The Senate version, which centers on giving employees choices related to health care coverage and cost-of-living increases upon retirement, would save about a third as much as Madigan's plan, which asks workers to pay more and get less in benefits. Cullerton, however, billed his proposal as "constitutionally sound," less of a gamble than Madigan's version that unions have vowed to challenge in court.
Cullerton pledged to call his take on pension reform for a Senate vote Thursday, setting up a potential showdown between two powerful Chicago Democrats with less than four weeks until the May 31 adjournment. Hanging in the balance is a fix for Illinois' worst-in-the-nation pension debt that's approaching $100 billion and gobbling up money that could be spent on education and the state's large stack of unpaid bills.
For Cullerton, Monday's move represented the culmination of negotiations he said were ongoing last week when he sent the Senate home as Madigan passed his pension overhaul in the House. Cullerton said Madigan's plan helped bring the unions to the bargaining table, and talks continued through the weekend.
"We must calculate the risk associated with passing a plan that could save zero if the court throws it out," Cullerton said in a statement. "We need to remember that the unilateral approach is a gamble. Betting against the constitution is risky."
As is often the case, the Madigan camp was noncommittal. Madigan spokesman Steve Brown said Monday that he was "not familiar" with the details of Cullerton's proposal, noting that the House passed a comprehensive plan and that the chamber is always happy to work with the Senate.
Cullerton made it clear that his legislation is "not a take-it-or-leave-it situation at all" and said he would be open to adjustments in the House.
"We know we have to pass a pension reform bill this year. We're the worst-funded in the nation. It's affecting our budget. We have to free up money for next fiscal year and fiscal years after," Cullerton said. "And that's why we have to pass these bills. We know that."
The Cullerton legislation incorporates his long-held belief that employees must be offered a choice when it comes to cutting benefits, an exchange necessary for a pension plan to fall within the legal and contractual contours of the state constitution.
Under the new plan, the choices are variations on Cullerton's prior proposals that allow employees and retirees to opt between scaled-back 3 percent compounded, automatic, cost-of-living increases and keeping health care in retirement.
Choice A applies to those currently in the pension systems covering teachers outside Chicago, rank-and-file state employees, university workers and legislators. Employees could opt to take 3 percent yearly cost-of-living adjustments based on simple interest and delay the start of those increases until two years after retirement. In return, they would keep access to health insurance, and future pay raises would be counted toward their pension. They also could enroll in an optional cash-balance plan, and teachers would be eligible for an early retirement option.
Choice B offers a couple more options. Employees could keep their current 3 percent compounded annual cost-of-living adjustments, but they would forgo retiree health care and could not count raises toward their pensions. Workers also could choose to keep the status quo in return for waiting three years to start collecting 3 percent compounded pension increases and paying an additional 2 percent from their paychecks phased in over two years.
The choices are different for those already retired and about to retire. They could continue to get health coverage and 3 percent compounded annual pension bumps but would see those increases frozen for two years in a staggered fashion. Under that scenario, they would receive retiree health care. The other option: keep the 3 percent compounded annual hike and give up access to health care.
Senate Republicans are wary until they see legislation rather than the outline Cullerton presented as he emerged from a closed-door meeting with fellow Democrats.
Other elements of the plan were billed as lessening the ability for unions to bargain over the benefit changes and employee contribution levels. It also would keep pension funding on the current payment schedule.
Endorsing Cullerton's plan are the American Federation of State, County and Municipal Employees, the Service Employees International Union, the Illinois Federation of Teachers and the Illinois Education Association, among others, in a coalition called We Are One Illinois.
"The union coalition has made a great effort to ensure fairness for the public employees and retirees who did not cause this problem, to ensure the stability of the pension systems for future generations and to offer a credible way forward," said Michael Carrigan, president of the Illinois AFL-CIO. "This agreement is our coalition's bottom line.
Carrigan maintained that the Madigan bill "threatens to rob the retirement savings of teachers, police officers and others in public service by 20-40 percent. His proposal is not only drastically unfair, but it is blatantly unconstitutional, rendering any advertised savings fictional."
The core elements of the Madigan bill would scale back cost-of-living increases, require workers to chip in 2 percent more from their paychecks and raise the retirement age to 67.
There would be no change to the retirement age under Cullerton's plan, which also would not limit the amount of a worker's pension that counts toward cost-of-living increases, as Madigan's version would.
Cullerton maintained that his proposal, co-sponsored by Sen. Linda Holmes, D-Aurora, would save about $46 billion, depending on who takes what options and the various ups and downs of markets and other factors. By comparison, Madigan's plan would save roughly $150 billion, according to advocates.
The Madigan plan would fully fund the pensions in 30 years; the Cullerton plan would fund the pensions at 90 percent, the targeted level of the current law. The differences fall within a major debate over the need to be fully funded or whether 90 percent is good enough to weather economic storms.
Sen. Heather Steans, a Chicago Democrat and budget leader, said there is widespread support for the Cullerton plan among Senate Democrats, but she wants a side-by-side breakdown between the House plan and the new Senate plan before committing. She had supported legislation in the Senate similar to the House plan, but it failed on a vote earlier this year.