by Paul Kersey
Director of Labor Policy
Negotiations between the State of Illinois and District
Council 31 of the American Federation of State, County, and Municipal Employees
are at a standstill. The union is
taking exception to what it considers provocative demands for concessions from
the Quinn administration. A recent
message from the union to its members even contains a hint of a strike threat.
While much is unknown about the state of negotiations –
collective bargaining sessions are closed to the public – there are facts that
the public should keep in mind as they read the news reports. Negotiations between the state and the
union are taking place against a backdrop of serious economic difficulties for
Illinois taxpayers.
- The state government is broke.According to the state’s own figures, there is a shortfall
of $83 billion in the state’s pension funds. To meet expected pension commitments, the state should have
$83 billion more set aside than it currently does. The state is also short $54 billion on the funds it should
have to meet retiree health care commitments. All told the state would need to find $137 billion to fully
fund its retiree benefit plans. That
adds up to $28,721 per household. And these figures are based on very optimistic assumptions about the
future performance of the state’s pension and health care funds. As new accounting rules take effect these
figures will increase. The
state is fast approaching a crisis on account of lavish benefits, and cannot
afford to maintain its current compensation levels.
- Illinois is already starting to fall behind on its
debts. The state has a backlog of
$8 billion in unpaid bills, especially reimbursement of Medicaid health-care
providers. As of yet there is no
plan for the state to eliminate this backlog. The state’s credit rating is the lowest of all 50
states.All the signs indicate
that Illinois state government is on a path toward default.
- State employee compensation is already generous. In 2008 the average state employee took
in 16 percent more in salary than an average Illinoisan who worked in the
private sector. State employee
benefits were half again as expensive as they were for private sector
workers. All told compensation
(wages and benefits) were 23 percent higher for state employees than for those
in the private sector. State
employees cannot plead poverty.
- The long-term trend has been for state employee
compensation to increase while private employee pay goes down. Between 1993 and 2008 total
compensation (wages and benefits) increased by 17.6 percent for state
government employees, while compensation in the private sector went down by 2.3
percent. Many of the rest of us
are hurting, but most state employees have been prospering.
- AFSCME is objecting to the governor’s calls for wage
concessions that the union claims would cost state employees as much as
$10,000. Even if true, this sort
of readjustment would not be the outrage that the union would have it sound
like. Based on 2008 figures, if
the average wage of state employees were cut by $7,700 that would put them on
par with private-sector workers in Illinois, roughly where they were in the
early 1990s.
We called for state employees’ wages to be cut by 10 percent
in our 2013
Budget Solutions and it seems that the administration recognizes the need
to rightsize employee pay.In
light of the above, neither the union nor the state employees it represents
should be shocked by calls for wage and benefit reductions.
