SPRINGFIELD — New calculations show the state will save about $15 billion less than initially projected from the controversial major government worker pension overhaul that lawmakers and Democratic Gov. Pat Quinn approved last month.
Critics who say the pension law didn’t go far enough cried that supporters are “backtracking” on the savings and point to the change as a sign more money-saving changes to public employee retirement systems will be needed. Backers of the law, however, pointed to some good news from the latest number crunching — it shows that the state will owe less toward covering retirement costs.
Last month, House Speaker Michael Madigan championed the pension overhaul as saving $160 billion over 30 years. But when the financial minds at the pension systems covering state workers, teachers outside Chicago and public university employees took a look, the savings estimate came out to $145 billion. The difference is in part a reflection of the various sets of assumptions folks wearing the green eyeshades make about how long tens of thousands of government workers will live and work.
The figures emerged in new documents released as Illinois prepares to borrow $1 billion early next month for public works projects including roads and schools. House Republican leader Jim Durkin of Western Springs told his troops in a memo late Friday that it is “good news to Illinois taxpayers and the systems.” It was a point echoed by Senate President John Cullerton, D-Chicago, and Senate Republican leader Christine Radogno.
Legislative supporters highlighted another part of the new estimates: if the pension law withstands a legal challenge from unions, the state will see its $100 billion pension debt immediately drop by about $24 billion instead of the previous $21 billion estimate. The better-than-expected projection is being driven by last year’s improved performance of the billions of dollars the pension funds have invested.
The Great Recession had dampened pension fund returns for several years, but the uptick last year was strong enough that it gave a boost to the pension system’s long-term outlook, said Quinn budget spokesman Abdon Pallasch.
But the stock market has its ups and downs. For that reason, Rep. Elaine Nekritz, Madigan’s pension point person, cautioned against looking at the figures every six months because shifts in the economy could put Illinois constantly on a “roller coaster of good news and bad news.”
“The message is that, as a result of good returns, we owe less and therefore the percentage of savings are less, but the longer-term view is that we have taken some very significant steps” to make the pension systems healthy, said Nekritz, D-Northbrook.
Not everyone agreed. Republican Rep. David McSweeney of Barrington Hills contended the new numbers show that supporters of the pension overhaul are “backtracking” on estimated savings by $15 billion.
The former investment banker also said he is “shocked” the new numbers show only $9.7 billion, or 6.7 percent, of the overall savings would occur during the next 10 years of the 30-year plan to get the pension systems fully funded. McSweeney maintained the plan relies on “back-loaded savings and accounting gimmicks,” saying better reforms still are needed.
New documents also showed the Teachers Retirement System, the largest of the state’s government worker pension systems, would go from about 42 percent funded before the overhaul to about 102 percent funded in the next 30 years.
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