Chicago agency's pension reform could be test case
SPRINGFIELD – As pressure mounts on Illinois lawmakers to solve the state’s pension crisis, the passage of reforms for Chicago park district employees is being held up as an example of a cooperative approach, even as it poses a dilemma for Gov. Pat Quinn, a vocal supporter of reform.
The plan’s relatively easy path contrasts sharply with the yearslong wrangling over the state’s $100 billion shortfall and Chicago’s $36 billion problem, which have diverted money from other services and led to higher government borrowing costs.
Lawmakers adjourned Nov. 6, shortly after passing legislation dealing with the park district’s $971 million pension shortfall. The bill reflected a deal that was reached after successful negotiations between the Service Employees International Union and administrators, although the union has since raised concerns about a late change lawmakers made to the bill.
Quinn hasn’t said yet what he’ll do with the measure. He could sign it, veto it, or do nothing and allow it to automatically become law 60 days after the Legislature passed it. Quinn, who is running for re-election in 2014, has been among the biggest champions of pension reform, but the Service Employees’ International Union is one of his top campaign contributors.
Members of a bipartisan committee dealing with the state’s pension nightmare say the park district plan won’t necessarily be a blueprint for state reforms. But they say it could serve as a “test case” in the courts, which are expected to have final say on the constitutionality of any reform passed by the Legislature.
“The unit of government engaged with its employees and came up with a plan and we passed it. It’s a very different path than we’ve taken with the state systems,” said Rep. Elaine Nekritz, a Democrat from Northbrook and committee member.
The legislation would force park employees to put 3 percent more of their salaries into the system. It reduces annual cost-of-living adjustments to 3 percent or half the rate of inflation – whichever is less – and requires employees to work until age 58 to retire with full benefits after 30 years of service.
The late change that led to the union’s objection was including current retirees in the cost-of-living adjustments. The original bill dealt only with future retirees.
Asked about the bill this week at a Springfield appearance, Quinn said he had not had a chance to analyze it. “We’ll look at the bill just as we look at every other bill,” he said.
The Legislature’s top Democrats – House Speaker Michael Madigan and Senate President John Cullerton – served as chief sponsors of the park district legislation. Cullerton aides said that did not mean they thought it could serve as a model for the state. In recent floor speeches, Cullerton has described the 2012 passage of the Metropolitan Water Reclamation District pension plan and Chicago Park District measure as a “test” of how pension reform deals will be interpreted by the courts.
The pension committee’s latest working proposal for the state would reduce the 3 percent annual compounded cost-of-living adjustments in retirement benefits to half of the rate of inflation. It also would reduce employee contributions by 1 percent. Elements such as raising the retirement age and moving to a 401(k)-style plan are still being vetted.
Madigan’s spokesman, Steve Brown, said the park district bill was able to pass because the city and SEIU sat down to craft an agreement. “Could something like that happen on the state level? That hasn’t been apparent by anybody’s estimation,” he said.
SEIU Local 73 spokesman Adam Rosen said the agreement was facilitated by the fact that the union was in the midst of negotiating a new contract.
“We were willing to negotiate and work on a way to improve the pension system to make sure everyone could draw a pension that is eligible in the future,” Rosen said.