May 9, 2013
Chicago Tribune Clout Street Blog

SPRINGFIELD – Senate President John Cullerton today sent his version of pension reform to the House, setting up a high-profile clash with the rival plan Speaker Michael Madigan already pushed through the House.

The showdown puts more than 700,000 active and retired public workers — school teachers outside Chicago, university employees, lawmakers, and rank-and-file state workers — in the middle over how to fix the nation’s worst-funded state retirement system.

Cullerton’s Senate Democratic majority sent his legislation to the House on a 40-16 vote as he called on colleagues to join him in support of a pension plan that has “strong constitutional principles.”

The Senate leader contended Madigan’s version of pension reform is “risky” because it will be found constitutional and will cost the state more time in trying to enact reform.

At the center of Cullerton’s legislation is his belief that the people in the systems must be allowed to have a choice of new pension options in order to get around the Illinois Constitution’s contractual obligation long believe to ban any diminishment or impairment to pensions.

But the series of options under the Cullerton plan would save about a third of the $150 billion that the Madgian proposal would save — a point that has prompted most of the Senate Republicans to side with the speaker rather than Cullerton.

“This is not the bill that would do the most for the people of this state,” said Senate Republican Christine Radogno of Lemont.

The Madigan proposal centers on raising the retirement age, scaling back cost-of-living increases and calling for current workers to kick in another 2 percent of their paychecks that would be phased in over this summer and next.

The speaker again today predicted his legislation is the version that will pass. He has said his proposal would be signed by Gov. Pat Quinn and pass constitutional muster with the Illinois Supreme Court.

The Cullerton legislation incorporates his long-held belief that employees must be offered a choice when it comes to cutting benefits, an exchange necessary for a pension plan to fall within the legal and contractual contours of the state constitution.

Under the new plan, the choices are variations on Cullerton’s prior proposals that allow employees and retirees to opt between scaled-back 3 percent compounded, automatic, cost-of-living increases and keeping health care in retirement.

Choice A applies to those currently in the pension systems covering teachers outside Chicago, rank-and-file state employees, university workers and legislators. Employees could opt to take 3 percent yearly cost-of-living adjustments based on simple interest and delay the start of those increases until two years after retirement. In return, they would keep access to health insurance, and future pay raises would be counted toward their pension. They also could enroll in an optional cash-balance plan, and teachers would be eligible for an early retirement option.

Choice B offers a couple more options. Employees could keep their current 3 percent compounded annual cost-of-living adjustments, but they would forgo retiree health care and could not count raises toward their pensions. Workers also could choose to keep the status quo in return for waiting three years to start collecting 3 percent compounded pension increases and paying an additional 2 percent from their paychecks phased in over two years.

The choices are different for those already retired and about to retire. They could continue to get health coverage and 3 percent compounded annual pension bumps but would see those increases frozen for two years in a staggered fashion. Under that scenario, they would receive retiree health care. The other option: keep the 3 percent compounded annual hike and give up access to health care.

Other elements of the plan were billed as lessening the ability for unions to bargain over the benefit changes and employee contribution levels. It also would keep pension funding on the current payment schedule.
Endorsing Cullerton’s plan are the American Federation of State, County and Municipal Employees, the Service Employees International Union, the Illinois Federation of Teachers and the Illinois Education Association, among others, in a coalition called We Are One Illinois.

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