7/27/2019 We Are One IL - Fact Sheet on Conf Cmte Draft Proposal

1/1

Draft Conference Committee Proposal Oppose

Unfair, Unconstitutional Pension Cuts

Pensions for teachers, police, child protective workers, nurses, and other public employees in state-funded

pension plans are modest and fair, allowing dignity and security in their retirement years.

Public employees did not create the current pension funding crisis, but they are willing to do their part to

help solve it. The We Are One Illinois union coalition has worked collaboratively to develop real pension

system funding solutions that are fair and constitutionaland significantly reduce the pension debt over

time. The coalition supports a true, negotiated compromise billSenate Bill 2404. SB 2404, unchanged,

deserves a full House vote.

In contrast, the draft conference committee proposal follows the same failed, illegal, and unfair approach as

SB 1, slashing pensions of current employees and retireesand jeopardizing hard-won retirement security.

The Draft Proposal Is Unconstitutional and Illegally Cuts Benefits

The draft proposal illegally cuts benefits, even though the Illinois Constitution specifically states

that pension benefits are a contractual right that cannot be diminished or impaired. Inviting a

legal challenge will lead to several years of budget uncertainty, doing little to address concerns

expressed by credit rating agencies. Further, if litigation overturns a bill like this, Illinois will

have kicked the can down the road and further jeopardized its fiscal situation and the solvency

of its pension systems. It may even owe back-payments to the pension systems.

The Draft Proposal Cuts COLAs as Deeply asor More Deeply ThanSB 1

The draft proposal makes it impossible for retirees to keep up with rising cost-of-living in

retirement. It unconstitutionally slashes COLAs through the Half-CPI cut and COLA holidays of

up to five years. Combined, these two COLA cuts erode the value of a retirees pension from29.5% to 32% after twenty years in retirement. This is essentially as deep a COLA cut as the

original SB 1and potentially deeper. A Half-CPI COLA with a three, four, or five year holiday

exceeds the COLA cut in the House version of SB 1 for certain retirement systems.

The Draft Proposal Provides Some of the Worst Inflation Protection in the Nation

Recent research by economists finds the Half-CPI COLA provides some of the worst inflation

protection in the nation. The cut is particularly harmful to lower-wage public workers and the

80% of employees in state-funded retirement systems who are not eligible for Social Security.

Senior citizensas major consumers of health care servicesare among the most at-risk

demographic groups subject to inflation. The research concludes that the longer [seniors] liveinto retirement, the harder it will be for them to make ends meet under the Half-CPI COLA.

The Draft Proposals Pensionable Salary Cap May Not Be Cost-Effective and Devalues Service

The draft report caps pensionable salary, creating a disincentive for hiring and recruiting in

critical public professions, particularly those that require advanced degrees, such as medicine

or higher education. Filling certain civil service positions is often a more cost effective practice

than contracting out for expensive, specialized services. Lastly, the cap ignores the mandatory

overtime required of many employees, especially those in physically demanding jobs.