House Speaker Mike Madigan responded to a labor coalition today in a letter, which was released to the media. The We Are One coalition had asked for a pension summit next month. Madigan’s response is below:
January 30, 2013
Michael T. Carrigan, President
AFL-CIO / We Are One Illinois
534 S. 2nd Street, Ste. 200
Springfield, IL 62701
Dear Mr. Carrigan:
I’d like to respond to your January 22, 2013 letter regarding the need to develop legislative solutions to address the underfunding of the state’s pension systems. Your interest in taking a more active role on this issue is welcome.
However, your suggestion of a meeting in Burr Ridge is not timely. A summit on this topic could have been called several years ago when we first started to grapple with this complex and controversial topic. A number of proposals have advanced since that time, but we have not been able to assemble the necessary bipartisan coalition to approve a plan that would stabilize the state systems for current and future retirees.
Your letter implies pension reforms faltered because the concerns of labor were not considered. In my view, the positions of organized labor were taken into account during the 2012 legislative session. I recall no fewer than eight high-level meetings that took place with labor, legislative leaders and the governor. At that time, I felt there was little willingness from representatives of labor to draft a comprehensive, common-sense solution.
The residents of Illinois have been asked to shoulder a higher tax burden in recent years. For several years, Illinois has had to address very serious issues, including rising pension, Medicaid and state healthcare costs, all of which have contributed to the state’s massive budget pressures. The state has reduced spending in many areas, but costs for pensions continue to increase and unions representing state employees insist that salaries be increased. Many state lawmakers understand the difficult situation before us, having voted to cut their own legislative pay the last four years.
To date, we have received no cooperation from the labor unions representing state employees on addressing these challenges. In fact, these unions often have been strongly opposed to any attempt to solve the problem. For example, AFSCME recently said it will not ratify a contract that decreases the take-home pay of its employees.
It is worth noting a recent editorial points out that of the 12 most populous states, Illinois has the fourth highest average state worker pay, including overtime, and information from the U.S. Bureau of Labor Statistics and Kaiser Family Foundation shows that Illinois state workers pay significantly less for their insurance premiums than those in the private sector.
It is time for labor to come to the table with an honest proposal that recognizes the state’s serious fiscal condition and puts government employees on par with those in the private sector relative to a benefits package.
One measure introduced in the 98th General Assembly, House Bill 98 sponsored by Rep. Elaine Nekritz, includes a series of proposals that would put Illinois on a path to preserving the state’s pension systems. We must also look for fresh ideas to end the practice of state payments for non-state workers. I look forward to your thoughts on both topics.
I look forward to your announcement of support of reforms that helps the state address its budget pressures and preserves the pension systems for the employees counting on them. Please feel free to contact me if you have any questions.
With kindest personal regards, I remain
MICHAEL J. MADIGAN
Speaker of the House
Response to Illinois House Speaker Michael J. Madigan’s Summit Invitation Rejection
The following statement is attributable to Michael T. Carrigan, president of the Illinois AFL-CIO, speaking on behalf of the We Are One Illinois union coalition, in response to Illinois House Speaker Michael J. Madigan’s rejection of the coalition’s summit invitation:
“We Are One Illinois regrets that Speaker Madigan has indicated he will not participate in the Pension Summit proposed by our union coalition. Our summit is a demonstration of good faith and commitment to seeking to solve the state’s pension funding problem in a way that is fair and constitutional.
Our coalition has already put forward a plan that addresses the intertwined problems of inadequate revenues and underfunded pensions. It would end the practice of politicians shorting actuarially required payments to the retirement funds; ease state budget pressures by closing wasteful tax loopholes, especially for big corporations; and require active public employees to pay more toward the pensions they earn and rely on. Our plan would provide at least $2.35 billion a year to stabilize the retirement funds, while preventing cuts to retirees who worked hard and played by the rules.
The We Are One Illinois plan has the potential to be a starting point for participatory discussions around a pension-funding solution. Crucially, we believe that pension legislation supported by all parties is the only way to meet constitutional muster and avert costly and time-consuming court battles.
In downgrading Illinois credit last week, Standard and Poor’s warned that unconstitutional pension cuts “risk … legal challenges” that could take “several years” to resolve, delaying “improved funded ratios and budget relief.” Illinois doesn’t have years to waste. The We Are One Illinois coalition of unions remains ready to work constructively on this problem right now.
We have pointed out that the public employees and retirees represented by our unions are helpers and problem-solvers by trade—the teachers, the caregivers, the protectors and those who respond in emergencies. They are committed to being a part of the solution to the pension problem as well, but they can’t do it alone.
We were particularly surprised and disappointed that the Speaker singled out state employees from our coalition—which includes teachers, police, fire fighters, nurses, caregivers and many others—and decried their efforts to maintain decent wages and affordable health care. In terms of comparison to other states, it is true that Illinois state employees are fairly paid—just as are other public employees , and indeed unionized private sector workers in our state. Illinois is a relatively high-wage state and all of our citizens are the better for it. Further, when comparing benefits to private-sector workers, it must be noted that nearly 80 percent of Illinois public employees—including teachers, police, fire fighters and university employees—are not eligible for Social Security. Finally, every serious, academic study has shown that public employees are paid less in wages and earn less in total compensation than comparable private-sector workers with similar jobs and educational attainment.
On the pension issue, the Speaker is correct to recall a series of discussions involving the union coalition, legislative leaders and the governor nearly one year ago. We were disappointed when those discussions were abruptly halted by the elected officials last spring, and despite our invitations throughout the ensuing months, never resumed. Our Feb. 11 Pension Summit is an opportunity to get back to work.
The people of Illinois want and deserve leaders who work together to solve problems. The public employees and retirees who serve the people need and depend on the modest pensions they earn and pay into from every check. A pension-funding solution that is constitutional, sustainable and fair requires openness and dialogue from all parties.”