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Pension Borrowing a Step Closer to Reality

Story Created: Jan 4, 2011 at 10:25 PM CDT

Story Updated: Jan 4, 2011 at 10:25 PM CDT

By Andrew Thomason   Illinois Statehouse News

SPRINGFIELD – After several false starts, the Illinois Senate could take action this week on a $4 billion bonding plan to shore up the state’s ailing pension system.

How much bipartisan support it will receive is still up in the air.
 
“We owe this money to the pension fund. What we’re saying instead is we should put the money in the pension fund and owe the money instead to someone who would issue the bonds,” Senate President John Cullerton, D-Chicago, said.
 
The Senate Executive Committee approved the proposal along political party lines, and it now moves to the Senate for approval from the whole chamber.
 
Bonds would be repaid over an eight year period. Not making this year’s payment would eventually cost the state $25 billion, according to Cullerton.
 
The state started a plan in 1995 to have its pensions system 90 percent funded by 2045, but underfunded pension payments and payment holidays have only exacerbated the situation.
Currently, the pension system is short $90 billion, making it the worst underfunded public pension system in the country.
 
Since Senate Bill 3515 passed out of the Illinois House of Representatives this spring, there have been several occasions, most recently in November, where the Senate was suppose to take up the plan, but failed to do so.
 
“We believe we have the votes for that and that’s what we’ll be calling on this week … We needed some Republican votes, I believe we can get some Republican votes,” Cullerton said.
 
Despite Cullerton’s statement that he has some votes from across the aisle, Senate Republican Leader Christine Radogno, R-Lemont, said her caucus isn’t quite ready to get behind the bonding.
 
“While at some point in the context of a compressive plan we are willing to consider some form of borrowing, we aren’t to that point just yet,” Radogno said.
 
That point could come, however. Radogno indicated in November that if changes to some of the state’s major systems were on the table the GOP might be able to lend some votes. Since then, there has been a serious look at reforming the state’s education, workers' compensation and Medicaid systems.
 
“There are other proposals to address the pension funding which are out there, and we’d like to see how the financial plan develops  — and see the reforms that we do seem to be working well together on  — actually enacted before we put votes on to this,” Radogno said.
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