News
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State commission votes on pension changes [posted: Feb.4 2005]
February 04, 2005 -Crain's Chicago Business
A state study commission is scheduled to vote today on possible changes in
pensions for state workers that could save taxpayers tens of billions of
dollars in coming decades.
But the hot-button ideas including raising the retirement age for some
workers and boosting employee contributions are certain to draw strong
opposition from organized labor. And some Republicans say the proposal is
more political puffery than real reform.
Up for a final vote before Gov. Rod Blagojevich's Commission on State
Pension are a series of proposed cuts and trims that would save $40 billion
to $50 billion of the $300 billion the state now is scheduled to spend on
employee pensions over the next 40 years. That's according to Rep. Bob
Molaro, D-Chicago, a commission member.
The outcome of the vote is considered the first round in this year's battle
over the fiscal 2006 state budget.
Included on the panel's list of options are boosting the worker
contribution to pensions by 1%, raising the retirement age from 60 to 65
for workers who have only eight years of service, and reducing
cost-of-living raises for newly hired workers to 2% from 3% a year.
In perhaps its best received idea, the panel also is set to suggest that
the state end a practice in which local school districts sharply raise the
pay of officials in the last year or two of their tenures, leaving the
state stuck with much escalated pension bills. The commission will propose
that the districts or the retirees shoulder the extra cost.
An official close to the governor said he will adopt "99%" of the
commission's plan in the new budget, but did not give odds of it winning
General Assembly approval.
See the
complete article on the Crain's Chicago Business website.
Please pass this information on to others interested in SURS. Anyone may
subscribe to the SUAATalk listserve.
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Annuitants Association [posted: Feb.2, 2005]
The ISU Annuitants Association
works hard at lobbying the state legislature on our behalf. You can access their website
to track the progress of this work. We are all eligible to join the Annuitant's association
and support their efforts.
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Ec & Fisc Name Change [posted: Feb.2, 2005]
The Illinois Economic and Fiscal Commission name has changed to the
Commission on Government Forecasting and Accountability.
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Governor's Messages [posted: Feb.2, 2005]
Listen carefully to the Governor's State of the State on February 3
and the Budget message on February 16 for hints on the future of the pension
systems. The Governor's Pension Commission seems to be on a course to have
a document of findings to him. There may be some hints in the state of the
state as a fore runner to something heavy in his budget message. Either will
be clues of his intentions and what we may be facing this year.
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Governor's Pension Commission [posted: Feb.2, 2005]
The GPC met last Friday. In addition to a presentation by TIAA_CREF
on defined contribution plans, the commission members worked their way
through a draft 'Recommendations for Governor Blagojevich.' Sections
include history, commission members, mandate, overview of the pension
systems and funding problems, 1995, funding law, identifying under funding
factors and problems, guiding commission principals, changes in benefits,
changes in funding, pension obligation bonds and principals, dynamic
scoring principal and an unfinished conclusion.
The bottom line is simple. The report contains two sections, one on
benefits and the other on funding. There are 11 points. They have been
re-formatted to fall under one of the above categories. The principal of no
new pension legislation unless there is a funding source is the only
straight recommendation so far. The remainder of the "considerations" all
serve as a benefit cut and funding suggestions really serve as a salary cut
if higher payroll taxes are imposed. The commission agreed on the term
'recommendation' for examination and consideration for the 11 changes. This
approach was taken as they may have been having trouble getting a straw poll
majority.
The funding side of the problem will be the center of attention for
the meeting on Friday February 4, 2005. After this meeting it will be
clearer about the details of the actual report that will be submitted to the
Governor. Cuts or 'savings' of various new funding schemes were discussed
at great length. It is too early to tell if they are interested in
recommending just paying what they already owe. There are rumors of pension
system cuts next year and some of the discussion could lead one to think the
commission is testing the waters. The one positive is that the document
clearly states the State of Illinois is responsible for not funding the
systems properly. Stay tuned.
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State Reviewing Pension Options [posted: Jan 2005]
The Governor recently established a Pension Commission charged with
recommending ways to address the State's severely under funded pension
systems: SURS, SERS and TRS (see full article below). The commission is
considering all options including decreasing the cost-of-living adjustment,
cutting the interest rate credited to members' accounts, increasing the
employee contribution, etc. According to James Hacking, executive director
of State Universities Retirement System, such changes applied to current
participants would constitute "a clearly unconstitutional diminishment of
benefits." State Representative Bill Brady serves on this commission. Feel
free to contact Senator Brady or other legislators to voice your concerns on
this issue.
Contacts
U.S. Senator Dick Durbin
U.S. Senator Barack Obama
State Senator Bill Brady, 44th Senate District
State Representative Dan Brady, 88th Representative District
U.S. Representative Jerry Weller, 11th Congressional District
If you are interested in receiving automatic e-mail updates from the State Universities Annuitants Association on a wide variety of
SURS related topics, you can subscribe to their list serve.
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Copy of an email sent to the list [posted: Jan 2005]
KATE CLEMENTS ---News-Gazette Capitol Bureau Chief
SPRINGFIELD - While the state constitution prohibits reducing pension benefits to participants who are already in the system, the Governor's
Pension Commission on Friday looked at a series of financial scenarios based on doing just that.
The commission's job is to recommend ways to address the severely underfunded pension systems for state workers, university employees and
teachers outside the Chicago public school system.
The panel's meeting Friday morning included presentations by Lance Weiss of Deloitte Consulting on what would happen to the state's pension
liability if the retirement systems for state university employees and state workers made various changes in benefits.
Those changes include:
- Decreasing the annual cost-of-living adjustment from 3 percent to 2 percent.
- Cutting the interest rate credited to members' accounts.
- Limiting annual salary increases in the final years of service to 5 percent.
- Increasing the employee contribution rate by 1 percent.
- Asking members to pay extra if they want the survivor benefit that is currently provided automatically.
Such changes applied to current participants would constitute "a clearly unconstitutional diminishment of benefits," said James Hacking,
executive director of State Universities Retirement System.
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For years, Illinois skipped or reduced its annual contribution to use the money for other expenses. It now ranks among the worst in the nation
in amount of unfunded liabilities and the ratio of current assets to future liabilities. A state law enacted in 1996 mandates annual state
payments to reach a 90 percent funding ratio by the year 2045, but those expenses have been a major drain on the state's cash flow. In the year
beginning July 1, 2005, the General Assembly's Economic and Fiscal Commission expects state revenues to grow by $325 million, but the
pension systems alone will need $600 million more in the next budget year than they did this year.
The commission is examining a whole range of ideas to improve the pension funding situation, but has not yet made any decisions or formal
recommendations.
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Interim Chairman Roland Burris, who has served as both comptroller and attorney general of Illinois, emphasized that the list of scenarios
presented on Friday did not come from either the governor's office or the panel as a whole, but from [Commission Member] Molaro.
Molaro noted that he did not necessarily agree with any or all of the items on the list, but felt that it was important that they be discussed.
"All we are doing is looking at options," Molaro said.
Burris recognized that even looking at such options "for discussion purposes only" could potentially outrage the teachers, professors and
other state workers who have been paying into the pension systems.
He refused to publicly distribute the charts and projections the panel members received, saying they were still in draft form and he did not
want them to be misinterpreted.
"It would be irresponsible on the part of the commission to release this information to the general public," he said.
State Rep. Bill Brady, R-Bloomington, who is also a member of the commission, moved that the documents be released immediately, but Burris
refused to recognize the motion.
"The chair is not going to recognize that motion because we don't want to distribute it," he said.
Several members urged that the panel find a way to share future information with the media and citizens who attend its public meetings,
either by projecting the presentations onto a screen or approving release of the documents prior to the meeting.
The commission's next meeting is at 9 a.m. Friday in Chicago's Thompson Center.
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