Pension Savings Estimate Off By $25 Billion
The estimated savings on a state pension proposal backed by Illinois House Speaker Mike Madigan is billions of dollars less than originally thought.
The Teachers Retirement System made a mistake in its calculations. The revision was outlined in a letter to the bipartisan panel working on solving Illinois' pension shortfall.
Madigan's plan involves across-the-board cuts in benefits. The revised calculation is about $25 billion less than the $187 billion savings originally touted over 30 years. Another plan from Senate President John Cullerton, which won union support, was estimated to save roughly $57 billion over the same period.
Meanwhile, the bipartisan committee has its own outline for overhauling pensions. State Rep. Elaine Nekritz says it would reduce benefits, with a savings of up to $146 billion dollars over 30 years.
“This number will stop the increased percentage of the general revenue fund dedicated to the pensions,” Nekritz said. She said pension costs have been eating into the budget for other state programs.
The new outline calls for tying pay increases in retirement to inflation and reducing employee pension contributions by 1 percent.
Rep. Michael Zalewski says the outline is only preliminary, but he says the committee is close to reaching a compromise.
"We have a very narrow runway to land a plane," Zalewski said. “and there are those who don’t think a middle is possible; but I’m not among them. I think there is a middle, and we’re coming in on it.”
Labor groups threatened to sue over certain pension reform proposals because the state constitution says benefits cannot be diminished. If the committee does agree on a new plan, they will face the task of convincing lawmakers to vote for it.
Meanwhile, the governor has suspended lawmakers’ pay until they come up with a pension plan.
Illinois Public Radio's Patrick Smith contributed to this report.