Illinois Looking to Stop Outsider Access to Pension System

No longer just concerned with saving the state's underfunded pension system money, reform efforts now seek to stop allowing interlopers who aren't state workers into the taxpayer-supported retirement systems.
by | May 7, 2013

By Ray Long

For years, the big debate about reforming the state's heavily underfunded pension system has centered on how many billions the state could save and how much money retirees might lose. But the proposal the House passed last week also seeks to stop allowing interlopers who aren't state workers into the taxpayer-supported retirement systems.

The moves follow Tribune/WGN-TV disclosures that found dozens of people enrolled in state pension systems without holding state jobs. They ranged from employees of the Illinois Principals Association and other school groups that lobby state government to about 40 employees with the Special Olympics.

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The discovery illustrated how private employees gained entrance into the worst-funded state retirement system in the nation with a pension debt approaching $100 billion.

Last week, Speaker Michael Madigan ushered through the House a sweeping proposal that advocates estimated would save the state more than $150 billion over the course of a 30-year catch-up plan to bring the systems to full funding.

The headline-grabbing elements of the Madigan legislation would raise the retirement age for younger employees to 67, increase the amount of money workers would contribute from their paychecks by 1 percent this July and another 1 percent a year later, and scale back the amount of cost-of-living increases by basing them in part on the number of years a person serves in a public job.

Madigan's proposal is now in the Senate, where a similar plan failed this session. Senate President John Cullerton, D-Chicago, has not promised the Madigan plan will get a vote, but the speaker has predicted passage in the Senate. Cullerton has touted a different methodology and is negotiating with unions that contend Madigan's proposal is unconstitutional because it reduces guaranteed benefits unilaterally.

Legal concerns also affect the part of the legislation taking aim at private employees in state plans. The Madigan plan would not remove outsiders already in the pension system but would apply going forward to newly hired members of those groups. The idea is that handling it that way could help the provision withstand a court challenge.

Gov. Pat Quinn, who has hailed the Madigan legislation, supports the ban on outsiders. Last year, the governor signed a law that cracked down on dozens of abuses of union members in Chicago-based and statewide unions.

"The governor has no tolerance for any private employee accessing a taxpayer-funded retirement. It's wrong, and it needs to stop," said Brooke Anderson, Quinn's spokeswoman. "Public employee retirement systems are for public employees. Nobody else. This is another mess from decades of mismanagement that needs to be cleaned up, a loophole that needs to be closed."

The provisions in the bill mirror a proposal House Republicans have long backed and follow the successful push by GOP leader Rep. Tom Cross of Oswego to close other loopholes. His new law scaled back the potential benefits of two teacher union lobbyists who got into the public teacher retirement system after substituting in classrooms for one day and aimed to prevent lucrative moves made by Chicago-area union officials that allowed them to double-dip and land hefty retirement packages.

Rep. Elaine Nekritz, the Northbrook Democrat who serves as Madigan's point person on pensions, said the "whole goal" of the pension overhaul is to "make sure that public employees receive a pension."

"So we need to make sure that public employee pensions are focused on public employees," she said.

(c)2013 Chicago Tribune


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