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Two-Tiered Pension System Moves on to Quinn

By   /   March 24, 2010  /   6 Comments

By Kevin Lee

Illinois Statehouse News

SPRINGFIELD — Gov. Pat Quinn is going to consider whether or not state employees hired next year and later will have to work  longer in order to receive their full retirement benefits.

Both the Illinois House and Senate on Wednesday overwhelmingly passed a controversial proposal that would establish a different pension system with slimmer benefits for new public employees.

The proposal affects the three separate state-funded pension systems for state workers, teachers, and state university employees, and repeats pension reforms for future lawmakers and judges that were passed by the House last week.

Legislative leaders said the sweeping proposal would help save the state billions of dollars, even though the state won’t see those savings for years.

Democratic Senate President John Cullerton said the so-called “two-tiered” pension proposal could help the state secure funding for large public works projects

“We are about to issue bonds for our capital construction package and if we don’t show that we’re trying to addressing our structural deficit, the rating agencies will likely downgrade us. That’s why we want to do this now,” he said.

Democratic House Speaker Michael Madigan was pleased to see Republican support for the pension plan.

“They’ve supported this because it was structured in such a way that to oppose it would be completely contrary to their public statements over several years,” he said.

If Quinn signs the proposal into law, incoming state employees hired Jan. 1 of next year or later would fall into the new pension system.

Under the new tier, public employees’ maximum retirement pay would be capped at $106,800 and employees would have to work until age 67 to receive full benefits.

Republican lawmakers have been calling for changes to the pension system and Senate Minority Leader Christine Radogno, R-Lemont, said she was pleased progress had been made.

“I have to say that I’m somewhat surprised that we’re here this evening voting on this, but also pleasantly surprised. This has obviously an issue that we’ve needed to tackle for a long, long time.”

Union leaders, including Henry Bayer, executive director of AFSCME Council 31 in Chicago, opposed the proposal.

Bayer said a new tier of pensioners would not help the state solve its fiscal crisis.

“The problem of our pension is not a problem of rich benefits. The problem of our pensions is that we have not funded them year in and year out as we are supposed to have done,” he said.

Some lawmakers, such as state Rep. Dave Winters, R-Rockford, voted against the proposal for different reasons.

Winters did not like a provision that would allow the Chicago Public Schools to defer nearly $1.2 billion in pension payments over the next three years and use that money toward classrooms.

“We are creating a cliff for the Chicago Public Schools where we may buy peace today, tomorrow we will have a disaster,” he said.

The sweeping proposal would also set restrictions on annual increases to pension pay. Pensions payments would either increase by 3 percent or half of the rate of inflation, whichever is less.

While most public employees’ would get increases based on their original pension payments, judges and lawmakers would get increases that compounded each year.

State Sen. Dale Righter, R-Mattoon, said he voted against the proposal because he said lawmakers and judges should not set the wrong example for other state employees.

“It seems to me that if the lawmakers in this building are going to stand up with any credibility whatsoever and say ‘We’re going to engage in sweeping reform, we’re going to change the system,’ we need to start with ourselves and that’s not what we saw tonight,” he said.

Quinn said in a written statement he would sign the proposal into law, but did not indicate when he would do so.