HIGHLAND - Wednesday, Illinois Senator Kyle McCarter (R-Highland) released a multi-point plan to fix the state's devastated public pension system. Governor Pat Quinn is calling for the state legislature to discuss the pension crisis when the House reconvenes August 17th. Most State Capitol observers expect any serious discussion to be delayed until after the election in November.
McCarter's proposal places tangible negotiating items on the pension discussion table, including ideas such as raising the retirement age to 62, capping all pensions and requiring employees to contribute more to their benefit package:
- All pensions must be frozen at their current vested level and a 401K-type defined contribution plan must be added, changes the private-sector and the federal government have already made.
- An agreed-to match by the state and/or employer that will cover the current underfunding and future growth must be decided upon.
- Employees will need to contribute as much as 3 percent more to maintain the current part of
their defined benefit plan.
- Employees must be asked to work longer, until the age of 62.
- We must cap all pensions at the social security maximum of $110,100. Above this, employees can add pretax earnings to a 401K-type plan.
- Cost-of-living allowances must be modified from 3 percent compounded to one-half percent of the consumer price index or 3 percent, whichever is less.
Sen. McCarter said Wednesday that another aspect of pension reform should include a shift of teacher pension liability to local school districts.
“An immediate and large cost-shift would prove to be disastrous and simply result in increased property taxes so, the liability shift should take place gradually over 10 years with no more than a half-percent in the first two years. While admitedly difficult, the new policy would be beneficial in the long run. Local school districts would be allowed to negotiate wages and benefits with their own money, thereby giving local taxpayers a true picture of education costs and spending.”
McCarter adds that at the same time state government’s part in the cost-shift provision must include a commitment for local tax dollars to come back to the schools by ensuring the schools are paid on time, that mandated programs such as transportation and special-education are fully funded and that costly government mandates such as prevailing wage, project labor agreements and special-education standards -- now higher than the federal standard -- be removed.
“School districts must be allowed to lower their cost of business in order to provide more benefits to the children they serve,” said McCarter.
“All these changes to pensions mean nothing if we do not include, in the reform bill, legal language that obligates the legislature to abide by the agreement with consequences if they do not keep their word,” said McCarter. “Legislators must quit making promises with taxpayer money in the form of pension benefits to ensure their re-election. Now is the time to be courageous; to be statesmen and fix this problem and fix it correctly.”
“The pension crisis requires action now,” said McCarter. “Pension reform is about more than the present. This is also about the next generation of our citizens who, unless real reform takes place, will be left with a massive pension debt that will be difficult if not impossible to overcome without massive tax increases and funding cuts to vital services like education and public safety. It’s irresponsible to leave our children and grandchildren with a bill for poor planning and decisions made today or in the recent past.”