Illinois lawmakers pass pension changes for state employees

pension1The Illinois General Assembly passed pension legislation Tuesday that university leaders said would “adversely impact public university employees, place higher education in Illinois at a competitive disadvantage, and ultimately weaken the state’s economy.”

Proponents of the bill, which passed the Senate 30-24 and the House 62-53 just minutes later, say it will address the state’s $100 billion pension shortfall. Democratic House Speaker Michael Madigan and Republican Senate leader Christine Radogno, among other top legislators from both political parties, pushed for the plan.

“In a statement regarding the public pension funding crisis a year ago, the University of Illinois called for a pension system that would be reasonable, responsible, sustainable and competitive with those offered by our peer institutions,” said a statement issued Monday by U of I President Bob Easter, UIC Chancellor Paula Allen-Meares, UIUC Chancellor Phyllis Wise and UIS Chancellor Susan Koch.

The pension measure “fails to meet those basic principles,” the statement said.

Last April, heads of all 14 Illinois public universities sent a six-point proposal to Gov. Pat Quinn and legislative leaders as a long-term solution for reforming the university pension system.

“We are profoundly disappointed that in nearly three years of engaging the legislative process on this crucial issue, the state’s nine public universities’ counterproposals will not be included,” university leaders said.

The measure just passed by legislators is complex, said Katherine Laing, executive director of the university’s Office of Governmental Relations. How it would affect UIC employees and retirees “really depends on your particular circumstances,” she said.

“It will severely upset the status quo,” Laing said.

The pension law would reduce cost-of-living adjustments, increase the retirement age for some employees and put a cap on pensionable earnings.

“The likely changes arguably lessen the retirement commitments made to employees and retirees, and their net effect also will harm the public higher education sector in Illinois,” university leaders said in their statement.

The plan would mean less money for university employees and retirees, said David Merriman, professor of economics and public administration.

“It’s potentially a very large cut in benefits,” said Merriman, faculty member in the Institute of Government and Public Affairs.

“It’s a very progressive change in the sense that it’s a much larger cut in the pension of those with higher incomes than those with smaller incomes and smaller pensions.”

The pension plan also includes a reduction in employee contributions for some participants and stronger legal requirements that the state makes its pension funding commitment.

“It would certainly improve the funding of the pension plan and move it toward stability, but it’s difficult to tell exactly how much,” Merriman said.

Gov. Pat Quinn has said he would sign the bill into law, making the changes effective June 1.

However, many political leaders and experts say the measure will be challenged in court because the Illinois Constitution says state retirement benefits “shall not be diminished or impaired.”

For more information, visit:

Institute of Government and Public Affairs

Northern Illinois University State Pension and Budget Update

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