Preckwinkle delays push for county pension reform
Thursday, May 23, 2013
Crain's Chicago Business
by Greg Hinz
The delay in passing state pension reform appears to be spilling over into efforts to shore up the cash-short Cook County pension fund. But some progress reportedly is being made on a settlement with worker unions, a deal that would be both sweeter and harsher than pending state legislation.
The new details about the status of county talks come from a pair of letters that were made available to me.
In one, dated earlier this month, the County Employees' and Officers' Annuity and Benefit Fund of Cook County asks for help, saying it will exhaust its assets in 2034 unless something changes. As of Dec. 31, the fund had just $7.8 billion in assets to pay promised benefits, barely half of its $14.6 billion in liabilities, with the so-called funded ratio dropping to 53.5 percent from 57.5 percent at the end of 2011.
The second letter was a response dated yesterday from Cook County Board President Toni Preckwinkle.
In the note to pension-fund trustees and county commissioners, Ms. Preckwinkle says she has “developed a solution” to make the fund solvent in the long term, but “because legislative leaders have been focused on efforts regarding state pensions, we do not envision changes to the law that governs the fund during this legislative session.”
The letter says those changes will include a later retirement age, a reduced cost-of-living allowance in payments to retirees and “dedicated funding for retiree health care.” Also included is an increase in payments by both the county and workers, with the hike proportionately the same for each.
'SURE LEGAL FOOTING'
Because the pact would be agreed on by labor and management, “this approach is on sure legal footing,” the letter says.
A source close to Ms. Preckwinkle confirmed that while a final deal still has not been struck despite more than a year of talks, a “balanced” deal is within sight.
That source declined to say how much the retirement age would rise but did say the COLA would be lowered to half the annual rise in the U.S. Consumer Price Index. It would rise as the pension system became better funded.
Various versions of the pending state legislation would make COLA cuts permanent or exclude it from any cut at all.
Another item mentioned in Ms. Preckwinkle's letter would partially lift a cap on how much of an employee's salary is pensionable. Under state law, any county employee hired after Jan. 1, 2011, can get a pension only on the first $110,000 of salary.
My source would not detail how much the cap would be lifted. But one of the labor negotiators on the proposed changes, Chicago Federation of Labor President Jorge Ramirez, said Ms. Preckwinkle has some room to move because the county actually is paying less for pensions on its post-2011 hires than a private employer does in Social Security payments.
“I think we're making progress,” Mr. Ramirez said. But, he added, “it will be difficult to act without seeing what the state comes up with first.”
Ms. Preckwinkle indicated in the letter that she hopes to present a county proposal to state lawmakers “in the months ahead.” All local government pension levels are set by state law.