By Meredith Colias
A 10-member legislative conference committee met in Chicago today for
its first public hearing in an effort to fix the state’s $97 billion
underfunded pension systems.
But lawmakers hoping to move forward on a compromise between two
polarizing pension plans broke little new ground as they heard testimony
largely backing one plan or the other. Talks will continue in private until
their next public meeting on July 3. Illinois adds an estimated $17 million per
day to its pension liability.
During its spring session, the General Assembly was unable
to reconcile differences between Senate Bill 1, backed by House Speaker Michael Madigan, and Senate Bill 2404, supported by Senate President John Cullerton and
unions. Senate Bill 1, which passed the
House, would raise retirement ages for state employees younger than 46,
phase in a 2 percentage point increase in their pension contributions over two
years and cap pensionable salary levels. Senate
Bill 2404, which passed the Senate and is supported by public employee unions,
would give retirees choices between keeping their health care benefits or their
current cost of living increases. Both bills were controversial and lacked
support to pass the other chamber. Opponents question whether either plan would
be constitutional and stand up to a challenge in court.
Either way, Northbrook Democrat Rep. Elaine Nekritz, a main player in pension negotiations, said the estimates needed to be backed by hard numbers, and the state had to stick to it. "We have never adhered to actuarial science. We have always made political judgments about what [the yearly state payments] should be."
Illinois has the lowest percentage-funded pension systems in
the country. The state Constitution prevents state government from slashing
existing public sector pensions. Union representatives argue that teachers and
other state employees should not bear the burden for the state’s failure over
decades to fully fund the pensions to their required level. “These are folks that
have paid their contribution when the state didn’t,” said Sean Smoot, director of the We Are One coalition of unions.
Skokie Democratic Rep. Lou Lang, who opposes Senate Bill 1,
told committee members they needed to consider ways to increase revenue to
reduce the liabilities, such as preventing the personal income tax rate from
dropping below 5 percent as it is scheduled to do in 2015. “We have a crisis.
We have to find the dollars available to pay for that crisis,” Lang said. Another
suggestion he made was considering funding the systems at less than 100 percent.
“If we were at 80 percent, none of us would be in this room.”
For a historical view of Illinois’ pension crisis, see “The
Pension Chasm” by Charlie Wheeler from the February 2010 edition of Illinois Issues here.
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