Illinois Gov. Bruce Rauner will give his budget address on Wednesday afternoon. He’ll announce a number of cost-cutting proposals, and pensions are sure to be featured.
What specifically does Rauner have in mind for the state pension system?
Greg Hinz of Crain’s Chicago Business got a hold of budget documents that hint at Rauner’s plans.
From Crain’s:
On pensions, Rauner is proposing to go substantially farther than the reforms passed a year ago by the General Assembly, reforms that now are being challenged before the Illinois Supreme Court.
Specifically, according to budget documents shared with me, Rauner intends to save $2.2 billion next year, cutting the state’s unfunded pension liability by $25 billion. He’d do that by freezing all benefits as of July 1, moving workers to a new plan in which cost-of-living hikes would be cut from the current 3 percent a year to the lesser of 3 percent or half of inflation, non-compounding; the normal retirement age would be 67, and overtime would not be counted in pension benefits.
These changes would apply to benefits earned after July 1. Benefits earned prior to that date would be paid at the previous rate. The Rauner document says that makes it constitutional as “earned benefits” are not cut. Expect a court challenge to that.
All of these changes would apply only to plans covering teachers, university employees and other state workers—not public safety employees.
Read an overview of the rest of Rauner’s probable budget proposals here.
Photo Credit: Metropolitan Planning Cou via Flickr Creative Commons License
