The Associated Press is reporting today that it has obtained an outline of ideas of a deal that may be in the works on a framework for meaningful "pension reform." According to the Associated Press report, the deal is in its preliminary stages and that it could save taxpayers and the state about $145 billion over 30 years, largely by ending automatic 3 percent cost-of-living increases for retirees.
State Senator Kwame Raoul heads a special 10-person committee that has been delving into the issue most of the summer. Senator Raoul, a Chicago Democrat and the committee's chairman, acknowledged to the Associated Press, that an outline is in place, but that the document is "preliminary." Raoul also emphasized that the panel is not yet ready to issue a final recommendation. Raoul said that the "committee has not come to a consensus. Our work is not done."
State Rep. Elaine Nekritz, a Northbrook Democrat and the pension panel's vice chairwoman, also emphasized to the Associated Press that "No one has signed off yet on the details."
A number of elements in the outline are aimed toward surviving a legal challenge, Article XIII, Section 5 of the Illinois Constitution which simply states "benefits of which shall not be diminished or impaired."
The outline calls for the resetting of retirees' annual cost-of-living increases at half the rate of inflation, containing both floors and caps. The proposed new formula equate to much smaller adjustments than the current 3 percent increases, which are compounded annually. The outline does not call for an increase in employee contributions, but in fact, calls for workers to pay in 1 percent less. It also does not increase the retirement age.
However, one significant change is that retirees' annual pension benefits based on their lifetime salary, rather than on the higher amount they're making during the final years prior to retirement.
Lawmakers voted in June to create the conference committee after reaching an impasse over two rival pension plans - one advanced by House Speaker Michael Madigan and the other by Senate President John Cullerton, both Chicago Democrats. Madigan's plan would have saved Illinois about $187 billion over 30 years, while the savings in Cullerton's plan - which was backed by the state's public-employee unions and specifically "We Are One Illinois" - were estimated at $47 billion over the same timeframe.
The consensus is that any meaningful "pension reform" bill would have to exceed the savings in Cullerton's Senate bill.
It appears this bill does just that.
In another related matter, Governor Quinn issued a line-item veto of House Bill 214 in early July of this year, to suspend pay for Illinois state legislators. Governor Pat Quinn halted the lawmakers' pay because he said the they hadn't come up with a solution to "pension reform." Speaker Madigan and President Cullerton have sued, saying Quinn's line-item veto of the state budget was unconstitutional. A Cook County Circuit Court judge has yet to rule on this suit.
However, the state lawmakers can at any time override the governor's veto, something they are reluctant to do for obvious political reasons.
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John is the author of an award-winning book, the 2010 Winner of the USA National Best Book award for African American studies, published by The Elevator Group, Mr. and Mrs. Grassroots. Also available an eBook on Amazon. John is also a member of the Society of Midland Authors and is a book reviewer of political books for the New York Journal of Books. John has volunteered for many political campaigns. John is an unpaid volunteer and social media advisor at Robin Kelly for Congress.