By CARL GREEN
Springfield, IL – Over passionate labor opposition, the Illinois General Assembly narrowly passed pension cost-savings legislation that could cost retirees many thousands of dollars in future cost-of-living adjustments.
The bill is intended to shore up the state’s sagging financial ratings and make more money available for state services such as education. It is expected to be tested in court before it goes into effect June 1.
Union leaders describe the plan as an unconstitutional attack on middle-class retirees who held public sector jobs and those working now.
“Teachers, caregivers, police and others stand to lose huge portions of their life savings because politicians chose to threaten their retirement security, rather than pass a much fairer, legal, negotiated solution…” reads a statement from We Are One Illinois, a coalition of unions and elected officials that supported a less drastic measure.
The plan is designed to save about $160 billion over three decades. The state is currently $100 billion short on its pension obligations – the biggest such deficit in the nation.
The We Are One Illinois coalition of unions, which is planning to sue for a stay of the legislation's implementation pending a ruling on its constitutionality, had backed a separate bill (Senate Bill 2404), which would have saved less on pensions, but was crafted to meet the constitutional test. The bill was passed earlier this year in the Senate, but House Speaker Michael Madigan (D-Chicago) blocked a vote on it in the House.
“It didn’t have to be this way,” We Are One said in a statement. “Bipartisan majorities in both chambers could have passed a much fairer, legal, negotiated solution – with real, substantial savings. Instead, leading politicians and their followers chose to violate their oaths of office, trample on the Illinois Constitution, and willfully ignore the plain letter of the law.
AREA LEGISLATORS SAY ‘NO’
Overall, the final bill passed by slender margins – 30-24 in the Senate and 62-53 in the House. But Metro-East and Southern Illinois lawmakers showed remarkable unity in opposing the measure.
Of the seven Senate districts that touch on the region and the 14 House districts within them, only one legislator voted for the bill. That was John Bradley (D-Marion), who also serves as assistant majority leader.
WHAT IT SAYS
The 327-page bill would:
• Reduce cost-of-living adjustment, now set at an automatic three percent per year, using a formula that ties the increases to inflation and adjusts them to favor longer-term and lower-earning workers.
• Suspend cost-of-living increases one to five years, depending on a worker’s age.
• Increase the retirement age for workers now 45 or younger by as much as five years. The increase is four months for each year under 46.
• Cap the amount of salary used to calculate pension benefits.
• Remove pension issues from collective bargaining.
• Reduce employee contributions by one percent.
• Offer a 401(k) plan to employees willing to leave the pension system.
• Increase state government payments into the system. (Unions could sue if payments fall short).
AFCSME spokesman Anders Lindall said it’s not much different from the bill that Speaker Madigan presented earlier this year but could not get through the Senate.
“It’s a bad rerun of a movie that we saw months ago, and for public servants and retirees, it’s a horror film,” Lindall said.
In one example of the COLA formula, a retired teacher with 25 years of service would receive a three percent annual increase, but only on the first $25,000 of pension benefits.
The We Are One Coalition estimates that a state-employed nurse retiring on a $40,000 pension would lose more than $7,500 in COLA over the first five years.
PAYING THE PIPER
For decades, Illinois’ government chose not to fully fund the pension system, instead using the money to balance the state budget, pay for projects and avoid tax increases.
Both Democrats and Republicans joined in the practice, which steadily built the $100 billion shortfall.
Now the piper must be paid – financial firms have dropped the state’s credit rating, and the government must now spend 20 cents of every tax dollar on pensions, leaving it unable to meet basic responsibilities.
On Thursday, Dec. 5, Gov. Pat Quinn signed the bill on Dec. 5, saying it would make the state stronger.
Sen. William Delgado (D-Chicago) called the measure “morally corrupt.”
“We are robbing the benefits of these hard-working people,” Delgado said.