SPRINGFIELD — Gov. Pat Quinn on Friday asked teachers and state employees to pay more toward their own retirements and said he’s looking for a way to shift some of the state’s pension costs to local schools, all in an effort to ease the state’s escalating pension costs.
Quinn wants teachers and state employees to pay 3 percent more of their salaries into their pensions, and he’d raise the retirement age to 67. Future retirees’ annual pension increases would drop, too.
He also wants to shift some of the state’s pension costs for teachers to local school districts and community colleges, a plan suburban school leaders have lambasted in recent weeks. But Quinn didn’t outline Friday how it’d work.
Quinn said the changes he did detail, though, were critical to make sure the state’s pension systems, which face an $83 billion deficit, don’t go under.
“We want them to understand that their pensions will be there when they retire,” he said.
The state’s yearly cost to pay for retirements continues to rise — from 6 percent of the state’s general budget in 2008 to 15 percent now.
Now, the governor has until a May 31 budget deadline to persuade lawmakers to back his plan or negotiate a new one, all while he’s also pushing controversial cuts to how the state provides health care for the poor.
One suburban member of Quinn’s own panel on addressing the state’s retirement deficit said the group still has more to do to find a proposal that will work. State Rep. Darlene Senger, a Naperville Republican, called the governor’s pension plan “half-baked.”
“A lot of this is crunching numbers, and the unions haven’t been at the table to discuss what the governor is proposing, which opens a lot of concern of whether this will even be possible,” Senger said.
Quinn’s plan faces harsh criticism from teachers and other state workers who argue that the state’s pension problem isn’t their fault, and they shouldn’t be punished for it.
“It is crucial that the pension problem not be compounded by an unconstitutional solution that is unfair to public employees who have always paid their share,” Illinois AFL-CIO President Michael Carrigan said in a statement, speaking for We Are One Illinois, a coalition that includes the state’s teachers unions.
Most lawmakers of both parties agree, though, that the state’s rising retirement costs need to be addressed in some form. The ideas to do so vary widely, though.
“The governor is showing real leadership here,” said state Sen. Michael Noland, an Elgin Democrat on Quinn’s pension working group. Noland said the group plans to continue to meet, and the idea of shifting future pension costs onto local schools will be part of those talks.
“The question is: How do you do it?” Noland said.
That’s a question local officials are watching closely, especially as top Republicans vie to block the idea.
“We are not for the shift,” Senate Republican Leader Christine Radogno told reporters.
How much more districts would have to pay — and how soon they’d have to start paying it — could vary widely based on what kind of plan lawmakers come up with. School districts across the suburbs estimate they could face costs in the millions, which could trigger teacher layoffs or property tax increases.
“We’re just going to have to wait and see,” said Evelyn Schiele, a spokeswoman for the College of Lake County.
Senate President John Cullerton, a Chicago Democrat, has pushed for a cost shift for more than a year but has criticized some other attempts to reduce teachers’ pension benefits as unconstitutional.
So praise from Cullerton Friday could be good news for Quinn’s proposal.
“While the proposal will need to be resolved through further discussions with stakeholders, Cullerton is pleased that the governor’s proposal embraces the legal framework that will allow the state to control pension costs in a constitutional way,” Cullerton spokeswoman Rikeesha Phelon said in a statement.
Quinn’s plan would raise the age a teacher can retire with full benefits from 55 to 67. Teachers now pay 9.4 percent of their salaries into their own retirements and would see that increase to 12.4 percent. And future retirees would see their annual 3 percent annual pension increase changed to 3 percent or half the rate of inflation, whichever is lower.
Employees could opt out of the reduced benefits under Quinn’s plan, a possible way to get around a constitutional restriction on reducing pension benefits. But if employees don’t go along, their future pay increases wouldn’t count toward raising their eventual pensions, and retirees wouldn’t get help with health care from the state.
“I think the employers need to make sure the employees understand the total amount of the benefits they are giving them, and by making them pay into the medical benefits, the employee then has a vested interest in keeping those medical benefits as low as possible,” said Bob McQuillan, founder of the Geneva TaxFacts watchdog group.Copyright © 2013 Paddock Publications, Inc. All rights reserved.