Unions: Pension bill forces choice ‘between harm ... or more harm’
BY DAVE MCKINNEY AND ANDREW MALONEY Staff Reporters May 29, 2012 12:16PM
Dan Montgomery, president of the Illinois Federation of Teachers, spoke out against a House Democratic pension-reform package Tuesday.
Updated: May 29, 2012 12:44PM
SPRINGFIELD — Public-employee unions lashed out at a House Democratic pension-reform package Tuesday, calling it “immoral” and unconstitutional because it forces current government workers and retirees to make the untenable choice between giving up post-retirement state health care or inflation-indexed pension increases.
“It fails the constitutional test in that it presents a Hobson’s choice. There’s no free choice here, but a coercive dilemma where a public servant must choose between harm on the one hand or more harm on the other,” Dan Montgomery, president of the Illinois Federation of Teachers, told a House panel hearing the proposal Tuesday morning.
“I don’t think this bill is pension reform,” Montgomery continued. “I think it’s theft to pay the state’s bills.”
The plan backed by Gov. Pat Quinn passed the House Personnel & Pensions committee by a 6-3 vote Tuesday morning and now awaits a full House vote, which could come later Tuesday. The bill appears on a fast-track with the clock ticking on an expected Thursday adjournment of the General Assembly’s spring session.
The long-awaited plan is estimated by Quinn’s administration to save up to $115 billion over the next three decades, completely righting the state’s drastically underfunded public pension systems.
Unfunded pension liabilities in the state’s five retirement systems stand at $83 billion, positioning Illinois among the most poorly funded retirement systems in the country and strangling funding for education, public safety and other government operations.
“We are on the verge of historic reform in Springfield, reform many predicted never would happen,” said state Rep. Elaine Nekritz (D-Northbrook), a lead sponsor of the legislation along with House Speaker Michael Madigan (D-Chicago). “With this change, we can move away from being financial laughingstocks.”
Madigan told the House Personnel & Pensions Committee that the package represented “an attempt to bring greater stability to the state’s pension systems, put an end to abuse, lessen the long-term liabilities to the state and ensure the systems are 100-percent funded by 2043.”
He added: “No time is better than now to move forward to solve the problem.”
Under the plan outlined, current state workers, university and community college employees and downstate and suburban teachers would be given the choice of giving up post-retirement, 3-percent cost-of-living increases in exchange for keeping state-subsidized health care as retirees.
Those already retired also would face the same choice.
The health-care perk would remain in effect for existing workers and retirees who agree to accept diminished cost-of-living adjustments that are either 3 percent or half the rate of inflation, whichever is less. For current workers, those lessened COLAs would not take effect until five years after an employee retires or age 67, whichever is earlier.
Current workers who opt for the lessened COLA would get to count future pay increases toward their pensions, not devote more of their paychecks toward their retirement earnings and not see their retirement age increased to age 67 to draw full benefits.
“This is a plan that has elements that virtually everyone involved in the discussion finds something to dislike and something they dislike intensely,” said Jerry Stermer, Quinn’s budget director and point person on pensions. “But it’s a plan that can get us out of the enormous, profound fiscal instability and financial debt, which looks like a chasm when you attempt to respond to it.”
The plan will not apply to judges in order to sidestep any potential constitutional challenges over separation of powers. Judges in the past have successfully sued to block efforts by the Legislature to withhold cost-of-living increases.
The measure also will not contain any of the changes Mayor Rahm Emanuel sought for the city’s pension systems during a trip to Springfield in early May.
The package also will include a six-year shift in pension costs from the state to local school districts, ramping up the percentage school systems must allot to pension costs to 6.2 percent of their payrolls.
Foreshadowing a likely legal showdown if the package becomes law, the state’s public-employee insisted the plan violates constitutional protections against the diminishment of public pensions and will expose workers and retirees to financial calamity.
“We’ll be returning to the days when someone who was facing retirement from the state of Illinois was facing retirement living at or near the poverty level because that’s how much you’ll be reducing the pension,” said Henry Bayer, executive director of AFSCME Council 31, which represents 40,000 state workers, 5,000 university employees and 13,000 state and university retirees.