Both houses of the General Assembly over the past several days have approved pension reform plans – one bold and one small.
All but one of McHenry County’s representatives in the House voted for their proposal. All three of its Senate members voted against theirs.
So the question is, what kind of bill, if any, will make it to Gov. Pat Quinn’s desk in an attempt to reduce the state’s $96.7 billion unfunded pension liability?
House Bill 1165, approved Thursday on a 66-50 vote, caps the 3 percent annual cost-of-living adjustment for existing retirees to only the first $25,000 of income for four of the five state-run pension systems, excluding judges. It also pushes back the eligibility for COLA increases to age 67 or five years after retirement.
Senate Bill 1, which passed Wednesday on a 30-22 vote, would force downstate and suburban teachers to choose between getting a 3 percent COLA or state health insurance once they retire.
Rep. Mike Tryon, R-Crystal Lake, was the sole county legislator who voted “no” on the House bill on the grounds that it would not survive an inevitable court challenge by the state’s powerful public sector unions.
The Illinois Constitution says that public sector pension benefits cannot be diminished or impaired, and Tryon pointed out that judges in Arizona and Colorado have recently tossed out their states’ attempts to lower COLAs for existing employees.
“The major component piece, the COLAs, has already lost in two other states
within the last six months,” Tryon said. “I’m really worried that this would pass, we take a budget credit, spend that money, and then lose in court.”
State Rep. Jack Franks, D-Marengo, said he is confident the bill would prevail if challenged. But that doesn’t mean he likes it.
Before his “yes” vote, Franks railed on the House floor that he hated every part of the bill and hated that years of legislative inaction, shorting the pension payments and other factors, has led to this point.
However, he said he hated the idea of the system going broke and retirees ending up with no pensions the most.
“[The vote] was one of the hardest things I had to do as an elected representative,” Franks said.
The House’s reform bill estimates far greater savings – $100 billion over 30 years – compared with the Senate bill, which would save an estimated $18 billion to $40 billion.
All three county senators – Pam Althoff, R-McHenry, Dan Duffy, R-Lake Barrington, and Karen McConnaughay, R-St. Charles – voted against Senate Bill 1, sponsored by Senate President John Cullerton, D-Chicago. They instead backed a stronger pension bill by Sen. Daniel Biss, D-Skokie, that mirrors much of the House bill. Senate Bill 35 failed on a 23-30 vote, with three voting present.
Duffy said Cullerton’s bill “isn’t even a step forward.”
“It’s not pension reform. All it is is a political vehicle [Cullerton’s] using to say he put a check in the box on pension reform, that he did something,” Duffy said.
Althoff, like Tryon, has constitutional concerns. Cullerton’s bill has an unusual provision that enacts lesser cuts should the courts throw out the main provisions.
“In my estimation, that [language] sends a clear signal to the courts that part A is unconstitutional,” Althoff said.
The House bill excludes judges, like past reform efforts, to bolster its odds of survival should it pass. When former Gov. Rod Blagojevich attempted in 2003 to strip judges of their 3 percent COLA, citing the cost, the judges sued, heard their own case and won.
The failure of the Biss bill signals trouble regarding whether a meaningful pension reform measure will make it through both houses. The House bill contains provisions the Senate rejected, and House members may consider the Senate bill inadequate.
Reps. David McSweeney, R-Barrington Hills, and Barbara Wheeler, R-Crystal Lake, are among them.
“The savings are in the COLA adjustment, and the bill that passed the Senate this week is completely inadequate. It doesn’t do the job,” McSweeney said.
Wheeler said she had hoped the Biss bill would pass, and hopes the Senate will reconsider stronger reforms that the House has advanced.
“What does the state of Illinois do if both houses can’t get behind pension reform? I don’t know, but I feel there was good progress this week,” Wheeler said.
Lawmakers likely will not take up pension reform again until at least late April. They adjourned Friday for two weeks for spring break, and their main business for the first two weeks they return will be advancing bills on their third and final readings.
In that five-week period, Franks pointed out, the unfunded pension liability will grow by more than $500 million – or put another way, almost double the cuts to education proposed by Quinn in his 2014 budget.
“The failure to act is not an option. If we do not act, our state pension system will go broke,” Franks said.
Under Quinn’s budget, 19 percent of the state’s general fund will go to meet pension obligations. In 2008, pensions took up 6 percent of state spending.
How they voted
Pension reform bills advanced this week in the Illinois House and Senate. McHenry County’s representatives in the House almost unanimously supported its bill, and the county’s representatives in the Senate unanimously opposed theirs.
• In the House, Reps. Jack Franks, D-Marengo, Barbara Wheeler, R-Crystal Lake, David McSweeney, R-Lake Barrington, and Tim Schmitz, R-Batavia, supported House Bill 1165, which passed on a 66-50 vote. Only Mike Tryon, R-Crystal Lake, voted “no,” saying the bill would not survive a constitutional challenge.
• In the Senate, all three local senators – Pam Althoff, R-McHenry, Dan Duffy, R-Lake Barrington, and Karen McConnaughay, R-St. Charles – opposed Senate Bill 1. They supported a stronger reform bill, Senate Bill 35, filed by Sen. Daniel Biss, D-Skokie.
On the Net
You can read both proposed bills on the General Assembly’s website at www.ilga.gov.