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President Baker emails campus on pension ruling

May 12, 2015
NIU President Doug Baker

NIU President Doug Baker

Dear NIU faculty, staff and annuitants,

As many of you know, last Friday the Illinois Supreme Court unanimously ruled that the sweeping pension legislation approved by the Illinois General Assembly and signed into law in December 2013 is unconstitutional.

Specifically, Public Act 98-599 violates the pension protection clause of the Illinois Constitution by reducing annual cost of living adjustments, increasing age and years of service requirements and changing other benefit calculation variables.

These measures were introduced to cut pension fund outlays and improve the financial footing of the pension systems in Illinois. But these reductions in employee benefits – as determined by the court – create a diminishment and impairment of employee retirement benefits and are unenforceable. State employees have worked for and counted on these benefits during their entire career and this ruling provides a sense of relief.

And for now, that’s the good news.

The bad news is that the Illinois pension system, including SURS, has some of the lowest “funded” ratios in the nation and are not on a sustainable financial path. Now, as the General Assembly and the governor work to devise an FY2016 budget plan, they must also go back to the drawing board to fix the pension problem in Illinois.

With the Supreme Court’s ruling, there is little that can be done to reduce the cost side of the equation, so the solution appears to be to provide state funding support for the pension programs at a level that will sufficiently meet the state’s obligation. At this time, however, due to the state’s financial situation, a pension solution involving dedicated or increased funding support will directly impact state operations and the university’s operating budget.

There is no easy answer. As the General Assembly works to develop a comprehensive financial plan that addresses the state’s operating budget and the state’s pension obligations we will continue to monitor the situation and strongly advocate for the university and its highly valued students, employees and retirees. I will provide you with an update as progress is made and events unfold.

Forward Together,