Pension commission will miss deadline >Capitol Fax

16 Apr

COMMISSION WILL MISS DEADLINE During his State of the State address earlier this year, Gov. Pat Quinn ordered his new pension reform working group to present him with a plan of action by April 17th. But the group won’t make tomorrow’s deadline, although it is continuing to work on a reform proposal.

The pension working group has reportedly decided to reduce workers’ retirement benefits while increasing employee contributions and shifting some responsibility for school and university pension funding away from the state. However, “We haven’t settled on specifics,” one working group member said yesterday.

So far, at least, the pension reform plan is not a “tiered” proposal. House Republican Leader Tom Cross’ tiered plan (which the governor rejected) would’ve raised employee contributions in order to push current workers into either a defined benefit program with fewer benefits or a 401(k)-style defined contribution plan. But the proposal on the table right now would not do either of those things.

Since details aren’t even close to being finalized, it’s unclear how the benefit reductions (which could include higher minimum retirement ages and eliminating the guaranteed annual cost of living adjustment for pension beneficiaries) and employee contribution hikes will pass constitutional muster. As you most surely already know, the state’s Constitution declares that public pension membership is an “enforceable contractual relationship,” and that public pension benefits “shall not be diminished or impaired.”

The idea appears to be to change the contractual relationship by somehow guaranteeing that the pension systems will always be properly funded. One idea under consideration is to allow for a private right of legal action if the state fails to make its scheduled payments. Under that plan, employees and retirees would be able to take the state to court if government contributions weren’t up to snuff. But that could open a whole other can of worms, and even open up some worm cans that nobody may even be thinking about right now, so no final decisions have been made, although the study group is hoping to hammer out a deal with labor unions on this particular topic.

Another problem facing the pension study commission is Senate President John Cullerton, who will likely propose his own plan if the governor’s proposal flops. Cullerton has so far appeared to refuse to completely buy into the governor’s reform process, appointing a member with little caucus support and no pension experience to the study commission (Michael Noland) and keeping his public comments to a bare minimum about the commission’s progress.

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