It's a mix of new and old ideas for fixing state worker retirement system

Clout Street

SPRINGFIELD - As state government leaders struggle to reach agreement on pension reform, a bipartisan group of lawmakers is floating a plan that's a mix of new and old ideas to try to break the logjam.

State workers, teachers, university employees and legislators would have to kick in more money from their paychecks each year to underwrite their pensions, and some of them would have to wait longer to retire.

The plan also would rein in cost-of-living increases that have exponentially increased the pension burden on taxpayers and set a 30-year target date for fully funding the financially bedraggled systems.

Some rank-and-file lawmakers led by Democratic Reps. Elaine Nekritz of Northbrook and Dan Biss of Evanston, see the approach as a way forward and are scheduled to formally unveil it Wednesday.

Union members are disappointed that workers and retirees were excluded from the discussion, but hope the proposal would represent a starting point, said Anders Lindall, spokesman for the American Federation of State, County and Municipal Employees.

The proposal contains a version of the politically problematic shift of the state's costs for suburban and Downstate school teacher pensions onto local school districts over several years. That idea is pushed by House Speaker Michael Madigan, D-Chicago, but opponents have argued it would lead to property tax increases

Under the proposal, retirees would get an annual cost-of-living increase on only the first $25,000 of their pensions, $20,000 for those who also get Social Security.

Retirement ages would not rise for people 46 and older, but a phase-in would increase retirement ages by as much as five years for people 34 and under. Current retirement ages vary, such as 60 for rank-and-file state workers and 55 for prison guards.

Employee contributions would rise 1 percentage point the first year and another 1 percentage point the second year. Contributions for rank-and-file state workers now are about 7 percent, according to the union.

The proposal also would make it clear that a failure by public employers, such as the state or a school district, would be grounds for a lawsuit if they didn't make proper annual payments --- a major reason why many public retirement systems are underfunded.

New public school teachers and state university workers would be part of a cash-balance plan, sort of a hybrid between a plan that guarantees employees a certain benefit and also partly relies on investment returns.

The plan comes as Illinois faces a pension debt of as much as $96 billion, the worst in the nation. Democratic Gov. Pat Quinn has noted that increased pension payments in the coming years could cut into how much the state has left to spend on education and other government services.

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