MIKE RUGGERI’S PENSION NEWS #16

FEBRUARY 19, 2016

THE CULLERTON/RAUNER THREAT

THE CULLERTON/RAUNER PENSION THREAT

Early in January, Rauner announced that he was in agreement with Cullerton on pension reform. 2 hours after that announcement, Cullerton repudiated Rauner’s statement saying that "he believes collective bargaining should continue to exist, and the governor does not share that ideal.” Cullerton’s model is;

Future salary increases are based on the employees choice. Employees would receive slightly lower cost of living increases if the employee elects to have those pay increases count towards retirement benefits. If they opt out, they opt out of future raises bossting their pensions.

Rauner wants to eliminate salary increases from collective bargaining. So Rauner is using the issue to kill collective bargaining. “In order for President Cullerton’s bill to be constitutional, salary increases have to be taken out of collective bargaining,” Rauner said.

Later in January, Cullerton spoke with Rauner and had this to say;

“I think we have an agreement,” Cullerton said. “There are some tweaks to be made by the lawyers, and then the question’s going to be, ‘How do we pass it?’”

“All these pension bills in the past that have passed have been very bipartisan and controversial, so we expect that the unions will probably not be supportive. So, that will make it more difficult to pass, but we’re going to be on the same page,” Cullerton said.

The plan reportedly focuses on giving state employees a choice. For instance, an employee who wants to keep the 3 percent, compounded cost-of-living raises payable in retirement would have to accept a lower pensionable salary. On the other hand, the employee could take the higher salary while working but get smaller cost-of-living raises while in retirement.

Backers of the Cullerton plan say it could save Illinois — which has unfunded pension liabilities of more than $111 billion — about $1 billion annually.

However, even supporters acknowledge such a plan likely would face a court challenge if passed.

Cullerton said the pension bill he and Rauner are working on does not include diminishment of collective bargaining for state employees.

“That’s not part of the deal,” the Senate president said.

Early in February, Cullerton had this to say;

Rauner announced last month that he’s backing a Cullerton plan to give workers a choice in retirement benefits as a way to chip away at Illinois’ $111 billion unfunded pension liability. He struck an optimistic tone in last week’s State of the State speech, calling it one of the most critical steps lawmakers can take to save taxpayers money.

But Cullerton, a Chicago Democrat, says it will be even tougher than usual to pass pension legislation this year because of upcoming elections, opposition from labor unions, an Illinois Supreme Court ruling that declared a previous law unconstitutional and the ongoing state budget saga. A pension bill could be part of a broader deal between Rauner and majority Democrats on a budget and other issues, he said — a process that’s likely to take several months, if not longer.

“With the union opposition and without 100 percent of Republicans on board, it’s going to be difficult,” Cullerton said. “Just like everything else this year, people want to know what the big picture is.”

Cullerton said he believes his approach is constitutional and he plans to sit down with union officials to discuss both the “legal side” and the “political side.” He also will present the legislation to Democratic House Speaker Michael Madigan once it’s drafted.

Schrimpf said Cullerton’s attorneys are expected to send their legislative language to Rauner’s office by the middle of this week.

Local 1600 will be working on responses to this new pension threat.

Mike Ruggeri

Local 1600 Pension Chair