May 31, 2013
By: Kurt Erickson
SPRINGFIELD – A plan to slowly shift employee retirement costs from the state to universities and community colleges is the latest won support in a House committee Thursday as part of the push by lawmakers to find a solution to the state’s pension mess.
The so-called “cost shift” proposal, which has already been agreed upon by the state’s higher education officials, is significant because it doesn’t include a controversial provision to shift the cost of pensions to local school districts.
That, said chief pension negotiator state Rep. Elaine Nekritz, D-Northbrook, still could surface before lawmakers leave town Friday.
The plan, which is now pending in the Illinois House, would phase in over 18 years the cost of university and community college employee pensions beginning in 2014.
Nekritz said the universities and colleges agreed to take on the costs in exchange for a loosening of some state oversight on purchasing and inventory.
Plus, she said, “These are people who have never been employees of the state of Illinois.”
Opponents said the shift would result in higher costs for students.
“This will clearly impact students’ tuition,” said Nick Yelverton of the Illinois Federation of Teachers.
The cost shift was the latest development in the scramble to craft a pension fix before the scheduled end of the legislative session on Friday.
The cost shift option is just one element in the mix to address a pension system that is underfunded by an estimated $97 billion.
As it stands, the House has approved a plan that House Speaker Michael Madigan, D-Chicago, says will save more money than a competing Senate version.
But that plan ran into trouble Thursday when a coalition of labor unions said it could force local school districts to pay into Social Security. The new wrinkle would be a major financial burden on school districts, potentially leading to property tax hikes.
“Given already tight budgets, this represents a huge unfunded mandate thrust upon school districts – perhaps the largest ever,” said a release from the We Are One coalition of labor groups.
The Senate has endorsed a plan that Senate President John Cullerton, D-Chicago, believes has a better shot of surviving a likely legal challenge. But, it doesn’t save the state as much money as the House version.
A third option began emerging earlier this week.
Democrats in the Senate, meeting behind closed doors, discussed three smaller pieces of pension reform previously approved in the House. The proposals would hike the retirement age for workers under the age of 45, cap the amount of salary that a pension can be based upon and limit cost-of-living adjustments.
Supporters of the more comprehensive House plan said the piecemeal approach wouldn’t do enough to resolve the state’s rising pension costs, which are squeezing out spending on other state programs.
The cost shift legislation is Senate Bill 1687.
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Copyright 2013 The Southern