Monday, August 26, 2013

Union leaders blast new outline for public employee pensions

By Jamey Dunn

Union leaders today publicly rejected a public pension reform outline that a special legislative committee is considering.

On Friday, the Capitol Fax blog and the Associated Press released details of a framework the bipartisan conference committee has been working on. The plan would toss out the 3 percent annual compounded cost-of-living adjustment retirees currently receive. Instead, cost-of-living adjustments would be half the rate of inflation. The rates would have a base level and cap set, but the outline obtained by the two outlets did not include those limits. The change would likely result in smaller COLAs for retirees.

Proposals in the past have called for retirees to contribute a larger portion of their paychecks to their retirement, but this concept would reduce the amount employees chip in by 1 percentage point. The retirement age would not change under the framework, but the way that retirement benefits are calculated might be changed to consider pay over several years of employment instead of the final typically higher-paid years. The changes in the outline are estimated to reduce the almost $100 billion unfunded pension liability by $18.1 billion and save the state $145 billion over 30 years.

The decreased contribution from employees would likely be used as consideration for reductions in benefits elsewhere. Several lawmakers believe that the state Constitution requires any cut in retiree benefits to come as part of a trade for something of value. However, there has been broad disagreement in the past on how consideration would be achieved and whether it is even necessary to cut future benefits that employees have not yet earned.

Union officials do not believe that the new plan would meet constitutional requirements. “Published reports suggest the legislative conference committee on pension reform is ready to rehash the same unfair, unconstitutional attacks on retirement security,” said a statement from the We Are Once Coalition. “Teachers, police, nurses, caregivers and hundreds of thousands more working and retired public servants earned their pension, never missed a payment, and in most cases aren’t eligible for Social Security. They deserve better from the conferees. So does the Illinois Constitution, which lawmakers are sworn to uphold and which provisions of the committee’s outline would directly violate.” The statement calls for lawmakers to reconsider the union-backed Senate Bill 2404. Senate President John Cullerton sponsored that bill, which was approved in by the Senate. But House Speaker Michael Madigan refused to call the bill for a vote because he said it did not save enough money. Supporters of SB 2404 said it could have easily passed in the House if called for a vote. The union support of the bill definitely helped to bolster its popularity among lawmakers.

Committee members have been saying for weeks that they are making progress toward a proposal for changes to the public employees' pension systems. However, they say the outline obtained by members of the press is not necessarily their final proposal. “The committee has not come to a consensus,” Committee chair Sen. Kwame Raoul, a Chicago Democrat, told the AP. “Our work is not done.”


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