Illinois legislative leaders are trying to persuade lawmakers to embrace a solution for the nation’s worst-funded U.S. public pension system as unions representing hundreds of thousands of workers and retirees push against the proposal.
The holiday weekend of lobbying is the prelude to the legislature’s Dec. 3 return, when lawmakers in the Democrat-dominated General Assembly will consider the plan designed to save $160 billion over 30 years and restore stability to the retirement system. Leaders didn’t disclose the measure’s particulars, but labor groups mobilized nonetheless.
“If their new plan is in line with what’s been reported from earlier discussions, then it’s an unfair, unconstitutional scheme that undermines retirement security,” We Are One Illinois, a coalition of unions, said in a statement.
Illinois’s five pension systems had 40 percent of the assets needed to cover obligations in fiscal 2011, the lowest ratio among states, data compiled by Bloomberg show. That has led to repeated credit downgrades for the lowest-rated U.S. state.
Yesterday’s proposal, agreed to by Democratic and Republican leaders, follows months of discussions by a special legislative panel appointed to develop a compromise.
Annual cost-of-living raises would be calculated against a sum equal to the number of years an employee worked, times $1,000, according to Crain’s Chicago Business, which cited sources it didn’t name.
The retirement age for workers younger than 45 would be raised, requiring employees to work as many as five years longer before receiving benefits. Employees could also choose a 401(k)- style retirement plan, the report said.
“I asked members to draft a plan that eliminated the unfunded pension debt and fully stabilized the systems, and this plan meets that standard,” Democratic Governor Pat Quinn said in a statement. “We have more work to do. I look forward to working with the leaders and members of the General Assembly over the coming days to get this job done.”
Resolving Illinois’s pension shortfall has proven a challenge. Lawmakers have failed at least five times in the last 15 months to restructure the plans covering 761,000 employees and retirees. Despite the backing of legislative leaders, approval by a majority of both houses is not assured.
“The Senate president will be debriefing members of his caucus in the coming days in hopes of garnering support,” said Ronald Holmes, a spokesman for Senate President John Cullerton.
Steve Brown, a spokesman for House Speaker Michael Madigan, didn’t respond to a telephone call and e-mail seeking comment on the deal.
Illinois has the lowest credit standing among U.S. states from the three biggest rating companies, at four steps above junk. The firms have repeatedly cited the pension shortfall as the basis for the reductions.