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Article updated: 5/8/2013 8:55 AM

Illinois Senate to move union-backed pension plan

Illinois Senate President John Cullerton has struck a deal with the state's biggest public unions over retirement benefits.

Illinois Senate President John Cullerton has struck a deal with the state's biggest public unions over retirement benefits.

 

Associated Press

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By Mike Riopell and Doug T. Graham

SPRINGFIELD -- Illinois Senate President John Cullerton said Monday he plans to push forward with a deal he's struck with the state's biggest teachers and workers unions over their retirement futures.

The proposal clashes with more aggressive benefit cuts proposed by Illinois House Speaker Michael Madigan and approved by the House last week, perhaps setting up a monthlong staring contest over what lawmakers should do about the state's immense $100 billion in pension debt.

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Comparing the pension plans

Cullerton plan
Illinois Senate President John Cullerton's plan would offer teachers and state employees three options:
Ÿ Less generous annual cost-of-living benefit hikes, and in exchange, their future salary raises would count toward their pensions and health care help would be guaranteed in retirement. Ÿ Keep current yearly cost-of-living hikes but give up health care coverage in retirement; raises wouldn't count toward pensions. Ÿ Keep current yearly hikes by putting 2 percent more of their salaries toward retirement and agreeing to skip the cost- of-living adjustments for three years.
Ÿ Retirees would get similar options.
Madigan plan
Illinois House Speaker Michael Madigan's pension cost-cutting proposal would:
Ÿ Cap how much of an employee's annual salary could count toward a pension at about $109,000. That number would grow slowly over the years.
Ÿ Reduce retirees' annual cost-of-living adjustments. A retiree would get a 3 percent annual increase calculated on $1,000 for every year worked. Someone who worked 20 years would get an annual increase of 3 percent of $20,000, or $600.
Ÿ Require employees to pay 2 percent more of their salaries toward retirement.
Ÿ Raise the retirement age by one to five years, depending on how old a worker is when the law takes effect.

The root of Cullerton's plan offers retired and working public employees a choice between keeping their current pension benefits and sacrificing health care help or taking a less generous retirement plan and keeping health care.

Cullerton has used this model all along, arguing it meets requirements of the Illinois Constitution that pension benefits not be "diminished."

The difference now, though, is that union leaders have for the first time signed onto his plan, agreeing not to sue if it becomes law.

Cullerton criticized the House plan, which doesn't offer a choice but would likely save the cash-strapped state far more money. Cullerton's could save around $46 billion over decades, he said.

Madigan's could save as much as $150 billion.

"If that bill is declared unconstitutional, there's zero savings," Cullerton said.

Cullerton's proposal could get its first hearing by a Senate committee Wednesday and could get a full vote the next day. It essentially would give workers three options.

They could opt for less generous annual cost of living benefit hikes, and in exchange, their future salary raises would count toward their pensions and health care help would be guaranteed in retirement.

If they wanted to keep their current yearly hikes, they would have to give up health care coverage in retirement and their raises wouldn't count toward their pensions.

Or, they could keep their yearly hikes by putting 2 percent more of their salaries toward retirement and agreeing to skip the cost of living adjustments for three years.

Retirees would face similar options.

"I think our members are pretty much on board with it," said state Sen. Linda Holmes, an Aurora Democrat who has pushed different union-backed pension legislation before.

But even if the Senate approves the bill this week, the House has to agree to the same plan before it could reach Gov. Pat Quinn's desk. And Madigan last week didn't show signs of backing down.

"The state's fiscal problems are so bad that they require radical surgery," Madigan said. "And this is the first step."

The Illinois House approved his proposal, which cuts the annual benefit raises for retirees, raises the retirement age and requires workers to withhold more of their paychecks.

Cullerton said the relative harshness could have pushed union leaders to compromise with him and voluntarily offer to agree to benefit cuts.

"The union coalition has made a great effort to ensure fairness for the public employees and retirees who did not cause this problem, to ensure the stability of the pension systems for future generations, and to offer a credible way forward," reads a statement from the We Are One Illinois union group. "This agreement is our coalition's bottom line."

Republicans in the Senate have largely pushed against the kind of plan Cullerton and the unions agreed to in favor of Madigan's. But Democrats have a 40-19 margin in the Senate and can approve legislation without GOP votes.

Lawmakers hope to approve a pension cost-cutting plan by their scheduled adjournment on May 31.

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