* We Are One Illinois press release from yesterday…
Today, the Illinois House of Representatives Executive Committee voted to pass SB1937 as amended out of committee by a vote of 8 in favor to 4 opposed. The legislation reforms the state pension funding ramp to address Illinois’ long term pension funding problems and the IRS “safe harbor” concern while making modest improvements to pension benefits for Tier 2 public employees. Because the legislation taps expiring bond funding, along with generating savings via a modified funding schedule, it will not significantly impact the state’s budgetary situation and does not require additional revenue increases.
We Are One Illinois spokesperson Pat Devaney responded to the news of committee passage:
“For years, public sector unions, lawmakers, and watchdog groups have sounded the alarm about the long-term financial stability of our state’s pension systems. Today, state lawmakers took the first step toward addressing these concerns once and for all by passing SB1937 out of the House Executive Committee. This is a critically important bill to strengthen our state’s finances, address the ticking ‘safe harbor’ time bomb, and help ensure we can recruit and retain the public employees necessary to provide high quality services to Illinoisans statewide.
“This legislation is the result of years of study, discussion, and negotiation with state lawmakers, the governor’s office, and interested parties. It includes Gov. Pritzker’s pension funding reforms to save taxpayers millions and makes modest improvements to benefits for Tier 2 public employees like teachers, firefighters, and nurses, who provide the same vital services as their Tier 1 colleagues while receiving a diminished pension that does not provide an adequate retirement.
“SB1937 taps into a portion of expiring bond funding to ensure our promises to state employees are kept in a fiscally responsible, credit neutral manner that does not require new revenues or damage the state’s budgetary situation. The bill also addresses the so-called ‘safe harbor’ issue, which could be weaponized by Trump’s IRS at any moment.
“Our members have made their voices clear through more than 100,000 calls and emails in the past year: this issue must be addressed, and it is not going away. We will continue to meet with lawmakers and Gov. Prtizker’s office to address their questions as we seek their support. We applaud lawmakers for making important progress during the veto session, and we urge them to finish the job and pass this bill through the General Assembly during the 2026 Spring session.”
BACKGROUND:
SB1937 makes a number of improvements, including:
• Improving the Tier 2 final average salary calculation to the average of the highest 6 of an employee’s final 10 years on the job.
• Lowering the Tier 2 retirement age to age 62 if the employee has maxed out their pension, 65 with 20 years of service, or 67 with 10 years of service.
• Improving the Tier 2 cost of living adjustment to 3% simple interest per year.
• Adjusting the Tier 2 pension salary cap to match the Social Security Wage Base, addressing the so-called “Safe Harbor” problem.
• Reforming the pension funding ramp to reach 90% funding by 2045 and 100% funding by 2049.
Click here to read the COGFA financial analysis of the legislation (please note this analysis lists the bill number as HB2540, a prior vehicle for the legislation).
* Gov. Pritzker was asked about the bill today…
It’s still being worked on. There was a committee hearing it, and, no, there’s nothing that that’s going to be signed in this or passed in this legislative session.
[Is the current language good enough for you?]
Oh, I think there’s a whole lot more work that needs to be done. Remember, I’m not going to sign anything that’s credit negative for the state. We are making a lot of progress in the state. Many of you know, we just got our 10th credit upgrade. It’s more credit upgrades than any state has received anytime in the last 25 years, than we received in the last five years. We need to keep on with that progress, and so whatever it is that we end up doing needs to make sure that isn’t taking us back.
- Candy Dogood - Thursday, Oct 30, 25 @ 1:21 pm:
===I’m not going to sign anything that’s credit negative for the state.===
This is a bit of a misdirection. It isn’t about being credited negative. It is a measure of priorities.
Pritzker simply does not believe that this is a priority and has other budget priorities. He’s also signaled that if this measure passes the House and Senate he might veto it which provides political cover for every legislator that has been pressured over doing something to address the inequity of Tier 2.
I’m certain that a billionaire who has always possessed great weath has no idea what it’s like to be a teacher looking at spending 45 years teaching till they hit 67 and receive a benefit that will require them to get a part-time job.
- One of Three Puppets - Thursday, Oct 30, 25 @ 1:25 pm:
Bond houses for the win over teachers and middle class public servants.
- Google is Your Friend - Thursday, Oct 30, 25 @ 1:35 pm:
==- One of Three Puppets - Thursday, Oct 30, 25 @ 1:25 pm:==
Recall James Carville’s quote, “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”
- City Zen - Thursday, Oct 30, 25 @ 1:45 pm:
What are Tier 2 members will to exchange for these pension enhancements? They obviously have a value that the state should not be giving away for free. Unilaterally cutting 5 years off the retirement age and getting nothing in return is not bargaining in good faith.
Absent that, I will accept a moratorium on all Tier 2 pension enhancements going forward. A frozen tier from which no Tier 2 participant can ever escape. Because if Tier 1 taught us anything, is that one pension enhancement begets numerous others. This just looks like the first of many steps back to Tier 1.
- Blazzzer - Thursday, Oct 30, 25 @ 1:56 pm:
So labor honestly says the bill doesn’t have a revenue increase. Can they show $273 million in cuts for FY 27 then? And another $50 billion something between then and FY 49?
- NobodyAskedMe - Thursday, Oct 30, 25 @ 2:35 pm:
@City Zen - Our golden years are not your bargaining chip. We put in our time. I’ll have close to 40 years of service in by the time I hit 62 after watching my coworkers retire in their 50’s, that five years is going to make a huge difference in what I can enjoy. Yes, we’re living longer, but that doesn’t mean those extra years are going to be great.
- Stuck in Tier 2 - Thursday, Oct 30, 25 @ 2:38 pm:
@city of zen. I think what they are getting at is getting people to apply for jobs and stay in them. If you haven’t noticed you should look on what jobs are available at the state. It has really been a revolving door of staff coming and going at a high rate. One last thing. Tier 2 employees pay the same amount as Tier 1 employees, but get a reduced benefit.
- Think again - Thursday, Oct 30, 25 @ 3:19 pm:
=SB1937 taps into a portion of expiring bond funding=
Redirecting bond funding dates that would otherwise cease and provide relief to taxpayers is the oldest trick in the books - the old “no tax increase” “tax increase”
- Candy Dogood - Thursday, Oct 30, 25 @ 3:25 pm:
===Unilaterally cutting 5 years off the retirement age and getting nothing in return is not bargaining in good faith.===
To borrow from your terms, let’s say we ignore the bad faith nature of how the Tier 2 law got passed and signed into law under what was literally the cover of darkness with legislators who voted on the proposal now being candid about not having bothered to read or understand the law. Also ignore that it was tied to an unconstitutional attempt to destroy the existing public employee pensions at that time. So, let’s just ignore that.
Right now the Tier 2 employees pay the same rate into the Tier 2 system that the Tier 1 employees pay into the Tier 1 system.
There was nothing done to balance the [redacted] sandwich that Tier 2 employees were being handed.
Now that it is a reality, the state as a problem.
=== Because if Tier 1 taught us anything, is that one pension enhancement begets numerous others. ===
This is a really odd lesson to take from Tier 1. A better one is maybe don’t adopt a constitution that makes it clear that pension benefits shall not be diminished and then spend the next 4 or so decades not paying into the pension system.
And if you do that for a couple of decades, maybe at that point you should actually fix it instead of creating a ramp that kicks the can further down the road where you can pretend like magic growth will fix it.
Aaaand maybe a decade after you do that and it becomes clear now terrible of an idea it was to kick the can down the road, maybe change that “pension ramp” so you pay more up front through a re-amortization of sorts instead of just shrugging and joining the ranks of elected officials that did nothing but pretend like they didn’t cause the problem.
That’s probably a better lesson.
- City Zen - Thursday, Oct 30, 25 @ 3:28 pm:
==Our golden years are not your bargaining chip.==
They are if you’re unilatering enhancing your benefits at a cost to me.
Would you be willing to contribute an extra 1% of earnings from now to retirement to subtract five years of service? How about in exchange for your final pension calculation based on 10 highest years?
Pension enhancements have a cost. They should also have a price.
==getting people to apply for jobs and stay in them==
State and local government has the lowest quit rates of any industry sector. There is no indicator that those employees are either leaving or not entering that sector at all because of Tier 2 pensions.
- Advocate for Truth - Thursday, Oct 30, 25 @ 3:52 pm:
Does anyone have any understanding of the increased interest costs of extending the amortization period. You are creating a more valuable benefit. What portion of the cost of these more valuable benefits are funded by increased participant contributions? Where is the discussion of how tier 2 pensions today far exceed the pensions of our residents in the private sector, to the extent they have pensions at all. When in the best case when public pensions are at best 70 % funded why are we increasing the unfunded liability. The municipal pensions all already safe harbor compliant, private pensions do not have an annual benefit adjustment, why are we always rolling over to the special interests? Finally increased pension costs funded by higher property taxes does not address the housing affordability crisis.
- Brave New World - Thursday, Oct 30, 25 @ 4:02 pm:
=There was nothing done to balance the [redacted] sandwich that Tier 2 employees were being handed.=
How about the union demand bigger raises for Tier II employees in the next contract? How about all the money dedicated for raises go to Tier II so we stop inflating the overly generous Tier I pensions?
- JS Mill - Thursday, Oct 30, 25 @ 4:23 pm:
= They are if you’re unilatering enhancing your benefits at a cost to me.=
They are not unilaterally enhancing their pension. The state is. The trade off is that Tier 2 continues to meet safe harbor. That saves YOU and everyone else tax money due to the fact that schools and other entities that fall u see state pension requirements will not have to raise taxes to meet the additional cost of Social Security payments due to falling out of compliance with safe harbor.
You are welcome.
- City Zen - Thursday, Oct 30, 25 @ 4:25 pm:
==Right now the Tier 2 employees pay the same rate into the Tier 2 system that the Tier 1 employees pay into the Tier 1 system.==
That’s how every pension system with multiple tiers works. The new tier is never more lucrative than the previous tier, which is why there’s a new tier.
And speaking of new tiers, New York had a “Fix Tier 6″ campaign in which they clawed back some benefits. Are they done? Nope. “Our goal is to get our Tier 5 and 6 members to parity with Tier 4 members, in both contributions and retirement age.
As I said, their end goal here is to get back to Tier 1. Hard pass.
- JS Mill - Thursday, Oct 30, 25 @ 4:26 pm:
The proposed changes are almost exactly what I thought they would be. Reducing the retirement age to 62 and pegging the income cap to SSI is spot on. And those two will have very little cost because the cap raise comes with additional revenue into the pension.
- Mason County - Thursday, Oct 30, 25 @ 4:35 pm:
Many companies and a number of private universities in the state have matching IRA’s . I know a number of the private colleges have SS + 5% matching IRA.
It appears that Tier 2 is barely meeting, and maybe not meeting, the SS equivalencies. Having a matching 4-5% IRA would help a lot. Yes, it does cost the state some money depending on how many employees contribute. But it is upfront money with not future pension obligations and would bring Tier 2 somewhat more in line with Tier 1.
- welp - Thursday, Oct 30, 25 @ 4:50 pm:
• Improving the Tier 2 final average salary calculation to the average of the highest 6 of an employee’s final 10 years on the job.
• Lowering the Tier 2 retirement age to age 62 if the employee has maxed out their pension, 65 with 20 years of service, or 67 with 10 years of service.
• Improving the Tier 2 cost of living adjustment to 3% simple interest per year.
• Adjusting the Tier 2 pension salary cap to match the Social Security Wage Base, addressing the so-called “Safe Harbor” problem.
• Reforming the pension funding ramp to reach 90% funding by 2045 and 100% funding by 2049.
Why change to last 6 years, this can cost more to taxpayers and does not address the SS issue
Lowering the retirement age also does not address SS issue, if they want to lower age I wish this was done for specific jobs/agencies not state wide, such as IDOC perhaps.
3% cola, I agree this is a must, a balance to keep up with SS but not overdone like compounded interest.
The salary cap wise a broken system when they first passed tier 2. It did need tweeked.
Changing the ramp and kicking the can down the raod, evn if only a year or two will ultimately cost more for the taxpayer.
- Ducky - Thursday, Oct 30, 25 @ 4:55 pm:
Anyone who works under the Tier 2 pension knows that, in truth, they help retain state employers relative to what would happen without it. If an employee is going to jump to a private job do so early on or when they are vested. The longer vesting time period gets talented employees to stick around longer in gov’t. The lesser benefits in Tier 2 do not come up as an issue for employees. The fact there is any pension at all is the talk amount younger folks.
- Mason County - Thursday, Oct 30, 25 @ 4:58 pm:
No more second class state employees. Have the same formula for GARS, JRS and the State Police. Wow, watch the favored ‘classes’ reaction to that type of fairness.
P.S. Judges and State Police make very, very good money compared to most other state employees so it is not targeting them. Just bringing everybody into line.
- Sue - Thursday, Oct 30, 25 @ 5:05 pm:
The alleged safe harbor argument is simply a canard and excuse for the unions to try to undermine the only pension reform ever enacted - the IRS has never opined that tier 2 presents an issue nor has the State sought an IRS determination- the public unions in this state have zero concern for taxpayers other then their members- if people accepting employment since 2011 were upset with tier 2- no one forced them to work for tge state or to become teachers