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Wed December 4, 2013
How They Finally Passed A Pension Overhaul
The Illinois General Assembly approved sweeping cuts to state employee pensions Tuesday. The move comes after years of stalemate over how to address a hundred-billion dollar liability — the worst-funded pension plans of any state.
Democratic Governor Pat Quinn immediately declared victory and says he'll sign it into law, while labor unions are promising a court challenge. Brian Mackey takes us inside a most unusual day at the Statehouse.
House Speaker Michael Madigan is rarely in the House chamber.
But there he was, patiently answering questions for nearly three hours, forcefully arguing for this pension overhaul.
"Something's got to be done," he said. "We can't go on dedicating so much of our resources to this one sector: pensions."
Madigan says the cost of pensions for state workers, university employees, and public school teachers has grown "too rich" for Illinois government.
The proposal is projected to save $160 billion over the coming decades. But Madigan rejected the notion that those reductions in benefits are too harsh on workers and retirees.
"This is not a one-sided bill," Madigan said. "There will be changes here. Much needed changes. But this bill is a well-thought out, well-balanced bill."
One of the most significant changes is a reduction in cost-of-living adjustments. Supporters of the change say even that phrase is misleading, since state retirees get automatic, three-percent raises every year, regardless of the actual cost of living.
Now, retirees will get smaller raises on just a portion of their income, tied to the consumer price index, and on a sliding scale based on years of service. And there's a lot more.
Like many lawmakers, Rep. Darlene Senger, a Republican from Naperville, spoke directly to employees worried about their retirement being cut.
"Our whole intent here ... is to make sure you have a pension until you no longer need it," Senger said. "And that's what this bill is doing."
So, what does this all mean for the average state retiree? That's tough to say, since that group includes rural kindergarten teachers and janitors and prison guards and neurosurgeons at state university medical schools.
Still, the Center for Tax and Budget Accountability took a shot at coming up with an example. (The group calls itself a bi-partisan think tank, though it does get financial support from labor unions.)
OK, so picture your favorite teacher, ready to retire after 30 years of service. Her initial pension starts out at $67,000. Right now, after 20 years of retirement, that would grow to more than $120,000. But under the new system, it would only reach $91,000. That's a cumulative difference of more than $280,000.
"There's only one way to describe that kind of blatant taking of one's life savings. We call it theft," said Dan Montgomery, president of the Illinois Federation of Teachers.
He points to a section of the Illinois Constitution that seemingly bans this sort of thing. It says membership in a government pension system is a contractual relationship, "the benefits of which shall not be diminished or impaired."
Because of those constitutional questions, unions say they will be challenging this in court. The labor unions found common cause with unlikely allies: conservatives, who complain the plan doesn't go far enough in wringing savings from pensioners.
"To vote for something just because we've been told, 'This is it, this is our chance at reform' — or in response to a media frenzy over this underwhelming bill — is short-sighted," Rep. Jeanne Ives, a Republican from Wheaton, said.
Ultimately, those arguments did not prevail. The vote came up first in the Senate, where the president reportedly spent a lot of time and effort cajoling and arm-twisting and whipping up the required number of votes. Even with that, it was as close as can be, with a vote of 30 yes, 24 no, and three voting present.
After recent big votes to legalize same-sex marriage, civil unions, even drivers licenses for undocumented immigrants — anything controversial and big — there are loud cheers from supporters. The victory of the pension plan was greeted with silence.
It's an acknowledgment that, even though it's taken three years to get to this point, the fight is far from over.