Pension overhaul on track in Springfield – chicagotribune.com

31 May

House lawmakers approved the latest version of a pension overhaul today as the clock ticks down toward a midnight adjournment deadline.

The plan to fix the nation’s worst-funded pension system came rolling out as House Republican Leader Tom Cross took over chief sponsorship, a move initiated by Democratic Speaker Michael Madigan Wednesday night.

The proposal’s main difference is that it removes a Madigan-backed plan to gradually shift state costs for suburban and Downstate teacher pensions to the school districts.

The proposal now goes to the House, but even reluctant Democrats went along in an 8-1 vote.

It would have to go to the Senate for approval before it could go to the governor.

Cross and Senate Republican Leader Christine Radogno of Lemont had argued the cost shift would result in higher property taxes worth up to $800 million a year.

House Majority Leader Barbara Flynn, D-Chicago, argued the Madigan version would have had the potential of saving the state $115 billion over 30 years. In contrast, she said, the best-case savings in the Cross plan is $89 billion. Currie voted for the plan.

Gov. Pat Quinn’s budget chief Jerry Stermer said the Cross plan would still save the $66 billion to $89 billion that meets the governor’s goal.

Madigan backed away from his position, he said Wednesday night, at the request of the Democratic governor, who sided with the Republicans.

Stermer said the Cross version would “stabilize the pension system.”

Under the proposal, a key element is that legislators, state officials, state employees, teachers, community college and university workers hired before Jan. 1, 2011 will have a choice.

First, they can opt for a lower, inflation-indexed cost-of-living adjustment upon retirement that could go no higher than 3 percent. They would receive guaranteed access to a retiree health care plan and ensure that future salary increases would be calculated into their pensions. The second option: keep getting 3 percent yearly cost-of-living adjustments for pensions but lose access to a state-subsidized retiree health care plan and see salary increases no longer counted toward their pension levels.

Another change from earlier this week is it removes a cash-balance plan for some workers.

Pensions for judges were not included in the changes. Madigan said that’s to prevent judges from facing a conflict of interest when they rule on any of the legal challenges that are expected to hit the courts.

Dan Montgomery, president of the Illinois Federation of Teachers, blasted the proposal, saying changes “make the problems even worse.”

But Rep. Elaine Nekritz, D-Northbrook, said the Cross bill is “seriously flawed” but she supported the bill to keep the issue alive on the last scheduled day of the legislative session.

Without action now, “Illinois is on a trajectory that will lead to fiscal ruin,” said Todd Maisch, who lobbies for the Illinois Chamber of Commerce. “This pension piece is really the linchpin. You can’t get to fiscal stability without it.”

via Pension overhaul on track in Springfield – chicagotribune.com.

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