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General Assembly Passes Pension Reforms

By Dana Jay

SPRINGFIELD--- Illinois lawmakers overwhelmingly passed overhauls to the state's pension system Wednesday.

The measure, which passed the House and Senate and is on the way to the governor, will trim retirement benefits for future government workers.

By passing the bill, “The General Assembly tonight took an important and vital step toward rescuing Illinois from fiscal calamity,” Gov. Pat Quinn said in a written statement. “I look forward to signing this important bill into law.”

The measure would only apply to state employees hired after this year. New hires would have to work until they're 67 to get full benefits; benefits would be based on no more than $106,800 dollars in salary; the size of annual increases would be capped.

The bill also reduced benefits for members of the Judiciary and General Assembly.

It's a change many have been calling for. Some have said it's one of the keys to solving the state's budget problems.

“Our pension problems hamper the state’s ability to borrow money and finance long-term capital projects,” said Sen. John O. Jones, (R )-Mt. Vernon, who voted yes on the bill.

The measure had bi-partisan support in both the House and Senate; and members from both parties found reasons not to vote “yes.”

State Rep. Mike Bost, (R )-Murphysboro, voted “present.”

"It is a good thing for the pension system and to reduce our overall long-term debt,” he said. “I would have probably voted for it had it been worked out just a little bit more."

State Rep. Brandon Phelps, (D)-Harrisburg, said he voted “no” because unions were not included in negotiations.

“I think it was done too fast,” Phelps said. “We don't even know how much it's going to save."

Backers say the plan would save the state's pension systems more than $100 billion dollars over the next several decades. State pensions are currently underfunded by $80 billion dollars.

Here’s how Southern Illinois Lawmakers voted:

Rep. Mike Bost, (R )-Murphysboro: PRESENT
Rep. John Bradley, (D)-Marion: YES
Rep. Brandon Phelps, (D)-Harrisburg: NO
Sen. Gary Forby, (D )-Benton: (It was "YES" or "PRESENT")
Sen. David Luechtefeld, (R )-Okawville: NO
Sen. John O. Jones, (R )-Mt. Vernon: YES

(A list of the roll call for the Senate vote was not available late Wednesday; a staffer for Luechtefeld and Jones confirms the republicans’ votes.)

CAT Tracks Editor's Note:

I shall find out how Senator Gary Forby voted and update the report...so you'll know how to vote come election day. (As my "amendments" above and below indicate, Senator Forby is now "toast" in my book. Of course, you are free to vote for any scoundrel of your desire...)

From the Chicago Tribune Website...

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Illinois lawmakers rush through pension reforms

By Ray Long and Michelle Manchir, Tribune Reporters

SPRINGFIELD

Future government employees throughout Illinois would have to work longer to get full retirement benefits, and the size of those pensions would be limited under a measure that zoomed through the General Assembly on Wednesday after years of calls for reform.

The idea is to save billions of dollars in the coming decades for taxpayers who will have to dig deep to cover retirement costs for teachers, lawmakers and many public servants throughout state government, universities, cities, counties and park districts.

But the pension cutbacks won't apply to anyone currently in the retirement systems, only to new government hires and state officials elected after the measure takes effect.

And the measure won't do much to whittle down Illinois' worst-in-the-nation pension debt, which is estimated to be $77 billion to $90 billion.

In a rare case of bipartisan agreement, Democratic and Republican lawmakers maintained that the legislation is legitimate reform on pensions, a long-languishing issue in state government.

"This bill is not window dressing," said Senate Minority Leader Christine Radogno, R-Lemont. "It's substantial reform."

House Speaker Michael Madigan and Senate President John Cullerton, both Chicago Democrats, sprung the reform legislation Wednesday morning and rushed to get it through the General Assembly before influential government employee and teachers' unions had much time to pressure individual lawmakers to vote against it.

Union leaders argue that new employees should get the same benefits as current employees. Democratic Gov. Pat Quinn will face union pressure to veto the bill, but a spokesman said he plans to sign it soon.

The legislation also would provide some relief to Chicago Public Schools, allowing the system to skip teacher pension payments for three years to give the district financial flexibility while its leaders struggle to fill major budget gaps.

Republican Rep. Randy Ramey of Carol Stream argued that the Chicago provision was unfair when other districts are facing "draconian cuts."

But Madigan insisted that the Chicago school system needed a break on its pension burden, which is largely supported by Chicago property owners while the pensions for teachers outside of Chicago are paid by the state.

One of the biggest cost savings is expected to come from increasing the general retirement age to 67 from 62 or lower in many cases, amounting to more than $40 billion over several decades, said Dan Hankiewicz, pension manager for the legislative forecasting commission.

The measure would also limit the salary level on which pension benefits are based to $106,800, as a way to reduce retirement benefits going to some of the state's highest-paid public employees.

The legislation also would strike at one form of double-dipping by banning public employees from getting a pension from one government while collecting a salary from another.

With voters already angry about high unemployment and a falloff in their 401(k) retirement nest eggs, lawmakers have heard increasing complaints that they needed to get the state's finances in order. The dissatisfaction over government spending has been amplified as Quinn presses for an income tax hike.

Madigan said Quinn made a special request to take action on the legislation this week, hoping that passage would allow Illinois to maintain its credit rating as it seeks to borrow money for a significant state construction program.

The House approved the bill 92-17, with seven lawmakers voting present. The Senate followed suit, approving it 48-6, with three present votes.

R. Eden Martin, president of the Civic Committee of The Commercial Club of Chicago, called the bill a "small step in the right direction, but it doesn't begin to solve the state's urgent fiscal problems."

But the growth in the state's pension debt should be reduced dramatically, said Dan Long, executive director of the Commission on Government Forecasting and Accountability. Long also said the state will save $119 billion over the next 35 years under the legislation.

Though major pension savings won't accumulate for years, Quinn and lawmakers plan to use the pension changes to save money as they craft a budget in the face of a $13 billion shortfall. Because the bill allows officials to recalculate the state's overall pension burden, they estimate saving $300 million to $1 billion in pension payments that would have been required in the next budget.

From the IEA Website...

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Pension bill passes - Focus turns to revenue

By Charles McBarron

Illinois Education Association President Ken Swanson Wednesday blasted the Illinois House and Senate for passing a pension bill that reduces benefits for future participants in the state’s pension systems, including the Teachers’ Retirement System (TRS) and the State University Retirement System (SURS).

The passage of SB 1946 came over the objections of the entire Illinois labor community. The bill’s proponents claimed it was needed to protect the state’s bond rating which was endangered by the poor business practices of the General Assembly and past governors.

President Swanson called on Gov. Pat Quinn to veto the bill, but that seems unlikely, since Quinn had raised the bond rating as a key issue.

Swanson pointed out that lawmakers will go on their spring break next week and he urged IEA members to contact them at their home offices and “Let them know how you feel about this pension bill.”

“Now that they have taken this action, they must act to address the revenue crisis in Illinois by passing a tax increase,” Swanson said.

“A one percent increase for education is not appropriate. This state’s problems, in education and human services, demand a more significant revenue bill, such as HB 174. That’s got to be the next step for this General Assembly and this governor,” he added.

Found a "bullet listing" of the changes to the pension system in the Springfield State Journal-Register. Click the link to read the entire article...

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Pension changes in Senate Bill 1946

• Affect the State Employees Retirement System, the Teachers Retirement System and the State Universities Retirement System.

• Apply only to people hired after the bill goes into effect in January.

• Require an employee to be 67 years old with 10 years of service in order to qualify for unreduced benefits. A person could retire at age 62 with 10 years of service, but with a reduction in benefits of 6 percent per year.

• Cap the salary used to determine benefits at $106,800.

• Base benefits on the highest average salary earned during eight consecutive years of the last 10 years of service. Now the benefit is based on four years of service.

• Would stop compounding annual cost-of-living benefit increases; those increases would be based on 3 percent or one-half of the consumer price index, whichever is less.

• Limit participation in the “alternative formula,” which provides enhanced benefits for high-risk state jobs, to correctional officers, state police and state firefighters.

• Do not allow a person to draw a pension from one system while working a full-time job covered by another pension system. Pension payments would be suspended during such a period.

CAT Tracks Editor's Note:

Hopefully...the last bullet means that I will still qualify for and receive my survivor's benefits from the Illinois Municipal Retirement Fund. It's something, but NOT enough for me to forgive the "YES" legislators or vote for them! (I'm still in the process of tracking down the vote of my State Senator, Gary Forby...)

POSTSCRIPT:

As they say..."Seek, and Ye Shall Find."