Illinois public unions will sue regardless of pension plan chosen

James McNamee, President of the Illinois Public Pension Fund Association, wrote in response to Scott Reeder’s column, Don’t worry about pension lawsuits; worry about savings, that “An unconstitutional reform is no reform at all. It might feel good to all those who have been advocating that public employees are the problem. Not the fact that not paying what you were supposed into the retirement system.”

It’s not that public employees are the problem; it’s that the legislature over the years has voted for pensions that are unsustainable, regardless of the funding and were doomed to bankrupt the state without higher and higher income taxes paid by Illinoisans.

Excerpt from Scott Reeder:

In our litigious society, lawsuits are inescapable.

So let’s quit thinking that this matter won’t inevitability be settled in court.

The question worth asking is: What do we want to be the test case to go before the Illinois Supreme Court?

Neither Mr. McNamee nor the General Assembly knows if these pension reform plans meet state constitutional requirements. The response of Mr. McNamee intentionally missed the entire point of Mr. Reeder’s column.

That point being that public unions are going to sue the state regardless of which pension plan is implemented, so the General Assembly should vote for the best solution to pay off pension debt, which will undoubtedly be appealed to the Illinois State Supreme Court.

According to Scott Reeder’s column, over the next 30 years a defined contribution plan, similar to a 401K plan, could save state taxpayers $218B; Madigan contends that his reform measure would save $150 billion; and if the union bill backed by Senate President Cullerton and passed by the Senate Thursday were to become law, it would save only $46 billion.

Public unions do not want the test case to be a 401K type defined contribution plan going before the courts, which they do not control and which removes the debate from  the political arena where they might better force the solution toward the union backed Cullerton plan. The senator’s plan doesn’t cost the unions as much, but it doesn’t resolve the pension debt problem.

The public unions are not certain how the courts will rule on the constitutionality of the plan, despite their assurances to the contrary. The unions are merely placing a straw man illusion in front of voters to divert attention from the state income tax increases that would ultimately be required to pay for their pension plan through a progressive tax or possibly by taxing retirement income for the first time.

Also, those who are benefiting from the current system want to maintain the status quo. Taxpayers can no longer afford these pensions for public unions who work for them, regardless of how the pensions have been funded.

It’s about time state employees receive the same type of pension plans as the rest of us. Very few in private industry receive any COLA; especially not 3% compounded COLAs, which are diverting tax dollars from the services that are supposed to be provided by the state. Soon there will be nothing left for anything else but funding pensions.

Private employees do not get a vote when their private companies tell them how their pensions will change going forward. Approximately 80% of private employees have been moved to 401k defined contribution plans.

Private employees get keep what they had earned prior to the time of the switch, but from that point on receive defined contribution benefits as their pension.

What possible reason do public unions think they are entitled to more in retirement than those who pay their salary and benefits?



  1. Interesting article. What about the fact that is you put teachers and other public employees into a defined contribution plan that you then have to start paying social security tax on their income? This would also be a huge cost to taxpayers if I understand correctly.

    • Ted Biondo

      Greg, the state is about to shift their public employee pension costs to the districts. The district already pays the entire 9.4% pension for the teachers plus their retirement medical – less than 1 %. I think the new contract says the teachers will have to pay any costs shifted from the state but eventually the district will negotiate to pay those costs also – greater than 20 millions.

      Social security costs, if the teacher’s pay their half as the private employees do for Medicare and Social Security would be a big cost savings over what the potential is under current TRS with state controled mandates.

  2. Brian Opsahl


    This problem should have been addressed a long time ago BEFORE they negotiated these sweet deals…complaining now is just whinning about it…we owe these guys what we agreed to give them…you can’t just go back now because you don’t like it….most of these deals where done during republican Governorships….correct..? and yes democratic legislators..

  3. wilson

    Can Illinois print money?
    When my house went under water and I had to relocate, I was mad as Hades, but I sucked it up, lost 6 figures out of pocket and marched on.

    • Ted Biondo

      No Wilson, the state has to borrow money with its worst in the country bond rating, pay even higher interest and go deeper in debt. They “balance” their budget by borrowing more money each year than they did the previous year, paying higher and higher interest each year until some day Illinoisans may find out what may happen in a bankrupt state.

  4. Carl Benassi

    I will start out with the reasons any pension adjustment is just plain wrong. It continues to amaze me how far politicians will go to keep stealing from their hard working middle class taxpayers in order to protect and provide dollars to the wealthy in Illinois. They even go above and beyond the original 100 billion dollar deficit figure that they created by not contributing their employer share of retirement funds by proposing a bill that would steal 160 billion dollars from retirees. That is 60 billion that the retirees will give in what can be called extra taxation imposed because they happen to be public servants and spent on things like corporate welfare. Then the politicians propose that for every 100 dollars they steal from retirees, they will put 10 dollars back into the retirement funds these retiree sacrifices are supposed to fix. The other 90 dollars the retirees will have stolen from them go to fund coporate giveaways. To top it off, these people we elect to represent us will not let us read the proposal so we the people can decide whether the people we elect, and then pay to represent us, are proposing a bill we would agree or disagree with. This either proves that they are arrogant people who think they automatically know what is best for the people they represent or that they are trying to push through a bill a majority would consider morally and legally wrong. In summary: they want to pass a bill with the excuse tht it will fix the 100 billion dollar short fall they created that will only put 10% of the money they propose to steal back into the fund they say necessitates the ripoff; they want to vote on something that renders the constitution of Illinois along with contractual law void; they propose to do this without informing the public they represent of what they are set to vote on. What happened to for the people, by the people, If someone who belongs to a group that is not affected by this legislation wants to argue that they think anything that does not increase their taxes is fine, get ready, even if this legislation passes, your taxes will be increased to cover state sponsored programs for the wealthy. By the way, have you future social security recipiants noticed that federal politicians are reducing benifits with the outlandish proposal that, if the price of beef goes up, they can take beef out of your cost of living adjustment with the justification that you will probably buy chicken instead of paying more for beef. It’s called “chained cpi”. The land of the free? Divide the people on retirement issues, then conquer anyone in any retirement system. So easy to see, but also very sad, because it is working.

    • Ted Biondo

      Carl – what happened to the social security trust fund money – the Washington Bureaucrats stole that too. Welcome to the club! My kids and grand kids will be paying the national debt of $17 trillion dollars in their future taxes coupled with $100 Billion dollars in Illinois state pensions. The tax rates will have to be in the 50-60% range between the two. The government promised an unsustainable pension and they knew it. To actually fund these pensions would have required 20% of your incomes and our state income tax rate to double and there still wouldn’t be enough to pay for it all. It has to be stopped and we all are going to be effected, even those on private plans, because the promises require too much!

      • Carl Benassi

        I have been busy working on products to patent and sell to provide money for my children so I finally had time to read your response to my comments. I want you to realize that I am not concerned about money that crooked politicians take from me, I am concerned that they are permitted by, “we the people” to do this, and much more, by circumventing the Illinois and United States Constitutions. I am asking you to use the credibility you have garnered with me along with many others to fight this infringement on the basic tenet this country was founded on and has served us well for 200 plus years. We must fight this, “divide and conquer”, strategy being implemented by those in power, by using every means we have at our disposal to inform our fellow citizens who fall prey to purposeful distractions like who wins on dancing with the stars or American idol, etc.. I have written to the RRSTAR about the Illinois pension theft, social security changing to a “chained” cost of living increase, and the reduction of military pensions. These all glossed over or even supported by the corporate media. It doesn’t matter whether the politicians are democrats or republicans. Lately it seems that they are all the same. Anything they did before used to be in the game of politics, I guess. The only problem I have for our children and grandchildren is when they are allowed by us older people to get away with trashing the Constitution, whether in Illinois or at the Federal level. We often hear about The Greatest Generation, who sacrificed much, by fighting in WW II to insure that their children and grandchildren would have a good future. I too could just live my life not worrying about future generations. To tell you truthfully, it would be much easier for me not to worry about it. Because of how I was brought up, I am compelled to do my best to stop this thing from occurring. Please do not think that I am only in this for my own gain. Please understand that we must all join in together for the good of this country. You may be better at convincing the public that it is necessary to pay attention to what is going on than I am. I am very disheartened that my articles in the RRSTAR have not generated much of a response by the our fellow citizens. I hear through personal contacts that people like and agree with what I have written, but none are motivated to join the fight. Thanks Ted, I hope you get this late response. Please let me read something, written by you to the RRSTAR, that encompasses these issues beyond the local or even state level. It is for the future of our country.–Carl–

        • Ted Biondo

          I read it Carl, thanks for the vote of confidence. I usually get to write in the printed version of the paper only on local financial issues, which I have studied for two decades or state financial issues. The blog is the only place I comment about federal and international issues but haven’t done so in the last couple of months.

  5. Carl Benassi

    I also want to include a comment directed soley to Ted. I wonder if you have children and/or grandchildren? By backing any proposal that urges legislators to find a way to circumvent any constitution adopted by the state or federal government, Ihope you realize you are contributing to a slippery slope that may have dire consequences for these young future citizens. I urge you to not be hypocritical by bemoaning Obama Care as unconstitutional and then backing the lawmakers in Illinois when they are attempting to render the constitution useless not to mention contractual law along with holding them responsible to do what is morally right. I want you to know that I have respected you for things you have fought for in the past, using your knowledge of law, and I don’t know if a man I consider to be very intellegent has simply mistkenly overlooked the fact that he may be one of the ones who will be blamed for the loss of any rights guaranteed to individuals in the future due to precedent, or if you do not have any decendants to consider, you are backing this position because of your own selfish gain. I would like to read a responce worthy of what I respect in you. Please respond to the whole of my message or if you feel you can’t address it all in a thoughtful manner, please don’t respond at all.

  6. @ Carl: I suggest that you put blame where blame is deserved-the Democrat politicians who promised the Teachers’ Union far more than the State (read: taxpayers)could afford, in exchange for their votes. Remember the phrase “If it sounds too good to be true, it probably is”? So, where do we get the money to pay for these pensions? More taxes? We are already chasing businesses and workers out of this State, because of its poor fiscal policies, and excessive regulations. Higher taxation will only increase this economic flight, and make our debt worse.

    Our State Constitution should not have been turned into a financial suicide pact by Chicago Democrats.

    • Carl Benassi

      Sorry, but I think you missed the point of what I wrote. I could succumb to the “divide and conquer” ploy by replying that:
      I don’t know where my union dues are spent or,
      I think some of them are spent for pro-abortion issues, which I don’t agree with or,
      When the manufacturing industry was going well, (I worked at J.L. Clark, Micro Switch in Freeport, and Sundstrand), while going to school to be a teacher and they offered pay, benefits, matching funds for retirement and paid tuition for employees which teachers never received or,
      Teachers received lower wages with the promise of a good retirement plan or,
      The fact that Social Security benefit increases were as high as 8% a year while teacher retirement increases were constant at 3%, etc.
      But then I would be playing into their “divide and conquer” plan that pits me against you. We are probably both hard working tax paying members of the dying middle class. We are suffering now because of politicians enacting laws that made it lucrative for companies to move overseas and corporate raiders (Romney in Freeport) to profit from, as a simple analogy, them buying a company, selling the good tires on the towing company’s truck that enabled it to tow a load uphill on snow covered roads and replacing them with cheap tires that could not tow that load,, pocketing the difference in tire cost. Then, because the company changed hands, they could restructure employee benefit programs and pocket the savings’ then tax sheltering their profits in off shore accounts so they pay less tax on their income than we do. They would then file for the company’s bankruptcy, because the truck is not able to do it’s job, which results in the loss of jobs, for who, we members of the hard working middle class. BUT>>>>>>>>
      All of this history and the politics of favoring the wealthy with legislation, bought and paid for by the people in control of this country,, no longer matters. My greatest concern is, when the politicians, backed by the corporate owned media, can go so far as to trample on any rights guaranteed by any state or federal constitution is not challenged, we have failed in our due diligence in fighting for our rights. That is why I am pushing so hard for help in curbing this attempt by the powers that be to set this precedent. The citizens of this country have done pretty well up to recently, but I fear that, if we let them circumvent the constitutional protections now, what will that mean for our children and grandchildren. I am asking you, just like I asked Mr. Biondo, to look past the, “me against you” or the false Democrat vs. Republican ruse, and protect the rights of our descendants.

  7. As far as teachers’ pensions go, who made the promises, and wrote the legislation? Democrats.
    I am not arguing that Republicans are innocent in the expansion of fiscally-unsound government, but, in Illinois, they are bit players, at best.

    We need to return to a small-government approach, at both the Federal and State level.

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