SPRINGFIELD, Ill. May 9 The Illinois Senate on
Thursday passed a labor union-backed bill to reduce the state's
nearly $100 billion unfunded public pension liability, giving
lawmakers for dealing with America's worst-funded state
retirement system a second option.
The 40-16 vote in the Democrat-controlled chamber sends the
measure to the House, which last week passed a more
comprehensive pension fix pushed by Democratic House Speaker
It was unclear which plan would prevail or whether some
combination of both might pass before the spring legislative
session ends on May 31.
Costs arising from pension underfunding, caused by years of
skipping or skimping on payments, are threatening the delivery
of core state services such as education and health care. The
pension crisis has pushed Illinois' credit rating to the lowest
level among the states.
Senate President John Cullerton's plan, negotiated with
union officials, offers current workers and retirees a choice in
how reductions in pension or health benefits would affect them.
The bill, however, would only shave the unfunded liability by as
much as $15.7 billion and bring the system to a 90 percent
funded level in 30 years.
"We feel that this bill obviously has strong sound
constitutional principles. Other versions of pension reform are
risky, and we know there's going to be litigation for sure,"
Cullerton said during debate ahead of the vote.
Madigan's bill, which unions have vowed to challenge in
court, calls for unilateral changes in pension benefits that are
expected to cut $30 billion from the liability and uses savings
over time to fully fund the system by 2044.
Senate Republicans, who largely voted against the measure,
argued that Cullerton's bill does not go far enough to shore up
the sagging pension system for teachers outside of Chicago,
higher education workers, lawmakers, and state employees.
"This bill doesn't do enough to change the trajectory of our
pension funds and you will be back here reliving this
nightmare," said State Senator Matt Murphy.
Cullerton has said Madigan's bill would save Illinois
nothing if unions were to prevail in an expected court battle
that would test whether the measure violates state
constitutional protections against diminishing or impairing
public worker retirement benefits.
Cullerton's plan would be expected to draw its own
constitutional challenge. The bill gives workers a choice in how
their benefits might be reduced, a so-called consideration
approach designed to comply with the constitution, but groups
representing retired teachers and state workers have said they
could sue over his bill should it become law.
Cullerton's approach offers an incentive, called a
"consideration" in pension parlance, designed to persuade
workers to accept changes in their pension benefits. Employees
who agree to the changes would do so willingly and receive a
benefit for doing so, and this tradeoff would address the
constitutional ban on reduction of pension benefits.
Under Cullerton's plan, current workers would be given
choices involving changes in cost-of-living adjustments for
pensions, higher contributions, and the use of future raises to
determine pension payments.
In return, they would have access to state-sponsored health
care in retirement. Retirees would have to agree to a freeze on
current 3 percent compounded cost-of-living allowances to retain
their health care coverage.
The measure is similar to one passed by the Senate in March
that dealt solely with the Teachers' Retirement System, the
largest of the state's five pension funds.
The Cullerton plan does have some similarities to Madigan's
bill. Like that measure, it also requires the state to make
timely and adequate pension contributions, while also exempting
pension changes from collective bargaining.
Madigan's bill sets a cap on salaries used to determine
pensions, limits cost-of living adjustments on pensions for
future retirees, increases retirement ages and hikes worker
It also introduces changes to calculating the state's annual
pension contributions that are designed to come closer to the
actual future cost of pensions.