Business groups hostile to public worker defined benefit pension plans have major 'seat at the table'... 'Working groups' discussing public worker pensions in Illinois

A series of "working groups" consisting of Illinois state legislators and representatives of various groups (including the unions) impacted by public worker pensions in Illinois completed its latest meeting at around 3:00 p.m. on Friday, September 16, 2011, in the conference room of House Speaker Michael Madigan at the Bilandic state office building in Chicago.

Above, State Rep Roger Eddy (left, hands folded) and State Rep. Elaine Nekritz (third from left facing camera) chaired the meeting on September 16, 2011. No list of those at the table was provided to the public. Substance photo by George N. Schmidt. The "working groups," which government staffers made clear to Substance were not official hearings on proposed or suggested changes in state government pension plans for state workers, began meeting during the week of September 7, 2011, at the Speaker's office. According to sources at the State of Illinois, a "Benefits and Contributions Working Group" had met on Thursday, September 15 under the chairmanship of Rep. McCarthy and Rep. Schmitz. The complete list of the meetings was not made available to Substance. A representative of the speaker said that no transcript of the meetings was being kept.

The "Funding Working Group" met on Friday, September 16 at 1 p.m. under the chairmanship of Rep. Elaine Nekritz (D) and Rep. Roger Eddy (R). Other representatives at the working group on September 16 were Rep. Daniel Biss (D) and Rep. Darlene Senger.

The agenda for the September 16 meeting was as follows:

• Examine and discuss increasing Tier 1 member contributions. What constitutes a contribution increase? What is an appropriate contribution increase? It has been recommended that the group examine and discuss benefits that were not properly paid for when such benefits were established and/or enhanced. So the group will examine information that identifies such benefits and revenue shortfalls.

• Examine and dicuss shifting employer normal cost to school districts, community colleges, and universiities. The group should keep in mind and discuss that if this strategy is implemented, the employers should be able to determine the benefit packages in which they are paying for. Discuss structuring the property tax levy so that the appropriate revenue is generated to pay for this.

• Reconfigure funding amortizatioin schedule and/or target. Under current law, the State is on a funding plan to be 90 % funded by 2045. An option could be to reduce the funding target to 80% or extend the date out from 2045 to 2060. However, it must be remembered that altering schedule to reduce payments will increase unfunded liability. Examine strategies to reform the current payment plan that achieves significant savings without significantly increasing the liability. Examine implementing a more aggressive payment method to pay off unfunded liability.

• Discuss the notion of separating normal cost from the unfunded liability in terms of the budget process. This will be extremely relevant if the atrategy to shift normal cost to the local employers is implemented.

• Dedicate revenue streams and contribution assurances. Creat other mechanisms and safeguards to enforce employer contribution schedules, this can also include strengthening current mechanisms to ensure that the full employer contribution is paid each and every year. Issuans of Pension bonds/notes. Implementing "return to work" fee that annuitants returning to work must pay towards the pension fund. Discuss the implementation of a tax on retirement income. Discuss and examine the realities of such tax, and whether or not that can be done solely.

A longer report on the discussion that was held on September 16 will be provided in this article by midnight September 17. No transcript of the discussion was available, and no taping of the meeting was permitted.

The meetings are scheduled to continue during the week of September 19.

The "Structure Working Group" is scheduled to meet on Monday, September 19 at 9:30 a.m. under the chairmanship of Rep. Biss and Rep. Senger.

And the apparently final meeting of what is being called the "General Working Group" is scheduled to meet on Tuesday, September 20 at 9:30 a.m. under the chairmanship of Rep. May and Rep. Tryon.

According to Robert Bures, executive director of the Retired Teachers Association of Chicago, the Thursday meeting of the "Benefits and Contributions" working group was cordial and consisted of well informed people. No press had been notified of the meetings prior to Thursday, September 15, and some staffers were surprised when Substance showed up to cover the "working group" on Friday, September 16. According to Shaw Decremer, who serves on the "Issues Development Staff" of speaker Madigan, the working group meetings are not formal hearings of the Illinois House, although they are open to the public and press. Decreamer asked that Substance not tape of record the Friday, September 16, hearing. According to those familiar with the earlier sessions and Substance coverage of the September 16 event, the people in attendance and speaking during the working groups are invited representatives of various pensions in Illinois, plus those whose members are part of the pension plans. Two groups, the Chicago Civic Federation and the Civic Committee of the Commercial Clubs of Chicago, were also participating in the discussions at the Friday, September 16, session. The Civic Committee has taken a radical position that public employee "pension reform" has to include the destruction of the defined benefit pension plans currently covering virtually all government workers in Illinois. In its most recent report, the Civic Federation has warned of the "cliff" that the Chicago Board of Education is facing if "pension reform" does not continue after the Chicago Board of Education's fiscal 2014 budget. Both groups represent Chicago's business community and have long expressed hostility towards the public worker unions (in the case of the Civic Committee) or have taken their research in a direction that focuses on the problems supposedly caused by problems with public worker pensions (in the case of the Civic Federation, which has left out the obligations of the Chicago Board of Education to fully fund the promises it has made to Chicago teachers).

The major presence of Eden Martin's Civic Committee of the Commercial Club underscores the dominance of the discussion of public worker pensions by the most conservative elements in Chicago. During the past year, Eden Martin has publicly presented his attacks on public worker pension funds in outlets ranging from The Wall Street Journal to Bloomberg News. One video interview with Eden Martin can be found at the following URL:


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