3 Local Lawmakers Discuss Pension Reform
300 learn about shifting legislation for public retirement plans from Garrett, May and Nekritz.
A combined crowd of more than 300 people came to hear their elected representatives and an outside expert explain the fast-paced changes taking place in public employee pensions at a pair of Town Hall meetings Saturday in Highland Park and Northbrook.
State Sen. Susan Garrett (D-Lake Forest) along with state Reps. Karen May (D-Highland Park) and Elaine Nekritz (D-Northbrook) hosted the meetings where Ron Snell, a public pension expert with the National Conference of State Legislators, gave the groups an overview of changes taking place in Illinois and across the country.
Nekritz and May sit on the House Pension and Personnel Committee and have been involved with legislation enacted earlier this year that reduces benefits for newly hired firefighters and police officers. They are also involved with pending bills that affect other public workers under the state’s purview.
Pending legislation would affect pensions for teachers, including those in the state university system, state employees and judges. Some of those affected by the proposed changes were in attendance.
In Northbrook, Snell began with an overview of changes taking place throughout the U.S., including increased employee contributions, eliminating double dipping and plans that blend both a traditional defined benefit plan with a defined contribution plan, such as a 401(k). He also noted a number of changes were expected to face constitutional challenges.
“I’ve never seen a year as busy legislatively as 2010. I expect 2011 will meet or pass that record,” Snell said. “[Employee] contributions are a big issue,” he added, explaining how states are trying to extract more from workers.
Some in the audience thought they were adding enough of their pay to benefit package. One person, who identified himself as a teacher, said 9.4 percent of his pay was going into his pension and asked Snell how the situation in Illinois compared to other states.
“It’s on the high side,” the pension expert said.
The legislators acknowledged funding of public employee pensions was lagging. According to May, the problem has existed in Illinois for 40 years.
“It’s an unfortunate tradition in our state,” she said. “It’s been going on since the '70s. It’s been Republicans and Democrats.”
May then explained the state developed a plan to cut the gap and even borrowed money to do so. The recent economic downturn put a crimp in the proposal.
“The plan was skewed with a high trajectory toward the later years,” she said. “When the market conditions of the last few years hit, we weren’t able to keep up.”
The state House member then mentioned that when she joined the Pension and Personnel Committee, she realized “something had to be done.”
Garrett explained that the state’s budget shortfall made it much harder to meet the pension funding goals legislated a few years ago.
“We have competing interests, other obligations as well,” Garrett said. “We have to fund Medicaid, the colleges. We have limited revenue. In 2003, we borrowed $10 million--and $8 million went into pensions.
Gary Riskin, a teacher from Glenview, told the crowd his full contribution had been paid into the plan for more than 20 years and he expected the state to do its part.
“We’ll meet you half way but where is the trust,” Riskin said. “We don’t want this to become like Wisconsin.”
May explained that pension reform legislation passed last year for public safety employees was, unlike Wisconsin, a negotiated effort between the unions and municipalities--with each side making painful decisions.
Nekritz told Riskin and the audience that an effort is being made. “That’s why we’re here,” she said, indicating lawmakers want to establish trust. “We want to come together to have a dialogue so we can solve this.”
May also made it clear that Illinois intends to keep its promises to state workers. “These people work hard,” she said. “We promised them something and we intend to honor it.”
One man accused the lawmakers of being unduly influenced by unions, saying the top contributors for Garrett and May were public employee unions. He added they were third for Nekritz. He left immediately after answers were provided to his remark.
Garrett explained that she had run unopposed since 2004, with no significant fundraising. May explained that she and Nekritz lost popularity with the unions when they began to push pension reform.
“I did not get one donation from AFSCME [American Federation of State County and Municipal Employees] or the teachers," May said. “They would not fund me because of my actions on the pension [committee].”
When people asked about the possibility of letting new hires use a defined contribution plan rather than the traditional pension, Snell explained accounting standards for states were more rigid than in the private sector. He said those restriction made a 401(k)-style plan harder to implement.
May and Nekritz also noted pending legislation to prohibit a retired person from earning a state pension if he or she returned to the workforce in another capacity.