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Legislative Agenda:
While the timing for a pension
reform bill to surface from the
conference committee remains an
unknown, there are some legislative
issues that would appear to be
predictable as we head into a new
school year.
In addition to the fight to gain
funding for public education that plays
out near the end of session each
spring, a couple of new issues could
arise in 2014 given the fact that it is an
election year that includes a race for governor. The
state’s budgetary issues revolve around revenue, much
like the planets circle the sun. And revenue must be
addressed next spring because the 2 percent income
tax increase is set to expire January 1, 2015. Expect a
graduated income tax to be part of the revenue
discussion. Also, expect talks about changing the
school funding formula.
While no politician wants to
utter the word “tax” – especially in
an election year – many
legislators acknowledge the need
for increased revenue, the
pension situation notwithstanding.
A graduated income tax might be
more
politically
fathomable
because while it is estimated to
increase revenue, those same
estimates indicate that it would
either lower or hold steady the
state income tax for the majority of residents in Illinois.
The “losers” would be those making the most money,
always a politically popular tact.
The school funding formula almost certainly will be
a topic of discussion for an advisory panel that was set
up to study the funding distribution method for public
education in Illinois. That panel was established by
unanimous approval of Senate Resolution 431,
sponsored by Sen. Andy Manar (D-Bunker Hill). In
addition to Manar, who is a co-chair of the panel, the
other seven members include:
Sen. David Luechtefeld (R-Okawville), co-chair
Sen. Jason Barickman (R-Champaign)
Sen. Melinda Bush (D-Grayslake)
Sen. Kimberly Lightford (D-Maywood)
Sen. Karen McConnaughay (R-St. Charles)
Sen. Michael Noland (D-Elgin)
Sen. Sue Rezin (R-Morris)
In calling for creation of the panel, Manar cited
inequities in school funding and said the panel would
focus on General State Aid.
“The General State Aid formula, by statute, is
intended to be the equalizing factor,” Manar said at the
time. “It’s very intricate and it’s based on a state that
existed in 1998, not based on a state that exists today
in 2013 … so now we need a distribution method that
accounts for those things.”
Manar’s advisory panel is due to report its
recommendations in February of 2014.
‘Six-Step Plan’ may be pension reform framework
Regarding the pension reform issue, many signs
appear to be pointing toward the conference committee
adopting much of the framework of the plan proposed
by university presidents, referred to as the “Six-Step
Plan” because it contains six main elements, including:
Increasing employee contributions by 2 percent
(from 8 percent to 10 percent) at a rate of ½ percent
per year for four years;
Adjusting the compound COLA
for retirees to ½ of the Consumer
Price Index (CPI);
Placing new employees into a
hybrid pension system that is a
combination of the defined benefit
and defined contribution plans;
Changing the way to calculate
the effective rate of interest used to
determine a range of benefits,
refunds and service credits set each
year by the SURS Board and the
State Comptroller;
Shifting the normal pension costs from the state to
universities at a rate of ½ percent per year; and
Ensuring that the state and/or universities make
their payments into the pension system
While that plan is specific to the State University
Retirement System (SURS) and might need to be
tweaked to fit the other four state retirement systems,
the presidents said that they estimated it could save as
much as Speaker Madigan’s Senate Bill 1 proposal.
The conference committee is awaiting reports from the
retirement systems’ actuaries, but when a proposal
might emerge – and, more importantly, whether it could
garner enough support to pass both chambers – is still
a question.
While the veto session still is a couple of months
away, this is a great time to reach out and make contact
with your representatives and senators while they are in
their home districts. We encourage you to make calls or
visits to establish or re-establish connections with them
and to let them know your thoughts and concerns
regarding public education.
Diane Hendren,
Director of
Governmental
Relations/
Chief of Staff
School funding formula, graduated income tax on radar
