Archive for May, 2011

Pension Reform is Moving Quickly in Springfield

Friday, May 27th, 2011

Last year the General Assembly saved taxpayers billions by prudently altering pension and health care benefits for future hires, but Illinois’ taxpayers are still on the hook for more than $100 billion in unfunded liabilities.

Since last fall, the Aurora Chamber has partnered with the Illinois Is Broke Campaign to bring attention to the staggering financial burden caused by the state’s retirement systems. Now, we are hours away from a debate and vote on SB 512.

Speaker Mike Madigan, Minority Leader Tom Cross, Representative Darlene Senger and others, have co-sponsored SB 512, a historic proposal that puts Illinois back on the path towards fiscal solvency. The legislation reforms the pension system for current employees.

The legislation is schedule for debate on the floor of the House of Representatives and votes are expected within hours.

To contact your elected officials in Springfield, visit: http://action.illinoisisbroke.com

 

From the Chicago Tribune:

SPRINGFIELD — Over strong union protests, the Illinois House’s top two party leaders won preliminary approval today of far-reaching pension changes that would reduce the benefits for many public workers throughout the state, including Cook County and Chicago.

Government workers would get to choose from three different options: Keep the same level of benefits and pay more, pay nothing more and get less in benefits, or enroll in a 401k-styled retirement plan.

House Speaker Michael Madigan, D-Chicago, joined Minority Leader Tom Cross, R-Oswego, in testifying that Illinois must address the “severely underfunded” pension systems that are owed $80 billion, a debt so deep that it competes with spending on essential government services.

“Every time a dollar leaves the legislature and goes over to the state pension systems, that’s a dollar not available for education, for social service programs and for whatever else the legislature chooses to appropriate the spending of money,” Madigan said.

The speaker said he was “fully supportive” of the legislation that moved to the House floor, hailing it as “forward looking.”

But Madigan conceded at one point that supporting the politically volatile legislation “will not be for the faint of heart.”

Cross, the measure’s main architect, acknowledged his proposed three-tier pension plan is a “very scary topic” because it impacts the lives of teachers, university workers, rank-and-file state employees, state lawmakers and most city of Chicago and Cook County employees.

Chicago and downstate fire and police were exempted. So were county and city workers outside of Chicago who are members of the separate Illinois Municipal Retirement Fund, which has about 90 percent of its debt covered, officials said.

The five retirement systems covering state government have less than 40 percent of their debt covered, a problem that ranks Illinois as one of the worst of the worst funded of any state.

“We can’t run from it,” Cross said.

The state’s pension systems put a strain on overall state funding when annual payments are made at the current level of $4.5 billion a year, Cross said. He warned that payments could grow to $20 billion a year by 2045. That’s when the state hopes to have the pension systems at the 90 percent funding mark. He estimated his three-tier plan could reduce that $20 billion expected payment by half.

Ken Swanson, outgoing president of the Illinois Education Association, challenged the proposal, saying the problems exist because “our pension systems have been used as a credit card” by politicians who have shirked their responsibilities to make adequate payments into retirement payments for decades.

One provision that “troubled” Rep. Karen May, D-Highland Park, was that the out-of-pocket payments eventually could go up if workers opt to pay more now in order to maintain their current level of pension benefits when they retire.

In particular, she questioned why the worker payments would be based on a percentage of an employee’s salaries for the first three years and then recalculated every three years. She called the three-year review a “last-minute wrinkle” and voted against the bill in the House Personnel and Pensions Committee.

No one would lose any of the benefits they earned up to the point when the legislation would become law, but future benefits would drop.

The bill advanced to the House floor on a 6-2 vote, with one lawmaker, Rep. Dan Biss, D-Evanston, voting present.

Rep. Elaine Nekritz, D-Northbrook, supported the legislation, saying the state needs to use “every arrow in its quiver” to reduce the pension debt.

Former Illinois Attorney General Ty Fahner, a Republican who serves as president of the Civic Committee of the Commercial Club, supported the legislation, saying 95 percent of Illinois citizens are paying for the costly state pensions. But he said those growing expenses for people who get state pensions “simply crowd out” state support for the needs of many more. He dismissed as “nonsense” the arguments of opponents who contended the move was an assault on worker rights.

Disagreeing was Henry Bayer, who heads AFSCME Council 31, the union that represents the largest portion of state workers. He charged the captains of industry who belong to the Commercial Club get astronomical salaries and pensions. And he maintained it would take 1,000 years for a state worker making typical $23,000 a year pension to make as much as the annual retirement benefits of industry big shots.

“Those are the people who are telling us our pensions are too high,” Bayer said.

Bayer dismissed charges that he is creating “class envy,” and he maintained the legislation is unconstitutional because it breaks a guarantee in the Illinois charter that says pensions cannot be diminished.

Lobbyist John McCabe testified against the legislation on behalf of the pension funds Cook County government and the Forest Preserve District. He said the changes could hurt employees because they may face skyrocketing payments every three years, calling the bill’s provisions an “almost a reckless attempt to fix this.”

Six Cook and Chicago public employee plans would be covered, including the one for Chicago schoolteachers.

The changes in the state pension systems would begin July 1, 2012. The city of Chicago and Cook County funds falling under the changes would begin Jan. 1, 2013. Judges would fall under the new provisions following their next election, pending approval of an amendment attaching the judicial system.

Deadlines Loom in Springfield

Friday, May 20th, 2011

With just a couple of weeks left in May, Springfield is abuzz with priorities: redistricting, workers’ compensation reform, budgeting and, quite possibly, gaming expansion. While there have been a few highlights this session, much remains to be done.

Senate Bill 7 was passed and (as we write this) awaits the Governor’s signature. SB 7 is the answer to education reform that many say is an example for other states to follow.  It is a legislative package that has been thoughtfully negotiated by education reform groups, teachers unions, and school management. A substantial body of research shows that teacher effectiveness is the number one in-school factor determining student learning—more powerful than class size, school facilities, curriculum, or other factors.

One of the most critical laws passed in the last legislative session will require teachers’ evaluations to be based largely on how well their students are doing academically (see Public Act 96-0861). SB 7 takes the next logical step to honor and respect effective teachers by incorporating performance in personnel decisions to keep the best teachers in the classroom. The initiative also includes critical steps to protect precious learning time by adding transparency and balance to the contract negotiation process, reforms that are considered imperative to enabling lengthening of the school day and school year.

For more information on SB 7, click here.

Senate Bill 621 is also a momentous legislative package that has passed both houses and was sent to the Governor’s desk. This plan allows the community to create a new elementary school focused on math and science that students from any of the City’s school districts could attend. Hosted at Aurora University, the program is a collaborative effort of AU, East and West Aurora school districts as well as Indian Prairie and Oswego school districts. Other groups and business leaders, including the Aurora Regional Chamber of Commerce, have been working on this effort for a number of years in an effort to offer science, technology, engineering and mathematics curriculum to eligible students.

For information on the program, visit AU’s Institute for Collaboration’s website.

With a number of budgets being discussed in Springfield, all eyes (and ears) are focused on what will come out of it. For instance, the House and Governor are $2 billion apart with the Senate in the middle – at $1 billion less than the Governor’s.  With a target date of May 31 for adjournment, much will have to be agreed upon. If all business is not concluded by midnight, a supermajority of three-fifths is required to pass legislation and would effectively put the Republicans in the driver’s-seat. While the Senate plan includes nearly $34.3 billion, the House is at $33.2 billion. The budget and redistricting remain.

Additionally, the deadline looms for Democrats to present and have approved redistricting maps for legislative districts. While as of today, the Senate Democrats have released their draft proposal of redistricting, the House Democrats have yet to release any plan. This process is required every decade, following a census. With Democrats in control of both State houses and the Governor’s office, they control the process.

As a result of the significant growth in the Aurora area, it appears that a new district will result to the south of Aurora. As proposed by the Senate, this new district – the 49th – would incorporate Oswego Township and stretch east and south toward Joliet and Plainfield. For a view of the Senate-proposed remap, visit http://www.precinctmaps.com/downloads/DRAFTcook_and%20collar_districts.

While SB 1349 amending the Workers’ Compensation Act failed last month in the Senate, a new proposal is winding its way through Springfield. SB 1422 is on its third reading in the Senate and works to address some of the issues that create a less-than-friendly business environment in Illinois. The one remaining sticking point is the issue of establishing a fair standard to make employers responsible for injuries that occur on the work site while safeguarding them from injuries that do not. By most key measures, Illinois has the second highest costs in the nation. And as numerous reports have disclosed, the system is open to fraud and abuse. Workers’ Compensation Reform is necessary.

Gaming expansion is being discussed yet again in Springfield – in an effort to help add revenue to the State’s checkbook. The Aurora Chamber – in partnership with other chambers throughout the state – opposes this measure. Currently, there is talk of adding new casinos, including one in Chicago, while allowing racetracks the opportunity to add electronic gaming in their facilities. We believe that this will leach from existing venues and negatively impact the local economy.

Finally, if you are interested in hearing more about the State’s financial issues, join us on July 21 at Gaslite Manor in Aurora. Illinois Comptroller Judy Baar Topinka will address the membership and discuss “Spending is the Issue for Illinois.” For information, visit the Chamber’s website at http://greateraurorachamber.chambermaster.com/directory/jsp/events/EventPage.jsp?ccid=20&eventid=2589.

Education Changes Headed Through State House

Monday, May 9th, 2011

This week, the Illinois House of Representatives takes-up the legislative package that the Senate approved unanimously last month after months of negotiations led by Sen. Kimberly Lightford (D-Maywood).

Senate Bill 7 is the product of long, intensive deliberations by education-advocacy groups, teachers, parents, school administrators, business leaders, state education officials and lawmakers.  Among other things, the package of reforms includes plans for:

  • A survey of schools’ learning conditions, to help guide practice and policy decisions. The surveys would elicit input from students, parents and teachers alike, starting in the 2012-13 academic year.
  • Stronger local school board training in such subjects as financial oversight, accountability and fiscal responsibilities. The legislation mandates at least four hours of training for every new board member, within a year of his or her election.
  • A number of changes regarding teachers’ employment. These include giving instructors’ classroom performance a far greater role in decisions about tenure, layoffs and dismissals.

The Aurora Regional Chamber urges all parties to continue working together toward a final product that places children’s learning and development at the center of all decisions related to school policy and practice. We thank Representatives Linda Chapa LaVia and Darlene Senger and Minority Leader Tom Cross for their leadership and co-sponsorship of the legislation in the House.

To contact your elected officials, visit our website.

Urgent Alert on Workers’ Compensation Legislation

Thursday, May 5th, 2011

THE CALL TO ACTION: May is the most important month in the legislative calendar. The opportunity for significant change in Illinois’ workers’ compensation laws is before the General Assembly this month. In collaboration with the Illinois Chamber of Commerce, we ask you to engage your legislators on this important topic throughout the month and commit to making contact this week.

Now is the time to take positive, proactive steps to communicate with your legislators about the need for change and how important this matter is to employers. If we are going to be successful with this endeavor it is important that you, the constituent, take the initiative to let your legislators know about your experiences, your costs, your concerns, and your frustrations with our broken system.

Make sure the legislators with whom you communicate understand that this is an issue where failure is not an option, nor is tokenism. Specifically, we do not want a repeat of the 2005 “fix” that resulted in Illinois’ workers’ compensation rates increasing by nearly 17 percent while at the same time average rates across the country declined by 19 percent.

It has been two weeks since Republican Senator Kyle McCarter’s proposal (SB 1349) failed to receive the 30 votes necessary to approve the measure and send it to the House of Representatives. Although the resulting tally was disappointing, the vote total was telling. All members of the Senate Republican Caucus voted for the legislation. The expression of Republican solidarity was significant.  The McCarter bill was drafted at the behest of, and with guidance from, the business community. The Illinois Chamber members’ initiatives were incorporated in the bill, as were elements known to be favored by the Quinn administration.

Click here to access our Grassroots Action Page and to Take Action on this issue.

EMPLOYERS GOALS:

Workers’ compensation covers many facets, but four have been at the heart of most discussions. A critical point to note is that none of the fundamental objectives employers desire for Illinois can truly be characterized as impractical, outlandish or out of the norm.

1. Causation: Twenty-nine states have a higher standard for determining whether workers’ compensation claims are attributable to workplace accident or injury. Illinois’ current threshold for the cause of a workplace claim is deemed to be as little as 1 percent. An Illinois employee is only required to show the work accident or duties could or might have been a cause of the injury, or could or might have been a cause in aggravating, accelerating, or exacerbating a preexisting condition to any extent or degree.

2. AMA Guidelines: Thirty-seven states require the use of American Medical Association guidelines to determine disability awards. The AMA has published guides to create a standard for rating physical impairment. In states that use AMA guidelines, the rating is used to determine the monetary award for any permanent disability. In Illinois an arbitrator, not a doctor, determines the extent of the impairment. Arbitrator rulings are neither consistent nor uniform. The process for determining impairment, and thus the extent of the cash award, is very subjective and causes workers to seek an attorney to obtain a high award.

3. Employer-Directed Care: Twenty-one states require the employee seeking care for a workers’ compensation case to use the physician selected by the employer from among a list of “authorized” physicians. Nineteen of the remaining 29 “employee choice” states limit the employee’s options to physicians within a managed care-type network. Thus, it is clearly obvious that employer-directed medical care in a workers’ compensation setting is the standard practice across the nation.  This means that employers are allowed to direct injured workers to specific doctors, hospitals, and specialists that the business or insurance company has determined to be the most effective in achieving successful medical outcomes. Securing health care networks and managing care for workers has proven to help secure better medical outcomes and lower employer costs. It is perfectly logical to extend the use of employer-directed medical care to worker compensation cases as well as health insurance cases.

4. Strengthen Utilization Review: Utilization review is a routine and standard process used by employers, insurance companies, and claims administrators to determine if proposed treatments are medically appropriate and necessary.  The review process is based on previous reviews and best practices. Utilization review is an effective way to ensure better medical outcomes, and control unnecessary costs. It is a widely accepted review process used in group health insurance and Medicare. Utilization review should be applicable to all medical treatments. Many of the more debilitating and costly services are provided outside of therapy care. Utilization review helps reduce the need for additional future care, avoids greater disability of the worker and helps get the worker back to work in a timely fashion. In states with a medical fee schedule in place for workers’ compensation calculations, the standard application of utilization review is critical to ensure cost savings are not undermined by the application of an extraordinary number of treatments.

For the full article from Doug Whitley, Illinois Chamber president, visit the Chamber’s website.

To send a message through the Chamber’s grassroots action center, visit here.