The end of session report from State Rep. Barbara Wheeler:
The Wheeler 64 Report: July 1, 2016
New FY17 Spending Bills will Enable Full K-12 School Operations for Entire School Year
The General Assembly took action on June 30 to fund K-12 Education for Fiscal Year 2017 at record-high funding levels. By contrast, however, the legislation funds most other State operations only through December 2016. The “stopgap” bills do not balance the budget and do not solve Illinois’ fiscal woes. The State’s leaders believe that the current Springfield policy gap has achieved dimensions great enough that only the voters of Illinois, in the November election, can choose which path the State should follow. The key bill that actually appropriated money for FY16 and FY17 was SB 2047. Some elements of the package appropriated money so that it could be legally used to match spending/spending commitments made in FY16, which ended on Thursday. Other bills in the package contained “substantive” legislation, effective starting on Friday, intended to implement the FY17 portion of the package and match State law to appropriated spending.
The stopgap budget package was signed by Governor Bruce Rauner before the end of the day and prior to the start of FY17. The measures include funding to ensure that Illinois schools, including the troubled Chicago public school system, will reopen on time. Money is included to resume or maintain operations at Illinois state universities and other essential public facilities. Funds are earmarked to enable the fulfillment of this summer’s construction schedule for the repair and maintenance of State roads, bridges, and mass transit facilities. Some money is provided for community social services. The House vote on SB 2047 was 105-4-1. After unanimous approval in the Senate, the appropriation bill became law as P.A. 99-524.
District 64 Schools to Receive Record-High Funding in FY17
One key element of the funding package approved on June 30 allows every Illinois School District to open on time in the fall with record-high levels of funding.
In fact, for the first time in seven years, funding sent through the state aid formula will not be prorated. Every District 64 School District will see an increase in funding for the 2016-2017 school year. The chart below shows an estimate of how each of my school districts will benefit:
Comptroller’s Count Shows Illinois Now Owes More Than $7.8 Billion in Past-Due Bills
The running count, which is frequently updated, is included in the public website operated by Comptroller Leslie Geissler Munger. As Illinois’ cash-flow superintendent, Munger is informed daily of the due-bill situation facing the State. The total of $7.81 billion, counted as of Wednesday, June 29, counts vouchers tabulated by the Comptroller’s office and payable from Illinois general funds that are classified as “backlogged” – vouchers on file for significant periods of time without State payment. The Comptroller’s office currently counts 66,971 backlogged State vouchers. These numbers are constantly changing as funds move in and out of various State coffers.
The $7.8 billion figure does not represent the totality of debts owed by Illinois and its taxpayers. Additional debts owed by Illinois included monies obligated by ongoing State programs but not yet billed to the State. In addition, pension actuaries warn that Illinois’ unfunded pension debts now total more than $110 billion. Illinois Republicans, led by House Republican leader Jim Durkin and Governor Bruce Rauner, point to these mushrooming debts and obligations. They continue to insist that the State enact structural reforms to its laws governing job creation and public-sector labor relations.
Chicago Board of Education Could Approve Massive Property Tax Hike for Owners of Chicago Real Property
The Chicago school board move, expected to raise $250 million annually, was authorized as part of SB 318. This measure, which was amended with the tax-hike language and passed by the Illinois House on Thursday, June 30, was part of the end-of-fiscal-year package to enact spending measures for FY17 and enable Illinois schools to open on time. The Chicago Public Schools budget gap necessitated action to enable the city to raise an additional $250 million/year from local resources.
If the School Board adopts this property tax increase, statewide taxpayers outside Chicago will not be responsible for this $250 million. Rejecting a “bailout” of the troubled Chicago system, House Republicans took the lead in rejecting the push by Chicago lawmakers to impose this burden upon the suburbs and Downstate. Part of the budget gap comes from a massive increase in the level of unfunded pension liabilities borne by Chicago Public Schools, and the Illinois House enacted the amendment in such a way as to require that the money raised by the tax hike must be deposited directly into the pension fund and cannot be diverted or used for any other purpose. Chicago Public Schools currently owes a $669 million pension payment to the teachers’ pension fund. The House vote to enact SB 318 was 82-29-0. Senate approval by a vote of 40-14-0 allowed Gov. Rauner to sign the measure into law as P.A. 99-521.
Governor Signs Enhancement to Open Meetings Act Spurred by College Turmoil
The new State law will require that any and all available minutes and verbatim recordings of meetings closed to the public must be made available to a newly elected official who has been selected to fill a seat in a public body. The new law grants a “level playing field” to access to confidential board-of-directors information to newly chosen members of the body’s board of directors. This is significant when a newly chosen member or members have been chosen as part of a reform effort aimed at questionable or improper actions affiliated with the previous board.
HB 4630, sponsored by Republican Rep. Jeanne Ives, was approved unanimously by both houses of the General Assembly this spring. It was inspired by recent management events at DuPage Community College and the election, by local voters, of a “Clean Slate” who took a majority position on the college’s board of trustees. Governor Rauner on Thursday, June 30, signed HB 4630 into law as P.A. 99-515.
House, Senate Vote to Waive Vehicle Sticker Delinquent Registration Renewal Supplemental Late Fees if No Warning Mailed
The waiver is only effective if the Secretary of State has not previously mailed a motor vehicle license sticker-renewal notification to the affected motor vehicle owner. These notification letters, which had been familiar elements in the mailboxes of Illinois drivers, were suspended in 2015 due to Illinois’ budget situation.
Many Illinois residents have complained about no longer getting the letters and then facing penalties for late sticker-renewal actions. In addition, police are authorized to stop motor vehicles with expired stickers.
The supplemental late-fee waiver bill was approved by the House on Thursday, June 30. The House vote on HB 4334, as amended, was 111-0-0. As the Senate had previously approved the final language of the bill, the House vote marked the final legislative step necessary to send the measure to the desk of Gov. Bruce Rauner for final action.
Happy Independence Day!
On Monday, people across the nation will celebrate Independence Day. As you gather with loved ones, please take a moment to remember those who have made the decision to serve their country and who have taken steps to defend the freedoms we enjoy.
Let us all honor all service men and women who continue to defend the liberties proclaimed by our Founding Fathers in the Declaration of Independence and through the United States Constitution.
It is important that we not only recognize their service; but also respect their devotion to duty.
Regarding Illinois’ unfunded pension debts now totaling more than $110 billion.
That is the taxpayer IOU to the following pension funds:
TRS – Teachers Retirement System of the State of Illinois (for teachers and administrators outside Chicago Public Schools.
SURS – State University Retirement System (for university employees)
SERS – State Employees Retirement System
GARS – General Assembly Retirement Systems
JRS – Judges Retirement System.
Those are what is considered the 5 “state” pension funds, as the employer contribution to the pension fund comes from the state (in the case of TRS, the school district as an employer also contributes .58%, which is a little over 1/2 of 1%).
However there are 20 pension systems in Illinois.
Two of those 20 pension systems, Downstate Police and Downstate Fire, consist of individual funds per police department, fire department, and fire protection district (a fire department is part of the municipality whereas a fire protection district is a stand alone taxing district).
Here are all 20 pension systems in Illinois organized by taxing district category, and the Article in the Illinois Pension Code for each one.
CITY OF CHICAGO PENSION FUNDS
1. Chicago Fire (Article 6)
2. Chicago Laborers (Article 11)
3. Chicago Municipal (Article 8)
4. Chicago Police (Article 5)
CHICAGO TAXING DISTRICT PENSION FUNDS
5. Chicago Housing Authority (no Article, it’s actually fully funded or close to it)
6. Chicago Park District (Article 12)
7. Chicago Public Schools (CPS) – Chicago Teachers Pension Fund (Article 17)
COOK COUNTY TAXING DISTRICT PENSION FUNDS
8. Cook County Fund (Article 9)
9. Cook County Forest Preserve District Fund (Article 10)
10. Metropolitan Water Reclamation District (MWRD) (Article 13)
DOWNSTATE TAXING DISTRICT PENSION FUNDS (DOWNSTATE IS ANYTHING OUTSIDE CHICAGO)
11. Downstate Fire (Article 4)
12. Downstate Police (Article 3)
13. Illinois Municipal Retirement Fund (IMRF) (Article 7)
STATE PENSION FUNDS
14. General Assembly Retirement System (GARS) (Article 2)
15. Judges Retirement System of Illinois (JRS) (Article 18)
16. State Employees Retirement System (SERS) (Article 14)
17. State University Retirement System (SURS) (Article 15)
18. Teachers Retirement System of the State of Illinois (Article 16)
TRANSIT PENSION FUNDS
19. Chicago Transit Authority Pension Fund (CTA) (Article 22)
20. Regional Transportation Authority Pension Fund (RTA) (Article 22)
Underfunded pensions are the number one taxpayer problem in Illinois.
Worried about raising taxes?
Then you need to be worried about pension funding.
Politicians, public sector workers, public sector unions, and others have been misleading the public about pension funding for decades.
If pension security was the goal, pension benefits would have been frozen.
Pension security was not the goal, so pension benefits were not frozen.
What was the goal?
So what happened?
Pensions were hiked.
How were pensions hiked?
1. Legislative pension benefit hikes to the above Articles in the Illinois Pension Code by State Senators and State Representatives passing Housing Bills and Senate Bills which Governors then signed into law as Public Acts.
2. Salaries were hiked.
3. Pension funding was diverted to salary hikes.
Hiking the pension benefits alters the pension formula or otherwise makes the pension more lucrative.
Hiking pension benefits was an annual event by legislators and Governors for decades.
The practice escalated after one sentence was added to the Illinois State constitution on December 15, 1970.
That sentence allowed UNLIMITED pension benefit hikes and UNLIMITED salary hikes to pension funds that were already underfunded.
Many of the benefit hikes themselves were underfunded.
Now that is only pensions.
The sentence added to the Illinois State Constitution on December 15, 1970 also obligates taxpayers to fund retiree healthcare benefits.
Retiree healthcare benefits were also hiked by the Illinois General Assembly and Governors.
Retiree healthcare benefits are even more underfunded than pensions.
Some retiree healthcare funds are unfunded, in other words, 100% underfunded.
There is no comprehensive list of all retiree healthcare benefit funds and perks in Illinois.
Retiree healthcare benefits receive less scrutiny than pension benefits.
Retiree healthcare falls under the category of OPEB – Other Post Employment Benefits, sometimes called postemployment healthcare benefits.
One reason retiree healthcare is so significant is that many public sector workers retire in their 50’s and early 60’s, before the retirees are eligible for Federal retiree healthcare coverage.
Here is an example of a benefit hike for retiree healthcare.
One retiree healthcare fund in Illinois is the Teachers Health Insurance Security Fund (THIS) which is part of the Teachers Retirement Insurance Program (TRIP), which began in 1980 as part of TRS.
Since TRS was underfunded, THIS/TRIP should not have been added.
First fully fund TRS, then add THIS/TRIP.
That is the point.
A second public sector retiree healthcare fund in Illinois is the College Insurance Program (CIP).
A third public sector retiree healthcare fund is State Employees Group Insurance Program (SEGIP).
The Illinois Policy Institute and PEW have both done studies about these three “state” retiree healthcare funds (THIS/TRIP, CIP, SEGIP) and found they are 100% underfunded (pay as you go, entirely unfunded) and found the three had in total a liability over $50 Billion.
That is the estimate in today’s dollars expected to be paid out over the retiree’s lifetime.
Some state prefund a portion of their retiree healthcare.
Illinois does not.
So as baby boomers retire, Illinois has to find the money to pay the benefits, or change the Illinois constitution to reduce benefits.
Of course many people would not be happy with a benefit reduction.
However, those benefits were typically added at a time when the pensions were already underfunded, so there was never a sustainable plan to pay for the benefits and the pensions in the first place.
Employees contributions to all the funds are on average much lower than employer contributions and thus too low (why should taxpayers outside these funds bear the majority burden for benefits more lucrative than taxpayers receive).
Keep in mind that full career employees retiring now have on average seen many benefit and salary hikes over the years while pensions and retiree healthcare was already underfunded or unfunded, so the argument one reason they took the job was due to today’s benefits is not accurate (today’s pension payouts due to salary and benefit hikes did not exist when they took the job).
So to recap.
Over $100 Billion unfunded liability for 5 state pension funds (TRS, SERS, SURS, GARS, JRS).
Over $50 Billion unfunded liability for 3 state retiree healthcare funds (SEGIP, CIP, THIS/TRIP.
No sustainable plan to fund that.
No serious discussions for a sustainable plan to fund that.
One dysfunctional state.
It took over a year to get a stopgap budget that is not even a sustainable budget for an entire year.
We are nowhere near sustainable government finances.
One good thing about this Barb Wheeler State Representative District 64 report is it includes bill numbers and public act numbers (SB 2047 / PA 99-0524), SB 0318 / PA 99-0521, HB 4630 / PA 99-0515), HB 4334 / awaiting governor approval), and the increased General State Aid (GSA) each school district will receive.
To achieve sustainable government finances taxpayers need a way to track what is happening in the Illinois General Assembly and that cannot be done without bill numbers and public act numbers.
It would be helpful if each legislator included bill numbers and public act numbers in each legislative report.
We never see a legislative report from Jack Franks on the blog.
Woodstock school district 200 has not ‘managed it’s budget’ it has simply raised the levy beyond all ability of more than half (median income) of its community can afford.
In the process, they have destroyed home values.
This is severe punishment to retirees or vets on fixed income.
One mechanism the school board uses to evade tax rate caps set up by law to protect taxpayers:
Deliberate overtaxation in transportation fund for express purpose of interfund transfer into tax-capped funds already levying maximum allowed by law.
Governor Rauner could stop this obscene perversion of the school code law by vetoing hb 5529.