Rauner’s “role model” falls short
Bruce Rauner says he wants Illinois to follow the same path as states like Wisconsin and Indiana, which have implemented anti-union, anti-worker policies, often in the name of “fiscal responsibility.”
Two recent developments out of Indiana, however, show the real impact of these policies – in one case, weakened retirement security for public employees, and in another, a problematic bankruptcy capping off a disappointing privatization deal.
Indiana has pushed hard to privatize government jobs and services ever since former Gov. Mitch Daniels took office in 2005. Rauner calls Daniels one of his “role models” and says he plans to “steal a lot of his people and his best ideas.”
Today, anti-union politicians in Indiana continue to push for further privatization. Legislators and current Gov. Mike Pence have been trying to privatize the state’s largest public employee pension system, the Public Employees Retirement Fund (PERF).
Lawmakers attempted to hand over the defined benefit plan to a private firm, Great Western. An investigation by AFSCME Council 62 found that Great Western would have charged fees and lowered the rate of return as much as possible, costing employees 40-45 percent of their retirement.
But while the Indiana legislature and Pence didn’t hand off the system to Great Western, they did enact a law cutting the rate of return by one-third and allowing employers to opt out of the plan.
That move put the system into a death spiral – the state’s two largest universities, along with some municipalities, stopped making contributions, creating an unfunded liability of $178 million that will fall on the shoulders of other government bodies and could get worse if other employers withdraw.
The legislation weakened a system that was already relatively modest. The Kokomo Perspective reported: “Public employees aren’t getting rich in retirement. The PERF formula pays out 1.1 percent times the years of service of the employee times their average monthly earnings of their five best years of service.”
While AFSCME is pushing a plan that would solve the problem and ensure solvency, many lawmakers in Indiana are now looking to instead switch entirely to a defined-contribution, 401(k)-style plan, leaving employees fully responsible for their retirement savings.
Indiana is also now dealing with a headache caused by the bankruptcy of a private firm that was given a contract eight years ago – during Daniels’ administration – to run the state’s toll road.
The Times in northwest Indiana reported that “Despite yearly toll increases, Indiana Toll Road revenues have never lived up to what investors expected when the lease deal was struck in June 2006.”
The bankruptcy has set off concerns by officials and the public about the toll road’s continued operation. Employee pay is now “subject to bankruptcy court approval.”
These failed policies are exactly what Bruce Rauner wants to bring to Illinois. If you want to make sure that doesn’t happen, the best thing you can do is volunteer to talk to voters in your community and make sure they vote against Rauner on November 4.