State Sen. Daniel Biss (D-Evanston) says Gov. Bruce Rauner’s plan to shift more state employees into a lower-cost pension plan may violate federal law.
Biss and State Rep. Elaine Nekritz (D-Northbrook) today introduced resolutions calling for a rigorous examination of whether the plan complies with federal regulations and its impact on workers and taxpayers.
“The road to pension hell is paved with rash actions,” Biss said at a Springfield news conference, arguing that the tier 2 pension system the state adopted for new employees in 2011 may not meet federal requirements that say governments can only escape having their employees covered by Social Security if their alternative plan provides equivalent benefits.
Rauner has proposed moving older state workers into the tier 2 plan starting July 1, unless they buy out their pensions and move to a 401(k)-style plan.
Rauner claims that would cut expenses in next year’s state budget by $2.2 billion and cut $25 billion off the state’s $105 billion unfunded pension liability.
The Biss and Nekritz resolutions, SR 315 and HR 358, call for the state to work with the federal government to study the constitutionality and sustainability of the tier 2 level pension plan.
If the state had to also pay into Social Security for workers, that could also increase costs for the state and local school districts, rather than relieving spending pressures, Biss says.
He says the best and most efficient way to receive an answer as quickly as possible is through a formal request from the pension systems to the IRS asking if a proposed pension fix like the governor’s is indeed feasible and legal.
If the state doesn’t seek answers to these questions and once and for all find a sustainable, affordable and actuarially sound pension solution, it could find itself in a hole without a means to climb out, Biss added.