Thread: Illinois Legislature Approves Benefit Cuts in Troubled Pension System

Illinois Legislature Approves Benefit Cuts in Troubled Pension System

By RICK LYMAN
Published: December 3, 2013

SPRINGFIELD, Ill., — The Illinois legislature on Tuesday ended a day of emotional debate and fierce back-room arm-twisting by passing a deal to shore up the state’s debt-engulfed pension system by trimming retiree benefits and increasing state contributions.

With the most-broken state employee pension system in the nation – some $100 billion in arrears – Illinois has been the focus of intense attention across the country as states and municipalities struggle to come to grips with their own public pension problems. The compromise reached in Illinois, a staunchly blue state with a strong labor movement that had successfully resisted previous efforts to trim pensions, could provide a template for agreements elsewhere.

The top leaders of both legislative houses, Democrats and Republicans, had cobbled together the bill and pushed strenuously for its passage. Union leaders and some Democratic lawmakers opposed it, just as strenuously, arguing that the bill fell too harshly on state workers who had paid into their pension plans over the years with the understanding that the benefits would be there when they retired.

Some Republicans also opposed the bill, saying it did not trim enough to solve the state’s pension troubles.

The lines were clearly drawn at a morning hearing by the conference committee that had approved the legislation last week in advance of Tuesday’s vote.

“We call it theft,” said Daniel J. Montgomery, president of the Illinois Federation of Teachers, promising to challenge the measure in court on the ground that “the so-called compromise bill” violates the state’s Constitution. “We will be back here again next year having seen this bill struck down by the courts,” he said.

Speakers representing the state’s business leaders, including the state Chamber of Commerce and the Illinois Farm Bureau, argued that the bill was an essential first step and insisted that while the reductions were painful, the burden fell on both workers and the state.

“The financial and human costs of not going forward would be devastating,” said Ty Fahner, speaking on behalf of the business groups before the hearing.

The legislature opened late Tuesday morning, and almost immediately recessed so both parties could go into closed-door caucus and leaders could count votes. The fruit of those efforts became clear through the afternoon, as the measure passed by 30 to 24 in the Senate, with 3 members voting “present,” and in the House by 62 to 53, with 1 voting “present.”

In both chambers, the debate was fiercely emotional.

“It’s difficult work we have to do and a difficult vote we have to take,” said State Senator Kwame Raoul, a Chicago Democrat who was a co-chairman of the conference committee that passed the legislation. “We cannot continue to be the embarrassment of the nation.”

There was no cheering or celebration when the bill passed in the Senate.

“I don’t take any joy in this action today,” said Representative Elaine Nekritz, a supporter of the legislation. “But it is the responsible thing to provide for a pension system that gives workers retirement security without bankrupting our state.”

Opponents were even more emphatic.

“This is more than a vote, this is defining the future of American workers,” said Senator William Delgado, a Democrat. “This is morally corrupt. We are robbing the benefits of these hard-working people.”

The break in the negotiations came last week when the Democratic and Republican leaders in the legislature ended months of wrangling andagreed on a plan that they said would save $160 billion and erase the state’s pension debt by 2044. It was the first time that top leaders from both parties had been able to reach a deal.

The savings were to come from curtailing cost-of-living increases for retirees, offering an optional 401(k) plan for those willing to leave the pension system, capping the salary level used to calculate pension benefits and raising the retirement age for younger workers, in some cases by five years. In exchange, workers were to see their pension contributions drop by 1 percent.

The plan’s architects said they expected it to generate $90 billion to $100 billion in savings from the changes in benefits to state workers, plus $60 billion to $70 billion from increased state payments into the pension system.

Negotiations had been particularly difficult in a state with a strong labor tradition. And Gov. Pat Quinn, a Democrat, who had made resolving the pension issue a priority, was also under pressure put the matter to rest before next year’s election.

http://www.nytimes.com/2013/12/04/us...stem.html?_r=0

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