BRADY PENSION REFORM HEARD IN COMMITTEE
A pension reform measure, soon to be introduced by Senator Brady, was heard in a “subject-matter-only” hearing by the Senate Executive Committee on April 30. Brady will soon file the plan as an amendment to Senate Bill 1388 to create a hybrid pension system that would apply to employees in all five state systems.
“Illinois has, without question, the worst-funded public employee pension system in the nation,” said Brady. “The fiscal instability inherent in the system is a major contributor to the state’s low credit ratings. which are the worst in the nation according to Standard & Poor’s and Moody’s.”
According to Brady, Illinois’ unfunded pension debt is close to $100 billion, a number that is more than double the $43 billion the state owed for pensions 10 years ago. When bond debt is added in, the total debt rises to $130 billion. With all figures are considered, Illinois owes roughly $10,000 per person, which is more than twice the $4,000 per person in pension and bond debt that existed 10 years ago.
“Pension reform is not only important to right our fiscal course here in Illinois, but also to ensure that the tax-hike imposed in 2011 will sunset as promised at the end of 2014,” said Brady.
The proposed amendment to Senate Bill 1388 would:
- Freeze the current defined benefit plan for everyone in all five state systems and base future benefits on the “frozen” salary as of Jan. 1, 2014.
- Retirees under the former defined benefits system would not be guaranteed a cost of living adjustment (COLA). Future COLAs would be granted by resolution from the General Assembly only in years when the state was able to afford it.
- Going forward, everyone in the five state systems would earn benefits under a hybrid “Tier 3” model similar to the proposal contained in the Cross-Nekritz legislation, HB 3411.
- Requires funding at levels recommended by experts.
Under Brady’s hybrid plan, public employees would receive a defined benefit, and would also invest in their own retirement plan similar to a 401(k) with savings that they could transfer no matter where they were employed.
“My legislation is expected to generate substantial savings for the State of Illinois,” said Brady. “We have an opportunity here to ensure a financially sound pension system for current and future retirees and put the state back on a firm fiscal footing.”
OTHER PENSION REFORM UPDATES
Late in the week, the House of Representatives approved, and sent back to the Senate, a heavily-amended version of Senate Bill 1, which had originally contained Senate President John Cullerton’s pension reform proposal. The amendments to the legislation contained a number of ideas that have surfaced in recent months. Senate Bill 1 passed the Senate in March on a vote of 30-22-2.
Senate Bill 1’s future back in the Senate is uncertain. The Senate President, the bill’s original sponsor, has argued that unilateral cuts in benefits cannot survive a constitutional challenge. He has argued that because the Illinois Constitution protects retirement benefits, any changes must offer teachers and other employees a choice between existing benefits and a new plan.
The House amendments to the bill generate savings mostly from reducing retirement cost-of-living increases for retired teachers and other employees.
As Senate Bill 1 was being amended in the House, union leaders announced that they had been in discussions with the Senate President to craft a measure that they say would be constitutional. No details of their proposal have been released.
Key changes to SB 1 include:
- Higher retirement age for employees currently younger than 45;
- Reduced Cost of Living Adjustment (COLA) on pension benefits;
- COLAs delayed until either age 67 or 5 years after retirement, whichever comes first.
- A cap on the salary that is eligible for pensions. The cap would be $109,971 and would be increased at half the rate of inflation each year.
- Employees would be required to pay an extra 2% of their salary into the pension fund.
- To guarantee funding, the various pension systems could sue the state to enforce payment.
On May 1, the Senate Executive Committee moved forward with a major expansion of gambling in Illinois. Senate Bill 1739 passed in the Senate and was sent to the House with a vote of 32-20-2.
Senate Bill 1739 would allow for a Chicago-based casino with up to 4,000 gambling positions. Additionally, the bill would allow for four new riverboats or casinos, a major increase in the number of gambling positions allowed at existing riverboats, and slot machines at Illinois racetracks. The four new riverboats or casinos would be located in Rockford, Danville, Lake County, and Southern Cook County.
Pensions and gambling weren’t the only big issues in the Senate this week. Committees spent much of the week reviewing House legislation, sending some measures back to the House for final approval. Click here to view a full listing of Senate action.
Passed by the Senate:
Trooper Memorial Rest Stop (HJR 12): Names the northbound and southbound Coalfield rest stops located at mile post 64 on Interstate 55 as the "Trooper Kyle Deatherage Memorial Rest Stop." Trooper Deatherage was killed in the line of duty in 2012. He began his career in law enforcement with the Staunton Police Department. He later worked for the Madison County Sheriff's Office before becoming a State Trooper with District 18.
Puppy "Lemon Law" (SB 1639): Creates a lemon provision, in which a customer may receive monetary compensation if a veterinarian finds that a diseased dog or cat was sold by a pet shop. Opponents raised concerns that the measure applied only to pet shops and not other sellers of animals when pet shops only account for 14% of all dogs and cats sold in the state.
Approved by Senate Committees
Primary Voting for 17 Year Olds (HB 226): Allows a 17-year-old who will be 18 by the general election to vote in the primary election.
Crimes Against Police Alerts (HB 2893): Creates an alert system called the "Crimes Against Police Officers Advisory" to send out alerts giving State Police and local law enforcement a warning that an individual may be targeting officers. It would be similar to other emergency alert systems, such as child abduction alerts.
No Indoor Tanning for Minors (HB 188): Prohibits a tanning facility from permitting anyone under 18 to use tanning equipment which emits ultraviolet (UV) radiations. Provides for exemptions for spray-on, mist-on, or sunless tans.