Pension News

Illinois Speaker of the House, Michael Madigan presided over a House Pension Committee meeting that began at 1:00 PM Thursday (5/16/2013) afternoon. The Speaker called the special meeting to work with community colleges and universities to advance a plan to shift the employer costs of pensions from the state to the employer universities and community colleges.

The hour long meeting featured testimony from community college and university representatives. Testifying for community colleges were Tom Ryder (ICCTA Legislative Counsel), Charlotte Warren (President, Lincoln Land Community College) and Laurent Pernot (Vice Chancellor, City Colleges of Chicago). Testifying for universities were Bob Easter, (President, University of Illinois) and Glen Poshard (President, Southern Illinois University). School district representatives did not participate in this meeting.

The testimony centered on a recent cost shifting proposal from the Speaker. That proposal provides that community colleges and universities will shift the employer cost of pensions from the state to universities and community colleges at the rate of 0.5% of pensionable payroll per year until the entire amount is shifted. This is similar to the ICCTA proposal and is estimated to take 13 years to shift the pension costs. Complicated cost control measures are in place to protect the community colleges and universities from future unfunded liabilities or pension enhancements that the General Assembly may be tempted to provide.

The proposal also requires that both the local community college or university board and the SURS Board approve of any new pension enhancements approved by the General Assembly. Under this provision it is entirely possible that Community College A would approve a benefit enhancement and Community College B would not approve. After a period of years it is possible that the pension plan could differ from one community college to another. The normal cost amount that each community college and university is paying would be adjusted as each may choose to enhance benefits or reject the enhancements.

The Speaker’s pension cost shifting proposal also provides for reconstituting the State Universities Retirement System Board in such a way that there would be three board members from the community college system and three board members from the university system serving on the new board. The chair would be selected from among the membership.

Currently there is no guaranteed representation from the community college system.

All of the presenters indicated that cost shifting will be difficult to achieve but is necessary to stabilize the pension funds and the state’s budget situation. The presenters were generally favorable toward the Speaker’s proposal. Community college testimony detailed the need to address remedies in the following areas of interest: 1) Improve the Tier II pension plan; 2) remove pensionable salary caps; 3) revise the “6% Rule”; 4) provide level state funding; 5) reduce age 67 retirement; and 6) several other suggestions were made.

Members of the Pension Committee asked questions about the proposal. No vote was taken on the measure and the Speaker announced that there would be another meeting next week to continue the dialogue.

Michael Monaghan

Executive Director

Illinois Community College Trustees Association

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