A compromise pension reform plan has been filed in the Illinois Senate, which is modeled on a proposal that received bipartisan support in the summer of 2016. Proponents of the proposals say that as Senate negotiations continue on a bipartisan, balanced, full-year budget, lawmakers should still act on issues where there is agreement, including pension reform.
Facing nearly $130 in unfunded pension liabilities, many Senate Republicans have advocated for pension reforms to help the entire state save money, while the mayor of Chicago—facing a local pension crisis—has been asking for state assistance. The pension reform and parity package has been introduced as a compromise proposal that proponents say would help move the state forward, saving taxpayers billions of dollars, offering Chicago Public Schools significant fiscal relief and hopefully generating momentum toward a full-year, balanced budget.
The reforms contained in this Senate Bill 2172 and Senate Bill 2173 have received bipartisan support in the past. The package incorporates pension reform concepts that have been supported by both Governor Bruce Rauner and Senate President John Cullerton.
Senate Bill 2172 includes the Tier 3 and budgetary items of SB16 along with the text of SB 2822 from the previous General Assembly. It creates an optional hybrid Tier 3 for new hires, as well as a voluntary 401k program for active Tier 1 employees and an optional pension buy out provision. Additionally, the legislation institutes provisions designed to curb late-career salary spiking, and closes the General Assembly Retirement System pension plan to new entrants. Among other provisions, the legislation also provides $215 million for Chicago Public Schools pensions in Fiscal Year 2017.
The second component, SB 2173, includes the consideration model portions of SB16 previously proposed by Cullerton. This measure applies to active Tier 1 employees of the General Assembly Retirement System (GARS), the State Employee Retirement System (SERS), the State Universities Retirement System (SURS), the Teachers Retirement System (TRS), and the Chicago Teachers Pension and Retirement Fund of Chicago (CTFP). Retirees are not impacted by this measure.