Will Illinois State Lawmakers Accept Brunt of Pension Reform?

Minority Leader Tom Cross with Speaker Madigan

One of the public pension reforms being proposed in Springfield this week will have its biggest economic impact on lawmakers.

As the BGA Think Tank reported last week in “Who can Fix State’s Public Pension Crisis? Try H.G. Wells”, lawmakers, led in the Republican House by Minority Leader Tom Cross, are considering a plan requiring all current public employees to choose one of three options in regard to future retirement benefits. Employees can choose to enroll in the pension plan available to new employees, which offers a lower state contribution; they can enter a 401(k) plan; or they can keep their current benefits and contribute a significantly larger percentage of their pay to the pension fund.

It’s that final option that has had lawmakers and staff scrambling to crunch numbers in Springfield to determine just how much more employees would have to contribute.

Originally, the pension reform bill called for an increase in all employees’ contributions to 20 percent—an idea that failed to garner enough support to get either Democrats or Republicans to vote for it. So lawmakers and staff have been crunching numbers to determine how much of an increase in employee contributions to pensions would actually be required for each group of employees to make the pension system financially sound.

In our recent “Sticker Shock” investigation into Illinois public pensions, the BGA reported that many of the state’s best-known politicians are receiving in large annual pensions and that more than 10 percent have already been paid more than $1 million since retiring.

Now, according to the Capitol Fax Blog, the numbers have been released, and the actual increase in the percentage of pre-tax income that goes to pensions is largest for state legislators. According to the Blog, the General Assembly Retirement System employee contribution would increase from 11.5 percent to 24.89 percent.

Other public employees would see increases in their contributions, but none as significant as those aimed at lawmakers.

The proposal is far from a slam-dunk. Unions, who oppose the plan, point to the Illinois Constitution, which states that pension benefits for current members cannot be diminished. They are working hard under the dome and on the airwaves to fight against changing benefits for its members.

Even if a bill changing pensions for current employees passes and is signed by the governor, the American Federation of State, County, and Municipal Employees, which represents 75,000 public employees in Illinois, will likely file a lawsuit challenging its constitutionality.

While the proposal itself may not pass the legal and political muster it needs to succeed, amidst all the talk about budget slashing and shared sacrifice, it is refreshing to see lawmakers take a look at ways they can help share and alleviate the fiscal burden of our state.

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3 Comments

Filed under Pension Reform

3 responses to “Will Illinois State Lawmakers Accept Brunt of Pension Reform?

  1. Ter

    I think it would pass muster. State workers do not have lifetime contracts, so their plan from the present on can be change.. Worse comes to worse, you could just fire them all and rehire them with the new pension plan.

    • Mark Heatherton

      Ter, you are not too well informed. Pension benefits for Illinois State workers are covered in the Illinois State Constitution.

  2. jah

    Illinois opted out of social security and for a State pension plan because the General Assembly wanted the option of NOT paying 6% into social security each year as required by federal law. So, our politicians did not pay into the pension plan as they were supposed to for years. They violated what should have been a fiduciary responsibility to pensioners and citizens through the costs of corruption and cronyism. Now they are asking hard working public employees who paid their share into the pension system to pony up for the politicians. The majority of us won’t make more than between 18,000 and 32,000 a year. We are not the big Jim Thompson’s who are triple dipper millionaires who failed to make payments into the system. So, don’t steal from us, when politicians like he already did.

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