Which pension fixes will be on the table?
SPRINGFIELD — The rising costs of Illinois teachers' and state workers' retirements continues to eat away — more every year — at the limited supply of cash the state has to pay for schools, roads, aid for the poor and disabled and other services.
Gov. Pat Quinn and lawmakers know they need to do something about it.
Cut benefits for current employees, and possibly even current retirees? Shift the state's future costs for teacher pensions onto local school districts?
Or wait out this election year, perhaps making some changes to save money but leaving substantive action at least until November?
Lawmakers and Quinn have talked for months about how revamping the state's pension systems must be a top priority this year, but they're facing steep political, legal and mathematical challenges that could hamper their efforts.
Quinn is expected to lay out at least some options for his goals for changes to the Illinois pensions systems next week, marking the beginning of what could be a seven-week sprint in Springfield as lawmakers try to meet their May 31 budget deadline.
The governor has had a pension committee of lawmakers — most from the suburbs — working on the issue for months.
What Quinn plans to announce, specifically, isn't being discussed publicly. But the governor's spokeswoman Brooke Anderson said there could be movement on several alternatives Quinn has mentioned before.
Among them: altering — or eliminating — a yearly 3 percent pension increase for most retirees, a major cost.
Quinn could ask workers and teachers to pay more toward their own retirement and raise the retirement age. Teachers, for example, contribute 9.4 percent of their salaries toward their retirements.
And a concept to save the state money by having suburban and downstate schools pay more toward teachers' retirements could come up, too, as supporters argue Chicago schools already cover that cost.
But it's an election year, a time when lawmakers tend to try to avoid controversial votes, lest they be punished for them months later at the ballot box. So whether lawmakers approve changes in the coming weeks remains an open question, especially as they also might try to cut almost 20 percent from the state's spending on health care for the poor — a cost to the state that is nearly three times larger than the $5.8 billion pension payment due this year.
Supporters point out it won't get any easier, especially because lawmakers have skipped pension payments in the past.
"There will never be a good time to do pension reform," said House Republican Leader Tom Cross of Oswego.
The reasons it's so difficult are far-reaching and complex. First, the numbers can be staggering. The state's pension systems are underfunded by $83 billion, more than twice the state's annual operating budget. So changes might have to be severe to make a dent.
Those changes could come at the expense of state workers and teachers, who argue they haven't done anything to cause the problem and shouldn't be harmed by changes in benefits. That's a powerful point among some lawmakers in Springfield.
And lawmakers would likely have to vote to reduce their own pension benefits, an idea some might privately oppose. Illinois judges who might eventually determine whether changes are legal get state pensions, too.
Suburban Republican lawmakers have already pooh-poohed the idea of moving the state's payments for local teachers' pensions to school districts, saying the proposal is just the state passing the buck to local property taxpayers.
Plus, Cross says, changing who pays for teachers' retirements doesn't address the fundamental problem of the pension funds' steep deficit.
"Shifting costs to local school districts is not pension reform," Cross said.
Cross has pushed for changes that would have workers choose to take a less lucrative pension plan, pay more out of each paycheck to keep their current one or enter a 401(k)-style program. His plan has languished in recent months, but Cross says it's still a "viable option."
Union officials have vowed to go to court over most reductions in pension benefits, and some Democrats like Senate President John Cullerton of Chicago have rejected Cross' plan as unconstitutional.
Instead, Cullerton wants lawmakers and Quinn to negotiate with the unions in an effort to avoid a lawsuit.
"The person you have the contract with has to agree with the concept," Cullerton spokesman Ron Holmes said.
Holmes said Cullerton hasn't begun those talks yet, choosing to see first what Quinn has to say next week. Quinn's self-imposed pension commission deadline is Tuesday.
"We're waiting until the 17th," Holmes said.
Despite their divergent views on how to handle the state's pension troubles, most lawmakers agree the issue is of critical importance. This month, Teachers' Retirement System Executive Director Dick Ingram said the funds he oversees could become insolvent by 2029 under certain conditions. If that happened, a person retiring today at age 55 could be without a pension at age 72.
"Sounding the alarm is better than doing nothing at all," said state Rep. Elaine Nekritz, a Northbrook Democrat and member of Quinn's pension committee.
She and state Sen. Michael Noland, an Elgin Democrat, said the pension committee might keep working on the issue even after Quinn's announcement this week.
Noland, who is also on the committee, said the group needs to try to find a solution that will both make a big difference in the state's retirement expenses and be palatable to enough lawmakers to win approval.
"We have to make both practical and political decisions," Noland said.
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