Pensions and health care were big topics at the town hall meeting held on July 22 at the Levy Center. State Representative Robyn Gabel, who convened her first town hall meeting, reported that the legislature made pension changes for new employees and increased protections for persons living in nursing homes but made little progress in addressing the systemic problems of the state budget.
Rep. Gabel said the state recently passed changes to the state’s pension systems. The changes apply only to new employees and to certain unions. Under the changes new employees will not be able to retire with full benefits until age 67 (rather than the current age of 55). The maximum salary on which their pension can be based is capped at $106,800, and the plan would base pensions payments on 60 percent of final salaries, rather than the current 85 percent. The final average salary will be the average of the highest eight consecutive salary years, opposed to four, out of the previous ten years. In addition, “double-dipping,” where a government employee collects two pensions from two public entities is banned. Cost of living adjustments (COLA) will be calculated using simple interest. COLA will be three percent or one-half of the inflation, depending which is less and will apply to those who are 67 and over.
A press release issued by the Governor’s office when he signed the new law said it would save taxpayers more than $200 billion over the next 35 years. The changes, though, do not lower the state’s estimated unfunded liability to its pension funds estimated at $78 billion.
Evanston resident Jim Young raised another issue, “The legislature has done nothing to address police and fire pensions.”
Rep. Gabel agreed and said, “I know [Mayor Tisdahl] is very concerned. … I’m committed to looking at what we can do.” She said another bill, sponsored by Terry Link, might have addressed those pensions but was stalled because “negotiations broke down when municipalities would not agree to put in the full amount [of required pension contributions].”
“The gorilla in the room is the budget,” said Rep. Gabel. “A budget is passed, but it is not complete. … Some of the money we expected did not come in.” The legislature will not meet again until November, she said. This leaves the budget in limbo until after the Nov. 2 General Election.
Rep. Gabel said she felt the legislature could look into consolidating township governments and perhaps school districts. “How we grow the economy in our state [is critical]. … Our strength is our technology. We also can look at putting shopping malls near airports.” Rep. Gabel also stated that in the fiscal year 2012 about four billion dollars will be cut from the Illinois state budget, specifically health care, human services and pension payment.
Julie Hamos, former state representative and current director of the Illinois Department of Health Care and Family Services, said, “Other states have venture capital funds. Illinois can’t do this, with the downturn in the economy.”
Mr. Young said, “With our political system, as exemplified by the Blagojevich trial and the fiscal situation in the state, with our pension problems, we scare investors away.”
Rep. Gabel said new legislation offers additional protection to mentally ill persons living in nursing homes. “There will be better screening of persons coming into nursing homes from prisons and increased ratios of nurses to patients,” she said. In addition, persons who will be going to nursing homes will now be screened for HIV and Hepatitis B. She said she thought these were good measures for public health.
Ms. Hamos said additional federal Medicaid dollars have come to the Illinois Department of Health Care and Family Services (DHCFS) as part of the federal stimulus program. This “influx of additional dollars” into the State’s health-care system, she said, has given her department “a lot of opportunity to do some good.” She said the DHCFS is looking at changes not only in health-care delivery but in health. “We’re thinking about keeping people healthy, not just paying bills,” she said. In addition, in 2014, Medicaid will accept any single person who receives an income of $10,000 a year and a family that receives $30,000. By doing this, DHCFS hopes that at least half of the unemployed will have medical insurance.
The newly approved federal health-care bill, combined with several state health-insurance programs poses a challenge for the DHCFS to get residents enrolled in the most advantageous health-insurance program, Ms. Hamos said. “The challenge is to make the enrollment [in health insurance] seamless. We want to expand enrollment, reform the delivery system – which is a fragmented system – and focus on prevention and wellness,” she added.
Cook County Commissioner Larry Suffredin said he and others are continuing to see if a federally qualified health clinic (FQHC) could be established in Evanston or Skokie.
“An FQHC is the way to go,” Mr. Suffredin told the RoundTable in a separate interview. He said Evanston alone might not meet all the income and coverage eligibility guidelines, “so we may have to expand to Skokie.”
Mr. Suffredin also said he is concerned about Evanston Hospital’s reduction of the area served by its outpatient clinic. Because Evanston Hospital’s clinic will not take patients from Rogers Park, that will likely put additional burdens on St. Francis Hospital, he said.
“We need to come up with a better standard for justifying property-tax exemptions,” Mr. Suffredin told the RoundTable. “There has to be a better way of having essential services provided,” he said. But, he said, “There are still going to be gaps in the system, and we need to have responsible programs available to address them, perhaps with partnerships among health-care providers.”
Mr. Suffredin said also said he is working with Attorney General Lisa Madigan on a “regional approach” to the issue Have hospitals give better services or give us [Stroger Hospital, the main Cook County hospital] the cash. Every hospital that has a property-tax exemption has to expect to provide service.” Governor Pat Quinn has also expressed his interest in the issue, Mr. Suffredin said.
Pension Advocate Speaks OutBukola Bella, director of the Illinois Retirement Security Initiative (IRSI), told the audience of about 50 people at the July 22 town hall meeting that Illinois pensions are not overly generous and that Illinois “”ranks in the bottom 20 percent of all states for retirement benefits paid to state workers.””
The IRSI, an arm of the Center for Tax and Budget Accountability, works to make sure that pensions are adequately funded and that the state is hiring the best public workers, Ms. Bella said. The group is supported by several unions, including the Illinois Education Association, the Service Employees International Union (SIEU) and the American Federation of State, County and Municipal Employees (AFSCME).
Ms. Bella enumerated what she termed “”misconceptions”” about pensions and pension funding in Illinois.
She said the state has not made its actuarially required contributions (ARCs) to pension funds in more than a decade and its unfunded pension liability is $78 billion. She also said 78 percent of state employees do not receive Social Security, so they need to have cost of living increases.
Retirees benefit a local economy. “”Every $1 invested in Illinois public pensions is supported by $5 in spending,”” Ms. Bella said.
“”Illinois now has the highest retirement age in the country [67, with the new statutes that apply to some new hires]. … Look at the payrolls costs for keeping employees up to age 67,”” she added.
Ms. Bella enumerated four suggestions from the IRSI for addressing the pension-funding deficit: borrowing money to pay into the funds; issuing pension bonds; amortizing the debt to one [annual] flat payment; and skipping payments to other agencies.