SPRINGFIELD, Ill. — State Senator Don Harmon (D–Oak Park) expressed his approval after both houses of the General Assembly passed Senate Bill 1946 on Wednesday evening in Springfield. Senator Harmon commented after the session adjourned.

"This dramatic reform will stabilize our public retirement systems, protect benefits for current retirees and employees, and boost our state’s economic viability," said Senator Harmon. "Our system has been severely underfunded, and these reforms will save Illinois taxpayers hundreds of billions of dollars over the next 30 years."

"Many of our members, including me, have heard from our constituents demanding this issue be addressed immediately," he continued. "We heard you, and we’ve taken this historic step to repair this structural problem within our system, and we have ensured that current employees and retirees will be paid the retirement benefits we promised to pay them."

The plan addresses key issues that had been raised: it reduces public pension benefits only for future employees (those not yet hired); it increases the retirement age to 67 to better match Social Security and private sector requirements; and it reduces the 3% annual cost of living adjustment for future retirees, adjusting it to be based on the Consumer Price Index up to a maximum of 3%. The new plan requires an employee’s retirement salary to be based on the last eight years of service rather than the last four years; however, the final average salary will not be able to exceed the Social Security cap of $106,800. In addition, the pensions of legislators and judges are capped at 60% of final salary, rather than the current 85%. The plan also provides temporary relief to protect teachers’ jobs with the Chicago Public School System.

The timing of this bill’s passage is critical. Bond rating agencies downgraded Illinois in 2009 and placed the State on a negative watch status in December because of massive unfunded pension liabilities. The bond rating agencies have indicated to the State they were on the verge of a significant additional downgrade without immediate action. A downgrade would cost the state hundreds of millions.

The Senate approved the bill by a 48-6 margin with three present votes, after the House voted 92-17 for approval with seven members voting present.