* Gov. Quinn was cautiously optimistic about the pension reform committee’s work product so far...
Illinois Gov. Pat Quinn called the outline of a pension overhaul proposal floated by a bipartisan panel “positive” and “progress,” but he shied away Sunday from saying whether he’d fully back it.
The so-called conference committee — a 10-member panel formed in June to come up with a solution to Illinois’ nearly $100 billion crisis — is considering a framework that would, among other things, end automatic 3 percent cost-of-living increases for retirees. Increases would instead be linked to the rate of inflation.
“It appears … that some progress is being made,” Quinn told reporters after an unrelated Chicago event. “We still have to get to the finish line but I think the concepts … are very positive indeed.” […]
He said although some of the concepts in the plan are familiar and his own budget office is heavily involved in the committee’s research, he wants to see final details of a plan before he weighs in.
* Background on the framework, from Friday’s post…
A bipartisan panel tasked with solving Illinois’ multibillion-dollar pension crisis is considering a framework that would save the state about $145 billion over 30 years, largely by ending automatic 3 percent cost-of-living increases for retirees. […]
It calls for setting retirees’ annual cost-of-living increases at half the rate of inflation, though it would set both floors and caps — which were not included in the outline — for what the rate would be. That formula would likely equate to smaller adjustments than the current 3 percent increases, compounded annually.
Employees would contribute 1 percent less to their own retirement, according to the document. But their annual pension benefit would be based on their salary over their career, rather than on the higher amount they’re making right before they retire.
It would reduce the state’s nearly $100 billion unfunded pension liability by about $18.1 billion and fully fund the retirement systems within 30 years.
Keep in mind here that there’s no deal yet.
* Also keep in mind that when Gov. Quinn talked to reporters over the weekend, he wouldn’t commit to actually putting votes on the bill, which is a demand of House Speaker Michael Madigan. Listen…
From the audio…
“Well, uh, it has to get to my desk. They still have to vote on it, the Legislature. I sure hope that they can expedite that. If the members of the House, the Senate pass the bill, put it on my desk, that does the job, erases the pension liability, moves us forward, then I’ll be able to sign the bill into law.”
* And, of course the Tribune editorial board didn’t care for the ideas…
Led by state Sen. Kwame Raoul, the pension committee has been hyperfocused on meeting the constitutional wording that pensions cannot be diminished or impaired. But without more ambitious reform that would save the pension system more money, the benefits may not be there for retirees at all — or taxpayers may have to pay more.
The committee’s draft plan assumes: 1) The state can and will continue to afford to make huge payments annually into the pension system. 2) The legislature will honor that “savings” commitment long after paying off old debt and not spend the money elsewhere. 3) All pension investments will meet an annual return of 8 percent … for three decades.
Taxpayers would be on the hook if any of those assumptions fail.
The pension committee continues to work out the details of the proposal, which its members hope to unveil the week of Sept. 9. So far, their proposal does not include giving workers the option of a 401(k)-style plan. That idea should be resurrected.
Committee: You’ve come this far. Keep going. You can do better than this. Give taxpayers and public sector workers a more ambitious plan that will stabilize the system. No wings, no prayers — just basic math.
The Tribune led the charge against Senate President Cullerton’s A-B plan, which could’ve solved this problem months ago. If they actively try to kill the pension reform compromise which eventually emerges from the conference committee, then they should be looked at as part of the problem here. You just can’t pass everything. There comes a time for compromise.