Here’s an interview with Illinois State Rep. Elaine Nekritz, one of the lawmakers who designed the state’s controversial pension reform law, known as SB 1.
Unions and state employees are suing Illinois over the implementation of the law, arguing that the law is unconstitutional for its paring back of benefits.
In this interview, Rep. Nekritz makes her argument for why the law should be considered constitutional.
Feature photo by Mr.TinDC via Flickr CC License
A Washington Times investigation has uncovered an interesting legal quirk in Illinois that lets retired teachers continue to build pension credit after retirement. The law allows teachers who later become union leaders to credit their union salaries towards their pension.
More from the Washington Times:
Collectively, 40 retired union leaders draw $408,136 per month in Illinois teachers’ retirement pension, or $4.9 million per year, according to data generated at the request of The Washington Times by OpenTheBooks.com, an online portal aggregating 1.3 billion lines of federal, state and local spending records.
Twenty-four of those retired union leaders have already collected more than $1 million each in retirement benefits, and the payments are likely to continue for years to come, the data show.
The union bosses collecting the payouts had jobs at the National Education Association (NEA), the Illinois Education Association (IEA) and the Illinois Federation of Teachers (IFT) after their teaching careers. Most got massive pay raises when they jumped from the classroom to the unions, swelling their pension payouts by large amounts at the expense of taxpayers.
The labor leaders contribute into the state pension program during the time they work for the unions, but their larger salaries are then used to calculate their final retirement eligibility. The result is taxpayers must pay pensions to these leaders that are exponentially larger than if they just continued to teach in the classroom.
The arrangements live on even as the Illinois Teachers Retirement System (TRS) hurdles toward insolvency — it is currently underfunded by an estimated $54 billion — with teachers currently in the classroom questioning what sort of retirement they’ll receive. Right now, the TRS could only afford to pay out 40 cents on the dollar of each retiree it owes.
“Government pensions should go to government workers, period,” said Adam Andrzejewski, founder of OpenTheBooks.com. “The pension system for the hard-working teacher and public servant is being drained by union bosses with special pension privileges.”
It’s important to note that the employees in question were still contributing to the pension system during the time they worked with unions — so they weren’t getting a completely free ride.
More details on the law in question, from the Washington Times:
The labor officials are able to collect teacher pensions because of a pension code carve-out granted by the Illinois General Assembly back in 1987 — a change for which the unions lobbied heavily.
Under the pension code, active employees of the IFT and the IEA with previous teaching service can be TRS members. The IFT and IEA have been able to designate employees as active TRS members if they were already TRS members because of previous creditable teaching service. Since the 1940s, the pension code has allowed active employees of the Illinois Association of School Boards with prior TRS creditable service to be active TRS members.
The statutes outlining additional benefits within Illinois state and local pensions have many times “been amended in the state pension code without much public discourse, financial analysis or even justification as to why we should add on nongovernment employees such as municipal associations, unions or anyone else,” said Laurence Msall, president of the Civic Federation, a nonpartisan research organization. “This is the definition of insider benefits that don’t serve identifiable public purpose.”
In 2012, Illinois Gov. Pat Quinn signed a law that prevented teachers from using service time with unions to boost pension benefits – but the law only applies to union work done before the teachers were hired, not after.
One of the hottest issues in the race for Illinois governor is also one where the candidates differ starkly: how to fix the state’s retirement system.
So it’s no surprise that pensions came up during the race’s first debate.
There were no revelations here; Pat Quinn and Bruce Rauner both used the time to double-down on their stances. From the Associated Press:
Quinn signed legislation last year that would fully fund the retirement systems by 2045, in part by cutting benefits. Public-employee unions have sued, saying the overhaul violates a provision of the constitution that says benefits can’t be reduced.
Rauner supports letting retirees keep the benefits they’ve been promised but freezing the systems and moving employees to a 401(k)-style plan in which workers are not guaranteed a certain level of benefits. He said that plan — similar to what most private-sector workers have — wouldn’t save much money to start but would save billions in the long term.
“I don’t believe it’s right to change the payments to a retiree after they are already retired, and that’s what Gov. Quinn did,” Rauner said.
But Quinn called Rauner’s plan “risky” because workers’ retirements would depend largely on market performance. He said he deserves credit for making Illinois’ full pension payment each year he’s been governor — something his predecessors didn’t do. That contributed to Illinois having the worst-funded pension systems of any state in the U.S.
Illinois’ pension reform law has spent the last 6 months being fast-tracked through lower courts. A ruling on the constitutionality of the law could come before the end of the year.
It was expected, and now it has arrived: a lawsuit has landed in the lap of a Sangamon County Circuit Court judge which seeks to overturn Illinois’ massive pension reform plan signed into law last month.
The lawsuit was filed by We Are One Illinois, a coalition of unions including the Illinois AFL-CIO, the American Federation of State, the Service Employees International Union, the Illinois Federation of Teachers, County and Municipal Employees, the Illinois Education Association and others.
The lawsuit, like the ones before it, centers on a provision in the Illinois Constitution that says pension benefits represent a “contractual relationship” and may not be “diminished or repaired”.
The Associated Press recaps the provisions of the reform law:
The plan reduces the annual cost-of-living increases for retirees and raises the retirement age for workers 45 and younger, giving some workers the option of freezing their pension and participating in a 401(k)-style contribution plan. It also puts some savings back into the pension funds and directs money from pension bond payments to the retirement systems after those bonds are paid off in 2019.
Lawmakers also included two components they say were intended to improve the plan’s odds of surviving a legal challenge: a 1 percent decrease in employee contributions and a funding guarantee, which allows the systems to sue the state if lawmakers don’t provide Illinois’ payments to the accounts.
The law was expected to take effect on June 1, 2014. But the lawsuit will likely delay implementation of the reforms, as the lawsuit asks the court to delay the law until the case is decided.
