Tuesday, May 31, 2011

By the Numbers: What's Your Major Worth?

At the risk of incurring the wrath of humanities types who are loath to put a dollar sign on the "pricelessness" of what they/we offer, here is a great report on which majors pay how much:

http://cew.georgetown.edu/whatsitworth/

Mostly common sense: engineering majors make more than any other group. Wide variance within the Humanities, with History at the top (yeah!) with $57,000 and Theology/Religious Vocations at the bottom. The latter, of course, "store up their treasure in heaven." If you exclude the heaven-rich category, Intercultural or International Studies is the lowest paid degree.

Just as my college kicks off a Global Studies focus. I knew it would be a hard sell, up there with "I spent four years learning how to 'sustain' the Earth!"

Monday, May 30, 2011

Health Alliance Update: House Votes 98-15 to Restore the HMO, Kabosh Quinn's Change to Health Care

http://www.news-gazette.com/news/politics-and-government/2011-05-30/bill-keeping-insurance-two-years-goes-governor.html

Earlier, the State Senate also voted by a veto-proof margin to keep Health Alliance alive. The only people against are those from Chicago because they wanted more choice at the expense of any one not in Chicago area.

Quinn expected to veto and there is no time to override. Watch wobbly Quinn, who ducks hard issues, become a stubborn "don't-question-my-judgment" governor on this one.

As I said in an earlier post, Illinois IS Chicago even when Chicago musters less than 15% vote!

Civic Committee and Pension Reform: Membership includes . . .

Critics have said that "big money corporate interests" are guiding the Civic Committee of Chicago to push for pension reform. Perhaps, but it's membership is diverse and includes several university presidents, including Michael Hogan. The richest members are the Crowns and Pritzkers--multi-billionaire families from Chicago and BIG, BIG backers of Obama. In fact, as Jewish donors sour on Obama, Penny Pritzker (who happens to be Jewish) is trying to reassure Jewish donors about the president's stance on Israel. (Penny Pritzker was a chief campaign fundraiser for Obama in 2008).

So, if "corporate interests" are behind pension reform in Illinois, it's not the Koch brothers but some very liberal Democratic billionaires. ; - )

To wit: Illinois is not Wisconsin. Illinois is Illinois. Or, rather, Illinois is Chicago. Ha!

Here is a membership list:

http://www.civiccommittee.org/members/index.html

Postscript to earlier story on death of SB 512: On June 10th they will announce the new Money Purchase Formula, which many expect to be lower. They can legislate pensions away and they can nibble them away with bureaucratic tweaks here and there. Expect a piecemeal, split SB 512 that may not include all the retirement systems (it already exempted cops, fire fighters and prison personnel). Also expect changes to pension formulae and whatever else can be done by faceless bureaucrats.

SB 512 Seems Dead until Fall!

Pension bill dead this session. Postponed until Fall!

http://capitolfax.com/2011/05/30/memorial-day-session-live-blog/

May 30, 2011
STATEMENT REGARDING PENSION REFORM
We are absolutely committed to reforming Illinois’ public pension system for current employees. It must be done to stabilize our systems and address long term financial issues for both the public employee pension systems and state government.
We believe passage of legislation addressing this issue is essential to the state’s well being.
It was made very clear during the May 26th hearing in the Personnel and Pensions Committee that both those who support pension reform and those who are opposed to Senate Bill 512 acknowledge we have a problem and something must be done.
Our goal is to enact reforms to our pension systems that provide a long term solution for both those who are members of the pension systems and those who fund them.
We will convene meetings over the summer to address the issues and concerns that have been raised and work toward a solution in this year’s Fall Veto Session. [Emphasis added]
-Illinois House Speaker Michael J. Madigan
-Illinois House Republican Leader Tom Cross
-Tyrone Fahner, President, Civic Committee of the Commercial Club of Chicago

Saturday, May 28, 2011

CARTOON VIDEO: "What About Bob? Pension Talk with Michelle Obama in 2035"

In 2011, the state of Illinois public pension was on the brink of disaster, with unfunded liabilities upward of $100 billion. By adjusting the benefits and contributions of current workers, the disaster was averted for those then retired. Those workers of 2011 "did their part" and are still working today, many of them into their 80s and 90s. They knew that it was more important to keep the seniors of 2011 in comfortable retirement so that taxpayers would not be burdened with the false promises of past politicians.

Now the year is 2035 and we look backward for lessons as Social Security is on a similar brink. While there are differences, there are many similarities: politicians promised too much, past generations did not adequately fund those promises, and the number of current workers is not keeping up with the growth in retirees. Even today, the retirement age is only 67 and those seniors vote. Politicians are caught in a bind and so we turn to President Michelle Obama, this nation's first female president and husband former president Barack Obama, both natives of Illinois. Knowing the "Illinois Lesson" well, President Obama calls an ordinary American to discuss what he can do. We will call our Everyman "Bob."

Click here for the full cartoon video (it views better in full screen - click the full screen icon on the bottom LH corner of the video):

http://www.xtranormal.com/watch/12152682/what-about-bob-pension-talk-in-2035


Friday, May 27, 2011

Who is Behind Illinois Pension Reform? Hint: Rahm Emanuel would be very happy

News story on Rahm Emanuel's well-known antipathy to unions (and anything else that stands in his way):
http://www.chicagonewscoop.org/emanuel-exerting-influence-in-springfield/
Emanuel’s lobbyists were successful in their effort to include city workers in a controversial pension bill. The measure would require city employees to pay more into their pensions, along with state workers, teachers and university employees. Chicago police and firefighters were not included in the bill. The proposal advanced out of a House committee Thursday.
Some legal experts say the plan would violate the Illinois Constitution, which says pension benefits “shall not be diminished or impaired.” But with heavyweights including Emanuel and House Speaker Michael Madigan (D-Chicago) supporting it, the measure gains stronger legs as it moves to the Senate.
During the mayoral campaign, Emanuel was vocal about the need to address the city’s underfunded pension system, but he did not say how he would fix the problem. He was not endorsed by the city’s police and firefighter unions due to concerns he would reduce pension benefits, and he lost several wards with heavy police and fire populations on Election Day.
Of course, there are many others who want pension reform and "honest men may disagree" but Emanuel is in the play on this one.

Health Alliance Update! Senate votes to block Quinn's cancellation of Health Alliance

Read the following: The vote was 37-13

http://www.news-gazette.com/news/health/health-care/2011-05-27/bill-undoing-health-contracts-clears-senate-future-uncertain.html

On the Lighter Side (Sort of): SIUC will have 64,000 students!

In the midst of doom and gloom, here is something on the lighter side (in a perverse way). It is a lesson in not projecting current trends onto the future, because some historian of the future may find your forecast and mock it (but wish it were true!).

In my office, I found a cache of old documents. One caught my eye: A projection (dated 1970) on what enrollment would be in 1980. The forecaster projected that SIU-Carbondale's enrollment would increase from 23,000 in 1969 to 32,500 by 1980 (click to enlarge).



Oops! If he had projected it to the present, SIU-C enrollment would be approximately 64,500 in 2012!

Ceteris paribus

What About Bob? Pension Talk in 2035

In 2011, the state of Illinois public pension was on the brink of disaster, with unfunded liabilities upward of $100 billion. By adjusting the benefits and contributions of current workers, the disaster was averted for those then retired. Those workers of 2011 "did their part" and are still working today, many of them into their 80s and 90s. They knew that it was more important to keep the seniors of 2011 in comfortable retirement so that taxpayers would not be burdened with the false promises of past politicians.

Now the year is 2035 and we look backward for lessons as Social Security is on a similar brink. While there are differences, there are many similarities: politicians promised too much, past generations did not adequately fund those promises, and the number of current workers is not keeping up with the growth in retirees. Even today, the retirement age is only 67 and those seniors vote. Politicians are caught in a bind and so we turn to President Michelle Obama, this nation's first female president and husband former president Barack Obama, both natives of Illinois. Knowing the "Illinois Lesson" well, President Obama calls an ordinary American to discuss what he can do. We will call our Everyman "Bob."

****

Phone rings. Machine voice: "Call is from Out of Area"

Bob: "Hello?"

President: Bob, this is President Obama, do you have a moment?

Bob: Mrs. President, it is an honor.

President: Bob, as a fellow Illinoisan, I am sure you remember the Great Pension Reform of 2011?

Bob: Sure do! We almost went broke until the two parties got together to fix the problem.

President: Well, Bob, that's why I am calling you. I am coming back to Chicago to launch a new reform of Social Security based on the Illinois Model. I'm sure you know that Social Security is on the brink of fiscal disaster?

Bob: Heck, yes. Everyone here is just worried sick that "Social Security won't be there."

President: Exactly. We want to make sure that your Mom and Dad [both on Social Security] are taken care of so you don't have to put them up in a room.

Bob: So, Mrs. President, no one else has a plan, and your party put a clause in there protecting the future Social Security benefits of retirees. I believe that was passed after the Scare of 2011 in Illinois by self-serving politicians eager for votes?

President: (Chuckles). Yes, we politicians can be self-centered and we don't always do the right thing. Sometimes, though, we do. I hope to do the right thing now even though it won't be popular. "Shared sacrifice" is never popular.

Bob: Mrs. President, I appreciate your honesty. It's refreshing coming from a politician.

President: OK, Bob, I know you are a busy accountant so I'll get down to business. Our plan to rescue Social Security will require some sacrifice from you and other current workers. You won't be alone, we are asking all workers to pay for their future Social Security benefits and those of your Mom and Dad.

Bob: (Silence).

President: Are you there, Bob?

Bob: (Coughs). Yes, Mrs. President, I was just wondering what you had in mind.

President: As you know, the bond rating of the USA is slipping and your children will pay the price. Plus we want to make sure your parents are comfortable in their retirement. It is your generation's turn to become the Next Greatest Generation.

Bob: (Stiffens) Go on.

President: Bob, let me make myself perfectly clear: your parents' will receive their benefits and you will receive benefits. In fact, you will be given choices that you did not have before.

Bob: Choice is always good.

President: Bob, I know you are self-employed and also employ several other people. In the past, we have asked you to contribute 7% as an employer and deduct 7% from your employees. I know that means you pay 14% for your own self-employment contribution.

Bob: It's hard and, I'll be frank, I'm not very happy paying it because a lot of people say "Social Security won't be there."

President: That's where they are wrong, Bob! It will be there for you, your parents and your children but we must reform it -- just as we did back in 2011. The first step is to double your contribution and that of your employees. I know that sounds difficult but the money will stimulate the economy and it will preserve 100% of your parents' Social Security benefits.

Bob: Mrs. President, that is 28% for me and every one of my employees!!

President: That's the difficult part but, again, if workers don't do it, we may need to tax everyone in the country with a Value Added Tax (VAT) that hits nonworkers (the poor) and workers alike.

Bob: I don't know. What about that constitutional amendment preserving benefits?

President: Bob, open your history books! In 2011, we kept your benefits but merely required that you pay more for them. We also gave you the choice to opt out and accept a smaller defined contribution plan.

Bob: Yes, but as I recall they doubled payroll taxes of Illinois state employees only and then doubled them again three years later when the actuary guys ran their numbers. That means my payroll tax would be 56% before I got to anything else!! (Voice rises)

President: Please, Bob, do not call it a tax. It is NOT a tax; it is a "contribution." True, we only hit state employees back in 2011 because their retirees were in trouble. But Social Security covers everyone in the nation so we have to ask ALL workers to share in the sacrifice. And, remember, you can opt for the trimmed down defined contribution plan.

Bob: But that won't allow me to retire. I can't handle that tax plus the other taxes, even with all the loopholes I know as a CPA.

President: Again, let me make myself clear: it is not a tax. We may have to call it that if this is challenged but we hope that won't happen.

Bob: Mrs. President, you encouraged us to get an advanced education and I have a B.S. in business, MBA and CPA. I didn't start my career in earnest until I was age 30. I am now 50. When can I retire?

President: About that. We will have to raise the retirement age to 70. Remember we already raised it once, from 65 to 67 when Social Security was in crisis back in the 1980s.

Bob: So, let me get this straight: I pay FOUR times as much but I still get to keep all my benefits?

President: Yes, up to a maximum of $106,800 X 80% or approximately $85,000.

Bob: Why the limit?

President: Sometimes you reach a point when enough is enough. Besides, you know that most people don't make that much.

Bob: But what is wrong with working hard and making more than that?

President: There is nothing wrong but fairness requires those who are better off to help those who are not so well off.

Bob: I have my doubts, Mrs. President. You say my benefits -- all of them -- will be there when I retire?

President: Absolutely. I promise.

Bob: Will they be adjusted for inflation, because I can't retire for another 20 years.

President: Your benefits will be adjusted for half the rate of inflation after you retire.

Bob: Wait there. My maximum benefit is $85K now and you don't adjust that until AFTER I retire? Are you saying that in 2055 my maximum benefit will still be $85K even though inflation will eat away at that figure? Even at 4% inflation, that means my benefit is a fraction of what you promised yesterday!

President: You are quick, Bob. Most people don't understand the effects of inflation. But it's the only way we can guarantee everyone 100% of their benefits in some form, today's dollars, future dollars, whatever.

Bob: I'm a businessman, Mrs. President. How can I compete with outsourced accountants who can undercut me? As I recall, a lot of businesses fled Illinois after 2011 so it wasn't all peaches and cream.

President: That is just Republican scare mongering. The population of Illinois may be smaller, older and less "productive" according to my opponents, but my 2034 U.S. Happiness Study found that the people of Illinois were happier than other people based on 63 different criteria adopted from the OECD in Europe.

Bob: Really?

President: Remember, Bob, no matter how poor you feel, you can't put a price on happiness. So "don't worry, be happy" my friend.

PENSION UPDATE: Hug Your Local Legislator!

I just heard from Mike Bost and he is voting a strong NO! on SB 512.

FYI: I will blog soon on the tremendous efforts of the SUAA (State Universities Annuitants Association). Led by Tom Welch and Linda Brookhart (who helps me answer your questions), they are dedicated to this one issue. Please join them (it's approx. $30/year). A worthy investment.

Go to suaa.org and check out the information.

PS: Seems the bill is getting a lot of opposition!!

Thursday, May 26, 2011

Here Comes the Pension Bill: Devilish Details, Part I

Rich Miller at Capitolfax.com notes the following (which didn't get by me but is lost in the fire burning over this issue):

"The media has completely ignored this aspect of the plan, and it’s buried way down in the SJ-R story today…
The Tier 1 contribution rates are subject to revision after the first three years and every three years thereafter. If the contributions become too burdensome, an employee can move down to Tier 2 or Tier 3 but never back up.
In other words, those numbers you see above aren’t final by any means. The contributions will automatically be recalculated every three years, and those contributions could very well be recalculated upwards as people leave the system. That scenario is a huge political nightmare for many, many legislators." (bold added for emphasis)

Wednesday, May 25, 2011

URGENT [EDITED]: Springfield pols out to Clean your Pension Clock: Read Amended SB 512

Read the whole bill before tomorrow's hearing (ha, ha) because the devil is in the details.

*UPDATE* I've learned from SUAA that the "actuarial formula minus six percent" (in effect after three years of pension reform) WILL be higher than the 15.3% pension contribution set for 2013-2015 (could be up to 28%; be grateful, it is less than the 34% demanded of judges now). 

Get off your Tier I pension or lose it all. A lose-lose scenario. The beauty of the thing: while legislators will have to stand and vote for 15% (12.75 percent K-12), the actuaries will do the real kill job in three years. Brilliant! 

But, remember, we will earn at least the equivalent of Social Security! Now there is another "contract between generations" that will stand the test of time (snark). Unless they spend our newly "deleveraged" dollars on something else and decide that we only need 3% and throw us on Social Security like they did federal employees. 

ORIGINAL BLOG:

This is written fast and furious because the hearings are tomorrow. Excerpts from the gobbledygook amendments made to SB 512 below:

Great indeterminacy. The only definite thing is a) the state won't pay more than 6%. Your retirement will be at least equal to Social Security benefits (what a joke).

To keep (for now) our "constitutionally guaranteed" defined benefit packages, we must all pay more, 15.31% of compensation (presumably salary and not all "compensation" including benefits?). Thereafter it is based on some actuarial formula that is in the hands of the state with history of rigging numbers. So your future contribution amount may be higher or lower (assume higher).

Sum up: it reads like it was written by mafia lawyers: sign or we kneecap you.
..
Sec. 8-103.3. Traditional benefit package. "Traditional
benefit package": The defined benefit retirement program
maintained under the Fund for employees who first became
participants in the Fund before January 1, 2011.
. . .
(1) Participants who elect the traditional or portable
defined benefit package shall contribute:


(A) In fiscal year 2013, fiscal year 2014, and 
fiscal year 2015, an amount equal to 15.31% of salary [teachers only increase 3.35% but SURS employees must pay 7.3% more than we are now].


(B) In fiscal year 2016 and in each fiscal year
thereafter, a percentage of salary equal to the
actuarially determined normal cost of the traditional
defined benefit package ["We'll tell you later and you accept the numbers we give you, sucker!"], minus employer contributions [6%]
...
The following clause is a puzzler: they want us in Self-Managed Plans but no more than 20% of us?

Sec. 10-110. Maximum self-managed plan participation. By
July 1, 2012, the Fund shall certify the total active
participant population. When the number of participants that
elect the self-managed plan is equal to 20% of the total active
participant population, then no participant may elect the
self-managed plan.

RETIREMENT SALARY CAP:

(e) Notwithstanding any other provision of this Article,
the required contribution of a participant who first becomes a
participant on or after January 1, 2011 shall not exceed the
contribution that would be due under this Article if that
participant's highest salary for annuity purposes were
$106,800, plus any increases in that amount under Section
2-108.1.

But they will adjust it for cost of living increases which are half the rate of inflation or 3% whichever is lower (if inflation is 4%, then you get 2%!). Not clear whether the half-inflation adjustments are annual DURING employment (i.e., cumulative increases) or only when you retire. If you start work now and retire at 67 (another requirement), then $106,000 will be worth a fraction of $106,000 today. Makes for good envy-based politics though and people (voters) don't think ahead.

Good news (cough, cough): The state promises -- PROMISES! -- that your retirement package will at least equal what  you would get under Social Security. OMG! My wife worked for social security and the motto was "retirement is a three-legged stool; Social Security is only one leg, a good pension is another, then there is savings." Unless you work for the State of Illinois.

Thursday, May 19, 2011

Making Sense of Pension Reform: Defined Benefit versus Self-Managed Plans

NOTE: If there are any inaccuracies, please report them in the comments.

There is misunderstanding on the part of those with Self-Managed Plans (SMPs) that the proposed pension reform places them in a better position than Defined Benefit (DB) plan members. True, the biggest hit will happen to those in Defined Benefit (DB) plans. The lower impact of the proposed "reforms" (on SMPs) occurs because DB plans (traditional, portable) are much more generous. Nevertheless, keep this in mind: if you are in a DB plan, you KEEP ALL PAST EARNINGS: employee AND employer contributions plus interest (averaged 8.5% in past 15 years). The effective rates below:

9–1–97 thru 8–31–98 9%
9–1–98 thru 8–31–99 9.5%
9–1–99 thru 8–31–02 10%
9–1–02 thru 8–31–03 9%
9–1–03 thru 6–30–05 8%
7–1–05 thru 6–30–09 8.5%
7–1–09 thru 6–30–10 8%
7–1–10 thru 6–30–12 7.5%

Source: SURS

This money doesn't disappear if the legislature effectively forces DB members into 401(k) style SMP plans. Here are the advantages of DB over SMP:

1. Under SMP stock investment plans, it would be hard to match the 8.5% over those years. Example: employee hired in January 1998. The Dow Jones ("stock market" average) was 6450. Thirteen years later end of 2011, the stock market was at 11,577. That is an 80% increase. HOWEVER, if that employee had earned 8.5%/year (on average) his/her money would have doubled after 8.5 years and tripled after 13 years. In other words, SMP stock market investments would have had to TRIPLE to match the DB plan -- that is equivalent to a stock market average of 20,000 at end of 2011 rather than 11,577. 

Source: http://www.econstats.com/eqty/eqea_mi_3.htm

How did DB outperform the stock market? This is controversial: first, keep in mind that the pension contributions are invested in a mix of stocks and bonds. Critics, however, believe that the pension board has goosed the numbers to please legislators: the higher expected rate of return, the less legislators must contribute! The truth is probably in the middle.

2. DB is more generous because the politicians are attacking it. Numbers aside, they are like the bank robber who was asked "why did you steal from the bank?" Answer: "Because that is where they keep the money!" Why?

3. Employers contribute 9.1% versus 7.1% for SMP employees (7.5% before expenses removed).

4. Cost of living: this is a HUGE factor -- when I ran financial plans for clients back in the 1980s, they grossly underestimated how much the cost of living (inflation) would erode the real value of their retirement savings. Yet the State protects DB recipients against inflation. SMP recipients are on their own -- each year their retirement fund is worth less.

5. SMPs are favored under the new Madigan/Cullerton bill in the legislature: state contribution "only" drops to 6% (although it may be 5.6% after expenses removed). Wonder why? Tens of billions of dollars in IOUs go POOF! when we are all on SMPs.

"What is to be done?" Note the usual caveat that you should seek advice from a licensed broker, estate planner, laywer, etc. before making any financial decisions. What would I do if I were a DB employee faced with a 7.3% increase in my pension payroll deduction? I'd hang tight until the courts have ruled. I don't expect much of the judiciary since the New Deal Court Revolution rendered government contracts something that could be changed at the whim of those in power. But who knows? Keep in mind you are still ahead of people who chose SMP over the years expecting to "beat the market" (and being handicapped with a lower state contribution!).

I joke that current retirees are "LGRs": the Last Generation of Retirees. It has nothing to do with partisan or class warfare but, rather, generational warfare -- and a "war" that isn't even declared but simply happened due the confluence of past events and current demographics.

On the generational front, there is positive news: if your parents left you or your spouse a trust fund/inheritance, you may still be able to retire and send the kids to private college. The rest of you are screwed. But I must end on a happy note. . .

There is another State of Illinois plan to raise retirement money (scroll down):







Wednesday, May 18, 2011

Health Alliance: UPDATE!



This year the great State of Illinois dropped Health Alliance HMO from its list of providers and replaced it with two carriers that better serve the Chicago area but have no downstate presence. This caused a bipartisan uproar "downstate," where Health Alliance serves 100,000 state employees. (Disclosure: I am a happy Health Alliance member and cringed when I heard the news that the state was dropping HA).

I contacted Senator Frerichs (D-Champaign), "point man" in Springfield leading the charge to "reset" the button on bidding. Below is his email to those of us who subscribed to updates on this issue:


"There's been some confusion surrounding the State's recent decision to drop Health Alliance's contract for group health insurance. Much has happened in Springfield and we've learned new information since the Governor's office and the Department of Healthcare and Family Services (HFS) first announced this decision on April 6th. I want to take this opportunity to review what's happened so far, and update you on next steps.

I've posted this timeline on my website which walks us through major events, starting from the initial announcement on April 6 through May 11, when the Chief Procurement Officer at the Executive Ethics Commission officially began his review of Health Alliance's protest. I'd encourage you to explore the relevant documents and news articles linked to in the timeline to gain a full perspective.
I particularly want to highlight two important next steps in the process which will determine if Health Alliance will continue to be an option for quality, affordable health insurance in downstate Illinois.

First, it's important to know that upon discovering their contract was not renewed, Health Alliance immediately filed a protest of the decision. The review of this protest officially began May 11 at the Executive Ethics Commission. Look for a decision from Matt Brown, the Chief Procurement Officer, in the next few weeks.

Next, and regardless of the outcome of the protest review, current statute requires the Commission on Government Forecasting and Accountability (COGFA) to "advise and consent" on the new group health insurance contracts. There are some disagreements about what power this "advise and consent" language actually grants COGFA, but in my opinion, the language clearly implies COGFA's ability to reject new contracts. As I explained in a recent Op-Ed in the Champaign News-Gazette, my intention as one of the members of COGFA is to vote against the new contracts. Look for COGFA to announce its next meeting sometime in the next few weeks.

The best outcome we can hope for from either of these upcoming steps is this: the process will be re-started and contracts will be re-bid. If the protest review yields a favorable outcome, or if COGFA does not approve the new contracts, it essentially hits the "reset button." Current health care contracts could be extended during the re-bidding process so no one's current health care would be disrupted.

Keep an eye out for these next steps in the process, and I'll do my best to keep you informed as new information becomes available. Thank you to the hundreds of you who have reached out to my office to express your concerns. I appreciate your input and I'll continue to do my best to ensure access to quality, affordable healthcare for our community.


In order for us to continue to stay in touch, it's important that you have my updated email address, which is frerichs@senatedem.illinois.gov. Please don't hesitate to email my office with any comments or concerns you may have.

Sincerely,
Senator Michael Frerichs
45 E. University Ave.
Suite 206
Champaign, IL 61820
Email: Frerichs@senatedem.illinois.gov
Office: (217) 355-5252     
Fax: (217) 355-5255
Danville Office:
28 W. North Street
1st Floor
Danville, IL 61832
Office: (217) 442-5252


Sunday, May 15, 2011

Pension Reform for all but Judges: Craven Effort to Buy Judicial Favor?

A northern Illinois newspaper notes how the Democrats in Springfield excluded judges, apparently (according to paper) in an effort to head off any personal animosity judges might feel in response to pension cuts. You see, judges are state employees too. The civics drivel taught in government schools about judicial review, lifetime tenure, separation of powers . . . well, it hasn't caught up to America in 2011, especially the Illinoisan corner of the USA.

Excerpt:
The Illinois Constitution says public employee pensions “shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” Senate President John Cullerton, D-Chicago, has said changing pension benefits for current employees is unconstitutional but plans to allow a vote in his chamber if the bill passes in the House.

“Half the people think that’s it,” McCarthy said of the hope that the law will not be struck down if it doesn’t affect judges. “Many of the members are legal people, so I think they have a vested interest in not irritating the judges they have to appear in front of.

“I’m sure no judge would do that, but you know.... I wish they were in, to tell you the truth.”

Rep. Rich Brauer, R-Petersburg, criticized the exclusion of judges.

“That’s the only way they can get that thing passed,” Brauer said.

Saturday, May 14, 2011

Quote of the Week: Glenn Poshard's One Liner Defending Our Pensions

In a recent email memo to SIUC staff, Glenn Poshard talked at length about the likelihood of major cuts to our pensions (all types, not just defined benefit). He included a great one liner worth repeating:

POSHARD:

In my view, this plan, including all of these options, represents no less than a forced migration into lower pension benefit plans for university employees. The notion that proponents of this legislation are suggesting that this plan can somehow withstand scrutiny on the constitutional issue of diminishment of benefits because it somehow provides a choice of options for employees, is comparable to the idea that there are free elections in Venezuela.

Friday, May 13, 2011

I'd Rather Be in Wisconsin: Illinois Democratic Leadership Attacks Pension -- Bye, Bye Constitution

http://www.substancenews.net/articles.php?page=2255&section=Article

“....Madigan and Cross intend to run a new bill that changes the benefits for current employees. According to the current legislative proposal (not quite fully shaped, but soon to be inserted into a Pension Bill —currently an amendment to SB 512) current employees will have three "options" beginning in June 2012:

OPTION ONE: Teachers may remain in the current plan and pay a considerably higher employee contribution (possibly as high as 15 percent);

OPTION TWO: Teachers may move to the new "Tier II" plan passed last year for new employees.

Tier II reduces benefits dramatically (retirement age increases, COLA changes, using 8 years instead of 4 for average salary for pension purposes, etc.) and pay the same 9% contribution;

OPTION THREE: Chose to have an employer contribution (6%) made to a separate "Defined Contribution" plan along with your employee contribution.

In recent weeks, the Illinois Democratic leadership "works together" with IEA. The IEA opposes and then relents to anti-union acts, stating "this is not Wisconsin."

It sure ain't -- it's far worse: latest pension bill (SB 312) requires those of us with defined benefit pensions to increase our contributions from 8% to 14.5% --- a 6.5% increase (pay cut)! That's to keep our "constitutionally guaranteed" pension.

"Pinkie promise."

Even worse, because the state is contributing so little (2%?) the feds will probably add Social Security tax (another 6.5% for retirement) based on the reasoning that our employer isn't offering a satisfactory pension.

Do the math: 6.5 + 6.5 = 13% pay cut to keep a pension not to be "diminished or impaired" (IL state constitution).

In Wisconsin, Republican Senator Scott Walker went after making workers pay half the pension contributions or 5.8%. Wisconsin: 5.8 versus Illinois 14.5% (even without added SSA tax).

Why are people on the Left surprised? This is progressive law coming home to roost. The men and women in Springfield are not progressives but some of their opponents call themselves "progressives." Yet progressives were never very big on "original intent" or "plain meaning" of constitutions," were they? The state constitution means as little as the federal constitution. And now the Left is "shocked! shocked!" that people aren't looking at the letter of the constitution or even top Democratic legal counsel analysis (worth reading - below):

http://www.illinoissenatedemocrats.com/images/pensions/D/Madiar%20Pension%20Abstract%2003-02-11.pdf

Full 76-page analysis:

http://www.illinoissenatedemocrats.com/images/pensions/D/Pension%20Clause%20Article%20Final.pdf

Where is the SIUC FA? No word on their site? They are busy demonizing Chancellor Cheng for her temporary 2% pay cut while ignoring the tsunami in Springfield. But, hey, it may all be over by next week. Making politics personal can sometimes be counterproductive . . .

Saturday, May 7, 2011

“O(h no) Canada!” MTV Signature Song Banned


When I grew up in the 1970s and 1980s, the stereotypical bowdlerizers of speech--the people excising "offensive" lyrics and literature-- were the uptight blue-nosed sort who feared that "someone, somewhere, was having fun." (H.L. Mencken).

Now, the "progressive" Left has replaced the Puritanical Right as the great policer of speech. "Progressives" have always policed speech ("you are politically incorrect, comrade!") so this is really nothing new. Both Left and Right have a long history of searching out words they feel are too sensitive to the ears of minors or thin-skinned individuals.

(Apologies in advance for those who suffer from blue noses or thin skin).

Latest example: the Canadian "Standards Council" has banned the Dire Straits song for using the word "faggot" in the classic 1980s tune "Money for Nothing." I learned this after listening to the song on the Dire Straits' album "Brothers in Arms." The song brought back memories of my youth so I searched out the video which was as good as I recalled (classic MTV video of the 1980s). Alas, the video has also been excised so that it is "good for all countries." Now Canada can join the Religious Right in America and the Muslim bloc (in the United Nations) in bullying or outlawing "hate speech." Perhaps the result will be some Universalist Code of Speech.

What makes this even more chilling is that they are attacking not only present speech but scouring the past for things that might offend someone if ever read or heard now. Shades of Fahrenheit 451.

The new rule of thumb: don't say anything that might offend any one one hundred years from now. Good luck guessing what might be on the "hit list" in the year 2111!

Coda: the secondary definition for "bluenosed: "Canadian."

Kind of appropriate, eh?