Rauner on Chicago School Pension Bailout

A press release from Governor Bruce Rauner:

Rauner Urges Swift Action on State-City Pension Deal as House GOP Readies Its Votes

CHICAGO – Following the announcement that House Republicans are prepared to put the requisite number of votes on an historic state-city pension reform deal, Governor Bruce Rauner once again called on the General Assembly to swiftly pass the legislation that would save taxpayers around the state billions of dollars, address an urgent request from the City of Chicago and help move Illinois forward.

The legislation, sponsored by House Republican Leader Jim Durkin (R-Western Springs) and 25 other House Republicans, is a companion to legislation filed last week in the Senate by Senator Michael Connelly (R-Naperville) and Senator Jil Tracy (R-Quincy).

The Senate legislation has already won support from Republican senators who previously opposed pension reform as part of a larger and controversial unbalanced budget package, suggesting the legislation could easily pass both chambers and come to the governor’s desk for signature.

“Taxpayers around the state will save billions by making structural changes to our state pension system, and we can afford to help students and teachers in Chicago Public Schools who are facing an immediate budget crisis,” Governor Rauner said.

“The people of Illinois want compromise.  This proposal is a win-win for everyone.  It’s time to get something done.”

The proposed state-city pension reform legislation would satisfy an agreement made by legislative leaders last June that if the General Assembly passed statewide pension reform, the state would pay the teacher pension costs of Chicago Public Schools (CPS) for one year.

That agreement fell through late last year when the Senate President broke the deal and the governor vetoed Chicago’s one-year assistance (SB 2822).

This proposal links the same CPS one-year pension pick-up to statewide pension reform filed by the Senate President earlier this month (SB 16).

The statewide pension reform includes President Cullerton’s consideration model for all state pension systems, a new Tier 3 hybrid defined-benefit/defined-contribution plan and other budget-saving items.

In total the package is expected to save taxpayers between $1-2 billion per year.

The package would win bipartisan support considering that SB 16 came within four votes of passage and SB 2822 passed both chambers of the General Assembly last summer as part of an agreement.

“If Chicago is asking for assistance from the state, we need to find a way to help the state save money and justify that assistance – otherwise it’s just a bailout,” Secretary of Education Beth Purvis said.

“These bills are good for taxpayers, reduce our pension liabilities and keep kids in school.”

Purvis noted that despite decreasing enrollment, Chicago Public Schools is already receiving a $74 million increase in education funding from the state this year on top of its roughly $250 million special block grant that no other school district receives.

The city’s request is for an additional $215 million on top of the $324 million it already receives.

This pension proposal was one of two paths the Rauner Administration suggested to help CPS close its budget deficit.

The other would authorize the Mayor of Chicago to use $215 million in funds from Tax Increment Financing Districts.


Comments

Rauner on Chicago School Pension Bailout — 14 Comments

  1. Just another kick of the over promised pensions can down the road.

    Cmon Rauner. You made your fortune investing these nonsense pensions and taking your cut. Give them what they put in and that’s it!

  2. Make the state solvent, eliminate all pensions including teachers.

  3. Here are the bills referenced in the press release.

    ++++++++++++++++++++++

    “The legislation, sponsored by House Republican Leader Jim Durkin (R – Western Springs) and 25 other Republicans, …”

    That is House Bill 4027 (HB 4027) in the 100th General Assembly

    This Illinois House Republican Pension Bill was filed by State Representative Jim Durkin on March 24, 2017.

    ++++++++++

    “…is a companion to legislation filed last week in the Senate by Senator Michael Connelly (R – Naperville) and Senator Jil Tracy (R – Quincy).”

    That refers to the following two State Senate bills:

    Senate Bill 2172 (SB 2172) in the 100th General Assembly

    This bill was filed by State Senator Michael Connelly on March 15, 2017.

    ++++++++++

    Senate Bill 2173 (SB 2173) in the 100th General Assembly.

    This bill was filed by State Senator Michael Connelly on March 15, 2017.

    +++++++++++

    Senate Bill 2822 (SB 2822) in the 99th General Assembly.

    This bill was filed by Democrat State Senator John Mulroe on February 17, 2016.

    +++++++++++

    Senate Bill 16 (SB 16) in the 100th General Assembly.

    This bill was filed by State Senator John Cullerton on February 28, 2017.

    +++++++++++

    Some union will sue if they believe the legislation will diminish their pension in any way, citing the pension sentence added to the State Constitution on December 15, 1970, which states pensions are contractual and cannot be diminished or impaired.

    State Senators, Representatives, and Governors continued with benefit hikes after the sentence was added to the state constitution, and most of those benefit hikes occurred to pensions that were already underfunded.

    State funding that could have gone to employer pension contributions was diverted to salary hikes, and that also occurred at the local level.

    All too often the result has been overly generous pension benefits, overly generous salaries, and underfunded pensions.

    Unions refuse to scale back benefit hikes which occurred while pensions were already underfunded, citing the pension sentence added to the state constitution on December 15, 1970..

  4. Unfortunately these pensions are NOT “over promised” – they are enshrined in our State Constitution, courtesy of the voters!

  5. The pensions are enshrined in the Illinois Constitution, but the funding for them is not, and the courts do not have the power to compel the Illinois General Assembly to fund them.

    It should make for some interesting times when the pension funds run dry.

    I plan on moving out of this state before then, but I will be watching and savoring the schadenfreude.

  6. **Unions refuse to scale back benefit hikes which occurred while pensions were already underfunded, citing the pension sentence added to the state constitution on December 15, 1970..**

    Your attempt to write off the “pension sentence” in the Constitution is cute, but unfortunately for you, but fortunately for people that have been promised these pensions, that “one sentence” is an ironclad guarantee that has been upheld more than once by the IL Supreme Court.

    It isn’t JUST the unions that cite that pension sentence. So does the Supreme Court.

    The Constitution matters, whether you like it or not.

  7. There was no attempt to write of the pension sentence.

    It is very clear what happened.

    Take the TRS pension system for example.

    TRS has always been underfunded.

    TRS produces a document called the Evolution of the TRS Benefit Structure.

    That document lists many of the benefit hikes to the TRS pension system.

    Every single one of those hikes occurred while TRS was underfunded.

    Because TRS has always been underfunded.

    How well does that represent or protect the taxpayers?

    Not at all.

    The teacher union lobbied for most of, if not all of, the benefit hikes.

    The teacher union did not have the best interest of taxpayers in mind when they lobbied state lawmakers for benefit hikes to underfunded pensions.

    The teacher union lobbyists, union leaders, union members, State Representatives, State Senators, and Governors were responsible for those benefit hikes.

    The taxpayer was not adequately informed in advance of the benefit hikes.

    The taxpayer was not adequately informed after the hikes.

    (Yes we know employees of the teacher union and teachers are taxpayers, and we also know administrators contribute to TRS).

    +++++++

    There was no claim the constitution does not matter.

    There was no claim that just the unions cite the pension sentence.

    There was no claim the constitution doesn’t matter.

    ++++++++

    There was a claim the unions refuse to scale back benefit hikes which occurred while pensions were already underfunded, citing the pension sentence added to the state constitution on December 15, 1970.

    That is a fact.

    A very important fact.

    Proven over and over again by union lawsuits to uphold the pension sentence, when state politicians attempted to cut benefits.

    +++++++

    There is no claim by me that it was a good idea for the state senators, representatives, and governors to pass a state law to cut benefits, given the pension sentence in the state constitution and past court cases litigating the matter.

    +++++++

    But once again, there is a claim the unions refuse to scale back benefit hikes which occurred while pensions were already underfunded, citing the pension sentence added to the state constitution on December 15, 1970.

  8. Crain’s Chicago Business has the following article about HB 4027 in the 100th General Assembly.

    +++++++++++++

    Crain’s Chicago Business

    Rauner Pushes CPS Plan, But Dems Unlikely to Back it

    by Greg Heinz

    March 24, 2017

    http://www.chicagobusiness.com/article/20170324/BLOGS02/170329905/rauner-again-pushes-cps-plan-but-democrats-unlikely-to-back-it

    +++++++++++++

    The following are excerpts from the article and the referenced bill

    +++++++++++++

    HB 4027 in the 100th General Assembly

    “The bill in question would force members of the state pension funds that cover teachers, university employees and white-collar workers to choose between keeping their 3 percent compounded annual cost-of-living hike in their pension or including any pay hikes they get after the law took effect in their pensionable base.”

    “But the Illinois Federation of Teachers said the Durkin bill likely is unconstitutional and urged the governor to ‘drop the ultimatums and do his job.'”

    +++++++++++++

    SB 2822 in the 99th General Assembly

    “Anyhow, Rauner last year agreed to give CPS the $215 million if the bill or something like it passed by Dec. 31.

    Nothing passed, so Rauner vetoed the companion CPS funding bill.”

  9. HB 4027 in the 100th Illinois General Assembly, as it sits right now, impacts the following Illinois public sector pension systems.

    The Article number assigned to the pension system in the Illinois Pension Code is included.

    – General Assembly Retirement System (GARS – Article 2)

    – State Employees Retirement System (SERS – Article 14)

    – State University Retirement System (SURS – Article 15)

    – Teachers Retirement System of the State of Illinois (TRS – Article 16)

    – Chicago Teachers Pension Fund (CTPF – Article 17) (CPS teachers)

    “…in Articles 7, 8, 9, 10, 11, 12, 13, & 17, establishes similar benefits if the governing body of the unit of local government adopts these benefits.”

    – Illinois Municipal Retirement Fund (IMRF – Article 7)

    – Chicago Municipal (MEABF – Article 8)

    – Cook County (Cook County – Article 9)

    – Cook County Forest Preserve (Cook County Forest – Article 10)

    – Chicago Laborers (LABF – Article 11)

    – Chicago Parks (PABF – Article 12)

    – Cook County Metropolitan Water Reclamation District (MWRDRF – Article 13)

    http://www.ilga.gov/legislation/BillStatus.asp?DocNum=4027&GAID=14&DocTypeID=HB&LegId=106465&SessionID=91&GA=100

  10. Not included in the legislation is the 5th “State” pension fund:

    Judges Retirement System of Illinois (JRS – Article 18)

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