Tuesday, May 29, 2012

Cross to Madigan: Take cost shift out of pension reform

By Jamey Dunn

A plan to reform most of the state’s pensions systems appears to have hit a snag.

 House Republican Leader Tom Cross says he cannot support Senate Bill 1673 because it would shift pension costs to local school districts, universities and community colleges. “I support a pension reform bill, not a [cost] shift,” Cross said. “Let’s do a pension bill, not a shifting bill.” Cross filed an amendment (Amendment 4) that he says would take the cost shift out of the bill.

Amendment 3 of the bill, which passed a House committee this morning, would require school districts to pick up the state’s costs moving forward, but the change would be phased in gradually over years. The state would still be responsible for the unfunded liability already incurred. Beginning in 2013, colleges and school districts would pay an additional 1 percent of payroll cost into the pension system for six years. After that, they would pay an additional half a percent until they reach the point of covering all costs. They would also take on the liability if pension investments fail to perform as expected.

The proposal would also require employees to choose between trading their current cost of living adjustments (COLAs) for less generous increases that would not kick in for five years after retirement or until age 67, or keeping their current COLAs but losing access to state health care. Employees who chose to keep the current COLA also would not have any future raises counted in figuring pension benefits. The measure would apply to teachers, state employees, university employees, legislators and state officials. It would not apply to judges.

Some Republican committee members and one Democrat said they would not support the bill because it is unclear how much schools would have to pay under the plan. Opponents said that there was not time for lawmakers to figure out how the proposal would affect their local school districts or get feedback from school officials. “How do I get input from my local school districts?” asked Rep. Karen May, a  Highland Park Democrat.

But Speaker Michael Madigan, who sponsored the amendment, said that it is lawmakers' job to look out for state government, which is facing substantial budget challenges. “Service this year in the General Assembly is not for the faint of heart,” Madigan told the committee.

 Cross said the shift would result in “uncertainty” for school districts and “that nobody knows how to quantify … their potential liability.” He added: “If you take out the shift, we can pass a pension bill. There [will] be no delay, and we can move forward and put it on the governor’s desk. And we’re willing to do that today, if [Madigan] will take out the shift.” But Cross said he thinks Madigan is running a bill that he knows will not get enough support to pass. “It really begs the question, what’s the speaker up to and is he really serious about pension reform?” He said Madigan is trying to avoid passing a bill that would reduce benefits for teachers. “He told me three weeks ago he didn’t want to do teachers,” Cross said. “So this is his way to not address the teacher problem.”

“There were a lot of hurdles to pension reform. … It’s very complicated, very convoluted,” Madigan said. “We’re just attempting to move forward with a very difficult piece of legislation.” He said of Republicans who did not support the bill: “I think they are concerned with the shift of the normal cost to the local school districts. My view, what we’re saying is, that the people that are spending the money ought to be responsible for paying the bills.”


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