SPRINGFIELD — New estimates released Tuesday indicate House Speaker Michael Madigan’s pension reform proposal would save more money over the next three decades than had been expected.
Number crunchers turned in a final review that showed the Madigan pension plan could save an estimated $187 billion to bring the state’s heavily indebted retirement plans to full funding.
The proposal would require state workers to take more money out of their paycheck, increase retirement ages and scale back cost-of-living bumps.
Senate President John Cullerton’s spokeswoman, Rikeesha Phelon, maintained the savings would be zero when a court determines the Madigan plan is unconstitutional.
Cullerton and Madigan are seeking to break a stalemate between their rival plans.
Cullerton has put together a deal with union backing that gives employees and retirees a choice of options, such as giving up retiree health care in exchange for keeping similar pension benefits. He argues the option helps meet the contractual obligations of a state Constitution long believed to guarantee pension benefits could not be reduced—or technically, diminished or impaired.
The latest estimates on the Cullerton plan showed savings would be $57.6 billion over 30 years under his proposal to bring up the systems to 90 percent funding, Phelon said.
A coalition of unions that backs Cullerton’s plan said the latest figures on the Madigan plan represent a “desperate attempt to trump up” savings.
Cullerton’s plan has passed the Senate he leads, and Madigan’s plan has passed his House.
Illinois has a $96.8 billion pension debt, making it the worst-funded state retirement plan in the nation.
The Madigan plan would initially knock down the pension debt by about $21 billion once implemented—about twice that of the Cullerton plan—if the numbers hold up, said Reps. Elaine Nekritz, D-Northbrook, and Darlene Senger, R-Naperville.
“We haven’t kicked the can down the road,” Senger said.
The $21 billion is less than the $27 billion to $30 billion originally estimated by sponsors and lower than some experts had wanted.
But Nekritz said the proposal’s initial savings are partly because the legislation levels off annual payments sooner rather than back loading so that more money would be saved up front.
Madigan has expressed confidence that his proposal would be upheld by the state courts.
Neither Madigan nor Cullerton counts immediate budget relief, figuring either plan will be challenged in court and take a year to be decided.
But the Madigan plan would give about $1.9 billion in budget relief in comparison to Cullerton’s $850 million in annual savings in the first year either plan would kick in.