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posted: 6/19/2013 5:00 AM

Some room for compromise between pension plans

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By Elliott Hartstein
Guest Columnist

The stalemate in Springfield between competing philosophies and positions on needed pension reform in the Senate and the House is simply not acceptable. Everyone needs to give in and compromise to get this job done. There are indeed some ideas which could be utilized to move this process forward.

The Illinois constitution mandates that public pensions may not be diminished or impaired. The House approach is that the magnitude of the public problem itself could impair the pension system will allow some latitude, and the Senate approach is that only by getting people to select between alternatives will we be able to get over this constitutional hurdle. The courts will ultimately decide what is or is not constitutional. Let us get a proposal passed and get this process of resolution under way. It is time for some melding of these competing proposals.

The core proposal in the House proposal deals with compounded cost of living increases which public employees get each year. I emphasize that this core principle deals with increases and merely means that those increases will be more under control and more sustainable.

Since this is not going to diminish anyone's pension but only give less increases, it seems that this proposal will be easier to stand up to constitutional standards especially coupled with the magnitude of the public financial problem which impairs the sustainability of the pension system. The basic concept puts a cap on the amount of money on which one can get a COLA and eliminates the compounding.

If there were going to be a change in this concept to make it more reasonable and acceptable, it would be changing the cap to be closer to the average teacher pension amount of $48,000. I think making a cap around $40,000 would be reasonable and would mean at current 3 percent rate, there could be increases of $1,200 a year without compounding.

This might be worthy of consideration when one considers most public employees do not get Social Security and do not even get survivors benefits upon death of a spouse.

Three other key components of the House bill are increasing the retirement age, increasing the member contributions and capping the salary amount on which pensions are paid to the Social Security wage base. Though these concepts are reasonable on their face and it might be arguable that they should stand up in light of the magnitude of the economic problem which in itself could impair the sustainability on the pensions, it might be possible for one to argue that they are a diminishment of the pensions.

Hence, some or all of these proposals might be stronger from a constitutional standpoint if the choice concept from the Senate were injected in a relatively simple manner. Employees could be asked to elect an alternative to be able to retire earlier as currently allowed or to retire at a more reasonable retirement age.

They could either:

• Give up access to state-subsidized health insurance in retirement, which is not constitutionally protected, and agree to pay an increased payroll contribution, agree to a cap on pensionable salary to the social security wage base and have a right to retire early between 55 and 59 with 20 years of service and a reduced benefit or at 60 with a full benefit as currently allowed; or

• Have access to state subsidized health insurance and avoid the full increase in contribution; or

• Have a lesser increase and forfeit COLA for a certain number of years if they retire at between 60 and 64 for reduced benefit or at 65 for full benefit.

I would urge that some or all of these ideas for compromise might be a reasonable balance of the two competing proposals on which the Senate and House have been deadlocked and might move us toward a solution of one of the most vexing problems facing our state.

Elliott Hartstein is a former mayor of Buffalo Grove and a former school board member at Adlai Stevenson High School District 125.

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