Facing the most serious unfunded liability in the country, and the prospects of a tanking bond rating, Illinois legislators passed sweeping reforms to the state's pension system Wednesday.
The law goes too far for many, including major unions, and not nearly far enough for some fiscal reformers. But its supporters say the bill is a big move in the direction of saving the state's enfeebled economy.
"It's been a long time coming," said House Speaker Michael Madigan, who proposed the bill, in an interview with Capitol Fax after its passage. And in a rare moment of bipartisan agreement, Senate Minority Leader Christine Radogno also stood up for the bill, according to the Chicago Sun-Times. "This bill is not window dressing. It's substantial reform," she said.
The bill enacts many major changes to 13 of the state's pension systems that reformers have long sought. It creates what has been called a "two-tier" system, where current employees keep their existing pension plans, but new hires will join a tighter new system. They will not be able to retire with full benefits until age 67. The maximum salary on which their pension can be based is capped at $106,800. Their payout will be based on their highest salary during eight consecutive years of the last ten.
"Double-dipping," where a government employee retires, is re-hired by the government elsewhere, retires again, and collects two pensions, is officially ended as well.
Savings from the pension reforms are expected to total between $300 million and $1 billion in payouts next year, according to the Chicago Tribune -- a small but significant proportion of the state's roughly $13 billion deficit. The picture is still better over the long term: "[Dan Long, executive director of the Commission on Government Forecasting and Accountability] also said the state will save $119 billion over the next 35 years under the legislation."
Unions across the state responded angrily to the bill, which moved through both houses of the legislature in a matter of hours Wednesday. The Sun-Times reports:
Even though the changes don't affect current government employees, the teachers unions predicted they would discourage talented teachers from entering the profession.
"This bill is nothing more than lawmakers shifting the burden of the state's past mistakes onto future teachers and public employees," said Ed Geppert, president of the Illinois Federation of Teachers. "If this bill becomes law, Illinois will have the highest teacher retirement age in the country."
From the other end of the spectrum, fiscal conservatives wished the bill had done more. The Civic Committee of the Commercial Club of Chicago and the Tribune's editorial page both expressed a desire to limit benefits to current state employees as well, going forward.
But neither side's objections were enough to slow the bill, which was pushed through before a possible downgrade of the state's bond rating. The bill left committee around noon Wednesday, won a 92-17 vote in the House at 5 p.m., and was ratified by the Senate 48-6 at 8:30 p.m. Wednesday.
Governor Quinn supports the measure, and is expected to sign off on it.