By Ray Long, The Chicago Tribune
Originally published by the Tribune: 2:24pm, CST, December 5, 2013
Gov. Pat Quinn today signed into law the sweeping overhaul of the state’s government worker pension systems that supporters hope will erase a worst-in-the-nation $100 billion debt.
“Illinois is moving forward,” Quinn said in a statement that thanked lawmakers and legislative leaders from both parties. “This is a serious solution to address the most dire fiscal challenge of our time.”
Employees unions opposed to the bill released a statement saying attorneys are preparing a lawsuit.
“Senate Bill 1 is attempted pension theft, and it’s illegal. Once overturned, its purported savings will evaporate, and the state’s finances and pension systems will be left in worse shape,” the “We Are One” union coalition said in a statement.
The new law, which takes effect June 1, will increase the retirement age for younger workers, scale back the annual cost-of-living increases for most retirees and establish a 401(k)-styled option for a limited number of workers. It would also skip some annual retiree increases, depending on when they retire.
The governor signed the bill during a private ceremony in the Thompson Center in downtown Chicago, a contrast to a large, public rally he held about a month ago at the University of Illinois-Chicago when he signed a gay marriage bill.
The new law also requires workers to pay 1 percentage point less from their paychecks toward the retirement system. It includes protections for some of the longest-serving, lowest-paid workers who get the smallest retirement checks, allowing them to collect the current level of benefits until they hit certain levels.
The measure is a product of more than two years of wrangling in Springfield. After failing to pass legislation in the spring, a bipartisan, House-Senate committee established a framework and the state’s four legislative leaders bridged the final gap last week. The legislation narrowly passed both chambers on Tuesday.
Governors and lawmakers short-changed the system for decades, pushing the debt higher and higher and leading to multiple credit downgrades on state finances. The new law sets up an opportunity for pension participants to sue if officials fail to make the necessary payments to keep the retirement funds on sound financial footing.
If no changes were made, the state would have been on the hook for about $374 billion in pension payments over the next 30 years. The new law cuts that price tag to an estimated $214 billion.
The difference of $160 billion projected in savings over the course of the 30-year period also is expected to supply some annual budget relief to a state that is struggling financially. VFP