EIU Annuitants Association

IV. Presentation by Jeff Hough, SUAA Legislative Liason: Legislative Liaison Hough offered updates on the following issues:

• SB 1313 (Retiree Health Care Premiums): Signed into law by Governor Quinn in June, SB1313 eliminates premium-free state-provided health benefits for retired state and university employees, lawmakers, and judges. In the future, retirees will be required to pay premiums for their health care -- the rates to be determined annually by the Director of CMS, following review and approval by a bipartisan panel of legislators. The initial annual premium is now being determined by CMS in consultation with AFSCME. Factors to be considered in determining rates: (1) annuitant's retirement income (social security will not be included in assessing that income); (2) age at retirement; (3) Medicare eligibility; (4) years of service. Also factored into the calculation of rates will be the special circumstances of annuitants who retired by 1985 with fewer than 20 years of service who signed an irrevocable agreement to receive a lower pension in return for free health care. CMS will send letters to all annuitants notifying them of their rates when rates are determined. SURS will send follow-up letters to annuitants explaining rate details. SURS has been told that CMS intends to pare "$200 million" from its current annual benefit costs.
• Constitutional Amendment to Appear (in Summary Form) on November Ballot: At present, legislation proposing to increase pension benefits can be approved by a simple majority vote. Constitutional Amendment 49, if approved, would impose a "higher threshold," stipulating that legislation proposing to increase pension benefits would require legislative approval by a three-fifths (60%) vote in both houses of the General Assembly (or the governing body of a unit of local government, school district, or pension or retirement system). The ambiguous language in the amendment's final clause (XIII, Section 5.1 [d]) was not in Mr. Hough's judgment crafted with any intent to impair section 5.1's existing non-impairment language. (N.B.: In this assessment, Mr. Hough's judgment differs sharply from that of SUAA's lobbyist, who on October 10 advised attendees at SUAA's Fall Board meeting in Normal that section [d] does in fact undercut Article XIII.5.1's existing non-impairment language.)
• Pension Reform Bill: Mr. Hough thinks a pension bill similar to SB 1673 "will probably be voted on in the lame duck session" (before January 9, 2013). SB 1673 obliges Tier 1 employees and retirees to elect irrevocably ONE of the following options: OPTION 1: accept a reduced, delayed, non-compounded COLA and remain eligible for state health care; or OPTION 2: keep the current 3 percent compounded COLA but lose state health care.
• The Good News: Although SURS is currently only 40 percent funded, Governor Quinn has not under-funded the pension fund during his stint as Governor. SURS will receive $1.4 billion for FY 2014.
• Questions/Answers: Among Mr. Hough's responses to questions posed to him by his audience were the following:
  1. Re: lawsuits: Gordon Maag, a retired appellate judge, has filed a lawsuit against SB 1313, as have, in collective actions, AFSCME and three other unions as well as five retirees in the SURS system.
  2. Re: "When we start paying for health care," will our health care providers receive reimbursement from the state more promptly than is now the case? There is no guarantee that providers will be promptly reimbursed after SB 1313 takes effect.
  3. Re: Constitutional Status of COLA: Although both the COLA and health insurance are provided by statute and can be amended, some argue that because the COLA is in fact a benefit it is protected by the Constitution's non-impairment clause.
  4. Re: Effective Date for Prospective Forced Choice between OPTION 1 and OPTION 2: It is likely that annuitants' prospective choice between OPTION 1 and OPTION 2 will need to be made by July 1, 2014 (or by January 1, 2014 at the earliest).
  5. Re: "Will a deceased spouse survivor's annuity be factored into the calculation of an annuitant's health care premium?": Yes, probably.
  6. Re: "Will we know what our health care premium will be before we are forced to make our [prospective] choice between OPTION 1 and OPTION 2?": Yes, probably.

V. Announcements:

• The next Chapter meeting is scheduled for January 10, 2013. Julie Sterling will preside.
• The annual Chapter Luncheon is scheduled for Friday, April 5.
• The Charleston League of Women Voters will hold a forum on the proposed Constitutional Amendment at 6:30 p.m., Monday, October 29 in Rooms A and B of the Carnegie Public Library in Charleston.
• Annuitants are encouraged to read carefully the email SUAA sent to us on October 17 — the email whose heading reads, "Letter to All SUAA Members Regarding Constitutional Amendment."

VI. Presentation by Alan Baharlou and Jayne Ozier Concerning "Efforts to Defeat Constitutional Amendment 49": Alan Baharlou reminded annuitants that the proposed Constitutional Amendment which will appear on the November ballot poses a threat to our state Constitution's pension protection provision (Article XIII, Section 5.1). Concerning SUAA's Oct. 17 email "Letter to All SUAA Members Regarding Constitutional Amendment," Jayne Ozier encouraged annuitants to study the email's recommendations concerning the phrasing and talking points we use in our letters to local media re: the proposed amendment and in our conversations with friends and neighbors.

The meeting adjourned at 10:15 a.m.

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