform
January 21, 2017 ILLINOIS SENATE LEADERS PROMISE BUDGET-DEAL VOTE WEDNESDAY
Click here to read article: foxillinois.com/news/local/cullerton-radogno-promise-budget-package-vote-wednesday
January 11, 2017 from Ed Wollett, Legislative Chairman
Hello Friends,
The forwarded IRTA "Call to Action" email (see January 9, 2017 post) should remind us that our pension and health insurance benefits are still at risk. But that does not mean we are powerless. Working together we can stop legislation before it makes its way to bill form.
What can you do? As a local unit leader, here are three things you can do today.
1. Communicate. Staying in touch with your local members is key. If you don't already have a members email database, start one. VoterVoice provides an immediate way to get legislative action reports. If you aren't signed up, use the link below. IRTA depends on grassroots efforts to communicate with local legislators.
VoterVoice Sign Up
2. Join our first line of defense. Ultimately, it is less expensive to work to stop legislation than to defend it in court. You can fund our first line of defense by joining the IRTA Political Action Committee's $1/month deduction program. We've made signing up easy. Use the link to sign up today.
IRTAPAC Sign Up
3. Forward this email to local members and non-members. Members and non-members can join and pay dues using the link below. Family and friends can use the same link to join as associate members.
Join IRTA
It's as simple as that. The worse thing we can do is depend on "someone else" to fight for protecting our rights. It's up to us.
Thanks.
Ed Wollet
Retiree and IRTA Legislative Committee Chair
January 10, 2017 IRTA LEGISLATIVE UPDATE
What happened yesterday in the Legislature?
A massive package of bills aimed at resolving the state's budget impasse will not get a vote in the Illinois Senate during the two-day lame-duck session.
Instead, Senate President John Cullerton said the bills -- including an income tax increase, a soda tax, pension changes and elements of Gov. Bruce Rauner's "turnaround agenda" -- will immediately be refiled after newly elected lawmakers are sworn in Wednesday to begin the 100th edition of the General Assembly.
Senate Republican Leader Christine Radogno, who negotiated the bills with Cullerton, said Monday she hopes the legislation can pass the Senate before
Feb. 1, 2017.
Rauner, a Republican, has insisted that parts of his agenda needed to be passed before he would entertain talk of tax increases to help balance the budget. However, House Speaker Michael Madigan, D-Chicago, has insisted that the budget be dealt with separately from the pro-business reforms that Rauner wants. Neither Madigan nor Rauner was involved in negotiating the bills that Cullerton and Radogno want to pass.
Concerns about timing:
Word of the negotiated proposals surfaced late last week with the thought that the Senate would try to approve them during the lame-duck session that began Monday. Both Republicans and Democrats in the Senate held lengthy private caucus meetings Monday to go over the bills. It was after those meetings that the leaders said a vote on the package would be postponed.
"There was some resistance to the lame-duck aspect of this," Radogno said. "We are often criticized for doing things too quickly."
She said some senators only learned details of the package Monday. She said the concerns were "primarily" about the timing rather than the substance of the bills.
Even if the legislation had passed the Senate, there was little likelihood the House would have taken the bills up before Wednesday, when all unresolved issues before the legislature have to start over again. Rauner has said he doesn't know all of the details of the various bills, although he praised the Senate leaders for working in a bipartisan way to reach compromises.
A further potential complication is that the bills were drafted in such a way that none of them would take effect unless all of them are passed into law.
"This was not a tax increase. This is a budget package with reforms," Cullerton said.
Bills that were part of the package include:
* Increasing the personal income tax rate to 4.95 percent from the current 3.75 percent. The income tax increase would generate $4.1 billion. The same bill also would impose a one-cent-per-ounce tax on sweetened beverages like soda, which would produce an estimated $560 million.
* Pension changes that would make employees choose between continuing to receive 3 percent increases in pension benefits at retirement or continuing to have future raises count toward their pension benefits. Also a change in how pensions are funded. Essentially, this backloads the pension payment so the state pays less now and more later. So the state is once again kicking the can down the road.
* A spending plan that would take the state through the end of its current fiscal year June 30.
* Authorization to borrow $7 billion that would be used to immediately pay down some of the state's $11 billion bill backlog.
* Gradually increase the state's minimum wage from the current $8.25 an hour to $11 an hour by 2021.
* A proposal making it easier to abolish township governments.
The Senate package will also take up a constitutional amendment to limit the amount of time lawmakers can serve as the top leaders in the House and Senate. There will also be bills dealing with workers' compensation and a two-year property tax freeze, although parts of those are still under discussion.
Cullerton Monday sidestepped a question about whether the Senate would take up a limited budget plan approved Monday by the House. The House passed a bill to provide money for higher education and some social services through the end of the fiscal year. A stopgap budget that provided those areas with funding for the first six months expired Dec. 31.
Money to cover those expenses would come from a portion of the state income tax set aside to support education and human services. Rauner has said he won't accept any more temporary spending plans unless lawmakers enact term limits and a permanent property tax freeze.
January 9, 2017 IRTA
Negotiations between the Illinois Senate leaders has resulted in a new pension reform proposal.
Although not a diminishment, they are proposing recalculating how the state pays into the pension system. This proposal will backload the pension payments, paying less now with the promise that the state will pay more down the road. This pushing off the pension payment is the same mentality that got the state into this mess in the first place.
In addition, the language in Senate Bill 17 would affect current employees. Not only is it unfair, the IRTA would suggest the changes proposed are unconstitutional.
The legal team who represented the IRTA Members against Senate Bill 1, Gino DiVito and John Fitzgerald, recently wrote an opinion concerning Senate President Cullerton's proposed "consideration" language in the bill.
Cullerton's proposal would offer Tier 1 employees a choice: IF they waive their right to a 3 percent compounded COLA, and instead receive the Tier 2 COLA increase that is 3 percent but not compounded, and delayed receiving that for five years or age 67 THEN their raises going forward will be pensionable.
However, if they DO NOT waive their compounded cola THEN any raises received after the effective date of the legislation becoming law will not apply to their pensionable salary.
This email was sent to those with Voter Voice. If you have not signed up, click under " more" above and cursor down to VoterVoice for directions. Voter Voice allows you to send an email to your legislators regarding legislation affecting teachers. It's easy and fast.
December 6, 2016 IRTA
Illinois Retired Teachers Association
From Capitol Fax and the Sun Times...Rauner said he warned the speaker last week that he’ll only approve another stopgap budget with term limits and a property tax freeze.
Besides deep fundamental disagreements about reforms, the two are so at odds that they disagree over the word “stopgap.” Last week, Madigan said it was the governor’s office that coined the term in late May, and that he preferred it to be called a budget. They also disagree about whose idea it was to try to pass a stopgap budget, which began in July.
The governor on Monday called that “semantics.”
“I call that a stopgap. He calls it a budget. Semantics. It’s not a real budget,” Rauner said.
And while the governor has said he’s still “fighting” for his reforms, he warned a stopgap budget may be where the state is heading.
“I will insist that those be part of any stopgap plan, Rauner said. “Be ready, because that’s where we’re going.”
We already know about these two demands in exchange for a stopgap, but have people really internalized them yet? All we’ve seen so far is straight reportage on his demands, but we are heading for a serious meltdown here and more people need to speak up. So far, I’m getting a lot of private feedback that people are still holding out beyond all hope for a deal. Does this sound like a deal is imminent?
* No stopgap could mean very real problems. Social service agencies are already crumbling. You can kiss many of them goodbye if they don’t get any more cash. Same for some of our universities.
August 31, 2016
"Moody’s Investors Service said Tuesday a decision last week to lower the estimated rate of return on teacher retirement investments “is positive” for Illinois while also placing additional pressure on the state budget."
Full article at this link http://www.sj-r.com/news/20160830/moodys-says-lowering-trs-investment-rate-is-positive-for-state
August 27, 2016TRS vote on lowering the expected rate of return on investments
The board that oversees the Teachers Retirement System voted today 9-0 to lower the expected rate of return on investments from 7.5 percent to 7 percent.
The Governor appointed three new members to the board this morning to fill previous vacancies. However, one of those members withdrew his nomination because of residency issues and the other two newly appointed members abstained from the vote.This alteration will mean the state of Illinois will have to pay TRS and additional $421 million in the coming fiscal year.When the board last altered the assumption from 8 percent to 7.5 percent in 2014, the state ended up on the hook for an additional $200 million in pension payments.We expect there will be a question over the legality of this vote because prior to today’s meeting, the issue was not posted correctly on the agenda 48 hours prior to the meeting as is required by the state of Illinois Open Meetings Act. If further action is taken the IRTA will send out additional updates.
July 26, 2016
A Message from IRTA Legislative Chair Ed Wollet
The Illinois Retired Teachers' Association Political Action Committee (IRTAPAC) is our first line of defense in the ongoing battle to protect healthcare benefits now that the Supreme Court has ruled in our favor protecting our pensions.
At a press conference last month, Governor Bruce Rauner made the following statement: "President Cullerton and I have agreed on how to do that. Even Speaker (Michael) Madigan's staff has agreed that it probably works. That's front and center now on the table after the (November) election."
The "that" the governor is referring to is bringing back some form of President John Cullerton's SB 2404 bill. Originally, SB 2404 would have forced a choice of keeping your COLA and giving up healthcare or keeping your healthcare benefit but giving up your COLA.
This might well be what we see proposed after the election, but thanks to our lawsuit against SB 1, this would only effect those yet to retire. Current retirees would not face this choice.
What we need to continue to be vigilant about is the cost of our healthcare. It seems that since the legislature was told they cannot take away our pension benefits, their next line of attack may be focused on the insurance benefits we receive through TRIP.
There has already been talk of increasing premiums or cutting benefits because the governor believes the insurance program retirees receive is a 'Cadillac' plan and he doesn't believe we deserve this kind of care.
This is where IRTAPAC becomes our first line of defense. IRTAPAC funds are used to help elect legislators who in turn support IRTA members. $1 per month, $12 per year, deducted directly from your pension sends a message to legislators that we will defend our benefits.
But to do anything, we need you and your support.
2016 is an election year. There are contested races for several seats in the Illinois General Assembly. Helping to elect state legislators who will oppose budget bailouts on the backs of retirees is the goal of IRTAPAC.
Your legislative committee will meet on August 4. We will review questionnaires that have been submitted by incumbent legislators and their challengers. We then will send our recommendations to the IRTA board of directors for final approval. Then it becomes our job...the job of all of us in IRTA...to ensure those who have supported us and our benefits continue to receive our support in the November Election.
Your IRTA legislative committee set a goal to double the IRTAPAC membership. Of the (37,000) IRTA members, (3,800) are IRTAPAC members. Our goal is to have 6500 IRTAPAC $1 per month deduct contributors by December 2017.
Please, join your fellow IRTA members and me today by clicking here to donate to the IRTAPAC. With your help, we can nip these types of unfair proposals before they become state law.
June 30, 2016
Legislative Update
Illinois has a budget…but it was a long road to get there.
As of Wednesday, June 29th Illinois has officially gone 364 days without a state budget. And if you want to see how that happened there is a great article from the Bloomington Pantagraph here -http://www.pantagraph.com/news/state-and-regional/govt-and-politics/illinois-is-in-crisis-here-s-how-it-happened/collection_a857c486-4941-56a6-b4c4-6ca6a2b913b6.html#1
That is why local media outlets from across the state banded together to send a unified message to the governor and legislative leaders…
Their directive: "Enough!" Orders both sides to drop the politics and actually pass a budget.
We are in desperate times. The State-Journal Register's editor, who helped coordinate the effort, said the drastic move comes after it became clear that elected officials stopped listening to their constituents.
Illinois newspapers printed a Page 1 budget message for lawmakers this morning," by Associated Press' David Mercer: "About a dozen Illinois newspapers are using their front pages to call on Illinois' political leaders to end the state's year-old budget stalemate. Newspapers in Springfield, Chicago and other cities are publishing simultaneous editorials in their editions Wednesday, when lawmakers return to the capitol to debate budget proposals. Newspapers rarely use their front pages for opinion pieces or coordinate opinions. Many plan to use the headline 'Enough
"Gov. Bruce Rauner, House Speaker Michael Madigan, Senate President John Cullerton and senators and representatives, each and all of you, we have had it. Not just we inconsequential newspaper and media institutions, but we all-important citizens of Illinois, who have watched as you allowed the state's economy to be pushed to the precipice of bankruptcy and its credit rating to plummet to the depths of ignominious junk. We teachers and administrators at public schools who must try to run our operations without knowing how much money to expect -- or whether to expect any at all -- from a government whose foundational document declares us to be its highest priority." http://bit.ly/292BDeY
Education Funding
While Chicago Public Schools would receive the biggest infusion of cash as part of a new Senate Democrat education funding proposal, CPS actually ranks 50th when it comes to greatest increase on a per pupil basis, an education reform group argues. Downstate and Central Illinois schools would see great per pupil gains under SB 2054. In all, the bill asks for $700 million more in education funding to be distributed based on district poverty rates.
An analysis from ‘Stand for Children’ estimates that "The top 10 biggest per pupil gains under SB 2054 range from the far south Cairo, to the Metro-East-area Venice, to Fairmont in collar counties and Dolton in suburban Cook. The top 50 per pupil increases go to downstate urban districts like Decatur and Peoria, rural districts like Mt. Vernon and Centralia, suburban districts like Yorkville and Proviso, and coming in at #50, CPS.”
Leaders finally meet Tuesday Night…
On Tuesday evening, the governor and legislative leaders finally met to discuss the stopgap measures they could support to ensure schools can open, the state can pay providers and the state can generally function, although not well.
Pretty much everybody has a reason to get a deal done. Rauner doesn't want agencies to collapse. Chicago Dems are under extreme pressure to bring home some school money. All legislators in both parties are getting absolutely hammered back in their districts. The real question tonight is: Have they finally found the will to move forward enough to do a stopgap and a K-12 compromise?
Speaker Madigan's emerged from the meeting stating: "I think we've had a good, productive day. It appears to me that everybody in the negotiations are negotiating in good faith. There are a lot of proposals on the table. A lot of good ideas. And I just told the group that my suggestion would be that we sleep on everything over the night, come back first thing in the morning and go at it again. I'm optimistic, optimistic that we can settle a whole host of problems and a lot of good will be done for the people of the state of Illinois."
Durkin stated: Taking a very global perspective on the budget... We made progress
Rodogno said: Caution is always in order
While President Cullerton was quoted as saying: We are halfway there…it is exciting that we’re this close
Leaders meetings continued Wednesday
The leaders reconvened on Wednesday morning with Cullerton emerging nearly an hour later stating they are continuing to negotiate. People are making offers and counter-offers. He said they were working on stopgap for human services and higher education, plus a P-12 funding bill. When asked what changed to spark the negotiations, Cullerton said he didn't know why, "but that's what we're doing." He said they would return to the governor's office to present another counter-offer.
These were the longest, and most consecutive, meetings amongst the leaders since Rauner took office.
As of Wednesday evening, the Legislative Reference Bureau was drafting a comprehensive stopgap measure which was set to include language from three senate bills covering the funding for state operational expenses, Higher Education funding for FY 2016 & FY 2017, and the human services funding that would take the state to January 2017.
What emerged Wednesday was a three-part plan to send money to public schools statewide in time for the upcoming school year while granting some of the extra financial help for CPS.
First, the state would add about $250 million in spending intended for school districts with low-income students. A sizable, to-be-determined chunk of that money would go to CPS.
Second, lawmakers would approve a bill to allow Chicago to raise property taxes to help pay for CPS pensions. Mayor Rahm Emanuel has been pushing for Springfield to give him the authority to restore a property tax levy that would be dedicated to teacher pensions, and has estimated that doing so would generate an additional $175 million for the district.
Third, the state would start picking up about $200 million of CPS pension costs, but would not start doing so until next year. The delay in part is meant to allow the legislation to pass with just a simple majority. That is because the threshold to enact bills jumped to a three-fifths majority after May 31. The pension spending could be tied to lawmakers sending Rauner separate legislation to help relieve the state’s pension troubles, with Rauner reserving the right to reject the pension help for CPS if the statewide pension legislation doesn’t materialize down the road.
The approach being crafted would provide full-year funding for schools statewide. The stopgap spending measure is designed to keep state government open for six months. That would allow Rauner and ruling Democrats in the General Assembly to punt their larger budget fight until after the November election.
In return, the Democrats had to agree to pass a pension reform bill by January or kiss two-thirds of that state largess goodbye. That may not sound like much, particularly since any pension reform would have to survive a very rigorous constitutional test, and that's an uphill road at best. Senate President John Cullerton's latest version of his "consideration" theory has been embraced by the governor, but constitutional scholars are sharply divided over whether the Supreme Court will allow it to become the law of the land.
The most important thing here is that for the first time since Rauner was sworn into office the Democrats have finally agreed to tackle an issue which will undoubtedly be opposed by their party's staunch supporters in organized labor - particularly the Chicago Teachers Union. So far, the CTU has been silent.
In other words, this is exactly the sort of deal making that should have been happening all along. Hopefully, it sets a pattern for getting things done after the November election.
The Illinois General Assembly passes a Budget at the last possible minute…if only for 6 months
There were five bills that passed the House and Senate on Thursday that constitute a compromised budget package that will get the state of Illinois through January and ensure education is funded through the 2017 fiscal year.
SB 2822 – This is the Chicago pension parity bill that will requires the state to contribute to the Chicago teachers’ retirement fund for one year. This creates parity with the money already provided to the downstate teachers’ pension fund.
SB 2562 – Tax Increment Finance Bill – specifically TIF areas for the Chicago Transit Authority as well as TIF’s for other areas across the state.
SB 1810 – This is the Budget Implementation Act for the stop gap measure (SB 2047). This gives the state to authority to expend these state/federal funds for the purposes set out in SB 2047.
SB 318 – Allows Chicago to levy a tax to pay into the Teacher Pension Fund of Chicago.
SB 2047 – Stopgap budget bill that will fund education for a year as well as human services, spending $25 billion in state and federal funds for the current budget year, and another $50 billion for the upcoming fiscal year. Schools will get just over $11 billion to stay open for a full year.
Under the plan, schools are getting over $500 million more in state aid than they did last year. There will also be a $250 million "equity" grant to help schools with low-income students. Chicago would get $100 million of that.
Part of the deal includes passing legislation to allow Chicago to raise $250 million in property taxes to help with teacher pension payments. A companion proposal will have the state cover $215 million in future pension costs beginning in June, like it does for all other Illinois school districts, but only if lawmakers pass legislation to reform the overall pension system.
The emerging plan calls for a $673 million increase for human services programs, including $20 million to restore programs that Rauner suggested eliminating.
There is also $1 billion for colleges and universities — about 85 percent of what they received the last time the state approved higher-education funding.
As always, if you have any questions or need any further information please do not hesitate to give me a call.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
June 29, 2016
As you well know, Illinois of the fifty states has the poorest funded state pension funds, but the Commonwealth of Puerto Rico’s pension funds are actually worse and are down to single digits. The Congress is considering a solution that will allow the PR government to quit paying its bond holders and use the money freed up to run the government and pay their pensions. There are those conservatives that fear this could become a model to be used to help those states (Illinois) that have a future possible problem. You should know that the states cannot declare bankruptcy, which is a matter of not only Federal law but also in the United States Constitution.
Bob Lyons
June 10, 2016
It was brought to my attention last week that the update seemed biased and for that I apologize. The intent of this update is to let you know what is happening in Springfield...the IRTA has no political position. Just a reminder that this update comes from press releases, press conferences and news articles published throughout the state. Again, this is for your information only and please draw your own conclusions from the information provided. I am trying to make sure you are up to date on the back and forth going on in the Capitol city as we wait for a budget agreement to come together and hopefully passed soon by the general assembly. Thank you.
Legislative Update – 6/9/16
You could get dizzy trying to keep straight who wants what in Springfield…it seems to change every other day.
In the last week of session, it was Speaker Madigan who rammed through a budget, saying someone needed to do something to get a spending plan on the books before the May 31 deadline. At that time, Gov. Bruce Rauner was urging patience, asking that working groups be allowed to find compromise.
Then yesterday, the governor held a press conference, demanding lawmakers come back to Springfield to pass an immediate stopgap budget. Madigan and Senate President John Cullerton were asking that working groups be allowed to continue their work to find compromise.
Now, the governor is criticizing the speaker for canceling Wednesday's session, accusing Democrats of dragging their feet to cause "a crisis in the schools."
Rauner's response came a few hours after Madigan's longtime chief of staff sent lawmakers a memo saying they wouldn't have to come to the Capitol so that behind-the-scenes talks could "continue without interruption."
The memo stated, "Democratic members of the bipartisan working groups continue to meet with Republican legislators and the governor's office to develop a resolution to the state budget impasse. The speaker is hopeful that progress will continue, as it has over the past few weeks."
Rauner has highlighted what Democrats are failing to do as schools openings come into question. He’s making sure the public knows he wants them to open in the fall.
Rauner held a press conference Wednesday stating: “Speaker Madigan and his majority are clearly working to create a crisis.” The governor also stated that calling lawmakers into special session would be a waste because House Speaker Michael Madigan says he doesn't want to act on legislation.
However, Rauner was quoted in the Chicago Tribune on 4/6/15 stating: “Crisis creates opportunity. Crisis creates leverage to change … and we've got to use that leverage of the crisis to force structural change.” So we are back to the he said he said routine.
(If you want to read that whole article, it is at the Chicago Tribune at the link here: http://www.chicagotribune.com/ct-bruce-rauner-statewide-tour-met-0407-20150406-story.html)
To counter the governor’s press conference, the Senate President also held his own news conference on Wednesday calling on the governor to put the campaign on hold and let lawmakers reach an agreement on a stopgap budget that would cover state services and an annual budget for schools. Cullerton is quoted from the press conference saying, “It’s hard to work with him, let alone agree with him, when he’s embarked on a scorched earth tour of Illinois. If the governor could just turn off the rhetoric’s for a couple of weeks, it would really help. It’s time for him to put down the keys to the campaign bus and join us in honest negotiations.’”
Madigan then released a statement on Wednesday that similarly called into question Rauner’s funding priorities. “While Governor Rauner continues his campaign-style tour, laden with personal attacks against those with whom he says he wants to work cooperatively, we remain committed to finding a solution to the state budget crisis, including a temporary budget to ensure schools open on time. The governor wants to fund many operations of state government, including the state's vehicle fleet and office supplies instead of providing life-saving services for Illinoisans. We, and the people of Illinois that we serve, have very serious concerns with the governor refusing to fund these programs in his proposal. We are committed to negotiating with the governor to fund these programs within the temporary budget, but many questions remain.”
To add to the rhetoric, Former Gov. Jim Edgar — one of the state’s most popular Republican governors — weighed in and said that Illinois is in its worst shape in 50 years, and warned that Gov. Bruce Rauner must tone down his “rhetoric” and abandon his “Turnaround Agenda” to get a complete budget done.
“I don't think that helps. When you're going through these kind of times, I think you need to be very careful what you say about anybody or anything in this process," former Gov. Jim Edgar said before speaking at an Illinois Campaign for Political Reform event.
"You might think things. There's a lot of times I had to bite my tongue, and I think in the long run that works out better," he said.
What does this mean for the stopgap budget:
Rank-and-file members of the general assembly who are in the working groups commented yesterday that they are continuing to work together to try to reach an agreement, however, they still aren’t close enough to come back to Springfield to vote on anything yet.
Looking forward:
In response to yesterday’s flurry of press conferences, Comptroller Munger held her own press conference today to detail what the further ramifications of the continued budget impasse will be on Illinois.
She stated, Not only do the court orders and consent decrees expire June 30, there were also only four appropriations bills passed in the last year totaling $23 billion, which will also expire at the end of the month.
- $13.7 billion authorized last July 1st to cover k-12 education funding and teacher pension payments
- $5.4 billion in federal spending authorized last August to help fund LIEAP, the children’s nutrition programs and public health services like cancer screenings, AIDS prevention and home delivered meals for seniors
- $3.1 billion authorized in December of last year for 911 call centers, local governments and domestic violence shelters
- $600 million authorized at the end of April to aid colleges, universities and MAP grant recipients to provide some financial relief. As of today, over 80% of these funds have been spent (This is also $1.3 billion less then was spent in FY15)
The comptroller concluded her press conference stating her office stands ready to assist in any way it can in furthering budget discussions.
While all this was happening, there was other important information being reported that may have fallen through the cracks:
From a Crain’s news article: Governor Rauner is "extremely upset" that Exelon says it is closing both the Clinton and Quad Cities nuclear plants because Illinois lawmakers failed to act on a state-funded bailout proposal.
Rauner said, “Here's the issue: you need to protect good-paying jobs. Exelon has good-paying jobs. I want to protect those jobs. I want to keep those jobs. I want to keep those plants open. But we also have got to balance that with protecting our ratepayers and taxpayers,” he said. The comments seem to indicate that Rauner, despite his general fealty to market principles, isn't philosophically opposed to “bailing out” a profitable company when 1,500 high paying jobs are at stake.
And news out of Bloomington, a program at Illinois State University devoted to helping build small businesses plans to close this month because it will run out of money because of the state budget stalemate.
The Illinois Small Business Development Center works with about 150 businesses and entrepreneurs a year.
From Reuters News Service: Moody’s Investors Service cut Illinois’ credit rating citing a political stalemate that has prevented the state from addressing its budget imbalance and big unfunded pension liability. The downgrade to just two steps above the “junk” level affects about $26 billion of Illinois’ general obligation debt, as well as $2.75 billion of sales tax revenue bonds.
“The state’s structural budget gap equals at least 15 percent of general fund expenditures, if the state’s underfunding of pension contributions is included,” Moody’s said in a statement.
It added that without a budget plan to offset a revenue loss from 2015’s rollback of income tax rates, Illinois’ chronic backlog of unpaid bills could reach prior peak levels of about $10 billion in the coming months.
Rating Outlook: A negative outlook is consistent with the potential for additional credit weakening after an extended impasse that has left the state increasingly vulnerable to adverse revenue trends, unplanned liquidity demands, and increasingly underfunded retiree benefit plans.
Factors that Could Lead to an Upgrade:
- Implementation of a realistic plan to provide long-term funding for pension obligations
- Progress in reducing payment backlog and adoption of legal framework to prevent renewed build-up of unpaid bills
- Enactment of recurring fiscal measures that support expectation of sustainable, structural balance
- Persistent and growing structural imbalance that leads to reduced liquidity and continuing growth in payment backlog
- Failure to enact legislation providing for payment on subject-to-appropriation obligations
- Continued increases in unfunded pension liabilities and indications of unwillingness to allocate sufficient resources to retiree benefits
Multiple Chicago Public Schools have found elevated levels of lead in their water since testing began district-wide last month — one in every five of schools tested so far.
And test results haven’t come back yet for hundreds more schools. The schools that have tested positive include: Beidler Elementary; Brentano Math and Science Academy; Budlong Elementary; Harvard Elementary; Esmond Elementary; Fernwood Elementary; LaSalle II Language Academy; Josephine Locke Elementary; Peirce School Of International Studies; Perez Elementary and Tanner Elementary.
So far, 58 schools have received results of the lead testing, which has included 15,853 samples of water sources as of June 7. Of the 3,044 samples with results so far, 70 have shown actionable levels of lead, roughly 2 percent.
As always, if you have any questions or need any further information please do not hesitate to give me a call. And, as the summer progresses I will continue to try and keep everyone updated on the chaos that is going on in the legislature.
DISCLAIMER:
The information above comes from press conferences, press releases and news articles and is meant to be informational only. This is not an endorsement of either party/office holder.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
June 1, 2016
Legislative Report
And it continues…
When I sent the last update out, it looked like there actually might be some type of agreement being put together that would allow for a short term budget fix so schools and service providers would be able to receive funding before July 1, 2016. Later that afternoon, the entire proposal fell apart. Although it looked like all were on board, the governor came out shortly after the leaders meeting on Friday declaring he would not sign any short-term solution and that the Democrats had walked away from the negotiating table. Although, the working groups were and are still meeting.
On the other hand, the Democrats are stating that this process is still not working because the governor will not negotiate on anything because he wants parts of his ‘Turnaround Agenda’ tied to the budget. The areas the governor has tied to the budget include workers compensation reform, collective bargaining changes, and property taxes. The democrats have said the governor is putting the business community before the education of the children of the state because of his position of no education funding without workers’ comp reforms. In addition, there were reforms enacted in 2011 and the Democrats are saying the insurance industry has not passed on those savings to employers, which they say is the real problem.
If you remember, the House passed a budget bill last Friday that would have funded education, higher education, service providers, and a number of other measures that are not currently covered by a court order or consent decree. The House proposal, SB 2048, however is over the $32 billion revenues by seven billion dollars. The argument being the governor could use this as a framework and line item out areas where he did not want to expend funds and this was a show of the priorities of the democratic caucus.
Madigan’s budget only appropriates – or directly allocates – $14 billion of the total $40 billion it’s estimated to spend. The remaining $26 billion, which includes items such as pension payments and debt service, will instead be on autopilot, determined by court orders, consent decrees and continuing appropriations. Rauner is unable to veto a large majority of that spending. In other words, much of the budget is untouchable.
The Republican Leadership came out again on Sunday on a WGN radio show with a new rhetoric.
According to leader Durkin, “It is the Democrats budget and if they wanted revenues they should have passed the tax increase two years ago in the lame duck session before Rauner took over as governor even though at the time, Rauner specifically asked that the general assembly let it expire. Durkin’s response to that question was the Democrats do what they want. Why did they listen to the then governor elect, they could have voted to continue the tax increase and had the additional revenues they needed?”
It seems like a year later we can’t get over the he said she said finger pointing.
At the last leaders meeting, Madigan says his caucus is prepared to be in continuous session all Summer.
Although, as of Monday morning, the Senate seems resolved to possibly passing the House version of the budget and letting the governor veto it. Their plan seems to be pass it, wait for the veto, come back and override the veto and hope that educators/providers can put enough pressure on the Republicans in the House so they will have the votes to override it as well. Then, they would come back after the election in November and pass a tax increase that would provide the additional revenues needed to make up the $7 billion shortfall.
However, as of Tuesday morning, the governor’s budget director is now calling for a stopgap measure for education, even though he just shot down the idea Friday. The new proposal by the administration is not designed as a full-year budget. It is designed as a bridge plan that allows schools to open, keep the lights on, protects public safety and prevent a government shutdown. It is fully funded and therefore fiscally responsible. This plan includes dollars for the homeless, domestic violence programs, state parks and senior programs. Additionally, early childhood, elementary and secondary education are funded under this plan. Human service providers will also receive payment under this proposal if they do not currently receive funding under a court order or consent decree.
The leaders meeting concluded today with some sense of agreement, no turnaround agenda items and no new revenues for the stopgap measure, and now the working groups can begin negotiating the specifics of the proposal, which will hopefully be voted on soon.
The Senate then voted on a measure, HB 2990, which would have funded k-12 education as well as TRS. This passed the Senate on a bipartisan roll call, however when it reached the House it was voted down 37-19-2. Not only that, but the Senate finally took up the House budget bill that was $7 billion over budget. Although no one was sure of what was going to happen, it also failed miserably. Only reaching a vote of 17-31-10. So at the stroke of midnight Illinois still has no budget, balanced or unbalanced. That leaves schools guessing about whether they can open on time in the fall -- something Rauner has desperately tried avoiding. It leaves other schools and universities at risk of closing. Not to mention social service funding which has been through the wringer already for the last 11 months.
What to expect next…
Rauner is launching a two-day campaign to advocate for a separate pre-K through 12 education funding bill and a "paid-for stopgap" funding for essential services, according to the administration.
Rauner will push rank-and-file Democrats to pressure leadership to return to Springfield and reach a compromise plan. To ramp up the pressure, Rauner, and other GOP lawmakers, including Sen. Jason Barickman, will visit schools and other facilities that are at risk without funding.
If Rauner now gets an education bill and stopgap funding, then Democrats would have succeeded in keeping the lights on while pushing the governor to back off of a turnaround agenda that Madigan and Cullerton say their party fundamentally disagrees with. At a news conference on Tuesday, the governor said he's not holding out hope that Democrats will pass his agenda items before the November election.
What does this mean for Illinois…
Now, it appears, the House and Senate working groups will continue to meet through June. The hope is they can reach a full year budget agreement, or even an education stopgap agreement, before July 1, 2016.
The House and Senate are now scheduled to be back in session every Wednesday throughout June, starting next week June 8th.
Is there anything they can agree on?
Three House Republicans broke with the governor on Monday to override Rauner’s veto on legislation to help the Chicago police and fire pension systems. Senate Bill 777 will allow the City of Chicago to lower the pension payments through a debt restructuring process. The legislation will also give the pension system additional time to reach full funding.
It seems that about the only thing they can agree on is Medical marijuana (SB 10). Advocates are applauding Gov. Bruce Rauner's about-face on expanding Illinois' pilot program in length and qualifying conditions, saying it will allow time to show the program is worthwhile and will help more patients — including many veterans — who are suffering.
Democratic state Rep. Lou Lang announced late Friday that he, the Republican governor and the GOP's House leader agreed to extend Illinois' four-year pilot program until July 2020. The agreement also adds post-traumatic stress syndrome and terminal illnesses with a diagnosis of six months or less to the list of 39 other qualifying diseases and conditions for which patients may use medical cannabis.
Rauner has previously rejected recommendations from Illinois' Medical Cannabis Advisory Board to add conditions, including PTSD. He also had opposed extending the program. His office confirmed the details of the new agreement, but declined to comment further. The bill passed the House 86-27 and the Senate 50-7.
As always, if you have any questions or need any further information please do not hesitate to give me a call. And, as the summer progresses if there are any changes I will send additional legislative updates.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
May 27, 2016
Legislative Report
As the House and Senate were again working this week to pass legislation in each chamber, they are continuing to work on a budget which started with leaders meetings this week.
The Tribune summed up this chaotic week…
Election-year pressures are building on the state legislature to end a near year-long impasse with the governor, and that turned into anger at the Statehouse this week. Senate Democrats were angry at House Democrats. House Republicans were even more indignant than usual toward majority Democrats. Chicago Public Schools students shouted and demonstrated in the Capitol rotunda. And one lawmaker accused an industry lobbyist of improper, if not illegal, activity. And through all this, Gov. Bruce Rauner said he remained optimistic of a successful conclusion to the session on Tuesday.
The widespread rancor was an indication that lawmakers and Rauner remain far apart in trying to end an impasse rooted in the governor's call for a "turnaround agenda" aimed at helping business interests but also altering laws and work rules involving unions and civil liability attorneys.
Democratic House Speaker Michael Madigan ignited the emotional outbursts Wednesday night when he muscled through a state budget plan $7 billion short of available revenues while offering CPS and schools statewide a critical funding lifeline for the next school year. Madigan said he found "unpersuasive" arguments being made about Rauner's agenda during meetings of side groups of legislative negotiators.
House Republicans contended their procedural rights had been violated in the initial 63-53 passage of Madigan's 500-plus page budget bill and questioned whether all the Democrats listed as voting for it were actually in their seats. Madigan offered a re-vote Thursday, allowing Republicans to air their grievances, before passing the bill again although with the bare minimum 60 votes needed.
Many see this political tug of war between the two men as what will be the overriding theme of fall elections for all 118 House members and 40 of 59 senators.
The House GOP campaign organization ramped up the political ramifications of the budget vote by launching automated phone calls against eight supportive House Democrats facing Republican challengers, contending they were backing a Madigan push "to increase Illinois' debt by $7 billion and force record high income-tax rates."
Rauner and Republicans also have been hopeful that rank-and-file Democratic members will split from their leadership, and they welcomed the schism between Democrats in the House and Senate over Madigan's budget move. Senate Democrats on Thursday held a lengthy and contentious closed-door meeting over the House budget bill and vowed to withhold support if it was called for a quick vote.
Democrats in the Senate majority chafed under Madigan's move to take control of the budget process, resurrecting long-standing ill will between senators who contend their efforts traditionally have taken a back seat to the interests of the powerful Southwest Side veteran who also is state Democratic chairman. Democratic Senate President John Cullerton was notably silent for the day.
Sen. Kwame Raoul, D-Chicago, said there was not a "warm feeling" toward the House Democratic budget move and argued it undermines efforts in the Senate to strike a compromise that could ultimately end the historic budget impasse.
"It's frustrating, and I know many members in this chamber who are frustrated by that (move) because it doesn't bring us any closer to ultimate resolution of this overall conflict, right? And people are suffering," Raoul said.
"As of right now, the posture amongst my colleagues is we are in engaged in negotiations with all four caucuses and the governor's office and we don't think that we are at a point that we can dismiss those negotiations," Raoul said. "We've got time. Five days is an eternity in Springfield."
For his part, Rauner declined to say directly if he would veto the spending plan should it reach his desk, despite promises from aides that he would not approve the legislation. Instead, Rauner said he was "cautiously optimistic" an agreement could be reached, though he said the Madigan move was "not helpful."
On another front, a measure that would legalize and regulate fantasy sports stalled after a dramatic accusation from Rep. Rita Mayfield. The Waukegan Democrat alleged that a lobbyist representing the two largest daily fantasy sports operators sent an "inappropriate email" in which the lobbyist promised he could get votes for the bill in exchange for charitable donations.
Calling it "criminal" and "totally unethical," Mayfield, a former co-sponsor of the bill, said she and other lawmakers won't support the measure.
A representative for Boston-based DraftKings and New York-based FanDuel flatly denied the accusation.
What else have they been doing…
Illinois lawmakers have approved a measure designed to prevent people with mental disabilities from owning guns. The proposal strengthens existing law by requiring circuit court clerks to report the names of people a judge deems mentally disabled to the Illinois State Police at least twice a year.
Another measure on the way to the Governor’s desk would give Illinois adoptees more information about why they were adopted has passed out of both chambers. The plan would require state adoption agencies to give adoptees age 18 and older information detailing the reasons for the adoption. Supporters say it is important for adoptees to have information about the nature of their adoption. But some cautioned that expanding rights to adoption information can infringe on birth parent confidentiality. The proposal only discloses non-identifying information about the biological parents.
In addition, the Illinois House of Representatives on Wednesday fell two votes shy of overriding Gov. Bruce Rauner's veto of House Bill 580. On May 16, Gov. Rauner vetoed the legislation that would let an arbitrator settle state-employee wages and working conditions if union negotiations stall, describing the bill as an attack on taxpayers. The governor said sending negotiations to an arbitrator would favor the union and strip away his power to represent taxpayers on a new labor agreement with state workers.
The governor and Illinois state legislative leaders are continuing discussions about how to end an 11-month budget stalemate. Rauner and leaders in the Illinois Legislature plan Friday meetings in Springfield ahead of the Tuesday scheduled session deadline.
As always, if you have any questions or need any further information please do not hesitate to give me a call.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
May 20, 2016
Legislative Report – 5/20/16
The House and Senate were busy at work this week, however, they still have not made much headway on the budget. So, what have they done?
They have approved SB 2343 that restricts how law enforcement agencies use devices that mimic cell towers to track phone locations in criminal investigations. The new policy would require a warrant before using cell-site simulators, also known as Stingrays.
In addition, SB 3011 will raise the legal purchasing age of tobacco and electronic cigarette products from 18 to 21 passed the Illinois Senate Wednesday by a vote of 32-22-2. The bill still requires approval in the House before it can be sent to the governor.
Legislators in both chambers have also passed a measure that will decriminalize the possession of small amounts of marijuana, SB 2228. The bill also sets a standard for what is considered too high to drive. A driver's blood would have to contain 5 nanograms of THC, marijuana's intoxicating chemical, within two hours of consumption to be considered impaired.
Senator Manar also passed SB 250 yesterday allowing automatic voter registration in Illinois. It would allow for the automatic registration of eligible Illinois residents to vote when they apply for or renew a driver’s license or state ID card unless they opt out. Proponents say the bill also would clean up and update voter files. Oregon has a similar law.
Both the Illinois House and Senate have approved a measure that will raise the base salary for home care workers to $15 an hour. Roughly 24,000 workers care for disabled residents in their homes and make $13 an hour. This is SB 2931.
Senator Raoul sponsored and passed HB3655, which is an effort to legalize and regulate daily fantasy sports. Illinois is a battleground state where DraftKings and FanDuel have active cases regarding their legality. A failure to get legislation passed would mean the sites’ status could be up to the courts. DFS bills have faced varying amounts of opposition in states this year but the pushback in Illinois has been fairly public, and includes the commercial casino industry in the state. However, at this time it is being held in the Senate
The Illinois General Assembly has passed another bill that would provide money for grants to low-income college students, but it faces a likely veto from Gov. Bruce Rauner. The latest proposal is similar to previous bills the governor opposed. It would authorize spending $227.3 million dollars to fully fund MAP grants for the 2015-16 school year. The earlier bill Rauner signed provided $167.6 million.
But the major difference – and the major sticking point for Rauner and his fellow Republicans – is that there is no specified funding attached to the new bill. The GOP argues that the state is already spending more than it will bring in this year.
Many public and private schools fronted their students’ money to cover MAP grants in the fall semester, but some reconsidered as the state’s budget impasse dragged on into the spring.
In other news…
Illinois Secretary of State Jesse White announced this week that his office is upgrading security features to the Driver’s License/ID card design. With implementation of these changes, Illinois has moved closer to achieving full REAL ID compliance, which is a federal mandate of the U.S. Department of Homeland Security (DHS).
By the end of July, applicants visiting Driver Services facilities will no longer be issued a new permanent DL/ID card at the end of the application process. Instead, they will leave the facility with a temporary secure paper driver’s license, which is valid for 45 days and will serve as their DL/ID for driving purposes and proof of identification. The temporary, secure paper driver’s license or ID card will contain a photo and the basic information that appears on the permanent driver’s license or ID card.
Meanwhile, the applicant’s information will be sent to a centralized, secure facility in Illinois. After fraud checks have been conducted to ensure the applicant’s identity, a higher quality, more secure DL/ID will be printed and sent via U.S. mail within 15 business days to the applicant’s address.
The upgraded driver’s license and ID card contain a variety of enhanced security features that take advantage of new developments in technology.
For purposes of air travel, DHS states that it will accept the temporary document in conjunction with the old DL/ID to board an aircraft until the permanent card arrives in the mail. Illinois joins 39 other states that have moved to centralized production of DL/ID cards. This includes heavily populated states like California, Texas, and New York – as well as Illinois’ neighboring states.
In addition, the design of the DL/ID card has been upgraded with important features that over-the-counter technology simply cannot produce. These types of anti-counterfeiting security features help prevent and deter fraud.
As always, if you have any questions or need any further information please do not hesitate to give me a call.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
May 17, 2016 Legislative Report 5/13/16
Sorry for the delay in the update this week, but let’s start off with some interesting political news…
Democratic Rep. Jack Franks announced on Sunday that he would not seek a new term in the Statehouse. Instead, Franks is moving toward a McHenry County Board bid. This is significant because Franks represents a frequent "no" vote on the Democratic side in the House, including on budgets his party has put forward. Franks has managed to win in a strongly held GOP district, so there is a stronger chance for Republicans to reclaim that seat.
The democrats will have until August to put a new name on the ballot to replace the representative. Franks has handily defeated every candidate thrown at him. But his decision to withdraw and focus on the chairman race gives the GOP a better shot at a pickup through candidate Steven Reick, of Harvard. The county Democratic Party has until August to select a candidate to run against Reick, and Democratic Party of McHenry County Chairman Michael Bissett said the decision would not happen until at least after Memorial Day.
In other news…
A school funding bill that revamps the education funding formula narrowly passed the Illinois Senate on Tuesday.
State Sen. Andy Manar’s bill (SB 231) passed 31-21, and now heads to the Illinois House, where members are working on their own plan. Illinois House Speaker Michael Madigan has formed a House task force to do its own review of school funding.
Also, a new appropriations proposal has been passed by both chambers. Senate Bill 2038 appropriates about $700 million for human service program expenses through the end of the fiscal year.
There is no General Revenue Fund money in this proposal. About $450 million is from the “Commitment to Human Services Fund,” which is a special fund that receives a small chunk of income tax revenues. It’s basically like the dedicated education fund which was tapped for the higher education bridge appropriations bill. Another $250 million is from various other state and federal funds.
In addition to the stopgap measure, budget negotiators have concluded their talks for now and have forwarded their leaders a package that raises $5.4 billion in new revenues and cuts $2.7 billion in spending. They will reportedly resume talks if and when the leaders need their input to work out specific details.
Under the proposal, the state would bring in roughly $5.4 billion through a combination of tax increases. That includes raising the personal income tax rate from 3.75 percent to as much as 4.85 percent, expanding the sales tax to certain services and eliminating some corporate tax breaks.
Meanwhile, spending would be cut by roughly $2.5 billion. That includes a reduction in health care spending for the poor, saving $750 million in pension costs by ending late-career salary spikes and requiring schools and universities to pick up employee pension costs above a $180,000 yearly salary, along with unspecified changes in how the state buys goods and services. In addition, the state would no longer be required to pay back $450 million it borrowed from special funds last year to plug a separate budget hole.
The state also would borrow $5 billion to pay down a backlog of bills expected to hit $10 billion by July 1. That debt has skyrocketed this year, in part because of the tax rollback, which created a $4 billion hole that only grew worse during the impasse. That’s because while there isn’t a full budget, more than 90 percent of government operations have been kept running through various laws and court orders, but big-ticket items like higher education, prisons and social services have only been partially funded or not funded at all.
The loan would be paid back over five years, with the goal that the state would carry a more manageable load of unpaid bills of about $3 billion a year.
As always, if you have any questions or need any further information please do not hesitate to give me a call.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
May 16, 2016 From Al Popowits
A Lack of Vision
Like two great beasts locked in mortal combat our two political parties are engaged in an ideological struggle over the dregs of a weakening state economy. This struggle which has ill-served the citizens of Illinois. Our Governor believes that he is aiding the state’s business interests by attacking labor unions and withholding financial resources from higher education. The legislature believes that borrowing from state pension funds and cutting state programs will insure a better tomorrow. Citizens need only to look at the results- a low rate of economic growth and high unemployment to realize that all these efforts have been in vain.
What is needed is a new vision of what Illinois could be …a land of opportunity for both business interests and job seekers alike. This new vision requires, however, that we recognize the following:
· First and foremost Illinois has a revenue problem. Illinois has experienced budget deficits every year for more than twenty years. Illinois currently owes $8B to its vendors and $112B to its five constitutionally mandated pension funds. It is financially impossible for Illinois to “cut” its way to solvency.
· Illinois has a consumer based economy not an industrial one. 72% of consumer spending is for services; 17% for goods. Illinois taxes primarily goods.
· Illinois is only one of five states that doesn’t tax annuities aka pensions.
· Forty-one states have an income tax. Thirty-four have a “Fair Tax”; Illinois is one of seven that has a regressive flat tax. This flat tax has not produced sufficient revenues to enable the state to pay all its bills.
· Providing access to a high quality public education is more likely than tax incentives to improve a state’s economy over time.
· Despite Article VI of the Illinois constitution which declares that “The state has the primary responsibility for financing the system of public education.” Illinois finances only 26% of public education. As a result “The Land of Lincoln” ranks last in the nation in the portion of educational funding paid by the state and first in the portion paid by local property taxes-66% (Federal government - 8%).
· The over reliance on regressive real estate taxes is unfair to the poor and middle classes because they pay a greater portion of their earnings than do the wealthy. Also the rate of growth in property taxes has significantly outpaced the rate of growth in income for those in the lower income brackets.
· Well over 95% of Illinois corporations are small S corporations which pay no corporate income tax. The remaining 5% are C corporations, the majority of which paid $5000 or less in income taxes.
All of the bulleted points above have implications for the state’s economy and therefore must be understood by the average voter before Illinois can move forward.
May 14, 2016 State Bankruptcy
The subject of the state declaring bankruptcy came up at a local meeting I attended this week. The link below leads to The Council of State Governments website and a discussion by law professor Kenneth Katkin on state bankruptcy. In short, states are prohibited from declaring bankruptcy. Municipalities (cities, school districts, counties, townships, etc) are permitted to declare bankruptcy.
Ed Wollet
IRTA Legislative Committee
Click here: http://www.csg.org/pubs/capitolideas/enews/issue65_3.aspx
May 6, 2016 - Legislative Report
Multiple measures aimed at General Assembly remap reform and instituting a graduated income tax in Illinois have died unceremonious deaths in Springfield during this week.
Fatality number one came when both the House and Senate refused to act on reapportionment bills that cleared the other chamber by wide margins.
The most widely backed plan, sponsored by Rep. Jack Franks (D-McHenry) would have taken decennial reapportionment completely out of hands of lawmakers and turned it over to an independent panel selected by the Illinois Supreme Court. Its fate was sealed when Sen. Kwame Raoul (D-Chicago), sponsor of the competing Senate plan, refused to let it out of committee, much like House Democrats refused to advance his bill before the deadline.
The twin defeats leave the remap ball solidly in the court of a third plan, which would give much of the power to the state's auditor general.
The Independent Map Amendment group is scheduled to file petitions today to get its proposal on the November ballot. First they will have to fight a near-certain legal challenge like the one that killed a similar referendum effort two years ago. http://www.chicagobusiness.com/section/%e2%80%9dhttp%3a/www.chicagobusiness.com/article/20140430/NEWS02/140439970/lawsuit-fights-illinois-term-limits-remap-moves%e2%80%9d
Meanwhile, a graduated income tax plan folded when the House left town without voting on a proposed Constitutional Amendment by Rep. Christian Mitchell (D-Chicago). http://www.chicagobusiness.com/section/%e2%80%9dhttp%3a/www.chicagobusiness.com/article/20160418/BLOGS02/160419846/is-it-time-for-a-graduated-income-tax-in-illinois%e2%80%9d
A second House Democrat, Skokie's Lou Lang had introduced parallel legislation to jack up individual tax rates to as much as 9.5 percent if voters okayed Mitchell's amendment. But with Mitchell lacking the votes to advance his proposal, Lang didn't bother to call his.
One Constitutional Amendment will be on the ballot in November. House Joint Resolution Constitutional Amendment 36 will prevent the cash-strapped state government from raiding funds intended to be used on transportation projects.
If it is approved Nov. 8, all money raised through various transportation-related levies such as the gas tax, tolls, licenses fees and vehicle registration costs would be put into what amounts to budget "lockbox." That money could only be spent on road construction and repair, enforcing traffic laws, paying off debt on transit projects and even costs associated with workers injured on the job. The change would not apply to state and local sales taxes that often are added on top of the gas tax motorists pay at the pump.
Also, Sen. Andy Manar's (D-Bunker Hill) latest plan to redo the state's much-criticized public school aid formula has failed to be called for a vote in the Senate. It was supposed to be voted on yesterday but word is he could not get enough votes in caucus for the bill to pass so he chose not to call it on the floor.
One measure that did pass, however, was a spending plan that authorized an additional $454 million for struggling colleges and universities, another stopgap measure as lawmakers continue an epic standoff over a full budget.
Lawmakers approved the bill on a near-unanimous vote and sent the measure to the House, which can take it up as soon as Tuesday when state representatives return to Springfield.
Last month, lawmakers used $600 million left over in an education fund to help colleges make it through the summer. The additional money lawmakers are considering now would get higher-education institutions to 60 percent of what would have been their current year funding levels.
Lawmakers are using dollars that would have been used to repay various state funds they borrowed from, like the School Infrastructure Fund and the Supplemental Low-Income Energy Assistance Fund.
On another positive note, the Senate has passed two measures out of committee that are rumored to be the Budget Implementation Act (BIMP) and the Shell bill for the FY2016 / 2017 appropriations language. HB 648 will be the BIMP and HB 2990 are rumored to be the potential bi-partisan appropriations package bills.
As always, if you have any questions or need any further information please do not hesitate to give me a call.
Mary Shaw
Illinois Retired Teachers Association
Government Affairs Director
217.523.8488
800.728.4782
May 10, 2016
Illinois’ Economy is Deteriorating From Al Popowits, WLSU Legislative
Common wisdom would suggest that being a low tax state would stimulate Illinois economic growth. However, in 2010 Illinois’ State GDP grew only 1.9%. This rate is far below the 2.6% which was both the National and Midwest average growth rate. If low tax burdens don’t attract industry than what does?
Michael Mazerov-senior fellow at the Center on Budget and Policy Priorities in Washington, D.C. has studied this question and has given us these surprising insights.
· There is little correlation between low corporate and individual taxes and economic growth. Therefore, reducing public services in an attempt to stimulate economic growth is not cost effective.
· The core drivers of economic growth are investments in human capital (education), physical infrastructure (public transportation, roads, bridges, etc), and innovation.
· A survey of entrepreneurs shows that the most important factors to them in choosing a site was first and foremost access to a pool of knowledgeable and talented employees, and secondly, proximity to customers and suppliers; low taxes were way down the list. Entrepreneurs are attracted to vibrant cities with good parks and public transit; excellent elementary and university school systems; and an exciting cultural scene. They need these in order to attract and retain a skilled labor force.
· It is start-up companies that are primarily responsible for job creation. Therefore, Illinois must encourage start-ups to open their doors here. Ninety percent of entrepreneurs who founded start-ups stayed in the state where they founded their business. The reasons had to do with family, availability of suppliers and customers, and the presence of a skilled and educated work force.
· Entrepreneurs cannot be lured with corporate tax cuts. The reason being that start-ups begin as small businesses-S corporations and as such pay no state corporate income taxes (Profits are passed through S corporations to their owners who pay a personal state income tax). The vast majority of corporations in Illinois are S corporations.
· Taxes are not a major factor in the migration of people from one state to another! For example, between 2008 and 2012 many people with incomes in excess of $100,000 moved from Texas (a no income tax state) to California (a high income tax state).
The writer suspects that since Illinois is a low tax state it does not have the resources to attract or retain businesses and jobs. He also suspects that emigration from Illinois has more to do with the lack of employment opportunities than it does with taxes.
May 4, 2016
The article below was sent to a local newspaper. If you believe that the ideas have%2
