Illinois House passes pension plan likely to shift retiree costs to schools

News-DemocratMay 2, 2013 

Illinois Legislature

The floor of the Illinois Senate.

SETH PERLMAN — AP

  • POLL

— A plan to fix Illinois' roughly $100 billion pension debt won passage Thursday in the Illinois House, and it likely will end up including a so-called cost shift that would force local school districts to shoulder most responsibility for teachers' retirements.

House Speaker Michael Madigan, D-Chicago, told fellow House members that as part of his plan, he will pursue a shift in pension costs for public school teachers from the state to school districts. That idea had been a major point of disagreement in negotiations and the reason reform efforts collapsed in last spring's legislative session. A shift would affect downstate and suburban school districts; Chicago schools have their own pension system.

Madigan's proposal, which passed 62-51, requires employees to contribute 2 percent more of their earnings to their pensions. They would also have to delay retirement and accept less-generous annual cost-of-living increases

The Madigan plan, which is an amendment to Senate Bill 1, does not yet include the cost shift to school districts.

Madigan's proposal still needs approval from the governor and the Senate. And Senate President John Cullerton has been pushing his own plan.

Rep. Dwight Kay, R-Glen Carbon, asked Madigan why he wants the cost shift.

"I intend to pursue the cost shift because I think we have a situation today that sends the bill to a second person to pay," Madigan said. "And I think that's a bad policy."

Kay -- the only House member from the metro-east who voted in favor of the bill -- said he agrees that it's "a bad policy" for local governments to award retirement benefits that the state has to pay.

Many downstate lawmakers have opposed a cost shift, arguing it will force school districts to raise property taxes.

Kay said it was a difficult vote, but necessary to prevent bankrupting the state.

"What we're doing today is not an easy move, but it's a move that if we do not make, I sense that we will fail, and we will fail quickly and we will fail completely," Kay said.

He added that state lawmakers have an obligation to represent "the best interest of the state of Illinois," not just their individual districts.

Rep. John Bradley, D-Marion, said: "We didn't get sent here to play to the home crowd. We got sent here to fix problems."

Pension costs eat up roughly 20 percent of the state's tax revenue.

Gov. Pat Quinn issued a statement after the House vote, calling the proposal a "comprehensive pension reform solution" that puts Illinois "closer than ever to addressing a decades-long problem that is plaguing our economy, our bond rating and the future of our children."

Quinn added: "Today's action sends a strong message to the people and businesses of our state: Illinois is ready for reform and we understand that this reform is critical to building a brighter future for all."

Cullerton has been pushing a plan that he says a court is more likely to deem constitutional. Cullerton has insisted that unilaterally cutting benefits or requiring increased contributions would violate the constitution, which says state pensioners' benefits can't be decreased.

Rep. Jerry Costello, D-Smithton, said he voted against the Madigan proposal because it's likely to be tied up in court for years.

"I'm told there has been much progress on Senate President Cullerton's bill, and an agreed-to version may be forthcoming," Costello said. "If agreed to, that bill would take effect once enacted, as there would be no challenge in court, thus saving the state time and money."

The Madigan plan is opposed by a coalition of unions representing teachers and state workers. The We Are One Illinois coalition issued this statement:

"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. It simply exacerbates Illinois' fiscal problems. In contrast, our coalition had a productive meeting today with President John Cullerton, and we hope to be able to continue the dialogue."

The Illinois Chamber of Commerce applauded the vote, saying the plan will "put the state back on a path to fiscal solvency."

How metro-east House members voted:

* Rep. Dan Beiser, D-Alton: No

* Rep. John Cavaletto, R-Salem: No

* Rep. Jerry Costello, D-Smithton: No

* Rep. Jay Hoffman, D-Belleville: No

* Rep. Eddie Lee Jackson, D-East St. Louis: No

* Rep. Dwight Kay, R-Glen Carbon: Yes

* Rep. Charlie Meier, R-Okawville: No

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