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Pension deal faces pushback from unions; backers pursue votes

Michael Madigan John Cullerton

Michael Madigan, John Cullerton

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Updated: January 2, 2014 6:41AM

Details of the pension deal reached by four House and Senate leaders and headed for a vote this week have supporters and critics in full-court press mode.

Union leaders, who are blasting the agreement, say their members will bombard lawmakers Monday, urging them to kill the proposed bill that could ultimately slash $160 billion from the state’s future pension liabilities and improve Illinois’ damaged creditworthiness.

“We think that this is a grotesque taking of retirement security from public employees, from teachers, firefighters and nurses,” said Dan Montgomery, president of the Illinois Federation of Teachers. “It’s not fair, and we also think it’s not legal.”

Anders Lindall, spokesman for AFSCME Council 31, said Friday that the union will sue if the proposal becomes law.

We Are One Illinois, a coalition of unions working on behalf of 1 million members, said on its website that the proposal “makes it impossible for retirees to keep up with the cost of living.”

The cost-of-living adjustment (COLA) cuts in the proposal erode the value of a person’s pension by nearly a third after 20 years in retirement and deprive retirees of thousands of dollars in income over the next five years, the group states on its website.

Over the next five years, a nurse who retired from the state with a pension of $40,000 would lose $7,500, and a retired teacher who has a pension benefit of $60,000 would lose $14,000, the group said.

The deal changes the annual 3 percent compounding COLA increases retirees now automatically get to a less-generous formula. Current employees would be eligible for one to five fewer annual COLA bumps, depending on their age.

The plan also raises the retirement age of workers on a graduated scale. For each year a member is under 46, the retirement age would be increased by four months, up to 5 years. We Are One Illinois criticized the plan for failing to make provisions for employees in high risk or physically demanding jobs, like police officers.

The plan establishes a schedule to achieve 100 percent funding no later than the end of fiscal year 2044. It calls for the state to contribute supplemental payments of $364 million in fiscal 2019 and $1 billion annually after that through 2045.

Shortly after word of the deal broke Wednesday, unions took to social media and their websites to galvanize their active and retired members into blitzing legislators with calls and emails to vote no on the deal.

Rep. Elaine Nekritz, D-Northbrook, who supports the deal and is a member of the bipartisan pension reform conference committee, said she understands the unions’ frustrations.

“I get that this is painful, and we never should have gotten here,” she said. “But we are having to balance the demands of making the pension payment with the demands for current services, and this achieves a balance between those two competing demands.”

Public-sector opposition is the biggest impediment to the legislation’s passage, said Sen. Matt Murphy, R-Palatine, also a member of the conference committee.

“Whether they are going to be able to keep it from passing is certainly an open question,” he said.

But Murphy and Nekritz voiced optimism.

“I’m getting reports that everyone is out working it and rounding up the votes,” Nekritz said. “This is the first time that all four leaders have agreed on a proposal. . . . At the end of the day, with the leaders pushing this and I think with sort of the recognition by legislators that we have to do something . . . I think we’ll get it passed.”

Republican gubernatorial candidate Bruce Rauner has criticized the bill.

“Any deal that would rank pension payouts to government union bosses ahead of priorities like education and public safety should cause grave concern,” he said last week when the tentative deal was announced.

Nekritz said that’s not the case and noted the bill’s so-called pension payment guarantee has wiggle room. If the state fails to make a pension payment, a retirement system could file action in the Illinois Supreme Court to compel the state to make the required payment. But if the state faces a crisis, it could simply vote to change what the required payment would be, she noted, effectively working around that guarantee.

Nekritz noted that flexibility does cause her some concern, despite her support of the deal.

“I can argue both sides of it because what we end up doing . . . is sort of digging ourselves back into the hole we’re in now by failing to make an actuarily adequate payment,” she said. “On the other hand, what you end up doing [otherwise] is having to say, ‘Well I’m going to have to cut $2 billion . . . pick your favorite program,’ and that’s not a good policy outcome either. There’s really no perfect way to do this that provides flexibility for funding other current services and make sure that the pension payment is fully funded. There’s just no way to do that.”


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