Lawmakers approves major overhaul of the state pension system

Governor Quinn plans to sign pension reform legislation passed today by state lawmakers.

The bill is designed to wipe out a worst-in-the nation, $100 billion dollar pension debt.

Savings comes from reducing cost-of-living increases and raising the retirement age.

Employee unions plan to sue calling the breach of promises unconstitutional.

Gov Quinn released a statement saying, “Today, we have won. The people of Illinois have won. This bill will ensure retirement security for those who have faithfully contributed to the pension systems, end the squeeze on critical education and healthcare services, and support economic growth.

Capture“I applaud House Speaker Mike Madigan, Senate President John Cullerton, House Minority Leader Jim Durkin and Senate Minority Leader Christine Radogno for their leadership and good-faith negotiations. I thank Senator Kwame Raoul and members of the conference committee for their hard work over the past six months.

“I salute the members of the General Assembly who showed great political courage by voting yes for pension reform.”

Sen Kirk Dillard voted “no” on today’s vote.  He said, “I hesitate to free-up billions of additional dollars that they can use to further expand entitlement programs or subsidize more pet projects.”

Illinois State Treasurer Dan Rutherford said in a statement, “The will of the General Assembly is the adoption of current pension reform legislation,” said State Treasurer Dan Rutherford.  “Litigation is inevitable, and I hope that the courts issue an expedited ruling as to the constitutionality of the legislation. The sooner the better, so we can move our great state forward.”

Also opposing the ruling, Senator Toi Hutchinson released a statement saying, “As a lawmaker, I have the responsibility of proposing just and constitutionally sound legislation. I do not believe this proposed law fulfils this responsibility. If this issue were simply about saving money, a bill would have already been passed. But this legislation deals with people’s very livelihoods, the retirement benefits of thousands of hard-working Illinoisans, and I cannot support a law that fails to take this truth into account.”

Mayor Rahm Emanuel released a statement saying, “Now state workers will have the certainty that pensions they paid into and are counting on will be there for them when they retire, and taxpayers can feel confident that they won`t have to shoulder the burden alone.”

Emanuel also says the works is not finished, and lawmakers need to bring relief to Chicago and other local governments.

2 comments

  • Bob

    It looks like the pension "reform" will effect more than current or future pensioners. The following was authored yesterday by the Human Resource Department of Northern Illinois University.

    Two elements in the compromise legislation are of special concern. The precipitous reduction in the COLA combined with the exclusion of all future salary increases from the calculation of pension benefits for those earning above the Social Security earnings limit would be especially detrimental for mid-career faculty and professional personnel, where little incentive would remain to continue their career investments in the Illinois sector.
    With this in mind, it is important to carefully examine and weigh the likely effect that this legislation, if enacted, will have on human resource investments at Northern Illinois University and the Illinois system of public higher education. Lifetimes of financial planning will be thrown into disarray and the State’s ability to attract and retain high quality employees will be severely damaged. Ultimately, it could weaken the capacity of the Illinois system of public higher education in its role as an economic engine for the state. Consider the exceptionally wide range of labor markets in which universities compete and participate – national, regional, and statewide marketplaces across a wide variety of professions ranging from faculty and other professional personnel who maintain the academic, research, and student services enterprises – to the many other specialized and skilled staff personnel that contribute to the success of students educated on our campuses. Tens of thousands of students, families, communities, and businesses rely on the mission of NIU and the other state universities every year.
    Pension reform must be viewed as more than a narrow exercise in cutting costs. Retirement security has deep public policy implications. Higher education employees have relied upon the State’s representation to maintain a predictable and secure set of core pension benefits that serve as the employer retirement plan including as a replacement for the Social Security System. This is both an ethical and constitutional requirement. For university employees, the normal costs (summation of annual benefits required under the retirement system) are known to be just average compared to comparable programs on a national basis, including Social Security. Furthermore, SURS participants have sacrificed the right to participate in Social Security during their university careers, and the State has not been required to pay the 6.2 percent OASDI employer match to the Social Security Administration. These personnel have never failed to pay their contributions into the retirement system. Under certain of the proposed changes, these assumptions are turned upside down, and longer-term employees in the Tier 1 program have no means whatsoever of revising their long term plans, financial assumptions, and career strategies.
    Illinois is not immune from market based national and global competition for the best and the brightest teachers, faculty, technicians, and managers. Higher education already faces unprecedented challenges in employee turnover, and this legislation will do more harm and exacerbate already serious retirement, recruitment, and retention challenges. Shorter-term mid-career personnel (generally more than 10 years from a planned retirement date) will likely seek other employment options. This cohort of personnel is a cornerstone of the developing human capital framework that supports the Illinois system of higher education. Many of these individuals are highly marketable and it is almost certain, under the proposals being considered, that many of them would pursue opportunities elsewhere. This would place the human capital investments of our college and university system at great risk.

    Complete Memo: http://niu.edu/statebudget/pension_reform/_pdf/Cu

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