*** UPDATE *** The response by Senate President John Cullerton’s spokesperson indicates that he believes the proposal is unconstitutional…
The Senate President is encouraged that members identifying ways to capture the local share of pension costs from local school districts. However, the larger proposal appears to impose unilateral pension reductions without offering voluntary acceptance by participants. We appreciate the efforts of Representative Nekritz and her colleagues but we will take a closer look at the plan to see if it can be squared with the pension clause.
*** UPDATE 2 *** . We Are One Coalition…
[ *** End Of Update *** ]
“We appreciate lawmakers’ latest attempt to move the pension conversation forward. As we have consistently stated, the We Are One Illinois coalition stands ready to work collaboratively toward a solution.
We were not consulted in the development of this plan, but our preliminary review suggests that there are significant problems with HB 6258 that need to be worked through. The pension debt was caused by the state’s failure to make actuarially adequate pension contributions, not by public employees, but like its predecessors, this proposal essentially balances the pension debt on the backs of teachers, police officers, nurses, caregivers, and other public servants both active and retired. It is also unclear at this juncture whether this proposal is constitutionally or actuarially sound.
We intend to thoroughly analyze this proposal’s elements and provide a more comprehensive response in the coming weeks.”
* Here are some dot points about the new bipartisan pension reform plan being floated by 20 rank and file House members…
* Cost of living adjustments would apply only to the first $25,000 of a pension if the retiree does not receive Social Security and $20,000 if he or she does. This change applies to both current and future retirees.
* Pensioners would receive no COLA adjustment until they reach age 67 or five years after they retire, whichever comes first. The summary says this provision will apply to retirees already receiving COLAs. So an employee who retired at age 58 and is now 60 would not receive another COLA adjustment until age 63.
* The retirement age would increase as follows:
Retirement ages in the current statute would apply to employees 46 and older.
One year would be added to current retirement ages for employees between 40 and 45 years old.
Employees age 35 to 39 would have to wait an additional three years.
Employees 34 and younger would have to wait an additional five years.
* Employee contributions to pensions would go up by 1 percentage point in fiscal year 2014 and 2 percentage points in fiscal year 2015.
* The salary that counts toward a pension would be capped at the higher of the Social Security wage base or the employees’ salary when the bill becomes law. […]
* School districts, community colleges and universities would take over the state’s pension cost at a rate of 0.5 percent of payroll per year.
* Pension systems would achieve 100 percent funding in 30 years.
* Courts could force the state, school districts and universities to pay their required pension contributions. “Other state funds” could be intercepted if the payments are not made as required by law.
* Once existing pension obligation bonds are paid off, annual bond service funds would be rerouted to pay off broader pension debt — about $694 million starting in fiscal year 2016 and $900 million per year in 2020.
State Rep. Elaine Nekritz (D-Northbrook), a leader on pension issues in the House is spearheading the latest effort, is being joined by a group of lakefront Democrats and two Republicans - state Rep. Chris Nybo (R-Elmhurst) and state Rep. David Harris (R-Arlington Heights). […]
The cost shift, as it’s commonly known, is the component that could most easily blow up a pension-reform deal in January. Even though Nybo and Harris support the idea, they appear to remain in the minority among Republicans, who see that shift as a de facto property-tax increase of $20 billion or more on suburban and downstate school systems. […]
But Tuesday, Senate Minority Leader Christine Radogno (R-Lemont) said there has not been any softening within her caucus on the question of shifting pension costs to suburban and downstate school systems, and that a cost-shift is a non-starter for most Republicans.
“The fact of the matter is the proposal on the table isn’t acceptable to us. Period. The end,” she told the Chicago Sun-Times.
In the big picture, a shift of a half a percentage point of payroll a year is not a whole lot of money and surely ought to be manageable. It won’t be easy, but new union contracts and better budgeting could avert major property tax hikes.
…Adding… A good point by Rep. Nybo…
Nybo said that while the idea of passing some of the state’s financial problems on to local schools still makes him uneasy, rising pension costs for the state means it has less money to send to schools.
“Schools are going to be hit either way,” Nybo said.
* Meanwhile, it doesn’t look like local government pensions will be addressed any time soon…
Roselle Mayor Gayle Smolinski told the Daily Herald Editorial Board Monday that a delegation of suburban mayors trying to lobby lawmakers in Springfield last week for pension changes on the local level found little support.
State officials could be looking to solve their own pension problems first before considering mayors’ rising police and firefighter retirement costs.
“It was worthless,” Smolinski said.