Bowman endorses university retirement system pension reform

2013-04-15T06:30:00Z Bowman endorses university retirement system pension reformBy Lenore Sobota | lsobota@pantagraph.com pantagraph.com

NORMAL — A six-point proposal to reform the State Universities Retirement System has been endorsed by the presidents and chancellors of all 14 public universities in Illinois, including Illinois State University President Al Bowman.

However, while Bowman thinks the plan offers a good compromise, he is not optimistic that reforms will be approved before the General Assembly’s scheduled adjournment of May 31.

Bowman has been frustrated by the proposals put forth by lawmakers thus far, calling them “clearly unconstitutional.” A clause in the state constitution bars the state from reducing pension benefits.

State Rep. Dan Brady, R-Bloomington, said, “My worry is Rome is burning and I’d rather get some water on the fire and let someone else figure out whether it’s constitutional or not.”

Bowman thinks the plan devised by the Institute of Government and Public Affairs at the University of Illinois is good because it is “both constitutional and it addresses in a direct way the unfunded liability.”

SURS has unfunded liability of $19.3 billion. The state’s overall public employee pension liability is $100 billion.

Key portions of the institute’s plan include:

- Shifting employer contributions from the state to colleges and universities over a period of 12 years.

- Increasing contributions of employees in the Tier I defined benefit program an additional 2 percent, phased in over four years.

- Replacing the annual 3 percent increase in the retirement annuity with an annual increase of half of the unadjusted inflation rate reflected in the Consumer Price Index.

The link to the CPI is crucial to the constitutionality of increasing the employee contribution because it is considered an additional benefit that protects retirees in periods of high inflation, Bowman explained.

The letter over the presidents’ signatures, sent to Gov. Pat Quinn, said the cost shift is feasible only if it’s phased in slowly and combined “with a stabilization of general revenue appropriations during the transition.”

While Bowman thinks the university plan also could work with other state pension systems, state Rep. Keith Sommer, R-Morton, isn’t convinced. Sommer has talked with Bloomington District 87 Superintendent Barry Reilly and thinks a cost shift would be “just devastating to the school districts.”

The various state pension funds cover state employees, members of the General Assembly, teachers, university workers and judges.

State Sen. Jason Barickman, R-Bloomington, said he supports many of the provisions in the institute’s report.

“I think it’s good that university administrators around the state appear to be coalescing around some solutions,” said Barickman, adding that he would like those who are part of the other four systems to come forward with their ideas.

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(5) Comments

  1. ct
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    ct - April 16, 2013 5:38 am
    The sins are both the unionized retirees and the legislators they bought. They both created this mess and both must pay for it.
  2. ct
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    ct - April 16, 2013 5:38 am
    You may have a point.

    I think they all want the courts to hash this out regardless and you can't get there without creating some laws first. Without knowing how the wind will below, it will be impossible to craft legislation that works as any compromise might be destroyed in court.

    Still the proposals mentioned in this article won't come close to fixing the problem.

    The large salary at retirement leading to much higher pensions needs to be addressed, probably with a cap.
    And a much higher contribution rate, at least another 5% plus addtional percents based on years of service.
  3. justagoodoleboy
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    justagoodoleboy - April 15, 2013 12:05 pm
    If they do change the way the annual increase is calculated Bowman and the others increases when they retiree will still be more than what most get per month.
  4. Chadwick Snow
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    Chadwick Snow - April 15, 2013 12:03 pm
    I guess this will all boil down to the term "benefit" . If the courts determine that the basic benefit is the pension annuity and the COLA is an add-on that is subject to change, then this would be constitutional. What I'm more troubled by is Dan Brady's comment that the legislature should just go ahead and let the courts rule on the present proposals. Most of those are clearly a violation of the Illinois Constitution and legislators know it. They want to simply be on record and point the finger at the courts. This is a growing trend across the country where state legislatures will enact statutes that violate their states' constitutions or the U.S. Constitution Unfortunately, this costs the state a significant amount of money to defend a case they won't win. Why not establish a blue ribbon panel of attorneys well versed in constitutional cases in Illinois and have them vet the proposals and make a recommendation. At least that way the state would have a fighting chance of defending the plan.
  5. parrot
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    parrot - April 15, 2013 10:20 am
    There are so many plans, ideas and bills out there designed to make retirees pay for the "sins" of the legislators I may be confused. IF this plan is talking about changing the way the annual increase is calculated for people ALREADY retired, it is most certainly a diminishment of pension benefits, something this person and others told me to my face before I signed retirement papers could never happen. No matter how you spin it, a cut is a cut.
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