Despite resistance, pension bill OK'd

SPRINGFIELD — The Illinois Senate on Tuesday approved a controversial pension reform measure (Senate Bill 1) aimed at reducing the state’s estimated $100 billion public pension system debt.

Here is a plain-text version of the legislation.

The vote came after a long day of closed-door meetings among legislators and their leaders, and a relatively brief hearing by members of the House-Senate conference committee that had advanced the bill last week.

During that hearing House Speaker Michael Madigan, D-Chicago, said that the state’s pension problems were the result of too-generous benefits.

“I think we all acknowledge that the reason we’re all here today, talking about this issue, is that the Illinois pension systems are just too rich to be afforded as the state goes forward,” Madigan said. 

But Sen. Linda Holmes, D-Aurora, later disputed Madigan’s contention, as he sat just a few feet to her right.  

Holmes, the only member of the 10-member conference committee to not sign off on the proposal, said the state had continually underfunded the pension systems.

“I believe this was actually more caused by the fact that we as a state did not make our pension payments as we should have, even though the employees worked and their full payments were made,” Holmes said. “I think a lot of this problem stems from the fact that we didn’t do what we were obligated and should have done.”

While Madigan and the two top Republicans in the Legislature — Senate Minority Leader Christine Radogno and House Minority Leader Jim Durkin — were at the conference committee hearing, Senate President John Cullerton missed it.

Senate Democrats said Cullerton was busy trying to round up votes from his recalcitrant members, many of whom were elected with the backing of organized labor.  

Among those was Sen. Mike Frerichs, D-Champaign, who also is running for state treasurer and has received much of his campaign contributions from labor unions.

Gov. Pat Quinn also was absent from the hearing although his budget director, Jerry Stermer, testified in favor of the legislation.

“Unlike previous proposals this plan will give priority to the long-serving employees with more modest earnings,” Stermer said. “I want to be clear there will be no reduction in monthly checks going out to current or future retirees. The plan slows the rate of growth of the annual adjustments with more modest slowing for lower-earning, longer-serving employees.”

But representatives of public employees unions and retirees called the legislation everything from “theft” to unconstitutional.

“How can you do this to the good people who serve our state?” said Dan Montgomery, president of the Illinois Federation of Teachers. “There’s only one way to describe that kind of blatant taking of one’s life savings. We call it theft.”

Linda Brookhart, executive director of the State Universities Annuitants Association, said the legislation “violates longstanding principles of contract law and the Illinois Constitution.”

And Tom Ryder, a former state representative who is now a lobbyist for the Illinois State Employees Association Retirees, said that “those who retire expected the rules on the day that they retired to be in effect for their retirement. They planned for it, they paid for it and they earned it.

“To now suggest that the rule changes that are part of this bill, for those folks who have already retired, are in some way appropriate does not face those facts for one simple reason. The retirees have no options.”

Earlier coverage Tuesday from Tom Kacich:

4:36 p.m. Kacich on Twitter: Pension bill passes both houses within 2 minutes of each other. Bill now goes to Gov. Quinn, who supports it.

From The Associated Press, the response: Gov. Pat Quinn says the people of Illinois have won after lawmakers approved a major overhaul aimed at solving the state’s $100 billion pension crisis. 

In a Tuesday statement, Quinn calls it “landmark legislation” that will ensure retirement security. 

The Chicago Democrat has made pension reform a top priority for two years, but efforts had been unsuccessfully including previous special sessions and his social media campaign. More recently, Quinn had refused to take a paycheck until lawmakers came up with a comprehensive solution. 

The Illinois House and Senate approved a bill that’s estimated to save roughly $160 billion over the next three decades. 

However, unions were opposed to the measure, calling it unfair and questioning its legality.

4:34 pm. Kacich on Twitter: House votes 62-53 w 1 present on

The Illinois Senate has approved the pension reform bill by a vote of 30-24. Sens Frerichs, Rose, Righter, Barickman all nos on pension vote. Sen. Bill Brady a yes.

4:22 p.m. Kacich on Twitter: Senate Minority Leader Christine Radogno is last Senate speaker on pension bill. Says 'we want to be in position to sunset' temp tax hike

4:15 p.m. Kacich on Twitter: Dem Sen Toi Hutchinson another no vote on pension bill. Said retirees have earned these benefits. "These are contracts."

4:07 p.m.:  Don't let politics and personal ambition keep you from solving this problem.

4:05 p.m. Kacich on Twitter: Sen. Matt Murphy, member of conf comm, says IL can't just make pension payments. "Think what we can do to save our taxpayers $160 billion."

3:59 p.m. Kacich on Twitter: : This is just a change in the way a person's pension grows, not a reduction. Maybe someday we can restore these benefits

3:55 p.m. Kacich on Twitter: : said he will vote against the pension bill "reluctantly"

3:54 p.m. Kacich on Twitter: GOP gubernatorial candidate Kirk Dillard says he has questions about pension bill's constitutionality; fails for lack of consideration. @KirkDillard: No guarantees here that the money will be spent wisely; this isn't the last chance to fix the pension problem

3:51 p.m. Kacich on Twitter: Sen. Jim Oberweis: Said that when he came here today he didn't know how he'd vote; hasn't stated how he will vote. Oberweis says this bill is not true reform but it may be the best we can get at this time. Leaning toward voting for it.

3:46 p.m. Kacich on Twitter: Sen. Linda Holmes: Today we're looking at breaking promises to retirees and current workers. "What we are doing is quite simply wrong."

3:43 p.m. Kacich on Twitter: " Just stick to pension payment schedule. Honor your promise to public employees"

3:40 p.m. Kacich on Twitter: ": Pension savings should go into underfunded pension systems, not into 'other things.' "

3:38 p.m. Kacich on Twitter: "Sen. Dale Righter, R-Mattoon: why does this bill only require 10% of savings to go back into underfunded pension system?"

3:38 p.m. Kacich on Twitter: ": This is morally wrong, morally corrupt."

3:17 p.m. Kacich on Twitter: "So far no one from East Central IL has spoken on the pension bill in the House"

3:13 p.m. Kacich on Twitter: "(State Rep. Michael) Zalewski (D-Riverside): Retirees are awaiting our decision and it has to be a gut-wrenching time."

3:10 p.m. Kacich on Twitter: ", R-Bloomington, wonders why the judges system isn't in the pension bill if only IL Supreme Ct will make the call" "The intent was to avoid a judicial conflict, says Madigan."

3:04 p.m. Kacich on Twitter: "I'm told there are 9 more speakers who want to opine on SB 1 in the House. No vote until at least 3:30?"

3:01 p.m. Kacich on Twitter: "(State Rep. Mike) Fortner (R-West Chicago) says he is concerned that funding guarantee in pension bill is weak. Says it's a risk we shouldn't be taking."

2:45 p.m. Kacich on Twitter: "(House Speaker Michael) Madigan says he is confident the pension bill is constitutional,altho didn't offer an argument"

2:23 p.m. Kacich on Twitter: "Madigan says that cut in employee contribution to pension funds was put in bill to satisfy likely court challenge re: consideration"

2:21 p.m. Kacich on Twitter: "Some IL state senators on the House floor for the debate on pension reforms."

1:51 p.m.: Kacich on Twitter: "Speaker Madigan again says the pension benefits are 'too' rich" for state revenues. Pensions now take up 20% of state revenue, he says"

"IL dedicates 14% of its state-source revenue to pensions, more than any surrounding state, says Madigan"

1:40 p.m.: Tom Kacich has posted on Twitter that the state House is ready to debate the pension bill. Here is Kacich's Twitter feed.

For audio and video coverage of today's meetings, click here (Senate) and here (House)

---

Kacich's coverage from earlier today.

11:17 a.m.:

The split between Illinois lawmakers on the controversial pension reform bill scheduled for a vote today was made clear by two Democrats sitting 10 feet apart in an ornate Senate hearing room this morning.
 
House Speaker Michael Madigan, D-Chicago, told a House-Senate conference committee that the state's pension crisis was the result of employee benefits that are too generous.
 
"I think we all acknowledge that the reason we're all here today, talking about this issue, is that the Illinois pension systems are just too rich to be afforded as the state goes forward," Madigan said while advocating for Senate Bill 1, likely to be voted on today. "I think everybody acknowledges that change must be done."
 
The "message" in the legislation, Madigan said, "is that the four (retirement) systems got too rich. There must be change."
 
But Sen. Linda Holmes, D-Aurora, later disputed Madigan's contention, as he sat just a few feet to her right. 
 
She said the state had continually underfunded the pension systems.
 
"I believe this was actually more caused by the fact that we as a state did not make our pension payments as we should have, even though the employees worked and their full payments were made," she said. "I think a lot of this problem stems from the fact that we didn't do what we were obligated and should have done."
 
The Madigan-Holmes exchange was indicative of the split among Democrats on the pension reform plan. And the Senate will be ground zero on the issue.
 
In fact, Senate President John Cullerton was the only one of the four legislative leaders to miss the conference committee hearing Tuesday morning. He was working to gather votes for the measure frfom reluctant Democrats.
 
Meanwhile, in his testimony Madigan said the pension reform plan would reduce state spending on cost of living adjustments, but would protect the most vulnerable retirees.
 
"And I think everybody acknowledges that one of the biggest problems in the system, the element that contributed so greatly to the richness of the system, was the presence of the 3 percent compounded adjustment in retirement. Please note that I did not use the word COLA because we all got drawn into a trap. We all talked about a COLA adjustment. The 3 percent, compounded pay increase in retirement is the furthest thing from a COLA because it bears no relationship to the cost of living."
 
The 3 percent annual increase would be revised under the list of changes in SB 1, Madigan noted. But he said it "would not be changed entirely."
 
"During the deliberations of the conference committee and during the discussions and negotiations among the leaders, there was great interest in protecting long-term, low-income workers," he said.
 
Up to a threshhold, he said, long-term, low-income retirees would be protected.
Representatives of union groups insisted, however, that the proposed pension changes are unconstitutional.
 
Tom Ryder, a former legislator and a lobbyist for the Illinois State Employees Association Retirees, said  that "those who retire expected the rules on the day that they retired to be in effect for their retirement. They planned for it, they paid for it and they earned it.
 
"To now suggest that the rule changes that are part of this bill, for those folks who have already retired, are in some way appropriate does not face those facts for one simple reason. The retirees have no options."

Here is Kacich's Twitter feed. And here are his Twitter posts from Tuesday morning:

"IL House is back in session, but not debating pension legislation"

"IL House just observed a moment of silence for IL tornado victims ... then went to caucus to discuss pension reform plan."

"Conf committee getting ready to adjourn after about 90 mins of testimony. Nine of 10 members have signed off on the report, says Chair Raoul"

"@SenBillBrady to pension plan foes: if we do nothing pension costs eventually will eat up 26% of state revenue ... is that sustainable? How?"

"House Leaders Durkin & Madigan still here, as is Senate GOP Leader Radogno. Sen Pres Cullerton hasn't appeared. Vote's all up to Senate Dems"

"HouseGOP Leader Jim Durkin: $160 billion saving is real money, not Monopoly money

"Dan Montgomery of IL Fed of Teachers predicts that pension proposal, if passed, will be found unconstitutional"

"Gov. Pat Quinn's budget chief Jerry Steamer says no reduction in monthly payments to retirees, just a slowing of growth. Quinn not @ hearing"

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Tuesday's proceedings on Illinois' pension reform proposal will begin with a hearing at 8:30 a.m. on the 327-page bill that a 10-member House and Senate conference has proposed.

Following that hearing, the bill can go to either the House or the Senate, although there was word Monday afternoon that the legislation would start in the Senate.

The legislation has heightened significance in the Champaign-Urbana area because of the high number of state employees. A study earlier this year found that 37 percent of state Rep. Naomi Jakobsson's constituents are government employees. About 28.5 percent of the constituents of Sen. Mike Frerichs, D-Champaign, are government workers. Those percentages include not only University of Illinois and state employees, but federal, county and school district employees, some of whom are not affected by the pension proposal.

The legislation, an amended version of Senate Bill 1, affects those in the State Universities Retirement System, the Teachers' Retirement System of Illinois, the State Employees Retirement System and the General Assembly Retirement System.

Lawmakers said it does not affect the Judges Retirement System.

Likewise, it has no impact on the separate Illinois Municipal Retirement Fund program that covers employers including cities, villages, counties, townships and various special districts, such as mass transit, parks, forest preserves and sanitary districts.

Part of the proposal would push back the retirement age for workers age 45 and under on a sliding scale. Annual 3 percent cost-of-living adjustments for retirees would be replaced with smaller annual adjustments for the highest earners. A limited number of workers would have the option of freezing their pension and starting a 401(k)-style defined contribution plan.

But union leaders and other opponents say the legislation is unconstitutional under a provision (Article XIII, Section 5) of the Illinois Constitution that states: "Membership in any pension or retirement system of the state, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired."

For audio and video coverage of today's meetings, click here (Senate) and here (House)

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billbtri5 wrote on December 03, 2013 at 2:12 pm

hey Mike will legislative pensions be cut as well?..

Utowner wrote on December 03, 2013 at 5:12 pm

Will the last person out of Illinois please shut off the lights?

Danno wrote on December 03, 2013 at 6:12 pm

...In other news, ADM gets tax break and, other pork barrel 'allotments' increase. Don't worry about turning off the lights; there's no energy available.

Utowner wrote on December 03, 2013 at 7:12 pm

Oh yeah, I forgot that we don't pay bills in this state...    

sanjuan wrote on December 03, 2013 at 7:12 pm

The most outrageous statement in this article is that of Speaker Madigan who said the pension crisis was the result of too generous benefits.   Hey Mike, how many times in your legislative career have you voted to suspend or defer required state payments into the system?  Think that might have impacted the financials a bit?    Guess I should change my name to ADM.   Somewhere you found money for them.  

spangwurfelt wrote on December 03, 2013 at 8:12 pm

Let the law suits commence.

football jingoists wrote on December 04, 2013 at 8:12 am

"...“I think we all acknowledge that the reason we’re all here today, talking about this issue, is that the Illinois pension systems are just too rich to be afforded as the state goes forward,” Madigan said...."

You can keep on thinking that, doesn't make it true. Liars, theives, what a disgrace.