Skip to comments.Supreme Court ruling signals trouble for state, Chicago (free stuff in the Constitution)
Posted on 07/04/2014 4:31:20 AM PDT by Libloather
The Illinois Supreme Court ruled today that subsidized health care premiums for retired state employees are protected under the Illinois Constitution, signaling potential trouble for an overhaul of pension benefits thats also being challenged in court.
Todays ruling also could affect the city of Chicagos ongoing phase-out of retiree health insurance subsidies, a program Mayor Rahm Emanuel was counting on to save millions of dollars a year, as well as legislation recently approved to modify the pension plans of city workers and laborers.
The 6-1 decision centers around a 2012 law that allowed the state to charge retired workers for health care insurance premiums, which many did not have to pay depending on how long they worked for the state.
(Excerpt) Read more at chicagotribune.com ...
No limits. This should be fun.
Caught in the gears of his own machine. Sweets to the sweet.
The problem both parties have in reducing future liabilities is that they refuse to deal with executive and administrative overcompensation
Even Scott Walker refuses to reduce number and pay/benefts of government executives...mainly because those jobs go to politicians later
Too many cheerlead union busting but fail to see big picture...until you cut the executives and administration...you never cut future liabilities
Entire states will have to go bankrupt. Then they can be dissolved, their constitutions voided. At which point the citizens of the area can reconstitute the state.
“Retired workers sued, arguing the changes violated a provision in the state constitution that declares pension benefits shall not be diminished or impaired. Attorneys for the state argued the constitution did not specifically declare health care benefits were protected.”
The exact same language and argument the unions used in Michigan when the state legislature voted to tax state employee pensions like regular income.
The Michigan supreme court ruled in favor of the state. They also ruled that the state employees could be forced to pay part of their health insurance premiums.
The Michigan high court ruled exactly opposite of what the Illinois court did.
“The problem both parties have in reducing future liabilities is that they refuse to deal with executive and administrative overcompensation.”
There aren’t enough of them to run up much of a future liability.
There are hundreds of thousands of state and local public sector workers though. That is what is bankrupting cities and states.
So when will the unions protest and take over the state capital? Will they attempt to recall the governor or the mayor? Of course not!
There are A LOT of executive and admin level jobs in all forms of govt. And their pay and benefits are a lot more costly than the normal rank and file
I unfortunately have worked in govt. This is fact.
You can fire all the rank and file regular workers...and will still go bankrupt in the same amount of time
You are probably correct...it may take entire states to collapse and have to be reconstituted
Executive and Administrative govt employee liabilty will be the tipping point...no one is firing them or cutting their benefits
“A lot” isn’t hundreds of thousands. Sorry, there just aren’t enough of them to bankrupt a state.
Well, the The teachers pension is currently underfunded by $55.7 BILLION.
That unfunded number grew by $3 billion last year alone. And this is with the state contributing 3x more money into the pensions than all of the teachers' contributions combined. In order for the teacher pension fund to just stop losing money, either the state would have to more than double what they contribute (meaning they would match teachers contributions at an insanely high 7 to 1 for their pensions, I can't imagine there is a company on earth that matches 401k contributions at 7 to 1) or teachers themselves would have to contribute 4x as much to their own pensions as they do now. It's a pretty grim situation
Now, how did it get that way?
Like any situation, it's not all black and white. But basically the teachers' negotiated VERY generous pensions a while back and taxpayers have been stuck with footing the bill.
To begin, teachers in Chicago have a defined-benefit pension. This provides retirees with a certain percentage of their pre-retirement salaries regardless of the return on pension fund investment. This is a great deal for retirees, but when the market all the investments are in is down it drains resources quickly. This is why private companies moved away from the practice of offering such pensions and now offer plans such as a 401k with possibly matching contributions. Defined-benefit pensions simply aren't financially sustainable in the long-term. Besides the benefits the pension guarantees, teachers also contribute almost nothing to their actual pension. The Chicago Teacher's pension fund says that teachers contribute 9% of their pay to their pension. In reality, the NYT and WSJ discovered that teachers only contribute about 2% of the income, with the school district covering the other 7%. In other words, teachers contribute almost nothing and the tax payers cover the rest.
The new constitutions will need to have a limit on the size of the state governments. Perhaps a limit on the number of state employees - let us say 1% of the state’s population of citizens. It would be interesting to see the figures for the number of governmental (state, county, and local) employees for each state as well as the citizen populations for each state. This might give us a clue as to which states are well managed (and not well managed).
Everything you say is right and sound until you invoke the economically meaningless distinction between employer and employee contributions to pensions.
Both percentages are fixed in contracts, so it matters not whether the total compensation package is, say $53,500 plus the cost of health insurance and other non-pension benefits, with the salary being $50,000 of which $1000 is required to be contributed to the pension and the extra $3,500 isn’t considered salary and goes to the pension, or the salary is $53,000 of which $4500 must be contributed to the pension, or the salary is $49,000 and there is a non-salary contribution of $4500 to the pension. The first you decry as the “teachers contribute almost nothing and the tax payers cover the rest,” in the second the teachers would be covering the whole cost of their pensions on your analysis, and in the last the taxpayers would be covering the whole thing on your analysis.
But this is a distinction without a difference. In each case the taxpayers are paying the teacher $53,500 for salary and pension (plus the cost of other benefits), of which $4500 is deferred compensation going into a pension plan. What is more, in each case, the pension contribution is non-taxable income, so in each case the teacher would get $49,000 in taxable income.
Which would be OK if they were consistently cranking out Einsteins and rocket surgeon graduates. As baby-sitters, it's about ten times what they're worth
How can a statute (pensions, for example) passed by one legislature bind another?
Einstein was Einstein before he ever met a teacher. Teachers don't create Einsteins, and they don't create "rocket surgeons".
Good students are born, not made.
Einstein didn’t have teachers?
So you’re saying the born good students are extinct? Or are the “educators” turning them into idiots?
Either that or about nine. Plus the judges of course.
All admin could be contracted out to office professionals (open bidding).