Editor’s Note: This is the third installment in a series of articles about public pensions in Illinois as the General Assembly grapples with a budget crisis.

More than 100 members of the Eastern community gathered Tuesday to address different pension concerns like possible employee contribution increases along with state constitutional issues like reducing benefits. 

President Bill Perry along with Hank Davis, the director of accountancy, and Richard Wandling, a political science professor, led the first forum on pension reform hosted by the Council on University Planning and Budget. 

Perry said Senate Bill 512, which proposes to raise employee retirement contributions from 8 percent to about 15 percent, was referred to the Illinois House of Representatives Rules Committee, and action will most likely be deferred until after the Illinois Primary on March 20. 

Davis said he thinks Senate Bill 512 is unsound because it puts more financial burden on employees when they were not the ones who caused the pension liability.

Perry said some aspects of pension reform could have a negative affect on recruiting and retaining faculty members who may decide to teach in a different state that offers a more appealing pension situation.

Another legislative topic discussed at the forum that could affect recruiting and retaining faculty members was Senate Bill 1318, which proposes to repeal the provisions that give 50-percent tuition waivers to children of state university employees.

Andrew Mertz, an associate professor of mathematics and political science who has taught at Eastern for about eight years, said he received several offers from different institutions before choosing Eastern, and he chose Eastern because of the personal interactions with people and certain benefits such as the tuition waiver. Mertz has two daughters.

“I think this is a great institution with a positive work environment, but depending on the reform, if the changes are extreme I am concerned that I may have to reevaluate my options,” Mertz said. 

Many other pension proposals are appearing in the General Assembly, but they have not advanced much, Perry said.

“If you go to the General Assembly’s website and search pensions, about 10 pages show up with more than 1,000 results,” Perry said. “There is a lot out there, but nothing is getting much traction yet.”

Perry said they should also address state constitutional issues about potentially reducing retirement benefits. 

According to Article 8, Section 5 of the Illinois State Constitution, “membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

Eastern Treasurer Paul McCann said defined benefits and defined contributions are the two main pension-payment options, and most people choose the defined benefits structure.

Defined contributions consist of choosing the amount of money to go toward retirement per installment and the full benefits would be determined in later years.

The defined benefits structure is the opposite of defined contributions as the employee chooses the total end amount for retirement and the installment is set for each pay period.

McCann said the defined benefits option is much more expensive to the state, and that is why the state would prefer to reduce benefits.

“The state is out of money and out of options, and they are looking for solutions to the problem,” McCann said. “In general, in order for the state to afford the defined benefit expenses, they would have to reduce immediate costs or come up with dollars regularly.”  

According to Gov. Pat Quinn’s Fiscal Year 13 Budget Address, the general revenue fund payment for public pensions is $5.2 billion, which is triple what it cost in FY 2008.

 Rachel Rodgers can be reached at 581-2812 or [email protected].