Illinois Senate President John Cullerton thinks legislators will be able to agree on a solution to the state's growing pension problem.
But it might have to wait until the fall veto session -- after the election, when lawmakers are likely to feel less vulnerable, Cullerton said.
The Chicago Democrat, in a visit with the News-Democrat editorial board, said he's confident legislators will support a plan to gradually shift the state's cost of teachers' pensions onto local schools, colleges and universities.
"Republicans said they're not prepared to vote for the cost-shifting. They agreed with it in principle, but they want some guarantees that it won't result in property tax increases," Cullerton said.
No one is sure how it got started, but the state pays the employer costs for the pensions of teachers, except those in Chicago, which has its own pension plan. Cullerton, House Speaker Michael Madigan and Gov. Pat Quinn have proposed shifting the employer cost onto local school districts.
With the current system, school districts can give raises without any concern about how much they'll cost the state in pension payouts. Cullerton said that means downstate taxpayers are helping to foot the bill for expensive, suburban-Chicago pensions.
"Most of the problems are not caused from downstate," he said. "They're suburban Chicago school districts that are paying $120,000 for gym teachers, and paying $250,000 for superintendents who are in the same system. Your salaries downstate are much more moderate."
He added: "The suburban school districts are paying real high salaries, and they're sending the bill to the state, instead of paying for it themselves. When you're negotiating salaries, you can't just send the bill off for pensions to somebody else."
Under the proposal, local schools and colleges would pay an increasing percentage of payroll every year toward the pensions. "It would probably take six or eight years before they would be done," Cullerton said.
Colleges and school districts were receptive to the idea, he said.
"Here's what we said to them: 'The past is our responsibility. All of that underfunding, that $83 billion worth of underfunding, that's our deal, and we're going to pay that off over 30 years. But we want you to pay what we would call the normal cost. So going forward, as you pay a salary to somebody, you've got to put a little skin in the game, you've got to put a little money aside. We'll give you time to do it, and we'll limit how much you have to pay,'" Cullerton said.
As a result, he said, the state will have more money available for schools in the form of state aid. The state could use the money to catch up on its late payments to school districts, he said.
School districts at first were afraid they'd have to increase property taxes.
"I fully expect that this money would be coming from a number of different sources," Cullerton said.
His staff is putting together a list of school districts' financial reserves, which he said total about $8 billion.
But Cullerton agreed he can't guarantee that a school district won't try to increase property taxes to cover the cost. That's what concerns some local legislators, from both parties.
Rep. Dwight Kay, R-Glen Carbon, said the cost shift would simply push Springfield's problems on others. He said it would "take the monkey off Springfield's back and burden taxpayers in Southern Illinois."
Also as part of the proposal, teachers will have to make some sacrifices. They could keep the 3 percent compounded, annual cost-of-living increases in their pension plans, but if they do, they lose their retiree health insurance, and their future raises won't count toward their pensions. If they give up the COLA increase -- which Cullerton said is what makes the pensions costs so high -- they can keep their retiree health insurance and have their future raises count toward their pensions.
"We're offering them something they thought they already had, but now we're making it a contract," Cullerton said.
He said it's unclear how many people will give up the COLA, "but you save money either way."
This past spring, the Senate approved the COLA pension reform for two other state retirement systems: state employees and General Assembly members. The House is yet to vote on those.
Cullerton said the House needs to quickly approve the reforms to the state employee and General Assembly pension systems, so ratings agencies know Illinois is serious about solving the problem.
Also, he said, it will encourage teachers to support the plan.
"We'll be able to say: 'Hey, teachers, we passed a law that affects us, we passed a law that affects all the state employees. We took away their pension benefits by giving them this contract. Now, what's your story?'" Cullerton said.
"Teachers are a little more sympathetic than state employees, but still, no one's getting pension benefits like these in the private sector, compounded COLAs like this," he added.
New figures from Gov. Pat Quinn's office suggest schools would have to pay out hundreds of millions of dollars more each year if they were forced to absorb pension costs.
Under one possible scenario, the extra cost to schools would be $580 million annually after five years. In a slower shift, the cost after five years would be almost $350 million.
That's a lot in raw dollars but still a fairly small share of overall education spending. A $580 million increase is roughly 3.4 percent of what school districts spent in the last fiscal year.
Quinn says the figures show schools would be able to absorb pension costs gradually.
But Republican leaders say this issue should not be part of the pension overhaul now under discussion.
The Associated Press contributed to this report.