In the state capitol, it’s a battle over two bills, competing proposals brought forward by two of the state’s top democrats to deal with our nearly $100 billion dollar pension problem.
As expected, the senate pension bill passed this afternoon, basically along party lines, 40-16. But that’s not the end of it. The House has already passed a competing proposal, with much deeper cuts.
Some call that bill the solution. Others say it’s a magnet for a lawsuit.
The state house executive committee heard testimony today about the effects of so-called “cost shift;” passing the cost of teacher pensions along to municipalities. It’s part of the pain of dealing with the worst pension crisis in the nation.
There was fiery pension debate in the senate with back and forth between two very different plans, proposed by top democrats. One from the senate president, crafted with union support. And the other proposed by the house speaker which cuts much deeper.
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.
The Chicago Tribune contributed to this report.