SPRINGFIELD – Illinois university employees would pay more toward their pensions and receive annual retirement-pay increases tied to inflation in a reform plan the Senate president supports, a spokeswoman said Sunday.
The proposal was developed largely by the University of Illinois Institute for Government and Public Affairs. It addresses employees of universities and community colleges and has been “unanimously endorsed by the presidents and chancellors of all Illinois public universities,” according to an outline obtained by the Springfield bureau of Lee Enterprises newspapers.
Although limited to employees covered by the State Universities Retirement System, it could serve as a template for fixing problems among other retirement systems, Southern Illinois University President Glenn Poshard said.
Rikeesha Phelon, spokeswoman for Senate President John Cullerton, said Sunday that the idea would get a committee hearing Tuesday as lawmakers return to Springfield for a special session called by Gov. Pat Quinn to deal with a $97 billion shortfall in what’s needed to cover retirement costs for five public pension systems. Legislators concluded their spring session May 31 without coming to a resolution.
According to a summary of the initiative obtained by The Associated Press, it recommends a phased-in, 2 percent increase in the amount most university and community college employees pay toward retirement – half of 1 percent each year for four years. And annual cost-of-living adjustments would change from a compounded, 3 percent jump to one-half of the inflation rate.
The employer portion of employee pension contributions, now paid by the state, would be shifted over a dozen years to the schools, by half of 1 percent a year. It would be combined with a guarantee to the institutions of stable funding from the state.
New employees would have to participate in a combined traditional pension plan with a defined-contribution arrangement, similar to 401(k) plans in private industry.
The plan would reduce the unfunded liability in the State Universities Retirement System by 28 percent, from $20.2 billion, and could be a model for a comprehensive solution. It would mean a paid-up SURS system by 2044 and, during that time, reduce state contributions by 47 percent, from $76 billion to $40 billion.
Although Cullerton supports the idea, Phelon said it’s uncertain whether he’ll sponsor the legislation. A version was introduced May 31 by Democratic Sen. Michael Hastings of Orland Hills.