Frustrated state lawmakers pitch pension fix
SPRINGFIELD (AP) – Rank-and-file lawmakers frustrated by slow progress and finger-pointing offered their own solution to Illinois’ multibillion-dollar pension crisis Wednesday, saying legislators need to take a new approach before the state is sent into “financial oblivion.”
But legislative leaders questioned whether the idea is constitutional or saves the necessary billions of dollars, which might put lawmakers right back where they started with just weeks to go in the legislative session.
More than 20 House members – including a handful of Republicans – joined Rep. Elaine Nekritz, chairwoman of the House pension committee, in a debut of the proposal designed to put a jolt into stalled talks on the final day of the fall veto session.
The Northbrook Democrat said the idea doesn’t answer everyone’s concerns but has more momentum than any previous pension pitch.
“We must continue to push this issue forward and not let excuses get in the way of progress,” Nekritz said.
Nekritz dismissed any question that lawmakers were bucking legislative leaders. She discussed her plan with House Speaker Michael Madigan, D-Chicago, and predicted it would get a House vote if the savings calculations that are underway work out to lawmakers’ satisfaction. House Republican leader Tom Cross, of Oswego, said the plan has “a lot of merit” and key components he supports, said added he has other ideas that should be in the mix.
But early indications were for an unwelcome Senate reception. Senate President John Cullerton said the proposal appears to be unconstitutional, while Senate Republican leader Christine Radogno said she won’t back a deal that shifts some costs to local school districts. Their reluctance could stymie the plan even if it gets House approval.
The state’s pensions are currently $95 billion underfunded – the worst shortfall of any state in the nation, largely because Illinois has failed to make sufficient payments to the plans over the years.
But there has been no deal despite years of negotiations and a failed special session called by Gov. Pat Quinn. Quinn says a solution is his top priority because as the unfunded liability continues to grow, efforts to catch up on state payments eat up more and more money each year, forcing cuts to schools, public safety, health care and other areas.
Nekritz’s legislation would reduce annual cost-of-living increases for retirees and require workers to contribute more to their retirement. Younger employees would have to work longer into their careers, and some costs for teacher pensions would gradually shift to school districts. That cost shift has stalled previous negotiations, with Republicans and some Democrats saying it would force districts to make severe cuts or raise property taxes.
The plan also includes a guarantee that Illinois will meet its funding obligations, allowing for court or other action to automatically ensure sufficient annual payments are made.
Quinn and legislative leaders hope to reach a deal before the Jan. 9 expiration of the current session, meaning dozens of defeated or retiring lawmakers could make a distasteful vote to cut pension benefits without risking voters’ wrath. And Republicans want in now so they have more of a say than after Democratic supermajorities take over the General Assembly this spring.
Rep. David Harris, R-Arlington Heights, said leaders should note the bipartisan nature of the working group’s effort.
“There is a genuine frustration on the part of many members of the legislature that there has not been meaningful negotiation, meaningful progress on this most serious issue until now,” Harris said.
A spokeswoman for Quinn called the proposal a “welcome contribution” and said the Democratic governor looks forward to seeing how much money the plan will save.
But Cullerton, a Chicago Democrat, said the new plan raises the same concern he had about earlier ideas – a unilateral reduction of pension benefits would be unconstitutional. He said his office will take a closer look at it.
Cullerton thought constitutional problems were averted in the last proposal put forward, which offered workers a choice of health benefits in retirement or a reduced annual cost of living increase.
Nekritz wouldn’t predict how a court would view it, but said a judicial ruling might be swayed by the plan’s guarantee that the state will meet its obligation in the future.
We Are One Illinois, a coalition of public employee unions, offered to cooperate on an agreement, but said the proposal “essentially balances the pension debt on the backs of teachers, police officers, nurses, caregivers, and other public servants both active and retired.”
For employees hired before 2011, the proposal would apply cost-of-living adjustments to only the first $25,000 of an employee’s pension, or only $20,000 for employees eligible for Social Security. It also would delay the increases until the employee turns 67 or until five years after retirement, whichever comes first.
The retirement age would be increased by one to five years for everyone 45 years old or younger, while workers age 46 and older would see no change in the age requirement. Employees also would have to contribute 1 percent more to their retirement in the first year the law is in effect, and 2 percent more each following year. And the amount of salary that counts toward determining the amount of a pension would be limited.
Teachers and university employees hired since 2011 would be put into a cash balance plan, which would guarantee a minimum defined benefit while allowing local districts to negotiate the cost of the benefit with their employees. The plan also limits lawmakers’ pension increases.
On one of the more controversial issues – shifting costs for teacher pensions to local districts – the plan calls for a slower phase-in than in previous proposals. Under the plan, colleges and universities would assume costs at a rate of 0.5 percent of payroll per year.
Rep. Daniel Biss, D-Evanston, a former math professor who co-authored the plan, said he’s confident it will have “extremely significant savings,” though the state’s actuaries haven’t crunched the numbers yet.
Nekritz said lawmakers introduced the plan Wednesday so that analysis can occur over the next few weeks, and the plan can be refined into legislation that has a chance of success.
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The bill is HB6258
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Online: http://www.ilga.gov
