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House Speaker Madigan Proposes Pension Reform Plan

SPRINGFIELD, Ill. (AP) -- Illinois House Speaker Michael Madigan sought Tuesday to tackle the pension crisis through a single piece of legislation that would require government employees and teachers to contribute more toward their retirement but receive fewer benefits in return.

Several bills already have received House approval, but Madigan's proposal ties them together. That, supporters say, makes it a one stop shop for pension reform, rather than require disparate fixes through separate legislative measures. The bill was scheduled for a committee vote Wednesday morning.

In moving the pension debate into high gear, the Chicago Democrat replaced language in legislation sent to the House by Senate President John Cullerton, removing Cullerton's plan for offering affected state-government employees and teachers a choice of benefits instead of unilaterally reducing them.

Notably, the proposal does not include shifting some teacher pension costs to school boards. Madigan has bemoaned the "free lunch" school districts get because the state pays the employer portion due to the retirement funds of elementary and secondary teachers.

Several Madigan proposals have been discussed but have a new twist. The highest salary on which a pension could be based would be about $110,000, instead of the $113,700 Social Security guideline. That salary would increase by only have of the rate of inflation each year.

But cost-of-living increases on retirement benefits could be more generous. Instead of basing COLAs on the first $25,000 of an annual pension, it would be 3 percent of $1,000 for each year of service. So someone working 30 years would do better than under past proposals.

Lawmakers have wrestled for years over a growing problem in the state's five pension accounts covering state and university employees, teachers, judges and members of the General Assembly. Years of skipping or shorting payments to the pension funds has left the state nearly $100 billion short of what it needs to cover the pensions of all current and retired employees.

To catch up, the state has to pay more than $6 billion in the budget year that begins July 1 — about one-fifth of the total amount available for all services, including education, health care and public safety.

The Madigan proposal would bring the systems to full funding by 2044.

Key pieces of the plan have popped out of the House as Madigan set up a system where the entire House debated pension-reform issues individually instead of all at once. Tuesday's legislation fulfills a prediction by Rep. Elaine Nekritz, a Madigan lieutenant on the issue, that those pieces would eventually be combined into one bill.

Other parts of the Madigan plan remain unchanged from those proposed by Nekritz, a Northbrook Democrat, and House Republican Leader Tom Cross of Oswego.

They include a promise that starting in 2020, the state will contribute an additional $1 billion annually to the pension funds, reflecting the retirement of bonds sold to borrow money for pensions. The final, $952 million payment is due in 2019.

And the bill would guarantee that the state would make the payment it owes each year — determined by actuaries — or the officials that operate the individual pension systems could file a lawsuit.

(TM and © Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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