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House Democrats unveiling pension reform plan

Updated: July 3, 2012 12:14PM

SPRINGFIELD — House Democrats plan to take the wraps off a major pension-reform package Tuesday that aims to reel in the state’s massive pension debt by scaling back post-retirement, cost-of-living increases.

The plan scheduled to be heard in a House panel Tuesday is expected to largely resemble the pension-reform package Gov. Pat Quinn put on the table last month, though it will not boost the retirement age for government workers to collect a full pension to 67 as the governor proposed.

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.

“I think the core of the bill will be what we’ve been talking about,” said Rep. Elaine Nekritz (D-Northbrook), a lead sponsor of the pension measure with House Speaker Michael Madigan (D-Chicago).

Opposed by labor unions, the plan aims to steer current employees and retirees away from automatic, 3 percent, post-retirement cost-of-living increases by limiting access to state-subsidized health care. That health-care perk would remain in effect for existing workers and retirees who agree to accept diminished COLAs that are either 3 percent or half the rate of inflation, whichever is less. Those lessened COLAs would not take effect until five years after an employee retires or age 67, whichever is earlier, Nekritz said.

Those existing workers and retirees who insist on keeping the 3 percent annual COLA would be bumped off the state health plan, she said.

Another incentive to persuade the current workforce into giving up the 3 percent COLAs awaiting them in retirement is that they could not have future salary increases factored into their pensions, she said.

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, Nekritz said.

Foreshadowing a likely legal showdown if the package becomes law, the state’s public-employee unions continue to insist the plan violates constitutional protections against the diminishment of public pensions.

“We believe it’s unconstitutional and patently unfair,” said Anders Lindall, spokesman for AFSCME Council 31, which represents about 40,000 state workers. “By gutting the COLA, the purpose of which is to protect against inflation, it will ensure that the value of the pension benefit erodes from the day an individual retires.”

Meanwhile, with the House and Senate in session on Memorial Day, a House panel advanced legislation that could lead to the early-release of inmates in a bid to deal with overcrowding in the state prison system.

The plan now positioned for a floor vote in the House would grant inmates more ways to earn good-conduct credit but empower prison officials to prevent early release for certain violent criminals.

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