Illinois legislators Wednesday presented a plan to reduce $95 billion in pension liabilities that would require teachers to pay more toward their retirement benefits and shift the responsibility of public employee pension costs from the state to local school districts.
Rep. Elaine Nekritz (D-Northbrook) Wednesday presented the bill she and Rep. Daniel Biss (D-Evanston) co-authored, using pieces of previous reform proposals and some new ideas.
Under the new plan, employees would be required to contribute one percent more toward their pensions during the first year of the legislation and two percent in following years.
School districts would assume employer costs for the Teachers' Retirement System (TRS) and all other pensions at a rate of .5 percent per year, according to a press release from the Illinois General Assembly.
Cost-of-living pension increases would apply to the first $25,000 of an employee's pension, new hires would be placed on a cash balance plan combining defined contribution and benefit plans and the retirement age would increase one, three and five years for employees 40-45, 35-39 and 34 and younger, respectively.
District 200 Superintendent Dr. Brian Harris said with 1,100 certified employees, the district's annual cost for pension obligations is $8 million. At an annual rate of .5 percent, the district would have to pay $500,000 toward pensions the first year the legislation goes into effect. The figure would increase every year until the district is the only partly funding pensions.
To cover the cost, he said the district will have to decide on cuts to staff or programming or ask taxpayers to increase the district's operating rate.
"What is $500,000 (to the district)? It's 10 teachers. It's a program—whatever the program may be. It's class size—raising class sizes," he said at a Nov. 28 board meeting.
The "compounding, cumulative" onus the district would assume with the reform would leave the board with no choice but to ask taxpayers for an operating increase, which they haven't done since 1987, he said.
"Unless we come up with another revenue stream—which would be another tax increase—we'd have to go to taxpayers if they want to maintain the status quo."
"We're going to have to. We're not going to have a choice."
We Are One Illinois, a labor coalition focused on protecting public employee pensions, issued a statement Wednesday that the coalition was not consulted in the development of the proposed plan.
"The pension debt was caused by the state's failure to make actuarially adequate pension contributions, not by public employees," the statement read.
Illinois Treasurer Dan Rutherford said in a statement the proposal could "spur serious discussions" on pension reform that need to happen immediately.
The current Legislature's term ends Jan. 9.