Imperiled Illinois Public Pensions Get Sweeping Reforms

上周伊利诺伊州立法者被召集到一个特别的立法会议，以修复国家养老金制度。980亿美元的伊利诺伊州养老基金，这是一个州长的错误帕特奎因since he first took office in 2009, has a 40 percent funding ratio and is running a deficit of $100 billion. In January and June ratings agencies, citing the state’s pension problems,降级伊利诺伊州的市政债券。12月10日标准普尔将国家的一般义务债券从“消极”升级为“发展”，保持其等级，引用国家的养老金改革是一个原因。

12月3日，立法者通过了Quince的养老金大幅度票据，这是两天后签署的法律。改革期望在未来三十年中拯救伊利诺伊州1600亿美元，福利削减约为900亿美元至1000亿美元，剩下的600亿美元达到700亿美元，达到债务减少700亿美元。在背景中徘徊是Rahm Emanuel，作为芝加哥市长的谁同样热衷于国家立法者终于在这一极度政治上发行的情况下达成一项法案。

The Illinois pension reform law has been criticized by many within the ranks of the state’s Democratic Party and national labor groups, including the AFL-CIO and the American Federation of Teachers. They see it as needlessly taking away workers’ benefits. While some on the right allege the changes are not deep enough, key local business groups, including the civic committee of the Commercial Club of Chicago, backed the bill.

Illinois’s pension problems are far from over. Organized labor groups have said they will challenge the new law in court, and the dispute could rise as high as the U.S. Supreme Court. Moreover, lawmakers still have to face the challenge of modifying Chicago’s pension funds, which have their own funding challenges and subsequent need for overhaul, to put it lightly. For one, the city faces a pension cliff in 2015. Illinois lawmakers are not done with pension reform yet.

“This has been a four-year-plus process,” says Steve Brown, press secretary for Michael Madigan, the speaker of the house and representative for a section of Chicago’s southwest side, an area known in part for its historically predominant population of public employees such as police officers and firefighters. The law “answers many of the questions that the ratings agencies and credit markets had about what was happening in Illinois,” he says. “It sets a clear path, probably a much better path than we had before in terms of stabilizing the pension funds.”

Madigan, who has long served as house speaker, was a co-sponsor of the pension bill, and his support was vital to its success. “The bill would not have passed without me,” he said in a statement released by Governor Quinn’s office. Earlier this year Madigan had not given his support to a proposed package of pension reforms, which subsequently failed to pass. That effort was championed by Senate President John Cullerton with the support of organized labor. In a statement released by his office after the pension bill passed, Cullerton applauded the end of the pension stalemate while acknowledging that “the legislative process involves compromise.” He did leave the door open, however, for a return to the negotiating table, saying, “Now it is time to move forward and allow the courts to rule on the constitutionality of our approach.”

The new law has five main components: a change to the cost-of-living adjustment for retirees, a percentage point decrease for employee contributions, an increase in the retirement age for certain employees, the creation of a defined contribution option and a strict schedule for the state to pay down the pension deficit. By sticking with these reforms, lawmakers estimate that Illinois’s pension plans will be fully funded by 2044. The law also includes a provision that would prohibit most collective bargaining on pension matters.

Within hours of the law’s passage, labor groups voiced their objections. “This is no victory for Illinois, but a dark day for its citizens and public servants,” said the We Are One Illinois, a coalition of more than 20 local labor groups headed by the Illinois AFL-CIO, in a statement. “Teachers, caregivers, police and others stand to lose huge portions of their life savings because politicians chose to threaten their retirement security.”

Labor groups were especially displeased with the changes to the cost-of-living adjustment, or COLA. Presently, most employees on the plan receive an annual 3 percent increase in their pension benefit. The new rule compounds the COLA at that rate on only a portion of a retiree’s pension — in most cases just $1,000. The retirement age for public employees who are 45 or younger has been raised as much as five years, for most workers to 60, in an effort to have the younger part of today’s unionized public workforce working longer.

养恤金法还向国家制度介绍了界定的捐款基金 - 劳动力通常拒绝的选项，争论他们不提供足够的退休保障。在伊利诺伊州的情况下，界定的缴费计划将以先到先得的基础仅为5％的员工提供。根据养恤金改革法，该计划将提供各种备选方案，包括国家管理和私人部门管理的投资组合。

共和党代表汤姆莫里森（Tom Morrison）是房屋人员和养老金委员会的成员，投票反对该法案，称“界定缴款”选项的有限性使其无关紧要。他认为，改革在提供了大量变革时没有走得太远。“我们没有做出小型改革的奢侈品，”他说。“我认为这账单太少，太晚了。”盖上裁定缴费基金的规模是一个妥协，以确保条例草案的段落，员工捐款的减少是员工的贡献。众议院少数民族领导人吉姆杜尔金奖，这些吉姆杜尔金赞成法律，表示贡献减少是地板上的争论的主要观点和几乎交易破碎机。

根据新法律，伊利诺伊州国家财政部要求建立养老金稳定基金，该基金与用于偿还养老金债务的基金。法律包括该时间表，即国家支付和要求缴纳养老金义务的时间表。

Chicago Mayor Emanuel was quick to praise lawmakers in Springfield for passing the reforms. “Today the Illinois General Assembly cleared a major hurdle by passing pension reform for the state’s four retirement systems,” he said in a statement. “Now state workers will have the certainty thatpensionsthey paid into and are counting on will be there for them when they retire, and taxpayers can feel confident that they won’t have to shoulder the burden alone.” Emanuel went on to urge lawmakers to now start on the second leg of pension reform — fixing Chicago’s funds.

芝加哥有195亿美元的资金pension obligations for firefighters, police and municipal workers and owes $13.9 billion in general obligation bonds. The $9.5 billion Chicago Teachers’ Pension Fund is also underfunded — to the tune of $17.1 billion. State Senate President Cullerton, whose district is on the North Side of Chicago, has made clear he is ready for the next round, saying, “It is critical that we turn our focus to the financial crisis facing the Chicago Public Schools’ pension system.” Cullerton has a powerful ally in the form of the American Federation of Teachers, which earlier this year endorsed his pension reform proposal, as did We Are One Illinois. During his time as mayor (since May 2011), Emanuel has already gone up against the teachers’ union in a particularly bruising fight over collective bargaining — and lost.

How Emanuel proceeds on pension reform will have ramifications for his 2015 reelection bid. Governor Quinn, however, is up for reelection next year. The common consensus in Illinois political circles is that Quinn needed pension reform before 2014. What looked to be a difficult Democratic primary became much easier this September when potential challenger Bill Daley, Obama’s chief of staff after Emanuel, stepped out of the race.

Quinn’s most likely Republican challengers, however, have wasted no time in criticizing his hard-won pension reform. Only State Senator Bill Brady, a Republican who ran against Quinn in the 2010 gubernatorial race, has endorsed the reforms. Brady, who served as part of the nine-member bipartisan panel of lawmakers that drafted the final bill, has endorsed the reforms. Private equity investor Bruce Rauner, who presently has the lead in the four-way GOP race, has said that the reforms do not go far enough. Illinois Treasurer Dan Rutherford, also in the race, has expressed doubts that the law will stand up to judicial review. A November 26 poll by Public Policy Polling, taken before the December 3 vote, has Quinn ahead of Rauner by 3 percentage points, tied with Brady at 41 percent, tied at 39 percent with Illinois State Senator Kirk Dillard and trailing Rutherford by 2 points.

到目前为止，债券市场对伊利诺伊州的养老金改革有所了解。伊利诺伊州债券的传播缩小了这笔交易的预期。“The fact that the legislature was able to take action — and what appears to be significant action — is a positive indicator, both for credit but for governance as well,” says Karen Krop, senior director of U.S. public finance at Fitch Ratings in New York. Plenty of work remains, however, before Illinois can hope to improve its rating. “For one thing, on pension reform itself, we still need to see an actuarial analysis to determine the real expected impact,” Krop explains.

像其他州和地区甲型肝炎e made pension reforms, such as Rhode Island, Oregon and Puerto Rico, the Illinois package is likely to be challenged in court. The reduction of the employee contribution was made in part, according to Minority Leader Durkin, in anticipation that doing so would help prevent the law from contravention of the commerce clause of the state constitution. The commerce clause exists in most state constitutions to prevent lawmakers and others from reneging on previously agreed-upon contracts. By lowering the contribution rate instead of the promised benefit, the hope is that the law does not infringe on the commerce clause. We Are One Illinois and similar labor rights groups argue, however, that the reforms impair pension benefits, thus violating the constitution. Speaking at a conference on December 6 in New York, William Brandt Jr., a turnaround expert and CEO of Chicago-based consulting firm Development Specialists, says he? thinks the Illinois fight could be the first in the present round of legal challenges to pension reforms to reach the U.S. Supreme Court. “You will have an issue in the Supreme Court based around the Illinois situation: Can you alter and amend the COLA?” Brandt says.

Get more onpensions。Plus:The 2013 Pension 40。