In a private ceremony attended by a few lawmakers, Gov. Pat Quinn signed landmark legislation Thursday to reform Illinois' massively-underfunded pension system, though labor unions immediately threatened a lawsuit challenging the new law.
The overhaul, approved by the General Assembly this week after years of delay and inaction, cuts benefits for most employees and retirees. It has a June 1 effective date, but could be delayed by the legal challenges as a coalition of unions said lawyers were directed Thursday to file a lawsuit.
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Quinn, who often signs laws with celebratory public events, hosted a closed-door ceremony at his Chicago office attended by fewer than a dozen people. Among them were House Speaker Michael Madigan, who took credit for brokering the deal in a statement afterward, and House Republican Leader Jim Durkin.
The solemn ceremony for Illinois' most pressing financial issue was a mark of how politically sensitive the issue is in Democrat-controlled Illinois, with hundreds of thousands of public employees and retirees across the state being negatively affected.
"Illinois is moving forward," Quinn said in a statement. "This is a serious solution to address the most dire fiscal challenge of our time."
Illinois' $100 billion shortfall in funding employee retirement benefits is considered the worst pension crisis in the nation. For decades, while other states dealt with similar problems, Illinois lawmakers and governors skipped or shorted payments to their state's five pension systems. The problem has led to repeated downgrades of the state's credit rating.
The new plan is expected to save the state roughly $160 billion over three decades and guarantees Illinois will make its full annual contribution to the pension funds. Legislative leaders have estimated the plan will reduce the current unfunded liability by about $21 billion and fully fund the retirement systems by 2044.
"It's the right thing to do, a long time in coming," Madigan told reporters after the signing. "There's plenty of congratulations that should be spread around to the people that were willing to take a tough vote but to do the right thing for the fiscal stability of the state ... It's a lot better than bankruptcy."
Quinn didn't deliver formal remarks ahead of the signing, instead talking to attendees individually. The list of invitees was so tightly controlled that one Republican lawmaker invited by Durkin had to wait for clearance in the lobby and wasn't allowed in until after the event had started.
Unions representing public employees say the legislation approved Tuesday violates the Illinois Constitution. They cite a provision that prohibits diminishing pension benefits.
"Governor Pat Quinn has given hundreds of thousands of working and retired teachers, nurses, police, caregivers, first responders, and others no alternative but to seek justice for retirement security through the judicial system," said a statement from the We Are One Illinois coalition of unions.
However, Quinn and legislative leaders believe the new proposal will survive a court challenge because of the funding guarantee and a reduction in employees' own contributions to their retirement funds.
Quinn's previous attempts to achieve pension reform went nowhere, including calling special legislative sessions, a social media campaign and a failed effort to withhold lawmakers' salaries until they acted.
Under the new law, automatic, annually compounded 3 percent cost-of-living increases for retirees -- considered to be the biggest driver of pension costs -- would be replaced with smaller annual adjustments for the highest earners. Some workers would have the option of freezing their pension and starting a 401(k)-style defined contribution plan. Also, the retirement age will be pushed back for some.
Quinn, who is up for re-election in 2014, claimed the pension vote as a victory. Three of his four Republican challengers opposed the law. The other, state Sen. Bill Brady, sat on a legislative panel that helped shape the overhaul. He also attended the signing.