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From the KFVS TV Channel 12 Website...

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Ill. House panel OKs government pension cuts

SPRINGFIELD, Ill. (AP) - Teachers, police, clerks and other public employees would have to dig deep into their pockets or give up some retirement benefits under legislation meant to stabilize Illinois pension systems.

Despite fierce union opposition, an Illinois House committee approved the measure 6-2 Thursday. It now goes to the House floor.

The sponsor, Minority Leader Tom Cross, R-Oswego, wouldn't predict victory for the pension overhaul despite having the support of House Speaker Michael Madigan, D-Chicago.

The state's five pension systems are $80 billion short of the money they'll ultimately have to pay out to retirees. Cross said the state must change that now or pension costs will eat up most of the state's annual revenue.

"That's not spin. That's not rhetoric. That's not hype. That is reality," Cross said.

But unions say it's not fair to fix the problem by squeezing public employees.

Testifying before the House pensions committee, they argued workers, unlike state government, have always paid their share of pension costs - $12.7 billion since 1990 - and that some of the retirement systems' shortfalls are a temporary reflection of the weak economy.

They also rejected arguments that Illinois retirement benefits are too generous. The average pension for public employees is $32,000 a year, they said, and 80% of those workers won't qualify for Social Security benefits.

"There are no Cadillac pension plans here in Illinois for public employees," said Henry Bayer, Illinois executive director of the American Federation of State, County and Municipal Employees.

The Illinois Constitution bars reducing retirement benefits for current government employees. Union leaders predicted an expensive court battle over the Madigan-Cross plan ultimately would end with the law being struck down.

Cross acknowledged the state's role in creating the shortfall.

"The General Assembly has a lot of blame in this. I don't think anyone can run from that," Cross said.

But the legislation focuses on employees, not the state, which could still choose to short the pension systems when money is tight in the future.

Current public employees would be given a choice: Keep your current retirement benefits but pay more or pick two other pension options that will be mandatory for future employees.

State employees who qualify for Social Security now pay 4% of their income into retirement funds. Under the Cross-Madigan proposal, that would jump to 9.29%. University employees now paying 8% would wind up contributing 15.31%.

Legislators would be hit hardest. Their 11.5% contribution would jump to 24.89%.

Judges, who would ultimately decide a lawsuit over the changes, have been left out so far.

Employees who don't want to pay that much could switch to a version with lower retirement benefits or to a "defined contribution" plan.

The lower benefits include setting normal retirement age at 67 instead of 60 before retiring, shrinking cost-of-living increases and using a less-generous formula for determining pension checks.

The defined contribution plan would give money to employees to manage as they see fit, like a 401(k) plan. That means their ultimate retirement savings would be determined by the market and investment decisions.

The bill is SB512.