Lawmakers approved major changes in the state’s public pension systems for teachers and most other public employees Dec. 3.
The one-day special session saw hours of nearly simultaneous debate in the Senate and House of Representatives. The two chambers took the unusual step of considering a Conference Committee Report that had been negotiated by a bipartisan, bicameral committee over the summer, with final negotiations conducted by the top legislative leaders of both parties.
Pension Reform Targets $160 Billion Savings
The Conference Committee Report on Senate Bill 1 makes major changes to the state’s public pension systems in order to save an estimated $160 billion, over 42% of all scheduled payments over the next 30 years. It should also result in an immediate savings of $1.2 to $1.5 billion in its first year.
With $100 billion in pension debt, Illinois has the worst-funded pension system in the nation and the worst credit rating in the nation. The reform was an attempt to stabilize the systems and help assure that essential state services are not crowded out by unaffordable pension payments.
Vote Splits Parties
Pension reform is one of the most controversial and divisive issues to come before lawmakers in years, with support split down the middle in both parties.
Opponents criticized the measure from both sides, with some arguing it went too far and required public employees who have paid their contributions to the systems to now make up for the state’s failure to meet its obligations. Others argued the reforms did not go far enough, suggesting the system of granting employees specifically defined benefits should be scrapped in favor of a system that would provide a defined contribution to individual workers’ retirement accounts.
The measure’s savings projections and constitutionality were also questioned. I voted against the bill because I think it violates the Illinois Constitution, which clearly states that the pension benefits of current and retired workers “… shall not be diminished or impaired.” Public employee unions announced just a day after the bill had passed that they would take the measure to court when the Governor signed it.
Supporters acknowledged that it would be challenged in court, but argued that the measure had been crafted to increase the odds that it would win court approval. That also said it was important to pass the changes so that the state’s Supreme Court could decide the issue and offer the Legislature additional guidance if the changes are ultimately ruled unconstitutional.
Quinn Absent from Negotiations
Gov. Pat Quinn was quick to sign the measure on Dec. 5. He took credit for the plan despite the fact that he had played virtually no role in negotiating the agreement and even refused to appear before the Conference Committee charged with developing the basic outline for changes. The final details were worked out among the four legislative leaders – the House Speaker, the Senate President and the Senate and House Republican Leaders – without the Governor.
Busy One-Day Session
The one-day special session also saw the Senate take up several other important measures, including two incentive packages designed to either retain or lure companies to Illinois.
These included tax credits for multinational agricultural product processor Archer Daniels Midland (ADM), which has announced it is moving its headquarters out of downstate Decatur. Under House Bill 2536, the company will receive tax credits if it keeps its headquarters in Illinois but also creates new jobs in Decatur.
The company must maintain 200 full-time employees at its new corporate headquarters, must relocate 100 employees into Decatur from somewhere outside of Illinois within five years, must hire at least 100 new employees every year for five years at the Decatur location, and must establish an internal committee for five years that promotes jobs in Decatur. The bill passed the Senate and must now win House approval.
Another bill, House Bill 3271, would create a specific EDGE (Economic Development for a Growing Economy) tax credit for Univar Co., which is considering relocating its corporate headquarters from the state of Washington to Downers Grove.
The measure also contains incentives designed to convince the recently merged Office Max and Office Depot to locate their combined headquarters in Illinois. Office Max is headquartered in Naperville, but Office Depot is Florida-based, and the two states are competing to land the combined headquarters. Like the ADM package, HB 3271 won Senate approval and is now in the House.
Other Legislation Passed
In other action during the special one-day session, Senate Bill 114 was approved and sent to the Governor to male several technical corrections to the state’s new concealed-carry law. For example, Senate Bill 114 clarifies how fingerprint information will be provided to the Concealed Carry Licensing Review Board, so that the procedure is consistent with federal law.
Also approved by the Senate and House, Senate Bill 1961 allows only the Attorney General to represent the Teachers Retirement System and the State Universities Retirement System in litigation. This removes the option of the systems’ boards to hire their own outside counsel for litigation. This was designed as a cost-saving measure and also to assure that if pension reform changes are challenged in court, the state will have a consistent and coordinated defense provided by the Attorney General.
Lawmakers also authorized (Senate Bill 1955) the transfer of $5.9 million from the state’s General Revenue Fund to the Illinois Emergency Management Agency for disaster relief to meet the state’s cost-sharing obligations under federal requirements.