Even before state legislators took a vote on a historic pension reform plan Dec. 3, campus leaders were crying foul over the plan’s potential effect on the university’s current and future retirees.
The pension overhaul won enough votes to pass the Illinois House and Senate, with Gov. Pat Quinn promising to sign the legislation into law. The plan is meant to reduce the $100 million in unfunded state pension liabilities and set the system toward solvency.
Workers entitled to state pensions will pay for most of that solution, with the pension program savings diverted to paying down the state’s unfunded liability by 2044.
The legislation includes cost-of-living adjustment reductions, caps on pensionable earnings, changes in the ways benefits are calculated, raises the retirement age by five years for employees younger than 46 and includes other provisions expected to be detrimental to retirees.
“As proposed, (the changes) would adversely impact public university employees, place higher education in Illinois at a competitive disadvantage and ultimately weaken the state’s economy,” President Bob Easter said in a Nov. 26 email sent to all university employees in anticipation of the legislation’s passage. The statement also was signed by the three campus chancellors.
“We are profoundly disappointed that in nearly three years of engaging the legislative process on this crucial issue,” he said, “the counterproposals of the state’s nine public universities will not be included.”
Easter was referring to a plan developed by the U. of I. Institute of Government and Public Affairs that was meant to address the pension crisis while better protecting beneficiaries. At one point it looked as though the plan was being considered, but lawmakers announced at Thanksgiving that a new plan was in the works and it would not offer the protections of the IGPA framework.
The passage of the plan settles one of the state’s most contentious and long-running issues – at least for the time being, considering the likelihood the new law will be challenged as unconstitutional by the state’s public employee unions.
Thanks to the long-running pension problems, Illinois has the lowest bond rating in the nation, a problem that also has negatively affected the U. of I.’s rating.
“Terrible, terrible, terrible,” said John Kindt, the chair of the SEC’s benefits committee, of the pension overhaul.
An emeritus professor of business administration, Kindt said the plan is stacked against public employees and that most of the new provisions amount to an overall erosion of university employee benefits.
He said a provision in the legislation that reduces the employee contribution by 1 is far outweighed by the other benefit reductions in the plan, which even changes the methods that future benefits are calculated –
“and not to the employee’s benefit.”
Chancellor Phyllis M. Wise said officials will continue monitoring the new law’s effects on employees in the aftermath of the vote in the General Assembly.
“Our analysts continue to examine the impact of the bill on our faculty and staff and to determine the longer-term implications for the entire Illinois family,” she said. “The campus administration will continue to work with President Easter to ensure that we remain competitive in hiring and retaining the very best faculty and staff.”
The pension changes come just as the Urbana campus embarks on the first steps of its three-year Strategic Plan, a cornerstone of which calls for the hiring of 500 faculty members in the immediate future.
Ilesanmi Adesida, provost and vice chancellor for academic affairs, told members of the Senate Executive Committee at their Dec. 2 meeting that administrators will continue to work to improve salary and benefits for employees, “regardless of the outcome in Springfield.”
He said the pension issue was one of “recruitment and retention” and of maintaining the university’s hiring competitiveness.
“The president and chancellor are on top of this,” he said.
At that same meeting, SEC Chair Roy Campbell announced the formation of a new senate committee to address issues of faculty compensation.
Easter has proposed the possibility of the university taking over some of the employee contribution obligations in the future, though doing so would cost nearly $20 million for every 1 percent of pension responsibility it takes over from the state. There also has been discussion at the university level of improving the Tier II pension system reserved for recently hired employees.
