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home : news : state news free June 28, 2016

1/8/2013 2:06:00 PM
Pension bill's sponsor discouraged

SPRINGFIELD, Ill. (AP) — The sponsor of a bill to address Illinois’ pension problem says she isn’t confident there will be a vote on the provision.

Democratic Rep. Elaine Nekritz emerged from a meeting with Gov. Pat Quinn today and said she’s “very discouraged.”

Nekritz says she’ll continue working to get votes. But she says it’s very difficult to ask lawmakers to vote for a measure that takes away the pension benefits the state promised to workers.

A House committee approved a proposal calling for more employee contributions and freezing cost-of-living increases. Nekritz says she went into the meeting with Quinn to talk about a possible vote on her legislation by the full Illinois House.

Today was the final full day of the lame-duck session.

The plant seeks more worker contributions and also pushes back when retirees can collect cost-of-living increases and requires the state to fully meet its pension funding obligations — was approved out of a House committee a day earlier. It has the backing of Gov. Pat Quinn, House Minority Leader Tom Cross and some business leaders.

Illinois’ unfunded pension liability is about $96 billion — the highest of any state in the country — and Illinois officials estimate it grows by $17 million daily. The accumulating debt has hurt the state’s credit rating, limiting Illinois’ ability to borrow. As the annual payments Illinois must make to the funds have grown, they’ve taken money away from education and other public services.

Those against the legislation stressed that state workers and employees have made their pension contributions as required, while the state has repeatedly skipped or shorted its payments, leaving Illinois with the nation’s worst pension funding crisis.

Cinda Klickna, president of the Illinois Education Association, said many teachers are scared because they have planned their lives based on what they thought their pension benefits would be.

“Their pension is their life savings. It is their safety net,” Klickna said. “What we’re talking about today begins to tear at that safety net. We are talking about people’s lives.”

The amended pension bill would not award annual cost-of-living increases until the age of 67 and would increase employee contributions by 2 percent of salary, spread over two years. Once cost-of-living increases take effect at 67, they would be applied only to the first $25,000 of a retiree’s pension, or the first $20,000 for retirees who also receive Social Security.

It also would require the state to fully fund its portion of pensions under threat of legal action by the accounts’ administrators.

Among the main questions still lingering about any pension plan is whether it will stand up to a legal challenge. The Illinois Constitution prohibits pension benefits from being “diminished or impaired.”

Union officials said they believe the current proposal violates that provision, which they called an “ironclad guarantee” of benefits. They said they are prepared to sue if the bill becomes law.

Mark Rosen, a professor at Chicago Kent School of Law, told lawmakers courts have ruled that constitutional language isn’t absolute, particularly if there are compelling competing interests such as a massive unfunded liability that threatens a fund’s solvency.

Nekritz said any change to pensions is likely to prompt a legal challenge, and lawmakers should let the Illinois Supreme Court make the final decision on what’s constitutional.

The bill is SB1673.


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