Pension plans' differences mean state still not close to answer
SPRINGFIELD — Although state legislators have passed two pension reform proposals this spring, the plans are so dissimilar that lawmakers seem to be no closer to a solution for the state's $100 billion pension liability today than they were months ago.
Senators on Thursday voted 40-16 for a plan (SB 2404) promoted by Senate President John Cullerton that has the backing of labor unions and is considered more likely to be determined constitutional.
Yet, with savings estimated at approximately $46 billion over the next 30 years, it saves the state only about one-third of a competing pension bill. That measure, sponsored by House Speaker Michael Madigan, was approved last week by the House. Madigan's SB 1 proposes to save about $140 billion over the next 30 years, although its opponents contend it is unconstitutional, would be thrown out by the courts and would delay a pension solution for years.
Among those voting for the Cullerton bill Thursday were most of the Senate Democrats, plus four Republicans. The yes votes included Sens. Mike Frerichs, D-Champaign, and Chapin Rose, R-Mahomet.
No votes included Republicans Sens. Jason Barickman and Bill Brady, both of Bloomington, and Dale Righter of Mattoon.
Both Rose and Frerichs said they supported the Cullerton bill because it included input from state employees and retirees (including downstate teachers, university employees and state employees) who are being asked to accept benefit cuts, and because it has a better chance of being found constitutional.
"For the unions to give up $46 billion, that's a pretty big number," said Rose. "I think there's a real argument to be made here by the unions that they paid their money."
"I don't think anyone is happy about having to roll back a promise," Frerichs said of state employees and retirees in his district, "but I think they're happier that public employees and those who consult them were part of the process."
Rose endorsed Cullerton's long-held contention that because his bill offers employees and retirees a choice of benefit options, it would not violate the Illinois Constitution's pension clause.
"To the extent that something could be more constitutional than something else," said Rose, an attorney, "this is far more constitutional than Senate Bill 1. I've read the Constitution, I've look at the case law. I agree with Cullerton on this."
Added Frerichs, "I have strong concerns about the constitutionality of Senate Bill 1, and I think we have a good alternative with the bill that was passed today."
Rose said he was optimistic that an agreed bill could be negotiated from the two distinct bills.
"My position on this has always been that the best bill, whether it's pensions or Medicaid reform, is one where everyone is at the table negotiating," he said. "We are finally in a position where everyone was at the table. We're seeing this thing play out. We now have one bill here and another bill here. Let's let this conversation continue.
"I'm for keeping this dialogue going. We're finally in a position where everyone is working toward a common goal. Let's let that play out in the next three weeks."
The Legislature is scheduled to adjourn on May 31.
The bill approved in the Senate on Thursday would give two options to retirees and employees who have given notice of retirement as of Jan. 1, 2013:
— Retaining their annual, compounded 3 percent cost-of-living allowance while skipping the COLA for two years in exchange for continuing to have access to the state's retiree health care plan or,
— Retaining the COLA arrangement but losing access to the state health care plan.
Active members would have three options:
— Agreeing to a simple 3 percent that they would receive two years later than now, having access to retiree health care, receiving all future salary increases as pensionable.
— Retaining the 3 percent compounded COLA but with a three-year delay, all future salary increases would be pensionable, and health care access would be retained, but they would have to contribute 2 percent more of their salary to the pension system.
— Or retaining the 3 percent compounded COLA, but with no access to health care and all future salary increases would be non-pensionable.
Area senators who voted against the measure offered a number of reasons.
Righter said he wanted a stronger guarantee that the state wouldn't skip or short-change its annual payments to the pension funds. He also wanted "a more incremental reform that I think the Supreme Court will bite on," and would give retirees or those soon to be retired "time to adjust to."
Barickman, during floor debate, said that the Cullerton bill doesn't go far enough and predicted it wouldn't solve the problem for the long term.
"In this quest for us to do something, I think we have to ask ourselves, are we doing enough so that we don't have to go back to those who work for us and say we're going to change the rules on you again?" he told his colleagues.
Of the 16 votes against the bill, 14 came from Republicans.
Senate Minority Leader Christine Radogno of Lemont said the measure doesn't do enough "to stabilize the (pension) system."
"This is not the bill that saves the most for the people of this state, and what they're really counting on us to do is to come together and figure out the best plan to send up to the court," Radogno said.
Added Sen. Matt Murphy, R-Palatine, "This bill doesn't do enough to change the trajectory of our pension funds, and you will be back here reliving this nightmare."
But Sen. Linda Holmes, D-Aurora, said the Legislature had to "do what is morally responsible" to retirees and employees.
"Sure, you can make your choice. Do you want to be so-called fiscally responsible or do you want to be morally bankrupt, and cheat the people who have helped us as a state for decades, and take away the promises, he absolute promises, that we made?" Holmes asked.