CHAMPAIGN – Gov. Pat Quinn's state budget, which is to be unveiled Wednesday, will have to include about $500 million in new cuts, predicted Senate President John Cullerton, D-Chicago.

"My guess is that based on the revenue estimates, we're going to have to cut from what we spent last year because of the drop in revenue from the (federal government) and because of our obligation to pay the pension funds," he said. "We will still have to cut from the previous year by about a half a billion dollars."

Cullerton was in Champaign-Urbana on Monday for several functions at the University of Illinois and for a meeting with the editorial board of The News-Gazette.

It's not clear which programs or departments will be cut, Cullerton said, although he hopes to avoid any more reductions to higher education. According to Quinn administration budget documents, $85 million was cut from higher education operations last year, of which about $46.7 million was from the University of Illinois.

"Higher education has been, adjusted for inflation, cut the last 10 years. Tuition has gone up to make up the difference. But the problem is, it's the same way throughout the nation, and you're getting more of a private school model than a public school," Cullerton said.

Among areas where cuts may be made, the Senate leader said, are in support for downstate and suburban schools and in retirement health care for public employees.

"When school districts in the suburbs and downstate negotiate contracts and decide salaries, they never have to worry about pensions because they don't pay anything into the pension fund," Cullerton said. "That's not the case for Chicago. The state pays virtually nothing for the Chicago pensions."

Half of the state's annual pension obligation is for suburban and downstate teachers, he said.

"They pay nothing into the system, and that ought to change," Cullerton said. "There ought to be an obligation to begin to have to pay something into the pension system from the local school districts."

Sen. Mike Frerichs, D-Champaign, who accompanied Cullerton on Monday, said he would support requiring school districts to make some contribution.

"It shouldn't be a huge amount, but something to give them some skin in the game," he said. "They ought to realize it will affect them somehow."

Cullerton also wants "means-tested" contributions from retirees for their health care.

"A lot of folks took early retirement from the state," he said. "They're out working other jobs. They're averaging $75,000 a year and they're getting free health care from the state. It's ludicrous."

Quinn administration officials said last week that the benefit is subject to collective bargaining and can't be changed until next year. But Cullerton said he hopes to revise it this year.

"When the unions can't get something from collective bargaining, they come to the Legislature and they try to pass a law," he said. "But when we try to pass a law, because we're just the Legislature, they say, well, save that for collective bargaining. We will try it this year."

Cullerton said he also hopes to reform the state's pricey workers' compensation system this year, but that it will be politically difficult because it's an issue that affects unions, lawyers, hospitals and doctors – all of which could suffer financially.

"The problem with that is, that we need people willing to take some tough votes," he said. "It's going to be tough getting it done. But it's our number one goal. We need to fundamentally reform that place."