What I Learned at the Annual SUAA Meeting in Springfield by Louann Tiernan

What I Learned at the Annual SUAA Meeting in Springfield

By Louann Tiernan

  1. The ongoing attack on the pension funds for public employees has greatly increased the amount of work for the Board of Directors, the officers of the Statewide association, the officers of the local chapters, and the office staff in Springfield.

I am impressed by the degree of understanding among the 150 members present regarding the myriad issues discussed and also by their generally positive attitude in spite of the serious threats the new legislation presents, and in spite of the complexities as well as uncertainties imbedded in the legal language of the bills. The care and attention participants received from SUAA staff members also made a positive impression. They worked steadily to make the meeting run smoothly.

I personally felt overwhelmed when confronted with all the issues in need of attention. However, thanks to the presentations that offered data, explanations and interpretations, I came away with quite an education—Pension Attack and Response 101. Didn’t pass with an A, though.

One presentation that helped a great deal in understanding the flawed method that the legislators have chosen to deal with the deficit was Ralph Martire’s keynote address and handout from the Center for Tax and Budget Accountability (CTBA). Ralph Martire is Executive Director of CTBA. The “Illinois Retirement Security Initiative Issue Brief” for HJRCA49 provides an excellent analysis of the deficit crisis for which public pension funds are incorrectly receiving the blame and the misguided plan to address this deficit with the Constitutional Amendment (HJRCA 49) that will be presented to the voters November 6, 2012.

“The problem was self-inflicted,” as the Brief states, by the legislature because the repayment schedule designed in 1995 (PA 88-0593) to return money borrowed from the fund “is straining current fiscal resources.” Because of the design of the repayment plan, “the retirement systems’ aggregate unfunded liability will actually continue to grow through FY 2029.” The reforms presently offered “ignore this reality” and instead aim to reduce pension benefits rather than deal with the real cause—the faulty repayment plan.

I encourage you to go to the Center’s web site www.ctbaonline.org and read the “IRSI Issue Brief.” It was a pleasure to read that “Nothing inherent in the pension systems—neither benefit costs nor design—has been the primary cause of either underfunding or the growing strain on the current fiscal resources that is ‘crowding out’ services.”

House Joint Resolution Constitution Amendment 49 (HJRCA49) is not as innocuous as some claim and believe because it only affects Tier IIs, those hired after January 1, 2011. I am not so sure of that anymore, but even so, it is very unwise not to take it seriously and not to work to defeat this amendment. The main thrust is that it restricts any governing board’s attempt to increase any pension benefit, because a 3/5 vote will be needed in both houses as opposed to a simple majority under the present law. However, as the Brief points out, the wording of this amendment creates “ambiguity surrounding what will trigger the 3/5 rule.” Another negative, summed up by SURS, is “[it] would grant unprecedented powers to government that will undermine protections contained in the Pension Protection Clause and eliminate the uniform laws that now exist for State employee benefits and obligations in the Illinois Pension Code.”

At the end of the two-day session, Dick Lockhart, our lobbyist in Springfield, stood up and said, “If the Constitutional Amendment is voted in, a flood of anti-pension legislation will flow through.”

We in the public pension system have become scapegoats; yet, convincing people to vote NO on this Amendment will be tough. One hefty reason that hit home is that “state employees are not valued,” as Steve Mansfield of COD said. We are being “put in a very bad light,” he said, especially by the “richest of the rich” members of the Chicago Commercial Club’s Civic Committee. That makes them the CCCCC—that redundancy should tell you something of their stagnation.

Steve says the Civic members are doing everything they can to blame us. Not civic minded at all, I declare. It seems that some, or maybe all, of their lawyers crafted the legislation that is targeting public pension plans. I recall over and over the divide and conquer strategy Scott Walker openly admitted he believed in. Some may remember a man named Turner who also had that same strategy. Fortunately, we were able to fight back by forming and maintaining a union. That has slipped away for most. Consequently, we aren’t going to get much sympathy—unless we can get out information:

  • The average pension from the last 12 years for all SURS retirees is $31,788.
  • The state’s own borrowing from the pension fund created the deficit.
  • The state’s poorly designed repayment schedule created the deficit crisis; restructuring it will reduce the deficit and eliminate the crisis.
  • Divide-and-conquer is the strategy being used to pit one part of the middle class against the other. Falling into that trap allows the ones at the top to run away with the money, as we have seen and heard aplenty in these last four years. Remember Frontline’s report on United Airlines’ bankruptcy that killed the pensions for their employees. But CEO Tilden received $9,000,000. Tilden is civic minded, you know—he belongs to the CCCCC.
  1. Senate Bill 1673—(not a significant year in history except that the English Test Act of 1673 presented citizens with a choice—and so it is for us with SB 1673. Employees and retirees will have a choice (it is a little better than the choice offered by England’s Test Act).

Option 1—Employees/retirees may continue participating in the health care plan but must accept a non-compounded cost-of-living adjustment (COLA) on future annuities, a reduced COLA equal to the lesser of 3% or one-half the urban Consumer Price Index on the amount of the retiree’s original annuity. The “Issue Brief” explains that the reduction is caused by the fact that this COLA is an adjustment on the base pension, not on the previous year’s pension as the compounded COLA in Option 2. Therefore, “a person’s pension benefit, under this option, does not keep pace with inflation.”

However, the good news is that if a retiree wants to go back to work, the increase in pay will increase a Tier 1 retiree’s “penionable earnings.”

Option 2—Employees/retirees may choose to keep the compounded 3% COLA, but then they may not participate in applicable retiree healthcare plans. Option 2 denies those who return to work an increase in pensionable earnings (from SURS Executive Director William Mabe’s handout at the meeting).

MVCCAA hopes to post a spreadsheet that will show members how to figure the dollar difference between these two options. Covered by Medicare, now or in the future? Option 2 looks good.

The only concern voiced at the meeting was the possibility that Option 2’s COLA might be reduced sometime in the future, declared non-compounded by some new bill (perhaps on the advice of the civic-minded CCCCC.)

In this same Bill are proposals for employers (such as a university, college, or school district) to pay a larger portion of pension costs; the State will pay less. Over time, not specified as yet, employers will pay the full contribution.

Oh, I almost forgot, under this proposal the State “shall remain required” (really? remain?) to pay the unfunded liability. The Senate adjourned May 31, 2012, choosing not to act on SB 1673 until later.

  1. Membership is as always a huge concern. As the first day’s cheerleader emphasized, “Numbers Matter.” Everyone knows that, right? On the first morning, we learned how to start a movement—get a young shirtless kid to dance on a grassy knoll. Eventually another will join him—the unsung leader of great movements—this second dancer. Soon others join in and they hop and jump and wave their arms, dancing up a storm with a gang on the knoll.

So start dancing ya’all! Numbers Count! No fair sitting on the side and enjoying the benefits of all the dancing done on your behalf.

“Make an effort to reach out to members of the entire staff,” we were advised after being stoutly admonished for neglecting others.

  1. Name change. (This is what happens when overly-stimulated adults spend too much time in a car.) SUAA—State Universities Annuitants Association—doesn’t quite fully identify the members. What’s an annuitant anyway? The Annuitants Association at Elgin Community College received the award for achieving the highest membership growth. They call themselves the “Elgin Community College Pension Plan Participants (ECCP3).

We thought that was a good idea, a good idea that is food for thought (we being the triumvirate at the task—MVCCT3).