Preckwinkle throws in the towel on county pension reform plan
Friday, May 30, 2014
by Dave McKinney
Cook County Board President Toni Preckwinkle abandoned efforts Friday to pass a pension-reform package for county workers and retirees this spring after her plan withered in the Illinois House in the face of GOP opposition.
"Pension reform is critical to protect the retirement security of our workers, the county's bond ratings and the interests of taxpayers in eliminating $6.5 billioin in unfunded pension debt," she said in a prepared statement. "I look forward to continuing to work with members of the General Assembly to adopt this sound plan of reforms later this year."
The plan she embraced would have hiked employee retirement ages and pension contributions, reeled in retirement benefits but preserved a compounding, cost-of-living increase that state and city retirees have been denied under legislation that passed the General Assembly last year and earlier this spring.
House Republicans balked at the compounding COLA.
One of the public-sector unions that opposed the legislation, calling it unconstitutional, urged Preckwinkle to reopen negotiations on a pension package.
"We urge Cook County to resume pension discussions with all county unions," AFSCME Council 31 said in a prepared statement. "Let's work together for a fair, constitutional plan all can support."
Here is the full text of Preckwinkle's statement:
"I’m grateful to the supermajority of Illinois Senators and to the members of the House Pension and Personnel committee who voted in favor of Cook County pension reform this week. Our reform package was the product of more than two years of collaboration. It has the support of 2/3 of the unions who represent Cook County employees, independent organizations like the Civic Federation and the Chicagoland Chamber of Commerce, local business leaders and bipartisan representatives of the Cook County Board of Commissioners because it is fiscally sound, equitable to all stakeholders, and on firm constitutional footing. I believe in our pension reform proposal and will continue to work with this broad coalition to see the bill enacted in the fall.
"The reform package we presented includes automatic correction mechanisms that will protect taxpayers in the event that adverse market conditions negatively impact the plan's funding in the future. Today, taxpayers fund 60% of the contributions to the retirement system, and employees fund 40%. Our proposed legislation mirrors this ratio, with the employee portion coming through a mix of benefit reforms and increased contributions. Cook County's proposed reforms take significantly greater savings pre-retirement and less post-retirement than other recent pension reform bills, asking Cook County workers, like all Americans, to work longer as they live longer before beginning to collect retirement benefits. In exchange, the pension fund, which is currently projected to be insolvent in 20-25 years, will provide benefits to our workers well into the future.
"Independent actuarial analysis shows this plan bringing the Cook County and Forest Preserve District pension funds to full solvency within 30 years, and we are confident that it will withstand legal scrutiny if challenged in the courts.
"Despite the belief by some that Cook County is not at a crisis point yet, we have been repeatedly warned by the ratings agencies that we’re likely to face a downgrade in our bond rating this summer if reforms to address the $6.5 billion in unfunded pension debt are not passed. In fact, just today Fitch Ratings placed the Forest Preserve District’s bond rating on negative outlook, directly stating that the lack of a solution to the pension crisis will lead to a downgrade. The longer we wait to act, the worse our pension situation becomes. Credit downgrades make it more expensive to borrow money and have a direct impact on the long-term financial stability of Cook County and the Forest Preserve District. The Civic Federation stressed the urgency of immediate action in their statement of support for our plan.
"Pension reform is critical to protect the retirement security of our workers, the County's bond ratings and the interests of taxpayers in eliminating $6.5 billion in unfunded pension debt. I look forward to continuing to work with members of the general assembly to adopt this sound plan of reforms later this year.