Statehouse Update: Committees continue action on pension reform, send other bills to full floor

Lori Clark

Lori Clark

In Springfield …

Last week was the deadline for bills to get out of committees in their chamber of origin, so most of the action occurred in the various committees.

However, there were some significant movements on various bills related to pension reform. SB 1, sponsored by Senate President John Cullerton, as amended, is not the comprehensive pension reform package discussed last week.

As currently amended, this legislation will impact only current teachers in the Teachers’ Retirement System who were hired before 2011.

Those teachers will need to choose between:

  • a reduced cost-of-living-allowance (COLA) on their future retiree benefits and keeping access to retiree health insurance, or
  • keeping a full COLA and paying the costs of retiree health insurance and other benefit reductions.

This legislation does not change the pension benefits or health insurance for retired teachers, nor does it affect the benefits or health insurance active participants in other state funded pension systems. The bill passed out of the Senate by a vote of 30-22-2 and was sent to the House of Representatives.

SB 35, the more comprehensive pension reform package sponsored by Sen. Daniel Biss, failed to pass out of the Senate (23-30-3). However, there is similar bi-partisan bill in the House: HB 3411. The Senate also passed SB 1224 which provides that payouts for unused sick or vacation time cannot be used to increase a retiree’s pension, although this would apply to new hires only; the State Universities Retirement System is included in this bill. SB 1224 has been sent to the House for consideration.

Meanwhile, in the House, HB 1165, a bipartisan pension reform bill, passed out of the House on March 21 by a vote of 66-50-0 and has been sent to the Senate.

Photo of an elevator’s "down" buttonHB 1165 is expected to reduce Illinois’ total pension liabilities by approximately $100 billion by 2045, by adjusting the COLA benefits to existing Tier I state employees. COLA benefits would be adjusted downward based upon variables including the age of the annuitant, the number of years since the annuitant’s retirement and the size of each annuitant’s annuity and other retirement benefits provided by law.

This would significantly reduce the unfunded liabilities of four of the five major state pension systems, including the State Universities Retirement System.

Concern about the growing unfunded liabilities of Illinois five state-funded pension systems, plus overall concerns with Illinois’ fiscal condition, led Moody’s Investor Service, the nationally known credit rating firm, to downgrade the bond ratings of four Illinois public universities – NIU, Eastern Illinois University, Governors State University and Northeastern Illinois University. This downgrade will make any future borrowing by the universities more expensive.

In the Senate Higher Education Committee, a number of bills were passed out:

SB 46, Committee Amendment 1, sponsored by Sen. Michael Frerichs, was passed unanimously. This bill limits the governor’s appointment authority for the University of Illinois Board of Trustees. Instead of appointing all 12 trustees, the governor would be able to appoint four trustees, the University of Illinois Alumni Association’s Board of Directors would be able to appoint and reappoint five trustees, and the remaining three trustees are students, one elected from each of the three main UI campuses.

SB 2167 was passed unanimously. The bill provides that beginning in the 2013-2014 academic year, if a person is utilizing benefits under the federal Post 9/11 Veterans Educational Assistance Act of 2008, or any subsequent variation, then that person is considered an Illinois resident for tuition purposes and will be offered in-state tuition rates.

Photo of a NO SMOKING signSB 2202 passed out of Committee by a vote of 7-5-0. This bill, sponsored by Sen. Terry Link, creates the Smoke Free Campus Act. Beginning July 1, 2014, smoking would be prohibited on the campuses of all state-supported institutions of higher education. The opposition is one of governance. There already are very strict smoke-free building state laws, and many believe that these policies should be left to the governing body of the public universities – in our case, our Board of Trustees.

SB 2245, Committee Amendment 1 (CA1), passed unanimously out of committee. It requires public universities and community colleges to give veterans and service members the earliest possible enrollment opportunity that they offer any class of students. This benefit must be used within 15 years after leaving military service. CA1 changes the language to account for the differing policies among public universities and also to include community colleges.

SB 2163, sponsored by Sen. Chapin Rose, had passed out of the Higher Education Committee on March 13; however, it was brought back for the addition of Floor Amendment 1. This adds public institutions of higher education to the list of employers who must provide a leave of absence for active military service. It defines the formula that is required by the employers covered by this act by codifying the Department of Central Management Services’ calculations used to determine the pay differential between the employees military daily rate and the employees public employee daily rate.

In the Senate Revenue Committee, SB 1448 was approved. This legislation creates the Endow Illinois Tax Credit Act to authorize an income tax credit to taxpayers who make an endowment gift to a permanent endowment fund. It sets forth criteria for authorizing the credits and provides that the endowment cannot exceed $10 million in 2013, $25 million in 2014 or $50 million in 2015.

Finally, the House Higher Education Appropriations Committee and the Senate II Appropriations Committee are beginning to hold hearings to solicit testimony on the proposed FY 2014 budgets. Gov. Pat Quinn’s FY 2014 budget contains a 5 percent reduction for public higher education, including NIU. President John Peters will testify Wednesday, March 27, before the Senate Appropriations II Committee in Chicago and Thursday, April 18, before the House Higher Education Appropriations Committee in Springfield.

The Voices section of NIU Today features opinions and perspectives from across campus. Lori Clark is director of State and Federal Relations for NIU.

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