Illinois Pension Proposal Faces Uncertain Future

The future of a potential solution to Illinois' mounting pension problem was hazy Tuesday, as House lawmakers entered the final full day of a lame-duck session not knowing whether the plan that seeks more worker contributions even had enough support to be called for a vote.

The plan — which also pushes back when retirees can collect cost-of-living increases and requires the state to fully meet its pension funding obligations — was approved out of a House committee a day earlier. It has the backing of Gov. Pat Quinn, House Minority Leader Tom Cross and some business leaders.

But it's uncertain whether the plan will advance further before the session ends Wednesday.

"There's never any guarantees in the legislative process," said Rep. Elaine Nekritz, a Northbrook Democrat who sponsored the bill. "If the roll call looks good, we'll figure out if we can move ahead."

New lawmakers are sworn in Wednesday, the day of Quinn's deadline for a plan to address pensions.

Illinois' unfunded pension liability is about $96 billion — the highest of any state in the country — and Illinois officials estimate it grows by $17 million daily. The accumulating debt has hurt the state's credit rating, limiting Illinois' ability to borrow. As the annual payments Illinois must make to the funds have grown, they've taken money away from education and other public services.

The plan that emerged over the weekend faces several obstacles and doesn't address all the issues.

First, the House would have to call a vote and approve it. Then it would move to the Senate, which isn't currently in session. Senate President John Cullerton has said that he could call lawmakers back Tuesday if necessary.

Even then, questions arose about if the plan was constitutional or went far enough to address Illinois' pension problem. The proposal doesn't contain a provision to deal with downstate and suburban school districts to pay their own pension costs, which the state currently picks up. Some opponents said that Illinois must consider other revenue sources, such as closing tax loopholes. They asked legislators to attend a pension summit to try to work out a plan that they say will pass constitutional muster.

Cross said he would work with his Republican caucus to get the measure passed on the floor. Two Republicans joined four Democrats in voting yes in the pensions committee.

"We've got to quit talking and we've got to pass something," Cross said. "This is something that has to happen. Its time has come."

Those against the legislation also stressed that state workers and employees have made their pension contributions as required, while the state has repeatedly skipped or shorted its payments, leaving Illinois with the nation's worst pension funding crisis.

Cinda Klickna, president of the Illinois Education Association, said many teachers are scared because they have planned their lives based on what they thought their pension benefits would be.

"Their pension is their life savings. It is their safety net," Klickna said. "What we're talking about today begins to tear at that safety net. We are talking about people's lives."

The amended pension bill would not award annual cost-of-living increases until the age of 67 and would increase employee contributions by 2 percent of salary, spread over two years. Once cost-of-living increases take effect at 67, they would be applied only to the first $25,000 of a retiree's pension, or the first $20,000 for retirees who also receive Social Security.

It also would require the state to fully fund its portion of pensions under threat of legal action by the accounts' administrators.

Among the main questions still lingering about any pension plan is whether it will stand up to a legal challenge. The Illinois Constitution prohibits pension benefits from being "diminished or impaired."

Union officials said they believe the current proposal violates that provision, which they called an "ironclad guarantee" of benefits. They said they are prepared to sue if the bill becomes law.

Mark Rosen, a professor at Chicago Kent School of Law, told lawmakers courts have ruled that constitutional language isn't absolute, particularly if there are compelling competing interests such as a massive unfunded liability that threatens a fund's solvency.

Nekritz said any change to pensions is likely to prompt a legal challenge, and lawmakers should let the Illinois Supreme Court make the final decision on what's constitutional.

Copyright Associated Press