Illinois House Speaker Michael Madigan (D-Chicago) Thursday chaired the second of a series of 'cost-shift' meetings, during which public higher-education institutions agreed to begin picking up the tab for their employees' pensions. (AP Photo/Seth Perlman)
SPRINGFIELD-Illinois' public colleges and universities will gradually begin picking up the costs of their employees' pensions starting next year under an agreed plan announced Thursday by House Speaker Michael Madigan and higher-education representatives.
"It's only the right thing to do," Madigan (D-Chicago) told reporters after the open meeting. "Whenever one person spends money and another person pays the bill it's a bad policy, especially for government."
Madigan's long-sought pension 'cost-shift' bargain - an idea not contained in either of the two major pension reform bills floating in the Legislature - comes in the second week of his formal discussions with higher education institutions.
Under the plan, the state's public universities and community colleges would pay an additional one-half percent of payroll costs into the pension system each year starting in fiscal year 2015 until the colleges cover all costs. Madigan indicated similar changes to elementary and secondary school districts were coming but did not discuss details.
Championed by Madigan, the cost-shift has been part of more sweeping past pension packages but has been perennially rejected by Republicans and suburban and Downstate Democrats, who fear school districts will have to lay off employees or raise property taxes to cover a heavier pension burden.
And while moving pension costs from the state to colleges and universities poses only a fraction of the larger cost-shift scheme, a consensus by higher-education institutions could gather support from traditional opponents who represent those colleges' districts.
Glenn Poshard, president of the Southern Illinois University system, called some of the measures "draconian," but he and University of Illinois President Robert Easter said they back the plan.
"We're willing to do whatever it takes because this issue is the single greatest issue threatening our people over the long haul," Poshard said. "We have to take the measures that we have to take. We can't avoid those responsibilities at this point in time."
Part of the problem is that past pension payments to the system were shorted. While the state will still be responsible for those deficits, the cost-shift would require schools to finance any unfunded liability accrued moving forward, an idea Madigan called "a logical extension of what we're doing here."
But that's a request higher-education leaders seem more than willing to give on.
"The bottom line is that's what our employees depend upon is the stability and the security of the system," Easter said. "So we're willing to entertain."
The plan would also implement a mechanism to ensure funding to the system is approved by state actuaries and would allow each college to reject any form of pension sweeteners the Legislature could pass down the road.
"That's a concession we made to them in response to their legitimate concern - that the General Assembly could be raising these pension benefit levels which could increase their cost," Madigan said.
Easter and Poshard also hinted at their desire to enhance pension benefits for newer employees as a way to attract and retain high-quality employees. Madigan admitted that negotiations include these 'Tier-2' benefits but went no further than saying they are part of "good discussions."
Adjusting newer employee benefits is a bargaining chip that Tom Ryder, lobbyist for the Illinois Community College Trustees Association, thinks may need to be shelved until broader pension reform is reached.
"The proposal that was put on the table today by the speaker's office simply tells us how fast we have to run in the race to get to total cost-shift," Ryder said. "We don't know that distance until pension reform passes and until we work out tier-2."
Meanwhile, Senate President John Cullerton (D-Chicago) said he's willing to take up the cost-shift proposal in his chamber.
"I'm very much in favor of the cost-shift," he said. "We're working with the speaker on that. We've been in attendance at the meetings."
As far as reaching larger, comprehensive pension reform to send to Gov. Pat Quinn, an answer appears hazy at best.
"We haven't gotten to that," Cullerton said. "We'll probably take that up next week, hopefully."