CHICAGO (AP) — Under growing public pressure to act, the leaders of Illinois’ General Assembly announced last week that they have reached an agreement on how to solve the state’s $100 billion pension problem and would begin trying to persuade other lawmakers to approve it in a special legislative session this week.
The deal was a significant breakthrough after months of negotiations and years of unheeded calls to shore up what’s considered the nation’s worst public pension shortfall. Without action, millions of dollars have been diverted from education and other programs and forced financial service companies to repeatedly lower the state’s credit rating.
But getting final approval for the deal in the full House and Senate is no sure thing: State employee unions are adamantly opposed to the curtailing of workers’ benefits, there’s a constitutional challenge on the horizon and many lawmakers are already in the throes of 2014 re-election campaigns.
“It’s going to be a very difficult roll call (of votes). Unions will be against the bill,” House Speaker Michael Madigan told reporters after the morning meeting in which the deal was reached.
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Madigan told reporters that the proposed agreement would save the state an estimated $160 billion over 30 years.
Even before details of the deal became widely known, some lawmakers expressed resistance.
State Sen. Linda Holmes, a member of a special committee that had worked on a solution over the summer, said Senate President John Cullerton had called her to inform her of the deal. A staunch ally of unions, Holmes said she doesn’t plan to vote for it.
“He told me, ‘The leaders have come to an agreement, and you’re not going to like it,’ ” Holmes said.
The proposal includes pushing back workers’ retirement age on a sliding scale, a funding guarantee, a 401(k)-style option and reducing the employee contribution.
Madigan also said retirees would continue to receive the current 3 percent annual compounded cost-of-living increases, but they would only get that rate up to a certain amount of annuity payments, based on years of employment. He says the new way of calculating the increases would benefit low-income workers who worked longer.
The funding guarantee allows retirement systems to sue Illinois if lawmakers don’t make the full contribution to the fund each year.
The plan also would require the state to put 10 percent of the money saved annually through benefit cuts back into the pension funds beginning in 2016. It also will redirect the money the state currently uses for pension bond payments into the retirement funds once those bonds are paid off in 2019.
A spokesman for Cullerton, who sponsored a plan last spring that was backed by unions but would not save as much money, said the Chicago Democrat would “work members over the next couple of days to try and garner support for the package.”
Both the House and Senate have been called back to Springfield for a special session that begins Tuesday.