Pension plan gets cool shoulder from Illinois House committee

Published May 15, 2015

SPRINGFIELD — The governor’s plan to address the Illinois pension crisis got a cool reception Wednesday from Democrats on a House personnel and pensions committee.

Gov. Bruce Rauner’s plan calls for a distinction between benefits already earned and “new” benefits, or benefits earned after a new pension law were passed.

Because benefits already earned would not be decreased, the Rauner administration contends its proposal would not violate the 1970 state constitution’s pension protection clause, even in light of a state high court ruling that last week tossed out a 2013 pension reform act.

“We don’t think the court clearly answered what benefits are protected,” said Kim Fowler, chief lawyer for Rauner’s budget office.

The Republican governor’s pension plan, which he says could save the state $2.2 billion in fiscal 2016, relies on paying out benefits at existing levels, Tier 1, for work already performed by state employees. But it would pay less-generous benefits, Tier 2, for all state employees starting in the fiscal year that begins July 1.

Rep. Scott Drury, D-Highwood, did not agree Rauner’s plan would pass constitutional muster. He cited a portion of the Illinois Supreme Court decision issued Friday:

“The protections afforded to such benefits by (the pension protection clause) … attach once an individual first embarks upon employment in a position covered by a public retirement system, not when the employee ultimately retires,” the court wrote.

“Accordingly, once an individual begins work and becomes a member of a public retirement system, any subsequent changes to the pension code that would diminish the benefits conferred by membership in the retirement system cannot be applied to that individual.”

Drury, a former assistant U.S. attorney, said that to him means the contractual relationship starts on the date of employment, and the state can’t lessen benefits from that day forward.

“The holding is not nearly as ambiguous as you’re making it out to be,” he told Rauner staff members. “That proposal isn’t realistic anymore in light of what the court did.”

Rep. Mike Zalewski, D-Riverside, concurred: “There is no reading of that decision that squares with your testimony today,” Zalewski said. “I’m sorry to have to say it that way.”

Rep. Jeanne Ives, R-Wheaton, said she didn’t think Rauner’s proposal is necessarily invalidated.

“I think the governor’s proposal is absolutely fantastic,” she said. “I’m all for it.”

No one shows up today at General Motors or AT&T and believes they’ll be getting pension benefits that people earned in the past, Ives said.

The committee seemed less chilly to the governor’s desire for a constitutional amendment ballot question in time for the 2016 general election.

Fowler said the proposed amendment language would make clear that benefits already accrued under the law in effect during a period of service must be protected. With that said, the amendment also would make clear the General Assembly and governor have the right to alter pension statutes through new legislation, she said.

A three-fifths vote of each chamber of the Legislature could place a constitutional amendment question on the 2016 general election ballot. To be enacted it would also need approval by three-fifths of voting on the question or a majority of those voting in the election.

Mark Fitton ([email protected]) is a reporter for the Illinois News Network, a project of the Illinois Policy Institute. An earlier version of this article first appeared at Reprinted with permission.