Trustees: seek options to protect employee retirement benefits
The new pension law, passed by the General Assembly Dec. 3, reduces cost-of-living adjustments, increases the retirement age for some employees and puts a cap on pensionable earnings.
“It is the highest priority for the university to remain competitive in the higher education marketplace, which will require the university to consider implementation of supplemental programs and options to address the changes made by the state’s pension reform,” said a board resolution passed unanimously at the trustees meeting in Student Center West.
University administrators will make their recommendations to the board before the law’s June 1 effective date.
Two lawsuits have been filed challenging the constitutionality of the pension legislation, which likely will delay the plan’s June 1 effective date, said Richard Dye, economist in the Institute of Government and Public Affairs.
The pension law isn’t enough to tackle the state’s budget shortfall, Dye told trustees.
“Even if the law passes constitutional muster and we add on top of that maintaining higher tax rates, the state still has a sizeable fiscal gap,” he said.
“Pension reform still leaves us in an increasingly unbalanced situation going forward.”
The state faces other fiscal challenges, Dye said, including its high unemployment rate. While the national unemployment rate has declined to 7 percent, the jobless rate in Illinois is currently 8.7 percent, he said.
“There’s slower improvement in Illinois,” he said. “Labor markets are problematic.”
The state has shown a temporary improvement in its delay in paying bills, Dye said, but “the future is ominous.”
The state made the remainder of its fiscal year 2013 payments to the university in September but still owes $386 million of its $669 million fiscal year 2014 appropriation, said Walter Knorr, university vice president and comptroller.