Thursday, May 09, 2013

Madigan pushes ahead with talks on shifting public pension costs

By Meredith Colias

Representatives from public schools, higher education and community colleges testifying before a House committee today warned Speaker Michael Madigan that gradually picking up the cost for their pensions would burden their already strained budgets.

Supporters of a cost shift on pensions are framing the debate as matter of fairness. Chicago Public Schools pays for most of its pension costs, and legislators supporting a cost shift want other districts, as well as public universities and community colleges, to begin to do the same for future retirement costs for employees. Seeing the cost-shift issue as a liability for the state, Madigan said he wanted to push through with a plan. “There has been a full year for everyone to absorb” this notion, he said. “This is going to happen.” Districts outside of Chicago set salaries that determine pension benefits the state has to pay. Madigan said he wants to see “the people that are spending the money pay the bill.”He did not offer specifics on how such a plan might be phased in out over time.

The fear among opponents is that making cash–strapped school districts outside of Chicago pick up the costs for pensions will force districts to lay off more teachers or raise local property taxes if they are not already at their maximum limit in counties with property tax caps. A spokeswoman for Senate Republican Leader Christine Radogno, who is opposed to a cost shift, said in a statement that it would “add insult to injury to downstate and suburban school districts and property taxpayers.”

“It changes the game in terms of the school district’s bottom line,” said Mike Jacoby,  executive director of the Illinois Association of School Business Officials. Universities taking on pensions of their own might be forced to raise tuition rates. Avijit Ghosh, representing the University of Illinois, said a university pension cost shift would affect its ability to retain high quality faculty and conduct research. “We cannot hide” from the impact of cuts universities would have to make to cover pensions costs, he said. Steve Cunningham of Northern Illinois University said administrators would be willing to work with legislators, but the transition would have to be phased in slowly enough for the university to able to absorb the cost.

Rep. Elaine Nekritz, a Northbrook Democrat, said that if pensions changes such as the plan the House passed last week, becomes law, the cost of future benefits would decrease. Nekrtiz said that SB 1 would also reduce the state’s liability, freeing up money that could be spent on education.

Madigan has said he hopes to get cost shift legislation passed this session, while keeping the plan as a separate proposal from the other pension reform bills the legislature is considering. The cost shift issue helped to sink efforts at pension reform in the final days of spring session last year. 

“As much as we would like to think he controls everything around here, there is the necessity of putting 60 votes on something,” Nekrtiz said. “We’ll see whether 60 legislators are willing to support that when it comes up.”


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