Quinn: 'I was put on earth' to fix state pension mess
Friday, April 20, 2012
Gov. Pat Quinn today unveiled his plan to cut public pension costs, calling on government workers to pay more, the retirement age to be raised and cost-of-living adjustments tightened.
The Democratic governor said the pension shortfall in Illinois is “one of the most difficult problems that Illinois government has faced for more than three decades.”
“I didn’t create the problem,” Quinn said at a Chicago news conference. “But I’m here to solve it. I know that I was put on earth to get this done.”
To help shore up the vastly underfunded system, Quinn called for a 3 percent increase in employee contributions and reducing the rate of cost-of-living increases. The governor also wants to raise the retirement age to 67.
Quinn estimated that if enacted, the changes would save $65 billion to $85 billion by 2045.
The state pension system is underfunded by more than $80 billion following decades of pension sweeteners approved by state lawmakers and various governors, and a lack of money set aside to cover the costs.
AFL-CIO President Michael Carrigan, on behalf of a coalition of unions, called the plan an tantamount to an endorsement of “unfair and unconstitutional cuts.” Carrigan said Quinn’s proposal will make “finding common ground much more difficult.”
“Forcing public servants to choose between two sharply diminished pension plans is no choice at all,” said Carrigan, whose coalition includes the American Federation of State, County and Municipal Employees, the union with most state workers.
“It is a clearly illegal attempt to solve the problem caused by past governors and the legislature solely on the backs of teachers, caregivers and other public workers,” Carrigan said.
Even so, Carrigan said unions are prepared to work with Quinn and state lawmakers to “find a solution to the pension funding crisis caused by the state’s failure to pay its share.”
Today’s news conference comes after a panel of lawmakers spent months trying to draft solutions that could win support among Democrats and Republicans.
The General Assembly will have six weeks to consider the changes Quinn is proposing today. Adjournment is scheduled for May 31, and getting a handle on pension costs is a top issue this spring.
Quinn offered the plan as a substitute for the current retirement system, which is more than $80 billion in debt. The current plan, under the best scenario, would be 90 percent funded by 2045.
“This is a plan that will erase the liability,” Quinn said. “At the end of 2042, we won’t owe billions of dollars.”
Under the 30-year plan, Quinn said his changes would make the pension systems 100 percent funded by year 2042.
Quinn’s plan would:
--Increase public employee contributions by 3 percent.
--Reduce the cost-of-living increase in retirement to the lesser of 3 percent or half of the consumer price index. There would be simple interest rather than compound interest.
--Delay a cost-of-living adjustments to either age 65 or five years after retirement.
--Increase retirement age to 67 for current employees, which would be phased in over several years.
--Require the state to pump in the correct amount that is owed to the pension systems over several years.
--Public sector pensions would be limited to public sector employment. The move follows Tribune disclosures that people employed by unions and groups as disparate as the Special Olympics have been able to tap into state retirement systems.
Current retirees would not be impacted by the plan, he said.
“I didn’t create the problem,” Quinn said. “But I’m here to solve it. I know that I was put on earth to get this done.”
The proposal still has a long ways to go to get legislature approval and to work with unions, the group that is most likely to raise the loudest objections.
The governor said he would need “bipartisan cooperation” to get the proposal passed, but it has to be done to be able to free up dollars that otherwise would eat away resources that could be used for programs like education.
“I really expect the legislature to rise to the occasion,” Quinn said.
Republicans praised portions of Quinn's plan, but raised concerns about a provision that would shift pension costs for teachers and university employees from the state to local school districts.
House Republican Leader Tom Cross of Oswego said the move could costs schools $1 billion, which would lead to an increase in property taxes.
Reaction to Quinn's proposal is rolling in, and outside of organized labor, is mostly positive.
Mayor Rahm Emanuel issued a statement. "I commend Gov. Quinn for proposing a framework to address the retirement security crisis facing the State of Illinois. This is a strong beginning and he has outlined many good ideas regarding retirement security, including ideas that we both discussed at the recent Tribune Forum."
A business group also mostly praised Quinn.
“We’re gratified that everyone now recognizes the depth of Illinois’ pension crisis. The governor’s announcement today demonstrates important movement toward solving our pension problems, but the devil is always in the details," said Ty Fahner, president of the Civic Committee of the Commercial Club of Chicago. "We agree with much of what is outlined in the Governor’s plan, but believe that further refinement is necessary"