Cook County and Forest Preserve District Board President Toni Preckwinkle today announced details of new legislation designed to bring the highly stressed pension funds for Cook County and Forest Preserve District employees to 100% funding status within 30 years.
The legislation is expected to be introduced into the Illinois General Assembly on Tuesday, May 27, 2014. President Preckwinkle is urging lawmakers to pass the bill before the spring legislative session ends on May 31, 2014.
The County Employees’ and Officers’ Annuity and Benefit Fund of Cook County had a funded status of 56.6% as of 2013. An independent analysis of the Fund projected that it would reach insolvency and an inability to pay full benefits in 20-25 years. Similarly, the Forest Preserve District Employees’ and Officers’ Annuity and Benefit Fund of Cook County had a 59.5% funded status as of 2013.
“Cook County and the Forest Preserve District regularly contributed the full amount permitted by state law to the retirement funds; however, benefit enhancements added to the pension code since 1985 coupled with recessions in 2001 and 2008 have left these funds highly stressed,” Preckwinkle said. “Put simply, without action by the Illinois General Assembly, the retirement security for anyone who will depend on these funds in the future is at risk.”
“This bill is the result of more than two years of collaboration with all of our stakeholders, including our partners in the unions and employee groups that participate in the County’s retirement funds. Our goal was to create an equitable and permanent fix to the broken pension system, one that protects the retirement security of the County’s employees as well as the interests of Cook County taxpayers,” President Preckwinkle said.
If the proposed reforms are implemented, independent actuarial projections show the funds attaining 100% funding status by 2043. Without reform measures, which include both increased funding from the County as well as increased contributions from employees and benefit changes, the funds are projected to reach -100% by 2052.
The reforms include automatic adjustment measures designed to keep the funds well-funded while also ensuring that benefits will automatically adjust to protect County taxpayers if market conditions or other forces negatively impact them in future years
“If we do nothing, the Cook County pension funds will run out of money in 2038, stranding tens of thousands of workers and retirees,” said State Senator Kwame Raoul (D-Chicago 13th), the measure’s Senate sponsor. “This negotiated plan not only includes the balanced approach and commitment to shared sacrifice that should always carry the day when we make decisions affecting individuals’ life savings, but also the unique proposition that as the funds’ fiscal health improves, benefit reductions should be restored. I commend President Preckwinkle for her hard work on this challenging issue.”
Preckwinkle also noted that under the legislation, any reforms which may affect employees’ decisions regarding retirement will be phased in over time beginning January 1, 2015.
“I believe in this legislation. That’s why I went to Springfield personally last week to explain it to lawmakers and why I’m coming back again this week to ask for their support,” said Preckwinkle.
“I commend President Preckwinkle for working towards a solution to the pension crisis since she first took office. Reform is needed now to ensure the long-term financial stability of Cook County,” said Cook County Finance Committee Chairman John Daley (11th).
“Today, we saw the culmination of hard-work, open dialogue and compromise. The Cook County pension reform bill before the legislature today ensures retirement security for the workers that serve the people of Cook County, that taxpayers are protected and our businesses are competitive,” said Commissioner Bridget Gainer (10th), Chair of the Cook County Pension Committee.
“I applaud President Preckwinkle and her team for their efforts to collaborate with the unions who represent Cook County employees in drafting this reform legislation. We are pleased to have the support of so many of our labor organizations and are grateful to them for their partnership in this process,” said Cook County Commissioner Joan Patricia Murphy (6th), Chair of the Cook County Labor Committee.