What pension changes mean for you. For more than two years, active and retired AFSCMEmembers—along with our union partners in the We Are One Illinois coalition—beat back repeated attempts to slash public employee pension benefits. But that hard-fought legislative battle ended Dec. 3 when the General Assembly, despite a last-minute whirlwind grassroots lobbying effort, passed Senate Bill 1. It makes significant cuts in the pensions of both active and retired participants in the State Employees Retirement System (SERS), as well as the Teachers Retirement System, the State Universities Retirement System, and the General Assembly Retirement system. The measure was swiftly signed into law by Governor Quinn. Most of its provisions are effective on July 1, 2014.
Now the fight will shift to the courts. AFSCME and our We Are One Illinois partners have retained legal counsel and are moving forward to lay the groundwork for filing a lawsuit challenging the new law’s constitutionality. We will also seek an injunction to stay the implementation of the law pending the outcome of the suit.
While the lawsuit is likely to be lengthy and very expensive, this legal battle is absolutely essential. The changes in this legislation break the promise that was made to public employees and jeopardizes the retirement security of hundreds of thousands.
As an active employee, the new law may impact you in any of three different ways, depending on your age now and your pension at the time of retirement:
- A reduction in the annual cost-of-living adjustment (COLA);
- COLA freezes—no COLA at all—for up to five years; and
- An increase in the age at which you can retire.
You can click here for a PDF fact sheet that summarizes the provisions of this new law in greater detail. And you can click here to access an interactive tool that will help you determine the financial impact these changes will have on you.
If your legislators voted in support of SB 1, be sure to let them know how disappointed you are. Click here to review the roll call on SB 1. A “YES” vote is the wrong vote! You can call on the We Are One Illinois hotline at 888-412-6570, or click here to send an email to your legislators.
Fair tax structure = pension protection insurance. There’s no doubt that the plain language of the state constitution bars diminishment of pension benefits, so there’s every reason to believe that the We Are One Illinois coalition’s lawsuit will prevail in court. But this is Illinois, where “reason” doesn’t always carry the day—so we can’t just sit back and count on the courts to protect us.
Moreover, it’s important to keep in mind that if the courts do uphold the new law, the pension cuts we’re now facing are only the beginning. You can be certain that politicians will continue to chop away at pension benefits every time they need additional revenue. Already the big-business Illinois Manufacturers Association is calling for further pension cuts—citing the new law as a “first step” in addressing the pension problem. And Republican gubernatorial candidate Bruce Rauner is pushing to eliminate pensions altogether.
Clearly we need to be prepared to carry the fight for retirement security forward, and one of the most important ways to do that is to fix the state’s chronic revenues woes. Illinois has such a poorly structured tax system that it has what economists refer to as a “structural deficit”—i.e., tax revenues are not sufficient to support the services that the state provides. That’s why a “temporary” income tax increase was put in place three years ago, and why the state will slide further into fiscal disaster if that increase is allowed to expire as scheduled in January, 2015.
That “fiscal disaster” is not only disastrous for the jobs of state employees and the vital services the state provides, it’s potentially disastrous for state employee pension benefits, too. The argument for enacting the steep cuts to pension benefits embodied in SB 1 is that Illinois’ dire fiscal situation should allow the state’s “police powers” to override the state constitution.
The fairest way to raise the revenues needed to achieve fiscal stability is to reform the state’s tax system to allow for different tax rates depending on income—where wealthier individuals pay more than middle-class folks. But right now the state constitution bars such a fair tax, instead requiring that everyone pay the same rate regardless of income.
Thirty-four other states already have a fair tax structure, and virtually all of them are in better fiscal condition than Illinois. It’s time for our state to catch up. That’s why AFSCME is backing the campaign to amend the state constitution to allow for a fair tax system in which the wealthy pay their fair share—and corporations don’t get away with paying nothing at all.
A Better Illinois, a coalition of more than 100 organizations, is leading the charge—with a big hurdle coming up this spring. While amending the constitution ultimately takes a referendum of all voters (with 60% voting in favor) just getting that question on the ballot requires three-fifths of state legislators to give the OK.
Getting that legislative approval will be tough—and it has to be done by May in order to put the amendment on the ballot in the fall of 2014. To help make it happen, every AFSCME member needs to aid in reaching the goal set by the delegates to the recent Council 31 convention of 50,000 petition signatures from union members, their families and friends.
If you want to help protect your pension for years to come, it’s critical to work right now to fix the state’s revenue problems—and the surest way to do that is to amend the state constitution to allow for a fair tax system that will stabilize state finances. Click here for a PDF copy of the petition for A Better Illinois that you can save, print and start circulating right away. And click here for a PDF fact sheet on the fair tax campaign.
Privatization halted in DHS, HFS – Take a simple problem and make it as complicated and costly as possible—that’s the approach of two key state legislators, Rep. Patti Bellock (R-Westmont) and Sen. Dale Righter (R-Mattoon), who are taking their cues from the anti-union Illinois Policy Institute.
The problem: Ensuring that redeterminations of eligibility for Medicaid are completed in a timely and accurate manner. It arose because both agencies involved in the redeterminations—DHS and DHFS—lacked sufficient casework staff and appropriate technology.
To address the problem, the General Assembly passed legislation in 2012 allowing the state to use a private firm to provide the technology support needed to verify income data. But under pressure from legislators, the Quinn Administration went much further in implementing the law and turned the entire redetermination process over to a contractor—Maximus—rather than just hiring the additional caseworkers needed to get the job done.
AFSCME immediately filed a grievance, contending that the Maximus contract violated the subcontracting provisions of the state master agreement. By the time the case got before an independent arbitrator, the union had developed evidence showing that not only did the deal with Maximus violate the AFSCME contract, it also violated sound public policy, costing the state an additional $18 million a year.
Arbitrator Edwin Benn subsequently ruled that the state violated the union contract by hiring Maximus to perform Medicaid eligibility redeterminations normally performed by DHS and DHFS employees. He ordered termination of the Maximus deal, but retained jurisdiction over the case so that he could address any issues related to the implementation of the award.
Rep. Bellock and Sen. Righter assailed the decision, urging that the full Maximus contract be kept in place—even though the state had never refuted the union’s evidence that the contract was wasting millions of dollars. The fiercely anti-union Chicago Tribune echoed this defense of inefficiency and wasteful spending.
In response to the pressure, in September the state announced it would appeal the arbitration decision in court. The appeal could have resulted in months or even years of delay in implementing the arbitration award. Arbitrator Benn then reconvened the parties for the purpose of resolving issues related to implementation.
This week, Arbitrator Benn issued a Supplemental Award. In exchange for relatively minor delays in the implementation of the initial order, the Quinn administration has agreed to withdraw its appeal and initiate an orderly process for termination of the Maximus contract. Equally important, the state agreed to hire more than 500 additional caseworkers in order to ensure that the redeterminations can be completed in a timely manner. Under the terms of the Supplemental Award, the state is required to return all caseworker duties back to bargaining unit employees by April 30, 2014, and the remaining parts of the Maximus contract must be eliminated by 2015.
No sooner had the award been announced, however, than the Maximus cheerleading squad got their pompoms out. Rep. Bellock and Sen. Righter attacked the award and renewed their call for all the work to remain with the private firm, despite increasing evidence of its failure to perform the work properly. To date, Maxmius recommendations to change existing Medicaid coverage were found in error and overturned in 47 percent of cases, its cancellations reversed in 31 percent of cases, and its findings deemed inaccurate in 15 percent of cases where the company said recipients should continue receiving benefits.
The Koch Brothers-funded Illinois Policy Institute joined in the Save Maximus crusade, but as is too rarely the case, concern for sound public policy and good value for taxpayers trumped politics, and the contract will be terminated. The joint efforts of dozens of state local presidents, stewards, rank and file members and Council 31 staff contributed to this important victory over privatization.
Via: Council 31