A Look Into How Illinois Lawmakers Justified Their Pension Benefit Boosts

In my prior article, I laid out the Illinois General Assembly’s repeated unanimous, near-unanimous or strong bipartisan majority support for a series of bills increasing pension benefits for public employees from 1989 – 2000.

But what more can we learn from what the senators and representatives themselves said about the bills? Their comments are quite instructive, as, repeatedly, they deem bills “paid for” solely because there exists a plan to fund them by future generations, and they congratulate themselves for their willingness to provide additional benefits to public employees.

Transcripts can be viewed at the same GA website.  And be warned: this is a lot of material, so strap in!

Going bill-by-bill, again, working backwards, we have the “Rule of 85” in PA 91-0927 or HB1582. In the Senate transcript of the November 30, 2000 legislative session, sponsor Senator Robert Madigan states that the “rule of 85” “was a portion of the employees – or, the bargaining agreement that was reached between the Executive Branch and the state employees this past spring.” After a bit of clarifying back-and-forth, he continues,

“I would just point out that, as far as I’m aware of, Floor Amendment No. 1 represents something – or, the language that is noncontroversial. . . . As far as the rule of 85, that’s something that I’m not aware of that anyone who would be affected by that has a problem with it.” 

There was no further discussion before the bill was passed. 

On the House side, again, Rep. Barbara Currie again repeats that this is a wholly noncontroversial bill because this provision was already agreed to by the Governor’s office in AFSCME negotiations, and “All this measure does is to codify those terms in the agreement.”

Rep. Douglas Hoeft affirms his support: “I . . . urge all of the individuals to uniformly support this so we can support our workers in the State of Illinois.”

Rep. Mike Bost expressed a concern that only the rule of 85 was being passed, and not other pending benefits.

And Rep. Terry Parke questioned Rep. Currie about the cost of this provision, to which Currie replied that the increase to the state’s accrued liability would be about $280 million, but that “this isn’t gonna cost any more than the money that the Governor has already committed to when he negotiated and signed the AFSME contract.” Parke and Currie then had a long discussion in which Currie insisted that this would not increase the state’s pension contributions “until we reach the year 2010” because “the system is in such excellent financial shape” (she’s not wildly wrong here, based on the then-prevalent guideline of 80% funding; and she would have had no way of knowing that the SERS plan, at 82% funded, was at its peak in 2000 and would drop to only 43% in three short years, thus demonstrating the folly of relying on an 80% funding guideline).  In any case, Currie asserts that “the statutory contribution rates will in fact cover more than the cost of this Bill.”

Presciently, Parke then finishes his comments: “We are spending ourselves into a serious problem with our pension system and with our appropriation process. One of these days this state is not gonna have enough money to meet the needs of the citizens and I want all of you to remember the days like this when you vote to increase your pension systems to come up with a pension, with a tax bill to increase somebody’s taxes to pay for these systems that you keep passing here in this General Assembly.”

Next, again working backwards, we have the 2.2% formula bills.

With respect to the SERS benefit increase, the Senate debate centers around collective bargaining. As Senator Jones says in the May 31, 1997 transcript, “I think Senator Collins had worked hours, and many hours and years to sponsor this piece of – this legislation so that we can arrive at the point we are today. So I – I stand up gladly and proudly to – to support you in this endeavor, but I think we should know where the real, real support originally came from and how it all came about. And it came about as a result of collective bargaining legislation.” (Again, all transcripts can be viewed online.)

On the House side, there was more discussion. The CGFA’s summary notwithstanding, there were a number of benefit boosts, including a “30 and out” provision. It was explained by Rep. Poe that the bill was “funded” by the fact that during the AFSME contract negotiations, the union accepted a reduced wage increase (relative to what they’d otherwise have demanded) in order to achieve this pension benefit increase, and it was taken on faith that the bill was indeed therefore truly “paid for,” when it ought to simply have been met with incredulity instead.

And, as in the Senate, there was much celebration of the bill. Here’s Rep. Schakowsky:

“I want to congratulate the Sponsors of this legislation and all those who worked so hard to bring this about. And, as we go home to our districts and tell the state employees that live there, how much we did for them and how much we appreciate them, I think it’s also very, very important that we acknowledge how we got here today. And, it seems to me that as important as all of us and you may have been, it’s also important to acknowledge that the . . . that organized labor, that the state employees themselves who sat at the table with the collective bargaining process, sat as workers with the administration, working out all of the details, spending the hours that it took, crunching all the numbers, compromising when they needed to, pushing forward when they saw an opportunity, and it is they who should also be congratulated and should congratulate themselves for today, bringing forth a piece of legislation that is going to provide some dignity to state workers when they retire, going to provide a substantial increase in their benefits that they so sorely need and so well-deserved. So, I think that it’s . . . that this Bill, we ought to be thanking AFSME and all of the members of organized labor who participated in bringing us here today.”

This is, of course, exactly the core of the reason why public sector unions are fundamentally so ripe for abuse, when the individuals who nominally have the role of “employer” gain so much politically from providing these generous benefits.

This brings us to the Teacher’s equivalent and the transcripts of May 21 – 22, 1998. Here the path of the bill was not as simple, as the speaker delayed moving the bill out of the Rules committee.

In the House, the May 21 transcript begins with Rep Cross complaining that the lack of progress on the formula boost was “discouraging and insulting” state teachers and prospective teachers.

Subsequently, Rep. John Turner reports that teachers are calling their offices and lobbying to get the bill passed, and he asserts that “the 2.2 plan provides a reasonable and affordable increase for teachers’ needs,” which is only fair because judges and other public officials are getting pay raises.

And Rep. John Jones referenced the benefits already approved for the SERS plan the prior year, and said “the plan we’re currently debating would only raise Illinois’ school teachers’ pension benefits to that same level. By ignoring our requests to bring it to a vote, you’re telling the teachers that they’re not as valuable, not as deserving of an adequate retirement system.”

The next day, the bill finally came up for a vote, after (according to Rep. Hannig) the conclusion of negotiations with the governor’s office, the Chicago and state teachers’ unions, and the Senate Republicans. 

Rep. Hoeft summarized the costs: an increase to the state of Illinois of $5.8 billion, plus costs to school districts of $10.1 billion. What’s more, he said, “we don’t know how much this is gonna impact our school districts.” 

And, again, Rep. Schakowsky praises this benefit as the long-overdue remedy to a “retirement package that thus far has been, not only inadequate, but when you compare it to others around the country and others in the State of Illinois, inequitable, unfair.” 

Still others lined up to praise teachers and profess the need to expand their benefits to demonstrate how valued teachers are. And others, including Reps. Woolard and Hannig, justified the bill by promised cost savings for local school districts who anticipated seeing long-service teachers be replaced with lower-paid junior teachers. 

In the Senate, in contrast, there was no such celebration of their generosity toward teachers. They simply passed the bill without discussion.

Finally, we have transcripts of the 1989 COLA/pension funding bait-and-switch bill to read. Again recall that this bill was wholly rewritten through negotiations, and presented in its final form on the day it was voted upon, June 30, 1989. 

In the Senate transcript for June 30, Sen. Jones describes the bill: a funding plan paired with the compounding cost of living. 

Then Sen. Schuneman speaks:

“The pension bill has something for everybody, folks. It’s been designed in such a way that everybody’s got something in here.” 

But as Schuneman continues to speak, it is clear that he is cynical about this design and in fact he is concerned about the cost, and he continues talking about the pension debt as the equivalent to paying the minimum payment on a credit card – but gets no traction. The next speakers are far more interested in clarifying the (even more generous) benefit boosts for General Assembly members, and after some side-tracking Jones picks up his “something for everything” point but not with Schuneman’s cynicism but sincerely calling for passage, citing the governor’s support (and with no mention of costs or the funding plan): 

“Sure, there is something in here for everyone. The Office of the Governor came out very strongly for the workers of the State of Illinois and in strong support for the compounding of the increases for State Employees and retirees. So, let’s give me a favorable vote on this bill, and we will do good for the people who work hard for the State of Illinois.”

And just like that, the debate is over – other than Schuneman, none of the 12 “no” votes wanted to be on the record with the reason for their objections.

Separately, at the House, again on June 30, 1989, the bill was brought up for debate. And, well, there was no debate. Of course, there was surely debate between the negotiating parties, and there may have been debate on prior days about prior bills/iterations of this bill, but once those negotiations were complete, all but seven members of the State House dutifully voted yes.

Did they support the funding plan, and consider the compounding COLA an acceptable concession to achieve this goal? Did they support the compounding COLA and figure that the lack of enforcement mechanisms in the new funding plan meant it was a suitable cover for their objectives? There’s no way to know – and that’s all the more the case given, again (see yesterday), the lack of reporting in the Chicago Tribune.

As always, you’re invited to comment at JaneTheActuary.com!