Illinois lawmakers are meeting August 17 for a special session to resolve the state pension system’s $83 billion liability shortfall.
(August 1, 2012) – Illinois Governor Pat Quinn has called lawmakers back to Springfield for a one-day special session and wants to pass legislation to overhaul the part of the state’s woefully underfunded pension system.
The session may culminate with a vote on pending reform legislation.
The bill in question, which is now before the House of Representatives, would overhaul the benefit structure and funding mechanism for state workers' pensions, but not teachers or university employees. Under the current system, the state will have $32 billion of unfunded liability by 2045.
The proposal calls on all active and retired state government workers to choose between two options: accept a cut to the yearly cost of living adjustment and retain access to state-supported health insurance, or keep the current 3% cost of living adjustment, compounded annually, but lose some access to state-supported health insurance.
Illinois largest public pension, the $37 billion Teachers’ Retirement System (TRS), would be ring-fenced from this legislation. But according to the fund’s Public Information Officer Dave Urbanek, any reform plan passed during the August 17 session would be a trial for the inevitable overhaul of the teachers’ pension.
“We are watching this very closely to see how it unfolds,” Urbanek said. “It’ll serve as a template.” But with the TRS facing $44 billion in unfunded liabilities, why not bundle it in to the reform legislation? “There’s a feeling among some senators that it’s better to deal with reform one group at a time. TRS is bigger than all the others put together, and before changes are put through some legislators believe we need to see if those changes are even constitutional.”
Urbanek said the TRS does not have a position on potential reforms. “Our job is to administer the fund and meet our obligations as best we can for members, working within whatever system legislators decide on.” TRS posted a 23.6% return in 2011, but Urbanek said he does not expect such success this year. “We don’t anticipate doing as well. The economy has been so volatile, and I think everyone’s feeling it."