Illinois Pension Reform (Updated January 5)

“…Potential issues on the table include:

 

·         Employees paying more in contributions. The Nekritz-Biss bill called for a 2 percent increase in employee contributions over a two-year period.

 

·         A reduction in the current 3 percent compound cost of living adjustment (COLA). The Nekritz-Biss plan called for the compound COLA to apply only to the first $25,000 in pension compensation, the first $20,000 for those retirees who also qualify to collect Social Security payments.

 

·         Not paying the COLA until a retiree reaches age 67, and possibly pausing all COLAs for up to a six-year period.

 

·         A pensionable salary cap that would freeze the pensionable salary at either the salary an employee is earning when the bill becomes effective or the Social Security salary cap, whichever is higher. The Social Security cap currently is $113,700.

 

·         A guarantee of the state payments into the pension systems.

 

·         The state paying another $1 billion a year into the pension systems beginning in 2020, when some of the state's pension loan payments are scheduled to end.

 

·         A cash balance plan would be created for employees who began work after January 1, 2011.

“The Senate, which adjourned Thursday, could be called back to Springfield Tuesday if the House passes pension reform legislation. Senate President Cullerton already is on record as saying the House should vote on the pension reform legislation that the Senate passed last May, the so-called 'choice' bill that offered employees and retirees the choice between keeping their compound COLAs or taking a reduced COLA in exchange for access to the state's health care plan.

“The Senate bill included only the State Employees Retirement System (SERS) and the General Assembly Retirement System (GARS). Cullerton spokeswoman Rikeesha Phelon said Friday that 'if there is a more comprehensive plan to address the other systems within that same framework, the Senate president would be open to that.'

“Cullerton has said that he thinks the choice provision is necessary in order for the reduction in pension benefits to be constitutional. Quinn said Friday that the pension bill would include constitutional 'backstops.' That could mean severability, so that if one part of the bill is ruled unconstitutional, the rest of the bill could remain in law.

Acknowledging that a court challenge to reducing pension benefits would be inevitable, Quinn said 'We will take on our legal opponents one by one and I think we will win...'"

Diane L. Hendren
Chief of Staff/ Director of Governmental Relations
Illinois Association of School Administrators

from Capitol Watch: “Removing cost shift clears way for possible pension reform bill”