Two prominent Democratic lawmakers are calling on Gov. Bruce Rauner to release the long-awaited details his pension proposal so they can figure out what it means for the state’s budget.
State Senator Daniel Biss, D-Evanston, and Rep. Elaine Nekritz, D–Northbrook, said on Tuesday they have some concerns over the changes to the pension system at the heart of Rauner’s budget. They publicly demanded last week that Rauner put his proposal in writing so it can be analyzed.
Rauner’s budget proposal includes $2.2 billion in projected savings from a new pension scheme that would move all current employees onto the cheaper Tier 2 pension plan instead of only new hires, as the existing plan does. All of the benefits earned so far would be maintained, but workers would pay into the new plan in the future.
An email request for comment from the governor’s office was not returned by publication.
Biss said the systematic change Rauner has proposed to the pension structure should not be done in a hurry.
“The road to pension hell is paved with rash actions,” Biss said.
He then laid out a list of examples of “rash” pension decisions from the past, including the three percent annual cost of living increase for pensioners put in place in the late 1980’s without a funding solution in place, as well as former Gov. Jim Edgar’s “pension ramp,” which involved paying increasing amounts to the pension system annually.
“When you make major actions on pension matters it’s important to think not only carefully about the consequences for today and tomorrow, but the consequences, literally for decades to come,” Biss said.
Biss also expressed doubts over whether the Tier 2 pension system would continue to meet federal standards. When employers or states choose not to participate in the federal Social Security program, they have to ensure that the very minimum, they are providing the same benefits Social Security would have. Biss said he is not convinced that over time, the Tier 2 system will continue to meet that standard.
“If you look at the simple test written in federal rules, it doesn’t appear to meet that test,” Biss said.
Nekritz said that she wanted an actuarial analysis of the proposal, which is another way of saying she wants to know what the risks are. She said getting that analysis done takes the kind of time that they are quickly running out of.
“It took us two to three weeks any time we wanted to get an actuarial analysis done,” Nekritz said, referring to research on the previous pension overhaul. “If the governor wants to do this quickly, then we need a proposal – a bill – that we can actually give to the pension systems to be able to say ‘What does this do?’ “
The two lawmakers also unveiled a pair of resolutions – Senate Resolution 317 and House Resolution 358 – urging the Teachers Retirement System and the State University Retirement System to reach out to the IRS for a ruling on whether the Tier 2 pension plan meets the standard set by Social Security.
“By choosing not to participate in Social Security, the governments are taking on the responsibility to provide a more generous retirement benefit to at least replace Social Security.” Biss said.
Biss said that the existing Tier 2 plan is less of a concern because most of the people enrolled in it are still years away from retirement, leaving lawmakers some time to work out the possible problems.
“We have some time to deal with it,” Biss said, “before it becomes, so to speak, truly ripe.”
Contact Alan Kozeluh at intern@illinoistimes.com.
This article appears in Apr 23-29, 2015.
