SPRINGFIELD – Illinois Senate President John Cullerton’s test run of pension reform, designed to show the financial world that lawmakers could take the smallest step toward fixing a gaping $96.7 billion hole, barely won approval Wednesday – on the second try – casting doubt on a mess that has vexed legislators for more than a year.
The Senate voted 30-22 to reform one state pension system facing financial trouble, but it was the largest of five, the Teachers’ Retirement System.
True to the approach he’s taken previously, Cullerton, a Chicago Democrat, wrote the legislation to give teachers a choice between health care coverage during retirement or reduced annual cost-of-living increases. The “consideration” approach, Cullerton insists, would allow the state to sidestep a prohibition in the Illinois Constitution against reducing previously promised pension benefits.
“Benefits cannot be changed unless the Legislature offers public employees and retirees a choice and the opportunity to consider and accept that offer,” Cullerton said.
But between the slim victory on a narrowly drafted bill and the earlier defeat of another Democrat’s comprehensive approach to the pension crisis, the action Wednesday leaves questions about whether the General Assembly has the stomach to tackle the pension mess.
Decades of underfunding by governors and legislators have left the five state pension systems at least $96.7 billion short of what they need to cover the retirement benefits promised to all current and former employees, from public schoolteachers to judges, and legislators themselves.
Since the first of the year, Cullerton has championed a two-pronged approach: his “consideration” measure and, as an alternative, a comprehensive measure that he doesn’t believe can survive a constitutional court challenge because it unilaterally cuts retiree benefits. His reasoning was that if both parts became law and a court threw out the comprehensive part, his “consideration” idea could survive.
But he pared that bill down to just teachers for Wednesday’s vote. He took the step, according to his spokesman, so financial agencies that have put Illinois’ credit worthiness at worst in the nation would see that legislators, stymied for more than a year on the issue, could agree on a least a piece of the puzzle.
“We want to send a clear sign to the investment community that we are capable of addressing one of the major pension systems,” Cullerton spokesman Ron Holmes said. Cullerton said his measure would save the state at least $18 billion, and up to $40 billion, during the next three decades as the state caught up with its pension deficit.
The bill failed by one vote on a first attempt, but Cullerton used a parliamentary procedure and recalled it minutes later. Before the second tally, Cullerton said “it’s not often you can push a green button” and save billions of dollars over 30 years. Opponents said Cullerton’s plan didn’t go far enough in addressing the problem. Republicans wanted to take a bigger bite, which they said the Senate could do with a plan by Sen. Daniel Biss, an Evanston Democrat.
Biss’s measure would require employees to contribute an extra 2 percent of their salaries toward their retirement and push back the retirement age to varying degrees, depending on how close current workers are to punching the clock for the last time. Opponents called the plan unconstitutional, which Biss acknowledged. But Biss said his plan offered a good compromise on other matters.
“The best thing we can do is balance these priorities against each other,” he said, later telling lawmakers that their vote wouldn’t be easy.
Senators voted down his plan 23-30. The bill got 12 Republican “yes” votes, while Biss could convince only 10 other Democrats to back his approach.
Despite his measure’s defeat, Biss said he remains “cautiously optimistic” that lawmakers will agree on a reform in the coming weeks.
“I believe those of us who voted ‘yes’ - on either bill - understand clearly that our actions today constitute an admission that we’ve failed to keep our promises,” Biss said in a statement after the Senate hearing. “But we have reached a point where there are no easy answers and no easy votes.”
Republican Leader Christine Radogno said choosing Cullerton’s bill but not Biss’s made little sense.
“I’m not sure what a piecemeal approach will do for our efforts in the long run,” the Lemont Republican said. “We have to have a comprehensive solution.”
The language in Biss’s proposal is identical to that of a proposal before the House that is co-sponsored by House Republican Leader Tom Cross of Oswego and Rep. Elaine Nekritz, D-Northbrook.