Thursday, May 2, 2013

Madigan’s Pension Bill Passes House

SENATE BILL 1 (House Version)

May 02, 2013


Y Acevedo, Y Durkin, N Lang, Y Roth, Y Arroyo, Y Evans, Y Leitch, N Sacia, N Beiser, Y Farnham, P Lilly, Y Sandack, Y Bellock, Y Feigenholtz, Y Manley, N Scherer, Y Berrios, N Fine, N Martwick, Y Schmitz, N Bost, E Flowers, N Mautino, Y Senger, Y Bradley, N Ford, N Mayfield, Y Sente, N Brady, N Fortner, Y McAsey, N Sims, N Brauer, Y Franks, N McAuliffe, N Smiddy, N Brown, Y Gabel, Y McSweeney, N Smith, Y Burke Daniel, P Golar, N Meier, N Sommer, Y Burke Kelly, Y Gordon-Booth, Y Mell, Y Sosnowski, N Cabello, Y Halbrook, N Mitchell Bill, Y Soto, N Cassidy, N Hammond, Y Mitchell Christian, Y Sullivan, N Cavaletto, N Harms, N Moffitt, Y Tabares, N Chapa LaVia, Y Harris David, Y Morrison, N Thapedi, N Cloonen, Y Harris Greg, Y Moylan, Y Tracy, Y Conroy, Y Hatcher, Y Mussman, N Tryon, N Costello, N Hays, Y Nekritz, Y Turner, Y Crespo, Y Hernandez, Y Osmond, N Unes, Y Cross, N Hoffman, N Phelps, N Verschoore, Y Currie, Y Hurley, N Pihos, N Walsh, N D'Amico, Y Ives, N Poe, N Welch, N Davidsmeyer, N Jackson, N Pritchard, Y Wheeler, Y Davis Monique, E Jakobsson, N Reboletti, N Williams, N Davis William,Y Jefferson, E Reis, Y Willis, N DeLuca, Y Jones, Y Riley, Y Yingling, Y Demmer, Y Kay, N Rita, Y Zalewski, Y Drury, Y Kifowit, N Rosenthal, Y Madigan, Y Dunkin, Y Kosel.

Some of the components of this bill:

  • Increase the retirement age for employees younger than 46. Employees from 40 to 45 would see a one-year increase; employees 35 to 39 would see a three-year increase, and employees 34 and younger would see a five-year increase; 
  • Require employees to contribute 2 percent more of their salaries. The increased contribution would be phased in over two years;
  • Cap pensionable salary at $109,000, the limit that is currently used for Tier-Two employees. The cap would increase at the rate of one half of the Consumer Price Index that is set for urban consumers;
  • Base the amount of pension benefits that would be eligible for cost-of-living adjustments (COLAs) on the amount of time employees worked. For each year of employment, $1,000 (or $800 for employees who receive Social Security benefits) of pension income would be eligible for a COLA. For example, if an employee worked for 30 years, then $30,000 of his or her retirement benefit would see an annual COLA. Before employees reached their cap, they would receive a compounding COLA. After they reached the cap, they would get a flat annual increase. A delay in first or next year COLA increases to age 67 or the fifth anniversary of retirement…
“Anticipating a legal challenge from unions, Madigan explained that if the bill becomes law, there likely would be a court order that would require the state to keep up the current payment schedule until the pension measure is resolved in court. The speaker has said he expects the legislation to pass the Senate and be upheld by the Illinois Supreme Court.” (This quotation is from the Chicago Tribune, May 2)

“…Not everyone in the chamber was sold on the strength of that pension-funding safeguard, noting that future Legislatures could weaken or suspend it. ‘We do not have a real guarantee,’ said Rep. Michael Fortner (R-West Chicago), who voted against Madigan's legislation. ‘The fact we can change it through our budget implementation process gives me concern a future Legislature will do very much the same things we've seen happen all too many times during the past decades under a variety of different administrations.’

“Madigan's plan did not include the pension system that covers the state's judges, including those who sit on the Illinois Supreme Court, which figures to be the ultimate arbiter of any pension plan that gets through the Legislature and signed by Quinn. Judges have the highest average annual annuity of anyone covered by a state pension: $117,564.

“The speaker, who Wednesday predicted Supreme Court sign-off on his plan, justified his move to exempt judges from the pension pain during floor debate Thursday. ‘Judges were excluded as a practical decision,’ Madigan explained. ‘We anticipate this matter will be before the Illinois court system and Illinois Supreme Court, and the absence of the judicial pension system in the bill will relieve them of the burden of dealing with a conflict of interest.’

"The coalition of public-sector labor unions fighting Madigan's pension package lashed out at the House action. ‘Senate Bill 1 is unfair to the active and retired teachers, nurses, police, and other employees who paid out of every paycheck to fund their pensions, even as the state shorted its share. On top of that, it is blatantly unconstitutional and thus saves nothing,’ said a statement from the We Are One Illinois coalition. ‘It simply exacerbates Illinois' fiscal problems.’

“The group is trying to craft an alternative to the Madigan plan with Cullerton, though neither the unions nor Cullerton offered details of what their proposal was. It described a Thursday meeting with Cullerton as "productive…” (from the Chicago Sun-Times).

For legal and moral rebuttals to Madigan's SB 1, click on the "pension analyses" tab under the blog's masthead.

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