The Union Backed Pension Agreement

Is it Constitutional?

I am SO GLAD that retirees are refusing to allow actives to negotiate on their behalf. Pension reform cannot happen on the backs of retirees.  The Union sponsored proposal is at
Retired teachers say union plan is unconstitutional, too
By Doug Finke (
The State Journal-Register
Posted May 07, 2013 @ 06:13 PM
Last update May 07, 2013 @ 06:33 PM

An organization of retired teachers said Tuesday it believes a union-backed pension proposal is unconstitutional and vowed to fight it.

The statement from the Illinois Retired Teachers Association came as House Speaker Michael Madigan, D-Chicago, and his top pension expert raised concerns about whether the plan being advanced by Senate President John Cullerton, D-Chicago, will save a sufficient amount of money.

Cullerton has cited constitutionality as the major reason to support the union-backed plan, which will be amended to Senate Bill 2404 today and heard in the Senate Executive Committee.

The plan, negotiated between Cullerton and public employee unions, calls for changes to pension benefits for both active and retired employees. The plan applies to state workers, university employees, lawmakers and teachers outside of the city of Chicago.

Retirees would have to choose between two options. Under Choice A, retirees could continue to receive a 3 percent compounded cost of living adjustment, although the COLA would be subject to a staggered, two-year freeze. They would continue to receive state-subsidized health insurance.

Under Choice B, retirees would continue to receive the 3 percent compounded COLA without interruption, but would give up health insurance.

IRTA executive director Jim Bachman called the changes “clearly unconstitutional.”

“The legislation may be less draconian than the bill sent over last week by the House of Representatives, but it still fails the test of constitutionality,” Bachman said in Tuesday’s statement. “If our organization sits back without a fight and allows changes to the spirit of our state’s laws governing enforceable contracts, then no agreement will ever again be safe from arbitrary dissolution under the law.”

Bachman noted the IRTA created a legal defense fund last year to be used to challenge pension legislation it believed to be unconstitutional.

The IRTA represents about 35,000 people. The state Teachers Retirement System said it has about 95,000 retired members.

Cullerton said the union-backed bill is a better alternative to a reform plan passed by the House last week because public employee labor unions vowed not to sue if their compromise is enacted. The unions have threatened to try and block the House plan in court if it becomes law.

The Illinois Education Association negotiated with Cullerton on the compromise plan. IEA spokesman Charles McBarron said the union believes the plan is constitutional because it gives workers a choice. He also said it was reasonable to include both active and retired workers in the plan.

“A bill that only affects one segment we think would be less fair than one that impacts more people associated with the pension system,” he said. “We believe there will be benefits for active and retired employees because this legislation will stabilize the systems.”

Even before the Senate votes on SB2404, some are raising questions about whether it will save enough money. The bill passed by the House cuts $30 billion off of the state’s nearly $100 billion pension debt. The Senate proposal cuts it by about $10 billion.

The House bill saves about $140 billion in pension payments over the next 30 years while the Senate bill savesan estimated $46 billion.

Madigan spokesman Steve Brown said the speaker is still reviewing the plan.

“All we’ve seen is a fact sheet. There’s really no way to determine how much savings, if any, there are,” Brown said, adding that even on the surface, “there’s a huge difference” in savings between the House and Senate plans.

“Common sense would tell you a member who voted for one proposal is not inclined, probably, to vote for something that does less,” Brown said.

Cullerton, though, has argued the House plan won’t save any money if the courts declare it unconstitutional.

Rep. Elaine Nekritz of Northbrook, the House Democrats’ point person on pensions, said she’s concerned that the Senate plan keeps the same pension payment schedule that now exists and is putting pressure on lawmakers to cut other parts of the state budget. She also said she’d like to see numbers from the state pension systems to verify the savings claimed in the Cullerton bill.

Sen. Bill Brady, R-Bloomington, who earlier voted for a plan similar to the House proposal, said he, too, wants assurances the Cullerton plan will save enough money to help the state’s pension problems. Sen. Sam McCann, R-Carlinville, who voted against the bill Brady supported, said he’s inclined to support Cullerton’s plan.

“Right now, I plan to vote `yes’ on this bill,” McCann said. “I believe the pension fix has to be negotiated. The only caveat to that is if I start hearing from a lot of current retirees (who think it is unfair).”

Doug Finke can be reached at 217-788-1527.

Back to the Pending Bills page
Back to the RTAC Home page
Go to the The State Journal-Register home page.