By MARK PETERS and STEPHANIE BANCHERO
New details emerged Friday about a proposal to overhaul Illinois’s public-employee retirement system, hardening opposition from public-sector unions and drawing criticism from some conservatives for not going far enough.
Democratic and Republican leaders agreed earlier in the week on a plan to repair the Illinois pension system—widely regarded as the most troubled among U.S. states, falling nearly $100 billion short of what is needed to meet promised benefits.
Newly released details show the state would save about $160 billion in part by replacing a 3% cost-of-living increase for public-sector retirees with a more complex system tied to years of service and the consumer-price index. The deal also would raise the retirement age for employees 45 years old and younger under a tiered system and would introduce the option of a defined-contribution plan for a slice of employees hired before 2011.
The agreement would require the state to make actuarially sound contributions—the lack of which has been a driving reason for the deep funding problems—and employees could take the state to court if it falls short on future payments. The deal would also reduce the contribution state workers, teachers and other employees make to the retirement system by 1% of their salaries, according to a summary of the agreement.
Since the financial crisis, states have been cutting retirement benefits for current and former workers and reducing what they offer new hires. Illinois has been deadlocked for more than two years on how to overhaul the state pension system to ensure it remains solvent over the long term. Wednesday’s agreement was the first one backed by House and Senate leaders from both parties and Gov. Pat Quinn, a Democrat.
Still, passage isn’t assured as lawmakers gather to vote on the issue Tuesday. Labor unions argue the legislation uses state workers to bail out a pension system the state has shortchanged for years. They plan to sue the state if the legislation passes, arguing benefits are protected by the state constitution.
Dan Montgomery, president of the Illinois Federation of Teachers, the state’s second-largest teacher union, called the proposal a “grotesque taking of the lifetime savings of public employees.”
At the same time, the Illinois Policy Institute, which advocates for free-market principles, said the legislation doesn’t go far enough to fix the state’s problems and would put pension payments ahead of education spending and public safety.
Legislative leaders were working Friday to build support for the latest agreement ahead of next week’s vote.
A spokesman for House Speaker Michael Madigan. a Democrat, said the plan takes the steps needed to stabilize the pension system and that organized labor hasn’t been helpful in working toward that goal.