Illinois Unions Propose Alternate Pension Reforms

May 23, 2005 ( - Illinois state employee and public school teacher unions are lobbying legislators to reject pension reform proposals from Governor Rod Blagojevich and rely instead on a combination of cigarette taxes, gambling taxes and bond sales.

>Blagojevich’s budget for the year beginning July 1 features about $820 million in savings from pension reforms for public school teachers outside of Chicago, university employees, state workers, judges and members of the General Assembly (See  Illinois Grapples With Pension Shortfall ), according to a news report in the Champaign-Urbana News-Gazette.

>Blagojevich has proposed for the Prairie State’s five retirement systems:

  • limiting automatic annual pension increases for new workers
  • increasing the retirement age for new workers
  • restricting the alternative pension formula for new hires in high-risk jobs (except police officers)
  • eliminating the money purchase option for new State Universities Retirement System (SURS) hires
  • changing the way interest is credited to the existing SURS members’ accounts
  • limiting end-of-career pay raises for current and future teachers and professors to 3% a year, unless their employer agrees to pay the state’s pension costs for any larger raises.   

>The Illinois Federation of Teachers, the Illinois Education Association, the Illinois AFL-CIO, the American Federation of State, County and Municipal Employees Council 31, and the Illinois Council of Service Employees International Union will present an alternative plan Monday at a special meeting of the General Assembly’s Commission on Government Forecasting and Accountability.

>Instead of the moves being pushed by Blagojevich, the union wants to make up the state’s shortfall by issuing pension obligation bonds, using revenue from cigarette and gambling taxes and by putting more into the state’s pension funds when the state coffers are flush with cash. The unions suggests that one-quarter of any one-year revenue growth greater than 5% go to pay down pension debt.

“The real problem here is not a benefits problem,” Dave Comerford, spokesman for the Illinois Federation of Teachers, told the newspaper “The real problem is a funding problem caused by lack of making payments. The only way to truly address it is to pay it down.”