Legislators expected to consider new pension proposal next week
SPRINGFIELD -- Following a switch in position by House Speaker Michael Madigan, Illinois legislators next week could consider a new state pension compromise.
Gov. Pat Quinn and the four legislative leaders are scheduled to meet in Chicago today to discuss the proposal, which reportedly contains elements of a number of previous pension reform plans.
Sources familiar with the new proposal said it includes an increase in public employee contributions to their pension plans, changes in annual cost of living adjustments to pension benefits and a cap on salaries that can earn pension benefits.
At a news conference Friday in DuPage County, Quinn said he is optimistic the plan can pass the General Assembly before Wednesday, when new state lawmakers will be seated.
“Madigan is committed to getting votes for a plan that we discussed,” Quinn said. “Getting votes in the House is crucial so we can get the plan over to the Senate.”
‘Major step forward’
A major stumbling point of previous pension plans was the idea of shifting the cost of downstate teacher pensions to local school districts instead of the state. Proponents say the shift is fair because teachers are employees of school districts, not the state. They say the cost shift would make districts more careful about granting pay raises, which, in turn, drive up pension costs.
But Republicans and many downstate Democrats feared the shift would lead to property tax increases or program cuts as schools tried to cover pension costs.
Now, however, Madigan, D-Chicago, is willing to wait on the cost shift if that would help pass a reform plan now.
“Not so long ago, I received a call from the speaker of the House, and he indicated he was willing to defer any discussions on the cost shift until a later date,” Quinn said. “That was a major step forward for all of us.”
Madigan spokesman Steve Brown confirmed that Madigan is willing to delay the cost shift if that will produce movement on pension reform.
“The speaker told the governor to pass what we can pass,” Brown said.
“It was such a paramount importance that we act now to begin the process of pension reform that he was willing to take that particular issue off of the table,” Quinn said.
Expect court challenge
“The cost shift was a big issue for Republicans and downstate,” said Rep. Darlene Senger, R-Naperville, who has worked on pension reform for House Republicans. “My gut is telling me this is moving it in a very significant direction.”
Quinn said the plan will result in the five state-funded pension systems, now $96 billion in debt, being 100 percent funded in 30 years.
However, he also acknowledged that any pension reforms passed by lawmakers will be challenged in court.
“That’s the way it is,” Quinn said. “but we don’t want to stop and let inertia take over.”
Public employee unions already have said their members would be willing to pay 2 percentage points more of their salaries toward their pensions if there was an ironclad guarantee the state would make its required contribution. The major reason for the $96 billion shortfall in state pensions is that the state for years has diverted money from pensions to pay for other programs. The plan reportedly includes a guarantee of state payments.
Advocates of pension changes say the biggest single reason pension costs are climbing is that benefits are automatically increased by 3 percent each year, and the increases are compounded. The new plan, like others, would change those COLAs to reduce costs.
The new plan also calls for money now devoted to paying off pension bonds to be used to reduce pension debt once the bonds are retired.
Doug Finke can be reached at (217) 788-1527.