The Illinois House of Representatives passed a comprehensive pension reform bill Thursday and sent it back to the Senate, which has approached reform from a different direction.
Under the House-passed bill, state employees would contribute one percentage point more each of the next two years and pensions would be capped at $110,000 of salary. Cost-of-living adjustments would change to 3% of $1,000 per year of service. Currently, a compounding 3% annual COLA on the pension benefit is granted.
The bill passed on a 61-52 vote.
Senate President John Cullerton, however, has been working with labor leaders on an alternative bill that he claims will be upheld in any constitutional challenge. Spokeswoman Rikeesha Phelon said Mr. Cullerton will discuss with his caucus how to proceed. Mr. Cullerton has been skeptical in the past that similarly worded bills to the one passed by the House would be overturned by the courts as unconstitutional.
The original bill put forward by Mr. Cullerton gave retirees a choice between receiving the compounding 3% annual COLA or retiree health care. That was dropped in the House in favor of the bill passed Thursday.
The House bill also increases the retirement age to 67, changes the state contribution to fully fund each pension plan by 2044 and includes a funding guarantee as well.
Illinois' unfunded pension liabilities are around $100 billion and the state has the worst credit ratings in the country, largely because of the failure to enact meaningful pension reform.
