By Karen Pierog
CHICAGO Dec 19 Illinois public sector labor
union leaders on Wednesday pushed back against proposals to
reform state pensions that could reduce their benefits, warning
that they would file a lawsuit if necessary.
In early January, the state legislature could debate a plan
unveiled by House lawmakers this month that would boost workers'
pension contributions, raise retirement ages and limit
cost-of-living increases for retirees. The aim is to fully fund
the state's five pension funds in 30 years.
Henry Bayer, executive director of the American Federation
of State, County and Municipal Employees Council 31, said the
state's solution comes down to asking workers to pay more for
"It's not fair," he said at a news conference for We Are One
Illinois, a coalition of public sector worker unions.
He added that passage of the proposed plan, or similar
legislation, would result in lengthy and costly litigation that
the unions are confident they will win given strong protections
for state worker benefits in the Illinois Constitution.
Unions asked for a mid-January summit with Governor Pat
Quinn and legislative leaders to work toward a negotiated
solution to the state's $96.8 billion unfunded pension
Quinn, a Democrat, has been pushing lawmakers to pass
pension reforms during their final session in January before the
newly elected legislature takes office.
That push got stronger last week after Moody's Investors
Service revised Illinois' credit outlook to negative from stable
and warned that a failure to deal with the pension liability
could lead to a downgrade of the state's A2 rating, already the
lowest among the states Moody's rates.
Illinois has skipped or skimped on pension payments for
years, leaving it with the lowest funded ratio among states.
That ratio fell to 39 percent at the end of fiscal 2012 from
43.3 percent, with both well below the 80 percent level
Union officials noted that most members will not receive
federal social security payments and must rely on their Illinois
pension in retirement. They said members have made their pension
contributions and blamed the problem on decades of state
borrowing from the pension system to fund government spending.
The unions offered their own proposal for "an ironclad
guarantee" that the state will make actuarially required pension
payments, a gradual increase of 2 percent in workers' pension
contributions that would ultimately raise more than $350 million
a year and the closure of so-called corporate tax loopholes to
gain $2 billion for state coffers.
Those loopholes include tax subsidies for biofuels, various
tax exemptions and a special tax break granted to the Chicago
At an unrelated event, Quinn told reporters he wants reforms
that will meet constitutional muster and that will be fair to
"We want to work with the labor unions and employee groups
as far as we can, but ultimately taxpayers come first," he said,
adding that action on pension reform should not be delayed.
The Quinn Administration also took the stance that a 2
percent contribution hike by workers that had been previously
proposed by unions would not fix the problem.
Senate President John Cullerton, a Democrat, agreed.
"We appreciate the labor community's willingness to offer
ideas on pension reform but this proposal alone won't produce
savings significant enough to solve our pension problem," his
office said in a statement.
A spokesman for House Speaker Michael Madigan did not
immediately respond to a request for comment.
The governor supports gradually shifting pension payments
currently made by the state to local schools districts,
universities and colleges, a move included in the House plan.
Teachers' Retirement System, which covers teachers in all
districts with the exception of Chicago Public Schools, is the
biggest state public pension fund and accounts for most of the
state's unfunded liability.
Dan Montgomery, president of the Illinois Federation of
Teachers, said there would need to be safeguards for poorer
school districts that would not be able to absorb pension
The unions also took issue with another bill that passed the
Senate in May that would require certain workers to choose
between reduced benefits and retiree healthcare coverage.