Pension shift to local schools to be removed from plan
SPRINGFIELD -- A controversial proposal to shift millions of dollars in teacher retirement costs to suburban school districts will be pulled from pension reform legislation in Springfield, ending a standoff by Republican lawmakers and maybe paving the way for approval today.
With today's deadline for approving a state budget looming, Republican lawmakers' objections to local schools taking on more expenses had stymied movement on public pension cutbacks and created an acrimonious rift in the state budget debate.
What's in the billHouse Speaker Michael Madigan has proposed abandoning a plan to shift pension costs to local schools. The legislation otherwise would:
Ÿ Guarantee the state pay its share of pension costs every year. Delinquency in doing this over decades has largely caused the state's pension mess.
Ÿ Cut a yearly cost-of-living pension increase for current and future retirees. The annual increase would be 3 percent or one-half the urban cost of living index, whichever is lower, starting five years after retirement or at age 67. Workers could keep the current cost-of-living increase formula, 3 percent compounded yearly, but would lose state retiree health care benefits.
Source: Illinois legislature
But late Wednesday night, as the Illinois House was about to adjourn, Democratic House Speaker Michael Madigan said Gov. Pat Quinn agreed with Republicans, so Madigan would relent and strip the cost-shifting language from the pension reform plans.
"I disagree with the governor," Madigan said. "But he is the governor."
Quinn, a Democrat, told the Daily Herald Editorial Board in April that while he liked the cost shift idea, it wasn't "essential" to the first round of pension reform.
"We want to deal with that accountability principle, but we'll do it on a separate track," Quinn said at the time.
Control of the pensions plan, Madigan said, will be moved to House Republican Leader Tom Cross of Oswego, who will have about 16 hours today to shepherd it through the House and Senate. Its approval is far from guaranteed.
If lawmakers can't find a way to cut teachers' and state workers' pension benefits by the end of the day, the effort could get significantly more difficult.
Starting Friday, any legislation that takes effect immediately requires more votes -- a tall order on a controversial proposal.
The pension plan would cut a yearly cost-of-living pension increase for current and future retirees, targeting the single biggest factor in rising pension costs. As a group, the plan includes state workers, teachers, university employees and lawmakers. Judges would be exempt.
It also would guarantee the state pay its share of pension costs every year. Delinquency in doing this over decades has largely caused the state's pension mess.
Quinn's budget director, Jerry Stermer, called the state's $83 billion in pension debt a "profound chasm" that could continue to drag on the state's budget and eventually bankrupt Illinois' pension funds.
"This plan rescues our pension system from disaster," Stermer said.
Teachers unions have protested cuts to their benefits, saying it was lawmakers' actions, skipping payments into pension funds, that created the debt.
Senate Republican Leader Christine Radogno shot back during a hearing, presenting old paperwork from 2005 showing that both the Illinois Education Association and Illinois Federation of Teachers supported skipping the payment then.
"There's plenty of culpability to go around," the Lemont Republican said.
Before Madigan's announcement, House Republicans Wednesday tried to halt progress on the new state budget out of frustration over the pension standoff, but Democrats were able to proceed without them, sending the Senate a spending plan for consideration today.
Now, the question is whether the Senate, which has already approved its own budget proposal, will go along with the House's version and if lawmakers can come together on a pension proposal by the end of the day.