Illinois lawmakers to vote on public employee pension changes

December 3, 2013

Passing pension revisions would be a big win for Illinois Gov. Pat Quinn (D) (AP Photo/Seth Perlman)

Facing the worst pension crisis in the U.S., Illinois legislators will vote Tuesday on sweeping but controversial changes that could save the state an estimated $160 billion over three decades.

The proposal, the result of an agreement between Democratic and Republican legislators and Gov. Pat Quinn (D), would establish a plan to erase the pension shortfall by 2044, according to the Chicago Tribune. It would reduce public employee pension contributions by 1 percentage point and limit future cost-of-living increases. Some state employees would miss cost-of-living increases, while younger workers would see their retirement ages increase by five years.

The reform would also create a 401(k)-type defined benefit plan that workers could choose instead of a pension, while banning the use of sick or vacation time to boost their years of service calculation.

Democrats are feeling heat from public employee unions, some of which oppose the plan. On Monday, those unions urged members to call legislators to make clear their opposition.

Republicans are being pressured by business groups to back the proposal, though some conservatives say it doesn’t go far enough to fix the state’s deep pension problems. Two of the leading Republican candidates for governor in 2014, state Treasurer Dan Rutherford and businessman Bruce Rauner, said they would oppose the revisions as inadequate solutions to the crushing pension problems.

Sen. Bill Brady (R), the GOP’s 2010 nominee seeking a rematch against Quinn, said he supports the bill.

Illinois’ pension system carries more than $100 billion in debt, a deep hole made worse by the great recession. The state is currently projected to owe $374 billion in pension payments over the next 30 years, a cost that would drop to $214 billion if the changes pass.

A little more than half the $160 billion saved would come from state workers, teachers who work outside the Chicago Public Schools system and university employees, the Tribune said. The remainder will come from early repayment of pension debt.

Passing the reforms would make as much as $1.2 billion available to the state’s budget every year, and the benefit cuts within the reform proposal would cut the pension system’s current debt to $79 billion, a 21 percent decrease.

The pension proposals won’t do anything to fix Chicago’s staggering deficit. Chicago owes more than $33 billion in unfunded pension obligations and outstanding general obligation bond debt, more than four times the $7 billion the city spends every year — and some market watchers believe the actual debt is much higher.

Chicago Mayor Rahm Emanuel (D) had hoped the legislature’s pension package would include a fix for the Second City, but legislative leaders said Monday that wouldn’t happen.

“It isn’t just Chicago that is looking at major pension issues. There are other communities across the state of Illinois, so maybe it’s time for a general look at all of those issues rather than just doing them one system at a time,” state House Majority Leader Barbara Flynn Currie (D) told the Tribune.

Reid Wilson covers state politics and policy for the Washington Post's GovBeat blog. He's a former editor in chief of The Hotline, the premier tip sheet on campaigns and elections, and he's a complete political junkie.
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