November 28, 2011

CAPE Awards Presented; APAC Chair Gets Award of Merit

APAC Chair Michael Moss was presented an Award of Merit by Chancellor Paula Allen-Meares.

AMONG THOSE receiving awards at the Employee Recognition Awards Program Nov. 2 were the four Chancellor’s Academic Professional Excellence (CAPE) recipients. The CAPE Subcommittee, which is part of APAC, was established by the Office of the Chancellor to accept nominations for the CAPE Awards and to recommend awardees to the Chancellor, and had recommended this year’s winners.

“APAC THEREFORE plays a crucial role in the CAPE Awards process,” said CAPE Subcommittee Chair William S. Bike. “This award is for APs only, and those receiving it can be proud that they were recognized after a rigorous process in which the subcommittee worked closely with the Office of the Chancellor. Clearly, Chancellor Paula Allen-Meares recognizes the importance of the work of APs in keeping UIC a top-quality University.”

THIS YEAR’S CAPE Award recipients were Ann Kathleen Barnds, Assistant to the Director, College of Urban Planning and Public Affairs; Rhea M. Begeman, Administrative Director, Assistant to the Head, Department of Emergency Medicine; Marilyn Foster Kirk, Associate Vice Chancellor for Development; and William J. Susinka, Executive Assistant to the Provost.

ESTABLISHED IN 1988, the CAPE Award recognizes the demonstrated excellence of Academic Professional staff, encourages their professional development, and indicates UIC’s regard for APs’ contributions.

ALSO AT the employee recognition event, Michael Moss, Chair of APAC, received an Award of Merit. This campus-wide honor recognizes outstanding Academic Professionals and support staff for sustained excellence in performance and commitment to their job. Moss is Assistant Director, Cost and Analysis, Grants and Contracts, Office of Business and Financial Services.

No Action on Pension Bill So Far

Senate Bill 512 sponsored by Rep. Tom Cross, would set three tiers of pension benefits and costs for current employees..

By Christy Levy
UIC News

THE ILLINOIS House of Representatives adjourned earlier without taking action on legislation affecting pension benefits for State employees, but the bill may be re-examined this week.

SENATE BILL 512 advanced during the General Assembly’s spring session but never reached a vote. It was revived in the fall veto session with an accompanying amendment.

THE BILL, sponsored by Rep. Tom Cross (R-Plainfield), would set three tiers of pension benefits and costs for current employees who pay into the State Universities Retirement System.

OPTIONS INCLUDE:

  • Pay significantly more to maintain the current level of benefits;
  • Pay less and receive reduced benefits;
  • Set up a self-managed plan.

A $110,000 cap on salary earnings used to calculate pensions and an increase in retirement age to 67 would apply to employees hired after Jan. 1, 2011.

UNIVERSITY OF Illinois leaders and legislative liaisons joined representatives from other public universities and State employee unions in Springfield to work against the bill.

“WE CONTINUE to press for a solution to the state’s pension funding concerns that doesn’t unjustly place the entire burden on the backs of our hardworking employees,” President Michael Hogan wrote in a Nov. 1 email to the campus community.

“I ENCOURAGE you to contact your legislators using your own personal email and resources to assert the importance of a fair solution and the problematic aspects of SB 512.”

IF PASSED the bill, which would not affect those already retired, would become effective July 1, 2013.

QUESTIONS HAVE been raised about the legality of changes to retirement benefits for current state employees due to a clause in the Illinois Constitution reads: “Membership in any pension or retirement system of the State ... shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

FOR MORE information on the proposed legislation, visit:

christyb@uic.edu

Cutting Pensions Would Lead to U. of I. Brain Drain

President Michael Hogan offered a thoughtful and well-reasoned argument for opposing Senate Bill 512.

By Michael J. Hogan
University of Illinois President

IT’S EASY to understand the Law of Unintended Consequences, the unanticipated and sometimes perverse effects of actions--sometimes government actions--that were ostensibly intended to provide a public good.

EXAMPLES OF this principle abound, but one that is often noted these days has to do with Senate Bill 512, now under discussion in Springfield, to fund the State's pension obligations to public employees. Leaders in Illinois public higher education worry that the proposed solution could have unintended consequences of substantial proportions. Their employees, many ineligible for Social Security, would have to accept diminished benefits or ante up significantly more to maintain the benefits they were promised.

THE LIKELY effect of Senate Bill 512 in its current form will be a brain drain from these public universities and their surrounding communities.

THE UNIVERSITY of Illinois is one of the largest and most productive employers in the State. Twenty percent of our workforce is pension-eligible and that includes some of our most distinguished faculty, physicians, and staff--many of whom would leave if onerous changes are made in the pension plan.

MAKE NO mistake about it, these outstanding and civic-minded employees have choices in a competitive market place not bound by geography. Those who leave may take their externally funded research projects worth millions of dollars with them and take their pension, too. Replacing these employees with comparable talent will be difficult so long as other universities are offering better benefits.

SUCH AN exodus would devastate our ability to meet the U of I's teaching, research, public service, and health care missions, and would slam the brakes on what has consistently been a vibrant economic engine for this great State.

AMONG THE top teaching and research universities in the world, the U of I and its three campuses directly and indirectly generates more than 150,000 jobs and more than $13 billion in economic impact for Illinois, a return of $17 for every $1 that the state invests in the U of I. We are the place that pioneered transistors, LED lighting, and MRI technology. We are the place that educated the founders of YouTube, PayPal and the NFL. None of this happens without great people. Entrepreneurial scientists pushing the boundaries of knowledge. Award-winning authors, artists and teachers, skilled health care professionals. Other universities in other states are hungry for this talent. We must work hard to retain them.

BUT THE proposed pension funding legislation will make it difficult to do that, and to recruit other highly professional faculty and staff. It will damage the public university system in Illinois, and in so doing, damage the State, as well.

AS WE contemplate the State's strategic advantages, how does it help in the long term to reduce funding for higher education, including two public Tier One research campuses, and provide substantially less compensation to its talented workforce?

WE KNOW that a solution to the pension problem is urgently needed, and we are willing to contribute our fair share to an equitable solution. But it needs to be based on the principles of equity and shared sacrifice, to which we can all contribute without doing great damage to the educational institutions central to the well being of our students and to the State's place in a knowledge-based economy.

I URGE legislators to consider the interests of our employees, the impact of their departure, and the threat that weakened public universities pose to the future of the State. The potential consequences are far too great to ignore.

(THIS ARTICLE originally appeared in the Chicago Sun-Times on Sunday, Oct. 30. Reprinted with permission of the Office of the University President.)

IGPA Analyzes State Economy for University Senate

The Midwest is leading the nation during the recovery in its manufacturing (above) and agricultural sectors, said David Merriman, Associate Director and Professor, IGPA.

By William S. Bike

DAVID MERRIMAN, Associate Director and Professor, Institute of Government and Public Affairs (IGPA), and Associate Dean for Faculty Affairs and Professor, College of Urban Planning and Public Affairs, spoke on “Illinois’ Economic and Fiscal Challenges and Responsibilities” to the University Senate recently.

MERRIMAN EXPLAINED that the University’s Board of Trustees requests such analyses from the IGPA.

HE NOTED that Illinois and the Midwest are “recovering slowly” economically—yet the “Midwest is doing well relative to the rest of the nation,” he said. “In fact, the Midwest is leading the nation during the recovery in its manufacturing and agricultural sectors.” Still, he noted that three years after the start of the previous two recessions, “The Midwest had already experienced expansion of over ten percent. Not this time. The recovery looks more like tunneling out of a hole than a vertical assent.”

MERRIMAN SHOWED an Unemployment Rate graph, in which Illinois unemployment mirrored that of the U.S. “The Illinois economy is like the U.S. economy,” he said. “So it’s not like Illinois is doing something wrong. Our economy is keeping pace with that of the U.S.

ILLINOIS, another chart showed, was running a Consolidated Budget surplus in 1997 and 1998. Today, there is a deficit of about $9 billion.

ANOTHER CHART showed total State expenditures from 1997 to 2012, which revealed that the share to higher education has dropped from about seven percent to about four percent.

MERRIMAN CONCLUDED that the State asking for a recission (return of funds from the University) was not out of the question.

APAC Meetings Scheduled; All Invited

ALL APs are invited to the monthly APAC meeting at 12:30 p.m. on the second Wednesday of the month. The next meeting will be held Wednesday, Dec. 14, in Room 5175 of the College of Medicine Research Building, 909 S. Wolcott. Every other month, a meeting is scheduled in Room 2750 of University Hall on the East Campus. Also scheduled are meetings Jan. 11 in Room 2750 UH, Feb. 8 in Room 5175 CMRB, March 14 in Room 2750 UH, April 11 in Room 5175 CMRB, May 9 in Room 2750 UH, June 13 in Room 5175 CMRB, July 11 in Room 2750 UH, Aug. 8 in Room 5175 CMRB, Sept 12 in Room 2750 UH, Oct. 10 in Room 5175 CMRB, and Nov. 14 in Room 2750 UH. For information, call (312) 996-0306.

SPARKY VISITS--UIC mascot Sparky the Dragon visited the APAC News office at the College of Dentistry recently to remind Academic Professionals about varsity winter sports at the University. He was greeted by APAC News Editor William S. Bike.

Join UIC United (SUAA)

UIC UNITED, the UIC Chapter of the State Universities Annuitants Association (SUAA), has announced a new dues program for UIC employees: Sign up for dues deduction from paychecks at $2.75/month, a discount of $0.25/month. Follow the link in the first sentence for an online application. First, check the button next to Current Employee (after Employment Status). Then scroll down to the drop-down menu after College/University and display University of Illinois at Chicago. The following will then be displayed blow below "You can have dues automatically deducted from your regular paycheck." For more information, contact Membership Director Sue Sindelar.

THE ORGANIZATION will host its annual holiday luncheon, Wednesday, Dec. 7, at 11:30 a.m. at the Parthenon Restaurant, 314 S. Halsted St. Cost is $20. Valet parking is complimentary. All are invited. For more information, contact Donna Knutson at (630) 579-6134, markanddonna@uicalumni.org, or Rose Kirk at (630) 852-7316, rfrankirk@comcast.net.

Zipcars Available on Campus

GET 24/7 access to a Zipcar, a car-sharing service with autos parked at several locations around campus, across the city, and around the world. After joining Zipcar, you can reserve a car online, let yourself in with a Zipcard, and drive. Hourly and daily rates include gas and insurance, with no maintenance or car payment charges. Campus locations are 501 S. Morgan St., 761 W. Polk St., 820 S. Paulina St., and 901 S. Paulina St. For information or to join, go to www.zipcar.com/uic.

Car Pool Help Offered

UIC HAS partnered with iCarpool, an online ride-matching service, to bring employees a new transportation program that helps find ride sharing opportunities.

BY CARPOOLING instead of driving alone, participants can save 50% or more on travel and vehicle expenses, improve outdoor air quality, and reduce greenhouse gas emissions by 3,000 lbs. per year.

TO REGISTER, visit http://bit.ly/UICiCarpool and setup a profile using your @uic.edu or @illinois.edu address. Note that this is not directly linked with your netid. For additional details, visit http://commuter.uic.edu/icarpool orhttp://sustainability.uic.edu/icarpool.

EMPLOYEES ARE encouraged to take advantage of the iCarpool program by registering as a participant; check back frequently to find carpool matches as site membership increases.!

FOR INFORMATION
contact icarpool@uic.edu or (312) 413-7440; the UIC Office of Sustainability, sustainability@uic.edu, (312) 413-9816; or the UIC Commuter Student Resource Center, commuter@uic.edu; (312) 413-7740.

The Continuing Crisis

Rhode Island State workers rallied against pension cuts at the state capitol.

Editor’s Note: “The Continuing Crisis” is a section of APAC News which links to news pertinent to the state budget crisis and other financial matters as they affect the University and Academic Professionals. These news outlets are not affiliated with or endorsed by APAC.

PUBLIC SAYS use taxes and cuts to solve State budget crisis. See KFVS-TV Channel 12, http://www.kfvs12.com/story/15787794/illinois-voters-favor-some-cuts-some-taxes-to-fix-broken-budget.

RHODE ISLAND may be the canary in the coal mine concerning Illinois pension woes. See Oct. 23 New York Times, http://www.nytimes.com/2011/10/23/business/for-rhode-island-the-pension-crisis-is-now.html.

UNIVERSITY PRESIDENTS in the State universities system sent a letter to Governor Pat Quinn, with copies to Senate President John Cullerton, Senate Minority Leader Christine Radogno, Speaker of the House Michael Madigan, and House Republican Leader Tom Cross, expressing the presidents’ interest in continuing to work on options and alternatives to SB512. Se the States Universities Annuitants Association site at http://www.suaa.org/ for more information. You can read the full letter by clicking here: http://www.suaa.org/assets/pdf/Quinn11.4.11.pdf?PHPSESSID=28f0fdb5585221ef4deab04474b5c780.

Vol. 4, No. 10 November 2011

ISSN 1946-1860
Editor: William S. Bike
Writing Staff: Ivone De Jesus, Gail Mansfield, Tomeiko Sewell

Chair: Michael Moss
Vice Chair: Jennifer Rowan
Secretary: Jacqueline M. Berger
Treasurer: Virginia Buglio
Webmaster: Jeff Alcantar

October 25, 2011

OCTOBER 2011 APAC News, Vol. 4, No. 9

Welcome to the October, 2011 edition of APAC News!

***NEW***
Click the tabs above ("Resources", "Careers", etc) for additional pages.
New content includes employee discounts, training classes and more!
Click "APAC News" from any page to return here.

State, University, Union Leaders Examine Our Pensions in IGPA Summit

George Bush appointee Jeffrey Brown (left), a Professor of Finance at U of I Champaign-Urbana, and Alicia Munnell, a financial advisor to the Bill Clinton Administration, achieved a rare consensus on what to do about Illinois’ public pensions crisis. UIC Philosophy Professor Anthony Laden (center) urged that employees and pensioners be treated with fairness.

By William S. Bike
STATE AND University of Illinois officials and union leaders came together Oct. 3 and 4 at the Union League Club of Chicago for “A Bold New Dialogue on Public Pensions.”

ORGANIZED BY the University of Illinois Institute of Government and Public Affairs (IGPA), the event kicked off Oct. 3 with keynote speaker Alicia H. Munnell, a professor of management sciences at Boston College.

Pension Reform: How to Get from Here to There

MUNNELL, WHO was a member of the President’s Council of Economic Advisers and assistant secretary of the treasury during President Bill Clinton’s administration, spoke about “Pension Reform: How to Get from Here to There.”

SHE NOTED that public pensions “were not considered a problem before the 2008 economic meltdown” and that, even before then, the “funding ratios for Illinois State pensions have been consistently below average. Among the bottom ten state pension plans in the nation, Illinois has three of them. Why is Illinois in this mess? Because the State has not been paying its annual required contribution (ARC), so the hole just gets worse every year.”

A DEFINED benefit (DB) plan is a traditional pension, an employer-sponsored retirement plan set up to pay a fixed monthly amount to eligible employees during their retirement years. The employer takes complete control over investment risk and portfolio management and determines each employee’s retirement benefit based on a formula—generally expressed as a percentage of annual salary—that takes into account the employee’s age, years of service, and earnings.

IN A defined contribution (DC) plan, the employer sets up an individual account for each participant and contributes a fixed amount to each account annually. The amount of each person’s monthly retirement benefit is not fixed nor guaranteed because it depends on the amount of money in the individual’s account at retirement. Also, the individual must bear responsibility for all investment risk and portfolio management. Individual retirement accounts (IRAs) and 401(k)s are examples of DC plans.

MUNNELL SUGGESTED moving away from DB pensions for State employees but did not go so far as to call for a complete switch to DC plans. Instead, she called for a hybrid plan.

“CONTEMPLATED CHANGES in Illinois pensions are driven by budget problems, not human resources needs, but State employees must be protected no matter what system is used,” she said. While some people today go so far as to suggest that government is not necessary, “You have public workers because you need tasks done and you need good people to do them,” Munnell stated. “Any pension changes should be fair and benefit all groups: current employees, new hires, and retirees.”

WITH ILLINOIS not contributing its full ARC, the State has been selling pension obligation bonds to raise money for the pension fund. Proponents believe Illinois can come out ahead in this approach by investing its money in the stock market and getting a better return than the interest it will pay on the bonds.

“THAT’S CRAZY,” Munnell said.

MUNNELL ALSO noted that cost of living adjustments (COLAs) “get these plans in trouble.” The COLA in Illinois plans is 3%, compounded annually. She noted that Minnesota, South Dakota, and Colorado recently reduced their retirement plans’ COLAs.

SHE OFFERED a two-fold solution to Illinois’s problems. “Illinois should start contributing the full ARC and revise its benefit structure,” Munnell said. “The goal should not be to hack at the plan but to set up a solid plan. I think State employees are entitled to their benefits. First, something has to be done on the tax side like raising taxes to fund the ARC. Then change the benefits.”

RESPONDING TO Munnell was Jeffrey Brown, professor of finance at the University of Illinois at Urbana-Champaign (UIUC) and a member of the federal Social Security Advisory Board under President George W. Bush.

WHILE TYPICALLY Munnell and Brown have occupied opposite sides of financial arguments in their careers, when it comes to Illinois retirement benefits they are—surprisingly—in almost complete agreement, showing that bipartisan solutions are possible.

BROWN ALSO does not favor Illinois going to a full DC pension, explaining that “people’s financial literacy is low. So they need a guaranteed ‘floor’ amount in pension funds for life. Supplementing that by an intelligently designed DC supplemental contribution would be ideal. A DB/DC model would be better than forcing people to choose one or another.

“THE CONVERSATION should be changed from ‘us vs. them’ to designing a good pension program,” Brown concluded

ANTHONY LADEN, an associate professor of philosophy at the University of Illinois at Chicago (UIC), spoke next and focused on fairness. He noted fairness in designing a pension plan should not be a cursory check “to be brought in at the end, but should be part of the discussion from the beginning.” He also said that, for constructive dialogue to happen, both sides should be prepared and willing to “look at each other face-to-face and explain their position in a way in which facts and evidence are used to back up their position and explain why they feel as they do,” rather than the modern-day way of arguing in which each side tries to demonize and shout down the other.

Collaboration is the Key to Success

Nick Berardino of the Orange County Employees Association. Pension reform in Orange County, CA, is considered a model because officials reached an agreement between organized labor and a 100% conservative Republican county board.

KEYNOTE SPEAKER on Oct. 4 was Nick Berardino, general manager of the Orange County Employees Association. Pension reform in Orange County, CA, is considered a model because officials reached an agreement between organized labor and a 100% conservative Republican county board. Berardino spoke on how “Collaboration is the Key to Success.”

PENSION REFORM agreement appeared even more difficult in Orange County because “taming” public workers was “a cause célèbre for conservatives in our area,” Berardino said. “They were getting elected on a platform of ‘We’re going to get these damn public employees under control.’ That made an already dollar-difficult issue into a football for political opportunists.

“YOU HAVE to be careful that you don’t get so polarized that you can’t deal with pension reform,” Berardino added. “Accepting reality isn’t fun, but that’s what both sides have to do to reach a workable agreement. Conservatives have to accept that collective bargaining isn’t going away. Labor has to accept that some pension reforms are necessary to preserve defined benefits. Everyone has to accept that pensions are complicated and most people—particularly journalists and lawmakers—don’t fully understand how they work.

“BOTH SIDES have to start selling this idea of accepting reality early on if you really want to reach a solution,” Berardino continued. “Or you can just beat each other up verbally. It’s easy and it pleases your constituents, but it doesn’t solve anything. Politicians and union leaders get elected by saying ‘no compromise.’ But you have to move away from this. We said to the elected officials, ‘No matter how much you dislike us, we aren’t going anywhere, so learn to work with us.’

“WORKERS HAVE a much better shot at protecting our benefits if we’re part of forming a solution,” Berardino said.

BERARDINO EXPLAINED why he believes public pensions are in crisis today. “In the late 1990s, most public pension accounts were well funded,” he said. “There was pressure to improve benefits,” and with the economy booming and plenty of money in government coffers, “enhanced formulas were adopted with overwhelming bipartisan support.”

WITH THAT no longer the case, conservatives pressured public employees to give up traditional DB plans. “Conservatives basically said, ‘Our money is in 401(k)s, and we’ve lost 70% of our retirement benefits. So should you.’”

WHILE THAT obviously was not a good deal for employees, a deal that could be sold to both sides was the approach Munnell spoke about earlier: Orange County and union officials created a hybrid retirement plan for employees that was part DB pension, part DC.

THE ORANGE County plan closely resembles a plan some have talked about for Illinois. County employees could decide whether to keep their old plan, or they could select the hybrid plan. Under the hybrid, Orange County employees would retire later and collect less from their pensions due to a reduced pension formula, but during their working years they would pay less each month toward the DB part of the plan and could decide how much to contribute to the DC part, with the county matching their DC contribution up to 2% of salary.

“WE COULD sell that to our members because we showed mathematically how some could actually make more money in retirement with the hybrid,” Berardino explained, noting the City of Atlanta has adopted a similar plan.

“IF WE as Americans can accept the core principles of fairness, we can come up with a solution,” Berardino concluded.

ACCORDING TO Public Sector Inc., an online forum on public sector issues and taxes published by the Center for State and Local Leadership at the Manhattan Institute for Policy Research, “The Civic Committee of the Commercial Club of Chicago has floated a pension reform for Illinois that would essentially copy private sector practice—existing pension plans would be terminated, and existing workers would keep their benefits accrued to date while receiving future benefits in a new pension system.”

RESPONDING TO Berardino was Tyrone Fahner, president of the Civic Committee of the Commercial Club of Chicago and a former attorney general of Illinois elected as a Republican. Fahner said, “We’re trying to protect the benefits of retirees, we’re trying to protect the benefits of current employees, we want to bring parity between new and current employees, and we want to protect citizens by stopping the politics of kicking debt down the road.”

PARITY BETWEEN State employees hired on or after January 1, 2011 and State employees hired before that date has become an issue because benefits for the two groups are so different. In the State Universities Retirement System (SURS), for example:

Employees hired before January 1, 2011

Retirement is age 60 with eight years of service, 62 with five years of service, or any age with 30 years of service; early retirement age is 55 with eight years of service. Vesting period is five years. Final salary is considered the average of the highest four consecutive years or the last four years, whichever is greater. Retirees get 80% of final average salary, no matter how high the amount.

Employees hired on or after January 1, 2011

Retirement is age 67 with ten years of service; early retirement is age 62 with ten years of service. The vesting period is ten years. Final salary is considered the highest eight years within the last ten years of service. Pensions are capped at $106,800 per year.

FAHNER SAID his organization is pushing to bring up Senate Bill 512 in the Illinois General Assembly in the fall; under this bill, State employees could either pay more for benefits or pay less but get fewer benefits. He noted that “If 512 is passed, we don’t want to see any benefits taken away that have already been earned.”

THE NEXT speaker was Henry Bayer, executive director of the American Federation of State, County, and Municipal Employees (AFSCME) Council 31.

BAYER SAID, “Orange County took some pension holidays, in which the county didn’t pay its portion of pension contributions at certain times. Here in Illinois, we took a pension sabbatical. In 41 years, we have not increased our pension funding level.

“SO LET’S confront reality,” Bayer continued. “The problem here in Illinois is not a pension problem. The average Illinois pension is $32,000—and these employees have no Social Security coverage. We have a funding problem, not a too-much-pension problem.

“THE STATE Constitution says the State will not impair the benefits of employees,” Bayer explained. “Officeholders swear to uphold the Constitution. You can’t just toss this aside. All of the plans put forth are to cut pension benefits. None advocates funding the pensions. We do need changes; we acknowledge we have a problem. Our members are being asked to sacrifice; we have in the past. The last time the pensions were reformed, our members agreed to forego a pay increase and agreed to work longer for full retiree health benefits. We have shown our willingness to step up to the plate.

“THE BILL changing benefits for new employees was a disgrace,” said Bayer. “It was passed quickly, with one speaker for each side given three minutes. We are more than prepared to face reality, but there is nothing in the proposed pension changes that requires the State to act responsibly.”

SOME HAVE said reducing State employee pensions would be preferable to raising taxes on corporations to gain the money to fund the pensions because the corporations are “job creators.” Bayer addressed this point by noting that “three-quarters of the corporations in this State pay no income tax. It drives me crazy to read in the paper when some business threatens to leave the State if they don’t get a tax break. Motorola and Caterpillar got tax breaks, and then left.

“WE’VE got to stop giving out handouts to these businesses that pay lower taxes than individuals,” Bayer said. “We earned our benefits. They get giveaways.”

BERARDINO ECHOED Bayer, noting “the money that we’re saving business here through giveaways is not being spent by them here. They are taking the jobs offshore.”

Small Group Discussions

SMALL GROUP discussions came next. Darren Lubotsky, who holds appointments at GIPA and in the Department of Economics at UIUC, led the discussion about “Pensions as a Component of Total Compensation.”

DAVID MERRIMAN, associate director of IGPA and a professor of public administration at UIC’s College of Urban Planning and Public Affairs (CUPPA), led a discussion on “Principles of Fairness and Options for Reform.”

THE STATE Constitution has a “non-impairment” clause that protects government employees’ earned benefits, saying such benefits cannot be reduced or altered. It is therefore constitutionally unclear what changes can be made in employee pensions. Does that mean future costs and benefits to current employees must remain unchanged, or does it mean accrued benefits are safe, but costs and benefits can be changed for current employees going forward? J. Fred Giertz of IGPA, a professor of economics at UIUC, led a discussion on this topic.

GROUP LEADERS for the small group discussions summarized conclusions their groups reached.

MERRIMAN SAID, “Tone down the rhetoric. Make the process as transparent as possible. There should be agreed upon, objective facts as to what the situation is with the pension plans. And whatever is arrived at should be arrived at with consensus, not rammed down anybody’s throat. There should be common goals. Whatever solution is achieved has to be realistic in the share of the budget it takes. Retirees should be guaranteed a basic minimum level for a decent retirement.”

LUBOTSKY NOTED pensions should be thought about “in the context of the total compensation package. Whatever we spend on pensions, we want to maximize the value for everyone. And all involved should realize that most people aren’t equipped to make good pension decisions, so design the pension to insulate people from bad decisions.”

GIERTZ CONCLUDED that “underfunding has to become a thing of the past. There has to be a buy-in to the concept of shared sacrifice and shared contribution. We could make changes in areas not covered by the non-impairment clause, such as retirement healthcare. And we have to think about the transition process—how do we get to where we want to be from where we are?”

Legislators Panel

State Senator Kwame Raoul (right) said, “We legislators must point the finger inward. It’s the Legislature’s fault—both parties—not the fault of the employees.”

A PANEL consisting of Representative Darlene J. Senger (R-96th, Naperville); Representative Elaine Nekritz (D-57th, Northbrook); State Senator Bill Brady (R-44th, Bloomington); and State Senator Kwame Raoul (D-13th, South Side, Chicago) offered opinions on the State pension crisis.

SENGER ASSERTED, “When we think of pensions, we shouldn’t think so much about the numbers, but about the people. I welcome everyone’s input so we can make better decisions. It’s important not to use scare tactics about pensions. We want to come up with something sustainable for the long run.”

NEKRITZ BELIEVES that “to solve the budget crisis, we have to use every arrow in our quiver—raising revenues and making cuts. I don’t believe we can take a certain percentage of the budget and say we can’t touch that. We must find a way to make the pension system sound.”

BRADY WANTS the State to make some hard choices. “We have an unfunded liability of $85 billion. Thirty-nine states have revised pension reforms similar to Senate Bill 512—employees have to ‘pay to stay’ in Tier 1; there will be lower contributions with lower benefits in Tier 2, with a DC plan. The State ideally should increase its contributions to pay down our pension debt and decide on no more pension borrowing. The State should pay in cash, on time.”

RAOUL TOOK exception to the views of some that the problem can be laid at the feet of former governor Rod Blagojevich. “This is not a problem that came about with the Blagojevich administration,” Raoul said. “It’s decades old. We legislators must point the finger inward. It’s the Legislature’s fault—both parties—not the fault of the employees. To fix the problem, we have to use an appropriate process that observes our State constitution.”

Wrapup

UNIVERSITY PRESIDENT Michael Hogan had the final word of the day. “Pension uncertainty is hurting us in recruiting the best and brightest employees for the University of Illinois,” Hogan said. “If we lose the ability to attract the best and the brightest, there will be serious consequences not only for the University, but for the State.

“AS PRESIDENT of one of the State’s largest employers, I’d be remiss if I didn’t advocate for a stable pension system for our employees,” Hogan concluded.

IGPA IS a public policy research organization based in all three University of Illinois campus cities. Its mission is to improve public policy and government performance. For more information, visit www.igpa.uillinois.edu. For the IGPA report on the pension summit, see: http://igpa.uillinois.edu/state-summit-2011/report.

Senate Bill 512 May be Resurrected

HALTED IN the spring, Senate Bill 512 would require current employees to choose among three retirement plans. They could stay in the current plan, but contribute more to it; they could choose to participate in the second-tier plan that has reduced benefits; or they could participate in a new 401(k)-style defined contribution plan.

IN A joint press release last spring from House Speaker Michael Madigan (D-Chicago) and House Minority Leader Tom Cross (R-Oswego), it was stated that the proponents still supported the concepts of the SB512 and planned to hold meetings over the summer in order to have a bill ready for the fall Veto Session beginning Tuesday, Oct. 25. Senate President John Cullerton (D-Chicago) believes the bill to be unconstitutional, however.

THE ORIGINAL provisions of SB512, if enacted, would either increase employee pension contributions without an increase in benefits, reduce employee contributions and decrease benefits, or move employees from a defined benefit plan (your monthly pension payout is guaranteed) to a defined contribution plan (your monthly pension payout is not guaranteed).

PRESIDENT MICHAEL Hogan testified against SB512 last spring, stating that it would harm the University irreparably in terms of our ability to recruit and retain employees.

APAC HAS continued to actively oppose the legislation. It has compiled more than 1,200 comments on pension reform submitted by Illinois voters in response to the original provisions of Senate Bill 512, and has distributed the comments to all State Senators and House Representatives associated with the bill--along with the message “these provisions would harm us irreparably, impairing our State institutions’ ability to recruit and retain high caliber employees.”

AS CITIZENS of the State of Illinois, University employees may contact your State Representatives and State Senators directly, although not via a University phone. Let them know what you think about pension reform. You do not have to be an expert on Illinois politics to call. You can search for your district officials by clicking http://www.elections.il.gov/districtlocator/DistrictOfficialSearchByZip.aspx.

NIU TODAY, a Northern Illinois University publication, wrote a plain language article that provides more information: http://www.niutoday.info/2011/10/04/pension-issues-likely-to-resurface-in-veto-session/.

THE STATE Universities Retirement System (SURS) has a webpage devoted to pending legislation: http://www.surs.com/shepherd.surs?flk=Legal&shp=63.

ACTUARIAL FIRM Buck Associates says SB512 could cost taxpayers $34 billion more and urged lawmakers not to adopt it. See http://finance.alphatrade.com/story/2011-10-19/MRW/201110191514MRKTWIREUSPR____0811413.html.

Senate Bill 2512 (SB 2512) Introduced October 25th



Synopsis As Introduced
Amends the General Provisions Article of the Illinois Pension Code. Provides that the total retirement annuity of a participant in a State-funded retirement system who first became a participant before January 1, 2011 shall not exceed $120,000 per year. Provides that a participant who first became a participant before January 1, 2011 is not eligible to retire from a State-funded retirement system before reaching age 62. Provides that these changes do not apply to a participant who is eligible to retire within 8 years after the effective date of the amendatory Act, regardless of whether the participant actually retires during that period. Effective immediately.

You can keep track of SB 2512 here: http://tinyurl.com/sb2512.

APAC Facelift: Notice Our New Look?

 A snapshot of APAC's new homepage.

BUILDING ON the success of our APAC News website – which has received over 25,000 page hits since launching this past January – we have worked to rebuild the APAC Homepage from the ground up. The goal was to include more information of interest to campus APs, and to make information easier to find. Expanded content includes “Resources” and “Careers” sections, which have information on employee discounts, professional certifications, training classes, and more. We have also integrated the APAC Homepage with APAC News. Take a look around by clicking on https://sites.google.com/site/uicapac/ or on the links across the top of any page (clicking “APAC News” from any page will return you here).

DO YOU like the new look? Hate it? Have other thoughts? Please click here and let us know: https://illinois.edu/fb/sec/9009796.

IT WILL take less than five minutes to submit your feedback, and it can help us make sure our new website meets your needs.

New AP Senator

Marelet Kirda, UIC's newest AP Senator.

SINCE SEPTEMBER 2006, Academic Professionals (APs) have had three elected representatives on the UIC Senate. Recently, one of the AP Senators, Jill Davis, resigned from UIC to pursue other opportunities, leaving one AP Senator position vacant. The new AP Senator is Marelet Kirda, Assistant to the Executive Director, Center for Advanced Design, Research, and Exploration (CADRE).

APAC Meetings Scheduled; All Invited

APAC Members at our September, 2011 meeting.
Seated on the front row are Jill Davis, Virginia Buglio, Jen Rowan, and Michael Moss.
Standing in the rear row are Bill Bike, Deidre Rush, Susan Varghese, Agnes Kawalec, Tomeiko Windham Sewell, Jacquie Berger, Yair Rodriguez, and Margaret Moser.

ALL APs are invited to the monthly APAC meeting at 12:30 p.m. on the second Wednesday of the month. The next meeting will be held Wednesday, Nov. 9, in Room 2150 of University Hall on the East Campus. The December meeting will be held Wednesday, Dec. 14, in Room 5175 of the College of Medicine Research Building, 909 S. Wolcott. Also scheduled are meetings Jan. 11 in Room 2750 UH, Feb. 8 in Room 5175 CMRB, March 14 in Room 2750 UH, April 11 in Room 5175 CMRB, May 9 in Room 2750 UH, and June 13 in Room 5175 CMRB. For information, call (312) 996-0306.

AP PROFILE

APAC member Lee Jackson.

Lee Jackson Pushes for Fairness in Civil Service, SURS Changes

LEE JACKSON has worked as a Program and Policy Analyst for the Department of Pediatrics for almost three years. He likes the everyday rigors and challenges he faces there.

“I AM most productive when there are deadlines to meet or high-priority projects to complete, and there is no shortage of either in my position,” he said. “I really like the sense of accomplishment that comes from meeting challenges and removing obstacles that come up in day-to-day work.”

JACKSON BECAME involved with APAC about six months ago because he heard about the critical issues looming for APs, namely Civil Service conversion and possible State Universities Retirement System (SURS) pension changes. He felt that APs had not been given enough of a voice on these issues and wanted to get involved and become “part of the effort to promote awareness and fairness on these and other issues for APs,” he said.

JACKSON WOULD like to see APAC achieve some of its primary objectives regarding the Civil Service audits, such as protecting AP seniority and “assisting in ensuring that positions that are true AP positions remain that way,” he said. Jackson is proud of the fact that APAC has worked tirelessly to protect employee pensions. “APAC has shown itself to be an organization of action, just as I had hoped for,” he said.

IN HIS free time, he plays the bass guitar in a cover band, follows politics, practices martial arts, and enjoys spending time with friends and family. Jackson and his wife, Emilie, have an 11-month-old daughter named Hazel.

JACKSON IS looking forward to continuing to create awareness of important issues and affect positive change for APs at UIC through APAC. Get to know Jackson a bit more at the next APAC meeting Wednesday, Nov. 9, at 12:30 p.m. in Room 2150 of University Hall on the East Campus.

--Ivone De Jesus