Judges left out of Illinois pension reform plan

May 30, 2012

By Andrew Thomason
Illinois Statehouse News

SPRINGFIELD, Ill. — Legislation intended to curb the rising cost of public pensions in Illinois would reduce the benefits for recipients, except for the judges.

Judges receive the highest average annual pension of any public employee, yet their benefits would remain untouched, according to legislation introduced by Illinois House Speaker Michael Madigan, D-Chicago.

The nearly 1,000 retired judges earn an average annual pension of more than $112,000. The average public employee retiree draws an average annual pension of about $40,000.

At the heart of Madigan’s legislation is a stark choice for current employees and retirees.

One, choose between smaller cost-of-living increases and remain eligible for retiree health care. Or two, get larger COLAs but be ineligible for retiree health care. The changes are borne from an attempt to slow the ballooning cost of public pensions, which is increasing from $4.2 billion this year, to $5.1 billion next year. How much the state would save won’t be known until employees and retirees choose an option.

Unions say the choices are unconstitutional, that they reduce benefits for current retirees, no matter what recipients decide. Reducing benefits for current retirees could violate Illinois’ constitutional provision, calling pension benefits an unbreakable contract, unions say.

If the current changes to public pensions manage to squeak out of the General Assembly and get Illinois Gov. Pat Quinn’s (D) OK, the public unions would probably sue the state.

Ultimately, the fate of the legislation would be decided by the justices of the Illinois Supreme Court, who, coincidentally, are members of the public pension Judges’ Retirement System.

I would call this buying off the judges. It’s a very sad situation, but it’s inevitable,” said Ann Lousin, a professor at the John Marshall Law School in Chicago who helped draft the Illinois Constitution in 1970.

Madigan said judges were left out of the legislation to avoid a conflict of interest.

Madigan danced around questions of whether the omission of judges was a way to get a favorable ruling from the Illinois Supreme Court.

Judges were included in 2010 when the Legislature approved increasing the age of retirement for public employees from 62 years old to 67 years old for anyone hired after Jan. 1, 2011. That legislation also capped the maximum salary a pension could be based on at $106,800 for anyone hired after Jan. 1, 2011.

Illinois House Republican Leader Tom Cross, R-Oswego, has his own reasons for criticizing Madigan’s recent pension legislation. But, Cross said, he would have liked to have seen judges’ pensions included this time around, too.

In addition to handing out the largest annual pensions, JRS has the second-highest discrepancy between what it owes current and future retirees compared to the assets it has on hand, also known as an unfunded liability.

A 2011 report on the five systems that make up the state’s public pensions shows that the JRS has an unfunded liability of $1.3 billion, or 71 percent. The worst funded public pension system is the General Assembly Retirement System, which has an unfunded liability of $197 million, or 78 percent, and is included in the pension reform legislation.

Andrew Thomason can be reached at andrew.thomason@illinoisstatehousenews.com.

Posted May 30, 2012

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