May 15, 2015
By: Monique Garcia & Hal Dardick
Cook County Board President Toni Preckwinkle is trying to revive a plan to overhaul government worker pensions, with supporters arguing the proposal is vastly different from changes to state retirement benefits recently struck down by the Illinois Supreme Court.
The proposal would cut benefits and raise retirement ages but also guarantee health care benefits for workers when they retire. It calls for the county to put almost $147 million more a year into the pension fund, though Preckwinkle continues to be vague about how she’ll fund that increase by repeatedly saying “all options are on the table.” If the County Board chooses to foot the bill with a property tax increase, the average homeowner would pay up to $65 more a year starting in 2017, according to one internal county document the Tribune obtained when Preckwinkle sought the same legislation last year.
That measure was approved by the Senate last year but stalled in the House. It is now scheduled to be heard by a panel of House lawmakers next week.
Lawmakers have been left scrambling to come up with a way to try to cut pension costs after the Supreme Court ruled that a 2013 law that cut state worker retirement benefits violated a clause in the Illinois Constitution that says such benefits “shall not be diminished or impaired.” But Rep. Elaine Nekritz, D-Northbrook, said the Cook County plan may get around that restriction using a theory in contract law called “consideration.” Under that theory, benefits can be scaled back, but only if workers agree to the changes and are given something in return.
Nekritz noted the proposal backed by Preckwinkle has the support of some labor unions and carries the promise the county would pay more into the system in exchange for a change in benefits. It also provides a first-time guarantee of health insurance subsidies for retirees and a hedge against inflation in cost-of-living increases, county officials said.
“When you put it all together, it has a much different structure,” than the law struck down by the high court, Nekritz said Friday. “It’s very much worth passing, and if there is a lawsuit, getting before the court.”
Under the proposal, current county employees would see their retirement contributions increased to 10.5 percent of their annual pay by 2016 — up either 2 percentage points or 1.5 percentage points, depending on the employee.
Future retirees, but not current ones, would get less in yearly cost-of-living bumps. Instead of 3 percent a year compounded increases, they would receive either half the rate of inflation or 2 percent, whichever is higher, with a limit of 4 percent. But unlike earlier state and city pension changes, the county adjustments would remain compounded, allowing pension checks to rise more quickly over time.
County workers also would have to work longer before they could retire. In most cases, retirement ages would be raised by five years.
The proposed changes would not apply to employees who started working for the county after 2010 because they already pay more and get less when it comes to retirement.
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