Illinois General Assembly advances pension reform
From press release
A sweeping bi-partisan pension reform measure was approved by the General Assembly March 24, with Senate Republican Leader Christine Radogno and Senate President John Cullerton serving as co-sponsors.
The bill, Senate Bill 1946, adopts reforms that have been debated for several years. Illinois has the worst-funded pension system in the nation, and without reforms, pension payments threatened to swallow increasingly larger chunks of the state budget.
The pension reforms will not impact existing public employees, whose benefits are protected by the state constitution. However, beginning next year, new employees will be subject to a higher retirement age and limits on cost-of-living adjustments when they ultimately retire.
A popular component of the reform is a ceiling on the maximum earnings that can be counted toward a pension. Numerous newspaper stories across the state have exposed the practice of school districts and other public bodies awarding golden pension parachutes to highly-paid school superintendents and others. Under the new measure, no additional pension benefits will accrue for salaries above the current Social Security maximum level of $106,800 (inflation adjusted).
Ultimately, it was the threat of a major credit downgrade that helped spur majority Democrats and Gov. Pat Quinn (D) to action. Mismanagement of the state’s finances under both Quinn and his predecessor, Rod Blagojevich, has driven the state to near bankruptcy.
Illinois is facing a budget deficit of at least $13 billion and has nearly $9 billion in unpaid bills piling up. Under Quinn, the state has the worst credit rating in its history and the prospect of a further downgrade as Illinois prepared to return to the market prompted Quinn and his fellow Democrats to accept the long-debated reforms.
Although the pension reforms will represent a major step toward improving Illinois’ finances, critics point out that much more must be done. Medicaid remains the fastest growing component of the state budget and, if left uncontrolled, it will squeeze out all other areas.
Despite Republican support for responsible reforms, Quinn has refused to reverse any of the Blagojevich program expansions that have driven up costs in the state—including program expansions that led directly to the former governor’s impeachment.
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