Posted on 06/11/2015 2:19:06 AM PDT by Cincinatus' Wife
Instead of looking to policymakers and accountants for help with state pensions, reformers across the country realize they need to hire a few more lawyers.
Illinois Gov. Bruce Rauner has to deal with serious pension problems after a unanimous state Supreme Court shot down the 2013 reforms of his predecessor. The Illinois Constitution does not allow cutting promised pension benefits, but Rauner seems willing to take the legal steps necessary to make the reforms stick this time around.
Illinois is not alone. Reforms made by Oregon's state legislators in 2013 included a reduction in cost-of-living increases. But Oregon's Supreme Court ruled that the promises made to those retirees must be kept. The expected cost to the state pension plan, and to taxpayers, may add up to $4 billion, nearly $1 billion of that coming in the next biennial budget term. The state must pay back lost benefits, too.
This is not to say that courts always are obstacles—just ask Michigan legislators. That state's Supreme Court upheld changes to the teacher pension system. Signed into law in 2012, the reforms required teachers to contribute more to their pensions or face benefit cuts.
Because pension reforms always will face a legal challenge, creative changes are needed. Rauner's constitutional amendment is one such angle. Going after the power of public-sector unions is another. But even that tactic is no guarantee if government officials aren't willing to follow through.
WHERE IT DIDN'T HAPPEN
Consider New Jersey Gov. Chris Christie, who, with his eyes on the White House, pushed reforms in 2011 that ensured that his state would meet the annual required contributions to the pension plan each year, all while attacking labor unions. But as New Jersey muddles through a slow economic recovery, Christie has gone back on his own deal and now refuses to meet those contributions in order to pay for a massive state general budget shortfall.
Illinois should instead look toward Wisconsin for a solid holistic approach. Act 10, which reforms government employee unions, has enjoyed popular support as well as legal validity. Gov. Scott Walker pulled pension negotiations out of the very political negotiating process and insisted that government employees come back to the reality that the promised benefits would never materialize without serious financial problems for the state. Employees must contribute more to their plans and put some skin in the game.
Other changes made on the accounting of pensions in Wisconsin have helped. Illinois' pension plans use sky-high discount rates, ranging from 7 percent for the General Assembly system to 8.5 percent for the Teachers Retirement System. Compare that with Wisconsin, where the state plan's discount rate is 5.5 percent. This seriously distorts the real cost of outrageous pension benefits.
As controversial as the changes in Wisconsin might have been, they have worked. Pension reformers in Illinois must present to taxpayers and lawmakers the legal difficulties and financial realities that require swift action to government pensions.
Joe Luppino-Esposito is a Washington, D.C.-based policy analyst at the Texas Public Policy Foundation.
Governor Walker: “No reason” changes he’s championed to public education can’t be pushed nationwide.
"MADISON — Governor Scott Walker says in an opinion column that there’s “no reason” changes he championed to public education in Wisconsin can’t be pushed nationwide....."
Walker takes on higher education in Wisconsin "...."Within the higher ed universe, this is being seen as an extremely consequential, signal event," said Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities.
A companion effort would take from professors and staff certain decision-making powers about campus issues including curriculum, research and faculty status. Combined with ending tenure in state law, the higher education proposal would be the first of its kind in the country, Nassirian said.....
“........Under the new provisions, the administration could fire them “when such an action is deemed necessary due to a budget or program decision requiring program discontinuance, curtailment, modification or redirection.”......
*ping*
"A member of the Illinois General Assembly has proposed a bill that would allow Chicago’s deeply troubled public school system to solve its massive projected budget deficit of $1.1 billion by declaring bankruptcy.
The House member is Ron Sandack, a Republican from the pleasant Chicago suburb of Downers Grove, according to WLS-TV.
“This knee jerk reaction to always say ‘let’s just raise taxes,” Sandack told the ABC affiliate. “That’s where a bankruptcy can actually be helpful.”
Sandack’s matter-of-fact recommendation comes as Chicago Public Schools, the third-largest taxpayer-funded school system in the nation, faces a grave and immediate financial crisis.
The bulk of the $1.1 billion deficit is a mammoth $634 million pension payment which will come due on June 30.
Chicago Public Schools doesn’t have enough money to make the payment. It also has no reserve fund.
Sandack’s legislation would allow Chicago Public Schools and other cash-strapped school districts across Illinois to seek Chapter Nine bankruptcy protection. Federal bankruptcy judges could then order debt restructuring, which could include partial or full release from pension obligations.
“We can’t tax our way out of this problem,” Sandack told WLS. “We need additional, broader relief.”.....
Don't bet on it. Look @ the GM Bankruptcy. Their Pension was not shut down and then ERISA stepping in which is SOP. Obama has fundamentally transformed contracts and bankruptcy laws. Funny thing is he was hands off with Detroit, their must be no gain in it for him. Chicago on the other hand...
Well, good luck with that. Philadelphia public schools could learn a lesson or two. (Every year it seems a 300 - 500 millions shortfall.)
Their solution has been to ask Harrisburg (i.e. Governor) for more money and then to attack non-stop (then) Republican governor and Repub held assembly. Resulted in Tom Wolf (newly elected Dem governor) promising his priority as "funding education for a change".
Funny thing is PA voters had been duped, because GOP ex-Gov. Corbett increased ed funding every year (thus conservatives ire), just not the extend that teachers union/public sector employee unions wanted.
Interesting....
$$$$$$$$$$$$$$$$$$$ FIFTY [50+] percent of ALL state budgets go to education - layered on top of that huge pile of money are your federal dollars (with all the mandates).
“But Oregon’s Supreme Court ruled that the promises made to those retirees must be kept.”
That’s complete crap. Legislatures are sovereigns and can change laws, including contracts, passed by previous legislatures. There is no such thing as a plenary legislature that can pass a law that cannot be changed by a future legislature. It’s why we have elections. These elections seat legislators that can modify acts and laws passed by previous legislators. If that can’t happen, then we might as well not hold elections.
These black-robed fascists in Oregon need to be impeached and removed from the bench. They’re too stupid to understand the concept of legislative sovereignty.
The problem with Illinois is that the pension programs are protected by the State Constitution. Article XIII, Section 5 of the Illinois State Constitution reads:
SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the
State, any unit of local government or school district, or
any agency or instrumentality thereof, shall be an
enforceable contractual relationship, the benefits of which
shall not be diminished or impaired.
“The problem with Illinois is that the pension programs are protected by the State Constitution.”
Indeed, that is a problem. How in blazes were the people of Illinois stupid enough to okay that amendment? Only a repeal amendment can fix this.
This isn’t an amendment, Dave. This is in the core Constitution which was passed in 1970. This wasn’t a later ill-conceived thought, this was part of the main thrust of the Constitution. This was not an accidental time bomb passed by an inattentive electorate in an off-year election, this was hammered out by those in power with full understanding of what it would mean.
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