A stripped-down pension reform package absent a controversial cost-shifting provision that would have transferred responsibility for payments of normal costs of pension benefits from the state to employers (universities, school districts and community colleges) passed the House Personnel and Pension Committee for consideration by the full House Thursday.
Pension reform legislation stalled yesterday due to concerns that the package’s cost-shifting provisions would cause large property tax increases and/or program cuts by school systems across the state.
In today’s version of the bill, employers would be forced to pay all pension liabilities associated with any salary increases included in the final rate of earnings calculation for participants retiring under the general formula. Additional provisions include cuts to the yearly cost-of-living adjustment (COLA) for current and future retirees. The annual increase would be three percent or one-half the urban cost of living index, whichever is lower, starting five years after retirement or at age 67. Workers could keep the current cost-of-living increase formula, three percent compounded yearly, but would lose access to state retiree health care benefits upon retirement.
Northern Illinois University submitted testimony in opposition to the bill.
Lawmakers have until midnight tonight to pass a pension reform package in the House and Senate and send to Governor Pat Quinn’s desk. If the midnight deadline is not met, legislators will have a more difficult time passing reform provisions, as a three-fifths vote is required in both chambers beginning June 1.
All indications at this time are that Governor Quinn would sign the reforms into law. His budget director, Jerry Stermer, testified in favor of the revised bill even though the package would result in less overall cost-savings due to the removal of the cost-shift provision.