From the Springfield Journal Register:
The Associated Press on Friday obtained an outline of ideas being considered by the 10-person committee, whose members have said they are making progress on an issue that has vexed the Legislature for years.
Sen. Kwame Raoul, a Chicago Democrat and the committee’s chairman, acknowledged the outline but said the document is preliminary and the panel is not ready to issue a final recommendation.
“The committee has not come to a consensus,” Raoul said. “Our work is not done.”
But the outline is the most detailed information disclosed to date of what the committee is considering or how much savings any proposal on the table could achieve.
It calls for setting retirees’ annual cost-of-living increases at half the rate of inflation, though it would set both floors and caps – which were not included in the outline – for what the rate could be. That formula would likely equate to smaller adjustments than the current 3 percent increases, compounded annually.
Unlike previous proposals that would have required employees to contribute more to their own retirement, the outline calls for workers to pay in 1 percent less. It also does not increase the retirement age, as has been previously proposed.
Those elements are an apparent attempt to improve the odds any proposal could survive a legal challenge. They also could make a plan more palatable to public-employee unions and legislators who have said earlier attempts at pension reform went too far.
Read more: http://www.sj-r.com/breaking/x1367232506/Possible-pension-fix-could-save-145B#ixzz2cqJ1a6rB
Fred Klonsky 
Forced “consideration” in the form of a 1% reduction in current employee contribution is no consideration at all for current retirees. Promises made should be promises kept. A contract is a contract. Constitutional protection is Constitutional protection!
from Rich Miller: NOT YET A DEAL, BUT HERE ARE SOME DETAILS It’s not a deal yet, by any means, but I have exclusively obtained a list of several of the pension reform items that have been sent to the actuaries for study by the pension reform conference committee.
The overall list is projected to save $145.6 billion through Fiscal Year 2045, reduce the pension funds’ unfunded liability by $18.1 billion and produce a 100 percent-funded system in 20 years.
The projected savings are much higher than the union-negotiated $47 billion, but significantly lower than the $187 billion in Speaker Madigan’s bill. Still, that’s a whole lot of cash.
Perhaps the most controversial item on the table will be the “reduction” of employee pension contributions by a percentage point. That appears to be designed to provide workers with some “consideration” in exchange for reducing other benefits. It makes some sense, and some political sense as well, considering that the unions have to be thrown some sort of bone. But you can bet that those screaming the loudest for pain (Tribune editorial board, etc.) won’t like it at all.
Compounded annual cost of living increases for retirees would remain, but instead of the current flat three percent raises, they could be set at half the rate of inflation, with various floors and caps. Some of those caps, I’m hearing, are quite high, so that may cause the “pain lobby” to scream some more.
Rep. Fortner’s plan for using current bond payments to make pension payments when the bonds are paid off is also on the table.
One proposal would change the way the state determines its contributions. The current system is “Projected Credit Unit,” which is an actuarial method the growth in salaries, etc. over someone’s career. The new system would be “Entry Age Normal” starting after FY2015, which is a far more widely used actuarial method.
There’s also been discussion of staggering the start-time for COLAs, which has been in previous proposals.
And there’s a proposal to set the interest rate for “money purchases” by SURS and TRS to the interest rate for 30 year treasury bonds plus 0.75 percent.
Again, remember that this is not a deal as of yet. It’s just the list of some of the items sent to the actuaries.
From the Illinois Constitution on July 4, 2013
From the Illinois Constitution – July 4, 2013
Article I, SECTION 16. EX POST FACTO LAWS AND IMPAIRING CONTRACTS
No ex post facto law, or law impairing the obligation of contracts or making an irrevocable grant of special privileges or immunities, shall be passed.
(Source: Illinois Constitution.)
Article XIII, SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
(Source: Illinois Constitution.)
Article XIII, SECTION 3. OATH OR AFFIRMATION OF OFFICE
Each prospective holder of a State office or other State position created by this Constitution, before taking office, shall take and subscribe to the following oath or affirmation:
“I do solemnly swear (affirm) that I will support the Constitution of the United States, and the Constitution of the State of Illinois, and that I will faithfully discharge the duties of the office of …. to the best of my ability.”
(Source: Illinois Constitution.)
The Contract Clause appears in the United States Constitution, Article I, section 10, clause 1. It states:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
The Contract Clause prohibits states from enacting any law that retroactively impairs contract rights.
(Source: United States Constitution.)
I have been retired for almost six years. How does contributing 1% less or not raising the retirement age, yet lowering the COLA , constitute consideration for current retirees?
Looks like we are going to court on this one.
This pension proposal is a Bill of Attainder: A bill of attainder is an act of a legislature declaring a person or group of persons guilty of some crime and punishing them without privilege of a judicial trial. The effect of such a bill is to nullify the targeted person’s civil rights, …However, the use of these bills fell into disfavour due to the obvious potential for abuse and the violation of several legal principles, most importantly separation of powers, the right to due process, and the precept that a law should address a particular form of behavior rather than a specific individual or group. (Wikipedia).
Did anyone else hear Steve Cochran on WGN radio yesterday (and future morning host Mon – Fri) command state retirees go to their union representative and demand a cut in their pension? “If you get a thousand dollar check tell your union rep you want it cut to $900.00” – this, supposedly, is to help assuage the staggering daily debt that state has incurred, etc.
This is what we will be hearing from now on on WGN.
Mr. Cochran is very likely earning a very nice salary and have a benefit package that includes an employer contribution to a 401K or other retirement program. Is he willing to follow his own advice (put HIS money where his mouth is) and demand a 10% cut in his salary and benefits? Not likely!
This is trick to re-open and nullify the entire contract. A one percent reduction in contribution? There’s always free cheese in a mousetrap.
Could this be a divide and conquer stategy to split retirees and actives by throwing a bone of contribution reduction? Just wondering…
There is nothing in this proposal that suggests that current retirees are excluded from the reduced COLA, making the “consideration” argument total BS.
document does suggest retirees’ annual pension benefits could be based on their salary over their career, rather than on the higher amount they’re making right before they retire
Could someone please explain what this means? I am an active teacher so this pertains to me and many other active teachers.
beata,
I have a lot of friends still working and wondered the same thing. Does this mean in 1982 you are earning $17,000 per year, 1983-$17,500, that they add your yearly salary over the course of your career and divide by the number of years worked to obtain the amount your pension will be based?
If so, this will dramatically reduce pensionable salary.
Rick and beat,
Yes. The intent is to reduce pensionable salary. The details are fuzzy, as they are meant to be. Will current retirees COLA be reduced? None of this is clear because there is no bill. These are trial balloons coming from the Committee of Ten. In spite of what some self-proclaimed pension stalwarts say, any bill that reduces current benefits, including how the benefits are calculated or what the COLA will be, will end up in court.
At 61, I am still smiling and serving the children and families of Illinois. I signed on to retire in June, 2015. I was fit, doing a good job, and active in the union local, so I stayed. It seems my smarter colleagues were out at 55, 58,etc. So now the state will punish me for working longer? I averaged my salary over the years as opposed to the last four. (In the 1970’s, in smaller districts, teachers started in the 4 figures!). My pension would be decreased by about two thirds! This is the most draconian suggestion so far! OMG! It does seem to unfairly target the older workers who started many years ago at small salaries.