Republicans weigh in on pension reform
By Hank Beckman For The Sun August 13, 2012 6:02PM
Illinois 95th District Rep. Mike Fortner asks a question at a public redistricting hearing held at the council chambers at Waukegan City Hall.
Updated: September 16, 2012 6:10AM
The Naperville Area Chamber of Commerce again took up the issue of public sector pension reform Monday at its monthly legislative luncheon.
State Rep. Mike Fortner (R-West Chicago) outlined Illinois House Bill 6204, legislation he sponsored to both reform the pension system for state employees and eliminate the system’s unfunded liabilities, estimated to be about $83 billion.
“Many states are wrestling with public pensions,” Fortner said.
He explained that revenue toward the system increases by 2 to 3 percent annually, while mandated pension payments have grown by 5 percent per year.
“That crowds out other state functions,” he said.
HB 6204 attacks the problem by separating it into two parts: reforming the system to reduce the cost to taxpayers and eliminating the unfunded liability by restructuring the method of payment, he said.
Increasing employee contributions, offering an optional defined contribution plan and capping the amount of an employee’s salary that counts toward their pension would accomplish the system’s structural reform, Fortner said.
Included in the bill is language to make the state’s obligation to keep up with pension payments binding as a point of law.
Fortner pointed out that, while the Illinois Constitution prohibits the reduction of employee benefits, it offers no suggestions about how to pay for them.
“It says nothing about (what) the state has to pay,” he said.
Fortner said that analysts have estimated that implementing HB 6204 would save the taxpayers about $400 million of the $1.5 billion spent on pensions annually.
“That is a pretty substantial number,” he said.
But limiting the yearly expenditures on public employee pensions does nothing to retire the unfunded liability, so HB 6204 addresses that as well.
Fortner said that the current fiscal year calls for a $3.6 billion transfer payment — coming from the state’s general fund — to help move the system toward being 90 percent funded by 2045.
Fiscal year 2014 sees that amount increase to $3.8 million.
Fortner would reduce that by taking the same amount currently made to retire state bonds maturing in 2015, 2019 and 2033 and putting the outlay toward fully funding the system.
HB 6204 was introduced July 19 and on July 27 added co-sponsors Sandra Pihos (R-Glen Ellyn) and Michael Tryon (R-Crystal Lake).
The proposal comes on the heels of Gov. Pat Quinn’s recent urging of the General Assembly to pass a version of pension-reform legislation, HB 6209, which would gradually shift costs of downstate and suburban teacher’s pensions back to local districts.
Currently, the state picks up the employer’s share of the pension contribution for most Illinois teachers.
The proposal proved highly controversial with local governing entities when first introduced last spring and hasn’t gotten any more popular since then.
“The Chamber strenuously objects to the cost shift,” said Patrick Skarr, Chamber vice president.
Fortner wouldn’t venture a guess as to what the chances were for HB 6204 to make it through. But he said he has received positive feedback on it from members of both parties.
“You will hear an awful lot of praise for this bill,” Fortner said.
Fortner acknowledged that a trust deficit existed between voters and state legislators and stressed that it was the reason he included making the provisions of the bill mandatory.
“That’s why I looked at the hardest language I could find,” he said.
House Rep. Michael Connelly (R-Naperville) said that the plan answered critics who wanted to know if state Republicans would actually do anything about the unfunded pension liabilities other than talk.
“‘What’s the Republican plan,’ they ask. ‘What’s the alternative?’”