Illinois Public Media News
Champaign City Council members have unanimously rejected the use of pension obligation bonds as a way to avoid service cuts during tight financial times.
Council members sided with administrators, deciding that using a low-interest loan to fund police and fire pensions carried too much uncertainty. City Finance Director Richard Schnuer said the investment risk was just too high. Council member Deb Frank Feinen said she made up her mind after reading a memo from Schnuer, and doing a quick web search on the bonds.
"When our financial adviser sits before us and talks about governments being risk averse, he's right, and there's a reason for it," Feinen said. "We're not individuals. I'm not playing with my home finances. Instead, I have a wider obligation not to take the easy way out."
Schuner also said issuing the bonds could affect Champaign's triple-A credit rating, making it harder for the city to issue debt in the future. Council member Tom Bruno said the city should only consider such an option if it wants to place today's financial burden on future generations.
"This is the year we should be feeling the pain," Bruno said. "Because this is the year that the recession has really hit the municipalities with a loss of revenues. I wish it wasn't a painful year. But if there's going to be painful years, maybe it ought to be this year, and not when my kids are my age."
Council member Mike LaDue said the city has managed its debt conservatively in the height of a recession. And he said those kinds of decisions, and not the issuing of the pension bonds, have allowed the city to take on a project like drainage improvements along John Street, where several homes have experienced flooding.
Champaign Mayoral Candidate Don Gerard said the pension obligation bonds would have been an option had Schnuer started researching the idea about 10 months earlier, when interest rates were about 2-percent.
"This will go right down the chute, but it's a shame that a year ago this wasn't looked at," Gerard said. "Because a year ago, it could have been a great opportunity. And I think the budget is something that we've been looking at for two years. These type of options should have been looked at a year ago. I'm very disappointed that they weren't."
The plan to use the bonds lost 8-0, but Mayor Jerry Schweighart said the discussion will likely go on for one more night. He and Gerard will debate one another Wednesday evening.
The debate, organized by the Junior League of Champaign-Urbana, begins at 6:30 at the Champaign Public Library.
An initiative in Indiana to provide incentives for companies to invest in clean energy, including nuclear power, is stalling because of recent events in Japan.
The incentives could have lead to the building of Indiana's first nuclear power plant.
But any such plans may have to wait.
Indiana Senate President David Long (R-Fort Wayne) says his state will need additional sources of energy in the coming years.
But Long says the earthquake in Japan that caused extensive damage to a nuclear plant there is forcing more review of Senate Bill 251.
"We need to take a step back, try to understand how this happened, what the circumstances were, was it human error, was it all caused by the natural disaster? If so, what part of it, was it the tsunami, was it the earthquake," Long says. "We don't have the answers to that right now, and we need to have some answers."
Past nuclear attempts in Indiana included the building of a nuclear power plant in Porter County.
Northern Indiana Public Service Company (NIPSCO) proposed building the Bailly Nuclear 1 Power Plant in the 1970s and 1980s along Lake Michigan.
But opponents and the 1979 accident at Three Mile Island forced NIPSCO to scrap its plans just two years later.
Indiana continues to need additional sources of energy since a study group told state legislators that the state will likely need 30 percent more electricity by 2015.
This at a time when the Obama administration plans to clamp down on coal-fired power plants to reduce pollution.
Indiana gets most of its energy from coal.
Officials at the Mitsubishi Motors North America plant in central Illinois say they have enough parts to keep making cars for another two weeks but they're awaiting word on whether Japan's massive earthquake and tsunami could lead to production disruptions.
Mitsubishi Motors North America spokesman Dan Irvin told The (Bloomington) Pantagraph that the production hubs of the firm's parent company, Tokyo-based Mitsubishi Motors, weren't affected by the disaster.
But Irvin says the North American subsidiary is still waiting for updates from companies that supply some parts for use at the plant in Normal.
The plant produces about 34,000 vehicles a year and employs more than 1,000 people.
University of Illinois Trustees could postpone their decision next week on constructing a wind turbine on the Urbana campus.
Audit and Budget Committee chair Ed McMillan said it is likely the U of I will seek another extension of the grant covering $2-million of the project. Trustees will meet March 23 on the Springfield campus. Urbana Mayor Laurel Prussing addressed the committee Monday, citing citizen concerns about noise pollution and shadows. She said the U of I has failed to address those areas, and meet with the public.
"The city does support alternative energy, but these things have to be very carefully placed," Prussing said. "And this is in violation right now of the Urbana wind turbine ordinance, and we'd like to see it corrected so it would be in a good place. And we're also concerned about the total cost."
Cost for the turbine project exceed $5-million. The head of a University of Illinois Student group pushing for turbine construction says delaying the project by a few more months, after two prior extensions, won't be a large setback. Student Sustainability Committee Chair Suhail Barot predicts the turbine will remain at its current site, by the U of I's South Farms.
"I think the university's position is correct in terms of its zoning," he said. "And it terms of the overall concerns, I think issues outstanding will be resolved."
Barot said students have more doubled their financial commitment to the project through sustainability fees, and not completing the turbine soon jeopardizes losing the grant from the Illinois Clean Energy Community Foundation. He said the U of I should feel 'morally responsible' for putting up the turbine.
Prussing said the university has also failed to consider wear and tear to township roads from the project, and suggests the U of I consider investing in an existing wind farm.
After a long and bitter debate, a partial deal has been reached to continue expansion of O'Hare International Airport.
It took the federal government to mediate negotiations between the City of Chicago and United and American Airlines, the biggest carriers at O'Hare. For now, the newly announced $1.17 billion dollar agreement funds parts of the O'Hare Modernization Program, including rerouting roads and installing a runway on the airport's South Side.
The airlines had long said that O'Hare isn't busy enough to warrant an expansion, but United CEO Jeff Smisek says U.S. Secretary of Transportation Ray LaHood helped changed his mind.
"Do we need this runway today? Of course not. But we do believe that with time, we will and we're willing to help fund our portion," Smisek said.
When asked what the city gave up to move negotiations forward, Mayor Richard Daley would only say, "I'm not gonna mention it."
Negotiations over the rest of the expansion are expected to resume in two years.
More talks between the Republican and Democratic leaders of the Indiana House might be inching the two sides closer to resolving the now three-week-long boycott by Democratic legislators.
The lack of any firm breakthrough, however, meant most Democratic members skipped Monday's floor session, continuing to leave the House with too few members to conduct business and the Democratic leader saying the boycott would continue Tuesday.
Republican Speaker Brian Bosma and Democratic leader Patrick Bauer said Monday they spoke by phone several times over the weekend. Bauer called them "fairly good talks," while Bosma said "perhaps" progress was made.
A Republican-backed proposal to allow state vouchers to help parents send their children to private schools has been among the sticking points of education- and labor-related bills that Democrats say they found objectionable and prompted them to leave for Illinois on Feb. 22.
Bauer told reporters Monday that he believed an agreement could be close on amending the voucher bill to further limit its scope, but he didn't provide details.
"I just haven't gotten that all nailed down yet completely," Bauer said. "I think they're amenable to cut out some of the huge fiscal hit on that."
The Republican sponsor of the bill has proposed capping the number of vouchers to 7,500 during the program's first year and 15,000 during the second year.
Bauer said Democrats still had unresolved concerns about a bill on government construction project wages, which includes provisions ending requirements that nonunion companies sign onto agreements involving union rules.
Bill sponsor Rep. Bill Davis, R-Portland, said he would support modifying the bill so that the state's prevailing construction wage law, which now applies to government projects of $150,000 or more, would start at $500,000 rather than the proposed $1 million level. He said he also would agree to delete a proposed complete exemption for public school and state university projects.
Bosma didn't seem certain that the amendments to those bills would be enough to bring back the boycotting Democrats.
"Every time we get there, there seems to be one more thing," Bosma said. "I'm just not exactly sure what they need at this point."
Rep. Terry Goodin of Austin, one of two Democrats representing his party on the House floor Monday, said he thought Bosma would have resolved the impasse by now.
Gov. Pat Quinn dealt a major blow to plans for two coal gasification plants Monday, using his veto pen to strike down legislation that would have locked in rates for the facilities.
In a veto message, Quinn said plans to build the synthetic natural gas facilities in southwest Jefferson County and in Chicago's south suburbs would result in higher utility bills for Illinoisans.
"Our investments in clean coal must not come at the expense of consumers," Quinn noted. "As we lead the way out of this historic recession, we must always be mindful of the effect our policies will have on the people of Illinois."
Both plants were touted as potential new users of Illinois coal, as well as major job creators. The Illinois Coal Association earlier estimated the facility near Waltonville to be built by Aurora-based Power Holdings LLC could use as much as 2 million tons of coal annually and employ hundreds of people.
The company was planning to use coal mined in nearby Washington County.
"It's a shame the governor chose to do this," said Sen. John Jones, R-Mount Vernon, who co-sponsored the legislation. "Governor Quinn has proved once again he's running jobs out of the state of Illinois."
A number of southern Illinois groups supported the plant, including Southern Illinois University, local chambers of commerce, state and federal lawmakers and mayors of towns from Mount Vernon to Marion.
The legislation would have allowed the company to enter into long-term contracts to sell the gas the plant would produce. Ameren and other gas suppliers would have had to purchase the synthetic gas for the next 10 years, even if cheaper natural gas was available elsewhere.
Quinn signaled he was committed to boosting clean-coal technology, but said the two measures would allow the companies to lock in unusually high rates.
The measures, which were approved in the lame duck legislative session in January, were opposed by the Citizens Utility Board and Attorney General Lisa Madigan's office.
University of Illinois President Michael Hogan said a voluntary employee reduction program on the Urbana campus went so well that it should be considered at the Springfield and Chicago campuses.
Faculty and staff were given a chance last year to resign or retire, and walk away with half of their salary, up to a maximum of $75,000. More than 480 employees left the U of I last spring to take the buyout, while 81 of those employees returned on a part-time basis. In addition, 70 professors are expected to leave in August.
The U of I's Associate Provost for Human Resources, Elyne Cole, said the number of employees who agreed to leave their jobs was "higher than expected." She said the university is expected to save $19 million annually because of the program, and those savings will trickle down to departments where cuts were made.
"It reduces the workforce both in terms of numbers and our overall salary obligations that we have for employees," Cole said. "And it will allow those units to make better decisions about how to use their resources."
While Hogan acknowledges the program's success in saving money, he said there have been costs attributed to those savings.
"You're losing teachers and you're losing workers," Hogan said. "So, that's one reason they do the re-hiring of retirees because you can still save money and get the service performed a little cheaper while you're building of cash reserves that could maybe help you make a permanent hire."
During a meeting Monday with the audit and budget committee, Hogan commented about a recently policy adopted by the U of I's Board of Trustees aimed at limiting tuition increases to no more than the rate of inflation. He said this will leave the university still looking for money for pay raises and won't strengthen the university's financial situation.
The state currently owes the U of I nearly $440 million in unpaid bills.
The chair of the University of Illinois' Board of Trustees, Christopher Kennedy, said he does not have any plans to run for political office.
Kennedy is a son of the late U.S. Senator Robert F. Kennedy, and nephew of former President John F. Kennedy. During a visit Monday to the Urbana campus, Kennedy talked about the importance of using Illinois' connections at the federal level to lobby for more research grants. When asked about his desire to run for office, he said he doesn't envision a future in politics
"I'd say the University is political enough for me," he said. "I have no aspirations beyond the university."
Kennedy currently runs Merchandise Mart Properties in Chicago. He was one of six trustees appointed in September 2009 by Governor Pat Quinn following a university admissions scandal.
The Board of Trustees is slated to meet Wednesday, March 23 in Springfield. The Board bumped up tuition last year by 9.5%, a figure that didn't sit well for some students and parents. While the agenda for that meeting has not been set, Kennedy shed some light on how the board may act if it is confronted with another tuition hike.
"I'd say the board has made it clear that we have no intention of raising tuition beyond inflation," Kennedy said. "Tuition at the University of Illinois will remain constant in real dollars, and we just have to figure out what the inflation rate is."
The board of trustees adopted a policy earlier this year linking tuition increases to other factors, including inflation. The state currently owes the U of I nearly $440 million in unpaid bills.
Kennedy said the university should better position itself to seek out federal research grants that will help retain jobs within the state, and improve Illinois' economy.
Children of longtime public university employees do not have to pay full tuition if they attend a state school.
As long as a parent has put in at least seven years of service, the children pay half price, but Senate Republican Leader Christine Radogno wants to do away with the perk. Radogno said during difficult financial times, it cannot be justified. She said it is unfair that a nurse working at a university hospital gets the benefit when a nurse at a private hospital does not.
"Even within the university community, it's not even universally applied," Radogno said. "It's applied based on your family status, which generally we try to stay away from that. So, if you happen to have children, you get extra pay."
Radogno said that does not make sense, and she doesn't buy university claims that it is an important recruiting tool.
Schools say that lawmakers have continually looked to higher education to help fill the state's budget hole, and that has already meant reduced benefits for university employees. Illinois State University spokesman Jay Groves said Illinois exports a lot of its high school graduates to neighboring states. He said the perk helps entice employees' children, their partial tuition and fees to stay in Illinois.
"You know she might be assuming that if students did not have that benefit, that they would go to public universities anyway, and that is not a given," Groves said. "So that is money taken away from the public universities if the student decided to go out of state or to a private institution."
If it gains traction in the legislature, Radogno's proposal would only apply to future hires. Current university workers would be grandfathered in and have the chance to keep the tuition break.
Radogno also has legislation that would eliminate full tuition waivers known as General Assembly scholarships. Lawmakers can award them at their discretion, and there have been cases of abuse. Governor Pat Quinn also supports ending that program.
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