New Pension Fixes May Emerge; Rauner Considering Ideas That "Haven't Been Brought Forward Yet"

May 14, 2015

Gov. Bruce Rauner answered questions from the media on Thursday for about ten minutes; for the first time he hedged on his pension plan.
Credit Zach Bernard

New ways to tackle Illinois' underfunded pension systems could be emerging, as the Republican governor appears to be backing away from his plan.

There's good reason many lawmakers are feeling flummoxed. Illinois' budget is already sagging. And with last week's state Supreme Court decision tossing a major pension law, the deficit is larger still.

The court decision was unequivocal - it's not constitutional to cut state employees' retirement benefits.

Gov. Bruce Rauner says he still hopes his fix would meet legal muster, because it leaves current benefits untouched and only deals with future ones. But for the first time, this morning Rauner hinted the justices' unanimous opinion has given him pause.

"When you look at the language, unfortunately their ruling was ... broad and tough and not crystal clear about what can change and what can't. I mean it leaves open to doubt a number of different scenarios," Rauner said. "We are considering several options, some of which haven't been brought forward yet."

It comes a day after a pair of Rauner's top aides defended the constitutionality of the governor's before a legislative committee convened by the House, and a day after Rauner on Wednesday met for about an hour with Democratic Senate Pres. John Cullerton about pensions.

Cullerton favors a legal theory known as "consideration": he essentially says because future pay raises are not guaranteed, it would be constitutional to not count them toward their pensionable salaries. Cullerton's plan would therefore give workers an option of either keeping a pension benefit that gives annual, compounded cost of living adjustments but forgoing future raises counting toward the pension, or giving up the COLA in order for salary hikes to be included.

The governor's plan would move current state workers, downstate public school teachers and university professors into the Tier 2, the system that public employees hired after 2011 are already a part of and which gives lesser benefits. Rauner also proposes giving workers the option of taking a one-time pension pay-out, and use it to begin a 401(k)-style account.

Rauner says lawmakers should pursue a handful of options, simultaneously.

"We're dealing with which ones will pass the General Assembly right now. The criterion ought to be which ones do we actually think can actually pass the court later on, too. So it's both hurdles," Rauner said.

The state's long term pension debt tops $100 billion.