Dear Colleagues:

The 2006 spring session of the Illinois General Assembly is nearing its end. I have received many e-mails and phone calls about the agreement the IEA Executive Committee has reached with key policymakers. This letter is intended to answer, as clearly possible, the questions I have been asked about the six percent compromise.

IEA Supports the Six Percent Pension Compromise

On Tuesday, April 24, the present and future directors of IEA Government Relations, Rich Frankenfeld and Jim Reed, respectively, joined me, along with representatives of IFT and the governor's office, for a meeting with Illinois House Speaker Michael Madigan and members of the House Democratic Caucus.

The purpose of the meeting, the latest in a long series, was to make sure everyone in the room had a full and complete understanding of the six percent pension compromise proposal which IEA, through its executive committee, has agreed to support.

The compromise is the product of months of hard work by the IEA Department of Government Relations and the grassroots activism of IEA members statewide who have demanded the legislature address unintended consequences of SB 27, the pension bill passed at the end of the spring 2005 legislative session.

While the pension compromise proposal, which could be voted on next week, does not eliminate all of the problems associated with SB 27, it does deal with many issues raised in the last year by IEA members.

I, along with the other members of the committee, strongly urge all IEA members to contact their state representatives and senators and urge them to support the six percent pension compromise.

Key Points of the New Proposal

There are a number of positive aspects to the agreement.

1. The agreement adds the following exemptions to the current 6 percent law for TRS and SURS members:
   • Change in status from part-time to full-time
   • Overload and overtime in most instances
   • Summer school in most instances
   • Promotions in certain defined areas
   • State grants, including NBPTS
   • Pre-K - 12 teachers in newly reorganized school districts
2. The proposal includes an exemption for salaries of members 10 or more years away from retirement eligibility. This is a significant issue for many of our local bargainers. Too many board negotiators were saying they weren't going to agree to any settlement above six percent for ANYONE on the salary schedule. This provision removes that argument in almost every situation.
3. Like past ERO agreements, the new proposal establishes a five-year sunset (expiration date). In addition, collective bargaining contracts entered into, amended or renewed during this five-year period will be allowed to continue the exemptions up to the year 2014.

Disappointment on Two Key Issues

Despite the efforts of the IEA representatives, Speaker Madigan remained unyielding on two key issues:

• There is no exemption language for salary increases above six percent in a teacher's last four years due to course work taken to meet the requirement for teacher recertification or any other purpose.
• No exemptions are included for vertical movement on the salary schedule or any compensation above six percent for additional extracurricular duties during the last four years of employment. As Chicago legislators have repeatedly pointed out, the Chicago teachers retirement system does not recognize ANY extracurricular compensation for pension purposes.

Pension Compromise is Good for IEA Members

We believe this is the best proposal that can win the all-important support of Speaker Madigan, pass in the General Assembly and be signed by the Governor this year.

An IEA Board member who spoke with his legislator this week said the decision by the speaker to listen to IEA and bend on some issues is raising eyebrows. "He told me he was surprised that Madigan agreed to as much as he did," the region chair reported.

Many of our friends in the legislature stressed the fact that, since 2006 is an election year, Speaker Madigan is unexpectedly amenable to revisiting SB 27. Many legislators have heard from IEA members on the six percent issue and that has been communicated to the speaker. The IEA Executive Committee believes the pension compromise is an opportunity to make significant, positive changes in SB 27.

Alternatives

If IEA decided to pass on this opportunity, we would continue to seek pension law changes, but the leverage we have today would be gone.

As there is no election next year, there would be little motivation for policymakers to make additional concessions or, for that matter, keep the current concessions on the table.

It could (and would) correctly be said that IEA had an opportunity to reclaim some lost ground and decided not to do so. Our influence with the legislature would be diminished, and passing future initiatives, including funding reform, would become even more difficult.

Background

When the battle to fix the shortcomings of SB 27 began last summer, we knew convincing Speaker Madigan to agree to any changes would be difficult. He had staked out his position early and clearly.

In Speaker Madigan's view, since the state is not at the bargaining table when end-of-career bonuses are negotiated, the ability of districts to commit the state to footing the bill (in pension costs) for the bonuses should be limited to no more than six percent.

From the beginning, Speaker Madigan has maintained that teachers should be able to receive whatever benefits they could negotiate for themselves. However, he said he did not consider it fair that a district and a union local could negotiate an agreement with bonuses of up to 20 percent and shift the entire cost to the state.

Why Pension Reform Became an Issue

Speaker Madigan has said his goal is to reduce pension law abuse. Front page newspaper stories during 2004 and 2005 that focused on the ridiculous pensions handed some suburban district superintendents put the speaker in a very strong position with the public, and, therefore, with his members.

What SB 27 Does NOT Say

Some school district negotiators have tried to claim the new law bars districts from offering employees contracts including raises exceeding 6 percent. This is false.

There are no restrictions on salary increases that can be offered by school districts. The change in law means that districts must pay the cost of increases exceeding 6 percent in a teacher's last 4 years before retirement.

Why IEA Endorsed SB 27

If we could get in a time machine and return to spring 2005, we would find IEA consumed with a single issue. There were many understandably angry voices raised that demanded IEA take action to preserve a benefit of great importance to thousands of IEA members.

That Benefit was the Early Retirement Option (ERO)

Preserving ERO was the primary focus for IEA last spring because the IEA leadership heard from region chairs, local leaders and rank and file members who stated clearly that their top priority was keeping ERO available.

When IEA governance signed on to support SB 27, it did so because:

• SB 27 included the IEA-backed ERO pension compromise that IEA members throughout the state demanded be preserved.
• It allowed IEA members to avoid major benefit cuts.
• The IEA counterproposal to raise taxes to avoid a reduction in pension funding was a non-starter with the legislature.
• It was the only bill capable of getting the simple majority needed.

It also is worth remembering that it was only after agreeing to support SB 27 that the negotiators for IEA and IFT saw the final language of the bill. To our surprise, the final bill included language allowing the General Assembly to reduce the payments to state pension systems, including TRS and SURS.

What If IEA Had Opposed SB 27?

If IEA had opposed SB 27, it is possible that the budget package would have lacked the votes needed to pass prior to the scheduled adjournment. Keep in mind last year's budget was passed with NO REPUBLICAN VOTES (just as this year's likely will be). Because the Democrats are the majority in both houses, no Republican votes were needed.

Had SB 27 been rejected, the issue would have been decided after the spring session adjournment date when the bill would have required a three-fifths majority, requiring support from both Democrats and Republicans.

Had the legislature been forced to go into overtime and seek additional votes, it is an absolute certainty that lawmakers on both sides of the aisle would have demanded funding for additional pet programs ("pork"). Given the state's financial situation, funding for these programs, which would have added tens of millions of dollars to the budget, would likely have had to come from state-backed pension programs, including TRS and SURS.

Here's how I think our world would look today had IEA refused to approve SB 27:

• There would be no Early Retirement Option.
• End of career bonuses would be capped at 3 percent, as was Speaker Madigan's initial proposal.
• State-backed pensions would have been depleted even more to pay for pork programs needed to generate the three-fifths majority needed to pass the budget.
• IEA would have little leverage during the current session because friendly legislators who went to the mat for the compromise last year would not be advocating for IEA as they have been doing.
• IEA would be on the defensive as we try to explain opposition to legislation that curbs abuses of the pension law by ensuring that the people who award raises have to pay for them.

Even with the benefit of hindsight, SB 27 was the best option available for IEA members, certainly better than refusing to participate and allowing legislators to do whatever they cared to do to balance the state budget.

Colleagues, having negotiated my share of contracts over the years, I'm well aware that sometimes we accept less than we want because, overall, the deal we can get is better for the members than no deal at all. The executive committee believes this is the reality for IEA with regard to SB 27 and the agreement before us at this time.

I strongly urge all IEA members to use the IEA Web site to contact their state representatives and senators and urge them to support the six percent pension compromise.

Looking Ahead

In the next year, the IEA organizational priority is to bring about systemic funding reform that includes pension funding stability.

It is time to look to the future. We have a lot of important work to do on a variety of issues and it will take all of us, IEA members, governance and staff to achieve success.

Thank you for all you do, and all you will do, for IEA.

Ken