New Pension Plan: A Fresh Start? Or Dead On Arrival?

A pension debt topping $96 billion – and counting – continues to plague Illinois.
Many prior attempts to do something about it have resulted in defeat. Now a dozen rank-and-file legislators are making a go of it.
They unveiled a package yesterday morning. But like its predecessors, it’s already getting bogged down with criticism.
Nekritz Biss 120512

With only a month left before this General Assembly adjourns for good, the pressure is on. Legislators are done with their veto session, but they’ll be back in early 2013 for one last week.
Illinois’ pension underfunding has been the biggest issue for this 97th General Assembly, since its two-year session began in January 2011.
But this is a golden period — the lame duck session, every two years after the election — when legislators’ next campaigns are furthest away.
Others, like Democratic Representative Karen May of Highland Park, have no election ahead, and thus may be more open to voting on something as controversial as reducing state employees’ retirement benefits.

“I feel like as a lame duck. I’m Goldilocks. The first proposal was maybe too hard, the second one too soft, I think this one might be just right.”

One of the plan’s authors – Representative Daniel Biss of Evanston – says that how it was designed. To take those frustrating, failed past attempts, and turn them into something more.

“Our approach today was to stitch together what we believe are the best of the different ideas from the disparate corners on this issue. Stitch together what we view as a comprehensive solution to this problem.”

So what does it mean for state employees, teachers and other public workers?
Some of it depends on their age.
The youngest employees will have to work an extra five years before they can get full retirement benefits.
But the retirement age stays the same for the oldest workers.
Employees would have to pay more for their retirement — an additional one percent the first year, and two percent after that.
Retirees would still get cost of living adjustments every year … once they’re 67 years old.
But that would only apply to the first $25 thousand dollars of an employees’ pension.
In short: employees are paying more … for a smaller benefit.
Bring on the public employees unions – here’s Anders Lindall, speaking on behalf of We Are One, a coalition of the state’s major labor organizations.

“The fact is the pension debt was caused by politicians who failed to pay their share, even as public employees like teachers and police officers and nurses always made their contributions. And we’re worried that this plan unfairly put the blame and balances the pension debt on the backs of those workers and retirees.”

Whether this latest proposal does less of that than previous versions … Lindall couldn’t say.
He says the unions are still analyzing it.
But it is markedly different than Senate President John Cullerton’s plan, which already made it through his chamber.
Cullerton’s proposal would force employees to make a choice: give up yearly pension increases, or lose access to discounted, state-backed health care in retirement.
That’s what has Cullerton, a Democrat, concerned.
The state constitution has a clause that says once they’re earned, retirement benefits can’t be taken away.
Cullerton maintains that the way to get around it is by giving employees a CHOICE that effectively reopens the terms of their benefits, requiring them to agree to the changes.
Even if that forces workers’ hands, the President’s spokeswoman, Rikeesha Phelon, says giving workers that choice is critical. And this new plan doesn’t do it.

“We don’t’ know that it would pass actual constitutional muster. Most notably the fact that it reduces pension benefits – those are a unilateral reduction in pension benefits – without allowing participants to actually accept those new terms. That is not something we think will square with the pension clause.”

But another one of the plan’s sponsors – Northbrook Democrat Elaine Nekritz – says the group didn’t give that option on purpose.
She says state workers were anxious about having to make a choice.

“We heard a lot of anxiety about that choice. How do I possibly know what the future’s going to bring? TO know whether I’m going to need the healthcare? Or how do I make the financial calculation in order to choose.”

She also says that giving employees a choice makes it difficult to know how much money the plan would save.

“For us to take this very difficult vote and to have uncertainly as to what the savings are, I think both of those combined led us to say ‘let’s see if we can find a different path.”

Nekritz says WHATEVER form a pension overhaul takes – if one does ever become law – it will be tested in court. And there’s no way to tell what’ll happen there.
What she and other supporters say is key is what ELSE their plan includes.
Like a provision meant to prevent Illinois from getting into this mess again.
It’d require the state and other employers to fund their share of workers’ benefits … or else be brought to court.
And, they say, it reduces the state’s expenses.
Right now, Illinois covers public school teachers’ and university professors’ pensions.
This measure transfers that cost to the schools over a gradual .
While a couple of Republicans have signed on, most suburban politicians are against that cost shift.
They believe it’ll lead to higher local property taxes.
Representative Tom Morrison of Palatine says before he signs on to the pension package, that has to be addressed.

“I would want to see a stronger property tax bill, to protect my property tax owners back at home. I’d also want to see getting rid of unfunded mandates so they’re not immediately passing a cost on to the taxpayers.”

Morrison may get that chance.
Supporters … including his fellow Republican, David Harris of Arlington Heights, say they want to use December to continue negotiations, to tweak it, to come up with something that can pass.

“There will be additions, modifications, deletions, changes, but we’ve got to move forward. If it can bring us closer to a solution, if it can generate what I refer to as critical mass of support, then we have started something meaningful here today.”

But as history has proven, that’ll be tough to do. Even as the unions decry how harshly workers and retirees are treated … the Illinois Policy Institute’s Kristina Rasmussen says the plan doesn’t go far enough.

“It is just tinkering at the edges. We’ve got a big problem. And this bill is almost palliative care. It’ll get us through another three to five years, but we’re’ going to come back with the same unfunded liabilities precisely because we’re not switching over to a defined contribution style system.”

All of the discussion on the matter may be for naught.
After all – in Illinois, the legislative leaders call the shots.
The new plan – or anything like it – may NEVER get called for a vote.
– Amanda Vinicky.

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One Response to New Pension Plan: A Fresh Start? Or Dead On Arrival?

  1. Pingback: Gov Punts on Pension Proposal, Turns Talk to Football | WUIS – My Source for News

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