Illinois’ Tier III pension plan faces roadblock, jeopardizing $500 million in FY18 savings

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ILLINOIS NEWS NETWORK

One of the pension funds that will be impacted the most by the state’s new Tier III pension plan doesn’t expect the plan to be implemented until fiscal year 2020 because of a variety of factors.

Illinois’ taxpayers are on the hook for an unfunded pension liability of more than $130 billion, and that number is growing. It’s the highest in the country.

Part of the budget that lawmakers imposed on the state this summer included a Tier III for state retirees and public school teachers to address the huge liability moving forward. The plan is a hybrid of defined benefits, or 401(k)-type plans, and defined contributions. It also allows Tier II participants to opt in to the new plan but will not impact the retirement funds for judges or state lawmakers.

The plan was budgeted to provide $500 million in savings for the current fiscal year, but that won’t happen if it’s not implemented. 

State Employee Retirement System assistant to the executive secretary Jeff Houch said there are some hurdles to implementing the new plan.

“We cannot enroll any member,” Houch said, “regardless if they’re currently a member of the system or a future [member] of the system until the IRS approves the plan.”

Teachers Retirement System Executive Director Dick Ingram said the IRS has been clear.

“When you have a choice between two options in a pension plan that have differing contribution rates, that’s not allowed,” he said.

Ingram said he expects lawmakers to pass a bill in the upcoming veto session with technical changes necessary to begin implementation. Even then, Ingram doesn’t think the plan will be ready until July 1, 2019, the first day of the state’s fiscal year 2020.

Current Tier II members and future members of TRS will be impacted. TRS said it’s still reconciling final numbers with its auditor for fiscal year 2017 but said right now there are 160,000 active members.

About 97 percent of the approximately 61,000 active SERS members paying into the fund won’t be impacted by the new plan because they will get Social Security benefits. That means only about 400 Tier II members can opt into the plan, pending IRS approval.

“It’s a huge unknown as to how many folks will elect to participate in the plan,” Houch said. “Savings at this point are unknown, and we won’t have a true sense until we start seeing who is going to elect for this.”

Ingram said it’s important to get this right because the math is unforgiving.

“For every dollar that [the state doesn’t] put in today [that it] should, it’s $3 down the road,” Ingram said. “And that’s obviously an easy political answer for today, but essentially you’re putting a burden on taxpayers that aren’t even born yet.”

TRS is 40 percent funded with $71.4 billion in unfunded liability. There are 106,000 retirees getting benefits now.

SERS is 34 percent funded with $30 billion in unfunded liability. There are approximately 57,000 retirees getting benefits now.

The other fund that will be greatly impacted by the new retirement plan is the State University Retirement System, which has over 231,000 members.

SURS’ defined benefit plan has $24.4 billion in unfunded liability for 63,000 benefit recipients. SURS also has an optional defined contribution plan. Over 20,500 members take part in that plan with assets of nearly $2 billion.

Retirement systems for judges and state lawmakers are not affected by the new plan. The Judges’ Retirement System is 32 percent funded with $1.7 billion in unfunded liability for more than 1100 recipients. The General Assembly Retirement System is the worst funded in the state. GARS is 13 percent funded with over $320 million in unfunded liabilities.

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Illinois’ Tier III pension plan faces roadblock, jeopardizing $500 million in FY18 savings

John Daley flips on soda pop tax, boosting repeal effort

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Cook County Board Commissioner John Daley has decided to vote to repeal the controversial soda tax, boosting the chances for repeal next week.

“I am going to vote to repeal,” Daley told the Chicago Tribune. “I listened to the community, the residents I represent, and there’s been a strong outcry.

“It’s a lot of taxes they’ve been hit with,” added Daley, referring to city property taxes, garbage fees and the recent increase in the state income tax. “It’s every economic group. It’s every ethnic group. It’s every part of the district.”

Daley’s change of heart represents a blow to Board President Toni Preckwinkle, who is trying to preserve the pop tax ahead of a Tuesday vote on a repeal measure. Not only is he the Finance Committee chairman, he’s been a loyal ally of Preckwinkle since she was first elected in late 2010 and voted for the penny-an-ounce tax on sugar- and artificially sweetened beverages last November.

Several commissioners said Daley’s flip on the issue could cause a domino effect among the other seven commissioners who originally supported the tax. But Daley said he won’t try to sway anyone and that commissioners have to make the best decisions they can in the interest of the people they represent.

“I think the president has done a terrific job of reforming county government,” Daley said, adding that he respects her push for the tax. “I’ve been overwhelmingly support of the president in the past.”

Commissioner Timothy Schneider, a Bartlett Republican who is chairman of the Illinois Republican Party and co-sponsor of the repeal ordinance, said he believes there’s now at least nine votes to repeal the ordinance — the minimum required on the 17-member board. Schneider, however, said he’s not sure if there will be 11 votes for repeal — the number it takes to override a Preckwinkle veto.

Daley explained his decision to the Tribune just hours after Preckwinkle presented her proposed 2018 budget, which relies on the $200 million a year in revenue it’s expected to produce.

She struck a defiant tone, calling next week’s repeal vote “a moment of truth.”

Repealing the tax would be “a step toward cutting essential services for our residents, a step toward layoffs, a step toward the kind of fiscal uncertainty that forces us to focus on plugging short-term budget gaps instead of dedicating ourselves to finding long-term solutions.”

Preckwinkle went on to note that some commissioners last year voted against the pop tax, but then voted for the county’s overall spending plan that relied on the revenue from the very tax they had voted against.

“There’s no longer space to rail against the tax but secretly hope your colleagues absorb the political heat for you because you know we need this revenue,” Preckwinkle said. “To support spending – and the vital services and benefits we provide – you must support revenue.”

Daley said that if the tax is repealed, commissioners and countywide elected officials will have to find a way to cut 11 percent in expenditures from their budgets. “There’s no source of new revenue from anyone, and no one’s willing to do it,” he said.

Daley represents a district that starts in his storied political family’s home base of Bridgeport and snakes southwest into Bedford Park and Burbank, then extends south to Oak Lawn, Evergreen Park and the city’s Southwest Side.

hdardick@chicagotribune.com

Twitter @ReporterHal

John Daley flips on soda pop tax, boosting repeal effort

The fight for abortion rights has never been easy in Illinois

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The Tribune’s editorial “Abortion funding, truthfulness and a question: Can Rauner recover?” is troubling from a number of perspectives, not the least of which is its assertion that there has been some sort of decades-long “compact” or “understanding” in Illinois that has kept abortion opponents from trying “to regulate the procedure out of existence” in exchange for the state refusing to cover abortion under Medicaid — as it does every other kind of health care. This is false.

The ACLU of Illinois has spent decades filing lawsuits to strike unconstitutional state restrictions on abortion and fighting efforts to pass new ones in Springfield. But for 45 years of ACLU litigation, and a number of hard-fought victories before the General Assembly, access to abortion in Illinois would look much like it does in Texas and Missouri. Our lawsuits, court injunctions and consent decrees keep the state’s abortion opponents in Springfield from legislating abortion out of existence. Contrary to the Tribune editorial, every year, anti-abortion legislators attempt to pass new restrictions that would upend safe, legal abortion in our state. In the last few years alone, they have attempted to ban one of the safest methods of abortion, compel abortion providers to lie to patients, and impose a TRAP — Targeted Regulation of Abortion Providers — law like the one from Texas that the U.S. Supreme Court invalidated in 2016.

House Bill 40 marked a critical victory for women’s health and equality. For the women and families of Illinois, House Bill 40 is not about politics; it is about advancing health, economic security and dignity. We applaud Gov. Bruce Rauner for putting politics aside and doing what is right for the people of our state.

— Colleen Connell, executive director; and Lorie Chaiten, director, Women’s and Reproductive Rights Project, American Civil Liberties Union of Illinois

The fight for abortion rights has never been easy in Illinois

4 things to know about Illinois’ gun laws

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Illinois gun laws are relatively strict compared to surrounding states, with background checks and a waiting period for gun purchasers. California is considered to have the toughest gun laws of any state.

Here’s a look at the state laws on the books:

Can you legally own a machine gun in Illinois?

In a word, no. Illinois law prohibits the knowing sale, manufacture, purchase, possession or carrying of “any weapon, which shoots, is designed to shoot, or can be readily restored to shoot, automatically more than one shot without manually reloading by a single function of the trigger, including the frame or receiver of any such weapon.” The law also prohibits “parts from which a machine gun can be assembled.”

What about accessories like “bump stocks,” which the Las Vegas shooter used to fire hundreds of bullets in seconds?

Bump stocks, modifiers that attach to AR-15 or AK-style rifles in order to help a shooter fire at a much faster rate, are legal in Illinois and can be found at many retailers. In fact, manufacturers of the devices claim they’re legal in every state.

U.S. Sen. Dick Durbin spoke on the floor of the Senate Monday in favor of stricter laws, which Democrats are pushing. “We’re not just casual observers of this violence,” he said. “We are supposed to pass laws to make America safer.”

Republican Gov. Bruce Rauner was asked at an event in Aurora Wednesday if he’d consider outlawing bump stocks. He did not directly answer the question, saying “I do support ongoing conversations with how we can keep people across America safer.”

So what are Illinois’ assault weapons laws?

Illinois does not have a statewide assault weapons ban in place.

After Illinois became the last state in the nation in 2013 to allow gun owners to obtain permits to carry concealed weapons, munipalities were given a short window to enact their own assault weapons bans.

Cook County, Chicago, Highland Park and Evanston all passed bans, where violators are punished by fines and must alter or surrender their weapons.

What do you need to do to buy a gun in Illinois? What about gun shows?

A buyer is required to show his Firearms Owner’s Identification Card when purchasing any firearms or ammunition. Getting an FOID card involves a background check.

Any seller is required to withhold delivery of any handgun for 72 hours, and of any rifle or shotgun for 24 hours, after the buyer and seller reach a purchase agreement. That waiting period, however, doesn’t apply to buyers who are dealers, or to law enforcement officers. The seller of a gun by law needs to keep for the next decade a record of the purchase, the serial number of the gun, the buyer’s identity and the buyer’s FOID card number.

By requiring such records, Illinois closed what is called a “gun show loophole.” Colleen Daley, executive director of the Illinois Council Against Handgun Violence, points out that it’s still easy for Illinois residents to travel to neighboring states to gun shows where background checks aren’t conducted and transport their buns back across state lines.

The group is pushing to pass legislation that would require background checks on all gun dealer employees, video surveillance on the outside of gun shops and training for employees to help them identify straw purchasers.

4 things to know about Illinois’ gun laws

Dem candidates for governor on best behavior at Whitney Young debate

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A day after the two Democratic primary frontrunners bickered over attendance at a forum, all seven candidates for governor kept things civil at a debate hosted by Whitney Young Magnet High School on Wednesday evening on the city’s Near West Side.

When billionaire entrepreneur J.B. Pritzker couldn’t attend a Tuesday forum held at Northern Illinois University, his campaign put out a statement saying his opponents had nixed Pritzker’s running mate Julianna Stratton from debating in his place.

NIU organizers had actually made the decision, leading members of business and nonprofit leader Chris Kennedy’s camp to decry Pritzker’s claim as “petty and insulting.”

The hatchet had apparently been buried by Wednesday evening at Whitney Young, where the candidates agreed on a wide swath of issues while tackling questions from students. School officials touted it as the first student-run gubernatorial debate in the country.

State Sen. Daniel Biss (9th) and Ald. Ameya Pawar (47th) were in lock-step with Pritzker and Kennedy in calling for a progressive income tax, changing the funding formula for Chicago Public Schools, raising the minimum wage, reinstating funding for mental health facilities, protecting DACA recipients and banning assault weapons.

Bob Daiber, regional superintendent of schools in downstate Madison County; anti-violence activist Tio Hardiman; and small-business owner Alex Paterakis joined the other candidates in hammering Gov. Bruce Rauner as a crony of President Donald Trump pandering to corporate interests.

Democratic gubernatorial candidate Chris Kennedy waves to an audience member as Tio Hardiman and Alex Paterakis look on during the debate at Whitney Young High School on Wednesday, Oct. 4, 2017. | Kevin Tanaka/For the Sun Times

“People like our current governor and president go to rural parts of the state and say that people in Chicago are getting more than their fair share. They want to divide us that way,” Pawar said.

The only time Pritzker called out Kennedy by name was to agree with him that the state should increase investment in Argonne National Laboratory and Fermilab to improve the state’s renewable energy prospect.

Pritzker claimed to stand out from the field due to his “leadership and vision,” touting his time at the helm of tech incbuator 1871 and his championing of early childhood education and school lunch programs.

Biss extolled his experience in building coalitions in the state Senate to help pass 80 bills he sponsored since being elected .

Kennedy got the biggest laugh of the night after a pint-sized eighth-grader asked a long-winded, complex question about how candidates would “alleviate the burden” of skyrocketing college tuition costs facing prospective students.

“Who raised that kid? What did you eat?” Kennedy said, adding that he would support fully funding state universities.

Kennedy kept the comedy going in his closing statement, citing a statistic that the only state seeing a greater exodus of millennial residents that Illinois is New Jersey.

“And who the hell wants to live in New Jersey?” he quipped.

Dem candidates for governor on best behavior at Whitney Young debate

Morning Spin: New Rauner TV ad touts school bill, debuts new slogan

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Welcome to Clout Street: Morning Spin, our weekday feature to catch you up with what’s going on in government and politics from Chicago to Springfield. Subscribe here.

Topspin

Even though Republican Gov. Bruce Rauner hasn’t definitively declared he’ll seek a second term, his campaign on Wednesday showed it’s still spending money on advertising by announcing a new TV commercial.

The new half-minute spot hails the new state school-aid formula funding law that Rauner eventually signed into law and debuts a new tagline for the governor: “Illinois is worth fighting for.” 

A female voice-over begins the ad by saying: “It’s been called ‘nothing short of a miracle.’ Against all odds, the highest level of funding for Illinois public education ever. Commonsense tax credits for donations to scholarship programs. And historic changes to the public school funding formula to help provide more funding for those children who need it most.”

The voice-over continues: “There’s a long way to go. And it won’t be easy. But Illinois is worth fighting for.”

The ad, however, doesn’t note that Rauner rewrote an earlier version of the bill after spending months criticizing it as a “bailout” for Chicago Public Schools. In the end, the compromise he signed gave CPS even more money than the version he amendatorily vetoed.

The Democratic Governors Association and union groups contended the narrator’s use of the phrase “nothing short of a miracle” is not a reference to Rauner but instead applies to the measure’s sponsor, state Sen. Andy Manar, D-Bunker Hill.

Last month, NPR Illinois quoted an education advocate saying of Manar: “The fact that he got it done in this political environment is nothing short of a miracle.” (Rick Pearson)

 

What’s on tap

Mayor Rahm Emanuel’s public schedule wasn’t available.

Gov. Rauner has a trio of stops in Aurora, including an announcement of the expansion of the Illinois Department of Economic Opportunity’s small business development center.

Cook County Board President Toni Preckwinkle will present her budget proposal at 11 a.m. at the county building. What she’ll say.

City Council committees will meet, including the Finance Committee, which will consider a measure on a new authority to oversee the state-authorized restructuring of city borrowing. 

Marilynn Gardner, president and CEO of Navy Pier, will give a lunchtime talk to the City Club of Chicago.

 

From the notebook

* More Rauner travel plans: The governor met with a trade delegation from Poland on Wednesday before announcing plans to travel to the country in the coming months.

The governor said his office was planning a trip to Europe and said stopping in Poland would be a “priority” as the state looks to build economic ties.

The announcement comes weeks after Rauner returned from a trade trip to Japan and China. He had long promised to travel on his own time to recruit businesses to Illinois, but those efforts were delayed amid the state’s yearslong budget impasse. (Monique Garcia)

Pawar launches video before hitting the road again: Democratic governor candidate Ald. Ameya Pawar released a new nearly 5-minute long digital ad as he was scheduled to begin on Thursday the second leg of his “Don’t Close Our Communities” tour.

The ad called “Unity” shows the Chicago alderman on previous bus visits across the state. The latest leg of his tour is supposed to take him to 14 cities in four days. He’ll be joined by his running mate, Cairo Mayor Tyrone Coleman.

“It’s easy to prey on people’s economic anxieties and turn other communities into the ‘other’ when people feel like they haven’t been listened to. That economic violence is how we get to a place where bombast and ugly political rhetoric is the same as political authenticity,” Pawar says in the video.

“We need to fight back against that. But the only way you fight that is with a positive agenda that brings people together,” he says. (Rick Pearson)

Another lawmaker won’t run again: This time it’s Republican state Rep. David Harris of Arlington Heights, who has spent more than 16 years in the Illinois House over two stints.

Harris won’t run for re-election in 2018. He’s a former adjutant general of the Illinois National Guard who first served in the House from 1983 to 1993, then again from 2011 until now.

He is one of the Republican lawmakers who broke with Gov. Rauner and voted for a tax hike and spending plan that ended Illinois’ historic budget impasse. Many of those GOP lawmakers have aren’t running for re-election in 2018 as primary challengers started to line up.

A full, updated look at lawmakers who are leaving Springfield since Rauner was sworn in is available here.

* How they voted: Illinois’ Democratic U.S. senators differed in their votes on whether to confirm Chicago attorney Eric Hargan to the No. 2 job at the federal Health and Human Services Department.

Senior Sen. Dick Durbin voted for Hargan’s confirmation and junior Sen. Tammy Duckworth voted against.

Hargan was confirmed as deputy secretary of HHS by a 57-38 vote

* Quick spins: State Rep. Greg Harris of Chicago told his Facebook followers that he’s been named an assistant House majority leader. He had been in leadership serving as Democratic caucus chairman. … Chicago Mayor Rahm Emanuel on Wednesday cut a ribbon at a Far North Side park newly named for the late Ald. Bernie Stone. The Bernard L. Stone Park is at Devon and Kedzie avenues.

 

What we’re writing

*Preckwinkle budget speech: Keep pop tax or make deep spending cuts.

Doomed by delay: How Illinois bureaucracy robbed parents of a chance to save their children from a deadly disease.

Details of new Illinois Lottery manager deal shrouded in secrecy.

DCFS investigator is assaulted while trying to aid a child in Sterling.

Democrats: Use state money to help with roads around Obama Presidential Center.

Alderman: Raise fees for Uber, Lyft rides to help balance budget.

Emanuel highlights public safety spending after report on police overtime abuses.

ACLU lawsuit alleges Chicago police brutality “magnified for people with disabilities.”

CPS agrees to drop civil rights lawsuit against the state.

Chicago’s once-dismissed sales tax lawsuit against Kankakee gets new life.

Cost to restore Grant Park after Lollapalooza tops $500K.

 

What we’re reading

* Cubs pitcher Kyle Hendricks to start game 1 against the Nationals.

Foxconn to locate Wisconsin plant in Mount Pleasant.

Massive development along Chicago River’s North Branch is new option for Amazon HQ2.

As weather turns colder, stink bugs go inside.

 

Follow the money

*Highland Park Mayor Nancy Rotering has filed paperwork to change her state campaign fund to run for attorney general as a Democrat. Rotering lost a 2016 primary bid for Congress to U.S. Rep. Brad Schneider of Deerfield.

*Track Illinois campaign contributions in real time here and here

 

Beyond Chicago

*FBI appears short on Las Vegas gunman leads.

Morning Spin: New Rauner TV ad touts school bill, debuts new slogan

Editorial: Don’t wait for justices; demand redistricting reform

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Despite spirited oral arguments Tuesday in a Wisconsin gerrymandering case, court observers still are no closer to predicting whether the U.S. Supreme Court will return the power to elect their lawmakers to the people.

Justices remain largely divided along ideological lines over whether to declare hyper-partisan gerrymandering unconstitutional. That leaves reformers’ hopes in the hands of Justice Anthony Kennedy, who has expressed interest in creating a test to determine when partisan map-making crosses the line. That’s probably why the court’s liberal bloc focused Tuesday on creating such a standard. Whether it had any effect on a poker-faced Justice Kennedy is uncertain.

Meanwhile, conservative justices worked equally hard to find reasons not to declare political gerrymandering unconstitutional while having nothing good to say about the practice.

Chief Justice John Roberts worried, for example, that the court would be overrun with map challenges and “have to decide in every case whether the Democrats win or the Republicans win.” That he said would damage the court’s credibility in the eyes of  “the intelligent man on the street” and “cause very serious harm to the status and integrity of the decisions of this court in the eyes of the country.”

Using that argument, justices would have abdicated their responsibility to rule in other cases of political significance, for example, Citizens United and Bush v. Gore.

Besides, the central issue here has little to do with party, and everything to do with the fundamental right of voters to choose their lawmakers and not the other way around.

What becomes of the “precious right to vote, if you can stack a legislature?” Justice Ruth Bader Ginsberg wondered about the kind of egregiously partisan gerrymandering at the center of Gill v. Whitford.

With 2020 census-driven redistricting looming, Paul Smith, the attorney for the Wisconsin map challengers, argued that we are “at the cusp of a really serious problem” if the high court gives a “free pass” to all the states to “effectively nullify democracy.” We may already be there.

With apologies to talented GOP Wisconsin gerrymanderers, Illinois House Speaker Michael Madigan’s equally talented armies of Democratic cartographers could write the textbook for partisan mapmaking. They’ve been aided and abetted in taking total control of state government from voters by sympathetic jurists who reject efforts by voters to take back the process.

And Illinois isn’t alone, as partisan map-makers across the nation employ ever-improving technology to slice and dice districts to the point where the poor voter is simply drawn out of the process. This case, many say, is our  last, best hope for a judicial remedy. Justice Kennedy’s rumored retirement  fuels concerns that, if the court doesn’t act now, it never will.

Of course, even if justices do weigh in, there is no guarantee a one-size-fits-all solution will restore power to voters in states such as Illinois. That makes it imperative Illinoisans do more than cross their fingers and wait for justices to do the right thing. We must continue to fight for reform.

That includes urging voters to join our editorial board and the folks at CHANGE Illinois in making redistricting reform THE key issue of the 2018 state elections. Demand that candidates for legislature and governor from both parties support placing a constitutional amendment on the ballot to permanently change Illinois’ flawed map-drawing process. Don’t forget to remind them of the consequences if they don’t.

Editorial: Don’t wait for justices; demand redistricting reform