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Unions call on Pritzker to support their Tier 2 pension overhaul

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Illinois

* Subscribers were told about this earlier today. Today, the union coalition We are One Illinois sent this letter to Governor JB Pritzker…

As you know, the We Are One Illinois coalition has been working steadfastly to fix the broken Tier 2 pension system. Since this effort ramped up last year, our participating unions have been in constant communication with legislators and your office about proposed changes.

Throughout this process, you and your office have repeatedly emphasized the importance of ensuring that any legislative changes to Tier 2 strengthen the financial standing of both our pension systems and the state as a whole. To that end, we have worked diligently toward a proposal that we believe will not add to the state’s unfunded pension liability, nor negatively impact the state’s credit ratings, nor require significant additional funding from the state budget this year or in the near future.

The legislation we have developed also acknowledges your recent proposals to address the shortcomings in the state’s pension funding ramp and resolve the so-called “Safe Harbor” issue that has existed in Tier 2 since its inception.

After many months of discussions with key lawmakers, we believe we have arrived at a proposal that satisfies these principles, makes real progress to ensure public employees on Tier 2 can receive a more fair and decent pension, and strengthens the state’s finances for the long term.

We discussed this legislative proposal with your GOMB director last week and have introduced it into the legislature as an amendment to SB 1937. We ask that you stand with us in supporting this important legislation as we work with legislators to pass it through the General Assembly before the scheduled end of session on May 31.

This amended proposal addresses the four core areas where Tier 2 benefits have fallen short for public employees, including:

• Improving the final average salary calculation
• Lowering the retirement age
• Improving the cost of living adjustment
• Increasing the Social Security Wage base to address the so-called “Safe Harbor” problem

None of these changes represent full equity with Tier 1 pension provisions, but rather provide an indicator to our members-public service employees of every kind-that there is greater hope for security and dignity in retirement.

This newest proposal also reforms and modernizes the way we pay down the unfunded pension liability to put us on a path to 90% funding by 2045 and 100% funding by 2049.

Based on our initial analysis, we believe this proposal will be at least credit neutral, will not add significantly to the pension liability, and will not require considerable additional state funding. In short, this proposal can put us on a path to improve the inadequate and insufficient Tier 2 pensions for public employees while also addressing our state’s decades-long pension funding problems - and without damaging our current budgetary situation.

We recognize the uncertainty coming from the federal government and share your concerns about potential cuts to critical services. However, we cannot ignore the teachers, firefighters, nurses, or other public employees who provide these services every day across our state. These workers deserve a retirement that allows them to live with dignity and pay their bills after a lifetime of service.

There have been dozens of hearings, conversations, and discussions about this topic as lawmakers and organized labor have worked to find a solution to this pressing problem. We have a unique opportunity in these final days of the legislative session to make significant progress on a problem that has plagued Illinois for years.

We hope that you will join us in this critical endeavor, and together we can make real strides to fix Tier 2.

The amendment is here. They want to use some of the money freed up after two pension obligation bonds are paid off.

posted by Isabel Miller
Tuesday, May 27, 25 @ 2:19 pm

Comments

A lot less for the Governor to consider if he decides not to run for Governor and not to run for President.

Comment by Candy Dogood Tuesday, May 27, 25 @ 2:27 pm
Not sure why labor continues to believe that there are savings to the State when the debt service on the 2003 POBs is retired.

Those debt service payments are scheduled to go to the funds as is because the certified contribution is the level percent of payroll to get to 90% by 2045 minus the debt service on those bonds.

From CGFA’s analysis of the pension systems. “The legislation set the maximum annual employer contribution to each system at the amount that would have been contributed without the bond issuance, minus the total debt service payments for the fiscal
year. Effectively, the reduction in retirement contributions is used to pay the debt service on
the bonds.”

Comment by Juice Tuesday, May 27, 25 @ 2:29 pm
While this discussion always seems to focus on state employees and the State’s pension payment, the bill also increases pension benefits for municipal employees, policemen, and firemen. How does this bill affect Chicago’s pension payment and their credit rating?

Comment by Numbers... Tuesday, May 27, 25 @ 2:48 pm
Would these workers be required to contribute more of their salary under this proposal?

Comment by ModerateGOP Tuesday, May 27, 25 @ 3:05 pm
LOL you must be new to Illinois

Comment by Paul Powell Tuesday, May 27, 25 @ 3:35 pm
Tier 2 needs to be fixed, but I have no idea if this is the right fix. Roll the dice and hope for the best??

Comment by Friendly Bob Adams Tuesday, May 27, 25 @ 3:47 pm
@Friendly Bob Adams
You just gave out the best campaign slogan this year

Comment by DuPage Saint Tuesday, May 27, 25 @ 4:19 pm
I readily admit that I am not as well versed on the pension issue as I should be as a responsible IL resident and member of Tier 1, but phrases like this give me pause when considering anyone’s recommendations: “the so-called “Safe Harbor” issue.”

It’s not “so-called.” It’s just the “Safe Harbor” issue.

Comment by Leslie K Tuesday, May 27, 25 @ 4:37 pm
==Would these workers be required to contribute more of their salary under this proposal?==

Of course not, but the state should be open to higher employee contribution rates for participants in exchange for any pension enhancements, especially any that go above safe harbor.

How much are they willing to pay? If the answer is zero, just say no.

==Tier 2 needs to be fixed, but I have no idea if this is the right fix. Roll the dice and hope for the best??==

That pension clause in the state constitution should scare off any notions of gambling.

Comment by City Zen Tuesday, May 27, 25 @ 4:39 pm
If We Are One is behind it it is not good for a state that is already broke. Leave Tier Two alone.

Comment by Tim Tuesday, May 27, 25 @ 5:06 pm
=We discussed this legislative proposal with your GOMB director last week and have introduced it into the legislature as an amendment to SB 1937.=

When did they become part of the legislature able to introduce bills??

=• Improving the final average salary calculation
• Lowering the retirement age
• Improving the cost of living adjustment
• Increasing the Social Security Wage base to address the so-called “Safe Harbor” problem=

The proof is in the details.

How much would they be powering the retirement age? I advocated for 62 here on the blog. That would be five years.

Adjusting the cap to match SSI would also make sense. Those two combined would be amople to solve their safe harbor issues.

COLA could be problematic. Back when the pension underfunding was really getting action, the AAI was responsible for about 12% of the underfunding issue if I remember correctly. Moving COLA to the Tier 1 AAI levels would/could be financially problematic. Same with “improving” the pension calculation.

I need to read through the amendment better.

Comment by JS Mill Tuesday, May 27, 25 @ 7:35 pm
I hope RNUG will give us his/her opinion on this proposal.

Comment by G'Kar Tuesday, May 27, 25 @ 9:10 pm
One imagines that there can be a clause that increases actual pension payments to safe harbor levels if needed. No additional fix required.

Comment by Jibba Tuesday, May 27, 25 @ 9:12 pm
===Would these workers be required to contribute more of their salary under this proposal? ===

Tier 2 participants currently pay the exact same portion of their salary as Tier 1 employees do.

Before suggesting that employees pay even more into the pension system to improve their benefits, you really should look into how awful Tier 2 pension benefits are and how the Tier 2 “fix” has created problems in retention and recruitment.

Comment by Candy Dogood Tuesday, May 27, 25 @ 9:16 pm
The “so called” safe harbor issue is an interesting way of saying the fix would only help our members that make over $176k.

The state giving benefit enhancements and paying for them with future moneys. Here we go again.

Comment by Bluewaters Tuesday, May 27, 25 @ 9:54 pm
I think I heard the governor saying there’s no additional monies in the budget this year. It appears that the We Are One folks that support him politically are not listening.

Comment by Tim Wednesday, May 28, 25 @ 6:00 am