Illinois lawmakers delay crucial pension reform again

Illinois lawmakers have delayed pension reform for public employees hired since 2011, known as Tier 2 employees, despite concerns from labor unions that their benefits are inadequate and may violate federal law. The “Safe Harbor” Social Security test requires pension benefits to be at least equal to Social Security benefits; failing to meet this requirement can be costly for employers. A coalition of labor unions introduced a proposal in the House during the final week of the spring session, but it did not receive a committee hearing. The reforms would have increased cost-of-living adjustments, allowed earlier retirement, and addressed the Safe Harbor issue by increasing the earnings limit for Tier 2 employees. The bill’s late introduction left little time for a thorough analysis, according to the governor’s office, which contributed to its demise. The union coalition argued that the governor’s office was part of discussions throughout the process. Despite the reform’s failure, lawmakers sought to address the Safe Harbor problem in the upcoming budget by creating a new Tier 2 reserve fund with a $75 million appropriation. Other pension reform was passed for Chicago police officers and firefighters, aligning their Tier 2 benefit calculations with those in the rest of the state. However, Chicago officials warned of the potential cost to the city. The We Are One Illinois coalition of labor unions criticized the lack of action, stating, “This issue isn’t going away. Public employees are leaving their professions and our state because they can’t rely on a pension that ensures dignity in retirement.” Illinois lawmakers approved changes that will cost Chicago taxpayers tens of millions of dollars in their first year and billions over time by granting more lucrative pensions to some police officers and firefighters. The changes were a negotiated fix agreed to by Mayor Brandon Johnson and Gov. JB Pritzker, aiming to bring parity between Chicago and downstate first responders and address a shortfall in benefits for employees hired after 2010. Budget watchdogs warned that the changes will add billions to the city’s pension liability by the end of 2023.

Lawmakers fail to pass pension reform

Chicago Chief Financial Officer Jill Jaworski’s office estimates the initial cost to be $52 million in 2027 and is still conducting a comprehensive analysis of the long-term costs. The bill includes three key benefit boosts: increasing the final salary cap used to determine pension benefits, adjusting the rate at which the salary cap rises annually, and modifying the timeframe for determining the final average salary figure. Critics argue that the fix will create a rising annual cost, which is expected to peak at $750 million by the 2050s, and add billions to the fund’s long-term liabilities. The legislation was passed in the final days of the spring legislative session, leaving the city with limited time to respond and conduct a fully validated, in-depth analysis. A measure awaiting Gov. J.B. Pritzker’s signature could mandate that specific insurance plans cover hippotherapy and other forms of therapeutic horseback riding in Illinois. Hippotherapy utilizes the movement of a horse as a form of physical, occupational, and speech therapy to address a patient’s specific needs, treating disabilities and disorders such as autism, cerebral palsy, arthritis, multiple sclerosis, strokes, head and spinal cord injuries, as well as behavioral and psychiatric disorders, including PTSD. Marita Wassman, founder of Ride On St. Louis, a nonprofit organization providing equine-assisted services for over 27 years, shared a notable case involving an 8-year-old girl with cerebral palsy who showed significant improvements in her ability to sit and hold her head upright after four months of treatment. Senate Bill 69, which mandates this insurance coverage, passed the Senate unanimously in April and the House in May with a vote of 78-33. The bill will become law if signed by Gov. J.B. Pritzker. The issue of insurance coverage for equine-assisted therapy has been contentious, with some insurance companies reluctant to compensate therapists for hippotherapy services. The new bill aims to clarify and standardize coverage, thereby alleviating confusion for patients and parents regarding which services are covered.