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House may make state workers pay more for pensions

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The Illinois House is considering a measure that would increase payments made by many state lawmakers, state workers, universities and teachers toward their pensions.

By Melissa Leu

SPRINGFIELD — Dennis Bentley, who has taught at Palos South Middle School in Palos Park for 27 years, may not retire in seven years because of a new pension reform proposal.

The Illinois House is considering a measure that would increase payments made by many state lawmakers, state workers, universities and teachers toward their pensions.

Bentley, who makes between $60,000 and $80,000 annually, said he fears he might have to delay his plans for retirement if he's forced to make higher pension payments.

"My pension plan has been set up for a long time now. Why all of a sudden is it going to be changed now?" Bentley said. "If everybody across the board is suffering, then that's fine, but I'm not sure it's equal."

Payments are expected to change for workers who were hired before Jan. 1, and pay into the State Employees Retirement System, Teachers Retirement System, State Universities Retirement System and General Assembly Retirement System. The plans are funded by a combination of state and employee contributions.

Those hired after Jan. 1 fall under a second tier of pension benefits that increased the retirement age to 67 and capped maximum salaries on which pensions can be based at $106,800. Those changes were created by reforms passed last year.

Under the proposal, the General Assembly will pay roughly 25 percent of their salaries into the pension system. Teachers will pay 13 percent and state employees will pay 14 percent, said state Rep. Kevin McCarthy, D-Orland Park, who did not have figures on hand for university employees. The percentages are pending lawmakers' approval.

Today, lawmakers in the General Assembly pay 11.5 percent, teachers 9.4 percent, universities 8 percent and state employees 4 percent or 8 percent of their salaries into their pension.

McCarthy, who's daughter has been a teacher for seven years, said this proposal is key toward ensuring the long-term solvency for the state's ailing pension system.

"What are we supposed to tell (new hires)? 'You're not getting anything out of this. Just keep giving, but you're not getting anything.' Because that's the truth if we don't do anything," McCarthy said.

The state's pension system was $75.7 billion underfunded, according to figures released June 30, with the most debt stemming from the Teacher's Retirement System at $39.9 billion, according to the Commission on Government Forecasting and Accountability, or COGFA.

COGFA is a bipartisan commission, created by the General Assembly, to "provide the legislature with research and information regarding state and national economies, revenue projections and operations," of state government, according to its website.

The bill will not affect judges, police officers, firefighters and local government employees who pay into the Illinois Municipal Retirement Fund. Judges were intentionally left out in case the potential law might be challenged in court.

State Rep. Jack Franks, D-Woodstock, said the measure likely will be ruled constitutional because despite asking people to pay more, it doesn't necessarily give people reduced benefits. He said a ruling either way would set a precedent.

"But (judges) better be careful what they wish for, because if they do rule that it is constitutional, then nothing would be barring us from next year of doing the same thing to them," Franks said. "So I think it's just a political calculation on the part of the sponsor. Frankly, I would have just left them in."

For average workers, however, higher payments toward their pensions correspond with other rising costs.

"Everything else in the world is going up. Our gas is going up. Our groceries are going up. And now they want us to pay more for this, and it will be health care next," said Kathy Reno, a nursing assistant at the Illinois Veterans Home in La Salle.

Reno makes about $38,000 annually, and if she retires in five years, she can cash in on about $13,000 per year in pension reimbursements, 33.4 percent of her final salary.

Former Illinois Gov. Jim Edgar said he fears changes in the pension payments might deter future employees from having long careers in state government.

"Is that going to cause an exit of quality people in state government?" Edgar asked. "We already have a morale problem with state workers. We've lost a lot of good people, and we can't afford to lose more people."

The success of the plan ultimately will depend on how many people switch from their current plan, which will require higher payments under the proposal, to other options where employees work longer and pay lower payments, or pay into a defined contribution plan similar to a 401(k), McCarthy said.

McCarthy said he expects to see an initial vote on the pension reforms Wednesday. A final vote in the Illinois House could come as early as Friday. If passed, the plan will go into effect next year and be evaluated after three years.

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