In what appears to be a situation of dueling pension reform measures, the Senate bypassed consideration of a pension measure being pushed by the House Speaker to debate the merits of a pension proposal backed by the Senate President.
Senate lawmakers also acted on a number of other measures during the week, including a bill to open the state’s system of education funding up to additional scrutiny, a measure creating the state-based health insurance exchange, and medical marijuana legislation.
Pension Reform – Senate Bill 2404
Senate Bill 2404 passed primarily along party lines with all but two Democrats and a number of state labor organizations supporting it, and most Republicans opposing it. Supporters of the measure contend that it may be more likely to meet Constitutional muster through provisions that give employees a choice of benefits.
Senate President John Cullerton has stated that Illinois retirees and employees must be given a choice of retirement benefits in order to circumvent the Constitutional prohibitions against reducing pension benefits.
Senate Bill 2404 would require employees in every system but the judges to choose one of three options:
• Keep their current Cost of Living Adjustments (COLA) on their future pension benefits – which is 3% compounded annually. Give up access to state health insurance when they retire and have future salary increases not count for their pension; or
• Keep the current COLA but agree to a three-year delay in that COLA. Retain retiree health insurance. Future raises would count toward pensions. Workers would be required to pay an additional 2% of their salary each year toward their pensions; or
• Take a lower COLA (3% with no compounding) and agree to a two-year delay in that COLA. Employees could keep their retiree insurance and pensionable raises and not have to make extra contributions.
Retirees would be able to retain their current 3% compounded COLA, but must choose between:
• Keeping access to health insurance and having a two-year freeze in their COLA; or
• Giving up health insurance with no COLA freeze.
Rough estimates project the proposal will reduce the state’s pension payments in the upcoming fiscal year by only $850 million, and would save a total of perhaps $46 billion over the next 30 years. While the measure would not strengthen the current funding formula, it would “guarantee” the state could make the pension payments required under current law.
However, opponents of the bill (including me) say Senate Bill 2404 does not do enough to stabilize the pension systems or reduce the state’s pension liabilities, which have been estimated to exceed $100 billion and may actually be closer to $200 billion. Opponents note that Senate Bill 1, the pension proposal being pushed by Speaker Michael Madigan, promises savings of about $150 billion over 30 years, including approximately $2 billion in 2015. Some of us believe that the only real, permanent, solution is to end the defined-benefit program for the future and move to a defined-contribution plan.
Education Funding Transparency – House Bill 3133
Senate lawmakers also turned their attention to other matters, including a bill sponsored by Senate Republican Leader Christine Radogno that would open up the General State Aid formula to greater public scrutiny. The Senate Executive Committee approved House Bill 3133, which would require the approximate amounts forecast to be paid for state Poverty Grants and Foundation Level Grants to be listed out in a state budget bill for easy review; the Property Tax Extension Limitation Law adjustment must also be listed separately.
The measure was introduced in response to a study conducted by Senate Republicans that revealed the General State Aid allocation has been listed as a lump sum in the state budget, which makes it difficult to decipher how state education funding is being allocated. House Bill 3133 seeks to increase transparency of the state’s system of education funding, which will allow policy-makers to detect trends that—until very recently—had been concealed, and ensure that schools are being funded in the way the General State Aid formula was intended.
State Health Insurance Exchange – House Bill 3227
The Senate also moved forward with implementation of a state-based health insurance exchange as part of the requirements of the federal Affordable Care Act, often referred to as “Obamacare.”
The Senate Insurance Committee approved House Bill 3227, establishing and outlining the structure of the Illinois Health Benefits Exchange.
It is projected that plan enrollment will begin October 1, 2014.
The exchange will initially have two components, one serving individuals and one serving businesses with 50 or fewer employees.
In 2016, the two parts could be merged and could also include employers with up to 100 employees.
Medical Marijuana – House Bill 1
The Senate Executive Committee also advanced legislation that would allow for the dispensation of medical marijuana. House Bill 1 would allow a patient who has been issued a registry identification card by the Department of Public Health to possess up to 2.5 ounces of cannabis during a 14-day period. The measure specifies certain qualifying diseases and illnesses, but does not include general eligibility for chronic pain or nausea.
House Bill 1 establishes criteria for medical marijuana cultivation centers and requires them to be registered by the Department of Agriculture, which may approve up to 22 licensed marijuana growers, but no more than one per State Police District. The bill stipulates that a cultivation center would only be permitted to provide medical cannabis to dispensing organizations whose purpose is to dispense cannabis and paraphernalia to qualified patients. The dispensing organizations would have to register with the Department of Financial and Professional Regulation, which would be allowed to approve up to 60 dispensaries.
In response to safety concerns, the bill provides a framework to allow for employer regulation and discipline for use of cannabis in the workplace. It also stipulates that a patient may not drive while under the influence of medical cannabis. The bill allows field sobriety tests to be administered to a medical cannabis card holder suspected of driving under the influence, and states that evidence would be admissible in court.
Additional Senate Action
Information about legislation moving through the Senate, as well as measures that have been approved by the General Assembly, is available at the Senate Republican’s “Senate Action” page.