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Senate approves union-backed pension plan

Illinois Senate President John Cullerton

Illinois Senate President John Cullerton

 

associated press/April 2013

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By Mike Riopell and Doug T. Graham

SPRINGFIELD -- The Illinois Senate approved a union-backed plan to cut the retirement benefits of nearly 700,000 teachers, state workers and retirees today, taking a vote that is directly at odds with House approval of a competing pension plan last week.

Unless one side blinks and approves the other's plan by the May 31 scheduled adjournment, another legislative session will pass without movement on one of the state's most serious financial challenges.

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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.
Ÿ Would affect teachers, state workers, university employees, lawmakers and retirees who started before Jan. 1, 2011.
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.
Ÿ Would affect teachers, state workers, university employees, lawmakers and retirees who started before Jan. 1, 2011.

The Senate approved the proposal backed by Senate President John Cullerton by a 40-16 vote.

The state is facing $100 billion in pension debt and rising yearly payments to cover retirement costs for public employees.

After years of protesting any changes to their members' pension benefits, union leaders this week rallied behind the plan, perhaps sensing it was better to back Cullerton's proposal than the House's harsher cuts.

"This isn't just a numbers problem," said state Sen. Linda Holmes, an Aurora Democrat. "This is people."

The Senate bill offers working teachers and workers three choices of how to either take reduced retirement benefits or sacrifice health care coverage. Offering the choice is Cullerton's plan to work around the Illinois Constitution's requirement that pension benefits not be "diminished."

The Illinois House's plan comes from Speaker Michael Madigan and includes far deeper retirement cuts. It would save more money, but Cullerton argues it would save no money if it's eventually struck down by the Illinois Supreme Court.

That's the root of the disagreement between Madigan and Cullerton, two of the state's most powerful Democrats.

Gov. Pat Quinn is cheering for both sides, hoping one side wins but not picking either.

At a news conference today, Quinn expressed his appreciation that Madigan's proposal contained many of the reforms Quinn laid out a year ago. But he praised Cullerton's bill in his annual State of the State address.

"Failure to act on public pension reform is holding back our economy," Quinn told reporters. "So we need both houses of legislature, by month's end, to put something on my desk that I can sign that is comprehensive that lives up to the outline I gave a year ago."

State Sen. Matt Murphy, a Palatine Republican, voted against the Cullerton plan, preferring Madigan's. Murphy argued because it's impossible to predict how the Illinois Supreme Court would rule, lawmakers should pick the legislation that could save more money.

"Don't get bogged down by the constitutional argument," Murphy said.

"Frankly, we have a court for that," he said.

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