| SPRINGFIELD, Ill
SPRINGFIELD, Ill Dec 5 A bipartisan group of
Illinois lawmakers on Wednesday unveiled a plan to fix the
state's underfunded pension system by boosting contributions
from public sector workers, raising retirement ages and limiting
cost-of-living increases for retirees.
The legislative framework, aimed at fully funding the
state's pension system within 30 years, drew criticism from
labor unions that said it relied too heavily on current and
retired public employees to pay for balancing the books. The
Senate president said it may violate the state constitution.
Under the plan, the responsibility for the state's biggest
fund, Teachers' Retirement System, along with pensions for
higher education workers, would shift gradually to local school
districts, universities and colleges at 0.5 percent of payroll
annually. It has 21 cosponsors.
State Representative Elaine Nekritz, the Democrats'
point-person on pensions, conceded that the bill is not perfect.
"We are all troubled by something in this bill," she said at
a news conference. "But the greater good must be our goal."
State Representative David Harris, a Republican, said the
problem goes beyond politics.
"We have to face this problem before it ruins us
financially," Harris said, adding that the legislation "moves
the discussion forward in a positive way."
Years of skipping or skimping on pension payments left
Illinois with an unfunded liability of $96.8 billion at the end
of fiscal 2012, a sharp jump from $83 billion in the prior
fiscal year. The funded ratio, which was already the lowest
among states, sank to 39 percent from 43.3 percent. A funding
level of 80 percent is considered healthy.
The burgeoning liability and elusive political consensus on
reforms have contributed to credit rating downgrades of
To ensure the state keeps up with payments for its five
pension funds, the legislation would allow the funds to enforce
those payments through the courts. As Illinois pension bonds
mature, revenue that had been used for debt service payments,
would be tapped to pay down the unfunded liability beginning
with $693.5 million in fiscal 2016, growing to an additional
$1.1 billion a year starting in fiscal 2034.
Democratic Governor Pat Quinn, who has warned that pension
payments are crowding out funding for essential services such as
education, called the new plan a "welcome contribution."
Senate President John Cullerton, a Democrat, questioned
whether the legislation could infringe on state constitutional
protections of public pensions.
"The larger proposal appears to impose unilateral pension
reductions without offering voluntary acceptance by
participants," his office said in a statement.
We Are One Illinois, a coalition of public employee labor
unions, said a preliminary review "suggests there are
significant problems" to work through in the bill.
The coalition said in a statement ... "like its
predecessors, this proposal essentially balances the pension
debt on the backs of teachers, police officers, nurses,
caregivers, and other public servants both active and retired."
Steve Brown, a spokesman for Democratic House Speaker
Michael Madigan, said pension reform will be on the agenda when
the legislature returns in January.
"The speaker has been and will be supportive of
comprehensive pension reform," he said, adding the new
legislation "certainly fits that bill."