Update on "grand bargain", pension reform, and more

House and Senate lawmakers returned this week and continued to vote on bills from the opposite chamber in an effort to complete their work before the scheduled end of session on May 31.

Legislative update 5.19.17

House and Senate lawmakers returned this week and continued to vote on bills from the opposite chamber in an effort to complete their work before the scheduled end of session on May 31. Bills in the Senate’s so-called “grand bargain” legislative package, along with two new pension-cutting bills, were the focus of media reports throughout the week. All the pension proposals under consideration would force current Tier 1 members of TRS, SURS, SERS, and the Chicago Teachers Pension Fund (CTPF) to choose between two losing options. Tell your Representative that a choice between two cuts is no choice at all. Your efforts have stopped unfair pension proposals before, so act NOW. Please call 1-217-733-5010 and urge your lawmaker to oppose these latest unconstitutional attempts to harm your retirement security. HB 4027 would unconstitutionally reduce pension benefits and underfund the Illinois retirement systems. SB 16 was approved by the Illinois Senate, while HB 4027 and HB 4045 were approved by the House Personnel and Pensions Committee. SB 16 is part of the “grand bargain” being negotiated between Senate President Cullerton and Governor Rauner. HB 4027 and HB 4045 are sponsored by Republican Leader Jim Durkin and Majority Leader Barbara Flynn Currie. These bills, among other provisions, are based on the “consideration model.” (See SB 16 below for details.) Here are some highlights of this week’s action: ..................................................................................................................................... Update on “grand bargain” proposals The Illinois Senate took votes on many portions of the well-publicized “grand bargain” this week. Here is summary of where each bill stands: SB 1 – Education Funding Reform – PASSED SB 1 includes language for the evidence-based model. This model consolidates a number of line items under the current school funding system to create a “base funding minimum,” which is the per pupil amount a district would receive from the state. The plan also defines what an adequate level of school funding would be for each district. Under the proposal, all districts would be held harmless (not lose any funding), based upon FY 17 levels. One benefit of the evidence-based model is that, in the event of underfunding, the plan would push state dollars into the neediest districts first and wealthier districts last. The IFT did not take a formal position on SB 1 because ISBE has not released data on how each district would be impacted by the bill. SB 1 passed 35-18-3. SB 16 – Pension Reform – PASSED SB 16 would unconstitutionally reduce pension benefits and underfund the Illinois retirement systems. The measure failed earlier this session. This week it passed with 31-21-0. SB 16 would require employees who participate in the TRS, SERS, SURS, and CTPF to select between two options:

  1. All pay increases going forward would not count in calculating your pension benefit. For purposes of determining your pension, your salary would never be any greater than it is today; however, your pension in retirement would be adjusted to keep up with inflation (COLA); or

  2. Your future pay increases would count in calculating your pension benefit; however, your COLA would be cut, so your pension would not keep up with inflation in your retirement years.

No matter what you choose, you lose. In addition, the legislation would drastically underfund the pension systems in the short term by enacting accounting tricks to lower the state’s contribution. While short term contributions would artificially be lowered, long term state contributions to the systems would increase under this legislation. These provisions will only increase pressure on future General Assemblies to take further measures that will harm members of the system. SB 478 (formerly SB 13) – Property tax relief/Mandate relief/third party contracting – FAILED

SB 478 is identical to a bill (SB 13) introduced as a part of the “grand bargain.” It provides for a two-year property tax freeze with exemptions. A school district would be eligible to apply for an exemption to the property tax freeze under certain circumstances, including:

  • The district is deemed to be in financial hardship by ISBE.

  • At least 50 percent of students qualify for free or reduced lunch.

  • At least 20 percent of students receive special education services.

SB 478 makes privatization and third party contracting easier in school districts by allowing them to contract out if the new employees would earn a comparable salary. The bill also eliminates a provision that guarantees benefits for those jobs if they are privatized. Other provisions in SB 478 reduce the physical education mandate from 3 days per week instead of 5. The measure also makes it easy to contract out driver’s education services. The IFT opposes SB 478 for the same reasons we opposed SB 13. Both measures:

  • Include a two-year property tax freeze (in 2017 and 2018) that will further erode already scarce revenue streams for schools and local governments.

  • Allow school districts to privatize driver education programs.

  • Eliminate third party contracting protections that require vendors to provide comparable salary and benefits to non-instructional employees.

  • Decrease physical education (PE) requirements, allowing school districts to excuse certain students from PE and reducing the scheduling requirement from daily to three times per week.

This measure failed in the Senate, where it needed a three-fifths majority (36 votes) to pass. ​ SB 3 – Local government consolidation – PASSED This bill would require all local units of government to use consolidation procedures currently used by DuPage, Lake, and McHenry counties. SB 3 would allow counties to dissolve local governments by referendum. Examples of various consolidations include two adjacent townships merging, the dissolution of a township within a municipality, or a township absorbing a township road district. The IFT does not have a position on SB 3. SB 4 – $7 billion in bonding to pay down state bills – PASSED Illinois owes more than $14 billion in unpaid bills. SB 4 authorizes the state to sell $7 billion in bonds and use those proceeds to address the backlog. The bonds would have to be paid off within five years, increasing the state’s annual debt service of $1.1 billion. SB 5 – Pension parity legislation for Chicago Teachers – PASSED Currently, Illinois funds the normal cost of teacher pensions through appropriations to TRS. However, the state does not do the same for the City of Chicago, which puts financial strain on woefully underfunded Chicago Public Schools. SB 5 would address this problem by providing state funding for CTPF as well. This will allow the $215 million previously appropriated to CTPF to be used for teaching and learning. The IFT supports SB 5. SB 6 – FY17 Appropriations/FY18 state budget – PASSED SB 6 contains a FY17 supplemental budget and a full FY18 budget. This would fund state higher education institutions to the tune of $1.1B, bringing university and community college funding up to FY15 levels. The bill also contains a $268M increase for K-12 funding and a $35M increase for early childhood education. However, the bill would apparently phase out the Teacher Retirement Insurance Program (TRIP) and the College Insurance Program (CIP). The IFT is still reviewing this bill, so stay tuned for additional information. SB 7 – Expanded gaming/casinos – PASSED SB 7 would establish five new casinos in the following cities/areas: Chicago and the Southern Suburbs, Lake County, Rockford, and Danville. It also adds gaming positions at existing racetracks and riverboats. The state initially hopes to generate revenue through the sale of additional gaming licenses and positions, and then annually from increased gaming revenues. SB 8 – Procurement changes – PASSED This bill includes reforms intended to streamline the state procurement process. “Grand bargain” bills that were NOT called for a vote include:

  • SB 2 – Minimum wage

  • SB 9 – Revenue/tax increase

  • SB 10 – local government debt consolidation

  • SB 12 – Workers compensation

It is uncertain how this will play out. Many of the bills now move to the House for further consideration, but with just 12 days of session remaining, it seems unlikely that the House will be able to reach agreement on all of them. Stay tuned for updates. ..................................................................................................................................... Bill prohibiting loc