Labor, Senate leader oppose Pritzker pension reform plan

Gov. J.B. Pritzker’s plan to tackle Illinois’ massive pension crisis faces opposition from key Democratic allies, despite praise from government watchdog groups two weeks ago.

Organized labor wants costlier pension sweeteners rather than fiscal restraint, while Senate President Don Harmon suggested the timing isn’t right for Pritzker’s proposal to fully fund the state’s pension systems by 2048.

“I don’t know if this is the year to do it, because I don’t think we do that in isolation,” Harmon said. “There are some other competing pressures on funding pensions and level of pension benefits, and I think the price tag right now may be too much to pay.”

The state’s five public pension plans for teachers, university employees, state workers, legislators and judges are underfunded by roughly $143 billion. That means they have less than 50 percent of the funds needed to meet current obligations - a crisis that hits close to home for Chicago, where city pension problems have consumed budget discussions for years.

Pritzker will deliver his annual budget address Wednesday as the state faces an estimated $2.2 billion deficit for the 2026-27 fiscal year beginning July 1. Harmon expressed concerns that declining federal funds will make passing a new budget even more difficult.

The governor presented legislators with the same pension plan a year ago, but they ignored it. Instead, they passed budget sweeteners for Chicago’s struggling municipal pensions, which Pritzker signed into law.

Now organized labor pushes for more sweeteners, this time for the state’s Tier II pension members hired after Jan. 1, 2011. Legislators created the less generous Tier II benefits in 2010 to contain skyrocketing pension costs, but labor wants those benefits raised to near equality with Tier I members.

Pritzker’s plan calls for using surplus revenues to pay down pension debt, though it’s unclear if any surplus funds will exist given the anticipated budget crunch. He also wants to redirect funds from expiring bond payments to the pensions. Illinois currently pays off bonds that expire in 2030 and 2033, according to the Illinois Policy Institute.

The plan would extend a pension buyout program that allows system members to transfer benefits to Individual Retirement Accounts. That program has generated an estimated $3 billion in savings so far.

Eight organizations including the Civic Federation, Better Government Association and State Chamber of Commerce issued a joint statement commending Pritzker “for his ongoing commitment to fiscal progress.” Even the Illinois Policy Institute, a frequent Pritzker critic, called his proposal a “step in the right direction.”

But those endorsements carry less weight than opposition from political insiders. Organized labor contends no pension bill can pass without its support.

The current payoff schedule calls for pensions to reach 90 percent funding by 2045. State pension contributions consume roughly 20 percent of Illinois’ $55 billion-plus annual budget - a burden that limits funding for other priorities and mirrors the fiscal pressures Chicago faces with its own pension obligations.