Senate Week in Review Oct. 3-7: State Facility Closure, Financial Forecast and Pension Reform

Please note: The Week in Review is written by a staff member of the Illinois Senate Republican Caucus and approved by legislators. It is meant to provide constituents with information about legislative action and activities during the week.

Springfield, Ill. – The Commission on Government Forecasting and Accountability (COGFA) held its first public hearing this week on the Governor’s plan to close seven state facilities and lay off more than 1,900 state employees, said State Sen. Ron Sandack (R-21st, Downers Grove). An Oct. 5 hearing was held in Rockford on the proposed closure of the Singer Mental Health Center, while the next scheduled hearings will be held Oct. 12 in Murphysboro and Chester.

Hearings on the proposed closures will continue as planned, despite an Oct. 3 ruling by arbitrator Edwin Benn against Gov. Pat Quinn’s proposal to shutter seven mental health, developmentally disabled and correctional facilities. Benn found the plan violates a 2010 contractual agreement Quinn made with the American Federation of State, County and Municipal Employee (AFSCME) union.

Per the cost savings agreement between Quinn and the union, the state’s financial obligations to AFSCME were reduced; in exchange the Quinn Administration agreed not to lay off any AFSCME members through June 30, 2012, or to close any state facilities through July 1, 2012.

According to the ruling, Benn stated that Illinois “is in violation of the clear language of the relevant Cost Savings Agreements.” Benn’s ruling also contradicted statements by Quinn, who has contended he was not appropriated the funding necessary to keep the facilities operating. Benn noted: “The state made contractual promises not to lay off employees represented by the union and to not close facilities prior to July 1, 2012. The state simply must keep those contractual promises. A party is not excused from previous contractual obligations by claiming that it presently can no longer afford to meet its obligations.”

The Governor’s Office announced plans to seek to stay and vacate the arbitrator’s decision, while pursuing the matter in the court system. Despite the arbitrator’s decision, the state is moving forward with public hearings on the proposed closings at the following facilities:  Chester Mental Health Center and Murphysboro Youth Correctional Center on Oct. 12; Mabley Developmental Center in Dixon on Oct. 17; Logan Correctional Center in Lincoln on Oct. 26; and Jacksonville Developmental Center on Oct. 24.

'Clouds on the Horizon'

A monthly briefing issued by the Commission on Government Forecasting and Accountability, highlighted gains in state revenue during September, but cautioned the state’s economic outlook may not be so promising.

According to COGFA, revenues increased in September by $350 million, even though it was a poor month for federal reimbursements. Due to the Democrats’ January tax hike, personal and corporate income taxes increased over last year’s returns. The report also noted the sales tax is performing well, despite economic indicators cautioning consumer weakness. 

However, COGFA revenue manager Jim Muschinske cautioned in his report that “[T]he forward view of revenues should be tempered with the realization that some clouds on the horizon will serve to stymie a repeat of similar growth.” Muschinske noted that the state will not enjoy the revenue boost from last year’s tax amnesty program.

Additionally, the report also cautioned that high unemployment, coupled with “the current economic ‘soft patch’ ” would impact future revenue performance. Muschinske said, “Looking ahead, continued economic malaise would jeopardize even modest revenue expectations well into FY 2013.”

Reigning in Pension Fraud

Also this week, a bill was filed that will help give more accountability to taxpayers by reconstituting the City of Chicago and Cook County pension boards.  House Bill 3827 will also require pension boards statewide to refer any suspected fraud to the local authorities.

In recent weeks, the Chicago Tribune and WGN TV have reported numerous pension abuses, including when the Chicago Municipal Employees’ Pension Fund allowed four members of the fund to keep their pensions after they falsified documents regarding pension eligibility. These abuses unveiled by the media were not reported to the proper authorities for investigation or punishment.

House Bill 3827 would mandate any board member or employee of any retirement system or pension fund created under the Pension Code or the Illinois State Board of Investment, who has reasonable suspicion to believe that fraud is being committed or has been committed, to either notify the board or the State’s Attorney of the county having jurisdiction of the alleged fraudulent activity.  Additionally, if a board, fund member or employee fails to report apparent fraud, he or she can be held liable for repaying any losses to the fund that occurred as a result of the breach, and/or be removed from his or her position.

The measure also creates a fresh start with regard to the city and county pension fund boards. The numerous boards of the City of Chicago Pension Funds will be standardized and have seven members.  All current board members’ terms will expire, and going forward the board will consist of four mayoral appointees who are not members of the fund or elected officials, two elected active members and one elected annuitant member. 

The board of the Cook County Pension Fund will also be reconstituted. The new board will be made up of nine members, including five appointees of the County President who are not members of the fund or elected officials, along with two elected active members and two annuitant members. 

The scandals associated with the boards of the state pension systems during Governor Blagojevich’s tenure prompted the General Assembly to enact similar reforms in 2009.  Public Act 96-6 reconstituted the boards of the state pension system by giving the governor more appointments and allowing the current appointments to expire.  

The legislative sponsors plan to move legislation during the upcoming veto session, as well as House Bill 3813, which was filed last month.  HB 3813 will repeal a portion of a law passed in 1991 that allowed city employees to retire with a city pension that was based on their much higher union salary.  HB 3813 will only allow union officials to accept a city pension based on their city salary when they left service.

“I have contacted Leader Cross and indicated to him that I will be the Senate sponsor of HB 3813, since I have introduced identical legislation, SB 2497, in the Senate,” Sen. Sandack said.  “I have also submitted legislation, SB 2498, that will end state legislative pensions for new legislators beginning in 2012.

“It is clear there can be no budgetary fix or, more importantly, true financial recovery for Illinois absent pension reform, which is something I have identified and focused upon for quite some time now. That is why I have taken these steps to introduce and sponsor legislation that can start to have an impact on reforming the system.  We are at a crossroads as a state and the question is whether or not common sense will soon prevail.”

Sen. Sandack said that he was encouraged by the recent pension reform efforts, however small they may be, saying that these steps are moving in the right direction. 

“Public pension reform is long overdue,” Sandack said.  “There can be no true financial recovery for our state's woeful financial condition without it.”

Additionally, Sandack said that even businesses in the state are now telling legislative leaders that public pensions must be reformed in order for Illinois’ financial condition to improve. 

“These businesses urging the legislature to take action on pensions are big employers who have options to relocate to Wisconsin or beyond,” Sandack said. “The far better, financially sustainable solution rather then their relocation would be consistent and sound policies for all businesses, creating an environment where businesses naturally want to stay.  In return, it will create good jobs and breathe life into the state. The future financial success of Illinois depends on pension and budget reform and it must happen now.”

Springfield 101 Oct. 13

Lastly, Sandack is hosting a free Springfield 101 meeting in October aimed at providing constituents with information on the legislation process and a budget update. 

The event will be held on Thursday, Oct. 13 at 7 p.m. at the Downers Grove Village Hall. During the meeting, attendees will learn how an idea becomes a law, what can stop a good bill from becoming a good law, and why it can be difficult to pass meaningful reform in Springfield. Sandack will also give a Springfield update on what is occurring with budget and pension reform.  Free informational brochures will also be available.

If you would like to attend, please RSVP to Sandack’s district office at 630-792-0040.