Pension bill would reduce benefits, create 401(k) for new teachers
SPRINGFIELD — Illinois House Republican Leader Tom Cross, Democratic Rep. Elaine Nekritz and a handful of other suburban lawmakers pitched a new plan Wednesday to cut the state’s pension costs, hoping a bipartisan presentation of support could burst open the logjam on the issue.
As more competing legislation is proposed to deal with one of Illinois’ financial problems, it could become more difficult for lawmakers to pick one to proceed with — and this new plan conflicts with other prominent ones.
But Cross, of Oswego, and Nekritz, of Northbrook, said they have more than 30 supporters in the House, about half of what they’d need to succeed.
Their plan would cut pension benefits as previous ideas have, but it would also have new teachers and university workers split their retirement benefits between a more certain pension-style system and a riskier 401(k)-style one.
That idea could have won over the support of more Republicans, some of whom have called for dropping a pension system for public employees altogether.
But union leaders pushed back hard.
“Employees like teachers, state university personnel, and police officers already do not receive Social Security, and more than half of their retirement would be at market risk under a hybrid proposal,” reads a statement from the We Are One Illinois union coalition.
Suburban school districts would pay the 401(k)-type account and largely get to choose how much they contribute. That would move the cost for teachers’ pensions away from the state slowly.
Republicans have generally opposed having local districts pay for teachers’ pension costs, which could cost school districts millions of dollars every year and eventually get passed on to local property taxpayers. But Cross’ support of this new idea represents a possible compromise.
“That cost is now more manageable and more certain,” said state Rep. Darlene Senger, a Naperville Republican.
Others aren’t likely to get on board immediately, though.
State Rep. Lou Lang, a Skokie Democrat, wants to, among other things, extend the state’s 2011 income tax hike to pay for public employee retirement costs. The income tax hike is set to expire in 2015.
And state Sens. Linda Holmes of Aurora and Pam Althoff of McHenry have presented bipartisan legislation supported by unions.
Senate President John Cullerton, a Chicago Democrat, is supporting a different proposal that has been backed by Gov. Pat Quinn. It combines a previous Nekritz and Cross plan with his own ideas, a move intending to essentially give the Illinois Supreme Court the final say on which one is constitutional.
Now, he’ll merge the new plan with his.
“We consider this a modification of their previous proposal,” said Cullerton spokeswoman Rikeesha Phelon.
The House is expected to begin debating various provisions of pension reforms one by one today, using test votes to gauge support for each one. They will be controversial.
One test vote could be on eliminating retirees’ yearly cost-of-living benefit increases entirely. Another would eliminate them until the state’s pension funds are healthier. And lawmakers also could debate having workers pay 5 percent more of their salaries toward retirement.
Union leaders have prepared their members for the debate.
“This is a serious attack on your pension — Call NOW!” a post on the Illinois Education Association website reads.
Cross and Nekritz said their legislation could save the state $2 billion a year. But it wouldn’t take hold immediately and help lawmakers with the budget they’re working to craft now.
“We still have enormous fiscal pressures,” Nekritz said.