CHAMPAIGN — The latest proposal to reform state employee pensions is expected to be a major topic at a forum on the State Universities Retirement System this afternoon.
The Campus Faculty Association set today's pension forum at the University YMCA before Gov. Pat Quinn announced his latest plans to address the state's $83 billion pension liability. He proposed raising the retirement age for public workers, increasing employee retirement contributions, and making colleges and school districts share the cost of pensions.
University of Illinois Professor Susan Davis, spokeswoman for the faculty group, called it a "unilateral pay cut and a way of forcing university faculty, school teachers and other state workers to shoulder the burden of the mistakes of the government."
Davis said she had hoped the forum could address ways to improve the second-tier benefits approved recently for newer state employees, but "now this almost looks like tier 3."
The deficit is a result of the state's failure to honor its financial obligations to the pension system, and employees shouldn't have to pay for what their employers are contractually obligated to contribute, the association said.
The free public forum on the health of the retirement system is scheduled for 4 p.m. at the University YMCA, 1001 S. Wright St., C.
The keynote speaker will be Amanda Kass of the independent Center for Tax and Budget Accountability in Chicago, which supports a graduated income tax and a re-amortization of state pension obligations to solve the funding crisis.
Quinn said Friday that employees should not be allowed to retire with full benefits until age 67, unless they give up some of their health benefits. He proposed increasing their pension contributions by 3 percentage points and capping cost-of-living increases for retirees at 3 percent, and gradually having colleges and schools take over employer contributions. UI officials have said that could cost the university up to $180 million.
In a statement to UI employees Monday afternoon, President-designate Robert Easter noted that the plan has not yet been introduced as a bill but said the university would "closely monitor" it through the legislative session.
"We also will be actively engaged in proposing adjustments and amendments to the proposal to minimize the financial impact on our dedicated employees and protect retirement benefits earned. Approval of the proposal by the legislature in its present form is uncertain," Easter said.
The Campus Faculty Association said eroding pension benefits would harm the UI's ability to recruit and retain top faculty and staff.
"Ultimately, this means undermining the educational and research missions of one of our country's great public institutions of higher education. We urge the governor and the state legislature to work with representatives of state employees to develop a plan that does not penalize those who have carried out their obligations over the past three decades and preserves the quality of education and services in our state," the association said in a release.
In an interview Monday, Kass argued that state pension plans aren't "overly generous," and that the problem can be addressed without slashing benefits.
"The issue with the Illinois retirement system is really one of funding, and paying down the unfunded liabilities," Kass said, and framing it as pension reform "skirts the issue."
Pension contributions consume a huge part of the state's general revenue each year, Kass said, and that may not change significantly under Quinn's proposals.
Quinn wants to shorten the time frame for paying down the retirement systems liability, from 2045 to 2042, and raise the funding target from 90 percent to 100 percent. The governor didn't provide numbers on what the state's annual contribution would be under his liability repayment plan, she said.
Legislators approved a two-part plan to pay off the system's unfunded liability back in 1994, with the deficit projected to grow through 2010 and then be almost fully funded by 2045 as the state's contributions increased.
But the payments didn't cover growing interest on the debt, the state took a pension "holiday" in 2006 and 2007, and then came the financial crisis of 2008, Kass said.
The center supports a re-amortizaion plan that would flatten out the pension payments, require the interest to be paid each year, and extend the repayment time past 2045 to ease the pressure on the general revenue fund.
The center also proposes increasing state revenue by switching from the current 5 percent flat state income tax to a graduated tax and expanding the sales tax to cover haircuts and other services. The center argues that the graduated income tax would mean a cut in the effective tax rate for 94 percent of state taxpayers but still increase state revenue by $2.4 billion annually.
On the web:
SURS fact sheet on governor's proposal: http://www.surs.com/pdfs/facts/GovQuinnPensionPlan.pdf 
UI President-designate Easter's message to employees: https://illinois.edu/emailer/massmail/23245.html 
Center for Tax and Budget Accountability graduated tax proposal: http://www.ieanea.org/media/2012/03/CenterTaxBudgeAccountability.pdf