April 30, 2012
By: Greg Hinz
After months of preliminary maneuvering, Illinois House Speaker Michael Madigan today finally unveiled a plan for state pension reform that he’s sponsoring and that he will seek to push through the House as soon as Wednesday.
In a 271-page proposed amendment to a pending Senate bill, Mr. Madigan calls for workers employed by the state, Illinois universities and school districts outside of Chicago to pay more, get reduced retirement benefits and retire later if they’re younger than 45.
In exchange, unlike in the current law, the state’s five major pension funds would be authorized to go to court to collect what they’re owed if the state fails to make its required annual contributions.
Various elements of that proposal have passed the House in recent weeks with Mr. Madigan’s backing and are similar to a proposal sponsored by Rep. Elaine Nekritz, D-Northbrook, and Illinois House GOP leader Tom Cross. But up to now Mr. Madigan has not put together all these elements into one bill.
Of equal importance, the amendment puts Mr. Madigan on a different path than Senate President John Cullerton, who sponsored the measure, SB 1, that Mr. Madigan wants to amend.
Mr. Cullerton would allow retirees to choose between keeping state-provided health insurance and full benefits, saying the Illinois Constitution requires such “consideration.” Mr. Madigan disagrees, and his amendment would ban the use of pension funds to subsidize retiree health care.
Steve Brown, Mr. Madigan’s spokesman, said the bill definitely will be called for a hearing and, presumably, a vote, by the House Personnel and Pensions Committee at 8:30 tomorrow morning.
Asked if the speaker will ask for full House action tomorrow, Mr. Brown said, “It will be called at some point. But I don’t know whether the timing is set.”
Mr. Cross told me his staff still is reviewing the proposal but indicated that with a couple of exceptions, it appears similar to measures he has backed in the past.
According to a fact sheet that Mr. Madigan is giving House Democrats this afternoon, the measure would require the pension systems to reach 100 percent funding by 2044. The size of payments would be much more level than under the prior funding scheme, which delayed the heaviest payments until decades into the future. Under the new scheme, the state would be required to pay an extra $1 billion a year above and beyond the required actuarial level starting in 2019.
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