By Ray Long, Monique Garcia and Alissa Groeninger
Gov. Pat Quinn wants to fix Illinois' debt-ridden public pension system by getting government employees to work longer, pay more toward their retirement and accept less in benefits.
The attempt to wipe out the $83 billion pension shortfall drew immediate criticism from organized labor and qualified praise from Democratic and Republican lawmakers. But questions also surfaced about whether a cost-shifting plan for suburban teacher pensions will lead to local property tax increases and if Quinn can persuade enough state workers to sign on to realize the savings.
The Democratic governor seemed to make it a personal mission to shore up a pension system that's been out of whack following decades of lawmakers not putting enoughmoney in and sweetening retirement packages for public workers.
"I didn't create the problem," said Quinn, pointedly pinning blame on predecessors. "But I'm here to solve it. That's my job, and I know I was put on earth to get this done."
The plan the governor laid out is certain to evolve during the six weeks before the Legislature's May 31 adjournment deadline. The issue also could end up getting kicked to a post-election session this fall, when lame duck lawmakers have been known to more freely put their votes up for grabs.
Quinn called for employees to pay 3 percent more and to work until 67 instead of 65 or even earlier in some cases. The governor also would reduce yearly cost-of-living increases for retirees to 3 percent or half of the consumer price index, whichever is less. Pension calculations would be based on simple interest rather than compound interest, the more costly method now in place. Cost-of-living adjustments also would start at either age 67 or five years after retirement, whichever is earlier.
In addition, Quinn's plan would seek to halt some of the pension windfalls for people who aren't even in state government but get into state retirement systems. Public pensions would be limited to public sector employment. That came as a nod to pension abuses uncovered by the Tribune that showed how union leaders managed to count time in their jobs as union officials.
The plan also would require the state to pump in the correct amount that is owed to the pensions, a decision based on actual math rather than the gut feeling of how much lawmakers and governors want to spend each year. There's nothing to stop lawmakers from hitting the reset button as they've done in the past, however.
Quinn estimated his proposal would save the state between $65 billion and $85 billion over 30 years. Quinn said the retirement systems would be 100 percent funded by 2042. Current law calls for 90 percent funding and theoretically would reach that point in 2045, but the costs threaten to eat up the state budget for decades.
"This is a plan that will erase the liability," Quinn said. "At the end of 2042, we won't owe billions of dollars."
Quinn would give current employees the option to reject the changes and remain enrolled in the current retirement plans. But there's a big stick if an employee doesn't take the carrot: Current employees who refuse to accept the new pension plan would not be allowed to figure any future pay raises into their overall pension calculation, and they would lose state-paid health care upon retirement.
The plan would not affect current retirees, Quinn said.
Republican leaders Sen. Christine Radogno of Lemont and Tom Cross of Oswego fear the Quinn plan would create a cost shift of up to $1 billion that would force property taxes to go up, always a hot-button issue for homeowners.
At issue is Quinn's goal of shifting pension costs for elementary and high school teachers outside Chicago onto the ledgers of local school districts and community colleges, which are partially funded by property taxes. Quinn also seeks to shift pension costs the state now picks up for public universities back to their overall operations.
Labor unions, long a honey pot of campaign funds for Democrats, wasted no time condemning the proposal. Illinois AFL-CIO President Michael Carrigan, on behalf of a coalition of unions, called the plan tantamount to an endorsement of "unfair and unconstitutional cuts."
For decades, state workers have operated under the belief that their retirement plans basically could only go up and not go down, seizing on a reference in the Illinois Constitution that says their pensions cannot be diminished.
But Senate President John Cullerton, D-Chicago, thinks Quinn's plan fits the constitution's guidelines, said Rikeesha Phelon, the Senate leader's spokeswoman. The Quinn proposal rests on contract principles as basic as having "an offer, consideration and acceptance by individuals," she said.
Steve Brown, spokesman for House Speaker Michael Madigan, said the constitutional question is one the courts will ultimately have to decide.
For Quinn, it was the second straight day of taking on one of the state's biggest financialcrises. On Thursday, he called on lawmakers to raise the cigarette tax by $1 and accept a series of major cuts to save Illinois' health care system for the poor.
Gov. Pat Quinn wants to fix Illinois' debt-ridden public pension system by getting government employees to work longer, pay more toward their retirement and accept less in benefits.
The attempt to wipe out the $83 billion pension shortfall drew immediate criticism from organized labor and qualified praise from Democratic and Republican lawmakers. But questions also surfaced about whether a cost-shifting plan for suburban teacher pensions will lead to local property tax increases and if Quinn can persuade enough state workers to sign on to realize the savings.
The Democratic governor seemed to make it a personal mission to shore up a pension system that's been out of whack following decades of lawmakers not putting enoughmoney in and sweetening retirement packages for public workers.
"I didn't create the problem," said Quinn, pointedly pinning blame on predecessors. "But I'm here to solve it. That's my job, and I know I was put on earth to get this done."
The plan the governor laid out is certain to evolve during the six weeks before the Legislature's May 31 adjournment deadline. The issue also could end up getting kicked to a post-election session this fall, when lame duck lawmakers have been known to more freely put their votes up for grabs.
Quinn called for employees to pay 3 percent more and to work until 67 instead of 65 or even earlier in some cases. The governor also would reduce yearly cost-of-living increases for retirees to 3 percent or half of the consumer price index, whichever is less. Pension calculations would be based on simple interest rather than compound interest, the more costly method now in place. Cost-of-living adjustments also would start at either age 67 or five years after retirement, whichever is earlier.
In addition, Quinn's plan would seek to halt some of the pension windfalls for people who aren't even in state government but get into state retirement systems. Public pensions would be limited to public sector employment. That came as a nod to pension abuses uncovered by the Tribune that showed how union leaders managed to count time in their jobs as union officials.
The plan also would require the state to pump in the correct amount that is owed to the pensions, a decision based on actual math rather than the gut feeling of how much lawmakers and governors want to spend each year. There's nothing to stop lawmakers from hitting the reset button as they've done in the past, however.
Quinn estimated his proposal would save the state between $65 billion and $85 billion over 30 years. Quinn said the retirement systems would be 100 percent funded by 2042. Current law calls for 90 percent funding and theoretically would reach that point in 2045, but the costs threaten to eat up the state budget for decades.
"This is a plan that will erase the liability," Quinn said. "At the end of 2042, we won't owe billions of dollars."
Quinn would give current employees the option to reject the changes and remain enrolled in the current retirement plans. But there's a big stick if an employee doesn't take the carrot: Current employees who refuse to accept the new pension plan would not be allowed to figure any future pay raises into their overall pension calculation, and they would lose state-paid health care upon retirement.
The plan would not affect current retirees, Quinn said.
Republican leaders Sen. Christine Radogno of Lemont and Tom Cross of Oswego fear the Quinn plan would create a cost shift of up to $1 billion that would force property taxes to go up, always a hot-button issue for homeowners.
At issue is Quinn's goal of shifting pension costs for elementary and high school teachers outside Chicago onto the ledgers of local school districts and community colleges, which are partially funded by property taxes. Quinn also seeks to shift pension costs the state now picks up for public universities back to their overall operations.
Labor unions, long a honey pot of campaign funds for Democrats, wasted no time condemning the proposal. Illinois AFL-CIO President Michael Carrigan, on behalf of a coalition of unions, called the plan tantamount to an endorsement of "unfair and unconstitutional cuts."
For decades, state workers have operated under the belief that their retirement plans basically could only go up and not go down, seizing on a reference in the Illinois Constitution that says their pensions cannot be diminished.
But Senate President John Cullerton, D-Chicago, thinks Quinn's plan fits the constitution's guidelines, said Rikeesha Phelon, the Senate leader's spokeswoman. The Quinn proposal rests on contract principles as basic as having "an offer, consideration and acceptance by individuals," she said.
Steve Brown, spokesman for House Speaker Michael Madigan, said the constitutional question is one the courts will ultimately have to decide.
For Quinn, it was the second straight day of taking on one of the state's biggest financialcrises. On Thursday, he called on lawmakers to raise the cigarette tax by $1 and accept a series of major cuts to save Illinois' health care system for the poor.