Governor agrees, but Cullerton responds: “Not my plan”

By Harvard Zhang

An unusual state bipartisan move took a turn Thursday as Illinois Democratic Senate President John Cullerton said a pension proposal Republican Governor Bruce Rauner attributed to him and endorsed was not what they talked about and didn’t have his support.

Sen. Cullerton declared that he and the governor still have “fundamental disagreement” over the role of collective bargaining in a pension overhaul, a role that he thought should continue to exist but the governor didn’t.

The plan Governor Rauner outlined at a Thursday morning press conference in the James R. Thompson Center in Chicago “isn’t what we discussed this morning and doesn’t have my support,” Sen. Cullerton said in a statement. “I look forward to working with the governor to clarify these issues and appreciate his willingness to consider other ideas and just how far he’s moved away from his original pension reform ideas.”

The governor replied to the senator’s statement arguing both the governor’s and the senator’s legal teams have agreed on the “Cullerton model” of pension bill that the governor and Republican leaders endorsed today.

“We hope the Senate President still supports this agreed upon model originally developed by his office,” the governor’s communication director Lance Trover said in an email statement. “If he no longer supports it, we urge him to immediately introduce new pension reform legislation that he thinks will be approved by the Supreme Court, and the governor will be open to considering it. Now is the time to act.”

The rare bipartisan action, considering the state’s continuing budget impasse caused by disagreements between leaders of the two parties, was expected to save state taxpayers $1 billion a year, according to the governor. The state is $113-billion in arrears in its pension fund contribution obligations.

“One billion dollars is not enough, but it’s a step in the right direction,” Governor Rauner said during the press conference. “We can use this as an example of what we might do together. Rather than continue to dig a financial hole, let’s solve the problems with comprise, free up resources and put it where it belongs together.”

The governor added that Sen. Cullerton was “appreciative, positive and forward-leaning. The president’s gonna be talking with members of the General Assembly about this.”

The state pension system has been struggling as Illinois, ranked lowest among the states by credit rating agencies, remains without a budget seven months into the current fiscal year. Illinois Comptroller Leslie Geissler Munger announced last October that a cash shortage caused by the budget logjam would force the state to delay its $560-million November pension payment.

Illinois’ contributions to its five pension funds will rise by $288.8 million to $7.8 billion in fiscal 2017, which starts July 1, adding to the state’s budgetary pressure, according to the non-partisan Civic Federation citing estimates by the retirement systems.

The pension makeover plan pertained to a pension bill Senate President Cullerton proposed last May after the state Supreme Court threw out a law attempting to ease the state’s pension crunch by sharply cutting the prospective retirement benefits for current state employees.

Sen. Cullerton’s “Consideration Model” of retirement benefits is supposed to give government workers a choice between keeping more generous yearly cost-of-living increases or continuing to include salary raises in retirement benefits calculation. Cost-of-living adjustment is utilized to counteract inflation effects on pension benefits.

The bill would allow future retirees a choice: to enjoy the present 3-percent compounded annual cost-of-living increase in pension benefits in return for excluding future salary increases in the computation of their pensions; or, to retain future pay increases in the pension computation, and accept lower annual increases, not compounded, in pension benefits.

The point of contention between Governor Rauner and Sen. Cullerton was on collective bargaining, according to the senator. The governor stressed at the press conference pay raises have to be taken out of collective bargaining for the bill to be constitutional. The Illinois Constitution declares that pension benefits “shall not be diminished or impaired.”

“Each employee will make their own choice to decide whether they want their salary increase to be pensionable or not,” Governor Rauner said. “Not the union’s choice.”

Senate Republican Leader Christine Radogno, and House Republican Leader Jim Durkin also voiced their support for the latest pension move.

“I guarantee that I’ll put more votes on this bill than I was able to do in the last round,” Sen. Radogno said during the press conference. “It will really be bipartisan, we’ll do our part. I hope it will be the first example of us coming together on many more compromises to move our state forward.”

Yet state House Speaker Michael Madigan, whom the governor called “completely unreasonable and irresponsible” during the Thursday press conference, emphasized that the legislation must be crafted to pass Constitutional muster.

The pension system overhaul has “nothing to do with who brings up the bill, but how the state Supreme Court rules and whether it is constitutional,” Madigan’s spokesman Steve Brown said.

Photo at top: Governor Rauner speaks at the press conference. From left to right, Rep. Jim Durkin, R-82nd District, Governor Bruce Rauner and Sen. Christine Radogno, R-41st District. (Harvard Zhang/MEDILL)