Gov Rauner Pushes Pension Trade-Off Deal, As Major Step to End Budget Standoff

Chicago:  At a press conference Friday, Gov Rauner announced 26 House Republicans are ready to support a pension bill that would look to save the state $2.25 Billion in pension costs.

The plan announced by Gov Rauner, and the details of which the governor said Democrat legislative leaders had already agreed to last June, would offer state workers a formula in which they could keep their current plan with its annual 3% Cost of Living Adjustment [ COLA ], but then not have future raises go toward their pension benefits. Or if current workers give up their annual 3% Cost of Living Adjustment, then future raises WOULD apply to their pension benefits.

As a sweetner to get Chicago Democrats to vote for the bill, the Governor offered a one-time “pension parity” payment to the Chicago Public Schools, of $215 million, that he characterized as being an idea first offered by Mayor Rahm Emanuel.

House Republican Leader Jim Durkin file

In a press release, House Republican Leader Jim Durkin Friday called on Speaker Michael Madigan and the House Democrats to join the House Republicans in passing what House Republicans call a comprehensive pension reform.

According to Rep Durkin, the legislation is modeled after legislation introduced in a bipartisan manner in the Senate, HB 4027.

In a release issued by House Republican Leader Durkin’s office, HB-4027 would do the following:

⦁ Senate President John Cullerton’s “consideration model” that would require members of TRS, SURS, SERS, GARS, and CTPF to exchange their Tier 1 COLA for the right to have future raises to be counted as pensionable, or keep their COLA and sacrifice future raises as pensionable. This concept previously received union support by the We Are One Coalition
⦁ Provides a one-time normal cost payment to the Chicago Teachers’ Pension Fund of $215.2 million for FY 17
⦁ Closes new member participation in GARS [ the General Assembly Retirement System]
⦁ Offers Tier 1 TRS, SURS, SERS and GARS employees the option to participate in a defined contribution (DC) plan
⦁ Creates a voluntary Tier 3 Hybrid defined benefit/defined contribution plan for new Tier 2 employees under TRS, SURS, and certain SERS members who do not participate in Social Security

Rep Durkin said, “With this legislation, we estimate the State of Illinois will realize short-term savings of $2.25 billion dollars from the general funds and a substantial step towards closing the deficit gap. This is a significant step towards achieving a balanced budget but also saving our pension systems.”

“I have secured 25 House Republican co-sponsors for this legislation. With our 26 votes the House Republicans have provided their pro-rata share of support for a structured roll call vote on this important issue. This means we will provide our fair share of votes. The Speaker needs to provide his 34 votes to move this legislation to the Senate. This legislation will earn the Governor’s signature. Speaker Madigan and I have worked in the past on pension reform and I am calling upon him to help secure passage of this legislation. This reform is a major piece of the puzzle for breaking the budget impasse,” said Durkin.

OPPOSITION FORMS

But shortly after his press conference, the Illinois Federation of Teachers President, Dan Montgomery, issued a statement calling this deal misleading, and urging members of the legislature reject it.
IFT President Dan Montgomery, “Governor Rauner is basing his promise to Chicago school children and taxpayers on alternative facts. The pension bill Rauner demands as a condition for funding education reflects legislation that has already been ruled unconstitutional by our Supreme Court several times.

This new bill, which also steals from public workers’ life savings, is likely to face the same fate, and therefore, its savings amount to nothing. For Rauner to say this is ‘good policy’ suggests he doesn’t understand the law or doesn’t care.

In the meantime, we will fall deeper into debt and students of Chicago will be deprived of the future they deserve. It’s time for the Governor to drop the ultimatums and do his job.”

Gov Rauner press conference on pension reform package

But in response to a reporter’s question at his news conference, Gov Rauner said in effect that his plan was him reaching out to Democrat legislators,  “This was their proposal, not mine.”  The Governor added that in his efforts to work with lawmakers he felt that if they reject this plan, that the Democrat lawmakers would be “moving the goal posts”

He added, “If we’re ever going to make progress, we have to take it one step at a time.  And what we do not do is move the goal posts on prior agreements.”

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