Pension Shift to Schools Divides Capitol

The Illinois House is considering a major change to the state retirement system. Public school teachers and state and university employees would see their benefits cut. But the proposal would also shift the burden of paying for teacher and university pensions away from the state. As Brian Mackey reports, that last idea has divided legislators and led to a few heated moments in the Capitol Tuesday.

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It’s not a politically appealing idea … but given Illinois’ worst-in-the-nation $83-billion unfunded pension liability, most state politicians seem to have come around to the notion that they need to cut benefits of state workers.

The latest proposal, which got through a House committee, gives employees a choice: agree to lower cost-of-living adjustments in retirement, or future pay increases won’t be counted toward a worker’s pension. Employees who don’t accept the reduced pension would also lose access to state healthcare after they retire.

The proposal would also end the state’s longstanding practice of picking up the employer’s share of retirement costs for university employees.

The divide comes over House Speaker Michael Madigan’s proposal to shift retirement costs for public school teachers onto local school districts.
All spring, Madigan has been saying it’s not fair the state pays into teachers’ retirement plans, but has no say in how much teachers are paid — and thus in how lucrative their pensions will be.

MADIGAN: “There’s a concept in America that we all strive to live under, which is called responsibility. Responsibility for our actions. And when one person can spend money and send the bill to somebody else, that’s not responsible, that’s not responsibility. That’s un-American.”

But opponents say shifting the costs onto schools is akin to sweeping the problem under the rug. The pension systems will still be underfunded, and the money has to come from somewhere. They say school districts could be forced to raise property taxes to cover the cost.

CROSS: “To our taxpayers and to our property owners, you will suffer, because the state decided to shift this responsibility onto your backs.”

Tom Cross is the Republican Leader in the House. He proposed an alternate version of the pension legislation — identical to Madigan’s but for one exception: it would not shift costs onto school districts.

It’s not clear Madigan can pass his proposal without Republican votes. Plenty of Democrats represent school districts in the suburbs and Downstate that have as much to lose as those in Republican districts.

So Cross tried to get his idea called for a vote on the House floor.
Democrats blocked the move, and that’s when the fireworks began.

Cross says Madigan’s refusal to consider his version of the pension changes raises a question of how serious the Speaker is about the proposal. He suggests Madigan might have a secret deal with teachers’ unions. Cross says Madigan suggested in a recent meeting leaving teachers’ retirement benefits out of this spring’s pension overhaul.

CROSS: “Hey, wink wink. Hey, union officials. You take care of me, I take care of you. Don’t worry about this. This is just a little ploy. Republicans can say they don’t like the shift, and them I’m simply going to take the bill out of the record or I’ll call it and it’s going to fail, and say, ‘I tried, but they didn’t like.’ But … it isn’t really, really going to happen.”

Cross also took issue with Speaker Madigan’s earlier lecture on responsibility. The Speaker has pointed to several factors as the biggest problem with the pension system: the compounded, guaranteed cost-of-living increase retirees get; the fact that the state pays into the pension system on behalf of public schools and universities. But Cross had a different factor in mind.

CROSS: “Maybe you need to take responsibility, Mr. Speaker, for your actions. Because, think about this, Mr. Speaker, for the last 40 years, you have had your fingerprints on the mess we have today.”

Those fingerprints are on year after year of state budgets that failed to make sufficient pension payments.

The Democrats’ refusal to call the Republican plan for a vote — which is the same thing as saying the Speakers’ refusal to call the Republican plan for a vote — had Republican Rep. Mike Bost, from Murphysboro, throwing a fit.

BOST: “Once again, total power in one person’s hands — not the American way. These damn bills that come out of here all the damn time — come out here at the last f—ing — and I got to try to figure out how to vote for my people.”

House Republicans say they would vote for the pension legislation but for the cost-shift to local school districts.

The divide puts Republicans in a tough spot. They’ve urged changes to the pension system for years — but now that it’s within their grasp, they’ve been put in a position where they’re the ones who appear to be standing in the way of change.

I’m Brian Mackey.

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