PENSION REFORM MOVES
Senate Bill 2404, Senate President John Cullerton’s pension reform proposal won approval in the Illinois Senate this week. Proponents said the bill was the best option because, in their view, it was most likely to be Constitutional. However, opponents said that the plan didn’t do enough to stabilize the pension system and that this bill was unlikely to permanently fix the problems in Illinois overburdened pension system. They argued that, in the future, Illinois would be right back where it is today.
Senate Bill 2404 gives employees a choice of benefits, something that Cullerton has long held must be a part of pension reform for any measure to be Constitutional. It would require employees in every system but the Judges to choose one of three options:
- Keep their current Cost of Living Adjustments (COLA) on their future pension benefits – which is 3% compounded annually. Give up access to State health insurance when they retire and have future salary increases not count for their pension; or
- Keep the current COLA but agree to a three-year delay in that COLA. Retain retiree health insurance. Future raises would count toward pensions. Workers would be required to pay an additional 2% of their salary each year toward their pensions; or
- Take a lower COLA (3% with no compounding) and agree to a two-year delay in that COLA. Employees could keep their retiree insurance and pensionable raises and not have to make extra contributions.
Retirees would be able to retain their current 3 percent compounded COLA, but must choose between:
- Keeping access to health insurance and having a 2-year freeze in their COLA; or
- Giving up health insurance with no COLA freeze.
It is roughly estimated that the proposal could reduce the state’s pension payments in the upcoming fiscal year by $850 billion, and would save a total of $46 billion over the next 30 years. While the measure does nothing to strengthen the current funding formula, it would guarantee that the state could make the pension payments required under current law.
Opponents of the bill contend that Senate Bill 2404 doesn’t do enough to stabilize the pension system or reduce the state’s overall pension liabilities. Some estimates have put pension liabilities in excess of $100 billion. Opponents note that in House Speaker Michael Madigan’s alternative, Senate Bill 1, promises savings of about $150 billion over 30 years including approximately $2 billion in 2015.
EDUCATION FUNDING TRANSPARENCY – HOUSE BILL 3133
Senate lawmakers approved a bill this week that would open up the General State Aid formula to greater public scrutiny. The Senate Executive Committee approved House Bill 3133, which would require the approximate amounts forecast to be paid for state Poverty Grants and Foundation Level Grants to be listed out in a state budget bill for easy review; the Property Tax Extension Limitation Law adjustment must also be listed separately.
This measure was introduced as a response to a study conducted by Senate Republicans that found that General State Aid allocation has been listed as a lump sum in the state budget, which makes it difficult to decipher exactly how state funding is being allocated. House Bill 3133 seeks to increase transparency of the state’s system of education funding, which will allow policy-makers to detect trends that—until very recently—had been concealed, and ensure that schools are being funded in the way the General State Aid formula was intended.
HEALTH INSURANCE EXCHANGES
The Senate moved forward with the establishment and implementation of a state-based health insurance exchange as part of the requirements of the federal Affordable Care Act, also known as “Obamacare.” The Senate Insurance Committee approved House Bill 3227, establishing and outlining the structure of the Illinois Health Benefits Exchange. The projected plan would begin enrollment in October of 2014. Initially the exchange would have two components, one serving individuals and businesses with 50 or fewer employees. In 2016 the two parts could be merged and also include employers with up to 100 employees.
The Senate considered a number of additional measures both in Senate Committees and as a full body. You can catch up on legislation moving through the Senate, as well as measures that have been approved by the General Assembly, by clicking here.