The Illinois constitution calls public pensions “an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
But House Speaker Michael Madigan’s plan for reform, which passed the House last Thursday, argues that the state can amend pension promises if its other vital interests are at risk.
That’s caused a split among lawmakers, who are reaching for ways to address a deeply troubled pension system that promises to eat up a fifth of the state’s general revenue in the next fiscal year, and labor groups who feel the burden of reform has been placed unfairly onto their backs.
Legislators have mulled the problem for years, but with the current system underfunded by $100 billion and the state’s credit rating last in the nation, there’s been increased pressure to act.
The plan by Madigan (D-Chicago), which edged through the House in a 62-51 vote with two abstentions (it needed 60 to pass), would curb benefits, like automatic cost-of-living increases, and require a higher employee contribution.
Unions say that violates the constitution and vow to challenge the bill in court if it passes the senate.
“We are not in favor of any plan that would diminish benefits,” said Karen Dirst, president of the Grundy County Retired Teachers Association.
Putting forth a plan, Dirst said, would ultimately cost taxpayers in legal fees because unions will challenge the bill in court.
According to State Senator Sue Rezin (R-Morris), Senate President John Cullerton (D-Chicago) is currently in talks with unions, and described the situation as fluid.
But Rezin said she expects long-term pension reform to be completed before the end of the current legislative session at the end of the month, which would require only a simple majority to pass.
“The problem doesn’t get better by delaying it,” Rezin said. “I do believe some type of reform will be finished by the last week of the session.”
What exactly that reform will look like remains uncertain.
Echoing previous statements on pension reform, Rezin said any bill that passes would have to be 100 percent funded in 30 years, include strong language to prevent missed payments in the future, and be constitutional.
Rezin didn’t get too specific about how well the Madigan plan stacks up agains that criteria because she is waiting to see what comes out of Cullerton’s negotiations with unions.
But, she said, if it doesn’t ultimately pass, a solution must still be in place.
“If you vote ‘no,’ what’s your plan?” Rezin said.
Representative Pam Roth (R-Morris), who was one of 22 House Republicans to vote yes on the bill, expressed reservations but said the cost of doing nothing would be high.
“We are in crisis,” Roth said. “If we do nothing, there isn’t going to be a pension system anymore.
“We can’t just kick the can down the road.”
As for the bill’s constitutionality, Roth said she expects the bill to be challenged in court.
But, Roth said, “Our attorney’s assure us that it is constitutional.”
Roth said she understands concerns many groups have about the bill, but feels that the current system is dragging down the state’s economy, pointing to the state’s poor bond rating.
“We are very close to having a junk bond rating,” Roth said. “So who will want to invest in Illinois now?” And not acting now, she said, could make things worse.
“If we do not take control, we’ll be downgraded in June,” she said.
But Dirst said the state does not have a pension problem, but a debt problem. And, she said, lawmakers are putting undue burden on retired teachers to fix it.
“We understand there is a problem,” Dirst said. “But we would like a solution that doesn’t violate the rights of retired employees.”
Roth does have concerns about the bill. For instance, she doesn’t like the way it would change cost-of-iving adjustments.
But, she said, lawmakers -- and union leaders -- on all sides of the issue need to come together for reform.
“You can’t expect a perfect bill,” Roth said. “If you do that, you’ll vote ‘no’ on everything.” “It’s about as close as we’re going to get right now.”