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Union Analysis: Senate Pension Reform Plan Saves More Than House Plan

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Illinois State Capitol buillding in Springfield (AP Photo)

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SPRINGFIELD, Ill. (AP) – An Illinois Senate pension reform plan would reduce state indebtedness to current and future retirees by more than a rival House proposal if health insurance costs are counted, a new analysis by a league of union groups shows.

A study by the We Are One Illinois coalition shows that if half of employees and retirees choose to forgo post-career health insurance as part of Senate President John Cullerton’s proposal, the state’s debt to two health insurance programs would be cut in half, by $26 billion.

The review, given to The Associated Press in advance of its general release Thursday, adds a new element to a tense debate over rival proposals on how to solve the state’s nearly $100 billion employee pension crisis, just a day before lawmakers adjourn their spring session.

Advocates of a House plan have argued that the union-backed Senate alternative did not save enough money, but the unions now argue that’s not the case. The coalition says the Senate plan, called SB2404, would save $32 billion off all future costs, compared to $21 billion for the House plan.

“This is all the more reason the House should pass SB2404 without change or delay,” Michael Carrigan, president of the Illinois AFL-CIO, said in a statement.

Decades of state underfunding have left lawmakers wrestling for years with a debt that has grown to $97 billion in five government pension systems. Supporters of the House plan, pushed by House Speaker Michael Madigan and sponsored by Rep. Elaine Nekritz, a Northbrook Democrat, have said the Cullerton plan doesn’t save enough money because Cullerton offers a choice to retirees on the benefits they must give up — the only way the legislation can survive a court challenge, he says.

In an analysis released last week, Nekritz pointed out that if roughly half of employees and retirees choose to forgo health care in favor of compounded cost-of-living increases in annual pension payouts, the Cullerton idea would only drop the pension liability by $6 billion.

The review acknowledged that it didn’t count savings in retiree health care — a bill of $52 billion in addition to the $97 billion pension shortfall.

“Retiree health care costs money,” said Steve Kreisberg, health policy director for the American Federation of State, County and Municipal Employees in Washington, D.C., who did the We Are One coalition’s analysis. “If half the people give up their health care as Nekritz says would happen, you then have a situation where about half the liability disappears.”

(TM and © Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)