Five things you need to know about AFSCME vs. Gov. Quinn

Negotiations between the State of Illinois and District Council 31 of the American Federation of State, County, and Municipal Employees are at a standstill.

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.

1. 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.

2. 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.

3. 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.

4. 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.

4. 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.