Problems surface for pension plan
SPRINGFIELD — An Illinois House committee approved a controversial and far-reaching pension revision plan Tuesday, but it may be in trouble with House Republicans.
The measure was approved by the House Personnel and Pensions Committee, 6-3, with all but one vote coming from majority Democrats.
With just two days remaining in the Legislature's spring session, the pension revision is the biggest obstacle remaining besides passing a slimmed-down state budget for the fiscal year beginning July 1.
Problems with the pension plan surfaced on the House floor when Republicans tried to amend the bill by removing a provision that would require downstate and suburban school districts to gradually pick up the employer's share of teacher retirement funding. The state now covers that share.
The amendment was ruled out of order by Democratic leaders, leading to heated remarks by House Minority Leader Tom Cross and Rep. Mike Bost, R-Murphysboro.
Cross suggested that House Speaker Michael Madigan's cost-shifting proposal was designed to fail, with Republicans getting the blame.
"I think this is typical Speaker Madigan. Let's throw a poison pill in there so (Madigan) can say, 'I tried. It didn't happen,'" Cross said. "He told me three weeks ago he didn't want to" include teachers pension payments in the legislation.
Even though House Republicans appeared somewhat split on the bill, and some downstate Democrats were said to be opposed, the measure did get the support of the pro-business Civic Committee of the Commercial Club of Chicago, plus the Illinois community colleges and the University of Illinois.
"We're very troubled by the need to have to pick up these costs," UI President-designate Robert Easter said after the committee hearing, "but we're troubled significantly by the instability and the lack of confidence in the current system. People who have opportunities to go elsewhere or people who are long-term employees deserve to have some confidence that the system will be there as well."
But union officials were overwhelmingly against the measure, calling it unfair and unconstitutional because, they claimed, it was a diminishment on contractual promises made to public employees.
Another major provision in the measure is designed to encourage public employees to sign onto a program that would give them smaller cost-of-living increases for retirees. Instead of receiving a 3 percent COLA, they would receive 3 percent or half the rate of inflation, whichever is lower. And their increases would not be compounded annually.
As an incentive to accept the lower COLA, they would be allowed to remain in the state's health care system in retirement.
"This bill would for sure cut the unfunded (pension) liability for the state," said Henry Bayer, head of the AFSCME public employees union. "But think about that. What is the unfunded liability? That is money that is owed and already deferred by current retirees and current employees."
The state would never tell bondholders, Bayer asserted, that it couldn't pay them the money it owed them.
"By the same token you shouldn't be saying that to active and retired public employees," he said.
"That is not something the General Assembly should be doing. But that is exactly what you will be doing if you pass this bill."
Bayer also decried the financial impact of the pension revision on state universities.
"The university budgets have been taking it on the chin now for decades. You've been reducing the funding to universities, and they've been forced to raise their tuition," he said.
"Now with this added cost on the shoulders of the universities that says you're going to have to pay the normal cost of pensions, that added cost is going to have to come from somewhere. It's either going to come from higher tuition and higher fees, or they're going to have to start laying people off, cutting back on the number of staff they have. That is not something that is going to maintain the high quality of the public universities in this state."
Easter, in fact, admitted that another tuition increase might be required to cover the cost.
"At this point we would do everything we can to be efficient in the use of resources to minimize the impact on tuition, but inevitably it could have an effect," he said.
Madigan, in his testimony to the House committee, said the Legislature has "been called on to administer a lot of tough medicine" this spring, including cuts to Medicaid and free health care to retired state employees.
"I have said to people from the beginning of the session that service this year in the General Assembly is not for the faint of heart," he said. "But as the sponsor of this bill, I am telling working men and women that their cost-of-living adjustment is not going to be as rich. It will still be there, it will just not be as rich. That's tough medicine."