U. of I. President Bob Easter has joined 14 other state university presidents in endorsing an alternative pension plan for employees within the State Universities Retirement System.
The presidents, along with the chancellors of all three U. of I. campuses, sent a letter to the governor and legislators April 4 in support of the plan, prepared by the U. of I’s Institute of Government and Public Affairs. The six-point proposal adds another option among the dozens of proposed pension reform bills that state legislators are considering.
So far, according to the State University Annuitant’s Association, three pension-related bills have passed in the Illinois House, and another, proposed by Senate President John Cullerton, awaits Illinois Senate consideration.
Meanwhile, with none of the competing bills reconciled, the total unfunded pension liability in the state is nearly $100 billion and climbing, and already has affected the state’s credit rating. The SURS liability is about $20 billion.
Easter said he and the other university leaders are hopeful the IGPA proposal receives serious consideration by legislators and is included in any final agreement.
“Proposals for solving the pension funding crisis have advanced in the early stages of the legislative session but the governor and lawmakers continue to seek a consensus solution,” Easter said in a massmail sent April 9. “The package of steps described in (the IGPA plan) is a viable option for SURS.”
One of the major components of the IGPA plan is to have universities gradually take on a portion of their own pension costs, something officials say will provide more autonomy and local budget stability.
“The cost shift will be feasible only if phased in slowly, as recommended in the paper, and made concurrent with a stabilization of general revenue appropriations during this transition,” said the letter sent to state officials.
Other components of the plan:
- Linking future cost-of-living adjustments to the consumer price index.
- Changing the value of the Effective Rate of Interest to eliminate what the authors say is a “hidden subsidy.”
- Increasing contributions by Tier I employees from 8 percent to 10 percent of salary over two years.
- Requiring the state to agree to a schedule to reduce SURS unfunded liabilities.
- Replacing the Tier II plan for new employees with a plan combining defined-benefit and defined-contribution programs.
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