Fire, police pension cutback bill expected to move to House floor

By CHRIS WETTERICH

THE STATE JOURNAL-REGISTER

Lawmakers are finalizing the details of a bill that would reduce pension benefits for future police officers and firefighters and are expected to move it to the House floor Tuesday.

“I believe this bill is about as agreed (to by both sides) as we’re going to get to,” said Rep. Kevin McCarthy, D-Orland Park, the legislation’s chief sponsor. “This isn’t going to be the panacea … I think both sides received some things they were very happy about.”

The bill was being drafted by the Legislative Reference Bureau Monday morning and wasn’t immediately available, but McCarthy described its contents to the committee.

Rockford Mayor Larry Morrissey said while it is time for the General Assembly to act on the issue, benefits for existing employees and retirees also will have to be changed. He wants to see everyone put into a 401(k)-style defined contribution plan.

“We’re debating about what’s going to happen with future employees when we’re not doing any hiring,” Morrissey said. “What about all the existing employees and existing retirees?

Morrissey said there is warfare between citizens who don’t want a tax increase to fund oversized benefits and existing employees and retirees.

“We’re not doing the job we need to do as trustees … for them if we’re suggesting that somehow this bill, if it passes, is going to deal with all of our problems. It’s not,” Morrissey said. “We’re going to have to deal with the fact that we have a system for the existing employees and the existing retirees that’s not sustainable.”

Morrissey told the committee the legislature should realize that barring a vast improvement in the economy, some of the systems will go bankrupt and cities will end up in court. Public officials need to have a plan to reorganize those funds, he said.

“This is a problem nationwide,” Morrissey said.

Pat Devaney, president of the Associated Fire Fighters of Illinois, said most of the fiscal problems in the state’s 636 police and fire pension funds stem from cities underfunding them. Devaney said his group is waiting until the bill’s final language is drafted before taking a position. Who’s to blame for the shortfall in some of the systems is a major flashpoint, with the mayors blaming overly generous benefits passed by the General Assembly.

Devaney said he was “incredulous” that Morrissey did not think the bill went far enough.

“They’re solving it (pension problems) on the backs of benefits for future police officers and firefighters,” Devaney said. “Without question, it’s (changing benefits for current employees and retirees) unconstitutional.”

Springfield Mayor Tim Davlin said there probably are “things in there both sides feel are despicable” but said the bill is “a good start where we’re at today.”

Davlin said the coalition of cities seeking the changes would not seek to change benefits for existing police and firefighters. But he hoped the General Assembly would consider legislation aimed at finding more efficiencies in the systems in the spring.

Although no specific figures were available, the city of Springfield could realize savings quickly because the number of police and fire it employs is so low, it will have to hire new employees who would fall under the new system, Davlin said.

“We’re going to reap the benefits faster than any other community,” Davlin said. “We’re going to be doing more hiring than anybody else.”

Chris Wetterich can be reached at 788-1523.

What Senate Bill 3538 does:

-- Changes the standard retirement age for police and firefighters from age 50 to age 55

-- Allows police and firefighters to retire early at age 50, with a 6 percent reduction in their pension for each year they retire before age 55.

-- Leaves intact current provisions allowing firefighters and police to retire with maximum pension benefits of 75 percent of their salaries after 30 years of service. Police will continue to contribute 9.91 percent of their salaries and firefighters will continue to contribute 9.45 percent of their salaries.

-- Caps the maximum salary upon which a pension can be based at $106,800. That number will increase annually at half the urban consumer-price index.

-- Seeks to end the “spiking” of salaries through late-career raises and promotions by basing pensions on the employee’s final average salary, which will be calculated by using an employee’s highest paying eight years out of the last 10 years they worked. Today, police and fire pensions are based on the employee’s salary on their last day of work.

-- Cost of living increases will be based on 3 percent or half the urban consumer-price index, whichever is less. Today, COLAs are an automatic 3 percent.

-- Requires cities to have the systems 90 percent funded by 2041.

-- Starting in 2015, it allows the pension funds to petition the state comptroller to subtract funds from tax money owed to the cities by the state if a city does not make complete payments to the system.

-- Requires the Commission on Government Forecasting and Accountability to assess the status of the 636 police and fire pension funds. It will also study the feasibility and desirability of pooling those funds together. Mayors believe that the pension funds would be more solvent if they were combined into one or two funds, similar to the Illinois Municipal Retirement Fund, which provides pensions for non-public safety workers in local governments. COGFA’s report is due Jan. 1, 2013.

An Opportunity to Reform Workers’ Compensation

If someone wrenches his back while hanging holiday lights at home, should his employer be forced to pay compensation just because he aggravated that same injury while at work?

And, is it logical that a state arbitrator’s opinion about the severity of a workers’ compensation injury is more influential than a medical doctor’s opinion and guidelines approved by the American Medical Association?
Of course not.
However, those two scenarios reflect the reality of a broken, biased and needlessly expensive Illinois workers’ compensation system that is overdue for reform.
Finally, some legislators – who have heard the Illinois Chamber’s call for workers’ compensation reform and seen the steady exodus of companies and jobs to states where business costs are lower – are willing to demonstrate leadership in addressing employers’ concerns.
Senate President John Cullerton (D-Chicago) announced last week that he has formed a bipartisan committee, the Special Committee on Workers’ Compensation Reform, which is an important first step in pursuit of meaningful legislation.
The group will conduct two hearings – Nov. 29 in Springfield and Dec. 8 in Chicago – before drafting legislation. The stated intention is to pass legislation out of the Senate before the close of the current General Assembly the first week of January.
It’s vital for the Illinois Chamber and our members to educate the six Senators on the committee – Cullerton, Republican Leader Christine Radogno (R-Lemont), Kirk Dillard (R-Hinsdale), William Haine (D-Alton), Kyle McCarter (R-Lebanon) and Ira Silverstein (D-Chicago) – about why strong workers’ compensation reform is absolutely essential for Illinois.
What You Can Do
Now is the time to tell your stories about how a costly workers’ compensation system filled with fraud and subjective decision-making has driven up costs for many businesses and compelled others to relocate out of state.
Until state leaders hear from employers like you, they will assume that the campaign to reform workers’ compensation isn’t a widespread concern. Your letters and e-mails directed to Senators Cullerton and Rodogno are extremely effective ways to build momentum toward real reform.
When you talk with legislators to let them know about your company’s struggles with workers’ compensation, remind them that Illinois has the third-highest workers’ compensation costs in the country, according to the Oregon Department of Consumer and Business Services’ national benchmarking study. Just four years ago, Illinois was 20th, according to the study. In those four years, Illinois’ workers’ compensation costs have jumped 15 percent while the national average has plunged 20 percent.
You can find more information about the Chamber’s battle for  workers’ compensation reforms in the Employment Law Council’s paper “A Case for Workers’ Compensation Reform in Illinois.”

The Illinois Chamber wants to hear about your frustrations with workers’ compensation and collect opinions regarding what you believe should be our priorities for reform legislation. Please send your stories and comments to jaydeeshattuck@gmail.comso the Chamber can share your workers’ compensation experiences with state leaders, the media and others.

 

Tell us about your most egregious examples of workers’ compensation judgments that have little basis in logic and hurt your business. Talk to us about how much your workers’ compensation insurance has gone up. We are especially eager to have comparative data and practical examples of disparities companies have experienced when comparing Illinois locations with those in other states.

Your input will help make it impossible for political leaders to ignore the need for significant changes in Illinois workers’ compensation statutes.
What Reform Looks Like
The Chamber’s goal is to persuade legislators to draft legislation that reduces workers’ compensation costs. Legislators should put these reforms at the top of the list when they’re considering changes:
In Illinois, employees can claim workers’ compensation if their injury was aggravated in any way by work, even if the injury took place somewhere else.
Therefore, we demand that the workplace must be more than 50 percent responsible for the cause of an injury before a workers’ compensation claim is approved. In fact, when Missouri changed to this standard recently, the workers’ compensation costs for businesses dropped significantly.
The Illinois workers’ compensation system does not follow the AMA guidelines but instead allows an arbitrator to conjure up numbers that are not as medically informed. We must incorporate the American Medical Association’s guidelines for disability, which are the standard for workers’ compensation claims in most states.
The 2005 law authorizing utilization review was designed to prevent the use of unnecessary medical procedures.  However, costly procedures and treatments in workers’ compensation cases continue to be a problem because utilization review is inconsistently applied in Commission rulings. California’s experience has proven mandatory utilization review is a better way to control costs.
Wage differential claims create tremendous abuse. It is reasonable to allow changes in wage differential cases for changes in economic circumstances, provide credit for previous wage differential claims and cap benefits to retirement age instead of providing awards for a lifetime.
Illinois law should acknowledge that workers have a responsibility to be alcohol and drug-free in workplaces. Impaired workers are a danger not only to themselves and property, but also to their fellow workers. A number of states, including Missouri, eliminate or dramatically reduce workers’ compensation benefits when injuries are caused by intoxication.
Employers should be able to initially direct choice in physician selections by an injured worker. Employer-directed care helps assure that quality care is provided and that the employee returns to work in a timely fashion.

Now is Our Chance

Businesses are well aware that the Illinois workers’ compensation system has been stacked against employers for far too long. For example, insurance companies often choose to settle cases rather than spend the resources to fight the system, even when employers are eager to challenge the claim. Meanwhile, insurance rates continue to rise and insurance companies continue to exit the state market altogether because they can’t make adequate margin on sales.
It is well known that employers have left the state or have declined to relocate to or expand in Illinois because of the high cost of doing business. Those businesses, and others, might think it logical to have a defeatist attitude when it comes to Springfield politics, and assume that no real reform will take place. To the contrary, the Chamber sees this potential legislation as a genuine opportunity to educate state leaders about the runaway costs associated with workers’ compensation in Illinois and to achieve meaningful change.

Our task is to make sure this round of reforms achieves significant bottom line savings. The last time the state addressed workers’ compensation was in 2005, but those changes proved inadequate and did not lower costs. Meanwhile, our neighboring states offer much lower costs and are successfully luring employers.

 

We hope you’ll join the campaign to fix a broken system and restore the prospects for job growth in Illinois.

 

Employers are encouraged to attend the Senate hearings and listen to the proceedings.  The first session will be at 1 p.m. next Monday, November 29 in Room 212 of the Illinois Statehouse. The Chamber staff also will provide a briefing for members that day at 11 a.m. at our offices at 215 E. Adams in Springfield.

 

10 Things the HR Department Won't Tell You

If everything’s going smoothly, you probably won’t interact with the folks in human resources much between the day you’re hired and your last day with the company. But every day in between, it’s their responsibility to make sure you’re doing your job well. Which means they know a lot more than you might think. We checked in with human resources experts to see what your current employer is keeping tabs on—and how your next employer could be judging you based on a whole lot more than the résumé you submitted.(read more)

Employees Will Shop Less Online But Take Bigger Risks During 2010 Holiday Season

ROLLING MEADOWS, Ill.--(BUSINESS WIRE)--Employees in the US plan to spend less time shopping online from a work-supplied computer this holiday season than they did a year ago, but more of them are engaging in risky online behavior (read more)

Workers’ Compensation Updates, Conference, and Initiatives

It’s all about jobs.

The challenge for Illinois’ future is to create, keep and grow jobs and employment opportunity even though the state has achieved a reputation for having an anti-business political climate.

Our political leaders can start to turn around Illinois’ economic condition and political reputation by reducing the cost of doing business in this state. Workers’ compensation is one of the fundamental issues that elected officials must address if we are to improve competitiveness and successfully restore jobs.

Yes, there were legislative changes adopted in 2005, but the changes have not lowered costs and are not worthy of being characterized as “reform.” If Illinois’ rankings are to improve significantly, nibbling at the edges and adopting only marginal adjustments are simply not enough.

That’s why the Illinois Chamber has taken the lead in pushing for workers’ compensation reform.

Already, the Chamber has:

Successfully fought the government’s imposition of excessive fees to fund the state’s Workers Compensation CommissionOrganized a conference this month that will give business leaders vital information about the newest workers’ compensation issues.Planned a workers’ compensation reform campaign, which will kick off at the conference and be focused on next session of the Illinois General Assembly.

The Chamber would like your feedback to help us achieve workers’ compensation reform in this state. Let us know about outrageous workers’ compensation cases. Give us guidance on what should be changed at the Workers’ Compensation Commission.

Let’s work together to make Illinois a better place to do business.

Litigation Settlement

Illinois businesses will save millions in assessments and benefit from operational improvements at the Worker’s Compensation Commission in the coming years as a result of the Chamber’s legal victory.

The most immediate benefit for employers and insurers is that the Commission will skip the next three assessments for the Rate Adjustment Fund (RAF) beginning January 2011. This will save businesses about $27 million over the next 18 months.

The court’s settlement order also instructs the Workers’ Compensation Commission to spend $30 million to improve transparency, efficiency and operations. The court retains control of the funds and must approve the state’s requests to withdraw funds. The Illinois Chamber has authority to monitor the use of the funds and has already initiated conversations with the Commission to begin the implementation process, which will occur over many months.

Chamber members are encouraged to offer ideas that would result in more efficient Commission operations. All comments are welcome, but you should know the primary focus of improvements will be directed at modernization of information technology capabilities. The existing systems are obsolete, inefficient and lack modern online functionality.

Workers’ Compensation Conference

Business owners, CFOs, HR professionals and risk managers can stay current with cost, fraud, legal and liability issues at the Illinois Chamber’s second annual fall conference on workers’ compensation. The event will take place Oct. 28 at the Marriott Chicago Oak Brook Hotel, 1401 West 22nd St. , Oak Brook, Illinois. The cost is $199 for members and $249 for non-members. You may register online at www.ilchamber.org.

At this conference, the Chamber will announce the campaign for worker’s compensation reforms that will be pursued during the next session of the Illinois General Assembly. We will:

Make the case for why the next round of workers’ compensation reforms must move forward.Introduce components of the Chamber’s WC Action Agenda.Solicit the input and commitment from conference attendees to help build a compelling case for legislative and governmental action aimed at reducing workers’ compensation costs in Illinois.

Why Reform is Important

Numerous multi-state comparative rankings that measure economic performance have consistently shown Illinois to have low standing when compared with high-growth states.

Chief Executive Magazine ranked Illinois’ business climate 46th in the country in 2010. The ALEC-Laffler State Competitive Index of 2010 ranked Illinois 48th in economic performance and 48th in job creation from 1998 to 2008, trailing only Ohio and Michigan. Only New York and California had more outward population migration than Illinois during the same period, suggesting that 640,000 people envisioned greater economic opportunity existed elsewhere.

Until we enact meaningful reform, the states that border Illinois will continue to flaunt their lower workers’ compensation costs.

For example:

In 2005, Missouri lawmakers enacted reforms and have since seen their costs drop more than 20 percent. Since 2006 the total average increase in Illinois workers’ compensation rates was 16.4 percent, and 6.3 percent in 2009 alone. During the same period, average rates for workers’ compensation across the country decreased 17.1 percent.Thirty states saw average rate reductions in 2008-2009, while Illinois joined only four other states that had an average recommended rate increase, according to NCCI Illinois State Advisory Forums.Indiana (2nd), Wisconsin (14th), Iowa (15th) and Missouri (31st) all ranked higher than Illinois (38th) in the 2008 Actuarial & Technical Solutions, Inc. State Rankings of Workers’ Compensation Comparative Costs for Manufacturers. This is another example of how neighboring states can tout their workers’ compensation cost advantage to Illinois employers and businesses that are planning job expansions in the region.

A number of states that compete with Illinois have addressed or are addressing their workers’ compensation cost issues and employers in those states are experiencing significant reductions in costs. Florida’s workers’ compensation rates fell more than 18 percent in 2009. Florida businesses have seen an average decrease in workers’ compensation costs of more than 65 percent since 2006. Colorado businesses experienced a 16 percent reduction for workers’ compensation in 2009, will see an additional 9.7 percent decrease in 2010 and have seen a 36.2 percent reduction since 2006. Arkansas workers’ compensation rates decreased nearly 20 percent the past two years and Pennsylvania has experienced a 19 percent reduction since 2006 as well.

Economists predict there will be a slow recovery to the current recession, but the economy will turn positive over the next two years. Thus, it is critical for Illinois political leaders to undertake the necessary changes that will position our state to be cost competitive when the recovery occurs.

Member Input and Engagement is Imperative

In order to build the case for reform, the Illinois Chamber needs employers to weigh in with examples of the most egregious workers compensation cases they have experienced. The objective is to establish a substantial record that demonstrates the irrational ills of a workers’ compensation system that has lost touch with common sense and caused employers to despair.

We also need employers with multi-state operations to provide good comparative data on costs, as well as sharing contrasting experiences that demonstrate how Illinois' workers' compensation operations can be streamlined, improved or made more efficient from the employers’ point of view. Contact us via e-mail through the Illinois Chamber’s Employment Law Council at sarahlynnseiz@gmail.com or by regular mail to: Jay Shattuck, Illinois Chamber Employment Law Council, 600 S. Second St. Suite 101, Springfield, Illinois 62704.

Featured Member - ONFX ~ Rudy Espinosa

How would you describe your line of work?

I like to help small business owners present and market their business online. Every business, small or large, should have a website. It is just as necessary as a business card these days. Your business must have these in place to operate and gain additional clients.

I recently sent out my first newsletter through the Lombard Chamber. I informed members that I now offer small business online marketing or SEO. SEO is short for Search Engine Optimization. If you want your website to appear in Google when someone searches for a specific set of words, I can help you!

If you need assistance marketing to the Latino community, I can help you too. Spanish is my native language. You may want to contact me soon. I have been told on forums recently by the SEO experts that my 2^nd language will present opportunities with low competition. I may become too expensive soon and will walk around with my nose in the air. Just kidding!

How did you become interested in this line of work?

I reserved my first domain name and setup my first website in the mid 90’s. As a kid, I loved to draw. My parents gave me my first computer in the 80’s. So, when I discovered that I could create something online and anyone with a computer (and the internet) could instantly see it --- I was hooked!

What is your favorite part of your job?

Showing off the new website to a client is cool. The only thing better, is the emotional reward when someone expresses their gratitude and appreciation for helping present their business online.

What is your least favorite part of your job?

I sincerely provide more than a client expects. I know it is a business but I take great pride in my work and my relationship with the client. I understand that small business owners have a tight budget. So, it is hard for me to tell someone that I can only provide X amount of services for X amount of dollars.

What does a day in the life of “Rudy Espinosa @ ONFX” consist of?

Wake up

Drink a protein shake

Start work

Eat

Work

Work out

Eat

Work

Eat

Finish work

What would you like your fellow Chamber members to know about you?

I am preparing for “2012”! LOL!

That was a joke (though I am probably the only one laughing), but I do feel like I am training for the so called “2012” event! I have been lifting weights for several years. A few years ago I built a solid 25 pounds of muscle. But 5 meals a day plus 3 protein shakes was too much work. So, I lost 25 pounds since then. My new goal is a six pack. I once tried the Adkins diet, but I gave up after 1 hour. I love bread and I especially love tortillas! For that reason, I do cardio just to look average, LOL! About a year ago, I took up jump roping and I am known as the “jump rope guy” at the gym. Twice a week, I try to play pool volleyball. About 5 months ago, I began Yin Yoga. If there is only 1 thing I could tell my fellow chamber members, it would be to try yoga. It helps many aspects of your life; physically and mentally. It helped me finally break my bench press plateau. I firmly believe it will help me regain the full split that I used to show off when I was a break dancer in the 80’s, LOL! I also read recently in my Esquire magazine, that certain poses help your stature and even help you appear taller. I am barely average height, so I need all the help I can get, LOL! More importantly, I have discovered that I will maintain a healthy back. I am in my mid 40’s and in the best shape of my life thanks to yoga. I urge everyone to try yoga.

Visit the website at www.onfx.com

Featured Member - Mr. Appliance

It Takes Two To Repair

Chicago Father, Son Open New Appliance Repair Business

Father, son duo, Leroy and Nicholas Litzhoff announce the startup of their full-service appliance repair business, Mr. Appliance® of the West and Northwest Chicago Suburbs. With each other’s support, the pair plans on becoming the community appliance repair expert.

“Mr. Appliance of the West and Northwest Chicago Suburbs will have the personal touch of a locally owned operation,” Leory Litzhoff said. “The technology and systems in place at Mr. Appliance will help us deliver faster, more reliable service.”

Upon purchasing the business, the Litzhoff’s attended a five-day training course on the latest technology and customer service techniques. They plan to create jobs and generate business for their community, as well as provide great service to their customers.

“We follow a professional system at Mr. Appliance. Our service professionals wear shoe covers inside homes and use a menu pricing guide so there are no surprises,” said Doug Rogers, president of Mr. Appliance Corp. “We’re delighted that Leroy and Nicholas have joined us, and we believe their business will be successful because we all operate under the same core values.”

The Litzhoff’s wanted to have a business founded on quality systems and customer services. The way they treat customers is unsurpassed.

“When we started researching for our own business, we wanted something that would give us the opportunity to capitalize on my mechanical aptitude and problem solving skills,” Litzhoff said. “When we found Mr. Appliance, we knew it was the right business for us.”

Mr. Appliance of the West and the Northwest Chicago Suburbs serves Cook, Du Page and Will counties.

Contact information