Monday, January 07, 2013

Time running out on proposed changes to state pensions

By Jamey Dunn

As the clock ticks on the final days of the two-year legislative session, sponsors of a pension reform bill work to try and line up votes before the new General Assembly is seated on Wednesday.

A House Committee approved Senate Bill 1673 today.The legislation would:

  • Freeze cost-of-living adjustments for six years. 
  • Increase employee contributions by 2 percent of salary. 
  • Phase in contribution increases over two years. 
  • Cap pensionable salary at the salary employees are earning when the bill goes onto effect or the Social Security wage base, whichever is more. 
  • Include a guarantee that the state makes its annual required contribution to the pension systems. 

Once the cost of living increase returns, it would only apply to the first $25,000 of retirement incomes and would not be awarded until employees turn 67. “The choice is clear. The time is now to end the excuses and say yes to reform for our pension systems,” said Rep. Elaine Nekritz as she presented the bill in a committee today. But that choice has been delayed for at least another day. The House adjourned this afternoon without taking up the bill. Nekritz and other supporters, including Gov. Pat Quinn, continue to lobby House members to try to find support needed to get the measure through the chamber.

 House Minority Leader Tom Cross supports the legislation and emphasized the need to approve pension changes to avoid another downgrade of the state’s bond rating. “If we do nothing in the next couple days, it is inevitable that we will be downgraded.” Cross said if lawmakers fail to act before the current session ends, “our reputation continues to diminish.”

Supporters of the plan say that it must be approved to address the state’s billions of dollars in unfunded pension liability and bring down pensions costs, which are starting to crowd out other areas of spending. “It’s clear that the state cannot devote exclusively to pensions such a large portion of its budget and still maintain the functions of state government,” said Lawrence Msall, president of the Civic Federation, a Chicago-based organization that has been a major advocate for pension changes.

However, union officials argue that measure does not represent a shared sacrifice but instead seeks to solve the problem entirely at the expense of employees and retirees. “This $95 billion liability is money that has been earned and is owed to active and retired employees. It’s not something they are going to earn in the future. It is something that is already earned and is already owed,” said Henry Bayer, president of the American Federation of State, County and Municipal Employees Council 31. The Senate is not in session but a spokesperson for Senate President John Cullerton said members have been put on “standby” to return to take up any legislation that the House might pass tomorrow. But the measure may not fare well in the Senate because it lacks Cullerton’s support. He wants the House to pass a version of pension reform that the Senate approved during the legislature's fall veto session or to  incorporate provisions from that proposal into whatever legislation representatives approve. 

The House is scheduled to return at 11 a.m. tomorrow.

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