By JEFFERY BISHKU-AYKUL
Assistant to the Editor
When Gov. Pat Quinn signed Senate Bill 1 Thursday, he capped a years-long debate in the Illinois legislature over how to address the state’s pension crisis — with the help of Hyde Park’s elected officials.
Beginning this year, Illinois’ unpaid debt to its public employee retirees amounted to more than $100 billion, around a seventh of its gross domestic product. With the livelihood of so many former teachers, police and firefighters on the line, whether to cut retirement benefits — and, if so, by how much — became a touchy issue. Many labor groups opposed any cut to benefits and some conservatives pushed for massive cuts, while a bipartisan contingent sought compromise.
Among the latter were Hyde Park legislators state Rep. Barbara Flynn Currie (D-25) and state Sen. Kwame Raoul (D-16), who played a key role in negotiating a solution as the chair of Gov. Quinn’s ad hoc Pension Reform Conference Committee formed last summer.
Finding a solution
“When we set out as a committee, we were at a position of stalemate,” said Raoul, who led a group of four other Democrats and five Republicans from both legislatures. At the time, debate had revolved around a previous version of Senate Bill 1 and the union-backed Senate Bill 2404, which critics said did not save the state enough money.
“The first thing that I did was I suggested that we move away from the framework of both of the bills, in order to keep the conversation going,” Raoul said, adding that the group proceeded to hold hearings and receive testimonies on different proposals.
The formation of the committee came shortly before a non-binding July 9 deadline set by Gov. Quinn for passing pension reform. In July, Raoul called the deadline “unrealistic,” a sentiment many other legislators shared. “That didn’t connect very well what was going on in the legislature,” Currie said, adding that she had “no idea” why Quinn set the date.
The deadline came and passed, and the conference committee worked through the end of the summer to develop a proposal saving $138 billion over 30 years. But Illinois Republicans sought a deal that would save at least $150 billion. “That was the point of frustration, that led to us taking it up to the leaders,” Raoul said, “because I was not going to engage in negotiations where I was basically negotiating against myself.”
Senate President John Cullerton (D-6) supported the $138 billion plan, but it would not be until the week of Thanksgiving, when he asked Senators to return for a vote, that progress on a deal would accelerate.
“Just put final signature on Pension Conference Committee Report. Difficult decision regarding difficult problem,” Raoul tweeted Dec. 2, with a photo of him signing the document. A finalized pension bill was being distributed to members of the Illinois General Assembly. In what critics panned as too short a time to review the bill, the legislation passed with a 30-24 vote in the Senate and a 62-53 vote in the House late the next day.
The bill is estimated to save $160 billion through 2044, through a series of drastic changes to state pension law.
Retirement ages have increased, by as much as five years for those under age 32. Unused sick days and salaries above $110,000 will no longer be taken into account in an employee’s pension benefits. Retirees who have worked for 30 years or more once received a three percent compounded increase to their pension every year, but will now get an increase corresponding with the consumer price index, which is tied to inflation. At the same time, public employees will contribute one percent less of their salary to retirement, while five percent of them will be eligible for a defined contribution plan.
The bill attracted criticism even from politicians outside the General Assembly. Sen. Mark Kirk (R-Ill.) and U.S. Rep. Jan Schakowsky (D-Ill.) — both of whom Raoul singled out as motivated by politics — criticized the bill, Kirk for its quick review and Schakowsky because, she said, it hurts public employees.
“There was no joy in Springfield when we adopted these changes to the retirement system,” Currie said.
The plan has proven highly controversial among unions and other worker advocates, with some dubbing the plan “pension theft.” State Sen. Linda Holmes (D-42), ultimately did not sign the conference committee’s report and called last week’s bill a “promise broken,” comparing the state to thief stealing valuables at night.
“There is an element of truth to what she’s saying, but the rhetoric is not helpful,” Raoul said. “If she wants to sit on her hands and allow the state to sink in a sinkhole, to become the state of Detroit, that’s not going to benefit public employees because they’ll all get laid off.”
Raoul did say, however, that as a representative of public employees, “I feel bad for them. I think what we did, there is an element of immorality to it. Because based on the deals, the agreements that were set in the past, the employees have consistently made their payment, whereas the state hasn’t consistently made its payment.”
“I think I blame us all. And I will include myself, no question about it,” said Currie, who has served in the Illinois House of Representatives since 1979. She pointed at negligence on the part of both parties and unions toward properly funding the pension system. “I’m not suggesting that the unions bear a major share of the blame, not for a minute, the workers don’t, but I think it was a plague on everybody’s house.”
Currie defended the bill as necessary to protect public employees’ jobs and the state’s other obligations and she said that the legislation does not constitute a slash to workers’ benefits. “There is no cut,” Currie said. “But if your expectation was that you were going to see these automatic three percent compounded increases, then you’re not going to see that.”
The Illinois Constitution declares that promised state benefits shall neither be “diminished or impaired,” a section that has injected considerable controversy into the debate over pension reform.
Shortly after the pension conference committee was formed, Raoul said that passing a constitutional bill was important. Still, he admits he isn’t sure whether the bill the General Assembly passed is constitutional.
To avoid stalemate, “I thought that it would be best to negotiate the best deal possible, to try to create some argument of constitutionality,” Raoul said. “Because doing nothing, and delaying it further, just digs us further in the hole, creates a situation where you can’t invest in education, human services and the core priorities of the state. Am I conflicted about the bill we passed? Absolutely.”
He added that any bill the legislature passed “would have faced a constitutional challenge. That’s something that’s inevitable no matter what we do.”
Currie says the final decision lies with the courts. She says of the new pension law, if she “hadn’t thought there were constitutional grounds for supporting it, I wouldn’t have supported it. I think it’s a difficult issue, and I certainly think that the ultimate arbiter will be the courts.”
What Gov. Quinn called the “biggest vote” of Illinois lawmakers’ careers may well be behind them. But a definitive conclusion to the state’s pension debt is far from certain.
Currie called the state’s plan to have fully paid off its pension debt by 2044 an “educated estimate.” Both she and Raoul noted that a 2011 tax hike signed into law by Gov. Quinn is set to expire soon, in 2015; the 67 percent personal and 47 percent business income tax increase has padded state coffers with billions in extra revenue. Both also named the recent economic downturn as a factor in the pension crisis, which begs the question of whether another crisis of similar magnitude could stall Illinois’ efforts to pay off its debt.
And they are flanked by opposition from conservatives and liberals alike: The We Are One Illinois union coalition is vowing to take legal action against pension reform, making it anyone’s guess if the courts will overturn Senate Bill 1.
“One of the things that I have learned in Springfield is that practically never can we say, ‘OK, problem solved,’” Currie said.