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.