Pension reform seen unlikely for Illinois legislative session
CHICAGO Nov 4 (Reuters) - Illinois's state legislature is unlikely to vote on a long-awaited pension reform in its current session that ends this week but could do so before the next one starts in January, spokespersons for legislative leaders said on Monday.
A $100 billion unfunded pension liability is squeezing out funding for core state services and has been a major reason behind credit downgrades that have left Illinois with the lowest ratings among U.S. states.
Some forward progress is reported in efforts to tackle the pension problem, with new reform proposals being sent late last week to pension system actuaries for analysis, according to Steve Brown, spokesman for House Speaker Michael Madigan.
He added that a vote could come before January if a reform plan can be agreed upon.
"The speaker said once there is an agreement he's prepared to reconvene (the legislature) at any time," Brown said.
The actuarial analysis of new proposals concerning cost-of-living adjustments is expected to take a couple of weeks to complete, said Rikeesha Phelon, a spokeswoman for Senate President John Cullerton.
A 10-member bipartisan panel of state lawmakers has been concentrating on changes to the current 3 percent compounded cost-of-living adjustments for retirees, including limiting the adjustments to half the inflation rate.
The Democrat-controlled legislature's last official session of the year is scheduled to start on Tuesday and end on Thursday.
A plan being considered by a special legislative panel created in June to thrash out pension changes has put forward a plan projected to save the state $138 billion over 30 years. Legislative leaders are seeking alternatives that would increase the savings to at least a reported $150 billion.
Moody's Investors Service said on Monday a continued delay means pension reforms might not be in place when Illinois begins fiscal 2015 on July 1.
The credit rating agency also noted in a report that preliminary fiscal 2013 data from Illinois' five retirement systems indicated a $16.6 billion or 9 percent drop in their adjusted net pension liability using Moody's pension methodology.
Moody's estimate of the net liability fell to $173 billion in the fiscal year that ended June 30 from $189.6 billion in fiscal 2012 due to investment returns of 12.9 percent on an asset-weighted basis and higher interest rates, the rating agency reported. In fiscal 2012, investment returns by the funds for state workers, legislators, judges, public school teachers, and higher education workers ranged from 0.6 percent to minus-0.1 percent, according to a state legislative commission.
"Still, inaction on benefits reforms more than outweighs the modest (adjusted net pension liability) decline and leaves severe pension deficits as the main credit pressure for Illinois, the lowest-rated U.S. state," Moody's said.