Lawmakers have set up a bipartisan commission comprised of state House and Senate members to assess the proposal, which attempts to overhaul the five major state pension funds for university employees, state workers, downstate teachers, lawmakers and judges, according to the Springfield Journal Register. James Hacking – the head of the University system – has told the commission that the plan assumes there will be long-term savings that the state can divert to other things immediately. If any of the revisions change in the future, the pension system could suffer severely, according to his testimony.
“We are spending the savings before it accrues,” Hacking told members of the General Assembly’s Commission on Government Forecasting and Accountability, according to the Journal Register. “There is no room for error whatsoever. It is a very risky program.”
The plan put forth under Blagojevich would, among other things, reduce the automatic annual benefit increases given to retirees; it would, however, only apply to future retirees.
Blagojevich has used the approximately $750 million in annual savings to plug a budget shortfall, according to the paper. The passage of such reform, however, is in doubt.
Although there is disagreement regarding the soundness of the plan, even those who have helped craft the reform acknowledge that it needs support from employee labor unions to pass, according to the Journal Register. The paper reports, however, that the teachers and state employees unions have expressed opposition. The assessment by Hacking, will apparently not help Blagojevich’s cause either. However, the Governor is standing by his reform proposal, according to the paper.
Illinois is not the only state to attempt reform if its defined benefits pension plan. Recently, Governor Arnold Schwarzenegger of California has said he will support any effort to change the system so that new employees receive defined contribution plans instead of defined benefit programs (See Schwarzenegger Supports CalPERS Overhaul Efforts ).