Springfield – The Illinois Legislature is coming close to the end of its session on May 31 with no decision in sight to deal with the lack of funding for public employee pensions.
That shortfall, estimated at $98 billion or more, has hamstrung the state government in meeting its myriad other obligations. It was caused by the decades-long practice of shorting the state’s annual contributions to the pension fund.
It would seem like progress has been achieved, since both the House and Senate have approved reform bills. But the bills are very different in their approaches.
Labor leaders, such as those with the American Federation of Teachers (AFT), prefer the Senate approach, but its opponents say it won’t go far enough in reducing the shortfall. Senate President John Cullerton is backing the plan, and it was co-sponsored by one area senator, Bill Haine, D-Alton, and is being co-sponsored in the House by Rep. Jay Hoffman, D-Belleville.
The House version, backed by powerful House Speaker Michael Madigan, makes tougher cuts in future retirement benefits and thus could have a greater effect on the shortfall. But its opponents say it appears to violate the state constitution, which has language guaranteeing that promised pension benefits cannot be reduced legislatively.
DESERVE RETIREMENT SECURITY
AFT President Randi Weingarten issued a statement supporting the Senate version. “Public employees, who care for the sick, teach our children and keep bridges and roads safe, make pension contributions throughout their careers and deserve to have retirement security,” she said.
“This proposal guarantees that the state funds pensions and doesn’t walk away from its obligations to hard-working employees.”
Both bills would increase the amount of pension contributions made by public employees, first by 1 percent and then by 2 percent.
In addition, the Senate bill gives workers a choice – they can accept either health insurance or limits to their cost-of-living adjustments. In that way, Cullerton said, the bill remains constitutional because neither benefit is reduced.
At the same time, the bill would obligate the state to make sufficient payments in future years to adequately fund pensions, as it hasn’t done until recently.
Said Weingarten: “The compromise achieved in Illinois shows that when people are willing to work together in good-faith negotiations, fair solutions are attainable.”
A STEP IN THE RIGHT DIRECTION
Opponents say the plan would reduce the shortage by only about 10 percent, not enough to change the state’s woeful financial picture. Supporters call it a step in the right direction.
The House bill includes higher worker contributions, but also adds caps on cost-of-living adjustments, raises retirement ages and shifts some costs to local governments such as school districts. It passed on a 62-51 vote, with many Democrats opposed, and union leaders have promised to test it in court. It was designed to eliminate the pension shortfall over 30 years.
Sen. James Clayborne, D-Belleville, was among those voting for the Senate plan. “I believe this is the best option Illinois has to fix the debt crisis,” he said. “While this was a hard vote, this constitutional legislation will help stabilize our state’s pension systems, start fixing our state’s finances and is as fair as possible.”
Haine’s statement noted that the Senate plan, while supported labor, still requires sacrifices of workers. “Our pension systems have required these necessary changes for far too long,” he said. “While this plan will require sacrifices, it will strengthen our state’s finances and give much needed stability to our pension systems.”