Welcome to the first issue of my weekly newsletter, the Reick Report, for the 104th General Assembly. Over the coming session I hope to keep you informed about the workings of the Illinois General Assembly and how it affects you because after all, it’s your money. My goal is to keep you informed and not clog up your inbox with hysterical headlines, but to bring you clear, in-depth, legislative updates and generally avoid the click-bait style “news” that you find on social media.
I’ve long said that more of what government does that affects your life happens in Springfield than in Washington, and this year will be no different. In the Reick Report, you can expect insights into:
• Our broken pension system and my proposals to fix them for workers and taxpayers.
• The work we must do to protect children within the child welfare system.
• Holding the line on spending your tax dollars.
• Local events, causes and goings-on here in McHenry County.
Communication is a two-way street, and your feedback on the issues we discuss in the Reick Report shapes the work I do on your behalf. I encourage you to let me know your thoughts, questions, or concerns.
Thank you for your trust and for the opportunity to serve you. I look forward to staying connected and sharing more updates soon.
Inauguration: Once More Unto the Breach!
The Inauguration ceremony for the 104th General Assembly was held on January 8th. The ceremony is a very scripted affair, with nominating and seconding speeches generally being formal and unremarkable, and usually take a conciliatory tone, offering compromise and cooperation to the other side.
I was selected to offer a speech to second the nomination of House Minority Leader Tony McCombie for Speaker and, having sat through four such ceremonies where the extended hand of compromise was drawn back as a bloody stump, I chose to take a different tack.
I took the opportunity to point out the autocratic nature of the Governor and the majority party and pointed out that the choice before us was more than perfunctory, it was an opportunity to reject the status quo and move toward a new path of reform. The reaction was mixed and vocal, as you can see if you’ve got about 6 minutes and want to watch the speech here.
The Sugar Rush of Stimulus is Over, Our Pension Crisis Isn’t
Illinois has an estimated $140 billion or so in debt to the five state pension funds. When you add the debt owed to the other public pension funds (City of Chicago, Chicago Teachers, Downstate Police and Fire, etc.), the number is considerably higher. If you’re a regular reader of the Reick Report, you have read about our pension systems – their underfunding, my proposed fixes, and the legislative proposals to enhance benefits. I’ve been writing about our pension mess since 2014, and if you want some background, click here, here, here and here.
On top of that, we have a two-tier pension system. Back in 2010, the General Assembly enacted the “Tier II” pension program, which was meant to be a more sustainable pension plan from the standpoint of cost to the state, with more modest benefits, a less generous Cost of Living Adjustment (COLA) and a longer time for members to become vested. As happens far too often when passing legislation, the General Assembly did not consider the downstream effects of what it was doing when this law was passed.
In addition to the friction that comes from having two people doing the same job with one having a “Cadillac” pension and the other one getting something significantly less, Tier II doesn’t meet Federal requirements known as “safe harbor” provisions, which are rules that ensure that employees receive a pension benefit of at least what they’d receive if they were part of the Social Security system.
Changes must be made to bring the Tier II benefit structure into compliance with safe harbor, otherwise Tier II retirees will have a cause of action to recover the shortfall, and that shortfall will be paid by local taxpayers, not the state.
In the last General Assembly, House Democrats introduced their version (H.B. 5909)of a fix that includes a wish list of pension enhancements that we call a “Christmas Tree” bill. These are bills that get loaded up with all kinds of shiny (and usually expensive) proposals in order to garner enough votes for passage. (The bill has been re-introduced in the 104th G.A. as Senate Bill 2.) The major changes for the three largest systems (and the increase in accrued actuarial liability (AAL) as projected by COGFA) include:
- Safe Harbor Fix – Maximum pensionable salary (salary cap) is tied to 100% of the Social Security Wage Base (SSWB) (Projected Debt Increase: $13.038 Billion)
- Final Average Salary (FAS) – Changes the calculation of final average salary as the basis for benefits to the highest 4 salary years over the last 10 years of service. Currently, the Tier 2 FAS is the highest 8 salary years over the last 10 years of service. (Projected Debt Increase: $2.811 Billion)
- Cost of Living Adjustment (COLA) – Increases COLAs to 3%, simple (not compounded). Current Tier 2 COLAs for all systems other than JRS and GARS are the lesser of 3% and ½ of CPI-U simple. (Projected Debt Increase: $9.8 Billion)
- Normal Retirement Age (NRA) – Normal retirement age changes to revert to Tier 1 (all systems) (Projected Debt Increase: $20.677 Billion):
- SERS Regular Formula changes from age 67 with 10 years of service to age 60 with 8 years of service.
- SERS Alternative Formula changes from age 55 or 60 (position-dependent) with 20 years of service to 50 with 20 years of service.
- TRS changes from 67 with 10 years of service to 55 with 34 years of service.
All told, the changes in the bill add up to an increase in our accrued pension liability of $59.958 billion which will be added to the current balance of $140 or so billion that we now owe. To begin to pay for the increase, beginning in FY 2027, we’d have to come up with an additional $1.132 billion over and above the billions we pay each year. And remember, the above numbers are only for TRS, SERS and SURS. The added debt for Judges and the General Assembly, not to mention the plans for the City of Chicago, Chicago Teachers and Downstate Police and Fire (among others) will substantially increase that amount. This is your money.
New Office Hours
Beginning in January my District office will be open on Mondays and Wednesdays from 8:30 AM to 4:00 PM. We’ll be available on an appointment basis on Tuesdays, Thursdays and Fridays, just call (815) 880-5340 or email me at reick@ilhousegop.org if you’d like to make an appointment.
Winter in McHenry County is Hot
Even in this bitter cold there are ways to stay active in McHenry County. Check out these fun ideas from cross-country skiing to bowling.
It’s Almost Groundhog Day, Again
In 1992, Woodstock was the site of filming for the movie “Groundhog Day”, and the city’s annual celebration of the movie and its role in it has become the focal event of winter. Click here for more information about this year’s celebration.