teacher/poet/musician glen brown: A Short Summary of Governor Quinn’s “Bold [Pension Reform] Plan” (April 20, 2012)

20 Apr

The “plan calls for a 100-percent funding of the retirement systems by 2042” (to “save Illinois taxpayers billions of dollars”). To accomplish this goal, there will be

  • A 3-percent increase in contributions for all current public employees;
  • A reduced Cost-of-Living Adjustment (COLA) to the lesser of 3 percent or ½ of the Consumer Price Index, whatever is less; the COLA will be one that uses a simple interest and not a compounded interest;
  • A delay of receiving a COLA until the age of 67 or five years after retirement;
  • An increased retirement age to 67, phased in over several years;
  • An establishment of a 30-year actuarially-required contribution funding schedule (according to the Governmental Accounting Standards Board).

According to Governor Quinn, “[the State of Illinois will] make sure that the public sector pensions go to [only] public sector employees… [This plan will] maintain the defined-benefit plan that exists today… Those who work for the state… and for local units of government, school districts, will have an opportunity to choose… Their pay raises will continue to be counted in the calculation of their pension benefits if they choose the plan that [Quinn has] outlined. They also will continue to receive a subsidy for their health care in retirement. If they choose not to accept the changes [that Quinn has] outlined…and continue in the current system… they will not have their future pay increases included in their pension calculation, and they will not have the subsidy that goes with respect to health care in retirement. The bottom line is that this saves between $65 – 85 billion for the people of Illinois through the period of time that we are talking about…”

Quinn is worried about a “double downgrade” in the state’s bond rating if the pensions’ unfunded liabilities are not addressed. Quinn believes that [his “bold”] plan is “constitutional” because the employee has an opportunity to choose either this proposed plan or to remain in his or her current defined-benefit plan. He said that the State of Illinois is “not under a constitutional obligation to offer subsidies for those who have retired in respect to their health care” and that the employee will give up health care if he or she does not choose the proposed plan as outlined.

Quinn said that this 30-year plan “will be written into law in plain language,” and the State of Illinois will be held accountable to make its payment to the systems. However, the State’s current responsibility for payment of the “normal costs” to the pension systems will be phased out over the next several years and be shifted to local school districts, community colleges and public universities. Quinn believes that this will not raise property taxes. Though Quinn stated that “if already retired, this particular plan will not affect you,” this plan will affect all of us, retired or currently working! Moreover, let all of us be aware of HB 4513 and HJRCA 49. These bills will be the next assault on all of us.

via teacher/poet/musician glen brown: A Short Summary of Governor Quinn’s “Bold [Pension Reform] Plan” (April 20, 2012).

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