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Cullerton sees path toward Illinois pension compromise

Caption
(AP Photo/Seth Perlman)
Illinois Senate President John Cullerton, D-Chicago, speaks with the Associated Press during an interview in his office at the Illinois State Capitol Tuesday, June 5, 2012 in Springfield, Ill. Cullerton says state leaders should push ahead on changes for state employees and the General Assembly, where there's general agreement on what to do. While that's being done, officials could continue negotiating on retirement changes for teachers and university employees.

SPRINGFIELD (AP) – Illinois leaders trying to revive a stalled overhaul of state retirement systems should push forward with what they agree on and keep negotiating the touchy question of who will pay retirement costs for teachers, state Senate President John Cullerton said Tuesday.

The Chicago Democrat said cutting costs at just two retirement systems would still save Illinois billions of dollars and show credit-rating agencies that the state is serious about cutting pension costs. It shouldn't be hard to pass legislation that cuts benefits for state employees and legislators because it's something the Senate already has approved, he said.

"This is a simple, one-day fix," Cullerton said in an interview with The Associated Press.

He spoke ahead of a planned meeting on the issue Wednesday with Gov. Pat Quinn and other legislative leaders. The Democratic governor invited the leaders to convene after the General Assembly adjourned last week without resolving the pensions issue, one of the biggest challenges facing the state.

One of the most serious disagreements is over what to do about pensions for university staff and downstate and suburban Chicago teachers. State government pays most of their retirement costs, but some officials want to shift those costs to the school districts and colleges that employ those workers. Opponents fear it would trigger local property tax increases.

Cullerton said he's confident that question can be answered, but there's no need to delay action in other areas until that happens.

Steve Brown, spokesman for Democratic House Speaker Michael Madigan, said the value of Cullerton's proposal will depend on reaction from the governor and from the rating agencies that are threatening to downgrade the state's credit yet again if Illinois doesn't fix its pension problems.

A better way to deal with the situation, Brown said, would be making it clear that state government can no longer pay the retirement costs of local employees.

House Minority Leader Tom Cross, R-Oswego, will not comment on the proposal before discussing it with Cullerton, a spokeswoman said.

Quinn also had no comment.

Illinois contributes to the pensions of hundreds of thousands of public employees, but it hasn't paid enough over the years to keep the retirement systems healthy. As a result, the money available is roughly $85 billion less than what will be needed in decades to come. Closing that gap requires state government to increase its contributions dramatically each year, leaving less money for other important services and threatening the state's shaky finances.

Officials are trying to figure out how to cut the state's annual costs. The approach that seems to have broad support among legislators — although not among the unions representing public employees — is to encourage employees to accept lower retirement benefits.

Instead of 3 percent annual cost-of-living increases, retirees would get the lower of either 3 percent or half the inflation rate. And the increases would no longer be compounded. Employees who reject that offer would face major increases in health insurance costs, and no future raises would count when figuring out their pensions.

Cullerton wants to make that change now for members of the General Assembly retirement system and the system for state employees in general. In the meantime, officials would continue to work on pensions for teachers and university staff, he said — possibly tinkering with the timetable so that any shift is made so slowly that schools don't raise property taxes.

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