Wednesday, April 24, 2013

Are Unions and the Illinois Senate Close to a Pension Agreement? (from today's Capitol Fax)

“Senate President John Cullerton said yesterday that he believes he is close to an agreement with public employee unions on a new pension reform proposal. The proposal is reportedly at least loosely based on two bills that the Senate has already passed.

“Last May, the Senate approved HB 1447, which required members of the State Employee Retirement System and the General Assembly Retirement system to choose between continuing to receive their annual 3 percent cost of living raises or give up access to government subsidized health insurance and forgo any pension benefits from future salary increases. If they choose to keep those COLAs, the raises wouldn't be compounded and would be limited to 3 percent or half the cost of living index. Last month, the Senate approved a similar pension reform bill which applied only to the Teachers Retirement System, and didn't include any changes for retiree benefits.

“The combined bill under discussion right now wouldn't include retirees at all and just focus on active employees. Cullerton said yesterday that he has met eight times with union leaders and they've asked for some changes, which are now being looked at by actuaries. He estimated that the proposal would save the state $45 billion over the next 30 years, but he wouldn't talk about specifics. Union officials also refused to discuss details at all last night, although one did say that he believed the two sides are "very close" to an agreement.

“It's no secret that Cullerton loves nothing more than cutting deals on major issues. So far, however, he hasn't been able to get anything like this over the hump. But if he succeeds at bringing the unions on board for a real reform proposal that requires no new state taxes (as the unions have demanded in the past), that would be a huge leap forward. The big question, as always, is what House Speaker Michael Madigan will do. Nothing [is going to] get done until that guy decides it will get done.

“Madigan reportedly wants two things from the Senate. First, the bill has to be bipartisan. Madigan believes that both parties created this pension mess, so both parties must be involved in the solution. Beyond that, a bipartisan bill gives the majority party political cover if the final proposal isn't beloved by the business community. And if the unions are on board, you can bet that business won't love it.

“Secondly, Madigan reportedly believes that Cullerton's "consideration" proposal is just too costly. Cullerton's legal thesis is that employees need to be given a choice in order to change their benefits because the Illinois Constitution's pension language is so strict. But Madigan reportedly believes that putting health insurance into the mix doesn't save enough money. Instead, he believes that making sure the pension funds are solvent is enough of a "choice" to justify changing benefit guarantees.

“So it remains to be seen what will happen even if the unions come to an agreement. Right now, union leaders seem pretty sure that Madigan will run a far less acceptable bill if they don't find a way to reach an accord with Cullerton. Madigan held off doing anything on pension reform last week and the House is not in session this week, so the pressure is on to get something done in the coming days. It's a classic good cop, bad cop kind of thing, and it appears to be working so far.”

(This article was submitted by Roger Sanders)

The Illinois Education Association states, "There is no agreement at this time."

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