Post by wvhsparent on Mar 25, 2010 9:50:48 GMT -5
www.dailyherald.com/story/?id=368229
State pushes through pension overhaul in day
By John Patterson | Daily Herald Staff
Published: 3/24/2010 10:13 AM | Updated: 3/24/2010 9:18 PM SPRINGFIELD - A sweeping pension reform plan that would raise the retirement age for new teachers, state and local government workers to 67, ban so-called double dippers and restrict how much salary goes toward pensions cleared the General Assembly Wednesday.
The 92-17 vote in the House and 48-6 Senate approval capped a whirlwind series of events that saw the pension overhaul emerge Wednesday morning and end up on lawmakers' desks for final action that evening.
It seems fear of a credit rating downgrade hurting the state's ability to finance billions worth of construction projects is more of a motivator than politics. The state's budget director told lawmakers that lenders are wary of not just the state's nearly $78 billion unfunded pension liability, but also lawmakers refusal so far to address it.
Any further credit downgrade would mean the state would pay more to borrow money and that means fewer projects get done. The state is on the verge of borrowing more than $1 billion to begin work on roads, bridges, schools and other projects in the coming months.
"That's why we want to do this now," said Senate President John Cullerton, a Chicago Democrat.
With billions of dollars in projects at stake, House Speaker Michael Madigan, a Chicago Democrat, quickly prodded the pension overhaul through the House.
Many House Republicans were left griping that pension reform - which they'd previously demanded - was advancing too quickly and asked that they get to go home and have town hall meetings to gauge public sentiment.
Only two area House members, however, didn't vote for the changes.
State Rep. Paul Froehlich, a Schaumburg Democrat, voted "no." Froehlich said he opposed the measure because of its negative effects on future government employees and teachers.
State Rep. Randy Ramey, a Carol Stream Republican, voted "present." Ramey said a provision letting Chicago shortchange its teacher pension fund by $400 million to help balance its budget and the lack of time to discuss the proposal with education groups prompted him to cast that vote.
There also were two suburban senators who didn't vote for the changes.
State Sen. John Millner, a Carol Stream Republican, voted "no." He too questioned the pension funding breaks for Chicago and the speed at which this passed.
"A bill of this magnitude should not be rushed through in a few hours," said Millner.
State Sen. Kirk Dillard, a Hinsdale Republican, voted "present", citing concerns with raising the teachers retirement age to 67 and not addressing police or fire pensions.
Following the General Assembly's approval, Gov. Pat Quinn issued a statement indicating his support. His budget plan counts on $300 million in savings from unspecified pension reforms.
If this becomes law, anyone hired by schools, universities, the state or local governments after Jan. 1 would have to work until 67 to get full retirement benefits. They could retire at 62 with reduced benefits. They can leave earlier, but cannot collect a pension until those ages.
Currently, under certain circumstances teachers and other public sector employees can begin collection pensions at 55.
In addition, pensions would be based on the highest consecutive eight years out of the last decade of service. Pensions currently are based on the highest four years. That change could drive down overall averages. The maximum pension remains at 75 percent of the final average.
The maximum salary for figuring a pension would be capped at $106,800. Public employees could still make more, but it wouldn't count toward pensions. Annual pension cost-of-living increases, now an automatic 3 percent, would be limited to half the rate of inflation or 3 percent, whichever is less and based on the beginning pension amount, not compounded every year.
As for double dippers, the proposed law would ban people from collecting one government pension while taking another public sector job. The first pension would be suspended during the duration of the second job. Upon retirement, the person could then collect both pensions.
The proposal also would raise judges' and lawmakers' retirement age to 67 from 55, similarly cap salary used for pensions and base retirements on 60 percent of that salary rather than the current 85 percent.
Labor unions were uniform in their opposition.
Steve Preckwinkle, director of political activities for the Illinois Federation of Teachers, asked lawmakers to envision 67-year-old teachers in classrooms across the state and noted how district budgets are set up for people retiring in their 50s after 30 years of work. Another dozen years of employment, at the top of the salary structure, would cost local taxpayers deeply, he argued.
"The impact on school district budgets is going to be severe," Preckwinkle said. "This will be the largest single unfunded mandate on school districts going forward. Property taxpayers - they are the ones who will be picking up the tab."
• Daily Herald staff writers Chase Castle and Timothy Magaw contributed to this report.
State pushes through pension overhaul in day
By John Patterson | Daily Herald Staff
Published: 3/24/2010 10:13 AM | Updated: 3/24/2010 9:18 PM SPRINGFIELD - A sweeping pension reform plan that would raise the retirement age for new teachers, state and local government workers to 67, ban so-called double dippers and restrict how much salary goes toward pensions cleared the General Assembly Wednesday.
The 92-17 vote in the House and 48-6 Senate approval capped a whirlwind series of events that saw the pension overhaul emerge Wednesday morning and end up on lawmakers' desks for final action that evening.
It seems fear of a credit rating downgrade hurting the state's ability to finance billions worth of construction projects is more of a motivator than politics. The state's budget director told lawmakers that lenders are wary of not just the state's nearly $78 billion unfunded pension liability, but also lawmakers refusal so far to address it.
Any further credit downgrade would mean the state would pay more to borrow money and that means fewer projects get done. The state is on the verge of borrowing more than $1 billion to begin work on roads, bridges, schools and other projects in the coming months.
"That's why we want to do this now," said Senate President John Cullerton, a Chicago Democrat.
With billions of dollars in projects at stake, House Speaker Michael Madigan, a Chicago Democrat, quickly prodded the pension overhaul through the House.
Many House Republicans were left griping that pension reform - which they'd previously demanded - was advancing too quickly and asked that they get to go home and have town hall meetings to gauge public sentiment.
Only two area House members, however, didn't vote for the changes.
State Rep. Paul Froehlich, a Schaumburg Democrat, voted "no." Froehlich said he opposed the measure because of its negative effects on future government employees and teachers.
State Rep. Randy Ramey, a Carol Stream Republican, voted "present." Ramey said a provision letting Chicago shortchange its teacher pension fund by $400 million to help balance its budget and the lack of time to discuss the proposal with education groups prompted him to cast that vote.
There also were two suburban senators who didn't vote for the changes.
State Sen. John Millner, a Carol Stream Republican, voted "no." He too questioned the pension funding breaks for Chicago and the speed at which this passed.
"A bill of this magnitude should not be rushed through in a few hours," said Millner.
State Sen. Kirk Dillard, a Hinsdale Republican, voted "present", citing concerns with raising the teachers retirement age to 67 and not addressing police or fire pensions.
Following the General Assembly's approval, Gov. Pat Quinn issued a statement indicating his support. His budget plan counts on $300 million in savings from unspecified pension reforms.
If this becomes law, anyone hired by schools, universities, the state or local governments after Jan. 1 would have to work until 67 to get full retirement benefits. They could retire at 62 with reduced benefits. They can leave earlier, but cannot collect a pension until those ages.
Currently, under certain circumstances teachers and other public sector employees can begin collection pensions at 55.
In addition, pensions would be based on the highest consecutive eight years out of the last decade of service. Pensions currently are based on the highest four years. That change could drive down overall averages. The maximum pension remains at 75 percent of the final average.
The maximum salary for figuring a pension would be capped at $106,800. Public employees could still make more, but it wouldn't count toward pensions. Annual pension cost-of-living increases, now an automatic 3 percent, would be limited to half the rate of inflation or 3 percent, whichever is less and based on the beginning pension amount, not compounded every year.
As for double dippers, the proposed law would ban people from collecting one government pension while taking another public sector job. The first pension would be suspended during the duration of the second job. Upon retirement, the person could then collect both pensions.
The proposal also would raise judges' and lawmakers' retirement age to 67 from 55, similarly cap salary used for pensions and base retirements on 60 percent of that salary rather than the current 85 percent.
Labor unions were uniform in their opposition.
Steve Preckwinkle, director of political activities for the Illinois Federation of Teachers, asked lawmakers to envision 67-year-old teachers in classrooms across the state and noted how district budgets are set up for people retiring in their 50s after 30 years of work. Another dozen years of employment, at the top of the salary structure, would cost local taxpayers deeply, he argued.
"The impact on school district budgets is going to be severe," Preckwinkle said. "This will be the largest single unfunded mandate on school districts going forward. Property taxpayers - they are the ones who will be picking up the tab."
• Daily Herald staff writers Chase Castle and Timothy Magaw contributed to this report.