Senate President John Cullerton (D-Chicago) argues pension legislation while on the Senate floor Thursday. The Senate approved a union-supported pension reform bill, but the measure faces an uncertain future in the House, where lawmakers passed a competing proposal last week. (AP Photo/Seth Perlman)

With reporting from Zach Buchheit

SPRINGFIELD-The Illinois Senate put itself on a collision course with the House Thursday by approving a Democratic pension-reform package favored by unions despite opposition from Republicans and a clear signal from Gov. Pat Quinn it wasn't his preferred pension fix.

"This is not a bill that just helps us this year or next year. This will help us for the next 30 years, and we have to be practical. We have to pass a bill. This is the best chance to do so," said Senate President John Cullerton (D-Chicago), the measure's chief Senate sponsor.

His legislation, which passed the Senate 40-16 and moves to the House, would wipe away about $11.5 billion of the state's nearly $100 billion pension shortfall - savings that are barely a third of a competing alternative from House Speaker Michael Madigan (D-Chicago) and now in the Senate's lap.

"The big problem with this bill is that it doesn't solve the problem," said Sen. Matt Murphy (R-Palatine), who like most Republicans voted against the plan.

The vote came after Quinn made clear his loyalties lie with the Madigan version of pension reform, not with what the Senate voted on Thursday.

Illinois House Speaker Michael Madigan had reason to celebrate Thursday when his COLA bill passed the House. | AP file photo

UPDATED...
With reporting by Dave McKinney

SPRINGFIELD - The Illinois House voted Thursday to limit compounding annual cost-of-living increases for state retirees in a constitutionally questionable move targeting the largest driver of the state's $97 billion pension crisis.

The Senate-bound measure, sponsored by House Speaker Michael Madigan (D-Chicago), passed the House on a 66-50 roll call and would affect current and retired state workers, university employees, legislators and downstate and suburban teachers. Judges weren't included.

Under the measure, current and future public employees would have to wait until age 67 or five years after retirement to begin collecting annual increases on retirement benefits. Public employees' annual cost-of-living increases would be capped at a compounding, 3-percent on the first $25,000 of their retirement annuities. Retirement income greater than $25,000 would increase by a flat $750 per year.

"This single benefit is the most expensive single component of the pension systems," said Rep. Elaine Nekritz (D-Northbrook), who presented the measure on the House floor. "As painful as it is we will never get the increasing pension costs under control if we don't address [the COLA's]."

Illinois State Senate President John Cullerton. | Jessica Koscielniak~Sun-Times

SPRINGFIELD-A scaled-back plan by Senate President John Cullerton to make suburban and downstate teachers choose between keeping a compounding, 3-percent pension boost or giving up state-subsidized health insurance as retirees eked out of the Senate Wednesday.

The proposal applies only to members of the Teachers' Retirement System and passed the Senate on a 30-22 roll call, marking the first pension-reform measure to pass the Senate this spring. Cullerton's bill now moves to the House.

"It's not often you can push a green button and save $18 to $40 billion over the next 30 years," Cullerton said, referring to the green voting switch senators use to cast "aye" votes. "We need to start with pension reform. We need to pass a bill over to the House, put them on notice we're serious."

Cullerton's approach involved scaling back an earlier version of Senate Bill 1 that he pushed. Originally, his plan represented a hybrid of House and Senate pension-reform packages.

The plan Cullerton (D-Chicago) settled on affected only one of the state's five retirement systems, but aides said other retirement systems would be brought up for individual pension votes.

The plan that emerged Wednesday represented what Cullerton regarded as the best chance to put a constitutional pension bill on Gov. Pat Quinn's desk because it would make teachers voluntarily give up a pension perk in the annual cost-of-living adjustment rather than taking it away.

The vote totals after SB1 failed to pass on the first attempt. | Dave McKinney~Sun-Times via Twitter

Sun-Times Springfield Bureau Chief Dave McKinney was reporting via Twitter from the statehouse as Senate Pres. John Cullerton's pension bill failed on the first vote. It would pass on a second try.

This vote came after SB35 - a pension bill brought by Sen. Daniel Biss (D-Evanston) - failed to pass.

How it went down, via McKinney on Twitter:

House Speaker Michael Madigan reported another $100,000 in contributions from SEIU Thursday following last week's collapse of a pension-reform deliberations that would have impacted a few thousand of the union's public-sector employees.

Friends of Michael J. Madigan, the speaker's personal political fund, reported receiving a $50,000 contribution from the SEIU Healthcare Illinois committee and another $50,000 donation from the SEIU Illinois Council fund.

A top union source told the Sun-Times Thursday that money actually was given to Madigan in late July, well before last Friday's special legislative session when the speaker presided over his chamber's failure to pass anything that would help cure Illinois' $83 billion pension crisis. Madigan and Gov. Pat Quinn blamed Republicans for inaction on pensions.

Earlier this week, the state Republican Party condemned the union for engaging in a "quid pro quo" with the speaker when the Madigan-run Democratic Majority reported receiving $97,000 in SEIU donations last Friday, the same day as the special session on pensions.