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Board and Committees
LEGISLATION AND RSEA ACTION
August 2, 2012

Meetings

Over the past year and a half, members of the RSEA legislative and legal committee and our lobbyist, Randy Witter of Cook-Witter, have met with legislators, the legislative Commission On Government Forecasting and Accountability (COGFA), and administrative staff of the Department of Central Management Services (CMS). We have done this along with two other retiree groups that we have been working with – the State University Annuitants Associations (SUAA) and the Illinois State Employees Association Retirees (ISEAR). As a result of these meetings, there have been some successes in reducing some of the adverse affects of proposals to change pension benefits.

In the summer of 2011, the COGFA commissioned Mercer Consulting to recommend alternative approaches for increasing the cost to state retirees for health insurance. The RSEA legislative and legal committee closely reviewed the Mercer Consulting recommendations, prepared a list of questions and issues regarding them, and met with the COGFA Executive Director to review the questions and problems. Representatives from SUAA and ISEAR also attended the meeting. Following this meeting, the recommendations contained in the Mercer Report were set aside and not implemented.

During the last couple of months, representatives from RSEA, SUAA, and ISEAR have been meeting with administrators from CMS for the purpose of exchanging information. This has provided an opportunity for the three retiree groups to identify situations that CMS may not have considered in developing the health insurance premium formula. Although the premium formula has not been finalized, it appears that CMS may incorporate some features in the formula based on information exchanged in these meetings.

One example is that anyone who retired prior to July 1, 2012 will be placed in the premium formula’s highest point count category for years of service and age at retirement. This will significantly reduce the amount of premium required for many retirees who retired at an early age and/or with fewer than the maximum years of service required for full pension annuity payment.

Another example is that anyone who is age 65 or older and not eligible for Medicare will be placed in a premium formula category as though they are eligible for Medicare. This will significantly reduce the amount of premium required for those retirees.

These meetings are planned to continue until such time as CMS finalizes the insurance premium rate formula and implements the process for collecting the premiums. Although these meetings have helped to reduce the adverse affect of the pension changes, the affects of PA 97-695 and the legislative proposals included in SB1673 and HB1447 will have major negative impacts on retirees. The RSEA board will continue to oppose changes that adversely affect the pension benefits of state retirees.

Lawsuits

The RSEA board does not agree with the pension changes put into law by the Legislature and the Governor with the passage of PA 97-695 and the changes proposed in SB1673 and HB1447. Nor do we think they should go unchallenged.

Three separate lawsuits have been filed to challenge the legality of PA 97-695. Each of these lawsuits has been filed by a separate individual or group of individuals. The RSEA board has been contacted by participants in two of the lawsuits. If other legislation, such as SB1673 or HB1447, is approved by the Legislature and the Governor, additional lawsuits will likely be filed. The RSEA board is considering the options for supporting or participating in these actions.

We believe that the language in the Illinois Constitution refers to pension benefits and that there is a contractual obligation on the part of the state to honor the pension benefits offered in return for the services rendered by retirees during their time of employment; that includes the pension benefits offered and accepted by retirees. However, these are now becoming issues that will be decided in a court of law.