The Illinois House approved a pension reform bill that could eliminate the state's $96.8 billion funding shortfall over the next 30 years, Reuters reported.
The legislation was approved by a vote of 62-51 and would impact Illinois teachers outside of the Chicago Public School system, state university employees and the Illinois General Assembly, the Chicago Sun-Times reported.
The bill still must be approved by the Senate.
The Chicago Tribune reported that the bill would increase the retirement age for employees 44 and younger. Employees also would contribute 2 percent more of their paychecks to their retirements.
The state would no longer give out compounded 3 percent bumps on the entire pension amount every year, the newspaper reported. Instead, increases would be based on $1,000 for every year service – so an employee working 20 years could get an increase based on the first $20,000 of their pension, the Tribune reported.
The Sun-Times reported that the current system of giving raises on the entire pension amount had exceeded inflation 13 times in the last 20 years. The newspaper stated that an employee who had worked 20 years and had a $35,000 annuity would get about $1,050 increase under the current forumla, but only $600 under the plan.
Reuters noted that no acturial anaylsis of the plan has been presented, but that Illinois House Speaker Michael Madigan said the plan would fully fund the pension system by 2044.
The Illinois Federation of Teachers called the legislation "pension-slashing" and that the measure could"dismantle the modest pensions earned by thousands of workers and retirees."
The union issued this statement:
"Senate Bill 1 is unfair to the active and retired teachers, nurses, police, and other employees who paid out of every paycheck to fund their pensions, even as the state shorted its share. On top of that, it is blatantly unconstitutional and thus saves nothing. It simply exacerbates Illinois' fiscal problems. In contrast, our coalition had a productive meeting today with President John Cullerton, and we hope to be able to continue the dialogue."