Public university leaders endorse pension plan
The presidents and chancellors of the 14 public universities in Illinois unanimously endorsed a six-point proposal for addressing the state’s pension funding crisis as it relates to the State Universities Retirement System.
In a letter to Gov. Pat Quinn and legislative leaders, the university chiefs called the proposal from the university’s Institute of Government and Public Affairs “a thoughtful and responsible approach.”
Higher education leaders signing the letter included UI President Bob Easter, Chancellor Paula Allen-Meares, UIUC Chancellor Phyllis Wise and UIS Chancellor Susan Koch.
“We believe that, as a package, the steps outlined in this proposal represent a viable path forward for reforming the SURS pension plan,” the letter said. “Compared to other options, it represents the most desirable long-term solution.”
The individual steps outlined in the IGPA report, part of the institute’s ongoing work on pension funding, include:
• link the annual cost of living adjustment (COLA) to the consumer price index
• change the value of the Effective Rate of Interest to eliminate a “hidden subsidy”
• in a gradual transition, shift pension contributions by the state to colleges and universities
• increase employee contributions by an additional 2 percent
• require the state to amortize the current SURS unfunded liability
• provide a new “hybrid” defined-benefit/defined-contribution plan for new employees.
The letter was sent April 4 to Quinn and the four legislative leaders — House speaker Michael Madigan and Senate president John Cullerton, both Democrats, and House leader Tom Cross and Senate leader Christine Radogno, both Republicans.
The General Assembly, which returns this week from its spring recess, faces a May 31 deadline for adjournment.
“Our goal has been to identify potential reforms that are financially prudent and consistent with principles of constitutionality, fairness, and equity,” the higher education leaders said in the letter.
They acknowledged the proposal’s additional financial burdens to the universities and their employees that would result from the cost shift and COLA adjustment.
“The cost shift will be feasible only if phased in slowly … and made concurrent with a stabilization of general revenue appropriations during the transition,” the letter said.
“We also realize that linking cost of living adjustment to the CPI will reduce retiree earnings in the short term. But this change also provides long-term insurance against high inflation, a valuable benefit for participants.”
The IGPA proposal addresses the state’s pension problems “while ensuring our ability to recruit and retain the academic and professional talent that every Illinois public university deserves,” the letter said.
“We look forward to working with you and others in the General Assembly to translate these ideas into legislation.”