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Pension deal uncertain as Ill. veto session nears

Published: Friday, Oct. 4, 2013 1:15 a.m. CDT

SPRINGFIELD (AP) – As the Illinois Legislature prepares to reconvene this month, key Democrats tasked with helping solve the state's crippling public pension problem are pushing a plan that would save $138 billion over 30 years, but also warning that continued partisan squabbling could scuttle any deal.

Senate President John Cullerton has thrown his support behind the plan, which would save considerably more than a previous Senate proposal but still offer a compromise to state employees that could help it pass legal muster. He and House Speaker Michael Madigan were recently briefed on the plan's details after it was hashed out behind closed doors.

House Republicans, though, have made additional demands, including raising the retirement age for state workers from 55 and giving retirees the option of moving to a 401k-style plan in which workers have more control over how their money is invested and the state isn't on the hook to pay a certain amount in benefits.

After 4 months of work, panel leaders still are uncertain if they will have a plan ready for lawmakers' annual fall veto session in Springfield Oct. 22.

"I think we're so close that we just need to agree to a middle ground and be done," said state Rep. Elaine Nekritz, a Northbrook Democrat and a leader of the pension negotiating committee. "But I do also think it's possible that it all breaks down possibly, too."

Illinois' five public-employee retirement funds have an unfunded liability of nearly $100 billion, due largely to lawmakers not approving adequate payments to the funds for years. The annual contribution to the fund, plus payments on past pension bonds, is about $7.65 billion this year. That takes crucial money away from schools and social services, and will only increase in years to come if without legislative action.

The bipartisan committee has been working on a solution since the Legislature adjourned in May without agreeing on a compromise.

At that time, the Senate and House backed different plans. The Senate plan would have saved $58 billion over 30 years and let employees choose which retirement benefits they wanted – an element Cullerton described as necessary to withstand a court challenge. The House plan would have saved $163 billion by reducing cost-of-living increases, raising the retirement age and increasing employee contributions.

The still-evolving $138.9 million plan includes reducing 3 percent annual compounded cost-of-living adjustments in retirement benefits to half of the rate of inflation. But it also would reduce employee contributions by one percent – a concession to state employees for other sacrifices.

Cullerton first announced his support of the plan to the (Springfield) State Journal-Registrar Wednesday. He told The Associated Press on Thursday that he thinks the current proposal is "less unconstitutional" than the House plan because of the considerations it makes for state employees.

"Of all the leaders, I'm the most interested in compromising," he said.

Yet House Republicans do not think the proposal goes far enough. Two Republican panel members, Reps. Darlene Senger of Naperville and Jil Tracy of Quincy, updated their caucus on the plan two weeks ago via conference call, and that's when the additional demands were made.

"It's not soup yet," House GOP Leader Jim Durkin said, adding, "just because people feel beaten down and they're tired of the issue they should not be making a vote out of expediency."

The chairman of the panel, Sen. Kwame Raoul, a Chicago Democrat, noted that there's still a lack of unanimity among Democrats as well as Republicans. A key remaining question is whether the influential Madigan will endorse the latest proposal. He has been steadfast in his support of the tougher House bill, saying only that a final compromise would have to be "meaningful."

Despite the Democrats' super-majority in each chamber, lawmakers say Republican votes will be needed to pass any compromise.

State-employee union officials remain adamantly opposed. Anders Lindall, a spokesman for AFSCME, the state's largest employee union, said his organization rejects many of the details that have emerged. He described Republicans' additions as "beyond the pale."

Lawmakers also point to another reason the issue could be punted into 2014. By law, pension legislation passed with simple majorities in each chamber during a veto session would not be effective until June 1. If passed in January with a simple majority, the deal would be effective immediately.

"If it doesn't have an effective date until June, would a court allow a lawsuit to come forward right away? The issue's not ripe until the law goes into effect," said Republican State Sen. Matt Murphy, another panel member.

"We're inside the 10 yard line," Murphy said, "and now it's a question of if we can punch it in."

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